<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(X) AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-14719
SKYWEST, INC.
Incorporated under the Laws of Utah 87-0292166
(IRS Employer ID No.)
444 South River Road
St. George, Utah 84790
(801) 634-3000
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
Indicate by check mark whether the registrant (1) has filed all
documents and reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or such shorter
period that the Registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
--- ---
The aggregate market value of Common Stock held by non-affiliates
(based upon the closing sale price of the Common Stock on the NASDAQ National
Market System) on June 20, 1996, was approximately $129,231,000.
As of June 20, 1996, there were 10,047,208 shares of Common Stock
outstanding.
Documents Incorporated by Reference
Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended March 31, 1996, are incorporated by reference in Part II as
specified.
Portions of the Registrant's Proxy Statement to be used in connection
with the solicitation of proxies to be voted at the Registrant's 1996 Annual
Meeting of Shareholders, to be filed with the Commission, are incorporated by
reference in Part III as specified.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in the definitive proxy statement
incorporated by reference in Part III of this Form 10-K/A, or any amendment to
this Form 10-K/A. /X/
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AMENDMENT NO. 1
The Registrant hereby amends its Annual Report on Form 10-K for the fiscal
year ended March 31, 1996, previously filed with the Commission (the "Annual
Report") soley for the purpose of refiling Exhibit 10.18 to such Annual Report,
portions of which are the subject of a request for CONFIDENTIAL TREATMENT
pursuant to Rule 24b-2 promulgated under the Securities and Exchange Act of
1934, as amended, submitted by the Registrant to the Commission. This Amendment
does not include any revisions to the text of such Annual Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Amendment
No. 1 to Annual Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SKYWEST, INC.
By: /s/ Jerry C. Atkin
----------------------------------
Jerry C. Atkin
Chairman, President and Chief
Executive Officer
Dated: November 19, 1996
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<TABLE>
<CAPTION>
Incorporated by Filed
Number Exhibit Reference Herewith
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<S> <C> <C>
3.1 Restated Articles of Incorporation............................................. (1)
3.2 Amended By-Laws................................................................ (6)
4.1 Articles IV and VI of Restated Articles of
Incorporation describing the Common Shares
and shareholders rights (included in
Exhibit 3.1)................................................................... (1)
4.2 Article II of the Amended By-Laws defining the
rights of Common Shareholders (included in
Exhibit 3.2)................................................................... (6)
10.1 SkyWest, Inc. Amended and Combined Incentive and
Non-Statutory Stock Option Plan................................................ (6)
10.2 Delta Connection agreement dated January 13, 1987
between Delta Air Lines, Inc. and SkyWest
Airlines, Inc.................................................................. (2)
10.3 Stock Option agreement dated January 28,
1987 between Delta Air Lines, Inc. and
SkyWest, Inc................................................................... (2)
10.4 Purchase Agreement No. 382 COI/85 dated
December 27, 1985 between EMBRAER-Empresa
Brasileira de Aeronautica S.A. and
SkyWest Airlines, Inc., as amended by a
Letter Supplement dated December 30,
1985 and an Amendment dated January 30, 1986................................... (1)
</TABLE>
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<TABLE>
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Incorporated by Filed
Number Exhibit Reference Herewith
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10.5 Aircraft Lease dated December 29,
1986 between EFA Leasing Company and
SkyWest Airlines, Inc. (N2698C)................................................ (3)
10.6 Aircraft Lease dated December 29, 1986
between EFA Leasing Company and SkyWest
Airlines, Inc. (N26974)........................................................ (3)
10.7 Aircraft Lease dated December 29, 1986
between EFA Leasing Company and SkyWest
Airlines, Inc. (N2699Y)........................................................ (3)
10.10 Aircraft Lease dated October 31, 1988
between CIT Group/Capital Financing, Inc.
and SkyWest Airlines, Inc. (N2720B,
N27220, N2724S)................................................................ (4)
10.11 Aircraft Lease dated December 12, 1988
between Heleasco Fourteen, Inc. and
SkyWest Airlines, Inc. (N27240, N2726N,
N2725D)........................................................................ (4)
10.12 Aircraft Lease dated April 10, 1989 between
Wilmington Trust Company, and SkyWest
Airlines, Inc. (N27297, N27278, N2730P)........................................ (5)
10.13 Lease Agreement dated December 1,1989 between
Salt Lake City Corporation and SkyWest Airlines,
Inc............................................................................ (7)
10.14 Purchase Agreement No. DSP/AJV-30B/93 dated
March 30, 1993, between EMBRAER-Empresa
Brasileira de Aeronautica S.A. and
SkyWest Airlines, Inc., as amended by a
Letter of Supplement dated May 17, 1993........................................ (8)
10.15 Purchase Agreement dated July 23,1993 between
Bombardier Regional Aircraft Division and
SkyWest Airlines, Inc.......................................................... (9)
10.16 Purchase agreement No. DSP/AJV-042/95 dated
June 9, 1995 between Embraer-Empresa
Brasileira de Aeronautica S.A. and
SkyWest Airlines, Inc......................................................... (10)
10.17 SkyWest, Inc. 1995 Employee
Stock Purchase Plan........................................................... (10)
10.18 Marketing and Code Sharing Agreement dated
October 24, 1996 between Continental Airlines,
Inc. and SkyWest Airlines, Inc................................................ X
</TABLE>
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<TABLE>
<CAPTION>
Incorporated by Filed
Number Exhibit Reference Herewith
- ------ ------- --------- --------
<S> <C> <C> <C>
11.0 Computation of earnings per share................................................. (11)
13.1 Certain portions of the Annual Report to Shareholders
for the year ended March 31, 1996, are incorporated
by reference into this report on Form 10-K........................................ (11)
22.1 Subsidiaries of the Registrant................................................... (1)
24.1 Consent of independent public accountants......................................... (11)
</TABLE>
(1) Incorporated by reference to Registration Statement on Form S-1,
File No. 33-5823.
(2) Incorporated by reference to Registrant's 10-Q filed for the
quarter ended December 31, 1986.
(3) Incorporated by reference to Registrant's Form 10-K filed for the
year ended March 31, 1987.
(4) Incorporated by reference to Registrant's Form 10-K filed for the
year ended March 31, 1989.
(5) Incorporated by reference to Registrant's Form 10-K filed for the
year ended March 31, 1990.
(6) Incorporated by reference to Registration Statement on Form S-8,
File No. 33-41285.
(7) Incorporated by reference to Registrant's Form 10-K filed for the
year ended March 31, 1992.
(8) Incorporated by reference to Registration Statement on Form S-2,
File No. 33-61958.
(9) Incorporated by reference to Registrant's Form 10-K filed for the
year ended March 31, 1994.
(10) Incorporated by reference to Registrant's Form 10-K filed for the
year ended March 31, 1995.
(11) Incorporated by reference to Registrant's Form 10-K for the year
ended March 31, 1996.
