Exhibit 10.3
HUB AND LINE-HAUL SERVICES AGREEMENT
by and between
AIRBORNE INC.
a Delaware corporation
and
ABX AIR, INC.
a Delaware corporation
, 2003
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TABLE OF CONTENTS
Page
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SECTION 1 EQUIPMENT AND SERVICES TO BE PROVIDED BY AIRCO...................1
SECTION 2 EQUIPMENT AND SERVICES TO BE PROVIDED BY GROUNDCO................2
SECTION 3 CHANGES IN SCOPE OF SERVICE......................................2
SECTION 4 PLANNING PROCESS.................................................4
SECTION 5 COMPENSATION.....................................................4
SECTION 6 COVENANTS AND WARRANTIES.........................................9
SECTION 7 INDEMNIFICATION AND INSURANCE...................................10
SECTION 8 INDEPENDENT CONTRACTOR..........................................12
SECTION 9 TERM............................................................12
SECTION 10 FORCE MAJEURE...................................................13
SECTION 11 EVENTS OF DEFAULT...............................................14
SECTION 12 TERMINATION.....................................................17
SECTION 13 NONDISCLOSURE...................................................18
SECTION 14 MISCELLANEOUS...................................................18
SCHEDULE 1 HUB SERVICES
SCHEDULE 2 GROUNDCO HUB FACILITIES
SCHEDULE 3 SURFACE LINEHAUL SCHEDULING SERVICES
SCHEDULE 4 MAINTENANCE SERVICES
SCHEDULE 5 HUB EQUIPMENT
SCHEDULE 6 STAFF
SCHEDULE 7 SERVICE STANDARDS
SCHEDULE 8 QUARTERLY FORECAST OF HUB OPERATING REQUIREMENTS
SCHEDULE 9 COMPENSATION
SCHEDULE 10 MANAGEMENT
SCHEDULE 11 INSURANCE
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HUB AND LINE-HAUL SERVICES AGREEMENT
This HUB AND LINE-HAUL SERVICES AGREEMENT (this "Agreement"), is made and
entered into as of this day of , 2003, by and between Airborne Inc., a
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Delaware corporation ("Groundco") and ABX Air, Inc., a Delaware corporation
("Airco"). Each of Airco and Groundco is a "Party" and collectively are the
"Parties."
WHEREAS, Groundco is a wholly owned subsidiary of Delta Holdings USA, Inc.,
a corporation ("Delta"); and
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WHEREAS, Groundco provides the pick-up and delivery, sorting and gateway
distribution services for some shipments handled by certain Delta affiliates in
the United States and desires to arrange for certain hub, line-haul and
maintenance services at its sorting facilities, as more fully described herein;
and
WHEREAS, Airco is willing to provide hub, line-haul and maintenance
services to Groundco pursuant to the terms set forth herein; and
WHEREAS, pursuant to the Guaranty dated the date hereof, Delta will
guaranty Groundco's obligations under this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
terms, conditions and consideration hereafter set forth, Groundco and Airco
agree as follows:
SECTION 1
EQUIPMENT AND SERVICES
TO BE PROVIDED BY AIRCO
1.1 Airco will provide to Groundco the hub services listed on Schedule 1
(the "Hub Services"), which will be performed by certain Airco personnel (the
"Hub Staff") at the hub facilities listed on Schedule 2 (the "Hub Facilities").
1.2 Airco will provide to Groundco the surface line-haul scheduling
services listed on Schedule 3 (the "Line-Haul Services"), by contracting with
third parties to provide these services as necessary or otherwise providing such
services through Airco personnel (the "Line-Haul Staff").
1.3 Airco will provide to Groundco the hub maintenance service personnel
("Maintenance Staff" and together with the Hub Staff and Line-Haul Staff, the
"Staff") to perform the maintenance services listed on Schedule 4 (the
"Maintenance Services" and together with the Hub Services and Line-Haul
Services, the "Services") with respect to the Hub Facilities and the related
equipment listed on Schedule 5 (the "Hub Equipment"). A description of the job
categories, head counts, seniority levels, and pay grade scales for the Hub
Staff, the Line-Haul Staff and the Maintenance Staff, including a break-down of
numbers of full-time and part time Staff and showing aggregate labor costs in
respect of all Staff, in each case, as of the most recent practicable date prior
to the date hereof is set forth in Schedule 6.
1.4 Airco will provide the Services in accordance with the performance
standards set forth in Schedule 7 ("Service Standards"). The Service Standards
will be subject to periodic review and adjustment by mutual agreement of the
Parties, based on market conditions and the needs of the Parties.
SECTION 2
EQUIPMENT AND SERVICES
TO BE PROVIDED BY GROUNDCO
2.1 Groundco will be responsible for designing, developing and constructing
the system, including real estate purchase and management; facility design,
placement, purchase and management; engineering of sortation equipment and
staffing requirements. Groundco will update as necessary the network
requirements and associated plans applicable to Airco's provision of the
Services under this Agreement, including the size and location of facilities,
type of equipment used, size and throughput requirements, line-haul delivery
routing, schedules and capacity requirements and maintenance schedules, will
consult with Airco regarding all such changes or updates and will give Airco
reasonable advance notice of any changes or updates. The Parties agree to
negotiate in good faith with respect to any modifications in pricing, service
levels, access or other arrangements that may be necessary or desirable as a
result of such changes in the system parameters. Airco will use its commercially
reasonable efforts to implement the plans, including the changes or updates
thereto, specified by Groundco pursuant to this Section 2.1.
2.2 Groundco will provide to Airco all equipment, facilities and other
inputs, information and materials necessary for Airco to provide the Services,
including the Hub Facilities and Hub Equipment, and will be responsible for the
repair, replacement and maintenance of such equipment, facilities and other
personalty as necessary (whether performed by itself, by contracting with a
third party or by compensating Airco for such work hereunder) to enable Airco to
perform such Services in accordance with the Service Standards.
