REGIONAL JET SERVICES AGREEMENT
THIS REGIONAL JET SERVICES AGREEMENT(the "Agreement") is
made as of the 25th day of October, 1996 by and between MESABA
HOLDINGS, INC., a Minnesota corporation ("Holdings"), MESABA
AVIATION, INC., a Minnesota corporation ("Mesaba"), and NORTHWEST
AIRLINES, INC., a Minnesota corporation ("Northwest").
WITNESSETH:
WHEREAS, Mesaba and Northwest desire to make certain
arrangements between them (including aircraft lease arrangements)
which will enable Mesaba to provide to Northwest commercial jet
transportation services using Avro Regional Jet aircraft;
WHEREAS, no franchise or similar arrangement is being
granted or is intended to be granted hereby; and
WHEREAS, Holdings, Mesaba and Northwest are each willing to
perform in the manner and upon the conditions and terms
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Northwest, Mesaba and Holdings do
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used in this Agreement, the
following terms have the following respective meanings:
Affiliate shall mean any entity or person controlling,
controlled by, or under common control with, Northwest.
Aircraft shall mean up to thirty-six (36) Avro Regional Jet
aircraft which are the subject of the Letter of Intent when, as
and if such aircraft are added to Mesaba's fleet pursuant to
Section 2.01.
Airport Landing Fees shall mean all landing fees, custom
fees, airport user fees and assessments and amounts payable or
assessed for joint or common use facilities to the extent such
fees and assessments are attributable to or result from Jet
Services.
Block Hours Payment shall mean the payment to be made
pursuant to Section 4.02, the amount of which is determined in
accordance with Exhibit A attached hereto.
Block Hours Report shall mean the reports to be prepared by
Mesaba pursuant to Section 4.02(a).
Buyer Furnished Equipment shall have the meaning ascribed to
such term in the Letter of Intent.
Default shall mean the occurrence of an event set forth in
Article IX, and the expiration of any cure period provided
therein without cure or other remedial action having occurred,
permitting immediate termination of the Agreement.
Designator shall mean "NW" or such other designator code as
Northwest may specify to identify regional jet flights.
Direct Costs shall mean Northwest's or Mesaba's actual costs
for goods and services without any surcharge for administrative
or general overhead expense.
DOT shall mean the United States Department of
Transportation or any successor to its functions with respect to
the regulation of air transportation.
DOT Certification shall mean any and all certifications and
approvals by DOT, FAA and other regulatory agencies required for
Mesaba to operate the Aircraft and to perform pursuant to the
terms of this Agreement and all Governmental Regulations.
Exisiting Services Agreement shall mean the Airline Services
Agreement, dated as of September 15, 1988, as amended, between
Mesaba and Northwest.
FAA shall mean the Federal Aviation Administration.
Governmental Regulations shall mean rules and regulations
prescribed by any local, state or federal unit of government
having authority and jurisdiction to regulate the business and
affairs of an air carrier having DOT Certification, including
without limitation, the DOT and the FAA.
Hub Cities shall mean Minneapolis/St. Xxxx, Minnesota and
Detroit, Michigan.
Identification shall mean the trade name (including
"Northwest Airlink", "Northwest Jetlink" or any similar or other
name), trademarks, service marks, graphics, logo, distinctive
color schemes and other identification selected by Northwest in
its sole discretion for the Jet Services to be provided by
Mesaba, whether or not such identification is copyrightable or
otherwise protected under federal law.
Jet Services shall mean the provisioning by Mesaba to
Northwest of Scheduled Flights using the Aircraft in accordance
with this Agreement.
Letter of Intent shall mean the letter of intent between
Northwest Aircraft Inc. and Aero International (Regional) dated
as of October 18, 1996 with respect to the purchase of up to
thirty-six (36) Avro Regional Jet aircraft, a copy of which is
attached hereto as Exhibit B.
Margin shall mean the {CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT} determined in
accordance with Section 4.04.
Northwest Nominee shall mean an individual designated to
serve as a director of Holdings and Mesaba by Northwest and
approved by the Northwest Directors (1) who is either an officer
or director of Northwest or an individual of recognized standing
and reputation in the airline industry and (2) with respect to
whom Holdings would not be required to make any disclosures in
its proxy statements of matters required to be disclosed pursuant
to Item 401(f)(2) through (6) of Regulation S-K of the rules and
regulation of the Securities and Exchange Commission.
Performance Period shall mean each six (6) month period
ending on a June 30 or December 31 occurring during the term of
this Agreement; provided, however, the first Performance Period
shall not commence until the earlier of (1) January 1, 1998 or
(2) the first January 1 or July 1 occurring after the eighth
Aircraft has commenced service pursuant to this Agreement.
Phase-in Period shall mean the period commencing on the date
the first Aircraft commences revenue service and ending on the
date on which the Block Hours Payment Rate is equal to the Phase-
in Period Block Hours Payment Rate determined in accordance with
Exhibit A, but in no event later than the date on which the
twelfth Aircraft commences revenue service.
PPI shall have the meaning ascribed to such term in
Exhibit A hereto.
Scheduled Flights shall mean (i) revenue passenger flights
which, regardless of frequency, are held out to the public and
published in the customary and applicable schedule distribution
systems, such as the OAG, or published by Northwest in its own
system time tables or (ii) any Northwest scheduled charter
flight.
Service Cities shall mean those cities identified from time
to time by Northwest to which Mesaba shall provide Jet Services.
Start Date shall mean the later of April 6, 1997 or forty
(40) days after the delivery of the first Aircraft to Mesaba.
Subleases shall mean the sub-subleases, subleases and/or
leases to be entered into by Mesaba and Northwest pursuant to
Section 2.01.
Termination Date means the date on which this Agreement
terminates whether by its term or as a result of a Default.
ARTICLE II
COVENANTS AND UNDERTAKINGS OF MESABA
Section 2.01 Use and Sublease of the Aircraft.
(a) Use of the Aircraft. Mesaba agrees that the
Aircraft may be used only to provide the Jet Services
contemplated by this Agreement and that the Aircraft may not be
used by Mesaba for any other purpose without the prior written
consent of Northwest.
(b) Sublease of the Aircraft. Mesaba and Northwest
agree to enter into (or, as to Northwest, Northwest agrees to
cause such Northwest Affiliate as Northwest may designate to
enter into) a sub-sublease, sublease or lease with respect to
each of the first twelve (12) Avro Regional Jet aircraft to be
purchased pursuant to the Letter of Intent when, if and as
Northwest takes delivery of each such Avro Regional Jet aircraft.