<PAGE> 1
CONFIDENTIAL TREATMENT
The attached agreement constitutes Exhibit 10.18 to the Annual Report
on Form 10-K for SkyWest, Inc. for the period ended March 31, 1996. The
Registrant has requested CONFIDENTIAL TREATMENT for portions of this Exhibit
pursuant to Rule 24b-2 promulgated under the Securities Exchange Act of 1934,
as amended. The Registrant seeks an exemption from the Freedom of Information
Act based on 17 C.F.R. section 200.80(b)(4).
<PAGE> 2
MARKETING AND CODE SHARING AGREEMENT
This Agreement is made this 24th day of October, 1995, by and between
CONTINENTAL AIRLINES, INC. ("CAL"), a Delaware corporation, and SKYWEST
AIRLINES, INC. ("SWA"), a Delaware corporation.
Recitals
CAL and SWA are each certificated air carriers providing air
transportation services in their respective areas of operation.
CAL and SWA desire to engage in joint marketing activities designed to
increase the flow of air passenger traffic on aircraft operated by both parties.
CAL and SWA desire to cooperate in the coordination of schedules by
allowing SWA to market its flight operations under the CO* designator.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, CAL and SWA hereby agree as follows:
1. SCHEDULES TO BE OPERATED. To the extent permitted by applicable laws,
and as mutually agreed, (i) SWA operated flights to and from Los Angeles
International Airport ("LAX") that connect with a CAL operated flight, at LAX,
to or from Cleveland Hopkins International Airport, Newark International
Airport, Honolulu International Airport, Houston Intercontinental Airport, New
Orleans International Airport, San Antonio International Airport, any airports
served by CAL or Continental Express, Inc. from the above mentioned airports,
and any other mutually agreed to airports and (ii) SWA operated flights that
connect with another SWA operated flight at LAX, will be marketed under not only
SWA's or another airline's designator code, but also under CAL's "CO*"
designator code. Exhibit A hereto sets forth the flight segments operated by SWA
that, when connecting at LAX with a flight operated by CAL or SWA, will utilize
the CO* designator code (the "CO* Flights") at the commencement of this
Agreement. The parties shall meet together every six months that this Agreement
is in effect to discuss the appropriateness of expanding or contracting the list
of city pairs on Exhibit A. Flights covering an origin and destination market
that is created by a CO* Flight connecting at LAX to a flight operated by CAL
(or vice versa) are hereinafter referred to as "Through Flights." Except as
expressly set forth herein, neither party shall have any obligation to extend
CO* Flights to other routes or to maintain operations on any routes and no such
obligation can be created by any oral statements or representations or course of
dealing by a party, but only by an express written agreement. For purposes of
this Agreement, a CAL operated flight does not include flights operated by
carriers other than CAL utilizing the CO* designator code, other than those
flights operated by Continental Express, Inc. or Continental Micronesia, Inc.
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2. CODE SHARING LICENSE.
(a) Grant of License. Subject to the terms and conditions of
this Agreement, CAL hereby grants to SWA a nonexclusive,
nontransferable, revocable license to use the CO* designator code on all
of its flights operated as CO* Flights.
(b) Control of CO* Flights. SWA shall have sole responsibility
for and control over, and CAL shall have no responsibility for, control
over or obligations or duties with respect to, each and every aspect of
SWA's operations including, without limitation, scheduling (except as
provided in Section 13 hereof), pricing (except as provided in Section
14 hereof), planning of flight itineraries and routings, reservations,
reservations control/yield management, dispatch, fueling, weight and
balance, flight release, maintenance, and flight operations and
compliance with applicable rules and regulations.
3. CONFIDENTIAL INFORMATION. Neither SWA nor CAL shall disclose
the terms of this Agreement or any proprietary information with respect to the
other obtained as a result of this Agreement, either during the term hereof or
thereafter except as may be required by law or by any order of a court or
administrative agency, and then on ten days' notice to the other. The parties
hereto recognize that, in the course of the performance of each of the
provisions hereof, each party may be given and may have access to confidential
and proprietary information of the other party, including proposed schedule and
fare changes, statistical data regarding loads and fares, sales and promotional
programs and other operating and competitive information ("Confidential
Information"). Each party shall preserve, and shall ensure that each of its
officers, agents, consultants and employees who receive Confidential
Information preserve, the confidentiality of the other party's Confidential
Information.
4. QUALITY OF SERVICE. SWA shall perform its service in a timely,
expert and quality manner, in accordance with the standards of customer service
reasonably established by CAL. Without limitation, SWA shall maintain its
aircraft in an airworthy, clean, attractive and comfortable condition and
strive to maintain a completion factor of at least 98% (without considering
delays caused by air traffic control or weather). SWA will, in conducting CO*
Flight operations, employ prudent safety and loss prevention policies.
5. AUDIT. CAL shall have the right, at its own cost, to inspect,
review, and observe SWA's operations of CO* Flights, and/or to conduct a full
safety and/or service audit of SWA's operations, manuals and procedures
reasonably related to CO* Flights, at such intervals as CAL shall reasonably
request. In the exercise of such right, CAL does not undertake any
responsibility for the performance of SWA's operations. CAL shall coordinate
its safety and service audits with SWA so as to avoid disruptions of SWA's
operations. Any safety audit may include, without limitation, maintenance and
operation procedures, crew planning, reservations, passenger and baggage
handling, customer service, personnel records, spare parts, inventory records,
training records and manuals, flight, flight training and operational personnel
records. Each party shall have the right, upon reasonable notice, at its
expense and no more than once during a six month period, to inspect and audit
the financial books and records of the other party as they relate to this
Agreement. Such financial audit may be conducted by the auditing party's
officers, employees
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or third party advisors and the party being audited will reasonably cooperate
with such individuals in the performance of the audit.
6. SALES AND MARKETING PROGRAMS. The parties will work to develop
mutually agreeable joint sales and marketing programs to help promote the code
share relationship and increase revenues from same. The parties will conduct
quarterly joint sales and marketing meetings to discuss possible sales and
marketing programs and strategies. SWA will participate in CAL's frequent flyer
program, OnePass, in accordance with the terms and conditions of a separate
agreement entered into by the parties hereto, and attached hereto as Exhibit B.
SWA shall have a nonexclusive, nontransferable, revocable license to use
the CAL Service Marks (as defined below) in its marketing programs for the
purpose of promoting CO* Flights. All advertising programs using any CAL Service
Marks shall be subject to CAL's prior approval. In general, SWA's use of the CAL
Service Marks shall do no more than identify the code share relationship between
CAL and SWA, and advertise that schedules are coordinated to provide convenient
connections. Any marketing program, advertising brochures, schedules, signs or
information disseminated to the public or intended to be disseminated to the
public ("Advertising Material") shall reflect that CAL and SWA are operated
separately and shall comply with any DOT policy on airline designator code
sharing.
SWA is specifically prohibited from using any of the CAL Service Marks
on its aircraft or other equipment, on its stationary, or elsewhere unless SWA
has received prior specific authorization in writing from CAL. SWA hereby
acknowledges CAL's exclusive ownership of the CAL Service Marks and agrees that
it will not do anything that would infringe, abridge or adversely affect,
impair or reduce the value or validity of the CAL Service Marks. In no event
shall SWA allow the use of any CAL Service Marks in marketing, selling,
promoting or otherwise identifying or referencing any flight which is not a CO*
Flight.