SECTION 3
CHANGES IN SCOPE OF SERVICE
3.1 Subject to Section 3.3, Groundco will not have the right to reduce the
scope of the Services during the 12 months following the date of this Agreement
(the end of such 12-month period being the "Anniversary Date"), except in
connection with performance failures or labor disputes that cause Airco's
failure to meet the Service Standards, in which case Subsection 11.4 will
govern.
3.2 In the event that Groundco desires to increase substantially the volume
of packages for which Services are required, or to revise the methods or
equipment used for providing Services, Groundco will give Airco reasonable
advance notice of any such proposed changes, but in any event no less than 90
days advance notice, and the Parties agree to negotiate in good faith with
respect to any modifications in pricing, service levels, access or other
arrangements that may be necessary or desirable as a result of such changes.
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3.3 Notwithstanding Subsection 3.1, Groundco has the right to take over
certain system design, planning, operational, auditing and purchasing functions
by hiring Airco Staff who fill the positions identified on Schedule 10 during
the first 12 months, but in such event (i) Groundco will offer to hire the Airco
employees performing such functions on substantially the same terms as their
current employment (including salary and benefits) and (ii) Groundco will pay
any costs incurred by Airco in transferring such employees to Groundco and
reimburse any termination or other costs incurred by Airco in connection with
employees who do not accept Groundco's offer of employment; provided however if
any of such Airco employees perform a dual function of providing Services
hereunder to Groundco and providing services to Airco, then the Parties will
negotiate in good faith with respect to Groundco's right under this Subsection
3.3 and the appropriate employees to be transferred. After the date hereof, if a
Party requests an amendment to Schedule 10, the Parties agree to negotiate in
good faith and not unreasonably withhold its approval of an amendment.
3.4 Following the Anniversary Date, Groundco will have the ability to
change the scope of Services to be provided pursuant to this Agreement by
terminating specific Services at one or more Hub Facilities. In the event that
Groundco desires to terminate such Services, Groundco will give Airco reasonable
advance notice of any such terminations, but in any event no less than 60 days
advance notice, and the Parties agree to negotiate in good faith with respect to
any modifications in pricing, service levels, access or other arrangements that
may be necessary or desirable as a result of such terminations. In the event of
any such partial termination of Services pursuant to this Agreement, Groundco
will either, at its option, (i) offer employment to any affected Staff on
substantially the same terms as their current employment (including salary and
benefits), pay any costs incurred by Airco in transferring such Staff to
Groundco and reimburse any termination or other costs incurred by Airco in
connection with employees who do not accept Groundco's offer of employment, or
(ii) pay associated severance or other costs arising out of terminating or
reducing Staff who have not been offered employment. Following any such
termination, the Parties will use their commercially reasonable efforts to
minimize any such costs.
3.5 With respect to any new main or regional hub or linehaul service
similar to the Services provided hereunder that Groundco or its Affiliates may
require in the United States (a "New Service"), prior to discussing, negotiating
with or providing information to any third party in respect of such New Service,
Groundco shall first give written notice (the "New Service Notice") to Airco
stating its intention to offer or develop such New Service and specifying
Groundco's preliminary cost estimates in connection with such New Service.
Within ten (10) Business Days after receipt of a New Service Notice, Airco may
submit in writing to Groundco an estimate of the Airco's cost for providing such
New Service, together with any other relevant information requested by Groundco
in the New Service Notice (such amount, plus the applicable Base Markup, the
"Airco Bid"). If necessary, Airco may request additional information from
Groundco or a reasonable amount of additional time in order to prepare and
submit the Airco Bid, and Groundco shall not unreasonably withhold such
information or its consent to such additional time. Upon expiration of such 10
Business Day period (and any extension period agreed by the parties), whether or
not Airco has submitted an Airco Bid, Groundco shall be free to solicit bids
(each a "Third Party Bid") from, provide information to, and negotiate with, any
third party provider (each a "Third Party Provider") in respect of such New
Service. In the event that one or more Third Party Bids is superior to the Airco
Bid,
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Groundco shall be free to contract with any Third Party Provider that submitted
a superior Third Party Bid to provide the New Service; provided that Groundco
shall provide Airco with sufficient information regarding the terms and
conditions of the accepted Third Party Bid for Airco to verify that such Third
Party Bid is superior to the Airco Bid. Notwithstanding the foregoing, nothing
in this Section 3.5 shall impose any obligation or restriction on Groundco in
respect of services it desires to in-source or otherwise provide directly on its
own behalf.
SECTION 4
PLANNING PROCESS
4.1 The Parties will review, on a quarterly basis, Groundco's Quarterly
Forecast of Hub Operating Requirements and Airco's capability for the next four
quarters no later than 30 days prior to the start of each fiscal quarter. The
Parties will conduct, in the third quarter of each year, a formal annual budget
review with respect to the Services for the upcoming year. The initial Quarterly
Forecast of Hub Operating Requirements is set forth in Schedule 8. During the
fourth quarter of each fiscal year, the Parties will hold weekly meetings at the
option of either Party.
SECTION 5
COMPENSATION
5.1 In exchange for the Services provided by Airco to Groundco under this
Agreement, Groundco shall (i) reimburse Airco, in accordance with the terms
hereof, for all of the costs described in Section 5.7 that Airco incurs in
providing the Services to Groundco (such amount, the "Cost Recovery Amount") and
(ii) pay Airco a fee equal to (x) the base xxxx-up determined pursuant to
Section 5.2 (the "Base Markup" and, together with the Cost Recovery Amount, the
"Base Compensation") plus (y) subject to Section 5.6, an incremental markup
determined pursuant to Section 5.3 (the "Incremental Markup" and, together with
the Base Markup and the Cost Recovery Amount, the "Compensation"). The initial
estimated Cost Recovery Amount, as of the Effective Time, is set forth in
Schedule 9.
