EX-10.1.1 2 mesa-ex1011_7.htm EX-10.1.1 mesa-ex1011_7.htm

Exhibit 10.1.1

 

Certain confidential information contained in this document, marked by brackets, has been omitted because it (i) is not material and (ii) would be competitively harmful if publicly disclosed.

 

Execution Version

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AMENDED AND RESTATED

CAPACITY PURCHASE AGREEMENT

between

AMERICAN AIRLINES, INC.

and

MESA AIRLINES, INC.

 

 

 

 

EFFECTIVE AS OF JANUARY 1, 2021

 

 

 

 

[***]=[CONFIDENTIAL PORTION HAS BEEN OMITTED BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED]

 


 

 

Execution Version

 

TABLE OF CONTENTS

 

ARTICLE I. DEFINITIONS

2

 

 

ARTICLE II. CAPACITY PURCHASE, REVENUES AND OTHER SERVICES

2

2.01

 

Capacity Purchase

2

2.02

 

Flight Related Revenues

2

2.03

 

Non-Revenue Pass Travel

3

2.04

 

Ground Handling

3

 

 

 

 

ARTICLE III. USE OF COVERED AIRCRAFT

3

3.01

 

Use of Covered Aircraft

3

3.02

 

Spare Aircraft; Substitute Aircraft; Damage to Covered Aircraft

4

3.03

 

Aircraft Unavailability

6

3.04

 

Exclusivity

7

3.05

 

Flight Designator Codes and Codeshare Term

7

3.06

 

Flight Dispatch

8

3.07

 

Maintenance of Covered Aircraft

8

3.08

 

Compliance with Other Terms of Related Agreements

10

3.09

 

Event of Loss

10

 

 

 

 

ARTICLE IV. SERVICE STANDARDS, PERFORMANCE MEASUREMENT AND TRAINING

10

4.01

 

Crews and Other Personnel

10

4.02

 

Governmental Regulations

10

4.03

 

Quality of Service

11

4.04

 

Access and Use of American Systems

13

4.05

 

Data Security

14

4.06

 

Processing and Adjudicating Customer or Passenger Complaints

15

4.07

 

Right to Inspect Aircraft and Service Conditions

15

4.08

 

Controllable Cancellation Codes and Controllable On Time Departure Codes

16

4.09

 

Data for Performance Measurements

17

4.10

 

Catering Products and Catering Services

17

 

 

 

 

ARTICLE V. SAFETY

17

5.01

 

Incidents or Accidents

17

5.02

 

Accident Reports

18

5.03

 

International Air Transport Association Operational Safety Audit

18

5.04

 

Emergency Assistance Agreement

18

 

 

 

 

ARTICLE VI. OTHER OBLIGATIONS OF CONTRACTOR

18

6.01

 

FAA or DOT Certification Suspension or Revocation

18

6.02

 

Fuel Efficiency Program

18

6.03

 

Use of Approved Marks and Copyrights

18

6.04

 

Ownership and Use of Data

21

6.05

 

American’s AAdvantage® Program

22

6.06

 

Periodic Reports

22

6.08

 

Liquor Licenses for Covered Aircraft

23

6.09

 

Operation of Covered Aircraft

23

6.11

 

Review of Insurance Coverage

24

6.12

 

Average Monthly Utilization

24

6.13

 

Reduction of Fixed Costs for Schedule Shortfall

25

6.14

 

Late Reduced Crew Estimates

25

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6.15

 

Intentionally Omitted

26

6.16

 

Resource Allocation

26

6.17

 

Intentionally Omitted

26

6.18

 

Actions during a Force Majeure Event or Labor Dispute

26

 

 

 

 

ARTICLE VII. CONTRACTOR’S COMPENSATION

28

7.01

 

Base and Incentive Payments

28

7.02

 

Costs and Expenses

28

7.03

 

Cost Savings

28

 

 

 

 

ARTICLE VIII. USE OF FACILITIES

28

8.01

 

Facilities

28

8.02

 

Conditions of Use for American Facilities

29

8.03

 

Replacement and Termination of Facilities Use

29

8.04

 

Facilities Related Insurance

29

8.05

 

Subleases

30

 

 

 

 

ARTICLE IX. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS

30

9.01

 

Contractor’s Representations and Warranties

30

9.02

 

American Representations and Warranties

31

 

 

 

 

ARTICLE X. INSURANCE

32

10.01

 

Minimum Insurance Coverage

32

10.02

 

Endorsements

33

 

 

 

 

ARTICLE XI. INDEMNIFICATION

34

11.01

 

CONTRACTOR’S INDEMNIFICATION OF AMERICAN INDEMNIFIED PARTIES

34

11.02

 

AMERICAN INDEMNIFICATION OF CONTRACTOR

35

11.03

 

Procedure for Indemnification Claims

36

11.04

 

Employer’s Liability and Workers’ Compensation

37

 

 

 

 

ARTICLE XII. TERM AND TERMINATION

38

12.01

 

Term

38

12.02

 

Termination and Withdrawal Rights

38

 

 

 

 

ARTICLE XIII. INTENTIONALLY OMITTED

44

13.01

 

Intentionally Omitted

44

 

 

 

 

ARTICLE XIV. MISCELLANEOUS

45

14.01

 

Notices

45

14.02

 

Binding Effect and Assignment

46

14.03

 

Amendment and Modification

47

14.04

 

Waiver

47

14.05

 

Interpretation

47

14.06

 

Confidentiality and Public Communications

47

14.07

 

Cooperation with Respect to Reporting

48

14.08

 

Right of Set-off

48

14.09

 

Counterparts

49

14.10

 

Severability

49

14.11

 

GOVERNING LAW

49

14.12

 

Entire Agreement; Conflicts with this Agreement; Amendment and Restatement

49

14.13

 

Remedies Cumulative

50

14.14

 

Further Assurances

50

14.15

 

No Third Party Beneficiaries

50

14.16

 

Relationship of the Parties

51

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14.17

 

Jurisdiction

51

14.18

 

WAIVER OF JURY TRIAL

52

14.19

 

LIMITATION ON DAMAGES

52

14.20

 

Equitable Remedies

53

14.21

 

Survival of Certain Obligations

53

 

SCHEDULES AND EXHIBITS

 

 

 

 

SCHEDULE 1:

 

COVERED AIRCRAFT

SCHEDULE 2:

 

SCHEDULING AND OPERATING RESTRICTIONS ON AIRCRAFT

SCHEDULE 3:

 

PASS THROUGH COSTS, CONTROLLABLE COSTS AND AMERICAN

 

 

ABSORBED EXPENSES

SCHEDULE 4:

 

FUEL EFFICIENCY PROGRAM

SCHEDULE 5:

 

COMPENSATION AND BONUSES AND REBATES

SCHEDULE 6:

 

INTENTIONALLY OMITTED

SCHEDULE 7:

 

ACCOUNTING AND AUDITING PROCEDURES AND PAYMENT TERMS

SCHEDULE 8:

 

CONTROLLABLE CANCELLATION CODES

SCHEDULE 9:

 

CONTROLLABLE ON TIME DEPARTURE CODES

SCHEDULE 10:

 

INTENTIONALLY OMITTED

SCHEDULE 11:

 

AMERICAN FACILITIES

SCHEDULE 12:

 

INTERIOR DESIGN OF COVERED AIRCRAFT (INCLUDING LAYOUT FOR PASSENGER ACCOMMODATION)

SCHEDULE 13:

 

CABIN INTERIORS PROGRAM COMPONENTS

 

 

 

 

 

 

EXHIBIT A:

 

DEFINITIONS

EXHIBIT B:

 

STANDARDS OF SERVICE

EXHIBIT C:

 

TRAINING

EXHIBIT D:

 

AMERICAN’S SECURITY POLICIES AND PROCEDURES

EXHIBIT E:

 

STANDARDS OF FACILITIES USE

EXHIBIT F:

 

CREW FORECAST TEMPLATE

 

 

[***]=[CONFIDENTIAL PORTION HAS BEEN OMITTED BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED]

 


 

 

Execution Version

AMENDED AND RESTATED

CAPACITY PURCHASE AGREEMENT

This AMENDED AND RESTATED CAPACITY PURCHASE AGREEMENT (as amended,

modified or supplemented from time to time, this “Agreement”), is dated as of November 19, 2020 and made effective as of January 1, 2021 (the “Effective Date”), between AMERICAN AIRLINES, INC., a Delaware corporation (together with its successors and permitted assigns, “American”) and MESA AIRLINES, INC., a Nevada corporation (together with its permitted successors and assigns, “Contractor”).

RECITALS:

WHEREAS, American and Contractor entered into that certain Code Share and Revenue Sharing Agreement, dated as of March 20, 2001, but effective as of February 1, 2001 (as amended, supplemented or otherwise modified prior to the Effective Date, the “Existing CPA”);

WHEREAS, American and Contractor desire to establish the terms by which Contractor will continue to provide Regional Airline Services utilizing certain regional aircraft on behalf of American and the Parties desire to enter into this Agreement to amend and restate the Existing CPA in its entirety on the terms and subject to the conditions set forth herein;

WHEREAS, the Parties are willing to amend and restate the Existing CPA on the terms and subject to the conditions set forth herein (it being understood that the Existing CPA shall govern the relationship between the Parties prior to the Effective Date);

WHEREAS, American holds a certificate of public convenience and necessity issued pursuant to certain 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;

WHEREAS, Contractor holds a certificate of public convenience and necessity issued pursuant to certain federal transportation statutes authorizing it to engage in air transportation of persons, property and mail, and is a regional air carrier providing scheduled domestic air transportation;

WHEREAS, Contractor is willing to provide, on behalf of American under American’s brands, the Regional Airline Services with respect to the Covered Aircraft as set forth herein, and American and Contractor desire to establish the terms by which Contractor will provide such Regional Airline Services;

WHEREAS, American and Contractor have executed that certain Amended and Restated Regional Airline Services Emergency Assistance Agreement dated as of August 6, 2018 (as amended by that certain Amendment No. 1 to Amended and Restated Regional Airline Services Emergency Assistance Agreement dated as of the date hereof, and as further amended, supplemented or otherwise modified in accordance with the provisions thereof, the “Emergency Assistance Agreement”), which forms a part of this Agreement for all purposes; and

WHEREAS, all references to specific Schedules and Exhibits in this Agreement shall be those certain Schedules and Exhibits attached hereto, which shall be deemed incorporated herein by reference and a part of this Agreement for all purposes.

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, American, on the one hand, and Contractor, on the other hand, agree as follows:

 

 

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ARTICLE I. DEFINITIONS

Capitalized terms used in this Agreement (including, unless otherwise defined therein, in the Schedules and Exhibits to this Agreement) shall have the meanings set forth in Exhibit A hereto.

ARTICLE II.

CAPACITY PURCHASE, REVENUES AND OTHER SERVICES

2.01Capacity Purchase. Subject to the terms and conditions of this Agreement and the Related Agreements, American shall purchase during the Term hereof all of the capacity of the Covered Aircraft and Contractor shall provide all of the capacity of each Covered Aircraft. Contractor shall use the Covered Aircraft, solely for, or as directed by, American in connection with Regional Airline Services and any other flights operated by Contractor or any of its Affiliates at the request of American pursuant to the terms of this Agreement and, without limiting the foregoing, in accordance with the following:

(a)Fares, Rules and Seat Inventory. American shall in its sole discretion establish and publish all fares, fare rules, related tariff rules, and other information for all seats on the Covered Aircraft. Contractor shall not publish any fares, fare rules, related tariff rules (other than as prepared or authorized by American), or other information for the Covered Aircraft. In addition, American shall have complete and exclusive control in its sole discretion with respect to the Covered Aircraft relating to all (i) seat inventories, including all positive space and “space available” non-revenue seating, and pass travel policies, subject to Section 2.03 and (ii) revenue management decisions, including pricing, overbooking levels, discount seat levels and allocation of seats among various fare categories.

(b)Flight Schedules. American shall have the right to schedule all CAATS (pursuant to the scheduling procedures set forth in Schedule 2) and Contractor shall operate the Covered Aircraft according to such schedule. Subject to the terms and conditions hereof, American shall in its sole discretion establish and publish all schedules for the Covered Aircraft, including determining the city pairs served, frequencies and timing of scheduled arrivals and departures of Scheduled Flights; provided that, unless otherwise provided for in this Agreement, all such schedules shall be subject to the scheduling procedures set forth in Schedule 2.

(c)Hubs. The operations for each Covered Aircraft shall be principally based at, and each such Covered Aircraft shall operate primarily from the Hubs; provided that at any time, [***] days’ prior Notice to Contractor, American shall have the right and option from time to time to specify that any Covered Aircraft will be principally based or primarily operated by Contractor at any other Hub or an Alternative Hub. In such event, Contractor shall take all action necessary to relocate the Covered Aircraft to such other Hub or Alternative Hub and once any Covered Aircraft has relocated, the term “Hub” as used herein shall include the Alternative Hub at which any Covered Aircraft has been relocated.

2.02Flight Related Revenues. Contractor acknowledges and agrees that American shall be entitled to and shall receive all revenues (including any consideration received from any interline and non-revenue travel agreements) resulting from the sale or issuance of passenger tickets associated with the Covered Aircraft and all other sources of revenue associated with the Covered Aircraft and its use and operation, including revenues relating to (a) any tickets sold under the designator code of a Third Party (such as an American codeshare partner); (b) transportation of cargo or mail; (c) ancillary passenger service charges, including any baggage charges, food, beverage (including revenues relating

 

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2

 

 


 

 

to the sale of beer, wine, liquor or any other alcoholic beverages), unaccompanied minor fees and duty free services; (d) guarantees, incentive payments or cost abatements from Governmental Authorities or other Third Parties in connection with scheduling flights to an airport or locality; (e) ticket change fees; and (f) pass travel and other non-revenue or reduced rate travel charges. All such revenues shall be the sole property of, and shall belong to, American, and if received by Contractor, shall be promptly remitted by Contractor to American. American shall perform all revenue accounting and management functions in connection with all such revenues. The parties hereto acknowledge and agree that all flight related revenue to which American is entitled hereunder (including under this Section 2.02) is independent of the non-exclusive license of Approved Marks set forth in Section 6.03(b) hereof.

2.03Non-Revenue Pass Travel. American shall have the sole right and option to implement and oversee all pass travel and other non-revenue or reduced rate travel on any Scheduled Flight in accordance with its policies and procedures as in effect and adopted by American from time to time, in its sole discretion.

2.04Ground Handling. American shall provide, or arrange for another Person to provide, all ground handling and related services with respect to the operation of the Covered Aircraft, including, but not limited to: (a) all gate and ticket counter check in activities, (b) all baggage handling, (c) all cargo handling, if any, (d) all passenger enplaning/deplaning services, including but not limited to sky cap, if any, and wheel chair services, (e) all aircraft loading/unloading services, including but not limited to airside busing (as necessary), (f) all passenger ticketing, (g) all aircraft cabin cleaning and related cleaning supplies, other than in connection with (i) routine clean-up and straightening between Scheduled Flights and (ii) providing Disinfecting Services, (h) all jet bridge maintenance (where applicable), (i) all security functions, (j) all janitorial services in connection with ground handling and related services with respect to the operation of the Covered Aircraft and (k) all deicing services. In connection therewith, American shall select in its sole discretion any Person to perform such services with respect to the operation of the Covered Aircraft without the consent or approval of Contractor.

ARTICLE III.

USE OF COVERED AIRCRAFT

 

3.01

Use of Covered Aircraft.

(a)Implementation Date. With respect to the Covered Aircraft under this Agreement as of the Effective Date, Contractor shall make such Covered Aircraft available for operations and the performance of Regional Airline Services on and after the Effective Date as contemplated by this Agreement. For Covered Aircraft added to this Agreement following the Effective Date, Contractor shall make the Covered Aircraft available for operations and the performance of Regional Airline Services at the Hubs as contemplated by this Agreement on or before the Implementation Date as noted on Schedule 1 attached hereto (the Implementation Date”), unless otherwise Consented to by American and Contractor; it being understood that the date such Covered Aircraft commences providing Regional Airline Services shall be deemed its Implementation Date. The Parties hereto agree that Schedule 1 hereto may be amended or updated from time to time as set forth in this Agreement.

(b)Use for Scheduled Flights. Except as American may otherwise Consent in its sole discretion, the Covered Aircraft (i) may only be used by Contractor to provide Scheduled Flights and (ii) subject to Sections 3.01(c) and 3.01(d), may not be used by Contractor for any other purpose, including flight operations for any other airline or flight operations or activities on

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3

 

 


 

Contractor’s own behalf. Contractor shall operate international flights as may be scheduled by American in its sole discretion, subject to the operational limitations of the Covered Aircraft and

obtaining necessary DOT approvals and required operating authorities and licenses, with the same Base Compensation, Pass Through Costs and other amounts to be paid to Contractor as applicable to domestic Scheduled Flights, and according to the same scheduling requirements as set forth in Schedule 2 hereof that apply to domestic city-pairs (as such scheduling requirements may be adjusted by American in its sole discretion to accommodate an international flight).