SWA hereby grants to CAL a nonexclusive, nontransferable, revocable
license to use the name SkyWest Airlines and any other SWA Service Marks in
CAL's marketing programs, for the purpose of promoting the CO* Flights.
As used herein the term "Service Marks" shall include, without
limitation: (i) with respect to CAL: "Continental", the "CO" and "CO*"
designator codes, and "OnePass", and (ii) with respect to SWA: "SkyWest" and
various trademarks, service marks and logos used by it, but not including its
designator code.
7. PUBLIC RELATIONS. In the event of any irregularity in CO* Flights'
operations, including, without limitation, any event causing damage to persons
or property, SWA shall identify itself as being operated independently of CAL,
and as being solely responsible for its operations. SWA may state that it holds
a code sharing license from CAL and that it obtains certain services from CAL
if third parties inquire as to such relationship.
8. IRREGULARITIES IN OPERATIONS. SWA shall promptly notify CAL of all
irregularities involving a CO* Flight which result in any damage to persons or
property as soon as such information is available and shall furnish to CAL as
much detail as practicable.
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9. REPORTING OBLIGATION.
(a) Changes of Service. Each party shall give the other party 60 days'
advance written notice (or notice as far in advance as possible if 60 days is
impracticable) of any intended (i) changes to its operating specifications, or
(ii) material changes to the manner of conducting its business or the nature of
its product. In the event any such change materially affects the value or risk
to the other party of this Code Sharing Agreement in the other party's
reasonable judgment, the other party shall be entitled to terminate this
agreement if the change is implemented. In addition, each party will give the
other party 60 days' advance written notice (or notice as far in advance as
possible if 60 days is impracticable) prior to making a schedule change that
affects a Through Flight.
(b) Correspondence from Government Authorities. SWA shall immediately
provide CAL copies of any correspondence received from any government authority
which, with respect to CO* Flights, references (i) any alleged noncompliance
with rules or regulations affecting air transportation, or (ii) any
investigation of SWA performed or proposed by any government authority,
including, without limitation, any communication issued by a government
authority concerning the airworthiness of SWA's aircraft, the compliance of
SWA's personnel with required operational or training procedures or any other
matter relating to the safe operation of SWA aircraft.
(c) Notice of Complaints. SWA shall monthly furnish CAL a summary of
complaints, notices of violation, requests to cease activity or similar
correspondence which reasonably relate to CO* Flights and which are received by
SWA from passengers, any government authority, or other parties. SWA shall
comply with CAL's reasonable requests for actual copies of any such documents.
(d) Operations. SWA shall provide CAL monthly written reports
containing the following data for the CO* Flights:
(i) the total number of scheduled, actual and canceled
departures for the month, by flight and city pair;
(ii) the load factor and the total number of revenue passengers
and (separately) non-revenue passengers boarded, by flight
number and city pair and separated by passengers connected to
CAL and passengers carried locally; and
(iii) completion and on-time performance data by system and
market.
10. FLIGHT DISPLAY.
(a) All Through Flights will be included in the availability and fare
displays of all computerized reservations systems in which CAL and SWA
participate, the Official Airline Guide (to the extent agreed upon) and CAL's
and SWA's internal reservation systems under the CAL designator code (CO or
CO*) as well as, with respect to the CO* Flights, SWA's designator code, to the
extent possible. CAL and SWA will take the
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appropriate measures necessary to ensure the display of Through Flights in
accordance with the preceding sentence.
(b) CAL and SWA will disclose and identify the CO* Flights utilizing
the CO* designator code to the public as actually being flights of and operated
by the operating party, in at least the following ways:
(i) a symbol will be used in timetables and computer reservation
system indicating that CO* Flights are actually operated by SWA;
(ii) to the extent reasonable, messages on airport flight
information displays will identify the operator of flights shown as
CO* Flights;
(iii) CAL and SWA advertising concerning CO* Flights and CAL and
SWA reservationists will disclose the operator of each flight; and
(iv) in any other manner prescribed by law.
11. TERMS AND CONDITIONS OF CARRIAGE AND CLAIMS PROCEDURES.
(a) In all cases, the contract of carriage between a passenger and a
carrier on a Through Flight will be that of the party that operates the flight.
(b) The parties will use existing IATA procedures when handling and
settling claims made by customers in connection with Through Flights.
12. IRREGULARITY HANDLING.
(a) In the event of flight delays, cancellations or other schedule
irregularities that affect CO* Flights, SWA will inform CAL of a pertinent
information concerning an irregularity for customer information purposes.
(b) The parties agree that they will cooperate in all available ways to
accommodate passengers experiencing flight irregularities in connection with a
Through Flight and that neither will forbear from providing such assistance
because the other may have been responsible for the flight irregularity. In the
event of a flight irregularity, the party causing or experiencing the
irregularity shall bear all related costs associated with accommodating the
passengers who have been delayed. The parties will review existing procedures
for accommodating interline passengers with respect to flight irregularities and
oversales to determine their adequacy for the purposes of this Agreement and
will make such adjustments in existing procedures as they find necessary or
appropriate.
13. AIRPORT OPERATIONAL ASSISTANCE. The parties intend to work to establish a
seamless connection for passengers connecting from a CO* Flight to a flight
operated by CAL (or vice versa) while traveling on a Through Flight. CAL and
SWA will cooperate to coordinate and maintain their schedules to minimize the
waiting time and to maximize convenience of passengers
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who are connecting from a CAL to a SWA flight segment (or vice versa) on
Through Flights. Each party will provide the other with the airport operational
assistance that is required to assure schedule compatibility for Through
Flights. The parties will use their respective reasonable efforts to align
gates and ticket counter space where CO* Flights operate.
14. PRICING AND CAPACITY CONTROL OF SHARED CODE SEGMENTS.
CONFIDENTIAL INFORMATION
APPEARING HERE HAS BEEN
OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.
15. REVENUE ALLOCATION.
CONFIDENTIAL INFORMATION
APPEARING HERE HAS BEEN
OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.
16. TICKET HANDLING.
(a) Passenger Ticket Stock and Accounting Procedures. CAL will
provide SWA with CAL passenger ticket stock in accordance with the
following procedures:
(i) CAL will supply SWA with adequate supplies of all necessary
passenger ticket forms, bag tags, boarding passes, validator
plates and other documents and materials necessary to enable SWA
to operate in a manner consistent with CAL procedures, upon
request to the office designated by CAL from time to time. A
receipt for all ticket forms delivered to SWA shall be signed
by an appropriate representative of SWA, and SWA shall comply
with CAL's procedures with
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respect to the control of, safeguarding of and accounting for ticket stock and
validator plates. All tickets and other documents and materials supplied by CAL
for use in connection with this Agreement shall be and remain the property of
CAL and shall be held in trust for CAL by SWA and issued or otherwise utilized
only as provided in this Agreement.