5.2 The Base Markup shall be 1.75% of and shall be payable (i) on all Cost
Recovery Amount items described in Section 5.7 and (ii) contemporaneously with
each payment of any Cost Recovery Amount.
5.3 The Incremental Markup shall be payable subject to Section 5.6 and
shall consist of (a) the cost component determined pursuant to Section 5.4 plus
(b) the service component determined pursuant to Section 5.5.
5.4 With respect to each applicable quarterly or annual period, the cost
component of the Incremental Markup shall equal (A) 0.25% of any reduction of up
to 4% in Airco's Cost Per Piece during such period as compared with Airco's
targeted Cost Per Piece in respect of such period as set forth in the applicable
Quarterly Forecast of Hub Operating Requirements plus (B)
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0.35% of any amount of reduction in excess of 4.0% (if any) in Airco's Cost Per
Piece during such period as compared with Airco's targeted Cost Per Piece in
respect of such period as set forth in the applicable Quarterly Forecast of Hub
Operating Requirements, in each case multiplied by the Cost Recovery Amount for
such period; provided, however, that, until the first anniversary of the date
hereof, no Incremental Markup shall be payable in respect of any percentage
reduction in Airco's Cost Per Piece during any applicable period within such one
year period that is greater than 5.0%. After the first anniversary of the date
hereof, Groundco shall review the desirability of maintaining such 5.0%
limitation with respect to subsequent periods.
5.5 The service component of the Incremental Markup shall be equal to the
sum of the Incremental Markup percentages determined pursuant to the tables set
forth in paragraphs (a) (b) and (c) of this Section 5.5, multiplied by the Cost
Recovery Amount for the applicable year.
(a) the Incremental Markup Percentage determined pursuant to the following table
based on Airco's reduction in the number of mis-sorts as compared with the
mis-sort target set forth in the applicable Quarterly Forecast of Operating
Requirements:
Mis-Sort Target Incremental Markup Percentage
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0.60% .037%
0.55% .075%
0.50% .112%
0.45% .150%
PLUS
(b) the Incremental Markup Percentage determined pursuant to the following table
based on Airco's reduction in the number of delays attributable to Aircraft
delays as compared with the Aircraft delay target set forth in the applicable
Quarterly Forecast of Operating Requirements:
Aircraft Delay Target Incremental Markup Percentage
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5.0% .10%
4.0% .20%
3.0% .30%
2.0% .40%
PLUS
(c) the Incremental Markup Percentage determined pursuant to the following table
based on Airco's reduction in the number of delays attributable to Regional
delays as compared with the Regional delay target set forth in the applicable
Quarterly Forecast of Operating Requirements:
Regional Delay Target Incremental Markup Percentage
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3.3% 0.05%
2.9% 0.10%
2.5% 0.15%
2.1% 0.20%
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5.6 No part of the Incremental Xxxx-Up shall be payable to Airco unless at
least 25% of such amount shall be placed in a management and supervisor bonus
plan the terms of which shall be determined by the Board of Directors of Airco.
5.7 Within 60 days after the end of each of each fiscal quarter in respect
of which the cost component of the Incremental Markup was earned, Groundco will
pay to Airco 40% of such cost component.
5.8 Within 90 days after the end of each fiscal year, Groundco shall pay to
Airco an amount equal to 60% of the cost component of the annual Incremental
Markup earned for the fiscal year then ended, such cost component to be
calculated in accordance with Section 5.5, based upon the applicable targets for
the fiscal year then ended.
5.9 The service quality component of the Incremental Markup shall be
payable annually, within 90 days after the end of each fiscal year, in respect
of the fiscal year then ended, in an amount equal to the Incremental Markup
Percentage determined pursuant to Section 5.4, multiplied by the aggregate Cost
Recovery Amount payable during such fiscal year.
5.10 In the event of any extraordinary increase or decrease in the number
of pieces within any applicable period, Groundco will consult with Airco to
determine, and may make at Groundco's option, a commensurate adjustment to the
applicable thresholds for determining the cost component of the Incremental
Markup in respect of any such affected period. The Parties acknowledge that the
applicable thresholds for determining the cost and service components of the
Incremental Markup for the first year following the date hereof have been
prepared based upon historical cost and service information provided by Airco to
Groundco, and Groundco shall have the right to adjust such threshholds after the
date hereof if it determines that the actual data pertaining to such historical
periods differs from the data provided to it by Airco.
5.11 The Cost Recovery Amount is intended to cover all of Airco's costs
with respect to providing the Services to Groundco. Such costs will include all
costs of maintaining the Staff (including salaries and benefits and the cost of
any program established to encourage improvements in Services and costs and in
meeting the Service Standards), the cost of line-haul delivery services,
insurance, taxes of Airco (other than income taxes) attributable to its
performance of the Services, any costs associated with expansion, contraction or
redeployment of the Staff (including any termination and/or relocation benefits)
or related equipment or services at the request of Groundco, and corporate
overhead; provided, however, that if at any time Airco derives more than 10% of
its revenue from the provision of services to third parties ("Ancillary
Services"), the parties agree to negotiate in good faith to determine a
reasonable allocation of the overhead costs attributable to Airco's provision of
Ancillary Services, and the overhead costs so allocated by the Parties shall be
excluded from the Cost Recovery Amount.