(c)Ad Hoc Charter Flights. If requested by American and subject to the terms of such request, Contractor shall use CAATS for charter flights not included in the applicable Final Monthly Schedule for the month of such flight and American shall specify the terms of such use.

(d)Maintenance/Ferry Flights. Contractor shall be entitled to use Covered Aircraft for the purpose of Maintenance/Ferry Flights. [***]

 

3.02

Spare Aircraft; Substitute Aircraft; Damage to Covered Aircraft.

(a)Spare Aircraft. Contractor shall at all times have available for the operation of Scheduled Flights or any charter flights pursuant to Section 3.01(c) additional CRJ-900 aircraft, in the amount set forth in this Section 3.02(a), which aircraft shall be a substitute, when necessary or required, for any other Covered Aircraft in the event of any operational issues or daily Line Maintenance requirements for any other Covered Aircraft (the “Spare Aircraft”). The number of Spare Aircraft to be designated to provide Scheduled Flights shall be a ratio of [***] Spare Aircraft for every [***] Covered Aircraft, but excluding from the calculation of such ratio any Spare Aircraft then providing Scheduled Flights (i.e., the Covered Aircraft immediately following the [***] Covered Aircraft, as set forth on Schedule 1, will be designated as Spare Aircraft). If the number of Covered Aircraft (excluding any Spare Aircraft) is not a multiple of [***], then American may determine in its reasonable discretion whether any additional Spare Aircraft shall be made available by Contractor; provided, however, that the Parties agree that

(i) if the number of Covered Aircraft is less than [***], then no Spare Aircraft will be designated, (ii) if the number of Covered Aircraft is [***] or more but less than [***], then [***] Spare Aircraft will be designated, (iii) if the number of Covered Aircraft is [***] or more but less than [***], then [***] Spare Aircraft will be designated; and (iv) if the number of Covered Aircraft is [***] or more and less than [***], then [***]) Spare Aircraft will be designated (provided that American, in its sole discretion, may agree to add an additional Spare Aircraft in the event of clause (ii) or (iii)). The Spare Aircraft shall be deemed Covered Aircraft at all times when operating Scheduled Flights or otherwise providing Regional Airline Services hereunder and must (A) be at all times in conformity with the requirements of this Agreement; (B) painted in a livery approved by American; (C) include American’s in-flight materials, in-flight publications, food and beverage products, advertising and paper goods; (D) be in the Interior Design designated by American; it being understood that, without limiting the Cabin Interiors Program and Section 4.03(e)(i), as soon as reasonably possible (but in no event later than [***]) and at all times during the Term thereafter, the Spare Aircraft shall satisfy the Interior Design requirements set forth on Schedule 12 (as such Schedule 12 may be initially provided and then subsequently modified by American in its sole discretion upon Notice to Contractor, in which case Schedule 12 shall automatically be deemed to be amended, modified and restated to reflect such modifications); (E) shall not bear logos, service marks or other symbols of an air carrier other than American; and (F) be in a seat configuration approved by American. The Spare Aircraft shall also be available at American’s request, subject to Contractor’s consent, to operate any other flight as designated by American on behalf of American or any of its Affiliates, and in such case (x)

 

 

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Contractor shall receive compensation for [***] and (y) such flight shall count towards any calculation of Controllable On Time Departures and Controllable Completion Rate, in all cases, as if such flight were a Scheduled Flight or any charter flight as otherwise provided in Section 3.01(c) hereof.

(b)Substitute Aircraft. Without limiting Contractor’s obligation to provide Spare Aircraft, in the event that a Covered Aircraft is not available for Regional Airline Services as a direct result of mechanical or service-related issues, Contractor may, upon prior Consent from American, temporarily substitute up to [***] such Covered Aircraft with up to [***] CRJ-900 aircraft (each a “Substitute Aircraft”). To request American’s prior Consent to any Substitute Aircraft, Contractor shall deliver a Notice to American that states the tail number of the Covered Aircraft to be substituted, the serial numbers of the Engines related thereto and the mechanical or service-related issue resulting in the requested substitution. American shall be under no obligation to Consent to such request for a Substitute Aircraft. Criteria that American may consider when determining whether to provide its Consent to a Substitute Aircraft may include the following (all as determined by American in its sole discretion): (i) no interruption of Regional Airline Services shall result from the substitution of such Substitute Aircraft; (ii) the Substitute Aircraft shall be of equal or superior performance capability and characteristics as the Covered Aircraft being substituted (prior to the substituted Covered Aircraft’s mechanical or service-related issue); (iii) [***] (iv) the Substitute Aircraft shall be in the same seat configuration as the Covered Aircraft being substituted; and (v) the Substitute Aircraft shall otherwise meet the requirements of this Agreement. Upon American’s Consent to such Substitute Aircraft, the terms and conditions of this Agreement applicable to the Covered Aircraft being substituted shall apply and be in full force and effect with respect to such Substitute Aircraft, and such Substitute Aircraft shall be deemed a Covered Aircraft at all times while providing Regional Airline Services. If the mechanical or service-related issue giving rise to such substitution is resolved, such Substitute Aircraft shall cease providing Regional Airline Services (once the Covered Aircraft being substituted recommences providing Regional Airline Services). [***]

(c)Damage to Covered Aircraft. Without limiting Section 3.02(a), Section 3.02(b), Section 3.07(c), Section 3.09 or Contractor’s obligations under this Agreement (including its obligation to provide Spare Aircraft as set forth in this Agreement), if a Covered Aircraft is not able to provide Regional Airline Services for a significant period of time as determined by American (the Parties hereby acknowledge that any time period greater than [***] shall be deemed a significant period of time) as a direct result of significant physical damage to such Covered Aircraft that was directly caused by American or an American Agent, then following Contractor’s request the Parties shall meet in good faith and elect one of the following options: (x) an adjustment to the upcoming schedules of Scheduled Flights or (y) Contractor shall substitute such Covered Aircraft with a Substitute Aircraft, in either case pursuant to the terms of this Section 3.02(c). If the Parties, each acting reasonably and in good faith, fail to reach an agreement regarding which of the foregoing options to select within [***] days of such meeting, then American shall select one of the foregoing options in its discretion.

(i)If the option in clause (x) of the foregoing Section 3.02(c) above is selected, then the Parties shall mutually agree upon such adjustments to the Final Monthly Schedule as in effect at such time.

(ii)If the option in clause (y) of the foregoing Section 3.02(c) above is selected, then the Substitute Aircraft shall satisfy all of the criteria set forth in clauses (i) through (v) of Section 3.02(b) and the terms and conditions of this Agreement applicable

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to the damaged Covered Aircraft that is being substituted shall apply and be in full force and effect with respect to such Substitute Aircraft, and such Substitute Aircraft shall be deemed a Covered Aircraft at all times while providing Regional Airline Services. The applicable Substitute Aircraft shall cease providing Regional Airline Services once the Covered Aircraft being substituted recommences providing Regional Airline Services. [***]

(iii)If the applicable damaged Covered Aircraft is not able to provide Regional Airline Services for over [***], then, American may elect to adjust the applicable Final Monthly Schedule [***].

(iv)Upon American’s request, Contractor shall promptly provide information reasonably requested by American regarding the status of the damaged Covered Aircraft, including dates for repairs and when such Covered Aircraft is projected to return to providing Regional Airline Services.

 

3.03

Aircraft Unavailability.

(a)Other Operator. American shall have the right and option at its sole discretion to cause an operator other than Contractor to operate a Scheduled Flight. If American determines that an operator other than Contractor will operate a Scheduled Flight, then to the extent American is able, it shall use commercially reasonable efforts to provide prior notice to Contractor thereof (but failure to provide such notice shall not prejudice or impact American’s rights under this Agreement and American shall not have any liability for any failure to provide such notice) and Contractor may provide evidence to American, in form and substance satisfactory to American in its sole discretion, of Contractor’s ability to provide such Scheduled Flight.

(b)Compensation. If an operator other than Contractor operates a Scheduled Flight, then Contractor shall not receive any of the compensation from American for such Scheduled Flight (including, but not limited to Block Hours, Flight Hours or departures, or reimbursement of any costs or expenses).

(c)Controllable On Time Departures and/or Controllable Completion Rate. If a Covered Aircraft is not available to operate a Scheduled Flight, and American is able to locate an operator other than Contractor to operate such flight, and that flight is canceled or delayed, then

 

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that flight shall count as a “Scheduled Flight” for purposes of any calculation of Controllable On Time Departures and/or Controllable Completion Rate as if such flight was provided by Contractor. For the avoidance of doubt, if that flight is not canceled or delayed, then it shall not count towards the calculation of Controllable On Time Departures and/or Controllable Completion Rate.

(d)Remedies. American shall have all applicable remedies, including, without limitation, under any Related Agreement or applicable law, relating to Contractor’s failure to complete a Scheduled Flight.

 

3.04

Exclusivity.

(a)Restricted Airports. Notwithstanding anything herein to the contrary, subject to Contractor’s existing contractual code share or capacity purchase agreement as in effect on the Effective Date, if Contractor provides regional airline flight services for American pursuant to a capacity purchase or similar arrangement (including this Agreement) for more than [***] aircraft, then Contractor shall not operate more than [***] departures per calendar day (taken on average over a month, but excluding any departures being operated by Contractor as of the Effective Date) for any Third Party into or out of any Hub. One of the Parties may request that both Parties meet (whether in person, telephonically or through other electronic means) to discuss the terms and conditions of this Section 3.04(a) and any desired amendments thereto and the Parties shall make commercially reasonable efforts to meet to discuss promptly following such request.

(b)Contractor Code Flight Restrictions. Notwithstanding anything herein to the contrary, and except as otherwise Consented to by American in its sole discretion, during the Term, Contractor shall not operate any flights under its own flight designator code into or out of any Hub.

 

3.05

Flight Designator Codes and Codeshare Term.

(a)All Regional Airline Services shall be operated under the name American Eagle” or such other name, incorporating an Approved Mark, as may be determined by American in its sole discretion and specified by American to Contractor, from time to time.

(b)All Scheduled Flights shall be identified by an “AA*” flight designator code (or such other flight designator codes as may be assigned by American in its sole discretion), as appropriate, in: (i) American, Contractor, and Third Party computer reservations systems, including Internet reservation systems; (ii) American timetables; (iii) airport flight information displays; and

(iv)passenger tickets and like media distributed to or accessed by travel agents, other airlines or the public (all Scheduled Flights that display the “AA*” flight designator code or such other flight designator codes as may be assigned by American from time to time in its sole discretion are referred to herein as “AA Flights”).

(c)To the extent Contractor subsequently discloses or identifies the AA Flights to the public as flights operated by Contractor, Contractor shall do so only in the following ways: (i) a symbol and/or text may be used in timetables and computer reservation systems indicating that AA Flights are operated by Contractor; (ii) to the extent reasonable and necessary, messages on airport flight information displays may identify Contractor as the operator of flights shown as AA Flights; and (iii) in any other manner prescribed and/or required by any laws, rules or regulations of a Governmental Authority.

(d)In all cases, the conditions of carriage with regard to passengers on AA Flights will be between a passenger and American.

 

 

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(e)Contractor agrees to operate all Scheduled Flights using the American flight designator code and flight numbers assigned by American, or such other flight designator codes and flight numbers as may be assigned by American (to accommodate, for example, an American codeshare partner). American shall have the exclusive right to determine which other airlines (“Codeshare Airlines”), if any, may place their two-letter designator codes on flights operated by Contractor with Covered Aircraft and to enter into agreements with such Codeshare Airlines with respect thereto. Contractor will cooperate with American and any Codeshare Airlines, as requested by American, with respect thereto (including, without limitation, making necessary governmental filings and entering into reasonably acceptable agreements with such Codeshare Airlines).

3.06Flight Dispatch. Contractor shall be solely responsible for, and American shall have no obligations or duties with respect to, the Dispatch of Scheduled Flights, any charter flights pursuant to Section 3.01(c), any Maintenance/Ferry Flights; provided that Contractor shall coordinate such Dispatch with American’s systems operation control and pursuant to Schedule 2.

 

3.07

Maintenance of Covered Aircraft.

(a)Generally. Contractor shall cause the Covered Aircraft and Engines to be maintained, inspected, serviced, repaired, overhauled and tested: (i) in accordance with this Agreement and Contractor’s FAA-approved Part 121 maintenance program and (ii) so as to keep the Covered Aircraft and Engines (A) in full conformity with all manufacturers’ manuals, instructions, AD mandatory service bulletins, technical data and recommendations and in airworthy condition under FAA and customary industry practice, (B) in such condition as may be necessary to enable the FAA airworthiness certificate of the Covered Aircraft to be issued and, at all times, maintained in good standing, and (C) in such condition as may be necessary or advisable to enable Contractor to provide the flights as contemplated by this Agreement. Without limiting the generality of this Section 3.07(a), Contractor shall ensure the Covered Aircraft, each Engine and all parts at any time used in connection therewith shall at all times be duly certified as being airworthy in accordance with applicable law. All modifications requested by American or required by an applicable Governmental Authority (other than Heavy Maintenance) shall be scheduled as may be agreed to by the Parties.

(b)Line Maintenance. All Line Maintenance on the Covered Aircraft shall be performed at a maintenance facility or station that is Consented to by American, such Consent not to be unreasonably withheld, conditioned or delayed, from time to time during the Term hereof; it being understood that the initial designations for such maintenance facilities and stations shall be as set forth on Schedule 2.

(c)Heavy Maintenance. Contractor shall deliver Notice to American at least [***] days prior to any Covered Aircraft needing to be removed from providing Regional Airline Services for purposes of accomplishing Heavy Maintenance, and the removal of such Covered Aircraft for Heavy Maintenance shall be subject to American’s prior Consent, which shall not be unreasonably withheld. During the time period that any Covered Aircraft is undergoing Heavy Maintenance, Contractor shall have available a Substitute Aircraft for such Covered Aircraft undergoing Heavy Maintenance, which Substitute Aircraft shall satisfy all of the criteria set forth in clauses (i) through

 

(v)

of Section 3.02(b).

(d)Covered Aircraft Requirements. Without limiting the foregoing or any other maintenance obligations of Contractor hereunder or under the Related Agreements, Contractor shall comply with the following requirements in connection with the interior and exterior maintenance of the Covered Aircraft:

 

 

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(i)Painting Covered Aircraft. Contractor shall repaint each Covered Aircraft (A) on or before such Covered Aircraft’s applicable “Repainting Date” as set forth in Schedule 1 and every [***] years thereafter and (B) from time to time as reasonably requested by American in order to maintain an acceptable exterior appearance or repair damage to the exterior of a Covered Aircraft. Any such repainting request by American shall include American’s required support and changes to the operating schedule to permit Contractor to remove such Covered Aircraft from service to accommodate such repainting. Painting of any Covered Aircraft must be approved in advance by American, which approval shall not be unreasonably withheld.

(ii)Cabin Maintenance and Exterior Cleaning. Without limiting the requirements set forth in Section 4.03(e), with respect to interior cabin maintenance and exterior cleaning of the Covered Aircraft, Contractor shall, [***], comply with the following standards and replacement schedule; provided that such standards and schedule may be amended from time to time by American upon no less than [***] prior Notice to Contractor [***]:

(A)An extensive interior cleaning shall take place every [***] using vendors Consented to in advance by American from time to time, which Consent shall not be unreasonably withheld;

(B)Carpets shall be cleaned every [***] and shall be removed and replaced as necessary;

(C)Seat coverings shall be conditioned every [***] in conjunction with every other extensive interior cleaning and replaced as needed both on the line and in conjunction with every Heavy Maintenance check of the airframe;

(D)Seat bottom cushions shall be replaced at least every [***] and back cushions for seats shall be replaced as needed in conjunction with Heavy Maintenance checks;

(E)The galley and lavatory floor laminate shall be [***]

 

(F)

The exterior shall be dry washed every [***];

 

(G)

The exterior of the Engines and the wings shall be dry washed [***];

(H)Contractor shall cause Disinfecting Services to be provided on the Covered Aircraft, promptly following request therefor by American, but in no event more than [***] following such request. Prior to any Disinfecting Services being provided on a Covered Aircraft, the Parties shall mutually approve the type of service to be provided, vendors providing such service, disinfectant materials to be utilized, location where the Disinfecting Service will be provided, and such other details as the Parties may mutually agree.

 

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(e)In connection with any improvements or modifications to any Covered Aircraft required by an airworthiness directive, Contractor (taken together with its Affiliates) shall not discriminate against such Covered Aircraft with regard to efforts to satisfy the requirements of such airworthiness directives, including the method and date of compliance, and shall satisfy all such requirements, including by using or applying any efforts used or applied by Contractor or its Affiliates with regard to any other aircraft owned or operated by Contractor or any of its Affiliates. In connection with any grounding order which relates to any of the Covered Aircraft, Contractor shall not discriminate against such Covered Aircraft with regard to efforts to satisfy the applicable requirements to lift such grounding order, including using or applying any efforts used or applied by Contractor or its Affiliates with regard to other aircraft owned or operated by Contractor or its Affiliates, and shall satisfy such requirements.