Mesaba agrees to enter into a sub-sublease, sublease or lease
with Northwest (or such Northwest Affiliate as Northwest may
designate) with respect to the remaining twenty-four (24) Avro
Regional Jet aircraft subject to the Letter of Intent when and as
Northwest takes delivery of each such Avro Regional Jet aircraft
if Northwest determines in its sole discretion to use such
aircraft for Jet Services pursuant to this Agreement. Northwest
shall have no obligation to lease or sublease the remaining
twenty-four (24) Avro Regional Jet aircraft to Mesaba and nothing
in this Agreement shall prohibit or limit Northwest (or a
Northwest Affiliate) from using or leasing to other air carriers
the remaining twenty-four (24) Avro Regional Jet aircraft.
(c) Terms of the Subleases. Each Sublease shall have
the following terms:
(i) the term of each Sublease shall be for a
period ending on the Termination Date;
(ii) the rent payable under each Sublease shall
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT};
(iii) the other terms of the Sublease shall be
substantially the same as the terms of the applicable head lease;
provided, however, (A) unless Northwest agrees otherwise, each
Sublease shall not contain any buyout rights, renewal options,
purchase options or other similar rights or options provided for
in the head lease, (B) in determining whether certain terms (such
as those relating to self-insurance requirements and past due
charges, for example) are substantially similar, the relative
creditworthiness of Northwest and Mesaba shall be considered, and
(C) any events of default and/or termination rights shall be
substantially the same as those set forth in the draft subleases
or sub-subleases to be entered into by Northwest and Mesaba with
respect to the leasing of {CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT} aircraft as
such drafts exist on the date hereof (provided that the
termination of the Existing Services Agreement shall not be an
event of default or otherwise give rise to a termination right).
(iv) the Sublease shall contain such other terms
as Northwest shall request of Mesaba to conform provisions of the
Sublease to the head lease and any ancillary documents actually
entered into by Northwest or its Affiliate in connection with
such Aircraft.
In the event Northwest or an Affiliate owns an Aircraft, Mesaba
shall enter in a lease as lessee with Northwest or its Affiliate;
such lease shall be on such terms and conditions as Mesaba would
be able to obtain from an independent third party, subject to the
terms of any debt financing associated with such Aircraft.
Section 2.02 DOT Certification. Mesaba has or shall obtain
not later than the later of (i) April 1, 1997, or (ii) thirty
(30) days after the delivery of the first aircraft to Mesaba, DOT
Certification and all other permits, licenses, certificates and
insurance required by governmental authorities and Article VIII
hereof to enable Mesaba to perform the services required by this
Agreement.
Section 2.03 Operation of Scheduled Flights.
(a) Provision of Scheduled Flights. Subject to the
terms and conditions of this Agreement, Mesaba shall use the
Aircraft to operate Scheduled Flights between the Hub Cities and
such Service Cities as shall be designated by Northwest from time
to time in its sole discretion. All schedules, block times and
aircraft routing for such Scheduled Flights and all utilization
of the Aircraft shall be determined by Northwest from time to
time, in its sole discretion, subject to the reasonable operating
constraints of Mesaba taking into consideration reasonable
maintenance and Aircraft rotation requirements.
(b) Use of Designator, Identification and Related
Matters. Mesaba shall operate the Scheduled Flights provided
under this Agreement using the Designator. The Scheduled Flights
shall be identified by Mesaba solely with flight numbers assigned
by Northwest. Mesaba shall use the Identification determined by
Northwest from time to time, in its sole discretion, for the
Aircraft, and for the uniforms and printed materials used in
connection with the Jet Services; provided, however, the uniforms
for the flight and cabin crews (as opposed to the use of the
Identification thereon) shall be determined by Mesaba provided
that such uniforms shall at all times be consistent with Mesaba's
existing uniform standards.
(c) Personnel and Dispatch Control. Mesaba shall be
responsible for providing all crews (flight and cabin) to operate
the Scheduled Flights and for all aspects (personnel and other)
of dispatch control.
(d) Aircraft Maintenance, Servicing and Cleaning.
Mesaba shall be responsible for all aspects of the maintenance,
servicing and cleaning of the Aircraft (other than incidental
cleaning provided by Northwest pursuant to Section 3.02(e)).
(e) Compliance With Governmental Regulations. All
flight operations, dispatch operations and flights shall be
conducted and operated by Mesaba in strict compliance with all
Governmental Regulations, including, without limitation, those
relating to crew qualifications, crew training and hours. All
Aircraft shall be operated and maintained by Mesaba in strict
compliance with all Governmental Regulations, Mesaba's own
operations manuals and maintenance manuals and procedures, and
all applicable equipment manufacturer's instructions. At all
times, Mesaba shall operate with the highest standards of care.
(f) Quality of Service. Mesaba shall achieve the same
quality of airline service provided by Northwest. In furtherance
of that goal, (i) Mesaba shall maintain adequate staffing levels
to ensure the same level of customer service and operational
efficiency that Northwest achieves, and (ii) Mesaba shall
cooperate with Northwest in any way necessary or desirable to
provide such comparable level of customer service in connection
with the operation of Jet Services.
(g) Nonexclusive Arrangement. Nothing in this
Agreement shall preclude Northwest from entering into similar or
other arrangements with other carriers for the provisioning of
regional jet services using Avro Regional Jets to or from the Hub
Cities, the same Service Cities or elsewhere.
(h) Mesaba Costs. Except as provided in Section 2.04,
all costs necessary to provide the foregoing services (including
(i) all personnel costs and costs in relation therewith such as
positioning, hotel accommodations, salaries, pensions, benefits,
employment taxes and per diems, (ii) all maintenance and repair
costs associated with the Aircraft (including line maintenance,
maintenance towing, hanger fees, local maintenance assistance,
spare parts, repairables, rotables and engine overhauls), (iii)
all flight dispatch costs, (iv) all related general and
administrative costs, (v) any related capital expenditures, and
(vi) other costs imposed pursuant to other sections of the
Agreement) shall be the sole responsibility of and payable by
Mesaba.
Section 2.04 Airport Fees. Mesaba shall pay all Airport
Fees associated with Scheduled Flights using the Aircraft, and
Northwest shall reimburse Mesaba for such fees in a timely
manner.