5.12 (a) Groundco will submit written purchase orders to Airco in respect
of any changes to the Services not contemplated by the most recent Quarterly
Forecast of Hub Operating Requirements. Groundco will pay for the Cost Recovery
Amount (plus the applicable Base Markup) on a weekly basis by advancing funds by
wire transfer to Airco on Monday of
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each week, or if not a Business Day (as defined below), on the following
Business Day using the estimated Compensation amount. The estimated Cost
Recovery Amount will initially be as set forth in Schedule 9 and thereafter
Groundco and Airco will adjust the estimated Compensation amount charged to
Groundco on a quarterly basis to reflect actual costs from the prior quarter
based on Airco's statement of costs. Within 45 days after the end of each
quarter, Airco will submit a statement of costs incurred to Groundco. Groundco
and Airco will reconcile the actual costs against previous funds paid by
Groundco to Airco and the resulting payment (the "Reconciliation Payment") to
the appropriate party will occur no later than 15 days after the reconciliation
process has concluded. Airco will make its financial personnel available to
discuss its statement of costs. Groundco will have the right to evaluate and
audit Airco's costs, plus the agreed commissions, at Groundco's sole cost and
expense. Any payment to be made to a Party as a result of an audit will be paid
no later than 15 days after the audit has been completed and the amount owing
has been agreed to by the Parties. Any such audit will be conducted during
regular business hours at Airco's offices at a mutually agreed time. Any
disputes regarding cost statements or any audit will be handled pursuant to
Subsection 14.1(a) and if not resolved in accordance with Subsection 14.1(a)
will be submitted to an independent accountant agreed to by both Parties for
resolution, without causing any interruption in Services or payments of invoices
thereafter. The conclusions of such accountant will be final and binding on the
Parties. For avoidance of doubt, Groundco will continue to pay to Airco the
estimated Compensation, despite any disputes with respect to prior payments.
Business Day means a day other than Saturday, Sunday or a day in which banks in
Ohio are closed.
(b) If, at any time prior to December 31, 2005, the cash and cash
equivalents and investments or other financial assets of any and every nature
held by Airco ("Cash") is less than $60 million (the difference between $60
million and Airco's actual Cash being referred to herein as the "Deficiency
Amount"), Airco may request that Groundco (and Groundco shall if so requested)
prepay (a "Prepayment"), by wire transfer to Airco contemporaneously with the
next payment of Base Compensation and in addition to the Base Compensation for
the forthcoming week payable pursuant to Section 5.12(a), the Base Compensation
payable in respect of: (i) if the Deficiency Amount is less than $20 million,
the Base Compensation for the one week immediately following the forthcoming
week, (ii) if the Deficiency Amount is $20 million or more (but less than $40
million), the Base Compensation for the two weeks immediately following the
forthcoming week and (iii) if the Deficiency Amount is $40 million or greater,
the Base Compensation for the three weeks immediately following the forthcoming
week; provided, however, that Airco may not make a request for Prepayment at any
time after it has made requests (in one or multiple requests) for Prepayments
for a total of three weeks, until the aggregate amount of Prepayments has been
reduced in accordance with this Section 5.12 by the amount of the Prepayment in
respect of (x) one week, in which case a Prepayment request for one week may be
made, (y) two weeks, in which case a Prepayment request for two weeks may be
made or (z) the entire aggregate Prepayment Amount, in which case a Prepayment
request for three weeks may be made. Airco shall maintain a record of the date
and amount of each such Prepayment (such record being referred to herein as the
"Prepayment Account") and the Prepayment Account shall have a starting balance
of zero, which shall be (i) increased by the amount of each Prepayment (each of
which shall be deemed to be a credit of Groundco to be applied towards future
payments of Base Compensation as provided in Section 5.12(c) or other amounts
owing hereunder or repaid as set forth in this Section 5.12) and (ii) decreased,
dollar-
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for-dollar, by the amount of all costs incurred by Airco in providing the
Services in respect of which Groundco has not paid the Base Compensation, as
provided in Section 5.12(c).
(c) At any time from and after the first anniversary of the making of
each Prepayment or, if such first anniversary falls after December 31, 2005,
from and after December 31, 2005, Groundco shall be entitled to apply the
aggregate amount of such Prepayment then on balance in the Prepayment Account as
a credit against future payments of Base Compensation or other amounts owing
hereunder and, if Groundco so elects to apply such amount (or any portion
thereof) as a credit against future payments of Base Compensation, then the Base
Compensation payable pursuant to Section 5.12(a) shall be reduced accordingly.
(d) If, as of January 1 or July 1 of each of 2003, 2004 and 2005,
Airco's Cash exceeds $60 million and there is a positive balance in the
Prepayment Account, Airco shall, within two Business Days after any such date,
as applicable, pay to Groundco, by wire transfer to an account designated by
Groundco, an amount equal to the lower of (i) the excess of Airco's actual Cash
as of such date over $60 million or (ii) the balance in the Prepayment Account.
(e) Within two Business Days following the occurrence of (i) a Change
of Control (as defined in the ACMI Agreement) or (ii) any expiration or
termination of this Agreement, Airco shall pay to Groundco, by wire transfer to
an account designated by Groundco, an amount equal to the balance then
outstanding in the Prepayment Account.
(f) Airco shall maintain complete and accurate records to support and
document each Prepayment, the Prepayment Account and Airco's Cash for purposes
of this Section 5.12, and shall provide to Groundco such information in respect
thereof as Groundco may reasonably request in order to substantiate any matters
pertaining to this Section 5.12. In the event that Groundco disputes the amount
of any payment owed by Airco pursuant to this Section 5.12, the Parties shall
use their reasonable efforts to resolve by written agreement, within 15 days
after the receipt by Airco of Groundco's objections, any differences as to such
amount. During such 15 day period, Airco shall continue to provide Groundco and
its Representatives with reasonable access to its properties, books, records and
personnel. If Airco and Groundco resolve all such differences, the amount at
issue, as adjusted by the agreed adjustments, shall be final and binding. If
Groundco's objections are not resolved by agreed adjustments within fifteen (15)
days after the receipt by Airco of Groundco's objections, then Airco and
Groundco shall promptly submit the items of disagreement to an industry expert
mutually acceptable to Groundco and Airco, and such Person (the "Industry
Expert") shall be directed by Airco and Groundco to resolve such items of
disagreement (based solely on information provided to the Industry Expert by, or
available from, Airco and Groundco) as promptly as reasonably practicable and to
deliver written notice to each of Airco and Groundco setting forth its
resolution of the disputed matters (such notice to include a worksheet setting
forth all material calculations used in arriving at such resolution). The fees
and expenses of the Industry Expert shall be allocated between Airco and
Groundco in the same proportion that the aggregate amount of the disputed items
so submitted to the Industry Expert that is unsuccessfully disputed by each such
party (as finally determined by the Industry Expert) bears to the total amount
of such disputed items so submitted.