3.08Compliance with Other Terms of Related Agreements. Notwithstanding anything herein to the contrary, Contractor covenants and agrees, at all times, to comply with the terms, requirements and conditions applicable to Contractor set forth in the Related Agreements.

3.09Event of Loss. In the event an Event of Loss has occurred with respect to any Covered Aircraft, then (a) such Covered Aircraft shall no longer be a Covered Aircraft under this Agreement effective as of the date such Event of Loss occurs, (b) the Parties shall use reasonable efforts to negotiate mutually agreeable terms to substitute an aircraft for such Covered Aircraft under this Agreement, and

(c) without limiting American’s and Contractor’s termination rights set forth in Article XII [***] Contractor shall, upon request from American, promptly provide all additional documentation reasonably requested by American with respect to such Event of Loss.

ARTICLE IV.

SERVICE STANDARDS, PERFORMANCE MEASUREMENT AND TRAINING

4.01Crews and Other Personnel. Contractor shall provide all crews (flight and cabin) and maintenance personnel necessary to operate all flights of Covered Aircraft and for all aspects (personnel and other) of Dispatch and operational control of such flights.

4.02Governmental Regulations. Contractor has and shall maintain at all times all FAA, DOT, TSA and other certifications, permits, licenses (including licenses to sell or dispense beer, wine, liquor or any other alcoholic beverages), certificates, exemptions, approvals and plans required by Governmental Authorities necessary to enable Contractor to provide Regional Airline Services, along with any insurance required pursuant to the terms hereof, to maintain the airworthiness of the Covered Aircraft and to operate the Covered Aircraft. All Regional Airline Services and all other operations and services undertaken by Contractor pursuant to this Agreement shall be conducted, operated and provided by Contractor in compliance with all laws, rules, requirements and regulations of all applicable Governmental Authorities, including those relating to airport security, the use and transportation of Hazardous Materials and dangerous goods, environmental rules and regulations, crew qualifications, crew training and crew hours, and the carriage of persons with disabilities. To the extent American subsequently elects or is required to include the Covered Aircraft in an EAS Program, Contractor agrees to assist American in its compliance with the program. Without limiting Section 3.07(a), all Covered Aircraft shall be operated and maintained by Contractor in compliance with all laws, regulations and governmental requirements, Contractor’s own operations manuals and maintenance manuals and procedures, and all applicable equipment manufacturers’ manuals and instructions.

 

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4.03

Quality of Service.

(a)Procedures and Performance Standards. Without limiting Section 4.03(e) or Section 4.07, at all times, Contractor shall provide Regional Airline Services to American in accordance with the procedures and performance standards approved by American from time to time in its sole discretion and provided to Contractor, including but not limited to those certain Standards of Service set forth in Exhibit B hereto. The Standards of Service set forth in Exhibit B hereto may be amended or changed by American from time to time upon (i) to the extent any such amendment or change may reasonably be expected to result in new or additional training of Contractor’s personnel, [***] prior Notice to Contractor and (ii) for all other amendments or changes, [***] prior Notice to Contractor; provided however that no advance Notice to Contractor is required for American to modify the in-flight service sample in Schedule 1 to Exhibit B or the cabin condition sample in Schedule 2 to Exhibit B each of which may be modified at any time by American in its sole discretion. Contractor shall be responsible for all crew and other employee conduct, appearance and training policies (as set forth on Exhibit C), aircraft cleaning (including the timing thereof so long as the standards are met), Disinfecting Services, standards and adequate staffing levels in order to comply with such procedures and meet such standards, including without limitation in respect of customer complaint response and any handling of irregular operations, all of which shall be handled in a professional, businesslike and courteous manner. Without limiting Section 3.07 or Section 4.03(e), Contractor shall cause its crews to conduct routine clean up and straightening of Covered Aircraft between Scheduled Flights.

(b)Contractor’s Representative Uniforms. Contractor shall require all of its respective personnel and any of its respective Contractor Agents providing Regional Airline Services in job classifications requiring direct public contact to wear uniforms and accessories furnished by Contractor that are of colors and styles approved by American from time to time. Contractor shall not alter or change such uniforms and accessories without the prior written Consent of American. If, after the Effective Date, American determines, in its sole discretion, that such uniforms and accessories should be materially altered or changed, then American shall provide Contractor with Notice of such alterations or changes. In the event that American decides to implement such alterations or changes, Contractor shall implement such alterations or changes.

(c)In Flight Services. Contractor shall comply with the catering requirements set forth on Exhibit B hereto. Contractor shall also coordinate all in-flight services relating to the Regional Airline Services with the in-flight services department of American or any Person designated by American to ensure consistency and quality of Contractor’s in-flight service, including non-safety related functions such as in-flight marketing announcements, meal and beverage presentation and delivery, and provisioning and usage of passenger amenity kits. Contractor shall sell beer, wine, liquor and any other alcoholic beverages on Scheduled Flights. Contractor agrees that such in-flight sales shall be conducted as directed by American from time to time. Contractor shall implement any suggestions made by American’s in-flight services department. All revenues collected by Contractor for such in-flight services on the Covered Aircraft shall be promptly remitted or provided to American. Contractor must provide Notice to American of any threatened catering related fines or penalties that could result in a liability to American in accordance with Section IV of Schedule 3 within [***] of receipt of such notification and allow for the involvement of American in the resolution process of such issue so that both Parties can work to minimize any fines to American.

(d)Communication of Scheduled Flight Information. Contractor shall provide as promptly as possible to American through ACARS, accurate and timely updates of planned and Actual Departure and arrival times of Scheduled Flights (including updates of irregularities), any

 

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changes in scheduling of a Scheduled Flight, Dispatch entries, data for textual flight plans, FOQA data (excluding any FOQA data that is not directly or indirectly related to fuel usage on Covered Aircraft), data for textual flight plans, and all other information related thereto as may be requested by American from time to time and as specified by American from time to time; provided that with respect to any FOQA data, Contractor shall not be required to deliver FOQA data to American if such delivery is prohibited by Contractor’s collective bargaining agreements and labor contracts as in effect on the Effective Date.

 

(e)

Aircraft Livery; Refurbishment and Design Costs.

 

(i)

Cabin Interiors Program.

(A)Scope of Cabin Interiors Program. Subject to the terms and conditions of this Section 4.03(e), Schedule 13 and as otherwise set forth in this Agreement, Contractor shall, [***], recondition, refurbish, repair, redesign and replace the aircraft cabin interior components for each Covered Aircraft, including but not limited to rear literature pocket attachments, armrests, tray tables, overhead bins, sidewalls and placards as set forth in Schedule 13, in each case such that all cabin interiors are in the form and condition approved of by American in its reasonable discretion (the “Cabin Interiors Program”).

(B)Cabin Interiors Program Schedule. Contractor shall complete each component of the Cabin Interiors Program for each Covered Aircraft, to American’s satisfaction, on or before the applicable Cabin Interiors Program Deadline set forth on Schedule 13. Completion of each component of the Cabin Interiors Program shall be deemed to have occurred upon receipt by Contractor of written acknowledgement from American as to the completion of such component of the Cabin Interiors Program having been performed and concluded to American’s reasonable satisfaction. Contractor acknowledges and agrees that time is of the essence for completion of each milestone in the Cabin Interiors Program.

 

(ii)

Interior Design.

(A)Interior Design Generally. Without limiting Section 4.03(e)(i) and in addition to the Cabin Interiors Program, as soon as reasonably possible (but in no event later than [***]) and at all times during the Term thereafter, all Covered Aircraft (including Spare Aircraft) shall satisfy the Interior Design requirements set forth on Schedule 12 including the layout for passenger accommodation set forth therein (as such Schedule 12 may be initially provided and then subsequently modified by American in its sole discretion upon Notice to Contractor, in which case Schedule 12 shall automatically be deemed to be amended, modified and restated to reflect such modifications). Without the prior Consent of American (such Consent not to be unreasonably withheld), Contractor may not materially alter the Interior Design of the Covered Aircraft.

(B)Changes to Branding. If American determines that the interior branding of a Covered Aircraft (other than any item addressed by the Cabin Interiors Program) should be altered or changed, then American shall provide Contractor with Notice of such alteration or change and within at least [***] following such Notice, [***] so that American may determine whether to

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implement such alteration or change. In the event that American determines that it shall implement such alteration or change, it shall provide Notice thereof to Contractor and Contractor shall use commercially reasonable efforts to implement such alteration or change no later than [***] following such Notice, unless a longer time period is Consented to by American (acting reasonably under the circumstances) [***].

(iii)Exterior Livery. Contractor shall maintain all Covered Aircraft in an exterior livery Consented to by American as provided below.

(A)Exterior Livery On Effective Date. The Parties acknowledge and agree that, as of the Effective Date, the exterior livery of each Covered Aircraft subject to this Agreement is painted in the colors and design approved by American.

(B)Exterior Livery Changes After Effective Date. If, after the Effective Date, American determines that the exterior livery of a Covered Aircraft should be altered or changed in any material respect, then American shall provide Contractor with Notice of such alterations or changes  and  within  at  least  [***] following such Notice, [***] so that American may determine whether to implement such alterations or changes. In the event that American determines that it shall implement such alterations or changes, it shall provide Notice thereof to Contractor and Contractor shall implement such alterations or changes no later than [***] following the delivery of such Notice [***]

 

4.04

Access and Use of American Systems.

(a)Systems Access. American may provide Contractor with access to American Systems as determined by American to be necessary or appropriate for Contractor to provide the Regional Airline Services.

(b)Use of Systems. Contractor shall use all American Systems and other systems, including ACARS and FOQA, deemed necessary or appropriate by American for Contractor to provide Regional Airline Services. Neither Contractor nor Contractor Agents shall access or use any American System for any purpose other than to provide Regional Airline Services.

 

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(c)Systems Support. Contractor shall be responsible for, and shall bear all costs and expenses in connection with, the maintenance and performance of any software and equipment it uses to access or interface with the American Systems at all times. Additionally, American may require Contractor to install and operate certain support programs on Contractor’s equipment that American requires for American’s internal reporting systems, and the allocation of the costs related thereto shall be as set forth in Section I(O) of Schedule 3.

 

4.05

Data Security.

(a)Safeguards. Where Contractor stores or Processes American Data, Contractor shall and shall cause its Contractor Agents to establish and maintain a secure environment for all American Data and any hardware and software (including servers, network and data components) to be provided or used by Contractor or its Contractor Agents to store or Process American Data. Contractor represents, warrants and covenants that the security measures they take in performance of their obligations under this Agreement are, and will at all times remain, consistent with the following (collectively referred to herein as “Security Best Practices”): (i) the security requirements, obligations, specifications and event reporting procedures set forth in Exhibit D, including, without limitation, the Security Requirements and (ii) any security requirements, obligations, specifications and/or event reporting procedures required by American in writing from time to time. Failure by Contractor to comply with Security Best Practices in fulfilling their obligations hereunder shall constitute a breach of this Agreement.

(b)Notice of Breach. If Contractor or any Contractor Agent discovers or is notified of a breach or potential breach of security relating to the American Data, then Contractor shall immediately (i) provide Notice to American of such breach or potential breach and (ii) if the applicable American Data was in the possession of Contractor or any Contractor Agent at the time of such breach or potential breach, Contractor (A) shall investigate and remediate with American’s assistance the effects of the breach or potential breach (such remediation to include restoring data to the last data back-up) and (B) shall provide American with assurance satisfactory to American that the likelihood of a recurrence of such breach or potential breach has been appropriately reduced. If Contractor breaches this Section 4.05(b), then American shall have the right to require Contractor to reimburse American for actual out of pocket costs and expenses of printing and mailing notification letters required by any law, rule or regulation of a Governmental Authority incurred by American or its Affiliates due to such breach and any credit monitoring services offered by American or any Affiliate in relation to the breach.

(c)Disaster Recovery. The terms and conditions of this Section 4.05(c) shall apply at all times following [***]:

(i)Contractor shall maintain a disaster recovery plan designed to (1) continue all Contractor business operations that are critical to the operation and functionality of, and American’s and authorized users’ access to, the Application, and (2) permit Contractor to comply with this Agreement, in each case, notwithstanding a Crisis (a Disaster Recovery Plan”). Contractor shall at least [***] per calendar year review, test and modify its Disaster Recovery Plan to ensure it is consistent with the guidelines and standards of the airline industry as such guidelines and standards evolve. Contractor shall provide American with the results of tests Contractor conducts on its Disaster Recovery Plan within [***] of such tests.

(ii)Contractor shall, as part of its Disaster Recovery Plan, host and operate the Application on a mirror system (“Backup Facility”) that (1) is at a hardened data center

 

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facility in the U.S. that is geographically remote from its Primary Facility, (2) other than location, is otherwise identical in all respects to the Primary Facility, (3) has hardware, software, network connectivity, power supplies, backup generators, and other similar equipment and services that operate independently of the Primary Facility, (4) has fully current backups of all American Data stored at the Primary Facility, and (5) has the ability to provide access to the version of the Application currently in use at the Primary Facility in accordance with this Agreement during a Crisis. Contractor shall operate the Backup Facility in an “active/active” configuration such that, in the event of a Crisis, American’s access to the Application will be uninterrupted.

(iii)In the event of a Crisis, Contractor shall promptly implement its Disaster Recovery Plan. The occurrence of a Crisis does not relieve Contractor of its obligation to implement its Disaster Recovery Plan.

4.06Processing and Adjudicating Customer or Passenger Complaints. American shall process and adjudicate all customer or passenger complaints related to this Agreement and the Regional Airline Services and Contractor shall assist American in processing and adjudicating such customer or passenger complaints in such manner as American may determine. To the extent information regarding the complaint is not requested by American, Contractor may provide information regarding such complaint, but American is under no obligation to consider such information in American’s processing, adjudicating, disposition or handling of such complaint. From time to time at reasonable intervals, as may be subsequently agreed to by the Parties, American shall provide Contractor with an opportunity to review such log entries, and following such review, the Parties shall meet and confer regarding such log entries and the underlying complaints. American shall have complete and exclusive control of the method of processing and adjudicating such customer or passenger complaints and any final disposition or handling of any customer or passenger complaint shall be in American’s sole discretion; provided that if Contractor requests additional information regarding a complaint prior to its final disposition, then American may in its discretion provide additional information (but failure to provide additional information shall not prejudice or impact American’s rights or Contractor’s obligations under this Agreement, and American shall not have any liability for any failure to provide such information).

 

4.07

Right to Inspect Aircraft and Service Conditions.

(a)Checks. Without limiting Section 4.03(e) and the rights set forth in Schedule 7, American shall have the right and option, in its sole discretion from time to time, to perform quality checks on Contractor’s in-flight service performance for Regional Airline Services (each such check an Inflight Customer Experience Check”) and the condition of the Covered Aircraft (each such check a “Cabin Condition Compliance Check”) to ensure the service performance of such Covered Aircraft meet the Standards of Service and the aircraft condition standards and actions as required in Section 4.03, Exhibit B and elsewhere in this Agreement and the Related Agreements, and such other service and condition standards that may be developed by American from time to time in its sole discretion in accordance with this Agreement. In performing an Inflight Customer Experience Check or Cabin Condition Compliance Check, American shall use the in-flight service sample described in Schedule 1 to Exhibit B, and the cabin condition sample described in Schedule 2 to Exhibit B, respectively; [***]. American shall use commercially reasonable efforts to use in-flight service samples and cabin condition samples uniformly across all of its regional flight operators. The conditions giving rise to an unsatisfactory score for any Inflight Customer Experience Check or a failing score for any Cabin Condition Compliance Check shall be as stated in Schedules 1 and 2 to Exhibit B, respectively.

 

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(b)Unsatisfactory Inflight Customer Experience Check. If there is an unsatisfactory score (as determined by American in accordance with Schedule 1 to Exhibit B) for an Inflight Customer Experience Check, then Contractor shall pay to American [***] for each unsatisfactory score in accordance with the wiring instructions set forth in Section IV of Schedule 7. Such amount shall be taken into account and paid in accordance with the next applicable reconciliation of amounts due to American pursuant to Section III of Schedule 5.

(c)Cabin Condition Compliance Check Failure. Without limiting the remedies set forth in Section 4.07(d) or Section 12.02, if there is a failing score (as determined by American in accordance with Schedule 2 to Exhibit B) for a Cabin Condition Compliance Check, then American shall provide prompt Notice of such failure to Contractor. No sooner than [***] after Contractor’s receipt of such Notice, American may conduct a second Cabin Condition Compliance Check on the same Covered Aircraft that resulted in the failing score. If the second Cabin Condition Compliance Check also results in a failing score, Contractor shall pay to American [***] (in accordance with the wiring instructions set forth in Section IV of Schedule 7) until such time as Contractor is able to demonstrate to American’s satisfaction that it has remedied all conditions giving rise to such failing scores. Such amount shall be taken into account and paid in accordance with the next applicable reconciliation of amounts due to American pursuant to Section III of Schedule 5.