Section 2.05 Minimum Completion Factor. Mesaba shall
achieve not less than a {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT} completion factor for
all Scheduled Flights which are scheduled to be operated by
Mesaba during each Performance Period. For purposes of this
Agreement, all cancellations due to airport closure and weather
minima at the Service Cities or the Hub Cities, or Northwest
controllable events, will be excluded from this calculation.
Section 2.06 Minimum On-Time Reliability. Mesaba shall
achieve a {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT} on-time arrival reliability factor
for all Scheduled Flights which are scheduled to be operated by
Mesaba during each Performance Period. For purposes of this
Agreement, an arrival will be considered on-time if it arrives
not later than {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT} minutes after its
published, scheduled arrival time, and all arrival delays due to
air traffic control holds, airport closure and weather minima at
the Service Cities or the Hub Cities or Northwest controllable
events will be excluded from this calculation.
Section 2.07 Fuel Burn. Mesaba shall operate the Aircraft
in accordance with all manufacturer and vendor standards and
requirements for optimal fuel burn performance and shall promptly
remedy any operating factors that cause or contribute to fuel
burn in excess of such optimal burn performance. Mesaba shall
provide to Northwest such fuel burn information as is necessary
or desirable to allow Northwest to monitor compliance with any
manufacturer or vendor agreement.
Section 2.08 Use of Other Designators. During the term of
this Agreement, Mesaba shall not use on the Aircraft its own
airline designator (except as otherwise required by Governmental
Regulations) or the airline designator, logo, or any other
identifying feature of another foreign or United States airline,
without the express prior written consent of Northwest, or unless
Northwest directs Mesaba to use such other designator, logo, or
identifying feature.
Section 2.09 Certain Notices to Northwest. Mesaba shall
give prompt written notice to Northwest of (a) any litigation
involving an uninsured claim of more than $1,000,000 against
Mesaba, (b) any proceeding before any governmental agency which,
if adversely determined, would materially and adversely affect
Mesaba's financial condition, affairs, operations or prospects,
and (c) any other matter which would materially and adversely
affect the financial condition, affairs, operations or prospects
of Mesaba or its ability to perform its obligations under this
Agreement.
Section 2.10 Financial and Reporting Covenants. Mesaba
shall provide to Northwest promptly following the filing or
providing thereof copies of all financial statement, reports,
notices and proxy statements filed with or provided to the
Securities and Exchange Commission by Mesaba.
ARTICLE III
COVENANTS AND UNDERTAKINGS OF NORTHWEST
Section 3.01 Inflight Supplies. Northwest shall furnish or
cause to be furnished to Mesaba, at Northwest's sole expense,
adequate supplies (consistent with Northwest's level of customer
service) of its customary inflight supplies including, but not
limited to, beverages, cups, napkins, sugar and blankets and
pillows in a form similar or identical to that used by Northwest.
Section 3.02 Terminal Operations. Northwest shall provide
or cause to be provided, at Northwest's sole expense, the
following functions relating to Jet Services: (a) all passenger
and gate check-in activities, including baggage check-in, (b)
passenger enplaning/deplaning, (c) aircraft loading/unloading,
(d) passenger ticketing, (e) aircraft cleaning between turns and
while parked overnight consistent with Northwest's cleaning
standards for DC-9 aircraft (unless the Aircraft when parked
overnight is subject to maintenance at a Mesaba maintenance base
in which event Mesaba shall clean the interior and exterior of
the Aircraft in a manner consistent with Northwest's aircraft
cleaning standards), (f) aircargo and small package service, (g)
ramp and foul weather cleaning and glycol service, (h) the
heating and air conditioning of the Aircraft while parked on the
ramp, and (i) fuel for the Aircraft and into plane fueling
services. Northwest shall use its own equipment to handle
Scheduled Flights operated pursuant to this Agreement and shall,
at its sole expense, provide sufficient personnel, equipment,
gates and ramps for the functions described in this Section 3.02.
Northwest shall have the option from time to time to require
Mesaba to perform some or all of these services and activities at
some or all of the Hub Cities and the Service Cities; provided
that, in connection therewith, (i) Northwest shall give Mesaba
not less than ninety (90) days' prior written notice as to the
services and activities to be performed and the locations
thereof; (ii) the period of Mesaba's services shall be not less
than one (1) year; (iii) Northwest shall pay Mesaba an amount
equal to {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT}; and (iv) Northwest shall bear the cost
of the capital expenditures associated with any equipment
required for Mesaba to perform such services.
Section 3.03 Passenger Fares. Northwest shall be the sole
authority for filing tariffs for flights operated pursuant to
this Agreement. Northwest shall establish passenger fares for all
flights operated pursuant to this Agreement. All charges for
filing of fares or tariffs relating to flights operated pursuant
to this Agreement shall be paid by Northwest.
Section 3.04 Scheduling Coordination. Northwest shall use
its best efforts to provide to Mesaba not less than sixty (60)
days' prior written notice of changes in routing, scheduling or
Service Cities; provided, however, Mesaba shall use its best
efforts to effect such changes if less than sixty (60) days'
prior notice is given. Northwest shall develop scheduling
procedures for handling irregular operations and related matters.
Section 3.05 Aircraft Interior and Seating. All matters
relating to the interior of the Aircraft, including
specifications and seating configurations, initially and from
time to time thereafter shall be determined by Northwest in its
sole discretion and all costs associated therewith shall be at
Northwest's sole expense.
Section 3.06 Pilot Transportation. Northwest shall provide
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT} for Mesaba pilots traveling overseas for
training related to the Jet Services.
Section 3.07 Certain Notices to Mesaba. Northwest shall
give prompt written notice to Mesaba of any litigation or
proceeding before any governmental agency or any other matter,
including Governmental Regulations, which, if adversely
determined, would materially adversely affect Northwest's ability
to perform its obligations under this Agreement.
ARTICLE IV
REVENUES; PAYMENTS; SETOFF
Section 4.01 Revenues. Mesaba acknowledges and agrees that
all revenues resulting from the sale and issuance of passenger
tickets and cargo airway bills associated with the operation of
the Aircraft and all other sources of revenue associated with the
operation of the Aircraft (including without limitation, beverage
service and excess baggage) are the sole property of Northwest.
Section 4.02 Block Hour Payment to Mesaba.