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5.13 In the event that Airco experiences extraordinary costs not
contemplated in the planning process set forth in Section 4.1, Airco may give
written notice to Groundco of such extraordinary costs and the Parties will
negotiate in good faith with respect to any increases to the estimated
Compensation to be advanced to Airco prior to the reconciliation process.
5.14 The payment of the Cost Recovery Amount does not include the
following, which will be paid directly by Groundco or which Groundco will
promptly reimburse (but in any event, within 2 Business Days) to Airco upon
receipt of a statement setting forth in reasonable detail Airco's actual cost
incurred in respect thereof and, for the avoidance of doubt, no Base Markup or
Incremental Markup shall be payable based on the items set forth in Schedule 9
as "Reimbursable Expenses." The Cost Recovery Amount shall not include, and
Airco shall not be entitled to reimbursement under this Agreement for amounts
incurred in respect of, amounts payable by Groundco pursuant to Section 10.1 of
the Employee Matters Agreement.
5.15 Any revenue from Ancillary Services will inure to the benefit of
Airco.
5.16 Notwithstanding Section 5.7, (i) the Cost Recovery Amount shall
exclude Airco's labor costs incurred in connection with providing any Ancillary
Services and (ii) to the extent that the average increase in stated hourly wage
rate scales for the positions applicable to hourly workers, stated hourly wage
rate range scales for positions of non-exempt workers or stated annual salary
range scales for the positions of exempt workers (including, with respect to
non-exempt and exempt workers, potential bonus opportunity based on the merit
matrix), in each case as currently specified in Airco's pay policy for Airco
employees engaged in the provision of the Services hereunder is more than the
lesser of 3% per annum or the CPI Rate plus 0.5% per annum measured on a same
quarter comparison to the corresponding quarter in the prior year (the "Labor
Cost Cap"), such increases shall not be included in the Cost Recovery Amount.
Nothing in the preceding sentence shall prohibit Airco from moving employees up
or down scales, giving seniority increases or providing pay increases consistent
with past practice and the pay policy. Set forth on Schedule 9 is the Airco pay
policy in effect as of the date hereof. In connection with the quarterly
planning process described in Section 4.1, the Parties will review the Labor
Cost Cap and negotiate in good faith any increases or decreases to the Labor
Cost Cap reasonably required to reflect changes in the Services, labor markets,
industry conditions, general economic conditions and the needs of the Parties.
SECTION 6
COVENANTS AND WARRANTIES
6.1 Airco represents, warrants and covenants:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware;
(b) It has the corporate power and authority to enter into this Agreement;
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(c) The making, execution and performance of this Agreement by Airco has
been duly authorized by all necessary corporate action, this Agreement has been
duly executed and delivered by Airco and this Agreement constitutes the valid
and binding obligation of Airco, enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to creditors rights generally, including, without
limitation, fraudulent conveyance laws, and by general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific performance
or injunctive relief, whether considered in a proceeding in equity or at law;
and
(d) It will comply in all material respects with all applicable
governmental laws and regulations in the performance of the Services hereunder.
6.2 Groundco represents, warrants and covenants:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware;
(b) It has the corporate power and authority to enter into this Agreement;
(c) The making, execution and performance of this Agreement by Groundco has
been duly authorized by all necessary corporate action, this Agreement has been
duly executed and delivered by Groundco and this Agreement constitutes the valid
and binding obligation of Groundco, enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to creditors rights generally, including, without
limitation, fraudulent conveyance laws, and by general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific performance
or injunctive relief, whether considered in a proceeding in equity or at law;
and
(d) It will comply in all material respects with all applicable
governmental laws and regulations in the performance of its obligations
hereunder.
SECTION 7
INDEMNIFICATION AND INSURANCE
7.1 Each of Airco and Groundco (the "Indemnifying Party") hereby
indemnifies and holds the other Party, including its officers, directors, agents
and employees (the "Indemnified Party") harmless from and against any and all
liabilities, claims, demands, suits, judgments, damages and losses, including
the costs, expenses and legal fees in connection therewith or incident thereto
(collectively, "Losses") arising out of the death or injury to any person or
entity, including but not limited to employees of Airco or Groundco, or arising
out of loss of, damage to, or destruction of any property whatsoever, including
but not limited to cargo and any other property of Airco or Groundco, as
applicable, or third parties caused by or arising out of (or in any way
connected with) such Party's performance of its obligations hereunder.
Notwithstanding the foregoing, (i) the indemnification obligations herein will
not extend to Losses caused by the negligence or willful misconduct of the
Indemnified Party (including its
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employees and agents), (ii) the indemnification obligations herein are limited
to the proceeds recoverable with respect to such Losses under any such insurance
policies held by the Indemnifying Party, unless such obligations arise solely
from the gross negligence or willful misconduct of the Indemnifying Party, and
(iii) no Indemnifying Party will have any obligation to indemnify the
Indemnified Party for any lost profits, reputational damage, incidental, special
or consequential damages, except to the extent that such damages are required to
be paid to a non-affiliated third party.
7.2 During the term of this Agreement, Airco will, to the extent available
on commercially reasonable terms and to the extent carried by similarly situated
companies in the industry, carry insurance described in Part I of Schedule 11.