(ii) SWA shall be responsible for the safe and secure custody and care of all
tickets and other documents and materials furnished by CAL. The tickets and
other documents of CAL shall be secured in a manner satisfactory to CAL and
consistent with any applicable LATA standards and specifications. Such tickets
and documents and all records relating to them and to the sale of
transportation on CAL shall at all times be made available for inspection by
CAL or its designated representative.
(iii) All tickets shall be issued by SWA in accordance with the currently
effective tariffs and contract of carriage applicable to the transportation
being purchased and applicable trade manuals, all in accordance with
appropriate instructions which may be issued form time to time by CAL.
(iv) All tickets shall be issued by SWA in numerical sequence and all must be
accounted for at each reporting period. All tickets issued by SWA and all
coupons of voided tickets shall be sent to the office or offices designated by
CAL from time to time on the work day following issuance.
(v) All checks accepted for the sale of tickets on CAL ticket stock shall be
payable to CAL and acceptance of checks shall conform to CAL's acceptance
procedures. Any losses resulting from returned checks where SWA has failed to
follow CAL's acceptance procedures, will be charged to SWA after CAL exhausts
reasonable efforts to collect.
(vi) All tickets for payment other than cash or check shall be supported by
such documents as shall be specified by CAL.
(vii) SWA shall assume full liability for and agrees to defend, indemnify and
hold CAL harmless from and against any and all claims, demands, liability,
expenses, losses, costs or damages whatsoever in any manner arising out of or
attributed to SWA's possession, issuance, loss, misapplication, theft, or
forgery of tickets, other travel documents, or supplies furnished by CAL to SWA
including but not limited to lost ticket forms, bag tags, boarding passes or
other documents and errors in ticket issuance. In the event SWA loses or has
stolen any ticket, fails to return tickets or other documents to CAL upon
demand, fails to remit pursuant to this Agreement the monies to which CAL is
entitled from the sale of any such ticket or document, or fails to account
properly for any such tickets or document, SWA shall be liable to CAL for the
agreed value of any such ticket or document, which is agreed to be the actual
damages or loss sustained by CAL from usage of any such ticket or document, as
measured by
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the then current, non-discounted retail price of the transportation or other
service obtained with the ticket or document or, if such value cannot be
determined, $2,000.00 U.S. per ticket.
(viii) SWA may accept all credit cards honored by CAL and is appointed CAL's
agent for such purpose, provided:
1. SWA observes the floor limits for each credit card set by the issuer
of the credit card ("Card Issuer") as amended by the Card Issuer from
time to time;
2. SWA accepts each credit card within the terms of the contracts
between CAL and Card Issuer;
3. SWA complies with Part 374 of DOT's Economic Regulations;
4. SWA does not accept blacklisted cards;
5. SWA shall reimburse CAL for any losses incurred by CAL as a result
of Contractor's failure to observe the terms of this section or of the
contracts between CAL and the Card Issuer;
6. SWA complies with all of CAL's procedures; and
7. SWA shall reimburse CAL for all charge backs, returns and other
charges attributable to or arising from SWA's acceptance of credit
cards, unless either (i) CAL has realized an offsetting credit
(including through the return and cancellation of a previously issued
ticket) or (ii) such charge back, return or other charge resulted from
the gross negligence, recklessness, or willful misconduct of CAL.
(ix) SWA shall reimburse CAL for any credit card fees, commissions, discounts,
etc., paid by CAL or deducted from payments made to CAL with respect to sales
of tickets for travel on SWA, and for any bad debt expense realized by CAL with
respect to tickets sold by SWA.
(x) SWA shall prepare and furnish to CAL all written reports, accounts, and
documentation with regard to ticket handling that CAL may require daily or at
such lesser frequency as CAL may prescribe, at its sole discretion, from time
to time during the life of this Agreement. SWA will comply with all reasonable
procedures specified by CAL with regard to ticket handling.
Within two business days after the termination of this Agreement for any
reason, SWA will return to CAL all passenger ticket forms, bag tags, boarding
passes and other documents provided to SWA by CAL pursuant to this Agreement.
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(b) Deposits. SWA shall deposit all funds, both cash and checks,
realized from the sale of tickets on CAL ticket stock by it in CAL
accounts maintained at depositories from time to time designated by CAL
on or before the first banking day following receipt of such funds.
(c) Delta Ticket Stock. SWA will be permitted to use Delta
Airlines' ticket stock to ticket passengers for travel on Through
Flights, with the understanding that CAL will suffer no adverse effects
as a result of such use. SWA shall hold harmless and indemnify CAL from
and against any such adverse effects resulting from such use of Delta
Airlines' ticket stock. The parties will work together to minimize any
such adverse effects.
(d) Ticket Acceptance. For the term of this Agreement, CAL
hereby authorizes SWA to accept flight coupons written for CO* Flights
in accordance with any applicable restrictions. SWA shall not endorse or
refund any such coupons without CAL's written consent, except in
accordance with CAL's contract of carriage. In addition, SWA shall
accept and is authorized to accept the coupons and certificates set
forth on Exhibit C hereto in accordance with the terms and conditions
applicable thereto.
17. COMPLIANCE WITH LAWS AND REGULATIONS. CAL and SWA each represent,
warrant, and agree that performance of its respective obligations under this
Agreement shall be conducted and all of its personnel shall at all times meet,
be in full compliance with an have all required licenses under any and all
applicable statutes, orders, rules and regulations, and satisfy all applicable
insurance requirements, whether in effect or hereafter promulgated of the
United States National Transportation Safety Board, Department of
Transportation or Federal Aviation Administration, Department of Defense or any
country or territory with jurisdiction over the Through Flights.
18. INDEPENDENT PARTIES.
(a) Independent Contractors. It is expressly recognized and
agreed that each party, in its performance and otherwise under this
Agreement, is and shall be engaged and acting as an independent
contractor and in its own independent and separate business; that each
party shall retain complete and exclusive control over its staff and
operations and the conduct of its business; and that each party shall
bear and pay all expenses, costs, risks and responsibilities incurred by
it in connection with its obligations under this Agreement. Neither CAL
nor SWA nor any officer, employee, representative, or agent of CAL or
SWA shall in any manner, directly or indirectly, expressly or by
implication, be deemed to be, or make any representation or take any
action which may give rise to the existence of, any employment, agent,
partnership, of other like relationship as between CAL and SWA but each
party's relationship as respects the other party in connection with this
Agreement is and shall remain that of an independent contractor.
(b) Status of Employees. The employees, agents and/or
independent contractors of SWA shall be employees, agents, and
independent contractors of SWA for all purposes, and under no
circumstances shall be deemed to be employees, agents or independent
contractors of CAL. The employees, agents and independent contractors of
CAL shall be employees, agents and independent contractors of CAL for
all purposes, and under no
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<PAGE> 11
circumstances shall be deemed to be employees, agents or independent
contractors of SWA. In its performance under this Agreement, each party shall
act as an independent contractor and not as an agent for the other. CAL shall
have no supervisory power or control over any employees, agents or independent
contractors employed by SWA, and SWA shall have no supervisory power or control
over any employees, agents and independent contractors employed by CAL.
