EXHIBIT 10.4
SECOND AMENDMENT TO CODE SHARE AND REVENUE
SHARING AGREEMENT
THIS SECOND AMENDMENT TO CODE SHARE AND REVENUE SHARING AGREEMENT
("Amendment") is made and entered into as of October 23, 2002 (the "Effective
Date"), among AMERICA WEST AIRLINES, INC., a Delaware corporation ("AWA"), MESA
AIRLINES, INC., a Nevada corporation ("Mesa"), FREEDOM AIRLINES, INC., a Nevada
corporation ("Freedom") and AIR MIDWEST, INC., a Kansas corporation ("AM").
RECITALS:
A. AWA and Mesa are parties to that certain Code Share and
Revenue Sharing Agreement, dated to be effective February 1, 2001, as amended by
that certain First Amendment to Code Share and Revenue Sharing Agreement, dated
to be effective April 27, 2001 (the "Code Share Agreement"). All capitalized
terms used herein, but not otherwise defined herein, shall have the meaning
given to such terms in the Code Share Agreement.
B. The Code Share Agreement requires Mesa to provide certain
Flight Services and Other Services for AWA, pursuant to the terms and conditions
of the Code Share Agreement.
C. Mesa, with the prior written consent of AWA, is permitted to
subcontract the performance of certain Flight Services, Other Services and
related obligations under the Code Share Agreement to wholly owned subsidiaries
of Mesa Air Group, Inc. ("MAG"). Mesa desires to subcontract certain Flight
Services, Other Services and related obligations under the Code Share Agreement
to be performed using the CRJ Model 700s (the "CRJ 700 Subfleet") to Freedom, a
wholly owned subsidiary of MAG. AWA is willing to permit the subcontracting of
those certain Flight Services, Other Services and related obligations by Mesa to
Freedom on the terms and conditions of this Amendment.
D. Mesa, AWA and AM desire to confirm the subcontracting of
Flight Services performed by the Beech 1900 Subfleet.
NOW, THEREFORE, in consideration of the promises, covenants,
representations and warranties hereinafter set forth, and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
AWA, Mesa, Freedom and AM agree as set forth below.
AGREEMENTS:
1. Consent to Subcontracting. AWA, subject to the performance of
the terms and conditions of this Amendment, hereby consents to Mesa
subcontracting the performance of the Flight Services, Other Services and other
related obligations under the Code Share Agreement, which are to be performed by
Mesa using the CRJ 700 Subfleet (collectively, the "CRJ 700 Services"), to
Freedom. As a condition to such consent, Freedom shall at all times during the
term of the Code Share Agreement remain a wholly owned subsidiary of MAG.
2. Assumption. Freedom assumes and agrees to discharge, perform
and satisfy on behalf of Mesa all the obligations, liabilities and duties of
Mesa under the Code Share Agreement relating to or arising in connection with
the provision of the CRJ 700 Services in the time and manner required by the
Code Share Agreement, to the same extent Mesa is required to
perform and satisfy such obligations, liabilities and duties under the Code
Share Agreement, including, without limitation: (i) the hiring, training,
employment and maintaining of employees required to provide the CRJ 700 Services
in accordance with Section 2.4 of the Code Share Agreement; (ii) maintaining the
service quality and levels when providing the CRJ 700 Services as required by
Section 2.5 of the Code Share Agreement; (iii) maintenance and repair of the CRJ
700 Subfleet in accordance with Paragraph 2.6.1 of the Code Share Agreement;
(iv) complying with the fleet configuration, cleanliness and appearance
requirements for the CRJ 700 Subfleet contained in Section 2.8 of the Code Share
Agreement; (v) complying with the charter requirements of Section 3.5 of the
Code Share Agreement; (vi) complying with all requirements contained in Section
4 of the Code Share Agreement (including making the disclosures and permitting
the reviews/audits permitted by Sections 4.4 and 4.5); (vii) maintaining the
minimum performance criteria in connection with the CRJ 700 Services, as
required by Section 5 of the Code Share Agreement (including, without
limitation, maintaining all records required by Section 5.5); (viii) providing
indemnification and defense of AWA pursuant to Sections 10.2 and 10.4 of the
Code Share Agreement for Damages arising out of, resulting from or incurred in
connection with (a) the provision of the CRJ 700 Services; (b) Freedom's breach
of the Code Share Agreement in providing the CRJ 700 Services; (c) damage or
destruction of property or any person, or injury or death of any person, caused
by, arising out of or in connection with any act or omission of Freedom, its
employees, agents, licensees, contractors, suppliers, officers or directors; (d)
taxes, impositions, assessments or other governmental charges incurred by
Freedom in providing the CRJ 700 Services; and (e) passenger complaints or
claims by passengers using the CRJ 700 Services; (ix) providing and maintaining
the insurance required by Section 10.5 of the Code Share Agreement; (x)
complying with the confidentiality requirements of Section 11 of the Code Share
Agreement; (xi) maintaining the records and reports required by and permitting
all reviews and audits permitted by Sections 7.5.3, 7.8 and 14 of the Code Share
Agreement; and (xii) the payment of taxes in accordance with Section 12 of the
Code Share Agreement.
