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EXHIBIT 10.5
CONFIDENTIAL TREATMENT
REQUESTED PURSUANT TO RULE 406
AMENDED AND RESTATED
REGIONAL JET AIR SERVICES AGREEMENT
BY AND BETWEEN
AMR CORPORATION
AND
CHAUTAUQUA AIRLINES, INC.
DATED AS OF JUNE 12, 2002,
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933. THE OMITTED
MATERIALS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
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AMENDED AND RESTATED AIR SERVICES AGREEMENT
This Amended and Restated Agreement (the "AGREEMENT"), dated as of June 12,
2002, but to be effective as of the SABRE Cutover Date (as defined below), is
between AMR Corporation ("AMR"), a Delaware corporation having offices at 4333
Amon Carter Boulevard, Mail Drop 5494, Fort Worth, Texas, 75261, and CHAUTAUQUA
AIRLINES, INC. ("CONTRACTOR"), a New York corporation having its principal place
of business at Indianapolis International Airport, 2500 South High School Road,
Indianapolis, IN 46241. Each covenant of AA (as defined below) made herein shall
be construed to mean that AMR shall cause AA to perform such covenant.
WITNESSETH:
WHEREAS, AA holds a certificate of public convenience and necessity issued
pursuant to the federal transportation statutes authorizing it to engage in air
transportation of persons, property and mail, and is a major air carrier
providing scheduled domestic and international air transportation; and
WHEREAS, Contractor holds a certificate of public convenience and necessity
issued pursuant to the Federal Transportation Statute authorizing it to engage
in air transportation of persons, property and mail, and is a regional air
carrier providing scheduled domestic air transportation; and
WHEREAS, AMR and Contractor have entered into an agreement regarding the
operation of Feeder Air Service (as defined herein) utilizing regional jets
pursuant to that certain Air Services Agreement dated June 11, 2001 ("AIR
SERVICES AGREEMENT"); and
WHEREAS, AMR and Contractor desire to amend and restate said Air Services
Agreement.
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, but only to the extent such
approvals and consents are required for the performance of services hereunder,
the parties agree as follows:
DEFINITIONS
1. "AA" means American Airlines, Inc.
2. "AADAMS" means American Airlines Digital Asset Management System.
3. "AA TARIFFS" has the meaning ascribed to it in Exhibit H.
4. "AATV" means AA Travel Vouchers.
5. "AA UNAUTHORIZED OBLIGATION" has the meaning ascribed to it in Section
6.02(b).
6. "AMERICAN CONNECTION" means the name pursuant to which Contractor will
operate Feeder Air Service.
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7. "AMERICAN CONNECTION MARKS" shall mean those trademarks, service
marks, tradenames, logos, emblems, uniform designs, and distinctive
exterior and interior color decor and patterns for aircraft, all as
used in connection with the AA American Connection brand of commuter
air service and listed or described on Exhibit B-1.
8. "ACCEPTED FREQUENT FLYER PROGRAM" means the AAdvantage Frequent Flyer
Program and any other carrier's frequent flyer program designated by
AA.
9. "ACQUIRING PARTY" has the meaning ascribed to it in Section 9.02(b).
10. "ACT" means the Securities Act of 1933, as amended.
11. "AFFILIATE" means, with respect to a Person, any other Person
controlling, controlled by, or under common control with, such Person.
12. "AIRPORT SUPPORT SERVICES" means those Ground Handling, Passenger
Handling Duties associated with providing AA's desired ground service
levels in conjunction with the Feeder Air Services contemplated
herein.
13. "AMERICAN EAGLE" OR "AE" means AMR Corporation's wholly owned regional
airline, American Eagle Airlines, Inc.
14. "AMR ENTITIES" means AMR Corporation and its successors, subsidiaries,
Affiliates, parent companies, general partners, limited partners,
predecessors and assigns, including but not limited to TWA, AA and AE.
15. "APPROVED AIRCRAFT" means any aircraft included in the Fleet Plan and
made a part of this Agreement.
16. "ATAC" means AA's automated agent check out system.
17. "ATA MANUAL" means the Air Transportation Association's Air Cargo
Council Trade Practice Manual.
18. "AUTOMATION EQUIPMENT" has the meaning ascribed to it in Exhibit L.
19. "BAGGAGE CLAIM" means notification by a passenger that his baggage has
been lost, damaged, delayed, pilfered or stolen and may originate in
the form of a report prepared on behalf of the passenger by airline
personnel, which may or may not entitle the passenger to receive
compensation.
20. "BANKRUPT PARTY" has the meaning ascribed to it in Section 7.02(a).
21. "BLOCK HOUR" means that time that commences when an aircraft moves
under its own power for the purpose of flight and ends when the
aircraft comes to rest after landing.
22. "BMAS" or "BAGGAGE MANAGEMENT ANALYSIS SYSTEM" means an internal AA
baggage tracking system.
23. "CALL OPTION" has the meaning ascribed to it in Section 7.03.
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24. "CAUSE" means termination of this Agreement prior to the end of the
Term for any of the reasons specified in Section 7.02.
25. "CDO" means continual duty overnight.
26. "CHARTER FLIGHT" means an unpublished revenue flight marketed by an
AMR Entity and operated by Contractor with an Approved Aircraft.
27. "CLAIMS" has the meaning assigned to it in Section 6.03(b).
28. "CLDR" means the Contractor Location Departure Ratio as defined in
Exhibit E.
29. "COMMON STOCK" has the meaning ascribed to it in Section 9.03(d).
30. "COMPLETION FACTOR" means number of Scheduled Flights operated divided
by number of Scheduled Flights.
31. "CONNECTING PASSENGERS" means passengers whose flight itinerary
involves a transfer to (or from) a Contractor flight from (or to) an
AA or AA Affiliate flight at the STL Hub, Focus City or other such
location where Contractor has connections to multiple AA destinations.
32. "CONSUMER ADJUSTMENTS" has the meaning ascribed to it in Exhibit F.
33. "CONSUMER PRICE INDEX" or "CPI" means the reference index published by
the Bureau of Labor Statistics Data, U.S. Department of Labor
Statistics Data, U.S. Department of Labor for the Consumer Price Index
- All-Urban Consumers, U.S. City average, all items (Base year 1982 -
1984 = 100).
34. "CONTRACTOR" means Chautauqua Airlines, Inc.
35. "CONTRACTOR CONVERSION" means the complete assumption by Contractor of
ground operations at a Covered Location, which results in the Covered
Location becoming a Contractor Location.
36. "CONTRACTOR LOCATION" means any Feeder Airport terminal facility where
Contractor has managerial responsibility for the disposition of
facilities and the performance of Airport Support Services pursuant to
the operation of Contractor's Feeder Air Service Flights.
37. "CONTRACTOR TICKETING LOCATION" has the meaning ascribed to it in
Exhibit F.
38. "CONTRACTOR UNAUTHORIZED OBLIGATION" has the meaning ascribed to it in
Section 6.02(a).
39. "CONVERSION EXPENSES" has the meaning ascribed to it in Section 7.03.
40. "CORPORATE COMPLAINT RATIO" means Corporate Complaints per 1,000
boarded passengers.
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41. "CORPORATE COMPLAINTS" means total number of complaints received by
Contractor and AA from passengers which are attributable to
Contractor's American Connection service, as tracked and reported in
AA's CAARE System or any successor system.
42. "COSTS" has the meaning ascribed to it in Exhibit E.
43. "COVERED CONVERSION" means the complete assumption by an AMR Entity of
ground operations at a Feeder Airport which results in the Feeder
Airport becoming a Covered Location.
44. "COVERED LOCATION" means any Feeder Airport terminal facility where an
AMR Entity has managerial responsibility for the disposition of
facilities and the performance of Airport Support Services pursuant to
the operation of Contractor's Feeder Air Service Flights.
45. "CRS" means computerized reservation system.
46. "CUSTOMER SERVICE POLICIES AND PROCEDURES" means the procedures
prescribed in writing by AA from time to time, for various activities
relating to the provision of air transportation services.
47. "DBC" means denied boarding compensation.
48. "DEFAULTING PARTY" has the meaning ascribed to it in Section 7.02(a).
49. "DESIGNATED USERS" has the meaning ascribed to it in Exhibit L.
50. "DISCREPANCY NOTICES" has the meaning ascribed to it in Exhibit F.
51. "DOD" means United States Department of Defense.
52. "DOT" means United States Department of Transportation.
53. "ENPLANEMENT TICKET TAXES" means Taxes required to be remitted by the
operating carrier at the time of enplanement under applicable law or
industry standard.
54. "ESCALATION PERCENT" and "EP" shall be defined and calculated pursuant
to Schedule E-4.
55. "EXCLUDED TAXES" means Taxes measured or determined by gross or net
income or profits, assets, capital or net worth.
56. "EXTRAORDINARY TRANSACTION" has the meaning ascribed to it in Section
9.03(a).
57. "FAA" means United States Federal Aviation Administration.
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58. "FEEDER AIR SERVICE" and "FEEDER AIR SERVICE FLIGHTS" means scheduled
air transportation utilizing the AA code, and operated by Contractor
as American Connection or comparable AA fully branded flights under a
non-exclusive license to use the AA Marks in connection with such
transportation.
59. "FEEDER AIRPORT" means any airport, other than the Hub, where
Contractor provides Feeder Air Service Flights at the request of AA
pursuant to this Agreement.
60. "FINAME" means Agencia Especial de Financiamento Industrial - Finame,
a Brazilian Federal public company.
61. "FIRM APPROVED AIRCRAFT" has the meaning ascribed to it in Schedule
C-1.
62. "FLEET PLAN" shall mean the schedule of placing aircraft into
operation for Feeder Air Service and code share flights as more fully
set forth in Exhibit C.
63. "FOCUS CITY" shall mean any airport so designated by AA other than the
STL Hub where AA and/or an AA Affiliate has connections to multiple
points within the AA network.
64. "FORCE MAJEURE" has the meaning ascribed to it in Section 7.03.
65. "FOS" means AA's Flight Operations System.
66. "FTP" means File Transfer Protocol.
67. "GROUND HANDLING" and "GROUND HANDLING DUTIES" means the provision of
one or more of the following: (1) handling, loading, and unloading of
baggage, cargo and mail, (2) receipt and dispatch, including,
towing/pushback, and observing aircraft engine start (3) baggage
delivery, (4) servicing potable water (5) connection and removal of
ground power unit and pre-conditioned air, (6) Light Aircraft
Cleaning, and (7) any other similar duties agreed upon by the parties
in writing.
68. "HOLDING COMPANY" has the meaning ascribed to it in Section 9.02.
69. "HUB" and "STL" means Lambert - St. Louis International Airport, St.
Louis, Missouri.
70. "INSECURE PARTY" has the meaning ascribed to it in Section 7.02(a).
71. "IPO" has the meaning ascribed to it in Section 9.03(d).
72. "IPO PARTICIPATION RIGHT" has the meaning ascribed to it in Section
9.03(d).
73. "IPO SHARE PRICE" has the meaning ascribed to it in Section
9.03(d)(1).
74. "IPO SHARES" has the meaning ascribed to it in Section 9.03(d).
75. "LABOR CONTRACT RESTRICTIONS" means certain contractual limitations
related to AA commuter carriers and the operation of regional jets as
stated in the AA-Allied Pilots Association collective bargaining
agreement dated May 5, 1997, as amended from time to time, or any
successor agreement.
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76. "LEASE" means a long-term aircraft lease for Approved Aircraft that
complies with the provisions hereof.
77. "LIGHT AIRCRAFT CLEANING" means wiping interior surfaces and windows,
sweeping/vacuuming, crossing seat belts, folding blankets, trash
removal, clean/restock seatback pockets and overhead bins, mopping
galley and lavatory, and lavatory service on an as needed basis.
78. "MAGSA" has the meaning ascribed to it in Exhibit E.
79. "MARKS" means any trademark, trade name, trade dress, service mark,
domain name, or other indicia of ownership owned or used by the AMR
Entities.
80. "MASTER AGREEMENT" means a Master Agreement, in substantially the form
of Master Agreement 372, dated as of June 11, 2002, by and among
American Eagle, Contractor and FINAME, relating to any Approved
Aircraft.
81. "MISHANDLED BAGS" means total number of Baggage Claims received by AA
from Connecting Passengers for which Contractor is at fault for lost,
damaged, delayed, or pilfered baggage.
82. "MITIGATING FACTORS" means on days where AA operations control has
advised Contractor operations control that AA is "thinning" its
operation, the reduction of Contractor's maximum 100% completion
number by the percentage of flights cancelled by AA and the exclusion
of those "thinned" Contractor flights from the Completion Factor
calculation for the purposes of assessing penalties pursuant to
Exhibit J.2.C.
83. "NEW AHI CALCULATED RATE" has the meaning ascribed to it in Schedule
E-3.
84. "NEW PLI CALCULATED RATE" has the meaning ascribed to it in Schedule
E-3.
85. "NTSB" means the National Transportation Safety Board.
86. "OAG" means the Official Airline Guide.
87. "ON-TIME ARRIVAL" means a Scheduled Flight that arrives prior to 15
minutes after scheduled arrival time; cancelled and diverted flights
are not considered on-time arrivals.
88. "ONE-TIME CALL OPTION" has the meaning ascribed to it in Section
7.03(b).
89. "ONE-TIME PUT OPTION" has the meaning ascribed to it in Section 7.03.
90. "ORIGINAL APPROVED AIRCRAFT" has the meaning ascribed to it in
Schedule C-1.
91. "PASSENGER HANDLING" and "PASSENGER HANDLING DUTIES" means the
provision of one or more of the following in conformance with Customer
Service Policies And Procedures: (1) ticketing and check-in of
passengers, including boarding pass issuance, re-accommodating and
reprotecting passengers, (2) gate passenger processing,
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including aircraft boarding and deplaning duties via jetway or ramp
level, (3) baggage service office duties, (4) passenger security
screening, (5) skycap services, (6) special passenger assistance, and
(7) any other duties normally agreed upon by the parties in writing.
92. "PASS THROUGH COSTS" mean those specific costs identified in Schedule
E-3.
93. "PAWOB" means passengers arriving without bags.
94. "PAYOR" has the meaning ascribed to it in Section 8(f).
95. "PERFORMANCE PERIOD" means a six (6) month period, from January 1 -
June 30, and from July 1 - December 31.
96. "PERSON" means a natural person, a corporation, a partnership, a
limited liability company, an estate, a governmental agency or any
other entity.
97. "PRIVATE PLACEMENT SHARES" has the meaning ascribed to it in Section
9.03(d)(2).
98. "PROPOSED AGREEMENT" has the meaning ascribed to it in Section
10.04(c).
99. "REVENUE PASSENGER" means each passenger who holds a ticket
(electronic or otherwise), flight coupon, voucher, or other form of
document which is valid for travel. The term "Revenue Passenger"
includes all passengers boarded on a Contractor American Connection
flight except AA, Contractor, and/or other airline employees,
dependents and other eligible persons traveling on a space available
or positive space basis in conjunction with an employee travel
benefits program.
100. "RJ TURN FEE" has the meaning ascribed to it in Exhibit E.
101. "RON" means remain over night.
102. "RPMs" means revenue passenger miles.
103. "SABRE CUTOVER DATE" means December 2, 2001, the date designated by AA
that Contractor discontinues the use of WorldSpan technology and
commences the use of Sabre Services in the performance of its duties
under this Agreement.
104. "SABRE SERVICES" means the computerized SABRE Reservations and
Ticketing Service (or any similar or substitute service offered by or
on behalf of AA), including associated support systems as designated
by AA that performs flight, hotel, rental car and other travel related
services, reservations and ticket issuance functions.
105. "SCHEDULED FLIGHTS" means those flights published in AA's CRS as of
seven (7) days prior to departure date.
106. "SHARED CODE SHARING JET FLIGHTS" shall mean the regional jet air
transportation operated by Contractor, as may be designated in writing
by AA from time to time, which flights are code shared with AA and a
third party air carrier.
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107. "SHIPMENTS" has the meaning ascribed to it in Exhibit H.
108. "SSIM" means Standard Schedules Information Manual.
109. "STANDARD MARKED" means Approved Aircraft painted with the "American
Connection" markings and distinctive colors described in Exhibit B-1
in addition to being painted with Contractor's name in such fashion as
AA shall approve, such approval not to be unreasonably withheld or
delayed; PROVIDED, that with respect to the Original Approved
Aircraft, until August 31, 2002, the term "Standard Marked" shall
include the Trans World Express" markings and distinctive colors
described in Exhibit B-2.
110. "TAX" or "TAXES" means any foreign, federal, state, local, municipal,
provincial, territorial or port taxes, including, without limitation,
sales and use taxes, gross receipts taxes in the nature of sales tax,
value added taxes, goods and services taxes, stamp taxes and other
similar taxes, fees, duties, imposts, licenses and charges (including
interest and penalties thereon) assessed, levied or imposed by a
competent authority under applicable law except for Excluded Taxes and
Ticket Taxes.
111. "TERM" has the meaning ascribed to it in Section 7.01(a).
112. "TICKET TAXES" means any foreign, federal, state, local, municipal,
provincial, territorial or port taxes, fees, duties, imposts, licenses
and charges (and any interest and penalties thereon) that may be
assessed, levied or imposed on, or otherwise collected from, customers
in connection with the transportation of persons or property by air
under applicable law or industry standards, including, without
limitation, sales and use taxes, gross receipts taxes in the nature of
sales taxes, stamp taxes, value added taxes, goods and services taxes,
excise taxes, arrival/departure taxes, custom, immigration,
agricultural and inspection fees, passenger facility charges and
similar user charges or surcharges.
113. "TWA" means TWA Airlines, LLC, a subsidiary of American Airlines, Inc.
114. "TWA MARKS" means those trademarks, service marks, tradenames, logos,
emblems, uniform designs, and distinctive exterior and interior color
decor and patterns for aircraft all as used in connection with the
Trans World Express brand of commuter air service and listed or
described on Exhibit B-2.
115. "UNCONTROLLABLE CANCELLATIONS" means cancellations that are not due to
any failure of Contractor or its vendors or subcontractors to provide
equipment, facilities, personnel, aircraft and crews necessary to
operate scheduled Feeder Air Service flights and include, without
limitation cancellations due to acts or omissions of AA or any other
third party or cancellations due to acts of God.
116. "USPS" means the United States Postal Service.
117. "WORLDTRACER" means an external AA baggage tracking system.