(c) Liability For Employee Costs. Each party, with respect to its own
employees (hired directly or through a third party), accepts full and exclusive
liability for the payment of worker's compensation and/or employer's liability
(including insurance premiums where required by law) and for the payment of all
taxes, contributions or other payments for unemployment compensation,
vacations, or old age benefits, pensions and all other benefits now or
hereafter imposed upon employers with respect to its employees by any
government or agency thereof or any other party (whether measured by the wages,
salaries, compensation or other remuneration paid to such employees or
otherwise) and each party further agrees to make such payments and to make and
file all reports and returns, and to do everything necessary to comply with the
laws imposing such taxes, contributions or other payments.
19. INDEMNIFICATION AND INSURANCE.
(a) Indemnification.
(i) SWA hereby assumes liability for, and shall indemnify,
defend, protect, save and hold harmless CAL, its officers, agents, and
employees from and against any and all liabilities, claims, judgements,
damages, and losses, including all costs, fees, and expenses incidental
thereto, of every type and nature whatsoever, including without
limitation those involving (i) death of or injury to any person
including, but not limited to, SWA's officers, employees and agents,
(ii) loss of, damage to, or destruction of any property whatsoever,
including any loss of use thereof, and (iii) trademark, service mark or
trade name infringement, provided that such liabilities, claims,
judgements, damages or losses are caused by or arise out of (or are
alleged to be caused by or arise out of) any alleged acts or omissions
of SWA or its officers, employees, or agents which are in any way
related to the services contemplated by this Agreement. CAL shall give
SWA prompt notice of any claim made or suit instituted against CAL
which, if successful, would result in indemnification of CAL hereunder,
and CAL shall have the right to compromise or participate in the defense
of same to the extent of its own interest.
(ii) CAL hereby assumes liability for, and shall indemnify,
defend, protect, save and hold harmless SWA, its officers, agents, and
employees from and against any and all liabilities, claims, judgements,
damages, and losses, including all costs, fees, and expenses incidental
thereto, of every type and nature whatsoever, including without
limitation those involving (i) death of or injury to any person
including, but not limited to, CAL's officers, employees
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<PAGE> 12
and agents, (ii) loss of, damage to, or destruction of any property
whatsoever, including any loss of use thereof, and (iii) trademark, service
mark or trade name infringement, provided that such liabilities, claims,
judgements, damages or losses are caused by or arise out of (or are alleged
to be caused by or arise out of any alleged acts or omissions of CAL or its
officers, employees, or agents which are in any way related to the services
contemplated by this Agreement. SWA shall give CAL prompt notice of any
claim made or suit instituted against SWA which, if successful, would result
in indemnification hereunder, and SWA shall have the right to compromise or
participate in the defense of same to the extent of its own interest.
(b) Insurance Coverage.
(i) Each party shall, at all times during the term of this
Agreement, maintain in full force and effect policies of insurance as
follows:
1. Comprehensive Airline Liability Insurance, including
Aircraft Third Party, Passenger, including Passengers'
Baggage and Personal Effects, Cargo and Mail Legal
Liability for a Combined Single Limit (CSL) of not less
than $250 million per occurrence per Aircraft. In respect
of Personal Injury the maximum limit is $25 million per
offense and in the aggregate.
The minimum amounts of insurance coverage required under
this paragraph 1 shall be per occurrence, combined
single limit for all coverage required under this
paragraph 1.
2. Workmen's Compensation
Insurance Per Accident
--------- ------------
(Company Employee) Statutory
3. Employers' Liability $1,000,000 (combined
-------------------- single limit
(i) Subject to Section 19(b)(i) above, each party as appropriate
shall cause the policies of insurance described in such Section
19(b)(i) to be duly and properly endorsed by that party's insurance
underwriters as follows:
1. as to the policies of insurance described in
paragraphs (b)(i)1 and (b)(i)2 of Section 19:
(A) to provide that any waiver of rights of
subrogation against other parties by one party will not
affect the coverage provided thereunder with respect to
the other party; and
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<PAGE> 13
(B) to provide that the one party's underwriters shall waive any
and all subrogation rights against the other party, its directors,
officers, agents, employees and other authorized representatives,
except for gross negligence or wilful misconduct, with regard to
any breach of warranty on the part of the other party or to
provide other evidence of such waiver or recourse against the
other party, its directors, officers, agents, employees and other
authorized representatives.
(C) to provide that each party, its directors, officers, agents,
employees and other authorized representatives shall be endorsed as
named insured parties thereunder, except for gross negligence or
wilful misconduct; and
(D) to provide that said insurance shall be primary insurance and
to acknowledge that any other insurance policy or policies of each
party shall be secondary or excess insurance.
2. as to policies of insurance described in paragraph (b)(i)1 of
Section 18 to provide a breach of warranty clause to said policies;
and
(iii) Each party shall cause each of the insurance policies referred to in
Section 19(b)(i) to be duly and properly endorsed to provide that said
policy or policies or any part or parts thereof shall not be canceled,
terminated or materially altered, changed or amended by each party's
insurance underwriters, until after 30 days' prior notice to the other
party, such notice period to commence when such other party actually
receives such notice.
(iv) Simultaneously with the commencement of this Agreement, and from time
to time thereafter upon request by either party, the other party shall
furnish to the requesting party evidence reasonably satisfactory to the
requesting party of the aforesaid insurance coverage and endorsements,
including certificates certifying that the aforesaid insurance and
endorsements are in full force and effect. Initially, this evidence shall
be a certificate of insurance required hereunder.
(v) In the event either party fails to maintain in full force and effect
any of the insurance and endorsements required under the terms of this
Section 19, the other party shall have the right (but not the obligation)
to procure and maintain such insurance or any part thereof. The cost of
such insurance shall be payable by the first party to the other party upon
demand by the other party. The procurement of such insurance or any part
thereof by the other party shall not discharge or excuse the first party's
obligation to comply with the provisions of Sections 19(b)(i) and
19(b)(ii).
(c) Survival of Rights and Obligations. The rights and obligations of Section
19(a) shall survive the expiration or termination of this Agreement.
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<PAGE> 14
20. TERM AND TERMINATION.
(a) Term. The term of this Agreement shall commence on October 24,
1995 and shall continue for a period of two years, unless earlier terminated as
provided herein, and shall continue thereafter until either party gives the
other party notice of termination at least 90 days prior to the effective date
of such termination. In no event shall termination or expiration pursuant to
this Section 20(a) be effective unless such 90 days' notice is provided.
(b) Termination as a Result of Changes of Law. In the event there is
any change in treaties, statues or regulations of air transportation that
materially affects the rights and/or obligations presently in force with
respect to the air transportation services of CAL or SWA or both, relating to
CO* Flights or the Through Flights, then the parties will consult, within 30
days after any of the occurrences described herein, in order to determine or
seek mutual agreement as to what, if any changes to this Agreement are
necessary or appropriate, including but not limited to the early termination
and cancellation of this Agreement.