Except for workers compensation insurance and excess workers compensation
insurance, the insurance set forth herein will contain provisions waiving
underwriter's rights of subrogation against any respective party hereto, and its
parent, its affiliated companies and the officers, directors, agents and
employees of each of those companies. Airco will obtain an endorsement naming
Groundco as an additional insured under general liability insurance and
automobile liability insurance and as a loss payee under its cargo legal
liability insurance. With respect to general liability insurance and automobile
liability insurance, Airco will obtain a standard severability of interest/cross
liability endorsement. The insurance to be procured by Airco will be for primary
coverage, without right of contribution among other insurers.
7.3 During the term of this Agreement, Groundco will, to the extent
available on commercially reasonable terms and to the extent carried by
similarly situated companies in the industry, carry insurance, described in Part
II of Schedule 11. Except for workers compensation insurance and excess workers
compensation insurance, the insurance set forth herein will contain provisions
waiving underwriter's rights of subrogation against any respective party hereto,
and its parent, its affiliated companies and the officers, directors, agents and
employees of each of those companies. Groundco will obtain an endorsement naming
Airco as an additional insured under general liability insurance and automobile
liability insurance and as a loss payee under its cargo legal liability
insurance. With respect to general liability insurance and automobile liability
insurance, Groundco will obtain a standard severability of interest/cross
liability endorsement. The insurance to be procured by Groundco will be for
primary coverage, without right of contribution among other insurers.
7.4 The Parties will periodically review the scope and amount of insurance
that Airco and Groundco are required to carry pursuant to Subsections 7.2 and
7.3 and make any necessary changes based on changes in market conditions,
including, without limitation, availability of such coverage on commercially
reasonable terms and increases in premiums.
7.5 Each insurance policy, and each certificate evidencing the same, will
contain a provision that not less then thirty (30) days' advance notice will be
given to the respective party hereto of cancellation or reduction in the insured
value or reduction in type of perils to be insured against in the policies. War
risk policies may be subject to standard war risk cancellation provisions and
availability on commercially reasonable terms.
7.6 The Party procuring the insurance hereunder will provide to the other
Party hereto prior to the commencement of Services a certificate from the
insurers that such
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insurance is in effect. These certificates will state policy numbers, dates of
expiration, and limits of liability thereunder.
7.7 If the procuring Party fails to pay its premium when due on any or all
of the foregoing policies for any reason whatsoever, in violation of this
Agreement, the other Party may, at its sole discretion, pay such premiums. In
the case of policies to be procured by Groundco but paid by Airco pursuant to
the foregoing sentence, Airco will charge Groundco the premium cost, plus 2%,
and in such case Groundco will promptly reimburse Airco for such charges. If any
of the foregoing policies are canceled, and not immediately replaced because
they are not available on commercially reasonable terms, the Parties will
promptly negotiate in good faith alternatives to such policies and/or seek
replacement coverage under other policies.
7.8 The Parties agree to cooperate and use their respective commercially
reasonable efforts to minimize the insurance requirements applicable to this
Agreement, including, where practicable, by seeking to obtain a single policy of
insurance which names Groundco and Airco as co-insureds in respect of all rights
and liabilities referred to therein, consistent with maintaining adequate
insurance coverage for both parties.
SECTION 8
INDEPENDENT CONTRACTOR
8.1 The Services provided by Airco hereunder will be conducted by Airco as
an independent contractor and neither it nor its employees, subcontractors, if
any, or their employees or agents, will be deemed employees of Groundco. Any
services provided by Groundco hereunder will be conducted or provided as an
independent contractor and neither it nor its employees, subcontractors, if any,
or their employees or agents, will be deemed employees of Airco. Unless
otherwise agreed by the Parties, the Staff will at all times remain employees of
Airco.
SECTION 9
TERM
9.1 The term of this Agreement (the "Term") shall be for a period of three
(3) years commencing from the date hereof, unless earlier terminated under the
express terms hereof or unless extended as provided below. The Term shall
automatically renew thereafter for additional one (1) year periods, upon
substantially the same terms and conditions, modified only to reflect those
changes to the provision of services under the Agreement that have evolved and
been incorporated in this Agreement at the time of renewal, unless either Party
provides the other written notice of its intent not to renew the Agreement not
less than 90 days prior to expiration.
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XXXXX XXXXXXX
10.1 Except as specifically provided hereunder in this Section 10, in the
event either Party hereto is rendered unable in whole or in part by force
majeure to carry out its obligations under this Agreement, it is agreed that the
obligations of each Party, other than preexisting payment obligations of
Groundco then due and owing, obligations for services which have been performed
under this Agreement but which have not yet been billed, and obligations under
this Section 10, will be suspended during the continuance of any inability so
caused, provided good faith endeavors by the Party giving notice of such force
majeure as required by the following sentence are made to remedy such cause with
all reasonable dispatch. A Party who is rendered unable, in whole or in part, by
force majeure to carry out its obligations will give written notice of such
force majeure to the other Party as soon as possible after the occurrence of the
event constituting force majeure.
10.2 The term force majeure means acts not within the control of the Party
bound to perform and which, by the exercise of due diligence, such party is
unable to overcome. A force majeure includes acts of God, weather, strikes,
lockouts, or other industrial disturbances (whether to themselves or their
corporate affiliates), acts of the public enemy, wars, acts of terrorism,
national emergency, shutdown of airspace, embargoes, blockades, riots,
epidemics, lightning, earthquakes, floods, tornadoes, explosions, accidents to
machinery or aircraft, failure of public utilities, unavailability of fuel, U.S.
military airlift emergency activation of the U.S. Civil Reserve Air Fleet,
inability to secure landing slots, and any other causes not within control of
the Party claiming suspension. It is understood that the settlement of strikes,
lockouts or industrial disturbances shall be entirely within the discretion of
the Party having the difficulty, and the requirement that any force majeure
shall be remedied shall not require the settlement of strikes or lockouts by
acceding to the demands of the other Party to this Agreement or any other third
party when such course is inadvisable in the discretion of the Party having the
difficulty.