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ARTICLE 1 - OPERATION OF FEEDER AIR SERVICES
1.01 - USE OF MARKS
(a) Contractor has no right or permission to use any of the Marks
without first receiving AA's express written approval to do so.
Subject to the terms of this Agreement, as amended, Contractor is
hereby granted the non-exclusive, non-transferable right and license
to use the TWA Marks (but only to the extent affixed to the Original
Approved Aircraft) and to use the American Connection Marks both in
connection with the operation of Contractor's Feeder Air Services.
If Contractor receives written permission to reproduce any
additional Marks, then Contractor will be given access to the AADAMS
so that Contractor may retrieve accurate renditions of such Marks.
Contractor acknowledges and agrees that it has permission to use to
the extent provided herein only the TWA Marks and the American
Connection Marks and those Marks to which it has been granted access
on AADAMS. Contractor may not use the Marks in any manner other than
as contemplated by this Agreement, as amended. Contractor
acknowledges that the Marks are the property of the AMR Entities,
and upon termination of this Agreement, Contractor will immediately
cease use of the Marks. Under no circumstances will Contractor: (1)
use or display any Marks (other than the TWA Marks) that Contractor
obtained from a source other than AADAMS; (2) alter the Marks in any
way; or (3) display the Marks without the appropriate proprietary
rights notices. Contractor agrees that it shall in no way contest or
deny the validity of, or the right or title of the AMR Entities in
or to the Marks, and shall not encourage or assist others directly
or indirectly to do so, whether during the Term of this Agreement or
thereafter. Contractor will take no actions that are adverse to the
AMR Entities' ownership rights in the Marks. Contractor shall not
utilize the Marks in any manner that would diminish their value or
harm the reputation of the AMR Entities. Contractor shall not use or
register any domain name that is identical to or similar to any of
the Marks without first receiving AA's prior written approval. Upon
written request from AA, Contractor agrees to provide AA with
reports at least every ninety days setting forth Contractor's use of
the Marks. Contractor may combine these reports with any other
report Contractor provides to AA under this Agreement. Contractor
will not, under any circumstances, transfer, sell, or give away to a
third party any products bearing the Marks that do not meet AA's
quality standards.
Notwithstanding the above, and except as may be otherwise provided
herein, Contractor shall have no right to use the TWA Marks beyond
the date that 145-08 is removed from service under the phase out
plan set forth in Schedule C-1.
(b) The Feeder Air Services operated by Contractor shall be identified
as follows:
1. The name "American Connection" and/or other American
Connection Marks shall be painted on aircraft and ground equipment
used for Contractor's Feeder Air Service Flights in accordance with
paint color and graphic design specifications of AA; no other
identification shall appear on the aircraft and ground equipment
except that Contractor's name shall appear in such fashion as AA
shall approve. Use of the "American Connection" painted aircraft for
Charter Flight use is also permitted.
2. Signage at the STL Hub and at Feeder Airport ticket
counters and gates shall depict the name "American Connection"
and/or other American Connection Marks in accordance with size,
color and design specifications of AA. "American Connection"
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is a Mark as defined by this Agreement and subject to the provisions
relating to Marks, including but not limited to Section 1.01(a).
3. All Feeder Air Services shall be operated under the name
"American Connection" or other such name, incorporating an AA Mark,
as AA shall from time to time approve. All Feeder Air Service
Flights shall be identified by an "AA" or "AA*" designator code, as
appropriate, in the OAG; in AA, Contractor, and third party computer
reservations systems, including internet reservation systems; in AA
timetables; in airport flight information displays; and in passenger
tickets and like media distributed to or accessed by travel agents,
other airlines or the public.
4. Contractor personnel at Feeder Airports and Hub ramp
positions and gates used for "American Connection" flights shall
wear an AA designed "American Connection" uniform, if so designated
by AA.
5. All ground equipment used by Contractor for the Feeder Air
Services shall be painted in an AA's color scheme, and identified by
an "American Connection" marking.
6. All advertising and promotion of the Feeder Air Services by
Contractor or by AA shall use the name "American Connection," and
not the Contractor name, except to the extent required by law for
disclosure of the operating carrier.
7. To the extent not already implemented, AA and Contractor
shall establish a Marks conversion timeline to effect the usage of
the American Connection Marks at locations where TWA Marks are in
use.
(c) In the event AA adopts new or different American Connection Marks
for which AA grants Contractor a license pursuant to subsection (a)
above, AA may require Contractor to use such new or different
American Connection Marks in connection with Contractor's Feeder Air
Services and if AA does so, Contractor's right and license to use
previously licensed American Connection Marks shall automatically
terminate upon completion of Contractor's changeover to the new
American Connection Marks pursuant to Section 1.02(l). Contractor's
right and license to use any and all Marks shall also automatically
terminate after 10 days prior written notice and opportunity to cure
in the event Contractor does anything during the Term of this
Agreement to contest, infringe or abridge AA's rights in any
American Connection Marks or TWA Marks.
(d) AA may from time to time change the Marks and logos used for
"American Connection" service. At any time during the Term of this
Agreement, and in the sole discretion of AA, Contractor may be
required to use such new or different Marks, external or internal
color decor and patterns on its Approved Aircraft and uniform design
as AA may determine and to discontinue use of certain other Marks;
PROVIDED, Contractor will not be required to discontinue its use of
TWA Marks on the Original Approved Aircraft until August 31, 2002.
Upon written notice from AA, which will include the specifications
for any such changes, Contractor will effect such changes as
promptly as practicable. Contractor will pay all costs it incurs in
any painting and decor modification of its aircraft as a result of a
change in AA's specifications of its external and internal decor;
PROVIDED such modifications occur at the end of the useful life of
the existing decor. For the purposes of this subsection, the parties
agree that the useful life shall be forty-eight (48) months from the
date the Approved Aircraft are decorated with the American
Connection
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Marks. If AA requires a change to new or different American
Connection Marks on a Contractor aircraft which has been previously
decorated with the American Connection Marks within the last four
years, the cost of such modifications will be prorated between AA
and Contractor based upon forty-eight (48) month useful life
commencing on the date each aircraft is decorated with the American
Connection Marks. For example, if AA requires Contractor to repaint
an Approved Aircraft at the end of the third year (36th month) of
its useful life, Contractor would be responsible for 75% of the cost
and AA would be responsible for the remaining 25% of the cost.
1.02 - SERVICE DESCRIPTION
(a) Contractor will continue Feeder Air Service with Original Approved
Aircraft as described in the Fleet Plan in Schedule C-1. Further,
Contractor will commence Feeder Air Service with Firm Approved
Aircraft (as defined in Schedule C-1) upon the Sabre Cutover Date
(which shall not be prior to October 1, 2001), including obtaining
all DOD, DOT, FAA and other regulatory approvals and will phase-in
operation of all Firm Approved Aircraft in accordance with the in
service dates provided in the Fleet Plan in Schedule C-1. Contractor
will discontinue operation of all Original Approved Aircraft in
accordance with the phase-out dates indicated in the Fleet Plan
provided in Schedule C-1. Unless otherwise agreed by AA, Contractor
will operate all flights under this Agreement with such aircraft
type and passenger seat capacity as specified in the Fleet Plan.
Contractor acknowledges that in the event such Firm Approved
Aircraft are not placed into service as of the date(s) indicated in
the Fleet Plan, except to the extent any such delay or failure
arises out of (i) an event that would give rise to a right to
terminate this Agreement for Force Majeure, or (ii) a matter
exempted from this Section 1.02(a) under the terms of Section
7.03(c), AA will suffer damages in connection with air
transportation services AA intended to market and sell in connection
with the use of such Firm Approved Aircraft. Accordingly, in such
situation, [*].
(b) Contractor agrees to operate Feeder Air Services from concourse `B'
or some other space at the STL Hub as designated by AA that is
adequate to perform its duties hereunder. Contractor shall not
operate Approved Aircraft in revenue service at the Hub except for
the Feeder Air Services (other than occasional Charter Flights).
(c) Contractor acknowledges and agrees that participation in the
American Connection program obligates Contractor to offer and
maintain a quality and professional level of service in terms of
schedules, customer service, and the like. Accordingly, at the
request of AA, the parties will: (1) meet to review and discuss the
services, operations, and objectives of Contractor as an American
Connection carrier; and (2) jointly develop a written business plan
for the operations and services of Contractor. Contractor will use
its commercially reasonable best efforts to comply with said
business plan and to accommodate all reasonable recommendations of
AA in these respects.
(d) It is understood and agreed that the use of regional jets in the
performance of services under this Agreement is subject to Labor
Contract Restrictions. Further, with respect to AA, the provision of
Feeder Air Service on certain routes and with certain aircraft types
is subject to certain restrictions in existing agreements with other
parties. Accordingly, Contractor agrees to dedicate such aircraft
type and number to accommodate such Labor Contract Restrictions.
Notwithstanding the foregoing, AA represents that Contractor
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shall have the right to provide Contractor's Feeder Air Services
with Firm Approved Aircraft.
(e) Contractor may operate its Feeder Air Services as an American
Connection carrier only as directed in writing by AA. Pursuant to
the terms of this Agreement, AA hereby consents to Contractor's
operation as an American Connection carrier with respect to such
routes and frequency of service designated by AA in writing.
At AA's request Contractor agrees to enter into such agreements(s)
with another air carrier (holding a valid and effective Certificate
of Public Convenience and Necessity or other appropriate authority)
as may be necessary to implement Shared Code Sharing Jet Flights
with such other carrier in connection with the Feeder Air Service
Flights which are the subject of this Agreement, including, but not
limited to, passenger and baggage transit procedures.
(f) Contractor agrees to maintain the Feeder Air Service in accordance
with the criteria set forth in Exhibits A and C, with respect to the
aircraft types and operation of Feeder Air Service Flights. Within
the operating capability of the aircraft used by Contractor, and
subject to equipment availability and the other provisions of this
Agreement, Contractor will comply with all requests by AA to
increase, decrease, or in any other way adjust or terminate the
flight frequencies or city pairs, or both, as operated and served
pursuant to the provisions of Exhibit A. AA will cooperate with
Contractor to optimize the use of its aircraft and crews to maintain
schedule integrity and efficiency. Contractor agrees to assist AA
with market planning and sales functions as requested by AA.
Coinciding with each regular AA schedule change after the date
hereof, Contractor shall adjust the scheduled times of operation of
its Feeder Air Service Flights as directed by AA, based on a minimum
connecting time of [*] or such other minimum connect time as AA may
from time to time publish. Additionally, the Feeder Air Service
Flights shall at all times be maintained by Contractor at levels
sufficient to satisfy the Scheduled Flights.
(g) AA shall be responsible for schedule production for Contractor's
Feeder Air Service Flights and input of such schedules into AA's
scheduling system. However, AA may delegate certain of those
functions and responsibilities to a third party or by mutual
agreement with Contractor, to Contractor. Such schedule changes will
be included in the information sent to the OAG.
(h) Procedures for regular submission of schedules shall be set forth in
a procedures manual which will be jointly developed by Contractor
and AA scheduling departments.
(i) All aircraft used by Contractor to provide the Feeder Air Services
shall comply with the applicable portions of Parts 298 and 25 of the
Economic Regulations of the DOT and Part 121 of the Federal Aviation
Regulations, or their successor regulations as applicable. Further,
aircraft types shall be subject to acceptance by AA in accordance
with the approved Fleet Plan provided for in Exhibit C.
(j) All aircraft used for the Feeder Air Services shall be Standard
Marked. From time to time, Contractor may temporarily (for not more
than 60 days, unless approved in writing by AA, such approval not to
be unreasonably withheld or delayed) operate Approved Aircraft that
are not Standard Marked (as provided in Exhibit C(1)(A)(3)) but
utilize an AA flight designator. All of Contractor's airport ticket
counters and gates used for Feeder Air Services shall display AA
timetables (and such promotional material as is
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from time to time furnished by AA), and shall be identified by
signage as described in Exhibit B-1. All Feeder Air Service Flights
shall display on the exterior (adjacent to the boarding door) and in
the interior of the aircraft, an AA approved sign or legend
identifying the flight as an "American Connection" flight "operated
by Chautauqua Airlines, Inc." Aircraft safety briefing cards shall
incorporate the American Connection Marks. Contractor shall also
distribute or place American Way or other magazines in the aircraft
seat pockets as determined and provided by AA. No other airline
magazine shall be placed in aircraft used for Feeder Air Services.
(k) Contractor shall require all of its personnel in job classifications
requiring direct public contact who provide Contractor's Feeder Air
Services to wear uniforms and accessories furnished by Contractor
which are of colors and styles as approved by AA from time to time.
Other Contractor employees who are visible to the public and who
provide Contractor's Feeder Air Services are to wear industry
standard AA approved uniforms furnished by Contractor as are
appropriate for the locale and environment. AA will consider
modifications to such uniforms that may better represent the demands
of the regional airline employee (E.G. exposure to elements and
cross utilization).
1.03 - STANDARDS OF SERVICE AND PERFORMANCE
Contractor agrees that, in providing services under this Agreement in
conjunction with one or more of the AA Marks, it will maintain or exceed
the Standards of Service and Performance Standards set forth in Exhibits
D and J respectively. AA will have the right, from time to time, to
inspect Contractor's Feeder Air Services to determine if they conform
with such Standards. Failure on the part of AA to conduct such
inspections will not relieve Contractor of its obligations to conform to
the applicable standards. The extent to which Contractor meets, exceeds
or fails to meet certain of the Performance Standards shall determine
the amount of the performance incentive paid to Contractor by AA or
performance penalty paid to AA by Contractor in accordance with the
terms set forth in Exhibit J.
ARTICLE 2 - SUPPORT SERVICES AND FACILITIES
2.01 - GENERAL
AA and Contractor agree that support services and facilities shall be
required to provide a high quality, seamless Feeder Air Service to
passengers. Facilities must, at all times, be kept clean, up-to-date,
and have adequate signage and lighting. Both parties agree to adhere to
the provisions described herein as the mechanism by which such support
services and facilities shall be managed.
2.02 - RESERVATIONS SUPPORT SERVICES
AA, at its sole cost, will handle reservations for all Feeder Air
Service Flights in the same manner and within the same standards that AA
utilizes to handle its own reservations.
2.03 - COMPUTERIZED RESERVATIONS SYSTEM AND ASSOCIATED SERVICES
(a) AA, at its sole cost, will provide Contractor with Sabre Services,
including without limitation, maintenance of the Feeder Air Service
Flights seat inventory and passenger processing, and other
associated support systems as directed by AA.
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(b) Contractor will perform and maintain in effect its standard SABRE
equipment and systems use agreement at all times during the Term of
this Agreement. Contractor shall comply with the provisions of
Exhibit L.
(c) Unless otherwise agreed to in writing between Contractor and AA,
connecting reservations to or from AA or other air carriers in an
"AA" itinerary will be made by AA and Contractor (and their
respective agents) and by other airlines in accordance with AA's
practices and any currently applicable industry methods and
procedures. In all cases, SABRE will be used by Contractor to
confirm the reservations of American Connection passengers through
the entire itinerary of their scheduled trips. AA will make
reasonable efforts to notify passengers of any last minute changes
in Contractor's Feeder Air Service schedules or operations,
consistent with notification practices and policies for AA's own
flights.
(d) Contractor shall provide AA in a timely manner, and in the format
required by AA, such flight movement, bulkout, sales and other
information as AA reasonably requires to enable it to carry out the
reservations, sales, invoicing, audit, planning, and other services
to be performed by AA under this Agreement.
(e) AA shall be responsible for the collection and remittance of all
booking fees, passenger facilities charges (PFCs), transportation
Taxes, and the like, applicable to Contractor's Feeder Air Services.
2.04 - OPERATIONS
(a) Contractor will provide accurate updates of its flights' planned and
actual departure and arrival times (including updates of
irregularities) in SABRE as soon as the planned flight schedule is
changed, or the flight departs or arrives, or suffers an
irregularity. In the event of flight delays, cancellations or other
schedule irregularities affecting Contractor's Feeder Air Services
Flights, and as soon as information concerning such irregularities
is available, Contractor shall update AA's FOS system via SABRE to
reflect such information. Further, when requested by AA, Contractor
will notify the designated AA department/personnel regarding certain
irregularities. For purposes of this Agreement, such scheduled and
actual departure and arrival and irregularity information shall be
known as "FLIFO." If Contractor becomes aware of any station(s)
which have any deficiencies in reporting FLIFO as required by this
Section, Contractor will promptly take corrective action to remedy
such problem including, if requested by AA, the submission to AA of
a corrective action plan.
(b) Contractor will be solely responsible for, and AA will have no
obligations or duties with respect to, the dispatch of Contractor's
flights. For the purposes of this Section, the term "flight
dispatch" will include, but will not be limited to, all planning of
aircraft itineraries and routings, fueling and flight release.
(c) Each party hereby represents, warrants and agrees that all air
transportation services performed, including the maintenance of
aircraft and engines, pursuant to this Agreement or otherwise shall
be conducted in full compliance with all applicable statutes,
orders, rules, regulations and notifications, whether now in effect
or hereafter promulgated, of all governmental agencies having
jurisdiction over its operations, including, but not limited to, the
FAA, DOD, and DOT. Each party's compliance with such governmental
statutes, orders, rules, regulations and notifications will be the
sole and exclusive obligation of the
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operating carrier, and the non-operating carrier will have no
obligation, responsibility, or liability, whether direct or
indirect, with respect to such matters. Additionally, Contractor
will comply during the Term of this Agreement with the AA/American
Connection Safety Standards, as described on Exhibit I.
(d) From time to time and upon the request of Contractor or its flight
crews, AA shall furnish Contractor's flight crews with such U.S.
Weather Bureau information or data as may be available to AA,
provided that in furnishing any such weather information or data to
Contractor: (1) neither AA nor its employees or agents will be
responsible or liable for the accuracy thereof; and (2) that any and
all costs incurred by AA in connection with providing such weather
information or data will be paid by Contractor.
2.05 - STATION FACILITIES, EQUIPMENT AND GROUND SUPPORT SERVICES
(a) Covered Locations
At all Covered Locations, AA, at its sole cost, shall provide
Contractor with all Airport Support Services, equipment, and
facilities, with the exception of the following:
1. aircraft on-call maintenance;
2. crew lounge;
3. equipment which is unique or specific for the operation of
Approved Aircraft at that location; and
4. fuel services, to include into plane services.
At Covered Locations where an AMR Entity has the capability to
provide the above excluded equipment and Airport Support Services,
Contractor agrees to allow AA to bid on these items, and will use AA
if competitively priced.