(a) Block Hours Reports. Mesaba shall provide to
Northwest periodic reports with respect to the number of block
hours of Jet Services flown by Mesaba in accordance with the
following schedule in each calendar month during the term of this
Agreement:
DAY OF MONTH REPORT DUE PERIOD COVERED BY REPORT
22 1ST - 15TH OF MONTH
7 COMPLETE PREVIOUS MONTH
(b) Payment Schedule. Northwest shall remit to Mesaba
by wire transfer of immediately available funds by the close of
business on the 26th day of each calendar month (or the next
banking day if the 26th is a bank holiday), as a provisional
payment, Mesaba's Block Hour Payment for Jet Services for the
period covered by the Block Hours Report furnished by Mesaba on
the 22nd day of the month. Northwest shall remit to Mesaba by
wire transfer of immediately available funds by the close of
business on the 11th day of each month (or the next banking day
if the 11th is a bank holiday), as a final payment, Mesaba's
Block Hour Payment for the preceding month, less the amount of
the provisional payment made on the 26th day of the preceding
month. For purposes of this Section 4.02, Mesaba's Block Hour
Payment for any period will be computed by multiplying the then
applicable rate set forth in Exhibit A attached hereto by the
number of block hours reported in Mesaba's Block Hours Report for
such period for Jet Services. Adjustments arising from
Northwest's audit of the Block Hours Report may be made within
forty-five (45) days following the end of each month.
Section 4.03 Incentives and Penalties. Mesaba shall be
subject to certain performance incentives and penalties described
in Sections 4.03(a), 4.03(b) and 4.03(e) ("Performance Criteria")
which shall be added to or deducted from the Block Hour Payment.
If Mesaba exceeds any operational criterion an incentive payment
shall be made by Northwest. If Mesaba does not achieve the
performance criterion, then a penalty shall be charged against
amounts owing to Mesaba. Any incentive payment or penalty charge
incurred by meeting or failing to meet Performance Criteria shall
be made in the wire transfer due on the 26th day of the month
following the end of the Performance Period in question pursuant
to Section 4.02(b).
(a) Completion Factor. If Mesaba's completion factor
(calculated in accordance with Section 2.05) is less than
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT} for a Performance Period, Northwest shall
receive from Mesaba {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT} during the applicable
Performance Period. If Mesaba's completion factor is greater than
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT} for a Performance Period, Northwest shall
pay to Mesaba {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT} during the applicable Performance
Period.
(b) On-Time Factor. If Mesaba's on-time factor
(calculated in accordance with Section 2.06) is less than
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT} for a Performance Period, Northwest shall
receive from Mesaba {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT} during the applicable
Performance Period. If Mesaba's on-time factor is greater than
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT} for a Performance Period, Northwest shall
pay to Mesaba {CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT} during the applicable Performance
Period.
(c) Reconciliation of Performance Standards. For each
Performance Period, Mesaba shall prepare a reconciliation of its
actual performance to the targeted performance. This
reconciliation will be completed and delivered to Northwest
within fifteen (15) days after the end of each Performance
Period. Northwest will remit or setoff any incentive or penalty
payment in the next wire transfer due to Mesaba. Northwest will
have the right to audit the reconciliation and shall report any
discrepancies to Mesaba. Any discrepancy not reported to Mesaba
in writing within sixty (60) days of the end of any Performance
Period shall be deemed waived. The payment of any discrepancy
from Mesaba shall be handled as a disputed amount in accordance
with Section 4.05.
(d) Limitations on Incentives and Penalties. In no
event shall the "net aggregate incentives" paid to Mesaba by
Northwest or "net aggregate penalties" paid to Northwest by
Mesaba during any calendar year exceed {CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT}. For
the purposes of this Section 4.03(d), the difference between the
sum of all incentive payments made by Northwest during any
calendar year to Mesaba pursuant to this Section 4.03 less the
aggregate of all payments due to Northwest during the same
calendar year by Mesaba with Northwest for its failure to achieve
the Performance Criteria shall be the "net aggregate incentives"
if the difference is a positive number and shall be "net
aggregate penalties" if the difference is a negative number.
(e) Additional Performance Criteria. During the term
of this Agreement, Northwest may introduce other performance
criteria for Mesaba's operations pursuant to this Agreement. The
parties agree that they will meet upon the introduction of such
additional performance goals for Northwest's operations, to
develop similar performance targets for Mesaba, taking into
account the differences in operations between the two companies,
and shall use their best commercially reasonable efforts to
develop a system of incentives and penalties for Mesaba's
performance with respect thereto in a manner consistent with the
performance standards agreed to herein.
Section 4.04 Annual Payment with Respect to the Margin.
(a) Calculation of the Margin. Not later than ninety
(90) days following the end of each fiscal year of Mesaba ending
during the term of this Agreement, Mesaba shall calculate and
deliver to Northwest its {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT} for Jet Services
provided under this Agreement for the fiscal year then ended (the
"Margin") by dividing (x) {CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT} by (y)
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT}. The result shall be expressed as a
decimal rounded to the fourth place (e.g., .111171 shall be
expressed as .1112). The calculation shall be derived from
Mesaba's audited financial statements for such fiscal year, shall
be determined in accordance with generally accepted accounting
practice and principles consistently applied ("GAAP"), and shall
take into account {CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL TREATMENT}.
(b) Margin Payment. If the Margin is greater than
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT} but is less than or equal to
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT}, Northwest shall receive from Mesaba an
amount determined as follows:
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT}
If the Margin is greater than {CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT}, Northwest
shall receive from Mesaba an amount determined as follows:
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT}
The amount payable by Mesaba pursuant to this Section 4.04(b) is
the "Margin Payment." Northwest shall setoff any Margin Payment
in the next wire transfer due to Mesaba.
(c) Audit of the Margin. Northwest will have the
right to audit the calculation of the Margin and the Margin
Payment, and shall report any disputes to Mesaba. Any dispute not
reported to Mesaba in writing within sixty (60) days of the
receipt of the Margin calculation by Northwest shall be deemed
waived. The payment in respect of any dispute shall be handled as
a disputed amount in accordance with Section 4.05.