10.3 During the period a force majeure continues which affects the parties
jointly, or which affects only Airco so that it is not able to provide the
Services, Groundco shall pay the Cost Recovery Amount in respect of periods
during the continuance of such Force Majeure, but shall not be obligated to pay
the Base Markup or the Incremental Markup.
10.4 During a period when a force majeure continues which affects
Groundco's requirement for Services, but does not prevent Airco from providing
such Services, Groundco will pay to Airco the Cost Recovery Amount, but shall
not be required to pay any Base Markup or Incremental Markup in respect of such
Services. During such period, the Parties will use their commercially reasonable
efforts to minimize costs. To the extent Groundco desires to suspend all or a
portion of the Services during such period, Groundco may request that the
Parties meet to discuss possible reductions in Staff; provided that Groundco
pays the termination and other costs relating to any such reductions. To the
extent that Airco does not implement any Staff reductions requested by Groundco
and Groundco has agreed to pay the termination and other costs associated
therewith, then Groundco shall have no obligation to pay any Compensation in
respect of employment of any Staff in excess of Staff designated by Groundco for
any particular operation under this Agreement.
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10.5 If a force majeure continues for 30 days, either Party may terminate
this Agreement by giving the other Party two Business Days notice, in writing,
of such termination. Nevertheless, if as a result of events described in
Subsection 10.4 hereof, Groundco is paying the applicable amounts required
therein, Airco may not terminate this Agreement hereunder so long as Groundco
continues to pay to Airco, as and when required, the Cost Recovery Amount.
Groundco may terminate any period of suspension under Subsection 10.4 in order
to terminate this Agreement by giving Airco at least fifteen (15) days notice in
writing of such termination. In the alternative, upon cessation of a force
majeure during such suspension period, Groundco may reactivate this Agreement on
written notice to Airco, and Airco will resume the performance of Services as
soon as reasonably practicable, taking into account any time necessary to rehire
any employees that may have been laid off during the suspension period.
10.6 If a condition of force majeure arises that affects Airco's ability to
provide Services hereunder, Groundco will have the right, but not the
obligation, to arrange for another provider to perform such services until such
time as such force majeure can be cured and Airco will be reinstated as soon as
is reasonable under the circumstances. For force majeure that renders only a
portion of Airco Services unusable to Groundco, a reduction in Compensation will
be made to reflect payment for the portion of the Services which Airco is
actually unable to so perform.
SECTION 11
EVENTS OF DEFAULT
11.1 Airco Events of Default. The occurrence of any of the following events
or conditions shall constitute an event of default by Airco hereunder (each an
"Airco Event of Default" and collectively, the "Airco Events of Default"):
(a) The failure of Airco to meet or exceed the Service Standards in either
(i) each of any two consecutive months or (ii) each of any three months (whether
or not consecutive) within any trailing twelve-month period;
(b) The material breach of any representation or warranty of Airco
hereunder;
(c) The dissolution, liquidation, cessation of business or immediate
termination of existence of Airco;
(d) The insolvency or bankruptcy of Airco or the appointment of a trustee
or receiver for Airco or for a substantial part of its business, or the
admission in writing of Airco of its inability to pay its debts as they may
mature;
(e) The institution by or against Airco of bankruptcy, reorganization,
arrangement, insolvency, or liquidation proceedings or any other proceedings for
relief under any bankruptcy or similar federal, state or local law for the
relief of debtors, provided that, if such proceeding is instituted against Airco
and is not consented to by Airco, it is not dismissed or stayed within sixty
(60) days after such institution;
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(f) Any other material breach or failure of Airco to observe or perform any
term, condition, covenant or agreement required to be observed or performed by
it hereunder; and
(g) The violation of any legal requirement or the suspension or revocation
of any license, certificate or permit necessary to conduct all or any portion of
Airco's obligation's hereunder and that prevents Airco from performing in any
material respect its obligations hereunder, unless such violation, suspension or
revocation occurred as a result of actions or omissions of Groundco.
11.2 Groundco Events of Default
The occurrence of any of the following events or conditions shall
constitute an event of default of Groundco hereunder (each a "Groundco Event of
Default" and, collectively, the "Groundco Events of Default"):
(a) The failure of Groundco to pay when due the Compensation in accordance
with Section 5 or any other amounts which may be payable by Groundco hereunder;
(b) A termination of, or default by Delta Holdings under, the Guaranty or a
repudiation by Delta Holdings of its obligations thereunder;
(c) The material breach of any representation or warranty of Groundco
hereunder;
(d) The dissolution, liquidation, cessation of business or immediate
termination of existence of Groundco;
(e) The insolvency or bankruptcy of Groundco or the appointment of a
trustee or receiver for Groundco or for a substantial part of its business, or
the admission in writing of Groundco of its inability to pay its debts as they
mature;
(f) The institution by or against Groundco of bankruptcy, reorganization,
arrangement, insolvency, or liquidation proceedings or any other proceedings for
relief under any bankruptcy or similar federal, state or local law for the
relief of debtors, provided that, if such proceeding is instituted against
Groundco and is not consented to by Groundco, it is not dismissed or stayed
within sixty (60) days after such institution;
(g) Any other material breach or failure of Groundco to observe or perform
any term, condition, covenant or agreement required to be observed or performed
by it hereunder; and
(h) The violation of any legal requirement or the suspension or revocation
of any license, certificate or permit necessary to conduct all or any portion of
Groundco's obligation's hereunder and that prevents Groundco from performing in
any material respect its obligations hereunder, unless such violation,
suspension or revocation occurred as a result of actions or omissions of Airco.
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11.3 Upon the occurrence and during the continuance of any Event of Default
enumerated in Section 11.1(c), (d) or (e) or in Section 11.2(d), (e) or (f), the
non-defaulting Party may elect to terminate this Agreement immediately in its
entirety upon giving written notice to the defaulting Party.