(d)Cabin Interiors Program Failure. Without limiting the remedies set forth in Section 4.07(c) or Section 12.02, if any component of the Cabin Interiors Program for any Covered Aircraft is not completed to American’s reasonable satisfaction by the Cabin Interiors Program Deadline then Contractor shall pay to American [***] (in accordance with the wiring instructions set forth in Section IV of Schedule 7) until such time as Contractor is able to demonstrate to American’s reasonable satisfaction that such component of the Cabin Interiors Program has been completed. Such amount shall be taken into account and paid in accordance with the next applicable reconciliation of amounts due to American pursuant to Section III of Schedule 5.

(e)Remedies Cumulative. [***]

 

4.08

Controllable Cancellation Codes and Controllable On Time Departure Codes.

(a)Change to Codes. In the event the codes set forth in American’s Delay Code Handbook and/or Cancel Code Handbook (or any successor handbooks thereto) are amended, restated or modified in any way, or American determines that any code set forth therein shall be deemed a Controllable On Time Departure code or Uncontrollable Cancellation code, then such amendment, restatement, modification or determination (each a “Code Change”) shall automatically be deemed to amend, modify or restate the applicable codes set forth in Schedule 8 (Controllable Cancellation Codes) and Schedule 9 (Controllable On Time Departure Codes)

 

 

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without any action by American or Contractor; it being understood that American shall provide Notice to Contractor [***] prior to any such Code Change.

(b)Change to Controllable On Time Departures or Controllable Completion Rate. If a Code Change occurs, then the Parties shall mutually agree on any relevant adjustments to the Controllable Completion Rate or Controllable On Time Departures, as applicable. If the Parties have not reached mutual agreement on such adjustment within [***] of the applicable Code Change, then American shall determine the applicable adjustment to Controllable Completion Rate or Controllable On Time Departures, as applicable, and such adjustment shall take effect as of the [***] of the [***] full calendar month following delivery of a Notice from American to Contractor thereof, and Schedule 5 of this Agreement shall automatically be deemed to be amended to include any such adjustment(s) as set forth in American’s Notice, without further action by American or Contractor. Any such adjustments made pursuant to this Section 4.08(b) shall be based on American’s review of Contractor’s Controllable Completion Rate and/or Controllable On Time Departures performance, as applicable, for the [***] full months prior to delivery of the applicable Notice.

4.09Data for Performance Measurements. The Parties acknowledge and agree that American shall use American’s own data when determining Contractor’s performance under this Agreement, including Likelihood to Recommend Factor, Controllable On Time Departures and Controllable Completion Rate.

4.10 Catering Products and Catering Services. American shall provide, or arrange for another Person to provide, all Catering Products and Catering Services for Scheduled Flights of Covered Aircraft (excluding any Maintenance/Ferry Flights).

ARTICLE V. SAFETY

5.01Incidents or Accidents. Contractor shall promptly notify American’s System Operations Control/Flight Dispatch Office of any Accident, Incident or any irregularity that could reasonably be expected to result in a complaint or claim by passengers or an investigation by a Governmental Authority involving any Covered Aircraft occurring during Contractor’s provision of Regional Airline Services, including those that result in any injury or death to persons or damage to property. To the extent Contractor is involved in any such Accident, Incident or irregularity, it shall furnish in writing to American detail concerning the same and shall cooperate with [***] in any appropriate internal or external investigation. Contractor shall provide American with notification of any security breach (regardless of level) as set forth in Contractor’s Accident or Incident reporting system, any other systems that provide information regarding Accidents or Incidents, and all reports prepared or derived from such systems [***]. Contractor shall maintain an emergency response plan in accordance with the provisions of the Aviation Disaster Family Assistance Act of 1996 and any amendments or regulations relating thereto. Contractor shall promptly inform American in writing of any material modifications to such plan. American shall manage the customer response efforts on behalf of Contractor in the case of an Accident or Incident involving Regional Airline Services or the Covered Aircraft, including responding to an Accident or Incident and providing necessary assistance and services to the family members of passengers and Contractor shall fully cooperate in such efforts [***].

 

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5.02Accident Reports. Contractor shall promptly furnish to American a copy of every written report and plan that Contractor prepares, whether such report is filed with the FAA, NTSB or any other Governmental Authority, relating to any Accident or Incident involving any Covered Aircraft or Regional Airline Services 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. Contractor shall also provide prompt Notice to American of all irregularities involving any Scheduled Flights (including, without limitation, irregularities that result in any injury to or death of persons or material damage to property) as soon as such information is available and shall furnish to American in writing detail regarding such irregularity.

5.03International Air Transport Association Operational Safety Audit. Contractor shall comply with the safety standards set forth by the International Air Transport Association Operational Safety Audit, and upon Notice from American from time to time, Contractor agrees to provide American with evidence in a form reasonably satisfactory to American of such compliance.

5.04Emergency Assistance Agreement. The foregoing provisions of this Article V shall in no way be deemed to limit, restrict or amend any of the obligations of Contractor pursuant to the Emergency Assistance Agreement, which shall continue in full force and effect after the Effective Date.

ARTICLE VI.

OTHER OBLIGATIONS OF CONTRACTOR

6.01FAA or DOT Certification Suspension or Revocation. If Contractor discovers or is notified of the suspension or revocation, or potential suspension or revocation, of an FAA or DOT certification used in connection with the Scheduled Flights or Covered Aircraft, then Contractor shall immediately deliver Notice to American of such suspension or revocation.

6.02Fuel Efficiency Program. Without limiting the obligations of Contractor pursuant to the terms hereof, Contractor shall promptly adopt and adhere to a “Fuel Efficiency Program” as described on Schedule 4, as such Schedule 4 may be subsequently amended from time to time by American, as long as Contractor’s adoption or adherence to such Fuel Efficiency Program does not materially and adversely impact the safety of Regional Airline Services under FAA operational specifications, or other regulatory constraints, or the airworthiness of the Covered Aircraft. American may also elect, upon no less than [***] prior Notice to Contractor, to incorporate performance goals and rebates with respect to Contractor’s compliance with such Fuel Efficiency Program, and Contractor shall cooperate with American in good faith to implement and perform its obligations in accordance with such changes to the Fuel Efficiency Program.

 

6.03

Use of Approved Marks and Copyrights.

(a)Ownership of Marks. Contractor acknowledges and agrees that American, Parent and/or one of their respective Affiliates, as the case may be, is the sole worldwide owner or licensee of the Marks.

(b)License to Use Approved Marks. Subject to the terms and conditions of this Agreement, including service quality requirements set forth in Section 4.03, Contractor is hereby granted the [***] right and license to use the Approved Marks solely as specified by American from time to time and solely for Contractor to perform its obligations, including by operating the Regional Airline Services, as specified in this Agreement.

 

 

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(c)Restrictions on Use. Contractor shall not use the Marks in any manner other than as permitted by this Agreement. Contractor shall only use the Approved Marks in a manner consistent with American’s quality standards, as they may exist from time to time, and shall not utilize the Marks in any manner that would diminish their value or harm the reputation of American, Parent or any of their respective Affiliates. All goodwill associated with Contractor’s use of the Approved Marks will inure solely to the benefit of the owner of such Marks. Upon termination of this Agreement, Contractor will immediately cease use of the Approved Marks, unless otherwise authorized in another agreement with American, Parent or one of their Affiliates. Under no circumstance will Contractor: (i) use or display any of the Marks that Contractor obtained from a source other than the American Airlines Brand Center Website; (ii) alter the Marks in any way; or

(iii) transfer, sell, or give away to a Third Party any products bearing the Approved Marks that do not meet American’s quality standards. Contractor agrees that it shall in no way contest or deny the validity of, or the right or title of American, Parent and/or one of their Affiliates, as the case may be, in or to the Marks, and shall not encourage or assist others directly or indirectly to do so, whether during the Term or thereafter. Contractor shall not use or register any domain name that is identical to or similar to any of the Marks without first receiving American’s prior Consent. American may inspect Contractor’s use of the Approved Marks at any time to ensure Contractor’s use of such Approved Marks is consistent with this Agreement. Upon written request from American from time to time, Contractor agrees to provide American with reports setting forth Contractor’s use of the Approved Marks.

(d)Marking. For all uses of Approved Marks, Contractor and its respective Affiliates shall affix proper trademark or service mark notice: the symbol ® for registered trademarks or service marks, or the symbols ™ or SM for unregistered trademarks or service marks, and where requested by American, a statement that the Approved Mark “is a (registered, if applicable) trademark (or service mark, if applicable) of American Airlines, Inc. (or Parent or any of their Affiliates, if applicable) and is being used by Contractor under license from American Airlines, Inc. (or Parent or any of their Affiliates, if applicable).

(e)Additional Approved Marks. Contractor has no right or permission to use any of the Marks, other than the Approved Marks, without first receiving American’s express Consent to do so. If Contractor receives American’s Consent to use any additional Marks, then such Marks will then be considered Approved Marks.

(f)New Marks. American has the right to amend the Approved Marks list at any time. If American removes a Mark from the Approved Mark list, Contractor must cease all use of the Mark within a time period to be determined in American’s sole discretion. Similarly, if American adopts a new Mark that it desires Contractor to use in connection with the performance and operation of Regional Airline Services, it will notify Contractor in writing and specify a deadline by which Contractor must incorporate and use the new Mark, and Contractor shall incorporate and use the new Mark by such deadline.

(g)Further Assurances. At American’s request, Contractor agrees to cooperate with American, Parent and their Affiliates in connection with applications and other filings to create, register, maintain, or otherwise perfect American’s, Parent’s and their Affiliates’ rights in Marks, at [***]. Upon termination of this Agreement, Contractor agrees to do everything necessary to effect cancellation of the recordation, if any, of Contractor as a recorded licensee of the Marks.

(h)License and Use of American’s Copyrights. American grants to Contractor a non-exclusive, non-transferable, limited, royalty free right and license to reproduce, display,

 

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perform, distribute and prepare derivative works of American’s Copyrights solely as specified by American from time to time and solely in connection with the performance and operation of Regional Airline Services in accordance with this Agreement. Any reproductions shall include the notice “Reproduced with permission of American Airlines, Inc. © [date] American Airlines, Inc.” Contractor agrees it will not materially alter works subject to American’s Copyrights without American’s Consent. All derivative works of American’s Copyrights created by or for Contractor shall be the sole and exclusive property of American, and Contractor hereby assigns, and upon creation shall be deemed to have automatically assigned, all right, title and interest in and to such derivative works to American, including all copyright and other proprietary rights therein.

(i)License and Use of American Software. American owns Copyrights and other rights in its proprietary software that it makes available to Contractor under this Agreement (the “American Software”). American grants to Contractor a nonexclusive, nontransferable right and license to install, execute and use American Software in the manner and for the purposes described in this Agreement and solely for the purposes of performing and operating Regional Airline Services in accordance with this Agreement. Contractor may use American Software only as expressly permitted in this Agreement. Contractor may not make copies of American Software, provide Third Parties with access to American Software (other than Contractor Agents who are provided access in connection with Contractor providing Regional Airline Services), distribute American Software, or modify American Software without American’s prior Consent. Contractor may not dissemble, decompile, reverse engineer, or modify American Software. The American Software shall be considered American’s Confidential Information for all purposes under this Agreement. Upon any termination or expiration of this Agreement, Contractor shall promptly remove all copies of American Software from its systems and return or destroy any physical media provided by American containing copies of American Software.

(j)Effect on American Data Provisions. Nothing in this Section 6.03 gives Contractor any additional license or rights in and to American Data that is not expressly set forth in this Agreement, nor does it affect Contractor’s duties with respect to American Data under this Agreement.

 

(k)

Infringement by Third Parties.

(i)If Contractor learns of any infringement or unauthorized use of any of the Marks, American’s Copyrights or American Software, Contractor shall promptly notify American in writing. American has the sole right to send infringement notices and bring infringement actions. If requested to do so, Contractor shall cooperate with and fully assist American in any such action, including without limitation providing Contractor’s files, communications, records, and other information relating to their Regional Airline Services or joining the action as a party, if necessary, [***]. Any award or portion of an award, recovered by American in any such action or proceeding commenced by American shall belong solely to American.

(ii)If a Third Party institutes a legal action against Contractor for its use of a Copyright, American Software provided to Contractor or an Approved Mark, as provided in this Agreement, then Contractor shall promptly notify American’s and Contractor’s liability insurance carriers of such suit in writing. American shall defend any such action, and Contractor shall cooperate in such defense as requested by American.

 

 

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6.04

Ownership and Use of Data.

(a)Ownership. All American Data is, or upon creation will be, and will remain the property of American and all right, title and interest in and to any American Data, including intellectual property rights to American Data, will be solely owned by American. Contractor (and upon creation will be deemed to) irrevocably assigns, transfers and conveys, and will cause all Contractor Agents to assign, transfer and convey, to American without further consideration all of their right, title and interest in and to the American Data. Upon request by [***], Contractor will execute and deliver, and will cause all Contractor Agents to execute and deliver, any documents or take any other actions that may be necessary or desirable under any law, rule or regulation of a Governmental Authority to evidence, preserve, or enable American or an Affiliate of American to enforce, its rights hereunder with respect to the American Data.

(b)Contractor Use Rights. Except as otherwise provided in this Agreement, without American’s approval (in its sole discretion), the American Data may not be (i) used by Contractor or any Contractor Agent; (ii) disclosed, sold, assigned, leased or otherwise provided to Third Parties by Contractor or any Contractor Agent; (iii) re-distributed or displayed via web sites or services (including, for example, through white label web sites); or (iv) commercially exploited by or on behalf of Contractor or any Contractor Agent. Contractor may access and use and may permit Contractor Agents to access and use the American Data (A) only as necessary to provide the Regional Airline Services to American and (B) for any other purpose for which American may provide advanced written approval (email shall not suffice) in accordance with this Agreement (collectively “Permitted Uses”). Except for the Permitted Uses, Contractor may not edit, modify, create derivatives, combinations or compilations of, combine, associate, synthesize, reverse engineer, reproduce, display, distribute, disclose, or otherwise Process American Data. In addition, for clarity, Contractor must not directly or indirectly engage in any of the following activities:

(x) use or disclosure of American Data in a way that may adversely affect American, including any use by or disclosure to other airlines, or (y) any kind of commercialization, marketing, advertising, licensing or resale that is based on American Data (e.g., targeted advertising to consumers based on the American Marks). Nothing in this Agreement conveys any rights or interest in the American Data to Contractor.

(c)Flight Status Data. With respect to Flight Status Data, in no event may Contractor disclose all or individual parts of the Flight Status Data, except as otherwise permitted herein.

(d)Return. Following the expiration or termination of this Agreement, American shall, at Contractor’s election, return or dispose of all Contractor Data in its possession within [***] after the expiration or effective date of termination of this Agreement. American may retain backup copies of Contractor Data that were captured as part of American’s normal course of business if it would be commercially or technologically impractical to delete such data in accordance with this Section 6.04(d) or for evidentiary purposes on the condition that American continues to comply with the confidentiality, compliance, data security and privacy provisions of this Agreement for as long as such backup copies exist. American may retain that portion of Contractor Data that it must retain pursuant to applicable law (including Data Law) on the condition that American continues to comply with the confidentiality, compliance, data security and privacy provisions of this Agreement, including but not limited to Exhibit D, for as long as it retains such data and deletes such Contractor Data as soon as American is no longer subject to such legal requirement.

 

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(e)Deletion. Subject to the remaining provisions of this Section 6.04, Contractor shall securely delete all American Data held in its systems and cause all Contractor Agents to securely delete all American Data held in their respective systems within [***] after the expiration or effective date of termination of this Agreement. Contractor may retain backup copies of American Data that were captured as part of Contractor’s normal course of business if it would be commercially or technologically impractical to delete such data in accordance with this Section 6.04(e) or for evidentiary purposes on the condition that Contractor continues to comply with the confidentiality, compliance, data security and privacy provisions of this Agreement for as long as such backup copies exist. Contractor represents and warrants that it has in place and follows a business process to delete backups of its customers’ data that are no longer needed. Contractor may retain that portion of American Data that it must retain pursuant to applicable law (including Data Law) on the condition that Contractor continues to comply with the confidentiality, compliance, data security and privacy provisions of this Agreement, including but not limited to Exhibit D, for as long as it retains such data and deletes such American Data as soon as Contractor is no longer subject to such legal requirement. Contractor shall use commercially reasonable efforts to anonymize and de-identify American Data retained by it after the expiration or termination of this Agreement pursuant to this Section 6.04(e).

(f)Survival. This Section 6.04 shall survive the termination of this Agreement and/or of the provision of Regional Airline Services.

6.05American’s AAdvantage® Program. Without the express Consent of American, Contractor shall not promote or offer any frequent flyer or similar customer appreciation or reward program to passengers on flights on the Covered Aircraft, other than American’s AAdvantage® frequent flyer program (as such program may be amended from time to time) or any other similar program developed or designated by American or as otherwise requested or directed by American from time to time in its sole discretion.