Section 4.05 Billing. Northwest shall xxxx Mesaba on a
monthly basis in respect of amounts owed to Northwest by Mesaba
under this Agreement. If such billed items are not paid by Mesaba
to Northwest or disputed by Mesaba within thirty (30) days of the
statement date, Northwest may offset the aggregate amount of
undisputed items against the next scheduled wire transfer
pursuant to Section 4.02(b). Disputed amounts must be paid by
Mesaba to Northwest when the dispute is resolved with interest at
the rate of one percent (1%) per month from the date of the
original xxxx, provided that Northwest may set off such amount
against the next scheduled wire transfer pursuant to Section
4.02(b) if the formerly disputed amount is not paid within thirty
(30) days of resolution. Northwest may also offset against the
next scheduled wire transfer pursuant to Section 4.02(b) the
amount of any rent payment under any Sublease with respect to
which Mesaba shall have defaulted and shall have failed to cure
before the expiration of any applicable grace period.
Section 4.06 Allocation of Start-Up Expenses. Northwest
and Mesaba agree that each shall be responsible for and shall pay
those start-up costs and expenses associated with commencing Jet
Services under this Agreement which are related to or result from
those cost and expense obligations for which each is otherwise
responsible under this Agreement. By way of example and without
limiting the foregoing, Mesaba shall pay all costs associated
with pilot, flight attendant and mechanic training, establishing
maintenance bases and obtaining DOT Certification, and Northwest
shall pay costs associated with Buyer Furnished Equipment,
Aircraft livery, any required ground equipment and any additional
ground and gate personnel.
ARTICLE V
AUDITING AND INSPECTIONS
Section 5.01 Audits. Upon the reasonable prior written
request by Northwest made not more frequently than once every six
(6) months, Mesaba shall make available its books and the books
of Holdings and all other direct and indirect subsidiaries of
Holdings, and records for its operations with respect to this
Agreement available for inspection by Northwest. Northwest shall
also be entitled to make copies and notes of such information as
it deems necessary and to discuss such records and the finances
and accounts of Mesaba with its Chief Financial Officer or other
employee or agent of Mesaba knowledgeable about such records.
Section 5.02 Inspections. Northwest shall be entitled to
conduct on site observations of Mesaba's in-flight service,
flight, maintenance and technical operations to monitor Mesaba's
operations in the same manner as similar functions are evaluated
at Northwest. The purpose of such inspections shall be to
determine Mesaba compliance with applicable Federal Aviation
Regulations, DOT Regulations, state and local laws and equipment
manufacturer's instructions. Mesaba's operation will be evaluated
according to the same standard as Northwest taking into account
the differences in size and operational capabilities between the
two airlines. Such inspections may be announced or unannounced,
but under no circumstances shall they interfere with the
operation of Mesaba's business. Northwest shall report the
findings of any such inspection to Mesaba in writing. Mesaba
shall provide a timely written response detailing a plan of
corrective action to remedy any deficiencies noted in an
inspection. If any deficiency comes to the attention of Mesaba
through audits or any other means, Mesaba shall take immediate
corrective action.
Section 5.03 Confidentiality. Each of Northwest and Mesaba
agrees that, except as otherwise required by Governmental
Regulations or any other applicable law, it shall not disclose to
others and shall keep confidential any confidential, non-public
information concerning the other that it obtains as a result of
or pursuant to this Agreement.
ARTICLE VI
NORTHWEST IDENTIFICATION
Section 6.01 Use of Identification. Northwest shall
establish and maintain an Identification for its program of
affiliation with Mesaba for Jet Services and Mesaba is granted
the right to use such Identification pursuant to Section 2.03(b)
and this Article VI. From time to time, Northwest may change the
Identification applicable to the program, including program
designation and trademark. Northwest shall have complete
discretion to change the Identification applicable to the
program. Such substitute Identification shall be used by Mesaba
in lieu of any prior name to identify Mesaba's association with
the program. If Northwest changes the Identification, Mesaba
shall, as soon as practicable make such changes as are requested
by Northwest to utilize the new name of the program and Northwest
shall be liable for the reasonable expenses incurred by Mesaba in
making such changes.
Section 6.02 Ownership of the Identification. Mesaba
hereby acknowledges Northwest's ownership of the name "Northwest"
and all related Identification and further acknowledges the
validity of the Identification. Mesaba agrees that it will not do
anything which in any way infringes or abridges Northwest's
rights in its Identification or directly or indirectly challenges
the validity of the Identification.
Section 6.03 Nonexclusive License. To the extent that
Mesaba is licensed to use the Identification in accordance with
this Agreement, Mesaba will use such Identification only in a
manner permitted by Northwest or in conjunction with the services
specifically contemplated by this Agreement. Nothing in this
Agreement shall be construed to abridge Northwest's right to use
and/or to license the Identification, and Northwest hereby
reserves the right to the continued use of all the
Identification, to license such other uses of the Identification
and to enter into such agreements with other carriers providing
for arrangements similar to those with Mesaba as Northwest may
desire. No term or provision of this Agreement shall be construed
to preclude the use of the trademark "Northwest Airlink" or
"Northwest Jetlink" or other xxxx as a trademark of an
affiliation program with Northwest or the use of any other
Northwest Identification by other individuals or corporations not
covered by this Agreement.
Section 6.04 Revocation of License Upon Termination of
Agreement. Should this Agreement be cancelled or otherwise
terminated for any reason, all right to use the Identification
provided Mesaba hereby shall immediately revert to Northwest and,
except as otherwise permitted under the Existing Services
Agreement or any successor thereto, shall not thereafter be used
by Mesaba in connection with any operations of Mesaba. Mesaba
shall, in such event, promptly, but in any event within ninety
(90) days (one hundred twenty (120) days with respect to any
distinctive color scheme), take such action as may be necessary
to change its facilities, equipment, uniforms and supplies to
avoid any customer confusion or the appearance that Mesaba is
continuing to have an operating relationship with Northwest.
Section 6.05 Alteration or Amendment of License. At any
time during the life of the Agreement, Northwest may alter or
amend the license to use the Identification granted under this
Agreement so long as Mesaba's rights hereunder are not
diminished, and may, subject to Section 6.01, require Mesaba to
use new or different Northwest Identification.
ARTICLE VII
[Intentionally Omitted]
ARTICLE VIII
LIABILITY, INDEMNIFICATION AND INSURANCE
Section 8.01 Independent Contractor.