(c) Other Termination Rights. In addition to any other provisions of
this Agreement, this Agreement may be terminated, without liability, as follows:
(i) By either party on 30 days' prior written notice, if the
other party has breached any material provision of this Agreement
unless such other party cures such breach within such 30 day
period;
(ii) By either party immediately on notice, if the other party
shall be dissolved or shall fail to maintain its corporate
existence in good standing, or shall have its authority to operate
as a scheduled airline suspended or revoked, either in whole or
with respect to the Through Flights, or shall cease operations as a
scheduled airline.
(iii) By either party immediately on notice if the other party
shall be cited by any government authority for any significant
noncompliance with a material law, rule or regulation with respect
to the marketing or operation of a Through Flight;
(iv) By either party if a petition is filed or against the other
party under bankruptcy law, or any other law providing for the
relief of debtors, and the affected party does not succeed in
having such petition lifted or stayed within sixty days from the
date of entry; the party at its option may cancel this Agreement
immediately and exercise such other remedies as may be available at
law and/or in equity;
(v) By CAL, without cause or incurring any liability (other than
liability incurred as of the termination date), upon six months'
written notice;
(vi) By CAL immediately on notice if:
1. SWA shall fail to maintain any of its aircraft in an
airworthy condition and conduct its flight operations in
accordance with the standards, rules and regulations
promulgated by any government authority; or
2. SWA shall have a completion factor of less than [*]%
during any [*] day period with respect to CO* Flights
(including in such calculations all flights canceled less
than one week prior to the date of its scheduled operation
and excluding flights not completed due to weather or labor
stoppages); and
(vii) By SWA immediately on notice if:
1. CAL shall fail to maintain any of its aircraft in an
airworthy condition and conduct its flight operations in
accordance with the standards, rules and regulations
promulgated by any government authority; or
2. CAL shall have a completion factor less than [*]% during
any [*] day period with respect to Through Flights (including
in such calculations all flights canceled less than one week
prior to the date of its scheduled operation and excluding
flights not completed due to weather or labor stoppages).
* = CONFIDENTIAL INFORMATION APPEARING HERE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
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<PAGE> 15
21. BOOKING FEE.
CONFIDENTIAL INFORMATION
APPEARING HERE HAS BEEN
OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.
22. ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS. This Agreement
constitutes the entire understanding of the parties with respect to the subject
matter hereof superseding all prior discussions and agreements, written or oral.
This Agreement may not be amended, nor may any of its provisions be waived,
except by writing signed by both parties. No delay on the part of either party
in exercising any right power or privilege hereunder shall operate as a waiver
hereof, nor shall any waiver operate as a continuing waiver of any right, power
or privilege.
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<PAGE> 16
23. NOTICES. All notices given hereunder shall be in writing delivered
by hand, certified mail, telex, or telecopy to the parties at the following
addresses:
If to CAL:
Continental Airlines, Inc. Telephone No.: 713-834-2966
2929 Allen Parkway Telecopier No.: 713-520-6329
Houston, Texas 77019
Attention: Vice President Alliance Development
With copy to:
Continental Airlines, Inc. Telephone No.: 713-834-2948
2929 Allen Parkway Telecopier No.: 713-520-6329
Houston, Texas 77019
Attention: Senior Vice President
and General Counsel
If to SWA:
SKYWEST AIRLINES, INC. Telephone No.:
Telecopier No.:
With copy to:
SKYWEST AIRLINES, INC. Telephone No.:
Telecopier No.:
24. SUCCESSORS AND ASSIGNS. Neither party may assign its rights or
delegate its duties under this Agreement without the prior written consent of
the other party, and any such purported assignment or delegation shall be void.
This Agreement shall be binding on the lawful successors of each party.
25. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
26. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
27. COUNTERPARTS. This Agreement may be executed in counterparts, all
of which taken together shall constitute one agreement.
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<PAGE> 17
28. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO
PRINCIPLES OF CHOICE OR CONFLICTS OF LAW.
29. EQUAL OPPORTUNITY. EEO clauses contained at 11 C.F.R. sections
60-1.4, 60-250.4 and 60-741.4 are hereby incorporated by reference. Each party
shall comply with all equal opportunity laws and regulations which apply to or
must be satisfied by that party as a result of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
CONTINENTAL AIRLINES, INC. SKYWEST AIRLINES, INC.
By: /s/ By: /s/
_________________________ __________________________
Title: VP Alliance Operations Title: Executive V.P. - Chief Operating Officer
---------------------- ----------------------------------------
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<PAGE> 18
EXHIBIT A
CO* Flights
NONSTOP ONESTOP
LAX - BFL LAX - BFL - SMF
LAX - FAT LAX - ONT - FAT
LAX - IPL LAX - SBA - SJC
LAX - MRY LAX - SBP - SMF
LAX - ONT LAX - SNA - MRY
LAX - PSP LAX - SNA - PSP
LAX - SAN
LAX - SBA
LAX - SBP
LAX - SJC
LAX - SMX
LAX - SNA
LAX - YUM
<PAGE> 19
EXHIBIT B
AGREEMENT
This Agreement, dated as of the 1st day of October 1995, is by and between
Continental Airlines, Inc., a corporation organized and existing pursuant to the
laws of the state of Utah.
Whereas, Continental has established an airline frequent traveler program
commonly known as "OnePass".
Whereas, SkyWest desires to become a participant in the OnePass Program,
and Continental desires SkyWest to become a participant in OnePass, on the terms
and conditions set forth herein.
Now, therefore, in consideration of the mutual premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For purposes of this Agreement, the terms set
forth below shall have the following meanings:
a) "Blackouts" are a form of capacity controls established by a Program
Participant, embargoing Reward travel, by date or geographic area.
b) "Capacity Controls" shall mean such reasonable restrictions, on the
redemption of Rewards, as may be established by a Program Participant from time
to time. To be valid, any such restrictions shall be approved in advance by
Continental. Such approval shall not be unreasonably withheld or delayed but
shall be consistent with the Program's purpose of making Reward travel available
to Program Members on a reasonable basis.
c) "Governmental Restrictions" shall mean any governmental restrictions
relating to or concerning the Program, including, to the extent applicable, the
Air Travel Industry Enforcement Guidelines and related commentary adopted by the
national Association of Attorneys General pertaining to airline frequent flyer
programs (as modified from time to time). A copy of such Guidelines, in their
present form, are attached hereto as Schedule A.