 

6.06

Periodic Reports. Contractor shall deliver to American:

(a)Detailed reports regarding the following in connection with its performance of the Regional Airline Services: (i) scheduled and completed maintenance operations (including Line Maintenance and Heavy Maintenance) of the Covered Aircraft within [***] of the maintenance being completed; (ii) customer service complaints directly received by Contractor, within [***] of Contractor’s receipt thereof; (iii) fuel usage on Covered Aircraft, not less than [***] during each calendar month during the Term hereof; (iv) without limiting Article V, any safety issues that may result in an adverse impact on the Regional Airline Services under FAA operational specifications or other regulatory constraints, within [***] of the applicable issue’s occurrence; and (v) information on changes to Contractor’s pilot labor costs, within [***] of such change;

(b)The following, along with Contractor’s monthly delivery to American of invoices for Pass Through Costs as set forth in Schedule 3, or as may otherwise be reasonably requested by American from time to time and in the form requested by American from time to time: (i) tax information relevant to any Pass Through Costs or American Absorbed Expenses or any in-flight sales on a Scheduled Flight; (ii) information regarding Approved Marks; and (iii) information regarding any licenses permitting the sale and dispensation of beer, wine, liquor or any other alcoholic beverages;

(c)No later than [***] following request from American, a report of the following with respect to aircraft maintenance technicians for each day during the applicable

 

 

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month (each to be reported on a station-by-station basis): [***]

(d)No later than [***] following request from American, (i) data in the format attached hereto as Exhibit F and (ii) a [***] rolling forecast [***] (the “Rolling Forecast”);

(e)Promptly following request from American, such other reports or operational statistics directly or indirectly related to the Regional Airline Services and the Covered Aircraft, such further information as American may reasonably require or request in its sole discretion to monitor Contractor’s performance under this Agreement and any Related Agreement, including, but not limited to, information regarding Contractor’s ability to provide Regional Airline Services, and any other data that could reasonably affect Contractor’s ability to perform its obligations hereunder;

(f)Notice promptly after Contractor becomes aware, or reasonably should be aware, that a Covered Aircraft’s performance or condition has resulted in (or may result in) a breach of one of the representations, warranties or agreements relating to such Covered Aircraft;

(g)As soon as available, [***], a copy of a report regarding the daily Minimum Equipment List with respect to each Covered Aircraft as in effect at the start of each day, each in a form acceptable to American in its sole discretion; and

(h)Until the completion of all components of the Cabin Interiors Program, monthly reports on the progress of the Cabin Interiors Program (with sufficient detail satisfactory to American), not later than the [***] of each calendar month subsequent to the Effective Date and, promptly following request from American, the date of completion of each component in the form attached hereto as Annex I to Schedule 13.

Contractor represents, warrants and covenants that at all times during the Term, the reporting provided to American pursuant to this Agreement, including this Section 6.06, will be prepared in good faith and after reasonable inquiry.

 

6.07

Intentionally Omitted.

6.08Liquor Licenses for Covered Aircraft. Contractor shall take all actions requested by American to acquire all licenses permitting Contractor to sell or dispense beer, wine, liquor or any other alcoholic beverages for consumption on the Covered Aircraft. Contractor agrees from time to time following any request by American to deliver to American such documentation as is required by any laws, rules or regulations of a Governmental Authority and such other documentation as American may reasonably require to evidence Contractor’s ability to lawfully sell or dispense beer, wine, liquor or any other alcoholic beverages on the Covered Aircraft.

 

6.09

Operation of Covered Aircraft.

(a)The Parties acknowledge that, for purposes of this Section 6.09, as of the Effective Date, no term of this Agreement is in violation of any collective bargaining agreement currently in

 

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effect and adopted by American. If, at any time following the Effective Date, any collective bargaining agreement binding upon American is amended, restated, supplemented or otherwise modified, or a new collective bargaining agreement becomes binding upon American, then American may Notify Contractor of the foregoing. At any time following Contractor’s receipt of such Notice, Contractor shall not change the manner in which it conducts business (including operating a particular aircraft type or number of aircraft) to the extent it did not do so prior to receiving such Notice in violation or breach of the new or modified collective bargaining agreement terms, to the extent such terms are described in such Notice, or enter into an agreement that would reasonably be expected to result in the foregoing.

(b)If Contractor breaches Section 6.09(a), then American may provide notice thereof to Contractor, and the Parties will meet and discuss such breach and a resolution thereof in good faith.

6.10Eagle Partnership Manuals. Contractor has become a signatory participant in the Eagle Partnership Manuals and shall at all times comply with the procedures contained therein with respect to the Scheduled Flights and all other services Contractor performs for American.

6.11Review of Insurance Coverage. Upon American’s request, Contractor shall allow a firm of independent aircraft insurance brokers appointed by American (which firm may be in the regular employ of American) to review the commercial aircraft hull and liability insurance and contractual liability with respect to the Covered Aircraft or Regional Airline Services; provided that all information provided to such insurance brokers shall be deemed Confidential Information and, prior to receiving such information, such insurance brokers shall execute and deliver to American a confidentiality and non-disclosure agreement regarding such Confidential Information in form and substance satisfactory to American in its sole discretion. American may confer with such insurance brokers to determine whether in such brokers’ reasonable judgment insurance afforded to American under such insurance policies is adequate in light of what is customary in the industry for airlines similarly situated with American and if such brokers advise American that such insurance coverage is inadequate, Contractor and American will consult and take such further action as may be reasonable to cure or mitigate such inadequacy; it being understood that any advice, opinion or suggestion obtained by American in the course of American’s conferring or consulting with such insurance brokers shall not be binding on American, but that American shall be free to follow or disregard such advice, opinion or suggestion in its discretion.

6.12Average Monthly Utilization. If American, in its sole discretion, has scheduled CAATS to fly at least a minimum average monthly Block Hour utilization per CAATS of [***] Block Hours per calendar day (the “Contractor Threshold”), such average to be calculated over a full calendar month, then Contractor shall fly at least the Contractor Threshold for the applicable month(s). If American, in its sole discretion, has scheduled CAATS to fly at least the Contractor Threshold for any full calendar month and a Notification Shortfall occurs with respect such month, then American may remove from the schedule of Scheduled Flights the number of CAATS [***] necessary for Contractor to meet the Contractor Threshold for the relevant month of determination. [***] In the event that Scheduled Flights are not flown after being scheduled pursuant to this Section 6.12, the Scheduled Flights not flown shall be omitted from the calculations set forth in Section IV of Schedule 5. It is further agreed and understood between the Parties that American’s rights and remedies as provided in this Section 6.12 shall not impair and shall not be deemed to limit, amend, modify or supplant any other rights or remedies American shall have hereunder or under applicable law, including, but not limited to, American’s rights and remedies as provided in Section 12.02 hereof. In no event shall American be required to elect

 

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between available remedies with respect to any Notification Shortfall; it being understood that American shall have the right to have all of the remedies related thereto be cumulative and non- exclusive.

6.13Reduction of Fixed Costs for Schedule Shortfall. If after American provides Contractor with the Requested Plan for a given month, a Schedule Shortfall exists for such month (or Contractor provides notice to American regarding a Schedule Shortfall for such month), then the Fixed Costs then in effect for such month shall be reduced by a dollar amount equal [***] It is further agreed and understood between the Parties, that American’s rights and remedies as provided in this Section 6.13 shall not impair and shall not be deemed to limit, amend, modify or supplant any other rights or remedies American shall have hereunder or under applicable law, including, but not limited to, American’s rights and remedies as provided in Section 12.02 hereof. In no event shall American be required to elect between available remedies with respect to any Schedule Shortfall; it being understood that American shall have the right to have all of the remedies related thereto be cumulative and non-exclusive.

 

6.14

Late Reduced Crew Estimates.

(a)Initial Crew Max. Not later than [***] prior to the commencement of any calendar month during the Term hereof, Contractor shall provide to American, in the manner specified in Section 6.14(f) below, the total number of hours that Contractor’s captains, first officers and flight attendants can each be scheduled for Scheduled Flights for the specific calendar month (the “Initial Crew Max”).

(b)Final Crew Max. Not later than [***] prior to the commencement of any calendar month during the Term hereof (the “Final Crew Max Determination Date”), Contractor shall furnish to American, in the  manner  specified  in  Section 6.14(f) below, the total number of hours that Contractor’s captains, first officers and flight attendants can each be scheduled for Scheduled Flights for the specific calendar month (the Final Crew Max”).

(c)Late Reduced Crew Estimates. Without limiting American’s other rights and remedies under this Agreement, if following any Final Crew Max Determination Date, the Final Crew Max is reduced for the relevant calendar month (any such reduced Final Crew Max pursuant to the terms of this Section 6.14(c), the Adjusted Final Crew Max”), then Contractor shall pay to American an amount equal to [***] for each Block Hour by which the Adjusted Final Crew Max results in a reduction of the aggregate Block Hours set forth in the applicable flight schedule (the “Late Adjustment Charge”). The payment of the Late Adjustment Charge to American under the circumstances provided for herein is not intended as a forfeiture or penalty. Contractor shall not be required to pay a Late Adjustment Charge for an Adjusted Final Crew Max only if all the following conditions are satisfied with respect to such Adjusted Final Crew Max: (A) between the applicable Final Crew Max Determination Date and [***] prior to the commencement of the applicable calendar month, the full-time employment ends for any reason for [***] or more of Contractor’s pilots and/or first officers that were providing Regional Airline Services to American and (B) the end of such full-time employment directly caused Contractor to reduce the Final Crew Max between the applicable Final Crew Max Determination

Date and [***] prior to the commencement of the applicable calendar month.

(d)Reporting Failure. In the event that Contractor fails to deliver to American the applicable Initial Crew Max, Final Crew Max or Rolling Forecast on their respective due dates, then Contractor shall promptly pay to American, on demand, a “late charge” equal to [***] per such report per day (a “Late Charge”).

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(e)Inaccurate Reports. Contractor represents, warrants and covenants that at all times during the Term, the Initial Crew Max, Final Crew Max and Rolling Forecasts each will be prepared in good faith and after reasonable inquiry. Each Final Crew Max provided by Contractor shall, in American’s reasonable good faith discretion, accurately in all material respects reflect Contractor’s pilots and flight attendants available to American during the specified calendar month and be prepared in good faith. Each Rolling Forecast provided by Contractor shall, in American’s reasonable good faith discretion, be prepared in good faith based on then existing facts and circumstances.

(f)Notices to American. All information provided to American pursuant to this Section 6.14 shall be sent (currently and until further notice from American) in electronic format by email to (i) [***] or (ii) such other addressee as American may designate.

(g)Setoff of Late Adjustment Charges and Late Charges; Non-Impairment. Pursuant to this Section 6.14 and Section 14.08 for any calendar month for which any Late Adjustment Charge or a Late Charge is owing (any such month, the “Late Adjustment Charge Application Month”), [***]. It is agreed and understood between the Parties, that any Late Adjustment Charge and/or Late Charge paid to American pursuant to this Section 6.14 shall not impair and shall not be deemed to limit, amend, modify or supplant any other rights or remedies American shall have hereunder or under applicable law, including, but not limited to, American’s rights and remedies as provided in Section 12.02 hereof. In no event shall American be required to choose between available remedies; it being understood that American shall have the right to have all of the remedies be cumulative and non-exclusive. It is further understood and agreed by the Parties that the provisions of this Section 6.14 are alternatives to other remedies provided herein and shall in no event be deemed a forfeiture or penalty. Without limiting the provisions of Section 14.08(a), pursuant to this Section 6.14, it is specifically agreed that for purposes of American’s right of set-off with respect to any Late Adjustment Charge and/or Late Charge, American and Contractor shall be deemed to have obligations to one another under this Agreement. In the event any Late Adjustment Charge and/or Late Charge is fully set-off by American against amounts owed by Contractor, then the obligation of Contractor to American shall be deemed extinguished to the extent of the amount so set-off. This set-off provision shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which American is at any time otherwise entitled (either by operation of law, contract or otherwise).

 

6.15

Intentionally Omitted.

6.16Resource Allocation. At all times during the Term, Contractor shall (a) allocate its captains, first officers, flight attendants and aircraft maintenance technicians used for Scheduled Flights in a manner no less favorable to American than Contractor allocates such captains, first officers and aircraft maintenance technicians to any Other Carrier, and (b) provide American with written calculations that demonstrate, to American’s reasonable satisfaction, for the applicable month, Contractor’s compliance with Section 6.16(a).

 

6.17

Intentionally Omitted.

6.18Actions during a Force Majeure Event or Labor Dispute. Without limiting the rights of either Party to terminate this Agreement as specified in Section 12.02 or other remedies available to each Party under applicable law:

 

(a)

Notice to American. Contractor shall provide prompt Notice to American if either

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(c)

a Force Majeure Event with respect to Contractor or a Contractor Labor Dispute occurs or

(ii) Contractor believes that there is a likelihood of an imminent occurrence of such a Force Majeure Event or Contractor Labor Dispute.

(b)Mitigation of Costs. Contractor covenants and agrees that it shall mitigate any of its costs and expenses incurred during a Force Majeure Event or Contractor Labor Dispute, if such costs and expenses are Pass Through Costs or American Absorbed Expenses, or otherwise reimbursable or payable by American in accordance with the terms and conditions of this Agreement. American covenants and agrees that it shall mitigate any costs and expenses incurred by it during a Force Majeure Event or Contractor Labor Dispute, if such costs and expenses are Controllable Costs, or otherwise directly or indirectly reimbursable or payable by Contractor in accordance with the terms and conditions of this Agreement.

(c)Performance During Force Majeure Event. Without limiting American’s right to terminate this Agreement pursuant to Section 12.02(b)(v), [***]

(d)Compensation During Contractor Labor Dispute. If Contractor is unable to operate at least [***] of the Scheduled Flights for more than [***] due to a Contractor Labor Dispute, then following such [***] period, Contractor shall not receive any of the compensation described in Schedule 5, nor be entitled to receive reimbursement from American of any Pass Through Costs pursuant to Schedule 3, with respect to any Scheduled Flights or any Covered Aircraft relating thereto other than for Scheduled Flights actually operated by Contractor, for the period of time following such [***] period that Contractor is unable to perform its obligations hereunder as a result of such Contractor Labor Dispute; in which event: (i) Contractor shall not have the right to terminate this Agreement as a result of American’s failure to pay the compensation set forth on Schedule 5; (ii) no default by American shall be deemed to have occurred under Schedule 5 with respect to payment obligations

 

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under this Agreement; and (iii) American shall continue to be entitled to all rights and benefits under this Agreement. For the avoidance of doubt, it is intended that the rights and remedies referred to in this Section 6.18(d) shall be cumulative and in addition to any rights or remedies otherwise available hereunder or under any Related Agreement or at law or in equity. The exercise by American of any one or more of such rights or remedies shall not preclude the simultaneous or later exercise by American of any or all of such other rights or remedies.

ARTICLE VII. CONTRACTOR’S COMPENSATION

7.01Base and Incentive Payments. Subject to the terms and conditions of this Agreement, during the Term, for and in consideration of the Regional Airline Services provided by Contractor hereunder and the operation of the Covered Aircraft, American shall pay to Contractor the compensation provided on Schedule 5 for such Covered Aircraft; [***]

7.02Costs and Expenses. Except as otherwise provided in this Agreement, the costs and expenses incurred in connection with the Regional Airline Services shall [***]

 

7.03

Cost Savings.

(a)Duty to Minimize Costs. In connection with providing Regional Airline Services to American, Contractor shall minimize costs and expenses incurred by it (including by complying with suggestions made by American for mitigating costs and expenses) if such costs and expenses (including aircraft fuel costs and expenses) are Pass Through Costs or American Absorbed Expenses, or costs or expenses otherwise directly or indirectly reimbursable or paid by American to Contractor in accordance with the terms and conditions of this Agreement or any of the Related Agreements. Further, with respect to any service or item the cost of which American is required to reimburse Contractor hereunder other than insurance required pursuant to the terms hereof, if American can provide or arrange to provide such service or item at a lower cost than the reimbursement cost that American would otherwise be charged, then Contractor shall allow American to provide or arrange to provide such service or item in order to permit American to lower its costs.

(b)American Cost Initiatives. [***] Within [***] of receipt of Notice from American, Contractor shall implement such American Cost Initiative.

ARTICLE VIII. USE OF FACILITIES

8.01Facilities. Subject to the terms and conditions hereof, American hereby grants to Contractor a limited, non-exclusive right and license to use and occupy the American Facilities to support the provision of Regional Airline Services as set forth in this Article VIII. The Parties acknowledge that the grant of the such license to Contractor has been made without obtaining the Consent and approval of any applicable any Governmental Authority or any similar authority or governing board in any domestic or foreign jurisdiction, or any private or quasi-governmental entity,

 

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governing board or other Person with authority to lease, convey or otherwise grant or restrict rights to use or operate any airport facilities associated with this Agreement (“Airport Operators”). If any such Airport Operator subsequently suggests or states that a Consent of any such Airport Operator is required for the grant of such license or for the use of the related American Facilities and American determines that obtaining such Consent is necessary or advisable, the Parties shall use commercially reasonable efforts to obtain such Consent and/or to effectuate such license on the terms set forth herein and in such manner as American and Contractor may deem advisable or appropriate. [***]. Contractor covenants and agrees that it will use the American Facilities exclusively to support the provision of Regional Airline Services, and shall not use such facilities for the provision of any services, including ground handling services, regional air services or any other services, to any Third Party or for any other purpose without the express prior Consent of American; it being understood that American shall have sole and absolute discretion to provide or decline such Consent for any reason whatsoever.