(a) Mesaba shall act as an independent contractor. The
employees, agents and/or independent contractors of Mesaba
engaged in performing any of the services Mesaba is obligated to
perform pursuant to this Agreement shall be employees, agents and
independent contractors of Mesaba for all purposes and under no
circumstances shall employees, agents or independent contractors
of Mesaba be deemed to be employees, agents or independent
contractors of Northwest. In its performance of obligations under
this Agreement, Mesaba shall act, for all purposes, as an
independent contractor and not as an agent for Northwest.
Northwest shall have no supervisory power or control over any
employees, agents or independent contractors engaged by Mesaba in
connection with Mesaba's performance of its obligations
hereunder, and all complaints or requested changes in procedures
shall, in all events, be transmitted by Northwest to a designated
representative of Mesaba. Nothing contained in this Agreement is
intended to limit or condition Mesaba's control over its
operation or the conduct of its business as an air carrier.
(b) Northwest shall act as an independent contractor.
The employees, agents and/or independent contractors of Northwest
engaged in performing any of the services Northwest is to perform
pursuant to this Agreement shall be employees, agents and
independent contractors of Northwest for all purposes and under
no circumstances shall employees, agents and independent
contractors of Northwest be deemed to be employees, agents or
independent contractors of Mesaba. In performing its obligations
under this Agreement, Northwest shall act, for all purposes, as
an independent contractor and not as an agent for Mesaba. Mesaba
shall have no supervisory power or control over any employees,
agents or independent contractors engaged by Northwest in
connection with the performance of its obligations hereunder, and
all complaints or requested changes in procedure shall, in all
events, be transmitted by Mesaba to a designated representative
of Northwest. Nothing contained in this Agreement is intended to
limit or condition Northwest's control over its operation or the
conduct of its business as an air carrier.
Section 8.02 Indemnification. Each party assumes full
responsibility for any and all liability to its own officers,
employees or agents on account of injury or death resulting from
or sustained in the performance of their respective services
under this Agreement. Each party shall indemnify, defend,
protect, save and hold harmless the other party, its officers,
employees, and agents from and against any and all liabilities,
claims, demands, suits, judgments, damages and losses (including
the costs, fees and expenses in connection therewith and incident
thereto) brought against the other party, its officers, employees
or agents by or on behalf of any other person, by reason of
damage to or destruction of property of any such person, or
injury to or death of such person, caused by or arising out of
any act or omission by the indemnifying party occurring while
this Agreement is in effect. Notwithstanding the foregoing,
neither party shall be liable for indemnifying the other for
claims of third parties if caused by the gross negligence or
wilful misconduct of the other. Each party shall give the other
party prompt and timely notice if it has actual knowledge of any
claim made or suit instituted against the other party which in
any way results in indemnification hereunder, and the other party
shall have the right to compromise or participate in the defense
of such claim or suit to the extent of its own interest. The
obligations of Mesaba and Northwest under the indemnity and
insurance provisions contained herein shall remain in effect and
shall survive without limitation the termination of this
Agreement with respect to any occurrence or claims arising during
the term of or in connection with this Agreement.
Section 8.03 Insurance.
(a) Mesaba agrees, at its sole expense, to maintain in
full force and effect the following insurance coverages:
(1) Workers' compensation and occupational
disease insurance, subject to the laws of the states wherein this
Agreement is being performed. Such coverage shall include
employers liability insurance up to a limit of at least
{CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT}.
(2) Comprehensive airline and property damage
liability insurance with limits of not less than {CONFIDENTIAL
MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT} combined single limit per occurrence, including, but
not limited to, aircraft liability, passenger legal liability,
premises and property damage liability, hangarkeepers liability
and baggage and cargo liability. Such insurance shall include
endorsements for personal injury and contractual liability.
(3) All risk hull insurance on the Aircraft.
(b) Prior to the commencement of Jet Services under
this Agreement, Certificates of Insurance shall be delivered to
Northwest evidencing compliance with the insurance terms of this
Agreement. All of the above insurance shall be written through a
company or companies reasonably satisfactory to Northwest, and
the Certificates of Insurance shall be of a type that
unconditionally obligates the insurer to notify Northwest in
writing at least thirty (30) days in advance of the effective
date in the event of any material change in or cancellation of
such insurance. The policies of insurance required by paragraphs
(2) and (3) of Section 8.03(a) shall provide coverage for events
which occur during the policy period, are continuing in nature
and not on a claims made basis, and shall include endorsements
that provide:
(1) That the Underwriters acknowledge that the
indemnification and hold harmless provisions of this Agreement
are insured under Mesaba's blanket contractual liability
coverage.
(2) That Northwest, its officers, agents and
employees are named as an additional insureds thereunder.
(3) That the insurance is primary with respect to
the matters within such coverage, irrespective of any insurance
carried by Northwest.
(4) That as respects the interest of Northwest,
the insurance shall not be invalidated by any breach of warranty
by Mesaba.
(5) That provide a severability of interest/cross
liability endorsement.
(6) That the insurer shall waive its subrogation
rights against Northwest, its officers, agents and employees.
(7) That any waiver of rights of subrogation
against other parties by Mesaba will not affect the coverage
provided with respect to Northwest.
ARTICLE IX
TERM; TERMINATION
Section 9.01 Term. This Agreement shall commence on the
date it is executed by both parties and unless earlier terminated
as provided herein, shall continue until the tenth anniversary of
the effective date of the first Sublease.
Section 9.02 Termination by Either Party.
(a) In the event that either Mesaba or Northwest (i)
makes a general assignment for the benefit of creditors or
becomes insolvent; (ii) files a voluntary petition in bankruptcy;
(iii) 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; (iv) commences
under the laws of any competent 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; (v) becomes the object of any proceeding or action of
the type described in (iii) or (iv) above and such proceeding or
action remains undismissed or unstayed for a period of at least
thirty (30) days; or (vi) is divested of a substantial part of
its assets for a period of at least thirty (30) days; then the
other party may by written notice terminate this Agreement
immediately.
(b) Except as provided in Section 9.03, in the event
of a breach of a nonmonetary provision of this Agreement by
either party remaining uncured for more than thirty (30) days
after receipt of written notification of such default by the
nondefaulting party, or in the case of a breach requiring more
than thirty (30) days notice to cure, the defaulting party does
not begin and pursue with due diligence a method of cure within
thirty (30) days after receipt of written notification specifying
in reasonable detail the nature of such default from the
nondefaulting party, then the nondefaulting party may terminate
this Agreement at its sole option.