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<PAGE> 20
d) "OnePass Rewards" shall mean certificates, rewards or tickets issued by
Continental to Program Members which entitle such members to discounts, credits
or other similar benefits for services and/or goods provided by Continental
and/or Program Participants.
e) "Program" shall mean the airlines frequent traveler program established
by Continental which is commonly known as "OnePass".
f) "Program Account(s)" shall mean the accounts established for each
Program Member to record and account for the mileage credits (i) earned by such
member for his/her patronage of Continental and Program Participants and (ii)
redeemed for "OnePass Rewards".
g) "Program Member(s)" shall mean individuals who have applied and been
accepted by Continental for membership in the Program.
h) "Program Participants" shall mean business entities that (i) are
recognized by Continental for the issuance of mileage credits to Program Members
for their patronage of such business entities and (ii) accept and honor OnePass
Rewards for use by Program Members at their business establishments.
i) "Terms and Conditions" are those rules relative tot he earning and
redemption of miles and other conditions of membership, contained in the OnePass
Member's Guide as approved and adopted from time to time by Continental.
Section 2. Program Participation by SkyWest. Effective as of October, 1995,
SkyWest shall become a Program Participant in accordance with the terms and
provisions set forth herein. SkyWest shall continue as a Program Participant
until September 30, 1997. As such, Program Members will earn mileage credits in
the Program through their patronage of SkyWest and SkyWest shall not and accept
Rewards issued by Continental as of October 1, 1995 to Program Members for their
use on SkyWest as set forth below.
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<PAGE> 21
Section 3. Award and Redemption of Mileage Credits.
a) Award of Mileage Credits. During the term hereof and in accordance with
the requirements, conditions and restrictions set forth in Schedule B attached
hereto and incorporated by reference herein, Program Members shall be credited
with 100% of Actual Flight Miles, or a minimum of 500 miles, whichever is
greater, for Coach Class travel on SkyWest flights that are "CO* Flights"
operating as part of a "Through Flight" or connecting with SkyWest operated
flight at Los Angeles International Airport (as such terms are defined in the
Code Sharing Agreement between the parties hereto). Continental will only grant
mileage credits to Program Members on SkyWest flights that are not in direct
competition with Continental or CO Express. Any change or restriction which
affects the Program Member's ability to earn mileage credit under this Section
3(a) shall be approved in advance by Continental and SkyWest as set forth in
Section 8 hereof and shall be in accordance with any applicable Governmental
Restrictions. Continental, in its sole discretion, shall be the final authority
as to whether any and all such changes are in accordance with any applicable
Governmental Restrictions and will be adopted as such. Continental reserves the
right to lower mileage earnings unilaterally for all OnePass Participants in a
non-discriminatory manner.
b) Redemption of Mileage Credits. In accordance with the requirements,
conditions, and restrictions set forth in Schedule C attached hereto and
incorporated by reference herein, SkyWest shall accept and honor OnePass Rewards
for use on SkyWest which are issued by Continental to Program Members. The
OnePass Rewards and services provided by SkyWest in connection herewith shall
relate to OnePass Standard, Pass, AllPass, Alliance/International Airline
Partner and Elite Mileage redemption levels as set forth in the OnePass Member's
Guide dated January 1995 and the OnePass Elite Member's Guide dated March 1995
as amended from time to time, and corresponding reward usage as set forth in
Schedule C. hereto. SkyWest shall accept and honor the OnePass Rewards through
one year from the
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<PAGE> 22
date of issuance by Continental of the OnePass Rewards. Such rewards shall not
be issued after September 30, 1997.
c) Review and Balancing. During the term of this Agreement, SkyWest and
Continental agree to quarterly reviews of miles credited for flights flown on
SkyWest and RPM's flown on SkyWest for reward travel redemptions. Any
imbalances between miles credited and RPM's flown for redemptions between the
two carriers shall be adjusted accordingly through mutually agreed upon
marketing initiatives.
Section 4. Recording of Mileage Credits. SkyWest shall record Program
Members' patronage which qualifies for mileage credit to their Program Accounts
in accordance with the procedures set forth in Schedule B. SkyWest shall submit
to Continental, at the address stated below, computer tapes to accurately
account for the mileage credits awarded through SkyWest participation in the
Program. Tapes shall be submitted twice monthly. Tapes submitted by SkyWest to
Continental shall be compatible with the data processing system as currently
used by Continental for the processing of such information. SkyWest shall be
responsible, at its sole expense, to conform its computer tapes for such
compatibility and, if necessary, reprogram or correct its system (and/or
information in the system) as required by Continental. Tapes shall be sent to
the following address or such other address Continental shall designate from
time to time:
Electronic Data Systems
Tape Librarian
9014 Research Drive
Charlotte, NC 28262-8507
Section 5. Reporting of Mileage Credits and Redemptions.
a) Reporting of Mileage Credits. On a monthly basis and at no cost to
SkyWest, Continental will provide to SkyWest a report summarizing:
(i) Flight Segments and miles credited for flights flown on SkyWest
by Program Members
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<PAGE> 23
b) Reporting of Mileage Redemptions. On a monthly basis and at no cost to
Continental, SkyWest will provide to Continental a report summarizing:
(i) Flight Segments and RPM's flown on SkyWest flights for reward
travel redeemed by Program Members
(ii) Flight Segments and RPM's flown on SkyWest flights by Continental
Reward Code
Section 6. Term; Early Termination
a) Term. This Agreement shall commence on the day and year first above
written and shall continue until September 30, 1997 unless terminated earlier as
provided herein.
b) Early Termination. This Agreement may be terminated by Continental upon
120 days' prior written notice to SkyWest, and may be terminated by SkyWest upon
120 days' prior written notice to Continental; provided, however, this Agreement
shall not be cancelled before June 1, 1996. All costs associated with
notification to Program Members of early termination of this Agreement initiated
by SkyWest shall be borne by SkyWest unless such notification can be included in
a timely manner in regularly scheduled OnePass communications. SkyWest, at its
option, may exercise its right to notify Program Members via an insert in a
regularly scheduled statement mailing subject to space availability and SkyWest
paying for the production of the insert. In the event of such early termination
of this Agreement, Section 3(b) hereof shall be deemed automatically modified to
require SkyWest to accept and honor, for the one-year period immediately
following the early termination date, OnePass Rewards that have been issued
before such early termination date. Section 3, as so amended, shall survive the
early termination of this Agreement.
Section 7. Advertising and Promotional Material. Beginning October 1,
1995, SkyWest agrees to make mention of SkyWest's participation in the OnePass
program in radio, print and collateral material whenever possible. SkyWest
agrees to submit all ad copy (other than standard pre- approved references
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<PAGE> 24
to SkyWest's participation in the OnePass program) referring to the OnePass
Program to Continental for prior approval (which shall not be unreasonably
withheld) and to provide to Continental a media plan of SkyWest advertising
when it is prepared. Any use of the Continental name or logo shall be approved
in writing in advance by Continental.
Section 8. Additional Participation. Subject to the reasonable discretion
of Continental, Continental agrees:
a) upon request by SkyWest reasonably in advance, to mention SkyWest in up
to two Program communications each year when space is available. Information
provided by SkyWest to be communicated to Program Members must be relative to
SkyWest's participation in the program or SkyWest service enhancements that
would benefit members.
b) subject to prior written approval of Continental and execution of
appropriate confidentiality and security agreements, to provide SkyWest access
to the Program membership base for targeted mailings by SkyWest. All costs
associated with such access shall be borne by SkyWest. Continental reserves the
right to execute the actual mailing. Requests for names and tapes require 45
days notice to Continental.
c) to have annual marketing planning meetings with SkyWest to discuss and
plan joint marketing initiatives.