In the event AA requires that Contractor utilize third party vendors
to provide Airport Support Services not excluded above, AA shall
directly enter into agreements with such vendors at AA's sole cost.
AA reserves the right, at its sole discretion, to instruct
Contractor to directly enter into agreements with third party
vendors to provide Airport Support Services not excluded above with
any resulting charges to be handled in accordance with Exhibit
E.1.C.
(b) Contractor Locations
1. At all Contractor Locations, Contractor, at its sole cost,
shall provide all manpower, equipment and airport facilities
necessary to provide Airport Support Services for Contractor's
Feeder Air Service Flights with the exception of any incremental
fluid, manpower, or vendor costs associated with the de-icing of
Contractor aircraft. Charges for such de-icing at Contractor
Locations shall be handled in accordance with Exhibit E(1)(C)(3-4).
2. Contractor agrees to staff Contractor Locations that have
three (3) or more daily round trips (weekdays) with its own
employees where facility constraints permit. Contractor shall be
given reasonable notice of schedule changes that will require it to
staff under this provision.
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3. In the event AA and/or its Affiliate(s) operates a flight
to a Contractor Location and requests Contractor to handle such
flight, AA agrees to pay Contractor for Airport Support Services
provided by Contractor, at the rate of [*] per scheduled departure
plus any incremental charges unique to such aircraft versus
Contractor jet aircraft (E.G., jetways and special equipment,
including the incremental cost of additional personnel to operate
such special equipment).
However, where AA operates flight(s) to Contractor
Locations that utilize a third party vendor to provide
Airport Support Services, AA shall, if it desires to use
such vendor, directly enter into agreement(s) with such
vendor.
4. For the initial purchase of new Contractor Location
automation equipment, as defined in Exhibit L, Contractor and AA
agree to adhere to the terms set forth in Exhibit E(3).
(c) The Hub
1. Except as provided in subsection 3 below, at the Hub,
Contractor, at its sole cost, shall be responsible for the gate
operations of its passengers and aircraft, security screening
charges, purchasing its equipment and leasing its facilities,
including facilities improvement surcharges. Contractor, at its sole
cost, shall enter into and maintain an operating agreement with AA
for space adequate to perform its duties hereunder at Lambert - St.
Louis International Airport.
2. At the Hub, AA, at its sole cost, shall be responsible for
providing ticket counter services, skycap services, all passenger
busing resulting from AA mandated remote parking of Contractor
aircraft, remote de-icing service for regional jet aircraft (when
such a remote de-icing operation is in effect for AA), and de-icing
fluid for on-gate de-icing. Charges associated with the de-icing
fluid for on-gate de-icing shall be handled in accordance with the
provisions set forth in Exhibit E(1)(C)(3-4).
3. At AA's sole discretion, AA, and/or its Affiliate, or a
third party may assume all gate and ramp handling duties at the Hub,
as detailed in subsection 1 above, upon 120 days prior written
notice. In such case and for this purpose only, the Hub would be
considered a Covered Location. In such event, AA and Contractor
shall modify the cost model to reflect such a change
proportionately.
(d) Contractor Conversion
In the event AA or an AA Affiliate no longer staffs personnel at a
Covered Location, AA reserves the right to designate such former
Covered Location as a Contractor Location, and Contractor will
completely assume ground operations at such former Covered Location.
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(e) Covered Conversion
In the event of a Covered Conversion, AA, at its sole discretion,
may purchase and Contractor agrees to sell, at Contractor's net book
value, any existing equipment necessary to operate AA flights.
Furthermore, before hiring new employees in that city, provided they
meet AA's eligibility requirements, AA shall allow Contractor's
employees to apply for appropriate positions in that location.
2.06 - SALES; PROMOTION; PASSENGER SERVICE DOCUMENTS
(a) AA will be responsible for advertising the Feeder Air Services
except as otherwise provided for herein.
(b) Contractor agrees to dedicate sales representatives, at its sole
cost and expense to support the marketing of Feeder Air Services
hereunder, at the request of AA.
(c) Contractor will notify all Feeder Air Service passengers connecting
to AA flights, via AA-provided ticket jackets and appropriate
signage, AA's passenger liability limits (Warsaw and domestic),
conditions of carriage, denied boarding compensation and like
matters. Contractor also agrees to adopt and maintain AA's domestic
(and if applicable, international) baggage liability rules as well
as AA's PAWOB and DBC policies as are from time to time in effect.
In selling air transportation of passengers, both on-line and
off-line, Contractor will use AA passenger ticket stock. Contractor
will report and remit to AA all ticket sales in accordance with the
Accounting Procedures set forth in Exhibit F.
(d) In the performance of its duties hereunder, Contractor will follow
the Customer Service Policies and Procedures using AA passenger
handling documents, including but not limited to ticket stock,
travel vouchers, baggage tags, passenger refund and compensation
checks, and the like. Contractor will reimburse AA for any expenses
incurred as a result of Contractor's non-compliance with the
Customer Service Policies and Procedures, in accordance with Exhibit
F.
(e) AA will include in its public timetables all of the Feeder Airports
and the scheduled Feeder Air Services provided by Contractor
pursuant to this Agreement, along with appropriate notations showing
that services between the Hub and such Feeder Airports are flights
operated by Contractor as an independent contractor. All such
references in AA's public timetables shall also contain notations
indicating that use of the name "American Connection" or any Marks
by Contractor is pursuant to a limited trademark license from AA.
(f) Area phone directories (white and yellow pages) for the Feeder
Airports will include, at the earliest possible time (at the expense
of AA), the AA toll free reservations phone number which shall be
answered by AA reservations personnel in accordance with Section
2.02, and, if desired by AA, a local phone number for the station.
(g) Contractor is authorized to, and shall, issue AA boarding passes to
those passengers checking in at the Feeder Airports who are ticketed
for AA, or an AA Affiliate and American Connection connections at
the Hub. AA and its Affiliates, as appropriate will issue boarding
passes to those passengers checking in for such Feeder Air Service
Flights at all locations where AA or an AA Affiliate provides
Passenger Handling Duties.
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(h) AA shall be responsible for sales programs promoting "American
Connection" and the Feeder Air Services including, without
limitation, Contractor participation in AA's "AAdvantage" Program.
No advertisement, solicitation, document or any other material using
any AA Mark will be published or otherwise promulgated without AA's
prior inspection and approval. No advertising that relates in any
way to AA, American Connection or Contractor's Feeder Air Services
will be placed by Contractor with an advertising agency unless AA
has given its prior consent regarding copy, layout and the specific
media plan. In addition, if AA has agreed to share the costs of any
such advertising, Contractor will obtain the prior consent of AA
regarding the funds to be expended for such advertising.
(i) Contractor shall participate in the AAdvantage Frequent Flyer
Program at no charge to Contractor. Feeder Air Service passengers
shall be eligible to accrue and redeem mileage on such flights and
on AA, and/or AA Affiliate flights consistent with AA's policies for
AA. Contractor shall carry all passengers traveling pursuant to
award travel from an Accepted Frequent Flyer Program at no charge to
AA.
2.07 - BAGGAGE HANDLING AND SETTLEMENT
(a) In the performance of its duties hereunder, Contractor will follow
the Customer Service Policies and Procedures related to baggage
handling, including procedures for delayed, pilfered, lost, and
damaged baggage. Baggage Claims shall be settled in accordance with
the procedures specified in Exhibit F.
(b) The parties agree to report and search for AA (and/or AA Affiliate)
and American Connection lost baggage in accordance with AA's
procedures using WorldTracer and/or BMAS as appropriate..
ARTICLE 3 - PASSENGER FARES
3.01 - PASSENGER FARES
AA has sole responsibility to establish all fares for Contractor's
Feeder Air Services under this Agreement.
3.02 - CONTRACTOR COMPENSATION
In consideration for the Feeder Air Services provided hereunder, AA
shall pay Contractor the amounts set forth in Exhibit E.
3.03 - INVENTORY CONTROL
AA shall establish and maintain all inventory and seat allocations on
flights operated by Contractor pursuant to this Agreement. AA may at its
discretion delegate this responsibility to a third party or to
Contractor, subject to Contractor's concurrence to perform such duties
for the time period requested by AA.
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ARTICLE 4 - SMALL PACKAGE, FREIGHT AND MAIL
Terms for an American Connection small package, freight and mail service on
Feeder Air Service Flights are set forth in Exhibit H. Settlement of all
small package and mail transportation transactions shall be in accordance
with Exhibit F.
ARTICLE 5 - OTHER ACTIVITIES
(a) Contractor shall not either directly or indirectly engage (or attempt
to engage) on its own behalf in any revenue air transportation (other
than pursuant to this Agreement) in any of the routes between the Hub
and Feeder Airports.
(b) Nothing in this Agreement shall prohibit Contractor or its Affiliates
from operating such air services as they may desire, except to the
extent such activities directly conflict with the express provisions
of this Agreement. In this regard, both parties recognize that this
Agreement would be violated if:
1. Contractor, or any Affiliate of Contractor, entered into a
cooperative marketing and service arrangement comparable to this
Agreement with another air carrier providing feeder air service in
connection with hub operations at MEM, BNA, MCI or any location within
fifty (50) statute miles of the STL Hub.
2. Contractor or any of its Affiliates operates aircraft with
Marks for non-Feeder Air Service (other than for Charter Flights).
3. Contractor, or any Affiliate of Contractor, markets any
flight to or from the Hub with any name other than as provided herein,
including but not limited to, under Contractor's or such Affiliate's
own two letter airline code.
(c) Contractor agrees to not engage in any conflicting activity referred
to in (b) above unless the AA has given its advance written consent
for such activity to be undertaken, except as may otherwise be
provided for herein.
(d) Nothing in this Agreement shall prohibit any of the AMR Entities from
operating such air services as they may desire. Further, nothing in
this Agreement shall prohibit AA from engaging in comparable "American
Connection" cooperative marketing and services arrangements with other
operators of aircraft.
(e) Contractor will not use any of the services, facilities or equipment
provided by AA to Contractor or its Affiliates under this Agreement
for air transportation or related services provided by Contractor
outside the scope of this Agreement. Neither Contractor nor any of its
Affiliates will be permitted to operate aircraft bearing Marks in city
pairs other than those specified by AA without the prior written
consent of AA. Contractor will not, without AA's prior written
consent, permit any third party, whether under a lease arrangement or
otherwise, to operate any aircraft in revenue service bearing Marks.
(f) AA reserves the right, at its sole discretion, to finance any option
Aircraft and become the Lessor of such aircraft to Contractor under
the terms of a Lease.
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ARTICLE 6 - LIABILITY, INDEMNIFICATION AND INSURANCE
6.01 - INDEPENDENT CONTRACTORS
(a) The employees, agents, and independent contractors of Contractor
engaged in performing any of the services Contractor is to perform
pursuant to this Agreement shall be deemed to be employees, agents
or independent contractors of Contractor for all purposes, and under
no circumstances shall be deemed to be employees, agents or
independent contractors of AA or any of the other AMR Entities. In
its performance under this Agreement, Contractor shall act, for all
purposes, as an independent contractor and not as an agent of AA or
any of the other AMR Entities. Neither AA nor any of the other AMR
Entities shall have 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 shall, in all events, be transmitted
by AA to a designated officer of Contractor. 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 or
financial losses which may result from the operation of the air
services to be provided by Contractor hereunder.
(b) The employees, agents, and independent contractors of AA engaged in
performing any of the services AA is to perform pursuant to this
Agreement shall be deemed to be employees, agents, and independent
contractors of AA for all purposes, and under no circumstances shall
be deemed to be employees, agents or independent contractors of
Contractor. In its performance under this Agreement, AA shall act,
for all purposes, as an independent contractor and not as an agent
of Contractor. Contractor shall have no supervisory power or control
over any employees, agents or independent contractors engaged by AA
in connection with its performance hereunder, and all complaints or
requested changes in procedures shall, in all events, be transmitted
by Contractor to a designated officer of AA. Nothing contained in
this Agreement is intended to limit or condition AA's control over
its operations or the conduct of its business as an air carrier.
6.02 - UNAUTHORIZED OBLIGATIONS
(a) Nothing in this Agreement authorizes AA 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 AA hereby agrees to defend,
indemnify, save, release, reimburse and hold Contractor, its
officers, directors, shareholders, 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 AA, its
officers, directors, shareholders, employees, agents or independent
contractors in the conduct of AA's operations.
(b) Nothing in this Agreement authorizes Contractor to make any
contract, agreement, warranty, or representation on AA's behalf or
on behalf of any other AMR Entity, or to incur any debt or
obligation in AA's name or on behalf of any other AMR Entity ("AA
UNAUTHORIZED OBLIGATION"); and Contractor hereby agrees to defend,
indemnify, save, release, reimburse and hold AA, the AMR Entities,
and their respective officers, directors, shareholders, 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
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reason of any such AA Unauthorized Obligation made by Contractor,
its officers, directors, shareholders, employees, agents or
independent contractors in the conduct of Contractor's operations.
(c) The fact that Contractor's operations are conducted under Marks and
listed under the TW designator code will not affect their status as
flights operated by Contractor for purpose of this Agreement or any
other agreement between the parties. Further, both parties
acknowledge that the Contractor's Feeder Air Services are flights
operated by Contractor and both parties agree to advise passengers
and all third parties of Contractor's operation of these flights as
required by applicable law, rule, or regulation.
6.03 - INDEMNIFICATION AND INSURANCE
(a) Each party, with respect to its own employees, accepts full and
exclusive liability for the payment of worker's compensation and/or
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 necessary to comply with the laws imposing such Taxes,
contributions or other payments.
(b) Contractor shall indemnify, defend, hold harmless and promptly
reimburse AA, the AMR Entities and their respective directors,
officers, employees and agents from and against any and all claims,
suits, penalties, liabilities, judgments, fines, losses and expenses
of any nature or kind ("CLAIMS") arising out of, caused by or
occurring in connection with (or alleged to arise out of, be caused
by or be occurring in connection with):
1. The death of or injury to persons, or delay or loss of or
damage to property (including aircraft, baggage or cargo) occurring
while such persons or property are under the control or in the
custody of, or being transported by Contractor (including, for the
avoidance of doubt, claims arising out of death of or injury to
Feeder Air Service passengers traveling on AA tickets that implement
limits or conditions of liability or jurisdictional rules with
respect to passenger claims that differ from those of Contractor),
except to the extent caused by the willful misconduct of AA or
another AMR Entity; and
2. Negligent acts or omissions of Contractor that are in any
way related to services contemplated by this Agreement, except for
Claims arising from the death of, or injury to, persons, or delay or
loss of or damage to property occurring while such persons or
property are in the control or custody of, or being transported by,
AA of the type referred to in Section 6.03(c)(1), in which case AA
shall indemnify and reimburse Contractor, notwithstanding such
negligent (but not willful) acts or omissions of Contractor.
(c) AA shall indemnify, defend and hold harmless Contractor and its
directors, officers, employees and agents from and against any and
all Claims arising out of, caused by or occurring in connection with
(or alleged to arise out of, be caused by or occurring in connection
with):
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1. The death of or injury to persons, or delay or loss of or
damage to property (including aircraft, baggage or cargo) occurring
while such persons or property are under the control or in the
custody of, or being transported by, AA, except to the extent caused
by the willful misconduct of Contractor.
2. Negligent acts or omissions of AA that are in any way
related to services contemplated by this Agreement, except for
Claims arising from the death of, or injury to, persons, or delay or
loss of or damage to property occurring while such persons or
property are in the control or custody of, or are being transported
by, Contractor of the type referred to in Section 6.03(b)(1) (in
which event Contractor shall indemnify and reimburse AA
notwithstanding such negligent (but not willful) acts or omissions
of AA); and
3. Passenger claims based on AA's failure to properly issue
and complete transportation documentation in accordance with the
provisions of the standard Airlines Clearing House or IATA ticketing
procedures, including the failure to put a proper notice of the
limits of liability on such documentation (it being understood that
in ticketing Feeder Air Service passengers, AA is entitled to apply
the limits of liability provided for in its own conditions of
carriage).
(d) During the Term of the Agreement, Contractor agrees to maintain
Airline Liability insurance, including comprehensive/commercial
general liability, passenger (including passengers on Feeder Air
Service flights, and all other revenue and non-revenue passengers),
baggage, cargo, mail, and aircraft third party legal liability (all
policies shall be extended to include war risks, hijacking, and
allied perils), with limits of at least [*] per any one occurrence
or such higher limits as Contractor may have in effect during the
Term of this Agreement. Such insurance policies shall be with an
insurance company or companies of recognized financial
responsibility, and satisfactory to AA, and which at a minimum
shall:
1. Name AA, the AMR Entities, and their directors, officers,
employees, agents and representatives as Additional Insureds,
2. Contain a Breach of Warranty Clause in favor of AA and the
other Additional Insureds, insuring AA's and their interests
regardless of any breach or violation by Contractor of any
warranties, declarations or conditions contained in such policies,
3. Contain a Waiver of Subrogation Clause in favor of AA and
the other Additional Insureds, to the extent Contractor has waived
its rights against AA under this Agreement,
4. Contain a Cross Liability Clause, providing AA and each of
the other Additional Insureds the benefit of all of the provisions
of the policy, except the limits of liability, in the same manner as
if there were a separate policy covering each insured,
5. Specifically state that the indemnification agreement
stated in (b) above is insured as a contractual obligation of
Contractor's insurers,
6. Contain a provision requiring Contractor's insurers to
provide AA with a written notice of any cancellation or adverse
material change in such insurance and
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providing that the same shall not be effective as to the benefit and
interest of AA or any of the other Additional Insureds for thirty
(30) days after written notice of such cancellation or adverse
material change is received by Contractor and AA,
7. Contain a provision stating that Contractor's liability
policy is primary without a right of contribution from any policy
carried by AA or any of the other Additional Insureds. The notice
period in respect of war and allied perils coverage shall be seven
days or such lesser period as is or may be available in accordance
with policy conditions, and
8. Contain a Date Recognition Limited Coverage Write-Back
clause or endorsement, in the event Contractor's insurance policy
contains a Date Recognition Exclusion clause.
(e) Hull All Risk insurance, including war risk, which shall include a
waiver of subrogation in favor of the AMR Entities to the extent of
the indemnity specified in Section 6.03(b), and
(f) Contractor agrees to furnish AA, in a timely manner, and not later
than the expiration date of each respective policy, with
certificates of insurance evidencing its maintaining and renewal of
the insurance required under (d) above.