8.02Conditions of Use for American Facilities. At all times, Contractor covenants and agrees that it shall comply with the “Standards of Facilities Use” set forth on Exhibit E hereto. If Contractor fails to comply with its obligations relating to the American Facilities as set forth herein and in Exhibit E and such failure continues for a period of [***] after Notice to Contractor to cure such failure (or such shorter period provided in any Sublease or lease between American and Contractor with respect to such American Facility), then American shall have the right and option to terminate immediately Contractor’s right to use the American Facilities or any part hereof; it being understood that American shall have the right and option to revoke Contractor’s use without terminating or affecting any other obligations of Contractor or American pursuant to the terms hereof and pursue any remedies or recourse against Contractor relating to such use. Contractor, [***], shall provide, or cause to be provided, all manpower, furniture and related furnishings, equipment and other airport facilities necessary to support the Regional Airline Services, unless American Consents otherwise.

8.03Replacement and Termination of Facilities Use. In addition to any rights granted to American under a Sublease, at all times and from time to time, American shall have the right and option, in its sole and absolute discretion, to designate any replacement facilities or to increase or reduce the size or space of the American Facilities, or terminate Contractor’s use of any American Facilities, all without the Consent of Contractor, so long as Contractor has sufficient facilities to perform its obligations hereunder (all as reasonably determined by American). Any American Facilities no longer used, or authorized to be used, by Contractor shall immediately cease to be American Facilities for the purposes hereof and Contractor’s right to use such facilities shall terminate immediately without further action of American. Notwithstanding anything in this Agreement to the contrary, American shall not be required to provide to Contractor any space or facilities (including American Facilities) following the end of the Term.

8.04Facilities Related Insurance. In addition to any insurance obligations applicable to Contractor under a Sublease and without limiting any obligation of Contractor pursuant to the provisions of Article X hereof, Contractor shall maintain, or cause to be maintained, in full force and effect policies of insurance with insurers of recognized reputation and responsibility reasonably acceptable to American, causes of loss, special form or all-risk property insurance with per occurrence limits adequate to cover the full replacement cost of the Crew Facilities and Line Maintenance Facilities and other property and liability insurance coverage of the types and in the amounts that would be considered reasonably prudent given Contractor’s size and nature and under insurance market conditions in effect at the time of placement.

 

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8.05Subleases. Contractor’s obligations and liabilities, and American’s rights and remedies, set forth in this Agreement with respect to the American Facilities are in addition to (and not in lieu of) any obligations and liabilities of Contractor, or rights and remedies of American, set forth in any Sublease, [***]. Nothing in this Agreement shall be construed to permit Contractor to take any action with respect to the any American Facility in violation of any applicable Sublease or vice versa; provided that, if it is impossible for Contractor to comply with any such Sublease and this Agreement with respect to the applicable American Facilities due to a conflict between the terms and conditions of such Sublease and the terms and conditions of this Agreement, then Contractor shall comply with the applicable terms and conditions of the Sublease with respect to the applicable American Facilities.

ARTICLE IX.

REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS

9.01Contractor’s Representations and Warranties. Contractor represents and warrants to American as of the Effective Date as follows:

(a)Organization and Qualification. Contractor is a duly organized and validly existing corporation in good standing under the laws of the State of Nevada and has the corporate power and authority to own, operate and use its assets and provide the Regional Airline Services.

(b)Authority Relative to this Agreement and the Related Agreements. Contractor has the corporate power and authority to execute and deliver this Agreement and the Related Agreements and to consummate the transactions contemplated hereby in accordance with the terms hereof and thereof. The execution and delivery of this Agreement and the Related Agreements and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Contractor. This Agreement and the Related Agreements have been duly and validly executed and delivered by Contractor and are, assuming due execution and delivery thereof by American and that American has legal power and right to enter into this Agreement and the Related Agreements, the valid and binding obligations of Contractor, enforceable against Contractor in accordance with its terms, except as enforcement hereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws, rules or regulations of a Governmental Authority relating to or affecting the enforcement of creditors’ rights generally and legal principles of general applicability governing the availability of equitable remedies (whether considered in a proceeding in equity or at law or otherwise under the applicable laws, rules or regulations of a Governmental Authority).

(c)Conflicts; Defaults. Neither the execution or delivery of this Agreement or the Related Agreements nor the performance by Contractor of the transactions contemplated hereby or thereby will (i) violate, conflict with, or constitute a default under any of the terms of Contractor’s articles of incorporation, bylaws, or any provision of, or result in the acceleration of any obligation under, any material contract, sales commitment, license, purchase order, security agreement, mortgage, note, deed, lien, lease or other agreement to which Contractor is a party; (ii) result in the creation or imposition of liens in favor of any Third Party or entity; (iii) violate any law, statute, judgment, decree, order, rule or regulation of any Governmental Authority applicable to Contractor or that relates to the provision of Regional Airline Services; (iv) constitute any event which, after Notice or lapse of time or both, would result in such violation, conflict, default, acceleration or creation or imposition of liens; or (v) cause American to be in violation or breach of any term of any collective bargaining agreement it may have with its pilots as of the Effective Date.

 

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(d)Approvals. Contractor possesses all approvals, certificates, licenses, permits or other authorizations of any Governmental Authority that are necessary or appropriate to execute and deliver this Agreement and the Related Agreements and to provide the Regional Airline Services and otherwise perform its obligations hereunder and thereunder.

(e)Permits. Contractor possesses all certificates, authorizations and permits issued by the FAA and other applicable federal, state or foreign regulatory authorities necessary to conduct its business, maintain the airworthiness of the Covered Aircraft, provide Regional Airline Services and otherwise perform its obligations under this Agreement and the Related Agreements, and Contractor has not received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a material adverse effect on Contractor or its ability to conduct its business, maintain the airworthiness of the Covered Aircraft, provide Regional Airline Services and otherwise perform its obligations under this Agreement or the Related Agreements.

9.02American Representations and Warranties. American represents and warrants to Contractor as of the Effective Date as follows:

(a)Organization and Qualification. American is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware.

(b)Authority Relative to this Agreement and the Related Agreements. American has the corporate power and authority to execute and deliver this Agreement and the Related Agreements and to consummate the transactions contemplated hereby in accordance with the terms hereof and thereof. The execution and delivery of this Agreement and the Related Agreements and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of American. This Agreement and the Related Agreements have been duly and validly executed and delivered by American and are, assuming due execution and delivery thereof by Contractor and that Contractor has legal power and right to enter into this Agreement and the Related Agreements, a valid and binding obligations of American, enforceable against American in accordance with its terms, except as enforcement hereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws, rules or regulations of a Governmental Authority relating to or affecting the enforcement of creditors’ rights generally and legal principles of general applicability governing the availability of equitable remedies (whether considered in a proceeding in equity or at law or otherwise under the applicable laws, rules or regulations of a Governmental Authority).

(c)Conflicts; Defaults. Neither the execution or delivery of this Agreement or the Related Agreements nor the performance by American of the transactions contemplated hereby or thereby will (i) violate, conflict with, or constitute a default under any of the terms of American’s certificate of incorporation, by laws, or any provision of, or result in the acceleration of any obligation under, any material contract, sales commitment, license, purchase order, security agreement, mortgage, note, deed, lien, lease or other agreement to which American is a party;

(ii) result in the creation or imposition of any liens in favor of any Third Party or entity; (iii) violate any law, statute, judgment, decree, order, rule or regulation of any Governmental Authority applicable to American; or (iv) constitute any event which, after Notice or lapse of time or both, would result in such violation, conflict, default, acceleration or creation or imposition of liens.

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(d)Approvals. Except as may be contemplated hereby, American possesses or will possess prior to the Implementation Date of any Covered Aircraft all approvals, certificates, licenses, permits or other authorizations of any Governmental Authority that are necessary to execute and deliver this Agreement and the Related Agreements and perform its obligations hereunder and thereunder.

ARTICLE X. INSURANCE

10.01Minimum Insurance Coverage. Throughout the Term, in addition to any insurance required to be maintained by Contractor under or pursuant to any of the Related Agreements or by any applicable Governmental Authority, Contractor shall at all times during the Term hereof maintain, or cause to be maintained, in full force and effect policies of insurance with insurers of recognized reputation and responsibility, in each case to the extent available and of the type usually carried by corporations engaged in the same or similar business, similarly situated and owning or operating similar aircraft and engines and covering risks of the kind customarily insured, as follows:

(a)Aviation Hull and Liability Insurance. Aviation hull and liability insurance, including aircraft Third Party bodily injury, passenger liability (including passengers’ baggage and personal effects), property damage, non-owned aircraft liability, hangarskeepers’ liability, personal injury, cargo and mail legal liability, products and completed operations liability, and contractual liability insurance, with a combined single limit of not less than [***] per occurrence (and in the aggregate with respect to products and completed operations), and with respect to non-passenger personal injury, a sublimit of [***] per occurrence and in the aggregate or such other limit which is customarily available in the industry.

(b)All Risk Ground Insurance. All risk ground and flight physical damage coverage covering all aircraft, engines and components that Contractor owns, leases or that are otherwise in Contractor’s care, custody and control, including non-owned aircraft, engines and components, with a limit sufficient to cover the agreed or stipulated value of the highest valued aircraft in Contractor’s fleet, inclusive of engines and all modifications and improvements. Such insurance shall also provide protection for hull war, war and other allied perils and include war and other allied perils liability insurance for passengers and Third Parties in the form of extended coverage endorsement (aviation liabilities) per clause AVN52E or its market equivalent. To the extent that the required war risks coverage in the preceding sentence is not included in such policies but is instead provided under separate insurance policies, government insurance and/or indemnification, Contractor shall provide evidence thereof in a form reasonably satisfactory to American.

(c)Workers’ Compensation Insurance and Employer’s Liability Insurance. Workers’ compensation providing the statutory coverage required by the appropriate jurisdiction and employer’s liability with policy limits of not less than [***] “Each Employee for Bodily Injury by Accident,” and [***] “Each Employee for Bodily Injury by Disease.”

(d)Automobile Liability Insurance. Automobile liability insurance covering all owned, non-owned, leased or hired vehicles with policy limits of not less than [***] combined single limit per occurrence.

(e)Network Security & Privacy Liability Insurance. Network security and privacy liability insurance with a minimum limit of not less than [***] for each claim that, at a minimum, covers liability resulting from (i) the loss, theft, or disclosure of (A) Confidential Information or (B) personal non-public information of any person, (ii) the

 

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unauthorized access to, use of, or tampering with computer systems, including denial of service attacks or inability of an authorized Third Party to gain access to services, (iii) the introduction of a computer virus or malicious code into, or otherwise causing damage to, a computer, computer system, network, or similar computer related property and the data, software, and programs thereon, or (iv) PCI DSS non-compliance.

(f)Other Property and Liability Insurance. Other property and liability insurance coverages and any other property damage liability insurance, exclusive of any manufacturer’s product liability insurance of the types and in the amounts that would be considered prudent for a business organization of Contractor’s size and nature, under the insurance market conditions in effect at the time of placement, but in any event of the type and the amount that American may require to prevent or minimize a disruption in the provision of Regional Airline Services resulting from a casualty or liability incident related to any of Contractor’s operations.

(g)Deductibles. All coverages described in this Section 10.01 shall be placed with deductibles that are commercially reasonable. On the Effective Date and on each anniversary hereof during the Term, Contractor shall furnish to American a list of the deductibles applicable for each such coverage described in this Section 10.01.

10.02Endorsements. In addition to any requirements under any Related Agreement, Contractor shall cause the liability policies required to be maintained pursuant to Section 10.01 above to be duly and properly endorsed by Contractor’s insurance underwriters as follows:

(a)Subrogation Rights. To provide that the underwriters shall waive subrogation rights against American and its Affiliates, except for their gross negligence or willful misconduct;

(b)Additional Insureds. To provide that American and its Affiliates shall be named as additional insured parties under Contractor’s liability coverage and only as respect to the operations of the named insured. Additional insured coverage is not provided to any party with respect to claims arising out of their legal liability as a manufacturer, repairer, or servicing agent of the Covered Aircraft;

(c)Right of Contribution. To provide that such insurance shall be primary to and without right of contribution from any other insurance which may be available to the additional insureds;

(d)Breach of Warranty. With respect to the aviation liability insurance only, to include a “breach of warranty” provision in favor of the additional insureds insuring their interest regardless of any breach or violation by Contractor of any warranties, declarations or conditions contained in such insurance policies;

(e)Cross Liability Warranty. With respect to the aviation liability insurance only, to include a “cross liability warranty” provision, providing American and each of the other additional insureds the benefit of all provisions of the aviation liability insurance policy in the same manner as if there were a separate policy covering each additional insured (the total liability of the insurers, in respect of any and all insureds, shall not exceed the limits of liability set forth in the policy);

(f)Contractual Liability. With respect to the aviation liability insurance only, to accept and insure Contractor’s hold harmless and indemnity undertakings set forth in this

 

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Agreement, but only to the extent of the coverage afforded by the aviation liability insurance policy or policies; and

(g)No Cancellation or Amendment. With respect to all of the insurance policies described in Section 10.01, to provide that such policies shall not be canceled, terminated or the limits or coverage required hereunder be reduced (or subjected to  an  adverse  change)  [***] in the case of nonpayment of premiums) after receipt by American of Notice from such insurers of such cancellation, termination or reduction.

(h)Evidence of Insurance Coverage. On the Effective Date and on each anniversary thereof during the Term, Contractor shall furnish to American a certificate of insurance certifying that such insurance and endorsements are in full force and effect. Such certificate shall be issued per the AVN67B form. If Contractor fails to acquire or maintain insurance as herein provided, then American may at its option secure such insurance on Contractor’s behalf and Contractor shall take all actions requested or directed by American and cooperate with American in connection with obtaining or maintaining such coverage.

ARTICLE XI.

INDEMNIFICATION

11.01CONTRACTOR’S INDEMNIFICATION OF AMERICAN INDEMNIFIED PARTIES. WITHOUT LIMITING ANY OBLIGATIONS OF CONTRACTOR AS MAY BE SET FORTH IN ANY RELATED AGREEMENT, CONTRACTOR SHALL INDEMNIFY, ASSUME LIABILITY FOR, DEFEND AND HOLD HARMLESS THE AMERICAN INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL CLAIMS AND SHALL PAY ON DEMAND ANY LOSSES THAT ANY AMERICAN INDEMNIFIED PARTY SUFFERS OR INCURS AS A RESULT OF, ARISING OUT OF, CAUSED BY OR OCCURRING IN CONNECTION WITH (OR ALLEGED TO ARISE OUT OF, BE CAUSED BY OR OCCURRING IN CONNECTION WITH) ANY OF THE FOLLOWING: (I) THE DEATH OF OR HARM OR INJURY TO PERSONS (INCLUDING ALL INVITEES, GUESTS, PASSENGERS AND SHIPPERS OF CARGO ON THE COVERED AIRCRAFT OR INVITEES OR GUESTS AT THE AMERICAN FACILITIES OR ANY EMPLOYEES OF CONTRACTOR OR AMERICAN OR ANY CONTRACTOR AGENT OR AMERICAN AGENT OR ANY AFFILIATE OF CONTRACTOR OR AMERICAN), AND ANY DELAY OR LOSS OF OR DAMAGE TO PROPERTY (INCLUDING PROPERTY OF SUCH INVITEES, GUESTS, PASSENGERS, SHIPPERS, EMPLOYEES AND AMERICAN AGENTS AND CONTRACTOR AGENTS, DAMAGE TO ANY AIRCRAFT (INCLUDING THE COVERED AIRCRAFT OR ENGINES, OR, IN EACH CASE, ANY PART OR ACCESSORY THEREOF), ANY BAGGAGE, CARGO OR ANY OTHER PROPERTY AT OR INCLUDED IN THE AMERICAN GATES OR FACILITIES AND HAZARDOUS MATERIALS), IN EACH CASE OCCURRING WHILE SUCH PERSONS OR PROPERTY ARE UNDER THE CONTROL OF, BEING USED BY OR IN THE CUSTODY OF, OR BEING TRANSPORTED BY CONTRACTOR OR ANY AFFILIATE OF CONTRACTOR OR ANY CONTRACTOR AGENT (INCLUDING, FOR THE AVOIDANCE OF DOUBT, CLAIMS OR LOSSES ARISING OUT OF THE DEATH OF OR INJURY TO REGIONAL AIRLINE SERVICES PASSENGERS TRAVELING ON ANY TICKETS REGARDLESS OF ANY LIMITS OR CONDITIONS OF LIABILITY OR OTHER JURISDICTIONAL LIMITATIONS ON CLAIMS OR LOSSES OR PRESENT AT THE AMERICAN FACILITIES), EXCEPT TO THE EXTENT ANY CLAIM OR LOSS IS DETERMINED TO HAVE BEEN CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AMERICAN, ANY AFFILIATE OF AMERICAN OR ANY AMERICAN AGENT; (II) ACTS OR OMISSIONS OF CONTRACTOR, ANY AFFILIATE OF CONTRACTOR, OR ANY CONTRACTOR AGENT, THAT ARE IN ANY WAY RELATED TO PROVIDING REGIONAL

 

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AIRLINE SERVICES OR REQUIRED TO BE PERFORMED OR NOT PERFORMED PURSUANT TO THE TERMS HEREOF OR ANY RELATED AGREEMENT OR IN CONNECTION WITH THE USE OF THE AMERICAN FACILITIES, INCLUDING NEGLIGENCE OR MISCONDUCT OF CONTRACTOR OR ANY CONTRACTOR AGENT, ANY VIOLATION OF ANY LAW, RULE OR REGULATION OF ANY GOVERNMENTAL AUTHORITY, EXCEPT TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF AMERICAN, ANY AFFILIATE OF AMERICAN OR ANY AMERICAN AGENT; (III) THE PERFORMANCE, IMPROPER PERFORMANCE OR NONPERFORMANCE, DIRECTLY OR INDIRECTLY, OF ANY COVENANT OR AGREEMENT OF CONTRACTOR PURSUANT TO THIS AGREEMENT, OR ANY BREACH OF ANY REPRESENTATION OR WARRANTY OF CONTRACTOR CONTAINED IN SECTION 9.01 OF THIS AGREEMENT OR CONTAINED IN ANY RELATED AGREEMENT; AND (IV) CONTRACTOR’S UNAUTHORIZED USE OR DISCLOSURE OF CONFIDENTIAL INFORMATION OF AMERICAN OR ANY UNAUTHORIZED USE OF ANY COPYRIGHT (INCLUDING ANY AMERICAN COPYRIGHT), THE MARKS, ANY APPROVED MARK, ANY AMERICAN SYSTEM, ANY SOFTWARE (INCLUDING ANY AMERICAN SOFTWARE) OR DATA (INCLUDING AMERICAN DATA), WHETHER OR NOT IN VIOLATION OF THIS AGREEMENT.