(c) In the event of a breach of a monetary provision
of this Agreement by either party and such default remaining
uncured for more than ten (10) days after receipt of written
notification specifying in reasonable detail the nature of such
default from the nondefaulting party, then the nondefaulting
party may terminate this Agreement at its sole option.
Section 9.03 Termination by Northwest. Notwithstanding the
provisions of Section 9.02(b), Northwest shall have the right to
terminate this Agreement immediately and at its sole option if:
(a) Mesaba shall default in the payment of any rental
payment due under any Sublease or with respect to any other terms
of any Sublease and such default shall continue for more than the
period of grace, if any, specified therein and shall not have
been waived.
(b) Mesaba shall default with respect to any other
terms of any Sublease, such default shall continue for more than
the period of grace, if any, specified therein and such default
shall constitute an "event of default" thereunder.
(c) Mesaba shall fail to comply with the provisions of
Section 8.03 and, as a result thereof, the insurance required
thereunder is not in effect.
(d) More than twenty-five percent (25%) of the
Aircraft are not operated for more than seven (7) consecutive
days other than as a result of a FAA order grounding all Avro
Regional Jets of all air carriers.
(e) There shall be a strike, cessation or interruption
of work involving Mesaba's pilots, flight attendants or mechanics
providing Jet Services.
(f) Mesaba's DOT Certification is not obtained prior
to the later of April 1, 1997 or thirty (30) days after the
delivery of the first Aircraft to Mesaba or is for any reason
suspended or revoked or otherwise not in full force and effect so
as to permit Mesaba to perform the Jet Services required under
this Agreement.
(g) Mesaba shall fail to provide Jet Services on or
before the Start Date.
(h) The person elected to replace Xxxxx X. Xxxxxxx as
Chief Executive Officer of Mesaba and Holdings and any successor
chief executive officer of Mesaba and Holdings shall not be
reasonably acceptable to Northwest.
(i) The Board of Directors of Mesaba and Holdings
shall fail to nominate and recommend for election by the
stockholders of Mesaba and Holdings a sufficient number of
Northwest Nominees so that if each such Northwest Nominee were
elected there would be three (3) directors designated by
Northwest then serving on the Boards of Directors of Holdings and
Mesaba, or the Boards of Directors of Mesaba and Holdings shall
fail to elect a Northwest Nominee to fill a vacancy created by
the death, resignation or removal of another director previously
designated by Northwest.
Section 9.04 Early Termination. Notwithstanding any other
provision of this Agreement, Northwest shall have the right to
terminate this Agreement and the Subleases as of the sixth
anniversary of the effective date of the first lease if Northwest
shall have given a termination notice to Mesaba not less than one
hundred eighty (180) days nor more than three hundred sixty-five
(365) days prior to such sixth anniversary.
Section 9.05 Revocation or Failure to Obtain DOT
Certification. If this Agreement is terminated because Mesaba
fails to obtain DOT Certification by the later of April 1, 1997
or thirty (30) days after the delivery of the first Aircraft to
Mesaba or because Mesaba's DOT Certification is suspended or
revoked or otherwise not in full force and effect so as to permit
Mesaba to perform the Jet Services required under this Agreement,
in addition to any other rights which Northwest may have, Mesaba
shall pay to Northwest an amount equal to {CONFIDENTIAL MATERIAL
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT}.
This Section 9.05 shall survive the termination of this
Agreement.
Section 9.06 Change in Control. Notwithstanding any other
provision of this Agreement, Northwest shall have the right to
terminate this Agreement immediately and at its sole option upon
the occurrence of any one or more of the following:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act") (a
"Person")) (other than Northwest) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (i) the then outstanding shares of common
stock of Holdings (the "Outstanding Holdings Common Stock") or
(ii) the combined voting power of the then outstanding voting
securities of Holdings entitled to vote generally in the election
of directors (the "Outstanding Holdings Voting Securities");
provided, however, the term "Person" as used in this Section
9.06(a) shall not include Northwest, any Northwest assignee or
transferee, or Xxxx X. Xxxxxx and his family or any affiliate of
Xxxx X. Xxxxxx which beneficially owns directly or indirectly
shares of Holdings common stock as of the date hereof;
(b) Approval by the Board of Directors of Mesaba or
Holdings of a reorganization, merger or consolidation (a
"Business Combination"), in each case, unless, following such
Business Combination, all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Holdings Common Stock and Outstanding Holdings Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 75% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which
as a result of such transaction owns Holdings or Mesaba through
one or more subsidiaries) in substantially the same proportions
as their ownership immediately prior to such Business Combination
of the Outstanding Holdings Stock and Outstanding Holdings Voting
Securities, as the case may be; or
(c) Approval by the Board of Directors of Mesaba or
Holdings of (i) a complete liquidation or dissolution, or (ii)
the sale or other disposition of all or substantially all of the
assets of Mesaba or Holdings, other than to a corporation with
respect to which following such sale or other disposition, more
than 75% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Holdings
Common Stock and Outstanding Holdings Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership immediately
prior to such sale or other disposition of the Outstanding
Holdings Common Stock and Outstanding Holdings Voting Securities,
as the case may be.
ARTICLE X
LIMITATION ON PERFORMANCE;
MISCELLANEOUS
Section 10.01 Limitation on Performance. The obligation of
either Northwest or Mesaba to perform under the terms of this
Agreement shall be limited or modified by, and neither carrier
shall be deemed to be in default hereunder as a result of any of
the following causes:
(a) Acts of God or the public enemy, civil war,
insurrections or riots; fires, floods, explosions, embargoes,
earthquakes, epidemics, or quarantine restrictions; any act of
government, governmental priorities, allocations, orders or
Governmental Regulations affecting materials or facilities;
inability after due and timely diligence to procure materials,
accessories, equipment or parts; or due to any other cause to the
extent it is beyond that carrier's practical control or not
occasioned by that carrier's fault or negligence.
(b) Cessation, slow-down or interruption of work, or
any other labor disturbance involving Northwest.
Section 10.02 Mutual Cooperation. Northwest and Mesaba
shall use their best efforts to cooperate with each other in
performing their respective obligations under this Agreement.
Section 10.03 Representations and Warranties. Except as
expressly set forth herein, neither Northwest nor Mesaba shall
make any representations or warranties, expressed or implied,
under or in connection with this Agreement.
Section 10.04 Assignment. This Agreement may not be
assigned by either party, without the written consent of the
other party.