6.04 - ENVIRONMENTAL
With respect to all matters which relate to or may affect the
environment, each party agrees to conduct its operations (including its
compliance with all federal, state and local laws and regulations
relating to pollution or the environment) in a prudent manner consistent
with industry 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.
ARTICLE 7 - EFFECTIVE DATE, TERMINATION AND CANCELLATION
7.01 - EFFECTIVE DATE AND TERM
(a) This Agreement became effective as of the SABRE Cutover Date and
will continue in effect through February 1, 2013, unless terminated
or canceled at an earlier date pursuant to one or more of the
provisions of this Article 7 or Exhibit J(2)(D)(the "TERM").
(b) In the event there is any change in the statutes governing the
economic regulation of air carriers, or in the applicable rules,
regulations or orders of the DOT or some successor agency or
department of the government having jurisdiction over air
transportation which change or changes materially affect the rights
and/or obligations presently in force with respect to the air
transportation services of AA or Contractor, or both, or in the
event for reasons wholly beyond the control of the parties, the AA
designator code cannot for any reason be used as contemplated under
this Agreement, then the parties will consult within thirty (30)
days after any of the occurrences described herein, in order to
determine what, if any, changes to this Agreement are necessary or
appropriate, including but not limited to the early termination and
cancellation of this Agreement. If the parties hereto are unable to
agree whether any change or changes to this Agreement are necessary
or appropriate, or as to the terms of such changes, or whether the
Agreement should be
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cancelled in light of the occurrences described above, then the
parties shall submit the matter to a neutral third party mediator
who will assist the parties in reaching a mutually agreeable
settlement in accordance with the Commercial Mediation Rules of the
American Arbitration Association. Each party covenants to cooperate
in any such proceeding for up to thirty (30) days.
7.02 - TERMINATION
In addition to the foregoing provisions of this Article:
(a) If one party (the "DEFAULTING PARTY") becomes insolvent or fails to
pay debts as they become due; or if the Defaulting Party takes steps
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 Defaulting Party either ceases or suspends
operations for reasons other than a strike, then the other party
(the "INSECURE PARTY") may on five (5) business days prior written
notice, terminate this Agreement on notice to the Defaulting Party
unless the Defaulting Party, within said five (5) business days,
gives adequate assurance of the future performance of this Agreement
by establishing an irrevocable letter of credit, issued by a U.S.
bank acceptable to the Insecure Party, on terms and conditions
acceptable to the Insecure Party, and in an amount sufficient to
cover all amounts potentially due from the Defaulting Party under
this Agreement. Such letter of credit may be drawn upon by the
Insecure Party if the Defaulting Party does not fulfill its
obligations under this Agreement in a timely manner.
If bankruptcy proceedings are commenced with respect to either party
("BANKRUPT PARTY") and if this Agreement has not otherwise
terminated, then the non-bankrupt party may suspend all further
performance of this Agreement until the Bankrupt Party assumes or
rejects this Agreement pursuant to Section 365 of the Bankruptcy
Code or any similar or successor provision. Within thirty (30) days
of the commencement of such bankruptcy proceeding, the Bankrupt
Party agrees to move the Court in which such bankruptcy proceeding
is pending to assume or reject this Agreement. Any such suspension
of further performance by the non-bankrupt party pending the
Bankrupt Party's assumption or rejection will not be a breach of
this Agreement and will not affect the non-bankrupt party's right to
pursue or enforce any of its rights under this Agreement or
otherwise.
(b) Unless provided for elsewhere in this Agreement, and except for the
failure to make payments of amounts when due, if either party shall
fail to perform, keep, and observe any of the material terms,
covenants or conditions herein contained on the part of such party
to be performed, kept or observed (other than insurance requirements
or any other condition or requirement, noncompliance with which is
specifically covered under another subsection of this Article 7),
the other party may give notice in writing to correct the condition
or cure the default and, if the condition or default continues for
thirty (30) days after the receipt of notice by the defaulting party
and, if within that thirty (30) day period the defaulting party has
not prosecuted with due diligence and corrected or commenced efforts
to correct the condition or default, the other party may then
terminate this Agreement upon an additional thirty (30) days prior
written notice, and this Agreement shall thereupon cease and expire
at the end of such additional thirty (30) days in the same manner
and with the same effect as if it were the expiration of the
original term. For purposes of this Article 7.02 (b), Contractor's
failure to comply with the Standards of Service as set forth in
Exhibit D hereof, shall be deemed a material default.
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If either party shall fail to make payment of amounts when due under
this Agreement after receiving written notice thereof, the
non-paying party shall have five (5) business days after the receipt
of such written notice to cure such non-payment.
If Contractor shall fail to make any "Escrow Payment" as defined in
and required under any Escrow Agreement (as defined in any Master
Agreement) entered into pursuant to a Master Agreement by and among
Contractor, American Eagle and JP Morgan Chase Bank, Contractor
shall have five (5) business days after receipt of written notice
from AA of such failure to cure such non-payment and in the event
Contractor fails to cure such failure within such period, AA may
terminate this Agreement on such fifth business day.
(c) In the event Contractor fails to meet any of the milestones, as may
be provided in a corrective action plan pursuant to Exhibit J(3)(D),
AA may terminate this Agreement upon fifteen (15) days written
notice to Contractor.
(d) If the services of the Airline Clearing House are withdrawn as to
either party, or if either party suspends or is required to suspend
all system operations for any safety reason, the other party may
terminate this Agreement upon five (5) days prior written notice.
(e) In the event of a material breach of any representation or warranty
of Article 2.04(c), that in AA's reasonable discretion, creates a
serious and imminent threat to the safe operation of Contractor's
American Connection Services, AA may immediately terminate this
Agreement in writing.
(f) In the event of any material failure to comply with the insurance
provisions of Article 6.03, this Agreement may be immediately
terminated by AA.
(g) Early termination or cancellation of this Agreement based on one or
more of the provisions of this Article 7 shall not be construed so
as to relieve any party hereto of any debts or monetary obligations
to any other party that shall have accrued hereunder prior to the
effective date of such termination or cancellation, or any damages
suffered as a result of such termination, if such termination is due
to a breach of this Agreement.
(h) In the event of the replacement of the President and Chief Executive
Officer of Contractor (or any executive performing the duties of a
chief executive officer however so titled) (the "CEO"). Contractor
shall have the right to designate an interim CEO. At such time as
Contractor identifies or selects a proposed permanent replacement
CEO (or at Contractor's option, one or more candidates for the
position of permanent replacement CEO) (collectively, the "Proposed
CEO"), Contractor shall provide written notice to AA identifying
such Proposed CEO. AA shall have the right to approve (such approval
not to be unreasonably withheld) or disapprove (such disapproval not
to be unreasonably provided) such Proposed CEO, and shall provide
written notice to Contractor of its approval or disapproval within
10 business days following AA's receipt of notice of the Proposed
CEO. In the event AA fails to provide notice of its approval or
disapproval within such 10 day period, AA shall be conclusively
deemed to have approved the Proposed CEO. In the event Contractor
fails to identify a Proposed CEO who is approved by AA as provided
herein within 180 days after the replacement of the CEO, AA may
terminate this Agreement.
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(i) In the event of a termination of this Agreement prior to the end of
the Term for any reason, AA agrees to reimburse Contractor for any
pre-paid aircraft rents under any Lease for all Firm Approved
Aircraft upon the date of such termination.
(j) Upon termination of this Agreement for any reason, the right to use
Marks granted herein will immediately revert back to AA.
(k) AA may terminate this Agreement without Cause upon 180 days prior
written notice; PROVIDED, that (1) such notice may not be given
prior to September 30, 2005, (2) AA shall reimburse Contractor for
the unamortized portion of training start up costs (principal only)
pursuant to the amortization table attached hereto as Exhibit M
corresponding to the month during which the Agreement terminates,
(3) the provisions of Section 7.03 herein will apply, (4) such
notice may not be given unless AMR shall have executed and delivered
to Contractor a Guaranty of the obligations of American Eagle or its
successor under each Master Agreement substantially in the form
attached thereto; provided, however, that no Guaranty shall be
required for any particular Master Agreement if AA shall have
assumed American Eagle's obligations under such Master Agreement in
accordance with the terms thereof, and (5) a termination without
Cause shall be void and of no force and effect and this Agreement
shall continue in full force and effect, if so required pursuant to
Section 4.4(a) of any Master Agreement, in which case AA shall not
be entitled to exercise its option pursuant to this Section 7.02(k)
to terminate this Agreement without Cause until such time as the
Termination Suspension Reason (as defined in the applicable Master
Agreement) would no longer prevent the Leveraged Lease Conversion
(as defined in the applicable Master Agreement) from occurring. As
a condition to AA's conversion of any option Aircraft to Firm
Approved Aircraft, AA and Contractor will negotiate a mutually
acceptable extension of the date set forth in clause (1) of this
Section 7.02(k) prior to conversion of the option Aircraft.
(l) A material failure to represent the AA brand to the same extent as
other users of the AA brand, including AE and other American
Connection carriers, as reasonably specified by AA in writing and
uniformly applied to all users of the AA brand, including AE and
other American Connection carriers, will be deemed cause for
termination of this Agreement as provided in Section 7.02, provided
that such failure is noted in two consecutive audits.
(m) The provisions of Sections 6.02, 6.03, 6.04, 7.03, 11.01, 11.02,
11.03, 11.04, 13.02 and Article 8 shall survive the termination of
this Agreement.
(n) In the event AA or AMR terminates this Agreement prior to April 30,
2008, or Contractor terminates this Agreement prior to April 30,
2008, based upon a breach by AA or AMR, AA shall reimburse
Contractor for the unamortized portion of certain concessions
granted by Contractor in this Agreement pursuant to the amortization
table attached hereto as Exhibit N corresponding to the month during
which the Agreement terminates.
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7.03 - RECIPROCAL OPTION FOR ASSIGNMENT OF LEASES
(a) In the event of a termination of this Agreement for Cause by AA,
Contractor grants to AA an option to be assigned any or all of the
Leases for the Firm Approved Aircraft (the "CALL OPTION"),
exercisable at its sole discretion, at the date notice of such
termination is delivered to Contractor. AA may exercise this Call
Option by written notice delivered to Contractor, within 60 days
following delivery of the notice of such termination, designating
those Leases to be assigned to AA. Upon delivery of notice of such
exercised Call Option, Contractor will be deemed to have assigned
all of its rights and duties under the designated Leases to AA.
Contractor shall pay within 30 days of invoice for any maintenance
conversion expenses required to transfer the Firm Approved Aircraft
subject to such Leases from compliance with the Contractor's
FAA-approved maintenance program to AA's FAA-approved maintenance
program ("CONVERSION EXPENSES"). Further, any parts and components
subject to "power-by-the-hour" maintenance arrangements shall be
paid in full by Contractor through the date of termination of this
Agreement.
(b) In the event of termination of this Agreement without Cause by AA:
1. AA grants to Contractor a one-time option to assign to AA
any or all of the Leases for the Firm Approved Aircraft (the
"ONE-TIME PUT OPTION"), exercisable, at its sole discretion, within
60 days after Contractor's receipt of written notice of termination
by AA. Contractor may exercise this One-Time Put Option by written
notice delivered to AA within such 60 days exercising the One-Time
Put Option and designating those Leases to be put to AA. Upon
delivery of notice of such exercise of the One-Time Put Option, AA
will be deemed to assume the designated Leases on the schedule set
forth in subsection (3) below.
2. Contractor grants to AA a one-time Call Option (the
"ONE-TIME CALL OPTION") to be assigned any or all of the Leases for
the Firm Approved Aircraft, exercisable, at its sole discretion, at
the date notice of such termination is delivered to Contractor. AA
may exercise this One-Time Call Option by written notice delivered
to Contractor contemporaneously with the notice of such termination.
Upon delivery of notice of such exercised One-Time Call Option,
Contractor will be deemed to have assigned all of its rights and
duties under the designated Leases to AA on the schedule set forth
in subsection (3) below.
3. Following notice of the One-Time Put Option or One-Time
Call Option under this subsection (b), the parties shall meet not
later than 90 days following such notice, to effect a plan of
orderly transition and wind down of the Agreement. Such transition
plan shall include, but not be limited to a transition phasing of
the designated aircraft from Contractor to AA (beginning not later
than the 181st day following such notice), at a rate of two aircraft
per month, on the last day of each month, for five months, based on
a schedule to be determined by AA, followed by the remaining five
aircraft on the last day of the sixth month. In such event, the Term
of the Agreement will be deemed to continue until the last
designated aircraft is phased from Contractor to AA, provided
however that performance measurement pursuant to Exhibit J shall not
be applicable during such a transition.
Contractor will not be liable for Conversion Expenses under this
Section 7.03(b), provided that Contractor continues to operate each
Firm Approved Aircraft in strict
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accordance with its approved maintenance program following notice of
termination, up to and including the date of termination of this
Agreement. Further, any parts and components subject to
"power-by-the-hour" arrangements must be paid in full by Contractor
through the date of termination of this Agreement in the event of
the exercise of either a Put Option or Call Option pursuant to this
Section 7.03(b).
AA agrees to indemnify and hold harmless Contractor from and against
any Claim arising from events or circumstances occurring after the
date of assignment out of any Lease that AA is deemed to assume
hereunder.
Contractor agrees to indemnify and hold harmless AA from and against
any Claim arising from events or circumstances occurring on or
before the date of assignment out of any Lease that AA is deemed to
assume hereunder.
(c) Contractor agrees not to enter into any lease or similar arrangement
(however so titled) for Firm Approved Aircraft other than pursuant
to a Lease. Contractor will not amend any Leases, or waive any
material rights thereunder, without the prior written consent of AA,
such consent not to be unreasonably withheld.
1. Each Lease entered into by Contractor must, at a minimum,
contain terms providing for the following: (1) the Lease must be not
less than 13 years in duration; (2) the Lease must be assignable to
AA without the consent of the Lessor and may not contain any
provisions that, upon assignment of such Lease to AA, impose a
penalty or any other adverse action on AA as a result of such
assignment; (3) the Lease must be assignable to AA under the exact
same terms and provisions as existed in the Lease immediately prior
to such assignment and such terms may not become more onerous to the
Lessee over the Term of the Lease; (4) shall contain a "half-life"
return condition provision; and (5) AA must have the ability to
purchase the leased aircraft on commercially reasonable terms
reasonably acceptable to AA.
2. AA will make its representative reasonably available for
consultation and assistance in negotiating a Lease. Once terms and
provisions of a Lease have been agreed upon by Contractor and the
lessor, Contractor shall provide a copy of such Lease to AA. AA will
then have ten (10) business days to approve the Lease (such approval
not to be unreasonably withheld) or to disapprove the Lease (such
disapproval not to be unreasonably provided), and to provide written
notice to Contractor of such approval or disapproval. If AA
disapproves a Lease, it shall include in its notice of disapproval a
detailed statement of the reasons for its disapproval and a detailed
statement of any suggested non-economic changes, which if obtained
by Contractor, would require AA to approve the Lease, as modified.
In the event AA fails to provide notice of its approval or
disapproval within such 10 business day period, AA shall be
conclusively deemed to have accepted the Lease. Approval or
disapproval of a Lease by AA shall not be considered a waiver of its
rights hereunder with respect to future Leases. In the event that AA
desires to change any non-economic term or provision of the Lease or
add a new term or provision and such changes are reasonable taking
into account the aircraft type subject to the proposed Lease and the
relative bargaining power of Contractor, Contractor shall have 15
business days to seek to effect such changes. Further, during both
the period in which AA reviews and comments on the Lease term (up to
10 business days) and the period in which Contractor seeks to effect
such changes (up to 15 business days), Contractor shall be exempt
from the [*] of delay liquidated damages provided for in
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Section 1.02(a). If such changes cannot be agreed upon between
Contractor and the lessor, then Contractor may not enter into the
Lease.
3. To the extent that AA requires changes to a Lease that
cause a delay in placing a Firm Approved Aircraft into service, AA
will not be entitled to, and Contractor will not be liable for, the
penalty of [*] of delay per regional jet, as liquidated damages,
provided for pursuant to Section 1.02(a).
4. AA agrees that a Lease may be between (A) Solitair Corp.,
an affiliate of Contractor, as lessor and Contractor as lessee, (B)
between Contractor as lessor and Contractor as lessee, or (C)
between a subsidiary of Contractor as lessor and Contractor as
lessee. The rent, residual and early buyout price and termination
value schedule shall be determined on the commencement date of the
Lease using the Warren & Selbert ABC Program using the inputs set
forth and marked with an asterisk on Exhibit P attached hereto with
such input items to be adjusted from time to time as provided
therein.
(d) Notwithstanding the foregoing, Contractor shall be entitled to
finance its acquisition of Firm Approved Aircraft pursuant to a
secured loan provided by FINAME, which secured loan shall be deemed
to be a Lease, so long as in connection with such secured loan
Contractor and FINAME enter into a Master Agreement with respect to
such Firm Approved Aircraft (in which case AA or its assignee shall
enter into such Master Agreement). For any Firm Approved Aircraft
that is financed in such manner, the rent, residual and early buyout
price and termination value schedule shall be determined on the
commencement date of the applicable Master Agreement using the
Warren & Selbert ABC Program using the inputs set forth and marked
with an asterisk on Exhibit P attached hereto with such input items
to be adjusted from time to time as provided therein.
(e) AA hereby assigns to American Eagle its rights and obligations upon
the exercise by either Contractor or AA, as applicable, of the
One-Time Put Option, the One-Time Call Option or the Call Option for
Approved Aircraft financed by FINAME and for which American Eagle,
Contractor and FINAME have entered into, or shall enter into, a
Master Agreement. For such Approved Aircraft, the exercise of the
Call Option, One-Time Call Option or One-Time Put Option shall be
deemed to be an exercise of an option to require a "Leveraged Lease
Conversion" (as defined in the applicable Master Agreement) in
respect of such Approved Aircraft rather than an assignment of a
Lease, and the provisions of this Section 7.03 shall be superseded
with respect to such Approved Aircraft by the provisions of the
applicable Master Agreement upon the exercise of any such option.
(i) If, in connection with an exercise by Contractor of its
One-Time Put Option, Eagle has given Contractor a
Deficiency Notice (as defined in the applicable Master
Agreement) with respect to an Approved Aircraft and the
Deferred Leveraged Lease Conversion Date (as defined in
the applicable Master Agreement) applicable to such
Approved Aircraft is greater than thirty (30) days after
receipt of such Deficiency Notice by Contractor, each day
after such thirtieth (30th) day that the applicable
Approved Aircraft is not available for revenue service
hereunder shall be excluded in determining the required
minimum payment on the basis of seven Block Hours per day
under Section 1.A. of Exhibit E hereto and
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Contractor shall not otherwise be entitled to compensation
in respect of such Approved Aircraft hereunder in respect
of such days.