3. AWA Obligations. Subject to Section 5 below, AWA agrees that
it shall perform and satisfy all of its obligations, liabilities and duties
under the Code Share Agreement relating to or arising in connection with the CRJ
700 Services for the benefit of both Mesa and Freedom in the time and manner
required by the Code Share Agreement, including, without limitation: (i) the
obligations and duties under Sections 3.1, 3.2 and 3.3 of the Code Share
Agreement regarding flight management, marketing of the CRJ 700 Services, and
airport services related to the CRJ 700 Services; (ii) providing indemnification
and defense of Freedom pursuant to Sections 10.3 and 10.4 of the Code Share
Agreement to the same extent AWA provides indemnification and defense to Mesa;
(iii) complying with the confidentiality requirements of Section 11 of the Code
Share Agreement; and (iv) providing and maintaining the insurance required by
Section 10.5.10 of the Code Share Agreement. Any failure, breach or default by
AWA to fulfill its liabilities, obligations and duties with respect to the CRJ
700 Services in accordance with the Code Share Agreement shall be a breach by
AWA of the Code Share Agreement entitling Mesa to pursue all rights and remedies
of Mesa under the Code Share Agreement.
4. No Novation. The CRJ 700 Services shall be deemed to be part
of "Flight Services" to be performed by Mesa in accordance with the Code Share
Agreement. The CRJ 700 Services and Flights operated by Freedom shall be
included in "Flight Services", "Schedules" and "Flights" for purposes of
calculating all of the performance standards set forth in Sections 5 and 8.2 of
the Code Share Agreement. AWA's consent to the subcontracting of the CRJ 700
Services to Freedom and Freedom's assumption of the obligations on Mesa's behalf
2
does not release, discharge or relieve Mesa or AWA from any liability,
obligations and duties under the Code Share Agreement to the extent they apply
to the CRJ 700 Services. Mesa and AWA shall remain liable and obligated for all
their respective liabilities, obligations and duties of Mesa under the Code
Share Agreement as they relate to the CRJ 700 Services. Freedom is deemed to be
a subcontractor of Mesa and Mesa shall cause Freedom's performance of the CRJ
700 Services to comply with and satisfy all of the relevant terms and conditions
of the Code Share Agreement and cause Freedom to comply with all recordkeeping,
reporting and disclosures required by the Code Share Agreement associated with
the CRJ 700 Services. Any failure, breach or default by Freedom to perform the
CRJ 700 Services in accordance with the Code Share Agreement shall be a breach
by Mesa of the Code Share Agreement entitling AWA to pursue all rights and
remedies against Mesa and Freedom permitted by the Code Share Agreement.
5. Payments. Until Mesa and AWA agree to the terms for making
payments directly to Freedom, all payments for the use and operation of the CRJ
700 Subfleet and the provision of the CRJ 700 Services to be made by AWA under
the Code Share Agreement shall be paid to Mesa in the same manner and time as
provided in Section 7 of the Code Share Agreement. For the purpose of
determining Actual Costs, Guaranteed Non-Maintenance Costs and Guaranteed
Maintenance Costs for the CRJ 700 Services and CRJ 700 Fleet, the costs and
expenses incurred by Freedom or Mesa, as the case may be, shall be the costs
used for determining amounts due by AWA. Until Mesa and AWA agree to the terms
for making payments directly to Freedom: (i) all revenue sharing required to be
paid pursuant to Paragraph 7.6 of the Code Share Agreement shall be paid by AWA
to Mesa; (ii) AWA shall have no obligation or duty to make any payments directly
to Freedom; and (iii) Mesa shall pay all sums payable to Freedom for the
operation of the CRJ 700 Subfleet and CRJ 700 Services pursuant to a separate
agreement to which AWA is not a party.
6. Term. Freedom may commence providing the CRJ 700 Services upon
Freedom's receipt of certification as a passenger airline from the Department of
Transportation authorizing Freedom to engage in the interstate air
transportation of persons, property and mail in the United States, its
territories and possessions. Mesa's subcontracting of the CRJ 700 Services to
Freedom shall terminate upon the expiration or termination of the Code Share
Agreement.
7. Air Midwest. AM, a wholly owned subsidiary of MAG, is
executing this agreement to confirm and acknowledge its assumption of and
agreement to perform as a subcontract of Mesa the AM Services as provided in and
in accordance with Section 2.1 of the Code Share Agreement.
8. Effect. Except as set forth in this Amendment, all of the
terms and conditions of the Code Share Agreement remain in full force and
effect.
AMERICA WEST AIRLINES, INC.
By: /s/ J. Scott Kirby
---------------------------------
Name: J. Scott Kirby
Title: EVP Sales & Marketing
MESA AIRLINES, INC.
By: /s/ Michael Lotz
---------------------------------
Name: Michael Lotz
Title: President
FREEDOM AIR, INC.
By: /s/ Michael Ferverda
---------------------------------
Name: Michael Ferverda
Title: President & General Manager
AIR MIDWEST, INC.
By: /s/ George Murnane III
---------------------------------
Name: George Murnane III
Title: Treasurer