Section 9. Remuneration. SkyWest shall pay Continental the sum of $[*] on
an annual basis for participation in the OnePass Program. Invoices for the $[*]
annual participation fee will be issued to SkyWest on or before the 1st day of
October during each year of this Agreement.
Payments under this Section 8 shall be due and payable within [*] [(*)]
days from invoice date from Continental setting forth the amounts due. SkyWest
will be assessed an [*]% interest charge for late payment of such invoices. Any
failure to pay timely upon [*] days written notice thereof from
_______________
[*] = Confidential information appearing here has been omitted and filed
separately with the Commission.
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<PAGE> 25
Continental and SkyWest's continued failure to make any such payment, shall
however, be grounds for termination of this Agreement. Payments shall be made
payable to Continental and shall be sent to the following address or such other
location as Continental may designate from time to time:
Continental Airlines, Inc.
P.O. Box 100023
Houston, Texas 77212
Section 10. Governmental Restrictions. Notwithstanding anything herein to
the contrary, SkyWest's participation in the Program shall be in accordance with
any applicable Governmental Restrictions. Any changes in SkyWest's
participation in the Program which include, but are not limited to, (i) mileage
credits awarded, (ii) redemption levels for OnePass Rewards, (iii) SkyWest
involvement as a Program Participant and (iv) restrictions on the availability
for Program Members to use their OnePass Rewards on SkyWest shall be subject to
the prior written approval of Continental and shall be in accordance with any
applicable Governmental Restrictions. Furthermore, SkyWest shall notify
Continental in writing at least 120 days prior to the effective date of the
change in SkyWest's participation in the Program for approval by Continental.
Continental, in its sole discretion, shall be the final authority as to whether
such change is approved for the Program and is in accordance with any
Governmental Restrictions, including any requirements relative to notification
of Program Members. All costs associated with notifying the Program Members of
a change to the Program which is initiated by SkyWest shall be borne by SkyWest
unless such notification can be included within 120 days of a regularly
scheduled OnePass communication.
Section 11. Indemnity.
a) Continental's Indemnity. Continental agrees to indemnify, reimburse and
hold SkyWest harmless from and against any claims (including, without
limitation, those based on strict liability and tort), losses, liabilities,
demands, suits, judgments, or causes of action in all legal proceedings, whether
civil or criminal, penalties, fines and other sanctions and any costs or
expenses in connection therewith,
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<PAGE> 26
including reasonable attorney's fees and expenses, which result (i) from air
transportation services provided by Continental as a result of the Program,
(ii) the promotion of the Program by Continental, or (iii) with respect to the
negligence of Continental in its participation in or administration of OnePass.
b) SkyWest's Indemnity. SkyWest agrees to indemnify, reimburse and hold
Continental harmless from and against any claims (including, without limitation,
those based on strict liability and tort), losses, liabilities, demands, suits,
judgments, or causes of action in all legal proceedings, whether civil or
criminal, penalties, fines and other sanctions and any costs or expenses in
connection therewith including reasonable attorney's fees and expenses, which
may result from or arise in any manner out of (i) the provision of air travel
services by SkyWest, (ii) the promotion of the Program by SkyWest, (iii) delay,
failure, or other activity or inactivity by SkyWest in the submission of tapes
or mileage transaction records pursuant to Section 4 above or in the honoring of
OnePass Rewards and (iv) any unilateral changes in SkyWest's participation in
the Program which were initiated by SkyWest but not approved by Continental.
Section 12. Miscellaneous.
a) CHOICE OF LAW. THIS AGREEMENT IS MADE AND DELIVERED IN, AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
b) Enforceability. Any provision of this Agreement which may be prohibited
or unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability in such jurisdiction only, without invalidating
the remaining provisions hereof in such jurisdiction and without invalidating
any of the provisions hereof in any other jurisdiction.
c) Ambiguities. SkyWest agrees that any ambiguities in the construction or
interpretation of this Agreement or any clause or provision herein shall not be
construed or resolved against Continental solely because it drafted the
Agreement or caused the Agreement to be drafted.
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<PAGE> 27
d) Confidentiality. Each party agrees to treat as confidential and
proprietary non-public information obtained by it from the other relating to the
Program. Each party agrees not to disclose or distribute such information to
any third party (other than the submission of tapes to Electronic Data Systems
pursuant to Section 4 or to use such information for any purpose other than the
performance of the express provisions of this Agreement.
e) Section Headings. The section headings contained herein are for
convenience and reference only and are not intended to define or limit the scope
of any provision of this Agreement.
f) Entire Agreement. This Agreement contains the entire understanding of
the parties and no warranties, representations, agreements or understandings
between and among Continental and SkyWest pertaining to the subject matter of
this Agreement or any provision therein are no longer of any force and effect
unless contained herein.
g) Amendments. No term or provision of the Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which the enforcement of the change, waiver,
discharge or termination is sought.
h) Assignments. Neither SkyWest nor Continental may assign its rights,
interests, duties or obligations under this Agreement without the prior written
consent of the other and should either party assign certain of its
responsibilities hereunder, neither party shall thereby be relieved of any of
its obligations, liabilities and responsibilities under this Agreement.
i) Further Assurances. Continental and SkyWest will promptly at any time
and from time to time, execute and deliver to each other such further
instruments and documents, and take such further action, as they may from time
to time reasonably request and which is necessary to carry out this Agreement
and to establish and protect the rights, interests and remedies created in favor
of the parties hereto.
9
<PAGE> 28
In Witness Whereof, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first above written.
CONTINENTAL AIRLINES, INC. SKYWEST AIRLINES, INC.
By: By:
----------------------------- -------------------------
Name: Name:
--------------------------- -----------------------
Title: Title:
-------------------------- ----------------------
Date: Date:
--------------------------- -----------------------
10
<PAGE> 29
SCHEDULE B
CONFIDENTIAL INFORMATION
APPEARING HERE HAS BEEN
OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.
<PAGE> 30
SCHEDULE C
CONFIDENTIAL INFORMATION
APPEARING HERE HAS BEEN
OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.
<PAGE> 31
EXHIBIT C
CONFIDENTIAL INFORMATION
APPEARING HERE HAS BEEN
OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.
<PAGE> 32
SPECIAL PRORATE AGREEMENT
BETWEEN
CONTINENTAL AIRLINES
AND
SKYWEST AIRLINES
CONFIDENTIAL INFORMATION
APPEARING HERE HAS BEEN
OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.
<PAGE> 33
ATTACHMENT A
CONFIDENTIAL INFORMATION
APPEARING HERE HAS BEEN
OMITTED AND FILED
SEPARATELY WITH THE
COMMISSION.
<PAGE> 34
ATTACHMENT B
CONFIDENTIAL INFORMATION
APPEARING HERE HAS BEEN
OMITTED AND FILED
SEPARATELY WITH THE
COMMISSION.