(ii) If, after the exercise by AA of either the Call Option or
the One-Time Call Option, Eagle cancels the Leveraged
Lease Conversion (as defined in the applicable Master
Agreement) with respect to any Approved Aircraft, pursuant
to Section 2.3(a)(ii) of the applicable Master Agreement,
AA agrees that its rights under the Call Option or the
One-Time Call Option in respect of the applicable Approved
Aircraft shall be of no further force and effect.
7.04 - 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 disputes, work stoppage,
fire, act of government, court order, or any other cause, whether
similar or dissimilar, beyond the control of that party including but
not limited to non-delivery or delay in delivery of aircraft to
Contractor or delay in completion of required training of Contractor's
employees by the aircraft manufacturer or delay in receipt of any
necessary government approvals ("FORCE MAJEURE"). If any such event of
Force Majeure substantially prevents one party's performance of the
Agreement for a period of [*] or more, the other party may terminate
this Agreement on [*] prior written notice.
ARTICLE 8 - TAXES
(a) The parties, respectively, shall be responsible for their own
Excluded Taxes attributable to the transactions contemplated by this
Agreement.
(b) Except as otherwise provided herein, AA shall collect from customers
at the time of sale, and timely report and remit to the relevant
competent authorities, applicable Ticket Taxes unless prohibited by
applicable law or contrary to industry standards. Contractor,
however, shall timely remit and report to the relevant competent
authorities applicable Ticket Taxes required to be remitted by the
operating carrier at the time of enplanement under applicable law or
industry standard ("ENPLANEMENT TICKET TAXES") (E.G., Canadian AIF
remittance and reporting, including annual certification). On
receipt of written or electronic notice, supported by relevant
flight manifest information, AA shall directly reimburse or
otherwise account through the general billing arrangement between AA
and Contractor for any such Enplanement Ticket Taxes remitted and
reported by Contractor.
(c) Each party shall be responsible for the payment of any Taxes it owes
on the purchase by such party of goods or services from the other
party. If invoiced, such Taxes shall be separately stated.
(d) A party shall indemnify, reimburse or advance (on request), and hold
the other party harmless from, an assessment of Taxes or Ticket
Taxes by a competent authority, plus reasonable attorneys' fees and
reasonable and severable costs incurred in defense thereof, for
which the indemnifying party is ultimately responsible for the
payment thereof under this Agreement. However, in the case of
Enplanement Ticket Taxes, the scope of such indemnity shall exclude
the assessment of interest and penalties if attributable to
Contractor negligence.
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(e) Each party shall promptly advise the other as it may become aware of
changes to the rate or applicability of any Taxes or Ticket Taxes.
Each party shall maintain and make available on a timely basis
records to administer an audit and defend an assessment or otherwise
substantiate a refund or credit concerning any Taxes or Ticket Taxes
for which such party is responsible for remitting and reporting to a
competent authority hereunder and shall implement procedures and
controls to ensure timely and accurate reporting and remittance
thereof.
(f) Notwithstanding Section 6.03 of this Agreement, within 10 business
days of receipt of notice of audit from a competent authority (or
sooner if delay would be reasonably prejudicial) concerning any
Taxes or Ticket Taxes an assessment for which the other party (the
"PAYOR") would be ultimately responsible for payment under this
Agreement, such notified party shall advise the Payor in writing
about such audit and shall include a copy of the notice of audit.
(g) The parties shall each bear their own costs in the administration of
an audit and shall reasonably cooperate with the other party and
take such action as may be requested from time to time, each at its
own reasonable expense, to minimize any assessment or potential
assessment of Taxes or Ticket Taxes by a competent authority in
connection with this Agreement. The parties shall periodically
apprise and consult with each other concerning the progress of the
audit and subsequent action to be taken. AA, however, shall control
strategic decisions concerning the administration of the audit and
action to be taken in connection with an assessment of Taxes or
Ticket Taxes arising therefrom, including selection of counsel and
the defense, assertion and settlement of any tax controversy. The
reasonable and severable costs of such counsel shall be borne by the
party ultimately liable for payment of such Taxes or Ticket Taxes.
ARTICLE 9 - ASSIGNMENT, MERGER AND EXTRAORDINARY TRANSACTION
9.01 - ASSIGNMENT
This Agreement may be cancelled or terminated by either AA or Contractor
if there is, by operation of law or otherwise, an assignment of this
Agreement, or of any of the rights, duties or obligations created
hereunder with respect to any party to this Agreement, without the
written consent of the other party. In the event that this Agreement is
assigned, whether by operation of law or otherwise, without such consent
having been given in writing, the party not making the assignment shall
have the right to terminate the Agreement following five (5) business
days written notice to the other party and an opportunity to cure within
such five (5) business days period. Notwithstanding the foregoing, (i)
AA may, without consent of Contractor, assign and/or delegate any or all
of its rights or obligations under this Agreement to any Affiliate
(provided that with respect to the assignment of a Lease, AMR guarantees
the performance of such Affiliate under such Lease) or any company into
which or with which AA or its successor may be merged, combined or
consolidated, or which may otherwise succeed to all or any substantial
portion of AA's assets; (ii) Contractor may, without consent of AA,
assign or transfer this Agreement pursuant to a transaction permitted
under Section 9.02(a) hereof; and (iii) either party shall have the
right to assign as security all of its rights to money to be received so
long as all offsets in favor of, and amounts due to, the party not
assigning such rights, have been or shall be taken into account.
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9.02 - MERGER
In the event Contractor merges with or is controlled or acquired by
another air carrier, or a corporation Affiliated with such an air
carrier ("HOLDING COMPANY"), or a corporation owned, controlled or
Affiliated with any such Holding Company and except for any such merger
with or acquisition by an entity that is under common control, directly
or indirectly, with Contractor, AA will have the option to terminate
this Agreement without liability to Contractor except as otherwise
provided in Section 9.03 (b) below.
9.03 - EXTRAORDINARY TRANSACTION
(a) For purposes of this Section, "EXTRAORDINARY TRANSACTION" means any
(1) merger of Contractor with another company not under common
control, directly or indirectly with Contractor, (2) sale, transfer
or lease by Contractor of all or substantially all of its assets,
rights or powers to an entity not under common control, directly or
indirectly, with Contractor, or (3) the acquisition by another
corporation or entity not under common control, directly or
indirectly, with Contractor of all or a majority (at least 51%) of
the outstanding voting power of Contractor.
(b) Contractor may enter into an Extraordinary Transaction, provided
that AA's consent to assignment of this Agreement is not otherwise
required pursuant to Article 9.01 herein and Contractor obtains for
AA an affirmation from any such third party, who succeeds to
Contractor's interest in this Agreement, that guarantees the full
and faithful performance of Contractor's Feeder Air Services under
this Agreement. In the event Contractor is unable to obtain such
affirmation, AA may, at its option, terminate this Agreement upon
consummation of the Extraordinary Transaction.
(c) Contractor agrees that (1) within thirty (30) days prior to the
closing of any Extraordinary Transaction with a third party, or any
initial or subsequent public offering of common stock of Contractor,
or (2) within seven (7) days prior to the closing of any merger,
sale, lease, or transfer of all or substantially all of its assets,
or acquisition by another entity which is not an Extraordinary
Transaction, Contractor will notify AA of such event.
(d) Contractor grants to AA a right to purchase up to five percent (5%)
of the common Stock of Contractor (the "COMMON STOCK") offered for
sale in connection with any initial public offering of Common Stock
("IPO SHARES") by Contractor pursuant to an effective registration
statement under the Act or comparable statement under any similar
federal or other statute then in force that will result in the IPO
Shares being listed or admitted to trading on a national securities
exchange or nationally recognized automated interdealer quotation
system ("IPO"). This right to purchase Common Stock of Contractor
granted to AA ("IPO PARTICIPATION RIGHT") shall be subject to the
following terms and conditions:
1. In the event that the effective date of the registration
statement covering the IPO Shares under the Act occurs after
February 15, 2002 (the one year anniversary of the granting of the
IPO Participation Right), AA may purchase up to five percent (5%) of
the IPO Shares in the IPO. The purchase price of the IPO Shares
subject to the IPO Participation Agreement shall equal the per share
price at which the IPO Shares are offered to the public pursuant to
the IPO ("IPO SHARE PRICE"). AA may purchase less than all of the
IPO Shares available under the IPO Participation Right.
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2. [Intentionally Omitted]
3. Contractor shall give AA prompt notice of its determination
to conduct an IPO, but in no event later than the date of the filing
of the IPO Shares registration statement under the Act. Contractor
shall provide to AA a copy of the preliminary prospectus concurrent
with its distribution to the public. Contractor shall provide AA no
less than 72 hours notice of the commencement of public trading of
the IPO. AA shall inform Contractor of the number of IPO Shares or
Private Placement Shares that AA will purchase pursuant to the IPO
Participation Right no later than 48 hours prior to the commencement
of public trading of the IPO.
Further, in the event Contractor enters into an agreement with
another air carrier to provide regional air service under a code
share agreement and provides such other air carrier with the right
to participate in an IPO on terms more favorable to such air carrier
than the foregoing with respect to the type, amount or pricing of
participation, Contractor agrees, subject to the provisions of this
Section, to amend the type, amount and/or pricing of rights granted
to AA to participate in an IPO so that they are not less favorable
than the type, amount and pricing or rights granted to such other
air carrier. Notwithstanding the foregoing, Contractor may provide
another air carrier with the right to participate in an IPO with a
type, amount or pricing of participation more favorable than that
available to AA, provided that such more favorable treatment is
proportionate to an increase in the number of regional jets subject
to such third party code share agreement as compared to the Firm
Approved Aircraft committed by AA to be placed in service under the
terms of this Agreement (initially fifteen).
(e) Sections 9.03 (b) and (c) herein above will not apply to any
proposed sale or disposition by Contractor of its aircraft or assets
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.
ARTICLE 10 - COMMUNICATIONS, TRAINING AND BENEFITS
10.01 - MEDIA COMMUNICATIONS
The corporate communications functions and personnel of Contractor and
AA will operate independently but in coordination with respect to
"American Connection" joint marketing objectives. In the event of any
Feeder Air Service accident or flight or ground incident involving the
death of any person(s) or threat or injury or potential injury to
persons or property, it is agreed that the provisions concerning
emergency response procedures as set forth in Exhibit I shall apply and
that the sole official spokespersons and liaison personnel with the
media shall be those individuals designated in AA's Emergency Response
Procedures Plan.
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10.02 - TRAINING AND TRAINING MATERIALS
Subject to the terms or specific training programs set forth in Exhibits
D and H:
(a) For existing programs, AA will provide to Contractor at AA's
incremental cost, recurrent training and training materials
pertaining to any specialized programs Contractor will be utilizing
under this Agreement, such as WorldTracer and BMAS.
(b) For new programs, AA will provide initial training and training
materials to Contractor employees at AA's expense. Contractor shall
be responsible for all Contractor employee expenses while attending
such training.
(c) Should Contractor request AA instructors for the purpose of
exclusive training for Contractor employees either for existing or
new programs, and if such training is permitted by AA, Contractor
will pay AA the actual salary related costs, including fringe
benefits, plus any reasonable and customary expenses incurred by the
AA instructor(s).
10.03 - CONTRACTOR REPORTS
(a) Upon departure of each Contractor Feeder Air Service flight from
Feeder Air Service cities, flight close-out entries shall be made by
Contractor in SABRE as required by AA. If Contractor becomes aware
of any station(s) which have any deficiencies in making "close-out
"entries as required by this Section, Contractor will promptly take
corrective action to remedy such problem including the submission to
AA of a corrective action plan.
(b) Contractor will furnish to AA operating performance reports in
accordance with Exhibit K.
(c) Contractor will furnish to AA (1) within 45 days after the end of
each of the three interim calendar quarters, unaudited financial
statements including Contractor's then current corporate balance
sheet and profit and loss statement, and (2) within 91 days after
the end of Contractor's fiscal year, Contractor's then current,
audited financial statements including, either separately or on a
consolidated basis, the balance sheet and the profit and loss
statement, together with associated footnotes, and a copy of the
independent auditor's report.
(d) AA may inspect Contractor's corporate records and accounts related
to Contractor's Feeder Air Services, from time to time, upon
reasonable notice during the life of this Agreement.
(e) Each business day Contractor will furnish to AA (Attention: -
Director - Planning) daily operating reports for each day of the
week in a format specified by AA for the preceding day(s) as per
Exhibit K.
(f) Contractor will be responsible for filing all reports and plans
relating to its operations with the DOD, DOT, FAA, NTSB or any state
or airport authority, and Contractor will promptly furnish AA with
copies of all such reports and such other available traffic and
operating reports as AA may request from time to time during the
life of this Agreement as per Exhibit K.
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(g) Contractor will promptly furnish AA with a copy of every report and
plan 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 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.
(h) Contractor shall advise AA's legislative affairs department (with a
copy to AA Director - Planning) of all planned communications,
whether written or oral, with government or civic officials in
connection with Contractor's Feeder Air Services. If requested by
AA, Contractor shall provide copies of any written communications.
Further, each party will endeavor to report to the other party any
unplanned meetings (where it is anticipated that negative media
coverage could result) that occur between either party and any
local, state, or federal governmental officials regarding
Contractor's performance as an American Connection carrier.
10.04 - AGREEMENTS WITH OTHER CARRIERS
(a) [*]
(b) Subject to Article 5 herein, in the event Contractor enters into an
agreement with a third party governing pursuant to which Contractor
will provide services substantially similar to those provided to AA
under this Agreement employing ERJ-140 aircraft, Contractor shall:
(i) provide promptly to AA a copy of all documentation of same, and
(ii) offer, on an all-or-nothing basis, to AA, the opportunity to
amend this Agreement to incorporate prospectively from the date of
AA's election all of the terms and conditions of such agreement to
govern all Approved Aircraft, including any option Aircraft. AA, in
its sole discretion, may elect, within 10 business days after
receiving such notice from Contractor, to amend this Agreement to
reflect such terms and conditions, and Contractor agrees to promptly
approve such amendment in writing in accordance with Section 13.01
herein. The rights granted to AA pursuant to this Section 10.04(a)
may be exercised an unlimited number of times throughout the Term of
this Agreement.
(c) Subject to Article 5 herein, in the event Contractor reaches
agreement in principle on all of the material terms of a
contemplated agreement with a third party pursuant to which
Contractor proposes to provide services substantially similar to
those provided under the terms of this Agreement employing aircraft
other than ERJ-140 aircraft (a "PROPOSED AGREEMENT"), Contractor
shall (i) provide promptly to AA written notice of such Proposed
Agreement, including a detailed description of all of the material
terms and conditions thereof, and (ii) offer, on an all-or-nothing
basis, AA the opportunity to enter into an agreement on the same
terms and conditions as such Proposed Agreement for the provision of
the same type of services by Contractor employing the same aircraft
that would be employed under such Proposed Agreement. AA shall have
the right, on only one occasion, within 10 business days after
receiving such notice from Contractor to elect to enter into an
agreement with Contractor on the same terms and conditions as a
Proposed Agreement, involving the provision of the same type of
services by Contractor with the same aircraft as the Proposed
Agreement; PROVIDED that either (i) AA elects concurrently to
exercise its option on any option Aircraft for which the time to
exercise such option has not already expired or (ii) AA has
exercised all such options. If AA fails to accept such offer in
writing, Contractor will be permitted to consummate the Proposed
Agreement (on terms materially no more favorable to the third party
than were offered to
35
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*Confidential
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AA) with a third party within 120 days of such failure to accept;
PROVIDED, that if no transaction is consummated with a third party
on such terms and conditions within such 120-day period, the
provisions of this Section 10.04(b) shall again apply.
(d) The provisions of Section 10.04(b) and 10.04(c) shall not apply to
the provision by Contractor of additional aircraft pursuant to
agreements between Contractor, on the one hand, and either America
West or U.S. Airways (or any successor to such entities), on the
other hand, existing as of the effective date of this Agreement.
10.05 - WAIVERS
No failure by either party to exercise, or delay in exercising, any
right, power or remedy, and no course of dealings between the parties
shall constitute a waiver of such right, power or remedy. No waiver by
either party or any default, misrepresentation or breach of warranty,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation or breach. No waiver shall be
valid unless in writing.
Notwithstanding the foregoing, neither party shall recover costs (with
the exception of interline settlements made in accordance with Exhibit
F) or enforce monetary penalties or incentive payments to which it is
entitled by the terms of this Agreement if the party seeking such
recovery or enforcement either knew or, with reasonable due diligence,
should have known of the facts or conditions giving rise to its claim
and failed to notify the other party in writing within twelve (12)
months thereafter.
ARTICLE 11 - CONFIDENTIALITY
11.01 - NONDISCLOSURE OF AGREEMENT
Except as required by law or in any proceeding to enforce the provisions
of this Agreement, AA and Contractor hereby agree not to disclose or
publicize to any third party the terms or conditions of the Agreement or
any related Agreement except in the sole discretion and with the prior
written consent of AA.
Notwithstanding the foregoing, either party may disclose the terms of
this Agreement on a need-to-know basis to its Affiliates, financial
advisors, outside law and accounting firms, bank lenders, or to other
financial entities or underwriters, provided such entities acknowledge
the confidential nature of such information and agree to be bound by the
non-disclosure requirements of this Article 11.
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11.02 - NONDISCLOSURE OF INFORMATION
For purposes of this Agreement, confidential information, whether oral,
written or in any other form is that information which pertains to the
business, marketing, or operational plans or procedures of the
disclosing party and which should reasonably be understood by the
receiving party by the circumstances of disclosure or by the nature of
the information itself, to be proprietary and confidential to the
disclosing party. Except as required by law or in any proceeding to
enforce the provision of this Agreement, AA and Contractor hereby agree
to use confidential information solely for purposes related to the
performance of services under this Agreement and further agree not to
disclose to any third party any confidential information received from
the other party without the prior written consent of the party providing
such confidential information or data. The foregoing restrictions for
the use and/or disclosure of confidential information shall not apply to
information that:
(a) was publicly known at the time such information was communicated by
the disclosing party to the receiving party; or
(b) becomes publicly known through no fault of the receiving party
subsequent to the disclosure of such information; or
(c) was in the receiving party's possession, free of any obligation of
confidence at the time of the disclosing party's communication to
the receiving party; or
(d) is developed by the receiving party independently of and without
reference to the disclosing party's confidential information or
other information that the disclosing party communicated in
confidence to any third party; or
(e) is rightfully obtained by the receiving party from third parties
authorized to make such disclosure without restriction; or
(f) is identified by the disclosing party as no longer proprietary or
confidential.