11.02AMERICAN INDEMNIFICATION OF CONTRACTOR. AMERICAN SHALL INDEMNIFY, ASSUME LIABILITY FOR, DEFEND AND HOLD HARMLESS THE CONTRACTOR INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL CLAIMS AND PAY ON DEMAND ANY LOSSES THAT ANY CONTRACTOR INDEMNIFIED PARTY SUFFERS OR INCURS AS RESULT OF, ARISING OUT OF, CAUSED BY OR BE OCCURRING IN CONNECTION WITH (OR ALLEGED TO ARISE OUT OF, BE CAUSED BY OR OCCURRING IN CONNECTION WITH) ANY OF THE FOLLOWING: (I) THE DEATH OF OR HARM OR INJURY TO PERSONS (INCLUDING ALL INVITEES, GUESTS, PASSENGERS OR SHIPPERS OF CARGO), OR DELAY OR LOSS OF OR DAMAGE TO PROPERTY (INCLUDING PROPERTY OF SUCH INVITEES, GUESTS, PASSENGERS AND SHIPPERS OF CARGO), SOLELY TO THE EXTENT SUCH CLAIMS OR LOSSES (X) ARE DIRECTLY CAUSED BY HAZARDOUS MATERIALS TRANSPORTED BY CONTRACTOR AT THE EXPRESS DIRECTION OF AMERICAN, (Y) AMERICAN (OR A PERSON ARRANGED FOR BY AMERICAN) PROVIDED THE CARGO HANDLING FOR SUCH HAZARDOUS MATERIALS, AND (Z) ARE NOT DIRECTLY OR INDIRECTLY THE RESULT OF, ARISING OUT OF, OR CAUSED BY THE ACTION OR INACTION OF CONTRACTOR, ANY AFFILIATE OF CONTRACTOR OR ANY CONTRACTOR AGENT, (II) OTHER THAN AS SPECIFIED IN THE IMMEDIATELY FORGOING CLAUSE (I), THE DEATH OF OR HARM OR INJURY TO PERSONS (INCLUDING ALL INVITEES, GUESTS, PASSENGERS OR SHIPPERS OF CARGO), OR DELAY OR LOSS OF OR DAMAGE TO PROPERTY (INCLUDING PROPERTY OF SUCH INVITEES, GUESTS, PASSENGERS AND SHIPPERS OF CARGO) OCCURRING WHILE SUCH PERSONS OR PROPERTY ARE BEING TRANSPORTED BY, AMERICAN, ANY AFFILIATE OF AMERICAN OR ANY AMERICAN AGENT PRIOR TO OR SUBSEQUENT TO ANY SCHEDULED FLIGHT (BUT, FOR THE AVOIDANCE OF DOUBT, EXCLUDING ANY SCHEDULED FLIGHT AND ANY CLAIMS OR LOSSES THAT WERE NOT IN THE PERFORMANCE OF ANY REGIONAL AIRLINE SERVICES BY ANY AFFILIATE OF AMERICAN), EXCEPT TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF CONTRACTOR, ANY AFFILIATE OF CONTRACTOR OR ANY CONTRACTOR AGENT; (III) THE PERFORMANCE OR NONPERFORMANCE, DIRECTLY OR INDIRECTLY, OF ANY COVENANT OR AGREEMENT OF AMERICAN PURSUANT TO THIS AGREEMENT, OR ANY BREACH OF ANY REPRESENTATION AND WARRANTY OF AMERICAN SET FORTH IN SECTION 9.02 HEREOF OR ANY COVENANT OR OTHER AGREEMENT OF AMERICAN SET FORTH IN ANY RELATED AGREEMENT; AND (IV) ANY UNAUTHORIZED USE BY

 

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AMERICAN OF ANY CONFIDENTIAL INFORMATION OF CONTRACTOR, WHETHER OR NOT IN VIOLATION OF THIS AGREEMENT.

 

11.03

Procedure for Indemnification Claims.

(a)Indemnification by Contractor. Any American Indemnified Party wishing to assert a right to indemnification from Contractor under the terms and conditions of this Agreement shall provide Contractor with prompt Notice of any Claim that such American Indemnified Party believes gives rise to any Claim for indemnity against Contractor or which could result in any Losses; provided that the failure to so notify Contractor shall not relieve Contractor from any liability which it may have under this Article XI, unless and to the extent (x) Contractor did not otherwise learn of such action, threat or claim and (y) the lack of such notice by any American Indemnified Party results in the forfeiture by Contractor of substantial rights and defenses.

(i)With respect to third party Claims, Contractor shall be entitled, if it accepts financial responsibility for such third party Claim, to control the defense of, to settle or to pay for any such third party Claim at its expense and by its counsel; provided that the American Indemnified Party’s prior Consent (which may not be unreasonably withheld or delayed) must be obtained prior to settling or paying for any such third party Claim. The American Indemnified Party shall provide Contractor with such information as Contractor shall reasonably request to defend or resolve any such third party Claim and shall otherwise cooperate with Contractor in the defense or resolution of any such third party Claim. If Contractor does not accept financial responsibility for the Losses relating to any third party Claim or fails to defend against the third party Claim that is the subject of a Notice under this Section 11.03(a) within [***] of receiving such Notice (or sooner if the nature of the third party Claim so requires), or otherwise contests its obligation to indemnify the American Indemnified Party in connection therewith and pay on demand all of the Losses associated with such Claim, the American Indemnified Party may, upon providing Notice to Contractor, pay, compromise or defend such third party Claim. In the latter event, the American Indemnified Party, by proceeding to defend itself or settle the matter, does not waive any of its rights hereunder to later seek indemnification from Contractor. Except as set forth in this Section 11.03(a), the American Indemnified Party shall not enter into any settlement or other compromise or Consent to a judgment with respect to a third party Claim as to which Contractor has an indemnity obligation hereunder without the prior Consent of Contractor (which may not be unreasonably withheld or delayed), and the entering into of any settlement or compromise, or the Consent to any judgment in violation of the foregoing shall constitute a waiver by any American Indemnified Party of its right to indemnity hereunder to the extent Contractor is materially prejudiced thereby. Contractor shall be subrogated to the rights of the American Indemnified Party to the extent that Contractor pays for any Losses suffered by the American Indemnified Party hereunder.

(ii)With respect to any other Claim, such Notice shall provide a reasonable estimate of the Losses, if then available, and within [***] after receipt of any Notice detailing any amount owed, Contractor shall either pay the amount of such Loss or contest the payment of such amount.

(b)Indemnification by American. Any Contractor Indemnified Party entitled to indemnification from American under the terms and conditions of this Agreement shall provide American with prompt Notice of any Claim that such Contractor Indemnified Party believes gives rise to a Claim for indemnity against American or which could result in any Losses; provided that

 

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the failure to so notify American shall not relieve American from any liability which it may have under this Article XI, unless and to the extent (x) American did not otherwise learn of such action, threat or claim and (y) the lack of such notice by such Contractor Indemnified Party results in the forfeiture by American of substantial rights and defenses.

(i)With respect to third party Claims, American shall be entitled, if it accepts financial responsibility for such third party Claim, to control the defense of, to settle or to pay for any such third party Claim at its own expense and by its own counsel; provided that the Contractor Indemnified Party’s prior Consent (which may not be unreasonably withheld or delayed) must be obtained prior to settling any such third party Claim. The Contractor Indemnified Party shall provide American with such information as American shall reasonably request to defend or resolve any such third party Claim and shall otherwise cooperate with American in the defense or resolution of any such third party Claim. If American does not accept financial responsibility for the Losses relating to any third party Claim or fails to defend against the third party Claim that is the subject of a Notice under this Section 11.03(b) within [***] of receiving such Notice (or sooner if the nature of the third party Claim so requires), or otherwise contests its obligation to indemnify the Contractor Indemnified Party in connection therewith and pay on demand all of the Losses associated with such Claim, the Contractor Indemnified Party may, upon providing Notice to American, pay, compromise or defend such third party Claim. In the latter event, the Contractor Indemnified Party, by proceeding to defend itself or settle the matter, does not waive any of its rights hereunder to later seek indemnification from American. Except as set forth in this Section 11.03(b), the Contractor Indemnified Party shall not enter into any settlement or other compromise or Consent to a judgment with respect to a third party Claim as to which American has an indemnity obligation hereunder without the prior Consent of American (which may not be unreasonably withheld or delayed), and the entering into of any settlement or compromise, or the Consent to any judgment in violation of the foregoing shall constitute a waiver by any Contractor Indemnified Party of its right to indemnity hereunder to the extent American is prejudiced thereby. American shall be subrogated to the rights of the Contractor Indemnified Party to the extent that American pays for any Losses suffered by the Contractor Indemnified Party hereunder.

(ii)With respect to any other Claim, such Notice shall provide a reasonable estimate of the Losses if then available, and within [***] after receipt of any Notice detailing the amount owed, American shall either pay the amount of such Loss or contest the payment of such amount.

(c)Joint Claim. Notwithstanding anything contained in this Section 11.03 to the contrary, Contractor and American shall cooperate in the defense of any Claim imposed jointly against them.

11.04Employer’s Liability and Workers’ Compensation. American, on the one hand, and Contractor, on the other hand, shall bear full responsibility for their respective employer’s liability and workers’ compensation liability to their respective officers, directors, employees or American Agents or Contractor Agents, as applicable, on account of injury or death resulting from or sustained in the performance of their respective services under this Agreement. American, on the one hand, and Contractor, on the other hand, with respect to their employees, hereby accept full and exclusive liability for the payment of workers’ compensation and employer’s liability insurance premiums with respect to such employees, and for the payment of all taxes, contributions or other payments for unemployment compensation or old age benefits, pensions or annuities now or hereafter imposed upon employers by

 

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any Governmental Authority, including state, local or foreign Governmental Authorities, with respect to such employees measured by the wages, salaries, compensation or other remuneration paid to such employees, or otherwise, and American, on the one hand, and Contractor, on the other hand, further shall make such payments and make and file all reports and returns, and do everything to comply with the laws or rules of any Governmental Authority imposing such taxes, contributions or other payments.

ARTICLE XII.

TERM AND TERMINATION

12.01Term. This Agreement shall be effective as of the Effective Date and (unless earlier terminated as provided herein) shall continue until the Withdrawal of all of the Covered Aircraft in accordance with the terms hereof (the “Term”); provided that with respect to each Covered Aircraft, each Covered Aircraft’s term shall commence on its Implementation Date and, unless otherwise Withdrawn prior thereto pursuant to the provisions hereof, shall continue until the specified dates set forth on Schedule 1 under the heading Aircraft Term (each an Aircraft Term”). A Covered Aircraft that has been Withdrawn from this Agreement shall no longer be subject to any of the terms and conditions of this Agreement, including any Aircraft Term.

12.02Termination and Withdrawal Rights. This Agreement may be terminated or certain Covered Aircraft may be Withdrawn during the Term hereof pursuant to this Section 12.02.

(a)Termination by American or Contractor. In addition to and without limiting Section 12.02(b) and Section 12.02(c) below or any other remedy available to either Party under applicable law, (i) if either American or Contractor has an Insolvency Event, then the other Party shall have the right to terminate this Agreement in accordance with this Article XII by providing Notice (which Notice shall specify the Termination Date and Wind Down Schedule, subject to this Article XII) to the Party suffering the Insolvency Event, (ii) with respect to Section 12.02(a)(ii) and/or Section 12.02(a)(iii) below, if either American or Contractor is the defaulting Party, then the other Party shall have the right to terminate this Agreement by providing Notice (which Notice shall specify the Termination Date and Wind Down Schedule, subject to the terms of this Article

XII)to the defaulting Party, or (iii) with respect to Section 12.02(a)(iv) below, either Party shall have the right to terminate this Agreement in accordance with this Article XII by providing at least [***] prior Notice [***] Notice shall only apply to Section 12.02(a)(iv) and shall specify the Termination Date and Wind Down Schedule, subject to this Article XII) to the other Party:

(i)Bankruptcy. American or Contractor (A) makes a general assignment for the benefit of creditors or becomes insolvent; (B) files a voluntary petition in bankruptcy;

(A)petitions for or acquiesces in the appointment of any receiver, trustee or similar officer to liquidate or conserve its business or any substantial part of its assets; (D) commences under the laws of any jurisdiction any proceeding involving its insolvency, bankruptcy, reorganization, readjustment of debt, dissolution, liquidation or any other similar proceeding for the relief of financially distressed debtors; (E) becomes the object of any proceeding or action of the type described in (C) or (D) above and such proceeding or action remains undismissed or unstayed for a period of at least [***]; or (F) is involuntarily divested of a substantial part of its assets for a period of at least [***] (each of (A) through (F) above, an “Insolvency Event”); and

(ii)Material Breach. American, on the one hand as the defaulting Party, or Contractor, on the other hand, as the defaulting Party, shall refuse, neglect or fail to perform, observe or keep either (A) any material non-monetary covenants, agreements, terms or conditions on their part to be performed, observed or kept hereunder or in any Related Agreement, or (B) any other covenant, agreement, term or condition contained herein that would reasonably be expected to substantially deprive American, on the one hand as the non-defaulting Party or Contractor, on the other hand as a non-defaulting Party, of any material benefits of this Agreement or any Related Agreement (individually and collectively, a “Material Breach”) and any such Material Breach shall continue for a period of [***] or more after Notice to the defaulting Party to cure such Material Breach. “Material Breach” includes, but is not limited to: (A) Contractor’s failure to comply with any of the Standards of Service pursuant to and as set forth in Exhibit B hereof (subject to Section V of Exhibit B), (B) Contractor’s failure to timely deliver any information as specified in Section 6.06, or (C) Contractor’s failure to deliver the information required by Section 6.14(a) or Section 6.14(b) to American pursuant to the terms and conditions of Section 6.14(a) or Section 6.14(b), as applicable;

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(iii)Monetary Breach. (A) A Party shall fail to pay any amounts owing to the other Party under the terms and conditions of this Agreement or any Related Agreement, and such failure remains uncured for more than [***] after receipt of Notice of such failure to pay, or (B) a Party shall breach a monetary provision of this Agreement or any Related Agreement, and such breach remains uncured for more than [***] after receipt of Notice of such monetary breach; or

(iv)Number of Covered Aircraft. At any time during the Term, there are fewer than [***] Covered Aircraft subject to this Agreement.