Section 10.05 Governing Law. This Agreement shall be
governed in accordance with the laws of the State of Minnesota.
Section 10.06 Notices. All notices given hereunder shall
be given in writing and shall be delivered in person or deposited
in the United States mail, certified or registered mail, return
receipt requested, with adequate postage prepaid, or given by
express courier, telex, telefacsimile, or other expedient written
means, addressed as follows:
If to Northwest: Northwest Airlines, Inc.
Department A6030
0000 Xxxxxxxxx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attn: Vice President-Market Planning
with a copy to: Northwest Airlines, Inc.
Department A1180
0000 Xxxxxxxxx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attn: Senior Vice President,
General Counsel and Secretary
If to Mesaba: Mesaba Aviation, Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: President
with a copy to: Mesaba Aviation, Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Vice President-Administration
and General Counsel
or to such other address as the respective parties hereto shall
designate by notice in writing to the other party. Notices shall
be deemed received and given on the date of delivery or the date
of refusal of delivery as shown by the return receipt.
Section 10.07 Parties. Except as provided to the contrary
herein, this Agreement, and the rights and obligations created
hereunder, shall be binding upon and inure to the benefit of the
respective parties hereto and their respective successors and
permitted assigns.
Section 10.08 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an
original but all of which shall constitute one agreement.
Section 10.09 Severability. If any term of this Agreement
shall be judicially determined to be illegal, invalid or
unenforceable at law or in equity, it shall be deemed to be void
and of no force and effect to the extent necessary to bring such
term within the provisions of any such applicable law or laws,
and such terms as so modified and the balance of the terms of
this Agreement shall remain enforceable.
Section 10.10 Captions, Section Headings and Table of
Contents. Captions, section headings and the Table of Contents
used herein are for convenience only and are not a part of this
Agreement and shall not be used in construing it.
Section 10.11 Availability of Equitable Remedies;
Procedures.
(a) In the event of a breach by either party of any
provision of this Agreement, the nonbreaching party may give
notice thereof to the breaching party, which notice shall specify
in reasonable detail the nature of the breach and shall demand
that the breaching party either cure the breach or refrain from
conduct constituting the breach (herein the "conduct"), as may be
applicable. If (i) the breaching party has not cured the breach
or refrained from the conduct, as may be applicable, within ten
(10) days following receipt of said notice from the nonbreaching
party, or (ii) the breaching party does not begin within ten (10)
days following receipt of said notice to pursue with reasonable
diligence a method of cure or begin to take steps toward ceasing
the conduct where the breach or conduct is such that it requires
more than ten (10) days to cure or to cease, as may be
applicable, then the nonbreaching party may seek to compel
performance by the breaching party in accordance with the
provisions of paragraph (b) below. If, upon receiving a notice
contemplated by this paragraph (a), a breaching party believes
that a breach has not occurred or that the conduct specified in
the notice does not constitute a breach of the provisions of this
Agreement, but the breaching party nonetheless cures the alleged
breach or refrains from the conduct within ten (10) days
following receipt of such notice, said party may thereafter
proceed in accordance with the provisions of paragraph (b) below
to seek a determination of whether a breach occurred or whether
the specified conduct constituted a breach of the provisions of
this Agreement.
(b) Because a breach of the provisions of this
Agreement could not adequately be compensated by money damages,
any party shall be entitled, following notification in accordance
with the provisions of paragraph (a) above, to an injunction
restraining such breach or threatened breach and to specific
performance of any provision of this Agreement and, in either
case, no bond or other security shall be required in connection
therewith, and the parties hereby consent to the issuance of such
injunction and to the ordering of specific performance. Further,
in the event any party refrains from the conduct of any activity
alleged in a notice received pursuant to paragraph (a) above to
constitute a breach of the provisions of this Agreement, such
party may thereafter proceed promptly to bring an action in the
District Court, County of Hennepin, State of Minnesota, for an
expedited judicial determination as to whether the conduct
specified constitutes a breach of the provisions of this
Agreement and, upon a determination that the conduct does not
constitute a breach, such party may promptly thereafter
recommence such conduct.
Section 10.12 Exhibits. The Exhibits attached hereto are
intended to be an integral part of this Agreement and are
incorporated into the Agreement by reference for all purposes.
Section 10.13 Integration and Entire Agreement. This
Agreement (including the Exhibits) and the Subleases and the
ancillary documents entered into in connection therewith are
intended by both parties as a complete statement of the entire
agreement and understanding of the parties with respect to the
subject matter herein and therein set forth. This Agreement may
only be amended or modified by a written agreement between Mesaba
and Northwest which specifically references this Agreement and
expressly provides for such amendment. This Agreement is entirely
separate from and unrelated to the Existing Services Agreement.
Section 10.14 Relationship of Parties. Nothing in this
Agreement shall be interpreted or construed as establishing
between the parties a partnership, joint venture or other similar
arrangement.
Section 10.15 Stock Purchase Warrant. Holdings agrees to
deliver to Northwest not later than the close of business on
October 29, 1996 an executed stock purchase warrant which shall
contain the following terms: (a) the warrant shall be with
respect to 615,000 shares of Holdings common stock; (b) the
exercise price shall be $10.875 per share; (c) the term shall be
for ten (10) years but shall terminate (i) as of the termination
date of this Agreement if this Agreement is terminated by
Northwest or (ii) as of the later of the termination date of this
Agreement or thirty (30) days after a termination notice if this
Agreement is terminated by Mesaba; (d) the warrant shall contain
customary anti-dilution provisions; and (e) the warrants shall
vest proportionately as the twelve (12) Aircraft are delivered.
Section 10.16 No Franchise Fees. Mesaba and Northwest
acknowledge and agree that no payment under this Agreement or the
Existing Services Agreement or any lease payments under the
Subleases or other lease agreements entered into in connection
with the Existing Services Agreement constitute a franchise fee
within the meaning of Minn. Stat. 80C.01, subdivision 9.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first set forth above.
WITNESS: MESABA HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------
/s/ Xxxxxx X. Xxxxx Its President & CEO
----------------------
WITNESS: MESABA AVIATION, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------
/s/ Xxxxxx X. Xxxxx Its President & CEO
---------------------
WITNESS: NORTHWEST AIRLINES, INC.
By: /s/ Xxxx X. Xxxxx
---------------------
/s/ Xxxxxxx X. Xxxxxx Its Vice President-Market Planning
-----------------------
Assistant Secretary