(g) is disclosed to an Affiliate on a need-to-know basis and that
Affiliate agrees to abide by the provisions of this Section 11.02.
11.03 - NOTIFICATION
If either party is served with a subpoena or other process requiring the
production or disclosure of any of the Agreement or confidential
information referenced in Article 11.02, 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 the
other party a reasonable period of time to intervene and contest
disclosure or production.
11.04 - RETURN OF INFORMATION
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
which is still in the recipient's possession or control.
ARTICLE 12 - RELATED AGREEMENTS
(a) Contemporaneously with the execution of this Agreement, AA and
Contractor acknowledge that the parties have or will enter into the
following additional agreements:
Reduced Rate Agreement for Employee Travel
Hub Real Estate Subleases
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System Ground Handling Agreement
Warrant Agreement of even date herewith
Amendment No. 3 to the Amended and Restated Trans World
Express Air Services Agreement, dated February 15, 2001
(b) Upon execution of this Agreement, the parties shall promptly meet
and proceed to work together in good faith to negotiate and
conclude the terms and conditions of each of the Related Agreements
not executed simultaneously with this Agreement.
(c) The agreements enumerated in this Article 12 are herein referred to
as the "Related Agreements." Notwithstanding anything to the
contrary contained in the Related Agreements, the term of each of
the Related Agreements shall be coterminous with the Term of this
Agreement.
ARTICLE 13 - MISCELLANEOUS
13.01 - ENTIRE AGREEMENT AND AMENDMENTS
This Agreement, including any Appendices, Attachments and Exhibits
attached hereto or 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. This 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.
13.02 - GENERAL
(a) Any and all notices, approvals or demands required or permitted to
be given under this Agreement shall be sufficient if sent by
certified or registered mail, postage prepaid, or if sent by
courier or overnight delivery service, or via facsimile provided a
confirming copy of such notice is sent via one of the foregoing
methods,
if addressed to AA: with a copy to:
Director - Planning Corporate Secretary
American Airlines, Inc. American Airlines, Inc.
4333 Amon Carter Blvd. 4333 Amon Carter Blvd., MD 5675
MD 5494 Ft. Worth, TX 76155
Ft. Worth, TX 76155
Fax: (817) 931-9325 Fax: (817) 967-4313
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and if to Contractor, addressed to: with a copy to:
President and CEO Wexford Capital, LLC
Chautauqua Airlines, Inc. 411 West Putnam Avenue
Indianapolis Int'l Airport Greenwich, CT 06830
Suite #160 Attention: President
2500 South High School Road Attention: General Counsel
Indianapolis, IN 46241
Fax # 317-484-4547 Fax # 203-862-7312
or to such other addresses as either party may hereafter specify by
notice as provided herein.
(b) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas.
(c) This Agreement may be executed in two or more counterparts, each of
which will be deemed an original and all of which together will
constitute one instrument.
(d) If any provision of this Agreement is held to be illegal, invalid
or unenforceable under present or future laws effective during the
Term, the legality, validity, and enforceability of the remaining
provisions of this Agreement shall not be affected thereby, and in
lieu of such illegal, invalid, or unenforceable provision, there
shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid or
unenforceable provision as may be legal, valid, and enforceable.
(e) The prevailing party in any legal proceeding based upon this
Agreement shall be entitled to reasonable attorney's fees and court
costs, in addition to any other recoveries allowed by law.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be entered
into and signed by their proper officers thereunto duly authorized as of the day
and year first above written.
CHAUTAUQUA AIRLINES, INC. AMR CORPORATION
By: /s/ Robert H. Cooper By: /s/ Charles D. MarLett
------------------------------- -------------------------------
Name: Robert H. Cooper Name: Charles D. MarLett
Title: EVP and CFO Title: Corporate Secretary
---------------------------- ----------------------------
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EXHIBIT A - FEEDER AIRPORTS
1. ST. LOUIS FEEDER AIRPORTS AND SCHEDULING STANDARDS
A. Subject to conditions specified elsewhere in the Agreement, Contractor
will provide Feeder Air Service between AA designated Feeder Airports
on the one hand, and the STL Hub on the other hand during and upon
completion of the Fleet Plan phase-in.
B. In scheduling Contractor operated aircraft, AA will not unduly require
the use of more than one flight crew (pilots and flight attendants)
per overnight ("RON"). In the event the marketing schedule does not
provide the crew with "legal rest," Contractor shall either "stage" a
replacement crew at the affected location or schedule the crew on a
CDO. If a CDO or staged RON is required, AA shall reimburse Contractor
its direct cost for such CDO or staged RON.
C. AA shall designate which Approved Aircraft type will be operated to
and from Feeder Airports and the STL Hub.
D. AA shall schedule the Approved Aircraft to maintain average daily
scheduled utilization within the minimum and maximum parameters noted
on Schedules E-1a and E-1b.
E. AA shall schedule the Approved Aircraft in an efficient manner at the
Hub and Feeder Airports.
F. AA shall have the discretion to change the frequency and deployment of
Feeder Air Service Flights between the Hub and Feeder Airports
provided reasonable notice, as defined in Section 2 below, is given to
Contractor.
2. ROUTE CHANGES
A. AA shall have the discretion to redeploy Approved Aircraft from time
to time given reasonable prior written notice is provided to the
Contractor. For the purposes of this Section, reasonable notice shall
mean:
(1) Thirty (30) days to add or delete service to Feeder Airports that
are Covered Locations or locations served by a third party
American Connection provider.
(2) Sixty (60) days to add Feeder Airports that are new Contractor
Locations.
(3) Sixty (60) days to delete Feeder Airports that are Contractor
Locations.
In the event AA requests Contractor to operate routes other than to or
from the STL Hub, Contractor and AA shall meet to determine what, if
any, changes are required to the STL cost model for the operation of
such non-STL Hub Feeder Air Service Flights.
B. Beginning on the Effective Date and continuing through December 31,
2001, AA shall have the discretion to redeploy Approved Aircraft from
time to time without regard to the notice provisions noted above;
PROVIDED, that during such period, AA shall give commercially
reasonable notice to Contractor of such redeployment.
* * *
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EXHIBIT B-1 -AMERICAN CONNECTION MARKS
1. THE AMERICAN CONNECTION MARKS ARE:
A. "American Connection," "American Connection," and AA's aircraft
interior and exterior decor, colors, and logos. Such American
Connection Marks may be retrieved by Contractor when granted access to
AADAMS pursuant to Section 1.01(a) on or after the execution date of
this Agreement. The American Connection Marks may be revised by AA
from time to time.
B. "AA" and "AA*", as appropriate as code to designate Feeder Air Service
Flights in the OAG, airline and third party reservations systems,
airport flight information displays, passenger tickets, and similar
media.
C. The "AAdvantage" frequent traveler program for promotion and benefits.
D. Any other American Connection Mark which AA from time to time may
designate.
* * *
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EXHIBIT B-2 - TWA MARKS
1. THE TWA MARKS ARE:
A. "Trans World Express," "TWE," "TWExpress," and TWA's aircraft interior
and exterior decor, colors, and logos. Such TWA Marks are depicted in
the logo sheet previously furnished by TWA to Contractor, and attached
hereto, which may be revised by AA from time to time.
B. "TW" and "TW*", as appropriate as code to designate Feeder Air Service
Flights in the OAG, airline and third party reservations systems,
airport flight information displays, passenger tickets, and similar
media.
C. The "Aviators" frequent traveler program for promotion and benefits.
D. Any other TWA Mark which AA from time to time may designate.
* * *
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EXHIBIT C - FLEET PLAN AND OTHER CONDITIONS
1. FEEDER AIR SERVICE APPROVED AIRCRAFT
A. REGIONAL JET AIR TRANSPORTATION SERVICE
(1) As directed by AA and subject to certain Labor Contract
Restrictions, Contractor will utilize Embraer regional jet
aircraft, types 145 and 140 (ERJ), configured in American Eagle
specifications (including but not limited to airframe,
powerplant, cabin interior, exterior trade dress, avionics, and
the like). Each aircraft shall be equipped with cold galley,
lavatory, and 3 crew personnel. Contractor may operate up to
eight 145 LR version ERJs, subject to certain Labor Contract
Restrictions, but all remaining aircraft shall be the 140 LR
version. Both parties agree that the use of ERJ type 145 will
require a separate schedule of Block Hour and passenger stipend
charges.
(2) Other regional jet and turbo-prop aircraft types may be used
subject to AA's prior approval and corresponding amendment to
this Agreement as appropriate.
(3) In the event Contractor's operational performance for any month
falls below target range as detailed in Exhibit J, upon
commercially reasonable notice, AA may assign one or more
Standard Marked Approved Aircraft as a spare aircraft to protect
operations pursuant to this Agreement. However, the ratio of
spare aircraft to scheduled aircraft shall never be less than
1:20 unless the parties otherwise agree. Approved Aircraft
assigned as spares shall not be counted in utilization
calculations used for Block Hour charge or Passenger Stipend
determination. AA will compensate Contractor for spare Approved
Aircraft in accordance with Exhibit E.
B. RIGHT OF FIRST REFUSAL
(1) Should Contractor have aircraft in excess of its operational
needs, Contractor will grant AA a right of first refusal to place
such aircraft in service for AA. All terms and conditions
contained in this Agreement shall apply to any service operated
by Contractor on behalf of AA with such additional aircraft;
PROVIDED that AA must exercise such right within 30 days of
notification by Contractor.
(2) Should AA require additional regional jets beyond the first 25
jets to fly under the American Connection Marks in revenue
service at STL, AA will grant Contractor a right of first refusal
to supply up to five ERJ type 140 aircraft, such aircraft to be
operated under the applicable terms and conditions of this
Agreement; PROVIDED that Contractor must exercise such right
within 30 days of notification by AA.
2. IN-SERVICE DATES / PHASE OUT DATES
In-service and phase out dates shall be as indicated on Schedule C-1.
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3. AIRCRAFT INTERIOR AND EXTERIOR SPECIFICATIONS
AA shall direct Contractor regarding the exterior trade dress and
interior fabric and color selection process of all aircraft Contractor
operates under this Agreement to ensure consistency with AA's or AE's
product appearance.
4. MAINTENANCE
A. Contractor agrees to maintain the Firm Approved Aircraft fleet to the
highest service non-mandatory bulletin/modification ("SB") status
maintained on the other aircraft operated by Contractor. Contractor
and AA agree to cause their maintenance personnel to meet at least
once each calendar quarter, or more often at the request of AA, to
review the SB status of the Firm Approved Aircraft fleet. In the event
that Contractor determines a particular SB is not cost beneficial, AA
may cause Contractor to perform the SB on the Firm Approved Aircraft
under the following circumstances:
(1) If AA performs an SB on its fleet and desires such SB to be
performed on Contractor's Firm Approved Aircraft fleet when such
SB is not already preformed or is not intended to be performed on
any of the Contractor fleet, then:
If AA provides a part or component to Contractor at no charge to
Contractor, Contractor will provide, at no additional charge to
AA, up to 100 man-hours per Firm Approved Aircraft of labor to
comply with the SB. Any man-hours in excess of 100 shall be
reimbursed by AA to Contractor at straight-time rates.
B. During the Term, Contractor shall furnish to AA such information
concerning the location, condition, use and operation of the Approved
Aircraft as AA may reasonably request. Contractor shall permit any
Person designated in writing by AA, at AA's expense, to visit and
inspect (at any reasonable time, provided that such inspection shall
not unreasonably interfere in any material respect with Contractor's
business operations or operation or maintenance of the Approved
Aircraft) the Approved Aircraft and the logs, manuals, records and
other documentation maintained in connection therewith and, at AA's
expense, to make copies of such records as AA may reasonably
designate. AA shall have no duty to make any such inspection and shall
not incur any liability or obligation by reason of making or not
making any such inspection. Any such inspection of the Approved
Aircraft shall be a visual, walk-around inspection which may include
going on board the Approved Aircraft and shall not include opening any
panels, bays, or the like; PROVIDED, that any such designee of AA
shall be entitled to be present during any maintenance check of any
Approved Aircraft at which any panels, bays or the like may be opened
and shall have the right to inspect such items during such maintenance
check. Upon written request from AA, Contractor shall provide AA with
the anticipated dates of any scheduled major maintenance checks
(including any "C", heavy "C" or "D" check) occurring within the
six-month period following such request. Contractor shall promptly
address any concerns of AA's Flight Operations, Ground Operations,
Maintenance and Safety Departments.
C. Contractor shall maintain, service, repair, overhaul and test or cause
to be maintained, serviced, repaired, overhauled and tested each
Approved Aircraft (and all parts and components thereof) in accordance
with its FAA approved maintenance program, so as to keep each Approved
Aircraft (and all parts and components thereof) in at least as good an
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operating condition as when delivered, ordinary wear and tear
excepted, and within the acceptable limits of performance provided in
the manufacturer's manuals.
* * *
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SCHEDULE C-1 - FLEET PLAN AND IN-SERVICE DATES
At the STL Hub, Contractor has agreed to continue to operate the following
in service ERJ-145 LR aircraft until the phase out dates listed (the
ERJ-145 units are collectively referred to as "ORIGINAL APPROVED
AIRCRAFT"), and to place the following 15 firm ERJ-140 LR units into
service according to the following schedule (the ERJ-140 LR units are
collectively referred to as "FIRM APPROVED AIRCRAFT"). Subject to the
provisions set forth herein, at no time will Contractor operate more than
15 aircraft under the American Connection Marks.
<Table>
<Caption>
CONTRACTOR MAKE/ IN-SERVICE PHASE-OUT TOTAL
UNIT MODEL DATE DATE AA RJ
UNITS
---------- ------ ---------- -------------------- --------
145-01 145 LR NA F-08 in service date 1
145-02 145 LR NA F-09 in service date 2
145-03 145 LR NA F-10 in service date 3
145-04 145 LR NA F-11 in service date 4
145-05 145 LR NA F-12 in service date 5
145-06 145 LR NA F-13 in service date 6
145-07 145 LR NA F-14 in service date 7
145-08 145 LR NA F-15 in service date 8
F-01 140 LR Nov-01 9
F-02 140 LR Nov-01 10
F-03 140 LR Dec-01 11
F-04 140 LR Dec-01 12
F-05 140 LR Dec-01 13
F-06 140 LR Dec-01 14
F-07 140 LR Jan-02 15
F-08 140 LR Mar-02 15
F-09 140 LR Mar-02 15
F-10 140 LR Apr-02 15
F-11 140 LR Jun-02 15
F-12 140 LR [*] 15
F-13 140 LR [*] 15
F-14 140 LR [*] 15
F-15 140 LR [*] 15
</Table>
Note: For the purposes of Section 1.02, specific "in-service" date shall be
confirmed to AA by Contractor not less than 90 days prior to the scheduled
date of delivery.
Additional Approved Aircraft may be added to the Fleet Plan by mutual
written agreement between the parties and under the same terms and
conditions stated herein.
Contractor may, at its discretion, substitute 140 LR version ERJs for up
to eight 145 LR version ERJs, upon notice delivered 30 days prior to the
respective 145 LR version ERJ in-service dates set forth above.
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EXHIBIT D - STANDARDS OF SERVICE
1. CUSTOMER SERVICE
Contractor will perform all customer-related services in a professional,
businesslike, and courteous manner.
A. In order to ensure a high level of customer satisfaction, Contractor
agrees that it will train or cause to be trained to proficiency, all
Contractor customer service employees associated with Contractor's
American Connection Services.
B. Contractor will establish and maintain customer handling procedures
and policies which conform with Customer Service Policies and
Procedures or other such documentation as AA may from time to time
adopt, to the extent that such procedures and policies are appropriate
for an American Connection operation.
Further, Contractor will establish, maintain, and enforce employee
conduct, appearance and training standards and policies which are
similar to those utilized by AA.
C. Contractor agrees to participate in any and all special training or
other programs that AA provides for its customer service employees.
Contractor may elect to accomplish such training through the use of a
"Train the Trainer" concept, if permitted by AA.
D. Upon the request of either party, Contractor and AA will meet to
discuss and review Contractor's customer handling procedures and
policies and Contractor's employee conduct, appearance, and training
standards and policies to ensure compliance with this Exhibit D.
E. Contractor shall resolve all customer complaints in accordance with
AA's Customer Service Policies and Procedures and will forward all
customer complaints to AA's Customer Relations Department to ensure
timely resolution of all customer concerns associated with the
American Connection Services provided by Contractor.
2. IN-FLIGHT SERVICE PRODUCT AND DELIVERY
Contractor shall cater flights as directed by AA. Contractor shall
coordinate with AA's (or its Affiliate's) In-flight Services Department to
ensure consistency and quality of Contractor's in-flight service product,
including but not limited to non-safety related functions such as inflight
marketing announcements, meal and beverage presentation and delivery,
provisioning and usage of passenger amenity kits, and the like. Contractor
shall implement suggestions made by AA's (or its Affiliate's) In-flight
Services Department if such suggestions can be implemented without
additional cost to Contractor. AA shall assist Contractor in obtaining
commissary items (beverages and complimentary foodstuffs) at AA's actual
cost, I.E. on a pass-through basis. If meal service is required by AA,
Contractor shall pass the additional cost through to AA.
Contractor will coordinate with AA to ensure consistency with AA's product
delivery, including but not limited to AA logo napkins, stir rods, cups and
the like. AA shall provide such amenities at no charge to Contractor.
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3. REPRESENTATION AND PRESENTATION OF THE AA BRAND
A material failure to represent the AA brand to the same extent as other
users of the AA brand, including AE and other American Connection carriers
as reasonably specified by AA in writing and uniformly applied to all users
of the AA brand, including AE and other American Connection carriers, will
be deemed cause for termination of this Agreement as provided in Section
7.02, provided that such failure is noted in two consecutive audits.
* * *
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EXHIBIT E - CHARGES PAYABLE
1. CHARGES PAYABLE BY AA
A. BLOCK HOUR CHARGE
(1) AA shall pay Contractor a fixed fee per actual Block Hour flown
in revenue service. The Block Hour rate is based upon
Contractor's fixed costs and will vary based upon the number of
scheduled Block Hours on an average daily basis for each Approved
Aircraft fleet (see Schedules E-1a and E-1b for ERJ-145 and
ERJ-140 respectively). Contractor will bear all product
reliability and operating cost risk unless otherwise stated
herein. The rate per Block Hour shall be adjusted only in
conjunction with schedule changes that affect the scheduled Block
Hour utilization subject to a minimum payment calculated on the
basis of [*] per day, regardless of whether the Approved Aircraft
are scheduled for such number of Block Hours per day.