(b)Termination or Withdrawal by American. In addition to and notwithstanding the other provisions of this Section 12.02, and in addition to any other remedy available to American under applicable law, American shall also have the right and option solely by providing Notice to Contractor to (i) terminate this Agreement as of a specified Termination Date and Withdraw all of the Covered Aircraft pursuant to a Wind Down Schedule provided by American and/or (ii) elect for any or all Covered Aircraft to be Withdrawn from the provisions of this Agreement on the Withdrawal Dates to be specified by American in the Notice of Withdrawal, on the occurrence of any of the following:

(i)Material Breach. The occurrence of a Material Breach by Contractor pursuant to Section 12.02(a)(ii) which continues for the period specified  in  such  Section 12.02(a)(ii);

(ii)Suspension of Contractor’s Certification. Contractor’s FAA or DOT certification used in connection with the Scheduled Flights or any Covered Aircraft is for any reason suspended, revoked, materially impaired in any manner or otherwise not in full force and effect;

(iii)Change of Control. A Change of Control has occurred to which American has not Consented in advance; provided that, without limiting American’s right to Consent in advance to any Change of Control, in the event that Contractor delivers Notice to American prior to a Change of Control requesting that American Consent to such Change of Control, and American wholly fails to respond to Contractor regarding such Notice within [***] of American’s receipt thereof, then American shall be deemed to have Consented to such Change of Control;

 

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(iv)Lack of Required Insurance Coverage. Contractor fails to comply in any respect with Article X, and, as a result thereof, the insurance required pursuant to this Agreement is not then in full force and effect or the insurance is not at any time in compliance in any respect with the requirements herein specified;

(v)Force Majeure Event. A Force Majeure Event occurs that affects Contractor’s ability to operate the Scheduled Flights or perform its other obligations under the Related Agreements and such Force Majeure Event continues for more  than  [***];

(vi)Contractor Labor Dispute. A Contractor Labor Dispute occurs, which impacts Contractor’s ability to provide the Regional Airline Services, and such Contractor Labor Dispute continues for more than [***];

(vii)Inspection or Audit. American determines in its reasonable, good-faith discretion, using recognized standards of safety, that (A) there is a material safety concern with the operation of any Scheduled Flights that has the potential to cause physical harm or significant reputational harm to American or its Affiliates or (B) Contractor’s level of safety with respect to its operation of the Covered Aircraft or the Scheduled Flights is not reasonably satisfactory to American;

(viii)Operation of Covered Aircraft. Contractor operates the Covered Aircraft for any purpose except as provided in this Agreement;

(ix)Failure to Maintain Controllable Completion Rate. Contractor’s Controllable Completion Rate is less than [***] during the Term of this Agreement;

(x)Failure to Maintain Controllable On Time Departures. Contractor’s Controllable On Time Departures is less than [***] during the Term of this Agreement; or

(xi)Operation in Violation of Collective Bargaining Agreement. Contractor breaches Section 6.09(a) hereof and such breach continues for at least [***] following American’s notice to Contractor thereof (such time period may be extended by American in American’s sole discretion).

(c)Withdrawal Rights of American.  In  addition  to  and  notwithstanding  Section 12.02(a) and Section 12.02(b) above, and in addition to any other remedy available to American under applicable law, American shall have the right and option solely by providing Notice to Contractor to Withdraw [***] Covered Aircraft on each occurrence of any of the following, in each case as may be specified in the Notice to Contractor (and Contractor shall thereafter Notify American of the specific tail numbers of each Covered Aircraft to be Withdrawn (in the event Contractor fails to notify American of such tail numbers within [***] of American sending such Notice, then American shall select the specific tail numbers in its sole discretion)):

(i)Failure to Maintain Controllable Completion Rate. Contractor’s Controllable Completion Rate is less than [***] during the Term of this Agreement;

 

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(ii)Failure to Maintain Controllable On Time Departures. Contractor’s Controllable On Time Departures is less than [***] during the Term of this Agreement; or

(iii)Cabin Interiors Program Failure to Satisfactorily Complete. Any component of the Cabin Interiors Program for any Covered Aircraft is completed in all material respects by the applicable Cabin Interiors Program Deadline, but not to American’s reasonable satisfaction and such failure continues for over [***], all as determined by American in its reasonable discretion; or

(iv)Cabin Interiors Program Failure to Complete on Time. Any component of the Cabin Interiors Program for any Covered Aircraft is incomplete in any material respect by the applicable Cabin Interiors Program Deadline, all as determined by American in its reasonable discretion.

 

(d)

Additional Withdrawal Rights of American.

(i)In addition to the other remedies set forth in Section 6.12 and this Section 12.02, and in addition to any other remedy available to American under applicable law, if a Notification Shortfall occurs with respect to [***] (or more), then American may also elect, in its sole discretion, upon Notice to Contractor given no later than [***] following the end of the such [***] (or more) period, to Withdraw from the provisions of this Agreement up to that number of Covered Aircraft that equals the average number of CAATS that did not meet the Contractor Threshold for the [***] (or more) periods (rounded up to the nearest whole number); provided that, following such Withdrawal, American may elect, in its sole discretion, to permit such Withdrawn aircraft to be reinstated as a Covered Aircraft hereunder upon delivery of Notice thereof to Contractor. For any and all Covered Aircraft to be Withdrawn pursuant to this Section 12.02(d)(i), American shall deliver a Notice stating (A) the Withdrawal Date for each Covered Aircraft, and (B) a schedule that identifies the number of Covered Aircraft to be Withdrawn. Contractor shall thereafter Notify American of the specific tail numbers of each Covered Aircraft to be removed in accordance with such Notice (in the event Contractor fails to notify American of the tail numbers within [***] of American sending such Notice, then American shall select the specific tail numbers in its sole discretion).

(ii)[***]

 

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(iii)[***].

(e)Rights and Obligations upon Termination or Withdrawal; Election of Remedies.

(i)Termination by Contractor. If Contractor terminates this Agreement pursuant to Sections 12.02(a), then the Wind Down Schedule shall be determined in accordance with the following terms and conditions:

(A)The Notice of termination delivered by Contractor to American pursuant to Sections 12.02(a)(i), 12.02(a)(ii) or 12.02(a)(iii) shall be irrevocable by Contractor and shall include a Termination Date that is at least [***]

 

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after the date of such Notice and a Wind Down Schedule that specifically identifies (by aircraft tail number or engine serial number, as applicable) the Withdrawal Date for each Covered Aircraft then subject to the provisions of this Agreement. The Wind Down Schedule shall provide for the Withdrawal of no more than [***] Covered Aircraft per month, until all Covered Aircraft are Withdrawn from the terms of this Agreement.

(B)The Notice of termination delivered by Contractor to American pursuant to Section 12.02(a)(iv) shall be irrevocable by Contractor and shall include a Termination Date that is at least [***] after the date of such Notice and a Wind Down Schedule that specifically identifies (by aircraft tail number or engine serial number, as applicable) the Withdrawal Date for each Covered Aircraft then subject to the provisions of this Agreement. The Wind Down Schedule shall provide for the Withdrawal of no more than [***] Covered Aircraft per month (unless otherwise mutually agreed by the Parties), until all Covered Aircraft are Withdrawn from the terms of this Agreement.

(C)For the avoidance of doubt, it is intended that the rights and remedies referred to in this Section 12.02(e)(i) shall be cumulative and in addition to any rights or remedies otherwise available at law or in equity. The exercise by Contractor of any one or more of such rights or remedies shall not preclude the simultaneous or later exercise by Contractor of any or all of such other rights or remedies.

 

(ii)

Termination or Exercise of Withdrawal Rights by American.

(A)Termination by American. In the event that American elects to terminate this Agreement pursuant to Section 12.02(a) or Section 12.02(b), the Notice delivered by American to Contractor shall be irrevocable and shall include the Termination Date selected by American and a Wind Down Schedule that identifies the Withdrawal Dates selected by American for all Covered Aircraft; it being understood that (unless American is terminating this Agreement pursuant to Section 12.02(a)(i), Section 12.02(a)(iv) or Section 12.02(b)(vi)) the first Withdrawal Date shall be no earlier than [***] following Contractor’s receipt of such Notice of termination. If American is terminating this Agreement pursuant to Section 12.02(a)(iv) then the first Withdrawal Date shall be no earlier than [***] following Contractor’s receipt of such Notice of termination and the Wind Down Schedule shall provide for the Withdrawal of no more than [***] Covered Aircraft per month (unless otherwise mutually agreed by the Parties), until all Covered Aircraft are Withdrawn from the terms of this Agreement.

(B)[***]

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(C)Within [***] of American sending Contractor a Wind Down Schedule or Notice of Withdrawal, as applicable, Contractor shall Notify American of the specific tail numbers of each Covered Aircraft to be Withdrawn in accordance with such Notice or Wind Down Schedule, as applicable. In the event Contractor fails to Notify American of the tail numbers within such [***] period, American shall select the specific tail numbers in its sole discretion.

(D)For the avoidance of doubt, any Covered Aircraft Withdrawn from the provisions of this Agreement pursuant to this Section 12.02(e)(ii)(A) shall no longer be used to provide Regional Airline Services following such Withdrawal under this Agreement and any compensation to be paid by American to Contractor with respect to such Withdrawn Covered Aircraft shall be prorated based on the number of days such Covered Aircraft was subject to this Agreement and the number of days in the applicable calendar month. In addition, until such time as such Covered Aircraft are Withdrawn, the same shall be subject to all the terms and conditions of this Agreement relating to the provision of Regional Airline Services.

(E)For the avoidance of doubt, it is intended that the rights and remedies referred to in this Section 12.02(e) shall be cumulative and in addition to any rights or remedies otherwise available hereunder or under any Related Agreement or at law or in equity. The exercise by American of any one or more of such rights or remedies shall not preclude the simultaneous or later exercise by American of any or all of such other rights or remedies.

(iii)Obligations upon Withdrawal of Covered Aircraft or Termination. Neither termination of this Agreement nor Withdrawal of any Covered Aircraft from the terms of this Agreement for any reason shall relieve American or Contractor of their rights and obligations incurred prior to the Termination Date or Withdrawal Date, as applicable, of such Covered Aircraft. If a Wind Down Schedule is delivered by either Contractor or American pursuant to the terms of this Section 12.02(e), Contractor shall continue to operate any Covered Aircraft for Scheduled Flights until its Withdrawal Date and Contractor shall receive compensation for such Scheduled Flights in accordance with the provisions hereof and subject to the terms and conditions hereof. Nothing contained herein shall limit Contractor’s obligations to provide maintenance and repair services for the Covered Aircraft (including any Engines) prior to such Withdrawal Date, as applicable.

ARTICLE XIII. INTENTIONALLY OMITTED.

13.01Intentionally Omitted.

 

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ARTICLE XIV. MISCELLANEOUS

14.01Notices. All Notices, Consents, or amendments under this Agreement shall be in writing in English and shall be deemed given to American or Contractor, as the case may be, upon

(a)confirmation of receipt of a delivery in person; (b) a transmitter’s confirmation of a receipt of an email transmission (but only if followed by confirmed delivery the following Business Day (i) by a nationally recognized overnight courier or (ii) by hand); or (c) confirmed delivery by a nationally recognized overnight courier, to the Parties at the addresses below.

If to American, to:

[***]

with copies delivered at the same address to the attention of:

[***]

and

[***]

If to Contractor, to:

[***]

with a copy to:

[***]

 

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And if to American pursuant to Section 14.06(b), a copy of such Notice shall also be provided to:

[***]

and

[***]

If to American pursuant to Exhibit D, to:

[***]

or, in each case, to such other address as a Party may have furnished to the other Party by a Notice in accordance with this Section 14.01.

Where in this Agreement the words “request,” “directed,” “inform,” “furnish” or “approved” or similar phrases, expressions or derivatives thereof are used rather than the terms Notice or Consent, such instruction to receive such communication shall be sufficient if done by email (and not in a second writing) (each a Communication”) so long as it is provided (i) in accordance with past practices or, if there are no past practices, in accordance with customary industry practices; (ii) the Person providing the Communication reasonably believes that the Person receiving such Communication is authorized to receive such Communication; and (iii) the Person receiving such Communication reasonably believes the Person providing such Communication has the apparent or actual authority to undertake the action in question.

14.02Binding Effect and Assignment. The terms and conditions of this Agreement shall inure to the benefit of and be binding and enforceable upon the Parties and their respective successors and permitted assigns. Without limiting any restrictions contained in any of the Related Agreements and except with respect to (a) a merger, reorganization, or consolidation of American with or into another Person; (b) an assignment of this Agreement or any rights pertaining thereto, in whole or in part, by American to an Affiliate of American or Parent; (c) a transaction, or series of transactions, by American involving the sale, pledge, lease, transfer or exchange of substantially all of the assets of

 

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American; or (d) any pledge or creation of any security interest in American’s rights under this Agreement, this Agreement and any of the rights, interests or obligations hereunder shall not be assignable or assigned (including by merger or operation of law) by any Party without the prior Consent of the other Party. In the event of (a), (b), or (c) above, Contractor shall be deemed to have released (without further action on the part of Contractor) American from any and all duties, obligations and liabilities (including assignor liability) arising under this Agreement after the date of assignment (including those liabilities arising from acts or omissions of American that occurred prior to the assignment), so long as American’s assignee has agreed to assume American’s duties, obligations and liabilities arising under this Agreement.

14.03Amendment and Modification. Subject to Section 14.02, and except as otherwise expressly provided herein, this Agreement may not be amended or modified in any respect except by a written agreement signed by both of the Parties.

14.04Waiver. The performance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) by the Party entitled to enforce such term, but such waiver shall be effective only if it is in writing signed by the Party against which such waiver is to be asserted. Unless otherwise expressly provided in this Agreement, no delay or omission on the part of any Party in exercising any right or privilege under this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any Party of any right or privilege under this Agreement operate as a waiver of any other right or privilege under this Agreement nor shall any single or partial exercise of any right or privilege preclude any other or further exercise thereof or the exercise of any other right or privilege under this Agreement.

14.05Interpretation. The table of contents and the Article, Section and other headings and subheadings contained in this Agreement and in the exhibits and schedules hereto are solely for the purpose of reference, are not part of the agreement of the Parties, and shall not in any way affect the meaning or interpretation of this Agreement or any Exhibit or Schedule hereto. All references to days, months or years shall be deemed references to calendar days, months or years. All references to “$” shall be deemed references to United States dollars. Unless the context otherwise requires, any reference to an “Article,” a “Section,” an “Exhibit,” or a “Schedule” shall be deemed to refer to an Article or Section of this Agreement or an Exhibit or Schedule to this Agreement, as applicable. The words “hereof,” “herein” and “hereunder” and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, unless otherwise specifically provided they shall be deemed to be followed by the words “without limitation.” All references to “meet” or “meeting” (in the context of the Parties meeting to discuss or confer) shall be deemed to include meeting in person, telephonically or through other electronic means. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing the document to be drafted. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence. Notwithstanding anything set forth in this Agreement, nothing herein shall be deemed to modify, restrict or limit any other requirements (including insurance) that may be required under any other Related Agreement.

 

14.06

Confidentiality and Public Communications.

(a)Confidential Information. Without limiting any other confidentiality obligations of Contractor as may be set forth in any of the other Related Agreements and except as may be either (a) provided in any of the Related Agreements, (b) requested by any court or administrative agency, (c) required by any law, rule or regulation of a Governmental Authority, (d) requested by a Governmental Authority, stock exchange or rating agency, or (e) required in any proceeding to

 

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enforce the provisions of this Agreement or any of the Related Agreements, American and Contractor agree (i) not to publicize or disclose to any Third Party any Confidential Information of the other Party, including the terms or conditions of this Agreement and any Related Agreement or any exhibit, schedule or appendix hereto or thereto, without the prior Consent of the other Party, except that a Party may disclose such information to its Affiliates, any Party for which indemnification is provided pursuant to this Agreement, Third Party consultants, advisors, representatives or labor organizations, unions, work groups or other groups negotiating or subject to such Party’s collective bargaining agreements, in each case, that have agreed to keep such information confidential and (ii) not to use any such Confidential Information of the other Party other than in connection with performing their respective duties and obligations or enforcing their respective rights and privileges under this Agreement or the Related Agreements or as otherwise expressly contemplated by this Agreement or the Related Agreements. If any Party is served with a subpoena or other process requiring the production or disclosure of any Confidential Information of the other Party, then the Party receiving such subpoena or other process, before complying with such subpoena or other process, shall, to the extent permitted by applicable law, promptly provide Notice to the other Party of same and permit said other Party a reasonable period of time to intervene and contest disclosure or production. Upon any termination of this Agreement, each Party must, at the written request of the other Party, return or destroy Confidential Information received from the other Party which is still in the recipient’s possession or control and certify its compliance with such written request. Notwithstanding the foregoing, the Parties may disclose to Third Parties, without limitation of any kind, the United States federal or state income tax treatment and tax structure of the transactions contemplated pursuant to the Related Agreements and all materials of any kind provided to them relating to such tax treatment and tax structure. For this purpose, “tax structure” means any facts relevant to the United States federal or state income tax treatment, but does not include other Confidential Information, including the identity of the Parties.

(b)Public Communications. Except as disclosed in connection with compliance with applicable securities laws and any stock exchange listing requirement, Contractor shall not issue any press release or public announcement relating to Regional Airline Services, Scheduled Flights, the cessation of Scheduled Flights, schedule changes, customer initiatives, marketing programs or promotions, without American’s prior written Consent following a sufficient time