(2) For the avoidance of doubt, AA will schedule the Firm Approved
Aircraft for a minimum daily utilization of [*] per day on
average. For example, in the event that AA schedules the Firm
Approved Aircraft for an average of [*] but Contractor actually
flies only [*] Contractor shall be paid for [*] at the Block Hour
rate corresponding to [*]
(3) Provided the Effective Date is prior to December 1, 2001,
beginning on the Effective Date and continuing through December
31, 2001, the Block Hour rate reflected in Schedule E-1a and
Schedule E-1b shall be reduced by five percent (5%).
(4) Provided the Effective Date is prior to March 31, 2002, effective
January 1, 2002 through March 31, 2002, the Block Hour rate
reflected in Schedule E-1a and Schedule E-1b shall be reduced by
two and one half percent (2.5%).
(5) Certain components of the Block Hour cost shall be subject to
periodic adjustment based upon Section C below.
B. PASSENGER STIPEND
(1) AA shall pay Contractor a passenger stipend for each Revenue
Passenger carried onboard Contractor's aircraft. The applicable
amount of passenger stipend is detailed in Schedules E-1a and
E-1b.
(2) Provided the Effective Date is prior to March 31, 2002, beginning
on the Effective Date and continuing through June 30, 2002, AA
shall not pay any passenger stipend with respect to Revenue
Passengers carried onboard any ERJ.
C. ADJUSTMENTS TO CHARGES
In addition to the Block Hour charge and passenger stipend, AA agrees
to pay Contractor the following items:
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(1) AA agrees to reimburse Contractor for certain Pass Through Costs
fully or partially excluded from the Block Hour charge or
passenger stipend. These Pass Through Costs and their associated
rules of application are listed in Schedule E-3(1)(I).
(2) AA agrees to reimburse Contractor for all third party vendor
charges incurred in providing Feeder Air Services at a Covered
Location. Contractor should contract such services when
necessary, pay the vendor directly, and then submit charges to AA
as Other Pass Through Costs as described in Schedule E-3(1)(I).
(3) AA agrees to reimburse Contractor for de-icing services provided
by vendors at all locations. Contractor should contract such
services when necessary, pay the vendor directly, and then submit
charges to AA as Other Pass Through Costs as described in
Schedule E-3(1)(I).
(4) AA agrees to reimburse Contractor for de-icing fluid provided by
AA maintenance at the Hub for purposes of on-gate de-icing of
Approved Aircraft. Contractor should pay AA maintenance directly
for such fluid, and then submit charges back to AA as Other Pass
Through Costs as described in Schedule E-3(1)(I).
(5) The Block Hour charge contemplates Contractor performing
Passenger Handling and Ground Handling Duties for [*] That number
will be adjusted for actual deployment by use of CLDR (or
Contractor Location Departure Ratio) as defined herein. "CLDR"
means the number of scheduled, weekday Feeder Air Service
regional jet departures handled by Contractor, divided by the
total number of scheduled weekday Feeder Air Service regional jet
departures operated by Contractor. AA shall recompute the CLDR
based upon the current marketing schedule then in effect. The
computation of CLDR shall be made at the beginning of each
calendar quarter when the total regional jet fleet count is less
than 20 units and semi-annually (January 1 and July 1) when the
total regional jet fleet count is 20 units or more. For purposes
of Contractor cost reimbursement, the following calculations
shall be performed on a monthly basis and AA agrees to reimburse
Contractor the amount generated by such calculation:
[*]
NOTE: The [*] departure cost (the "RJ TURN FEE") is based
upon April 2000 economics and is subject to the Escalation
Percent (see Schedule E-4) beginning April 1, 2002.
(6) If, during any calendar quarter, the level of Uncontrollable
Cancellations incurred by Contractor is more than [*] of
scheduled Block Hours, then AA shall pay to Contractor an amount
determined in accordance with the following formula:
[*]
where
[*]
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[*]
(7) Contractor shall receive for each designated spare Standard
Marked Approved Aircraft the following:
a) Fleet average Firm Approved Aircraft lease expense, up to
$117,000 per ERJ 140 aircraft per calendar month
b) Fleet average Firm Approved Aircraft hull insurance
c) Fleet average Firm Approved Aircraft property tax
d) Fleet average Firm Approved Aircraft war risk insurance
Spare compensation shall be on a monthly basis prorated by
aircraft day. Payments for the assignment of spare Approved
Aircraft shall be made in accordance with Exhibit F.
2. CHARGES PAYABLE BY CONTRACTOR
A. AA GROUND AND PASSENGER SUPPORT SERVICES TRAINING
Contractor will provide, at no cost to AA, all necessary training to
enable AA, and/or its Affiliate(s) to fulfill its obligations under
any ground handling agreements.
B. AUTOMATION
1. Contractor shall pay all automation maintenance costs in the
Feeder Cities and Hub, as appropriate.
2. Contractor shall pay all communications charges associated with
the transmission and reception of ACARS data.
C. UNANTICIPATED COSTS
Any costs incurred by Contractor in conjunction with Contractor's
American Connection Services shall remain the responsibility of
Contractor unless expressly subject to payment by AA as provided
elsewhere in this Agreement.
D. OTHER CHARGES INCURRED
1. Contractor agrees to pay AA for all costs or expenses, including
fines and penalties ("COSTS") imposed on AA directly arising out
of Contractor's failure to comply with AA's Customer Service
Policies and Procedures with regard to the ticketing and boarding
of any passenger for American Connection Services or any other
passenger connecting to transportation services offered by AA,
including but not limited to Costs arising out of Contractor's
failure to verify travel documents or under collection or under
remittance of fares, Taxes, PFC's, security surcharges or the
like, except to the extent Contractor's non-compliance is due to
the failure of AA to comply with any such applicable law, rule,
regulation, or procedure.
2. Any services, if requested by Contractor and performed by AA,
that are not otherwise identified in this Agreement shall be at
[*] of Mutual Assistance Ground Service Agreement ("MAGSA")
rates.
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3. SHARED COSTS
AA and Contractor agree to share the following costs on an equal (50/50)
basis:
A. Ongoing SABRE automation equipment cost
B. Installation of initial SABRE automation equipment at Contractor
locations
AA will purchase and install equipment, then bill Contractor fifty percent
(50%) of such cost. AA will retain all rights to the equipment. In the
event of a Covered Conversion, AA will reimburse Contractor's expenses for
the initial purchase and installation.
4. HUB RELOCATION
In the event AA requires Contractor to relocate to different facilities at
the Hub other than Concourse B, AA and Contractor shall modify the cost
model to reflect any changes as a direct result of the relocation
proportionately.
* * *
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SCHEDULE E-1a - [*]
[*]
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SCHEDULE E-1b - [*]
[*]
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SCHEDULE E-2 - INTENTIONALLY OMITTED
(SCHEDULE E-2 INTENTIONALLY OMITTED.)
* * *
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SCHEDULE E-3 - PASS THROUGH COSTS
1. The following cost groups shall be reconciled on a monthly basis, with the
cost difference passed through to either AA or Contractor. The difference
between the direct cost to Contractor and the cost assumed in the pricing
model shall be reconciled monthly by Contractor and such reconciled
difference shall be either reimbursed to Contractor (under payment) or
credited to AA (over payment). The settlement date for all Pass Through
Costs shall be made in accordance with the terms set forth in Exhibit F. AA
reserves the right to audit Contractor's Pass Through Costs.
A. Fuel (into-plane) - The Block Hour charge assumes a gross (into-plane
including taxes and servicing) fuel price of [*] of Jet A fuel. To the
extent that Contractor's actual fuel costs per gallon deviate from
this amount, the difference, multiplied by the actual number of Jet A
fuel gallons consumed by Contractor's Feeder Air Service Flights,
shall either be reimbursed to Contractor or credited to AA.
B. Landing Fees - The Block Hour charge assumes a gross landing fee (per
1,000 lbs. of maximum aircraft landing weight) [*] To the extent that
actual landing fees paid by Contractor deviate from this amount, the
difference, multiplied by the actual amount of landing weight for
Contractor's Feeder Air Service Flights, shall either be reimbursed to
Contractor or credited to AA.
C. Passenger Liability Insurance - The Block Hour charge assumes an
insurance cost of [*] per 1,000 RPMs. Each year, on the anniversary
date of Contractor's policy, the rate shall adjust up or down [*]. To
the extent that the insurance cost for Passenger Liability Insurance
paid to Contractor by AA deviates from the New PLI Calculated Rate,
the difference, multiplied by the actual number of RPMs (000)
associated with Contractor's Feeder Air Service Flights shall be
either reimbursed to Contractor or credited to AA. Alternatively, AA,
at its sole discretion, may elect to offer Contractor Passenger
Liability Insurance coverage for its Feeder Air Service operations
with terms and conditions to be mutually agreed to by the parties.
D. Aircraft Hull Insurance - The Block Hour charge assumes a cost of [*]
of Aircraft Hull value. Each year, on the anniversary date of
Contractor's policy, the rate shall adjust up or down [*]. To the
extent that the insurance cost for Aircraft Hull Insurance paid to
Contractor by AA deviates from the New AHI Calculated Rate, the
difference, multiplied by the actual Hull values divided by $100,
associated with Contractor's Feeder Air Service Flights shall be
either be reimbursed to Contractor or credited to AA. Alternatively,
AA, at its sole discretion, may elect to offer Aircraft Hull Insurance
coverage for its Feeder Air Service operations with terms and
conditions to be mutually agreed to by the parties.
E. War Risk Insurance - War risk and allied perils insurance, including
any surcharges paid to commercial insurance companies and premiums
paid to governmental agencies.
F. Aircraft Property Taxes - The Block Hour charge assumes a property Tax
of [*] of assessed aircraft property value. To the extent that the
actual property Tax ratio paid by Contractor deviates from this
amount, the difference, multiplied by the actual assessed aircraft
property value, shall either be reimbursed to Contractor or credited
to AA.
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G. De-Icing Services - The Block Hour charge does not include any
expenses related to the cost of de-icing aircraft. Contractor shall
pay for these services when required to do so and shall submit the
direct cost of these services back to AA for reimbursement. AA shall
reimburse Contractor for its actual cost of de-icing associated with
Contractor's Feeder Air Service Flights.
H. International Service Fees - The Block Hour charge does not include
any cost associated with NAV-CANADA, customs clearance, or other
service fees associated with operating service to non - US destination
points. To the extent that Contractor incurs such costs in providing
Feeder Air Service, AA agrees to reimburse Contractor its actual costs
incurred.
I. In-Flight Meals - The Block Hour charge does not include any expenses
associated with meal service provided by Contractor on longer flights
furnished in accordance with AA dining standards and directives. To
the extent that Contractor incurs such costs in providing these meal
services, AA agrees to reimburse Contractor its actual costs incurred.
J. Other Pass Through Costs - AA agrees to reimburse Contractor for
certain costs directly related to Contractor's Feeder Air Services and
costs associated with vendor services at Covered Locations as set
forth in Section 2.05.
K. Aircraft Ownership Costs
(1) [*]
(2) [*]
(3) [*]
(4) [*]
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SCHEDULE E-4 - ESCALATION PERCENT
The escalation percent as computed below (the "ESCALATION PERCENT" or "EP")
shall be applied to the Block Hour rates and Revenue Passenger stipend rates in
Schedules E-1a and E-1b. The first escalation adjustment shall be made effective
April 1, 2002, and shall be computed based upon the change (expressed as a
percent) from the March 2000 CPI index of 171.2. Thereafter, the escalation
adjustment shall be made effective April 1 of each subsequent year and shall be
computed based upon the published report of CPI released during the immediately
preceding March. The escalation adjustment shall be used to adjust the rates for
the fiscal year beginning that April 1st by applying the EP to the rates in
effect for the prior year. However, in no event shall any EP adjustment for any
single year exceed [*] The Escalation Percent shall be computed as follows:
[*]
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EXHIBIT F - ACCOUNTING PROCEDURES
The following accounting procedures reflect the understanding between AA and
Contractor regarding various accounting, reporting and settlement procedures.
These procedures are based on Contractor using AA stock, and each
Contractor-operated AA ticketing location ("CONTRACTOR TICKETING LOCATION")
operating as if it were an AA-operated AA ticketing location.
1. SALES REPORTING AND CASH TRANSFER
A. Each Contractor Ticketing Location will be automated with AA's ATAC,
and Contractor agrees to adhere to the same ticketing procedures,
ticket reporting and cash remittance timing as required of a Covered
Location, including:
(1) Reporting of auditor coupons and other sale documents daily to
AA's ticket lift processing facility in Juarez, Mexico.
(2) Depositing cash and check sales the next business day into the
local AA depository bank. These funds will be withdrawn
automatically from the local depository bank (on the second
business day following the day of the sale) by AA's central
depository bank through utilization of the Bank Automated
Clearing House system.
B. AA and Contractor have agreed to establish the local depository bank
accounts as AA accounts managed and overseen by AA.
C. All sales by Contractor will be subject to the same sales audits, to
be conducted at such times as AA may elect, as may be performed by AA
on sales reports for any AA staffed location. The audit will include
establishing discrepancy notices ("DISCREPANCY NOTICES") for ticketing
errors, cash under collections or shortages, and unreported sales
which have been determined to be the fault of Contractor. Contractor
will be charged for these errors (up to the amount of any actual
expense incurred by AA) in the same manner AA charges any AA staffed
location, if not corrected, except as provided in Section 4.B of this
Exhibit, within 90 days after the Discrepancy Notice is established.
D. Sales will include those made using the same credit cards accepted by
AA. The sale amount will be billed directly to the credit card
companies for billing to their cardholders via AA's Advance Credit
Billing System programs through ATAC.
E. Contractor will be responsible for and will indemnify, hold harmless
and reimburse/pay AA the tariff value of, any transportation furnished
by AA or other carriers on AA ticket stock lost, stolen or
fraudulently issued after delivery of the same to Contractor, up to
the date that such ticket stock is blacklisted. Blacklisted ticket
stock accepted by Contractor employees for transportation shall be
subject to full reimbursement by Contractor to AA.
2. REFUNDS
A. Contractor shall be responsible for and shall indemnify, hold harmless
and reimburse/pay AA the tariff value of, any transportation refunded
by AA or other carriers on AA ticket stock lost, stolen or
fraudulently issued after delivery of the same to Contractor, up to
the date that such ticket stock is blacklisted. Blacklisted ticket
stock accepted by Contractor
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employees for refund shall be subject to full reimbursement by
Contractor to AA, if the refund applied to AA.
B. Refunds made by Contractor are subject to audit and a Discrepancy
Notice will be established for any over refunds issued at the error of
Contractor. The original Discrepancy Notice will be sent to the
issuing location with a copy to Contractor central accounting within
45 days of the issued refund. If the discrepancy is not corrected,
Contractor will be charged 90 days after the Discrepancy Notice is
established.
C. Contractor shall adhere to AA's procedures pertaining to the flow of
refund documents (unused coupons, lost ticket applications, and the
like). AA will provide such procedures to Contractor in writing.
D. Applications for refunds of lost AA tickets will follow standard AA
procedures, including but not limited to collection and payment to AA
by Contractor of the applicable AA lost ticket charge.
E. For consumer adjustments, denied boarding, Baggage Claims or
involuntary refunds pertaining to Contractor flights (collectively
"CONSUMER ADJUSTMENTS"), Contractor shall be authorized to issue
appropriate settlement documents as AA may direct and authorize from
time to time, and in accordance with AA's policies and procedures
pursuant to Section 2.06(d).
F. Monthly compensation due Contractor for any designated spare Standard
Marked Approved Aircraft shall be added to the total Block Hour charge
paid in accordance with section B above.
3. INTERLINE SETTLEMENTS AND WIRE TRANSFERS
A. Except as otherwise provided for herein, AA and Contractor agree to
settle all interline transactions using the rules prescribed in the
ACH Manual of Procedure and any other applicable industry procedures.
B. AA shall pay Contractor for Feeder Air Services, via wire transfer,
according to the provisions set forth below:
(1) AA shall estimate Contractor monthly payment based upon the
published flight schedule and shall pay Contractor [*] of the
estimated Block Hour charges in the following installments:
(a) On the 5th day of the month, or the next business day, AA
shall pay Contractor [*] of the estimated Block Hour charge
for the current month;
(b) On the 10th day, or the next business day, AA shall pay
Contractor [*] of the estimated Block Hour charge for the
current month; and
(c) On the 25th day, or the next business day AA shall pay
Contractor [*] of the estimated Block Hour charge for the
current month, plus the reconciliation of the prior month's
Block Hours charges and prior month's passenger stipend, as
detailed below, plus any amounts due
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Contractor for Freight and Small Package shipments under
Section 6 of Exhibit F below.
AA may offset amounts due AA by Contractor against the prior
month's reconciled amount identified in Section 1.C above.
C. AA shall perform all revenue accounting functions for passenger
revenue to the same degree as it would for any AA station, within the
limits of AA's automation systems. Contractor may audit AA's
procedures at any time upon reasonable notice.
D. Within 60 days of the conclusion of a performance period as specified
in Exhibit J, AA and Contractor will settle as appropriate under
Exhibit J, based upon Contractor's performance and amount of bonus or
penalty incurred. AA and Contractor will be jointly responsible for
determining the payment to be made or any penalty to be credited to
AA.
E. Ticket Stock, AATVs, and the like will be payable by Contractor, and
Contractor shall at all times be responsible for all accountable
items, including but not limited to AATVs, ticket stock, and the like.
There shall be no charge for proper use of AATVs for DBC.
F.-N.[INTENTIONALLY OMITTED]
O. BAGGAGE SETTLEMENTS
Contractor shall handle all baggage related matters in accordance with
AA's procedures, as may be amended from time to time. [*] Baggage
Claims involving Connecting Passengers in which the cause or blame
cannot be determined shall be [*]
4. FURTHER DEDUCTIONS FROM INTERLINE SETTLEMENTS / WIRE TRANSFERS
A. [INTENTIONALLY OMITTED].
B. AA will deduct from its payment under Section 3.B above to Contractor
any Discrepancy Notices issued to Contractor Locations which have not
been paid or cleared within ninety (90) days from date of issuance. If
Contractor, after making a good faith effort to collect, cannot do so
because of the age of the item at the time the discrepancy was
established, AA will consider adjusting the deduction, but is not
obligated to do so.
C. AA, in the exercise of its sole discretion, may elect to deduct from
AA's payment to Contractor under Section 3.B above those charges to
Contractor outlined in Exhibit E of this Agreement, or any other
amounts or charges payable to AA by Contractor pursuant to this
Agreement, or otherwise as may be authorized by Contractor, including
Performance Penalties under Exhibit J(2)(C).
D. In lieu of Section 4.C above, AA, may invoice Contractor through the
ACH for passenger billings, non-transportation or any other charges
payable to AA.
5. CREDIT TRANSACTIONS
A. AA authorization and form of payment procedures will be followed for
acceptance of credit cards and checks.
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6. SMALL PACKAGE, FREIGHT, AND MAIL
A. Exhibit H sets forth the applicable procedures and revenue split for
the carriage of Shipments and Mail, as those terms are defined in
Exhibit H. Contractor shall use only AA documents for Shipments.
(1) Contractor will report all Shipment transactions in accordance
with AA's procedures.
(2) Billing discrepancies detected at the time of an audit by AA will
be handled consistent with Section 1 of this Exhibit F above.
7. AUDIT AND SECURITY MATTERS
A. Contractor shall permit AA to examine Contractor Ticketing Locations
to the same extent any AA staffed location is audited internally.
B. Security reviews will be conducted as required by AA's Security
Department.
C. Contractor will follow AA policy and procedures for security of ticket
stock, undeposited cash, and the like, copies of which shall be
furnished to Contractor upon request.
D. Contractor will observe all sine table security and other computer
security measures that AA adopts for its own airport and sales
functions.
8. AA ACCOUNTS
A. AA shall maintain such books of accounts and records as shall be
necessary to perform the foregoing accounting and settlement services,
which books of accounts and records will be available at all
reasonable times upon reasonable prior notice for inspection by
Contractor or its designated representatives.
B. AA will use the same degree of care and will apply the same standards
and safeguards for the accounting and settlement services provided
hereunder as AA uses for its own accounting services.
* * *
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EXHIBIT G - DIVISION OF PASSENGER REVENUE
All passenger revenues shall accrue to the benefit of AA.
* * *
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EXHIBIT H - SMALL PACKAGE, FREIGHT AND MAIL
1. If requested by AA, Contractor will provide services under the terms of
this Exhibit H. This Exhibit H sets forth the terms which will govern the
transport of small packages ("Priority Parcel Service") and general air
freight ("ExpressAAir" and all other products), but not mail (herein
collectively referred to as "SHIPMENTS") carried from origin to destination
in part on AA (or Affiliate, including third-party American Connection
carriers) and in part, or entirely, on Contractor's Feeder Air Services.
Shipments shall be as defined in AA's tariffs, as published in the ATPCO
Official Local Cargo Rate Tariff (the "AA TARIFFS") for Domestic shipments
and the TACT for International shipments. This Exhibit H also sets forth
the terms which will govern the carriage of mail, when carried by
Contractor at AA's request. Mail shall be defined as all items offered by
the USPS for carriage on flights operated by AA, Contractor or both
("MAIL"). AA reserves the right to determine and amend procedures to be
used by Contractor with respect to the provision of services associated
with Shipments and Mail.
2. All Shipments shall be transferred between AA and Contractor at the
designated transfer city as shown on the airbill of each Shipment. However,
general air freight shall be originated only at AA cargo staffed stations.
Freight originating from AA cargo or routed to a Contractor American
Connection flight at the Hub may be accepted for carriage. Contractor shall
not carry hazardous materials, as that term is defined by federal aviation
regulations and/or the DOT, with the exception of Dry Ice, Class 9 (if
permitted by Contractor's approved FAA operations manual).
3. The procedures which govern the interline transfer of Shipments between
Contractor and AA, as described in this Exhibit H, shall be those set forth
in the AA Tariffs as are in effect from time to time; PROVIDED that to the
extent that any such procedures are inconsistent with the terms of this
Agreement, this Agreement shall govern. Contractor agrees to adopt the AA
Tariffs as from time to time are in effect.
4. AA will include Contractor's Feeder Air Service markets in ATPCO
filings/tariffs at no charge to Contractor. Contractor shall neither
publish nor provide rates or services to any customer or company
independent of AA Cargo's tariffs for any AA Cargo product.
5. Contractor will handle small packages, freight, and Mail as directed by AA,
and all such small packages, freight, and Mail revenues shall accrue to the
benefit of AA. Except as otherwise provided in this Exhibit H, any
additional small package or freight related costs incurred beyond those
costs incurred in the provision of passenger and Mail services pursuant to
this Agreement, as a result of the direction by AA for Contractor to handle
such small packages and freight, will be borne by AA.
6. From time to time Contractor shall permit AA to inspect Contractor's cargo
operations, including Contractor policies and procedures for the handling
of cargo; PROVIDED however that any inspection of Contractor operations
shall be conducted by AA so as to minimize any disruption to Contractor.
Contractor shall promptly address all reasonable concerns of AA noted
during such inspection, to AA's satisfaction.
7. Contractor agrees to adopt and implement, in accordance with AA's policies
and procedures and at AA's cost, any automation (to the extent that the
cost/benefit of such automation allows Contractor's to continue its cargo
operations) required by any regulatory authority in connection with the
security, tracking and accounting functions of handling and transporting
small package shipments by air. Contractor shall comply with AA's
reasonable request of Contractor to implement new automation/technology
that is not required by regulation at AA's cost. For any
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new automation functions, AA will provide training to Contractor training
instructors per Section 10.02(b).
8. AA (or at AA's discretion, an Affiliate) will provide cargo training to
Contractor employees requiring such training on a space available basis at
no cost to Contractor. However, Contractor will pay the cost of its
employee travel and expenses while attending such training.
A. Each Contractor station manager shall receive approved AA cargo
training.
B. Each Contractor employee who bills, handles or processes small
packages shall receive approved AA cargo training.
C. If, in AA's sole discretion, Contractor experiences cargo service
failures, AA will so advise Contractor in writing. Within thirty (30)
days thereafter, Contractor shall discuss the situation with AA and
commence corrective action.
9 The provisions of Sections 6, 7, and 8 of this Exhibit H shall equally
apply to the carriage of Mail. However, Contractor bears the responsibility
of obtaining any training that is provided or required by the USPS for the
carriage of mail.
10. All revenues for Mail shall accrue to AA.
11. Contractor's compliance with the terms applying to the carriage of Mail in
this Schedule H shall be at no additional cost to AA.
12. Contractor shall not be responsible for service failures in the carriage of
Mail provided that identifiable service failure issues are promptly
addressed to prevent future failures.
13. Mail shall be handled and carried by Contractor (or an AA approved
subcontractor) at no additional charge to AA. Contractor will arrange all
necessary staffing and ground handling to pickup Mail from the origin
airport Mail facility and ensure such Mail is loaded on its flights. Mail
scheduled for delivery to the Mail facility at a destination of a flight
operated by the Contractor shall be delivered by the Contractor or its
subcontractor to the designated facility. Contractor shall also be
responsible to transfer Mail arriving on one of its flights to another
Contractor flight, third party American Connection operator, AE, or AA,
when the USPS has designated such a flight routing on the destination and
routing label affixed to the Mail container(s). At the STL Hub, such
transfer shall occur at a mutually agreeable Mail exchange point.
14. Contractor agrees to comply with all personnel screening requirements set
forth by the USPS, and all other provisions of the USPS Air System Contract
for transportation of Mail by air. The USPS Air System Contract shall be
made available by AA to Contractor in the event Contractor is not already a
signatory to the USPS offering. Contractor understands that any of its
subcontractors who are engaged in mail handling as any part of their duties
must comply with USPS personnel screening requirements in order to become
and remain eligible subcontractors for mail handling services.
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EXHIBIT I - AMERICAN CONNECTION SAFETY STANDARDS
1. Contractor shall comply with all applicable safety, operational,
maintenance, and personnel standards. These shall include all applicable
Federal Aviation Regulations; all DOD, DOT regulations; any appropriate
directives from the NTSB and all special regulatory mandates, such as
advisory circulars. Contractor shall coordinate with AA to ensure that
Contractor's compliance with such initiatives is not inconsistent with AA's
compliance (E.G. timing of placing defibrillators on board aircraft and
associated training).
2. AA is entitled to audit all relevant aspects of Contractor's operations and
facilities, including safety, flight operations, maintenance, cargo and
ground operations. These audits shall be of reasonable length, and shall be
in sufficient depth and detail to permit AA's auditors to properly certify
Contractor's safety and compliance with all applicable regulations. AA
shall notify Contractor of an intended audit with reasonable notice of the
audit dates. The audit shall not unreasonably disrupt Contractor's
operations.
3. AA and Contractor agree to fully comply with all provisions of the Family
Assistance Act of 1996 and any amendments thereto. AA and Contractor shall
maintain and file with the NTSB and DOT required plans which are fully
compliant with the provisions of the Act. Copies of these plans shall be
exchanged for effective planning purposes.
4. Within a reasonable time following the execution of this Agreement, AA and
Contractor shall meet to set forth, at AA's direction, each party's role,
responsibilities, and obligations in the event of an aviation disaster and
the activation of each carrier's family assistance plan. Both parties shall
accomplish all training and preparation necessary for their respective full
and complete compliance with every requirement under the Family Assistance
Act and for the coordinated response to a disaster involving either party,
as determined by AA.
* * *
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EXHIBIT J - PERFORMANCE STANDARDS, INCENTIVES AND PENALTIES
Pursuant to Article 1.02 (c) of this Agreement, both parties recognize the
importance of maintaining the highest level of product delivery and customer
satisfaction. Accordingly, Contractor agrees to adhere to the performance
standards outlined in this Exhibit J.
1. PERFORMANCE STANDARDS
Contractor agrees to use its best efforts to meet the target range
standards of completion, on-time performance, customer service performance
(complaints), and baggage delivery during each month of the Term of this
Agreement, as indicated in the following table:
<Table>
<Caption>
SERVICE CATEGORY [*] [*] [*] [*]
-----------------------------------------------------------------------------
Completion Factor [*] [*] [*] [*]
On-Time Arrivals [*] [*] [*] [*]
Corporate Complaint Ratio [*] [*] [*] [*]
PAWOB Ratio [*] [*] [*] [*]
</Table>
The above service categories shall be measured according to DOT definitions
and rules unless otherwise agreed by AA and Contractor. Contractor shall
make available to AA its statistics within 15 days of the close of each
calendar month and in accordance with Exhibit K of this Agreement. AA may
periodically audit Contractor statistics for accuracy and compliance to
definitions.
Contractor shall be held accountable to the PAWOB ratio performance
standards to the extent Contractor performs Ground Handling Duties at the
Hub.
The parties agree to review performance status upon delivery of the 15th
regional jet aircraft (as delineated in Exhibit C) to Contractor.
Contractor agrees to negotiate in good faith other performance criteria
that AA may request.
2. INCENTIVES/PENALTIES
A. BONUS LEVEL
In the event that Contractor meets the bonus level for any performance
category on average for a Performance Period, AA shall pay to
Contractor an amount equal to [*] per Revenue Passenger boarded during
the Performance Period for each performance category met or exceeded,
up to a maximum bonus of [*] enplaned Revenue Passenger.
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B. TARGET RANGE
Should Contractor fall within the target range levels for any
performance category on average for a Performance Period, there shall
be no payment due to/from Contractor for the performance category
measured.
C. PENALTY LEVEL
In the event that Contractor falls within or below the penalty level
for any performance category for a Performance Period, then Contractor
shall pay to AA a penalty of [*] per Revenue Passenger enplaned during
the Performance Period for each performance category within the
penalty level range on average for the Performance Period, for a
maximum penalty of [*] per Revenue Passenger enplaned. Mitigating
Factors shall be taken into account for the purposes of assessing
penalties pursuant to this Exhibit J, Section 2.C.
D. DEFAULT LEVEL
In the event that Contractor fails to achieve a level of performance
above the lesser of (i) the default level, or (ii) [*] In the event
that Contractor fails to meet the milestones of such approved plan,
then AA may terminate this Agreement pursuant to Section 7.02(c).
For each Performance Period in which Contractor's performance falls
within the Default Level provided in the chart above in any category,
[*]
E. MEASUREMENT AND PAYMENT PARAMETERS
(1) Measurement of the service categories shall be made on a
semi-annual basis, from January 1 - June 30, and from July 1 -
December 31.
(2) The first Performance Period measured shall be January - July
2002, and thereafter all Performance Periods shall follow
regularly.
(3) AA and Contractor shall measure Contractor's monthly and
semi-annual performance based upon the most recent information
pursuant to the provision of reports in Exhibit K of this
Agreement. Contractor and AA shall jointly share responsibility
for performance measurement and calculation of incentive or
penalty. Verification of performance shall be accomplished within
25 days following the end of every month and semi-annual
Performance Period as appropriate, unless otherwise agreed to by
the parties.
(4) Contractor shall be eligible to receive the bonus payment from
AA, or required to make its penalty payment to AA, within 60 days
of the conclusion of the end of each Performance Period. All
payments will be made by wire transfer between the parties.
EXHIBIT K - REPORTS
1. BOARDING INFORMATION. Information reports containing data covering boarding
and other information agreed to by the parties for Contractor's operations
hereunder will be produced
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from the close-out entries and provided by AA to Contractor, on a monthly
basis as soon as available.
2. QUARTERLY COST DATA. Contractor will furnish to AA in a Microsoft Excel(R)
spreadsheet format, within forty-five (45) days after the end of each
quarter, the following reports: DOT Form 41 Schedule P-1.2 (Statement of
Operations) and P-5.2 (Aircraft Operating Expenses by type). Contractor
agrees to provide this information to AA regardless of its obligation to
report to the DOT.
3. DAILY / MONTHLY OPERATIONS. Each day Contractor will furnish to AA
(Attention: Director - Planning) daily operating reports for the preceding
day which will include the number of revenue passengers boarded; the number
of denied boardings, in both raw numbers and percentage terms (using a base
of 1,000 passenger boardings); 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 On-Time Arrivals in
accordance with a format to be provided by AA or other mutually agreed upon
format. The foregoing flight departure, flight cancellation and on-time
performance response shall show a break down by equipment type.
The above report shall be furnished to AA by Contractor and will include
month-to-date numbers and an attachment describing Mitigating Factors, if
any.
4. PASSENGER IRREGULARITY REPORTS. Contractor shall provide a copy (Attention:
AA's Managing Director - Inflight) of any irregularity report involving a
passenger travelling on Contractor's Feeder Air Services that is deemed
reportable to any governing authority.
5. FURTHER INFORMATION. Additional information as may be reasonably requested
by AA shall be furnished by Contractor upon request.
* * *
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EXHIBIT L - AUTOMATION INTEGRATION
1. COMPUTER RESERVATIONS SYSTEM USE
A. INSTALLATION AND TRAINING
Subject to the provisions of this Agreement, and notwithstanding any
separate agreement between Contractor and SABRE, Contractor will
maintain a minimum complement (as designated by AA, consistent with
its standard automation installations) of terminals plus associated
equipment for printing messages, data, air tickets, boarding passes,
baggage tags, and the like ("AUTOMATION EQUIPMENT") at each of
Contractor's Feeder Air Service airport locations and selected
administrative locations. 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 AA, in its sole discretion, under terms and conditions to be
determined by AA on a case-by-case basis. AA will train Contractor
employees in accordance with Section 10.02 of this Agreement, as
applicable, in the proper use of SABRE and Automation Equipment. Where
permitted by AA, Contractor agrees to establish a training program
with internal instructors. Only qualified personnel who have
satisfactorily completed an AA prescribed training program will be
permitted to operate any Automation Equipment (hereinafter "DESIGNATED
USERS"). AA may, at its discretion, monitor or test the proficiency
level of Designated Users. If AA determines that their proficiency
levels are insufficient for the proper use of the Automated Equipment
or SABRE, then Contractor must arrange for its Designated Users to
undertake any further training which AA determines necessary to bring
such Designated Users to the desired proficiency level.
B. STANDARDS OF USE
(1) To maintain an effective interconnection between SABRE and the
Automation Equipment and to prevent misuse thereof, Contractor
agrees that SABRE and the Automation Equipment will be used and
operated (1) in strict accordance with operating instructions
provided by AA, and (2) solely for the performance of the
specific business functions designated by AA. 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 SABRE Manual. Contractor will maintain a
list of all employees and agents who have access to SABRE and
their assigned file number and passwords. AA may at any time deny
access to SABRE to any employee of Contractor if such employee is
found by AA to have engaged in unauthorized operation of SABRE or
abused the Automation Equipment. Contractor will take all
precautions necessary to prevent unauthorized operation or use of
SABRE and the Automation Equipment.
(2) Contractor will not alter or change the SABRE Services display as
provided by AA or its Affiliates without the consent of AA as
reflected in an amendment to this Agreement. Contractor may not
provide SABRE or its data base to any other person or entity
without the consent of AA as reflected in a written amendment to
this Agreement.
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(3) Except as expressly permitted in this Agreement or other written
agreement with AA, Contractor will not allow (or permit) SABRE
(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
AA.
(4) 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 SABRE.
2. TECHNOLOGY INTERFACE
AA agrees to provide the necessary support to ensure dynamic transfer of
operational data directly to Contractor's System Operational Control center
in Indianapolis, IN. [*]
AA may require Contractor to install and operate certain support programs
necessary for AA's internal reporting systems. In such case, AA shall bear
responsibility for purchase, installation, and training of Contractor
employees for use of such support programs.
* * *
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EXHIBIT M - TRAINING COSTS TABLE
[*]
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EXHIBIT N - ECONOMIC CONCESSIONS TABLE
Calculation of payment to contractor in the event of early termination for
certain economic concessions given to AA as a result of the September 11, 2001
terrorist attack on the United States (see note below).
[*]
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EXHIBIT O
[INTENTIONALLY OMITTED]
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EXHIBIT P - LEASE PRICING ASSUMPTIONS
[*]
Purchase Price*: [*]
Lease Term. [*]
Closing Date*: [*]
5-yr Generic
US Swap Rate*: [*]
Equity After-Tax
Yield*: [*]
Composite
Tax Rate: [*]
Lender's
Debt Rate*: [*]
CIRR Rate: [*]
Rent Structure: [*]
Average Monthly
Accounting Rent: [*]
Residual: [*]
Early Buyout Date: [*]
Early Buyout Price: [*]
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