11.4 Upon the occurrence and during the continuance of any Event of Default
enumerated in Section 11.1(b), (f) or (g) or in Section 11.2 (b), (c), (g) or
(h), the non-defaulting Party may, without prejudice to any other remedy which
it may have at law or in equity, terminate this Agreement by giving notice of
such default, and the Party receiving such notice shall have thirty (30) days
from the date of receipt of such notice to cure such default. If the Event of
Default has not been cured by midnight of the thirtieth (30th) day after receipt
of such notice, this Agreement shall be deemed immediately terminated, unless
such cure period has been extended in writing by the non-defaulting Party or the
defaulting Party is using commercially reasonable efforts to cure such default
and such default is, in the reasonable judgment of the defaulting Party, capable
of being cured within a reasonable period of time (not to exceed 30 days), in
which case such additional time shall be allowed in order to cure such default.
11.5 Upon the occurrence and during the continuance of any Event of Default
enumerated in Subsection 11.1(a), Groundco may only terminate this Agreement
after giving notice of such default to Airco and after the following procedures
shall have been employed in an effort to cure such default: (i) the Parties
shall have met and conferred to determine the nature and the causes of the
default and, if possible, the changes to operations as may be necessary to
eliminate such default and (ii) following such meeting between the Parties, they
shall diligently attempt to implement any such changes to the operations that
have been determined will resolve such default, and they shall make such further
adjustments or changes as are foreseen to be necessary to avoid a recurrence of
the conditions that gave rise to the default. If the Parties are unable to
reconcile the problems associated with the default, or the changes they have
implemented fail to cure the default within ninety (90) days of operations after
the implementation of such changes, Groundco may terminate this Agreement unless
Airco in good faith contests the default, in which event Groundco's right to
terminate shall be resolved in accordance with Section 14.1 of this Agreement.
11.6 Upon the occurrence of any event of default enumerated in Section
11.2(a), Airco will give Groundco notice thereof, and Groundco will have two (2)
Business Days from the date of receipt of such notice (the "Outside Cure Date")
to cure such default. In addition to payment of the Compensation, Groundco will
pay to Airco an additional amount equal to the Compensation payment times LIBOR
plus 2% divided by 365 for each day such payment has not been made from the
Outside Cure Date. Groundco shall pay such Base Compensation payment and
additional amount as set forth in the preceding sentence and, to the extent
Groundco contests any such amount, Groundco shall seek recovery in accordance
with Section 14.1 after it has paid and Airco has received such Base
Compensation and any additional payments as set forth in the preceding sentence.
11.7 Subject to the last sentence of Section 7.1, the right of either Party
under this Article XI to terminate this Agreement following a Default of the
other Party hereto shall not
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be deemed an exclusive remedy, and will be in addition to any other remedy such
Party may have either at law or in equity.
SECTION 12
TERMINATION
12.1 Termination by Airco. Airco may terminate this Agreement at any time
upon written notice:
(a) subject to and in accordance with Section 11, following a Groundco
Event of Default;
(b) upon two Business Days prior written notice to Groundco after an event
of Force Majeure shall have continued for 30; provided, however, that Airco may
not terminate this Agreement pursuant to this Section 12.1(b) so long as
Groundco elects to continue paying the Cost Recovery Amount; or
(c) upon a termination of the ACMI Service Agreement between the Parties
dated of even date herewith (the "ACMI Agreement")
12.2 Termination by Groundco. Groundco may terminate this Agreement upon
written notice:
(a) subject to and in accordance with Section 11, at any time following an
Airco Event of Default;
(b) upon the occurrence of a Change of Control (as defined in the ACMI
Agreement) without the prior written consent of Groundco, if any Person or
Persons acquiring stock or becoming a director or officer of Airco in connection
with such Change of Control is a major integrated international air express
delivery company with annual revenues in excess of $5 billion or is an Affiliate
of such company (or is a director or officer of such company or its Affiliates,
as applicable;
(c) upon two Business Days prior written notice to Airco after an event of
Force Majeure shall have continued for 30 days; or
(d) upon a termination of the ACMI Agreement.
12.3 Upon termination of this Agreement pursuant to Subsection 12.1 or
12.2, there will be a transition period of up to 60 days to be mutually agreed
by the Parties during which time Airco will have access to the Hub Facilities
and Hub Equipment and will continue to provide Services to Groundco. During such
transition period, Groundco will continue to pay Airco the Cost Recovery Amount
and the Base Markup.
12.4 Upon termination of this Agreement pursuant to Subsection 12.1 or
12.2, Groundco will pay to Airco the costs of termination. In the event of any
such termination, Groundco will either, at its option, (i) offer employment to
any affected Staff on substantially the
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same terms to their current employment (including salary and benefits), pay any
costs incurred by Airco in transferring such Staff to Groundco, and reimburse
any termination or other costs incurred by Airco in connection with employees
who do not accept Groundco's offer of employment, or (ii) pay associated
severance or other costs arising out of terminating or reducing Staff who has
not been offered employment. Following the termination of this Agreement, the
Parties will use their commercially reasonable efforts to minimize any
termination costs.
SECTION 13
NONDISCLOSURE
13.1 Airco agrees that except as required by the provisions of any law,
order, rule or regulation to which Airco is subject, Airco will make every
reasonable effort not to publicly disclose or describe its business relationship
with Groundco, its parent or any of its parent's other subsidiaries to any
person, firm or entity. The Parties acknowledge that this Agreement will be
filed with the Securities and Exchange Commission and will cooperate to seek
confidential treatment of the portions agreed to by the Parties.
SECTION 14
MISCELLANEOUS
14.1 Any and all controversies or claims arising out of, under or relating
to this Agreement or its performance (other than payment of estimated
Compensation amounts which will first be governed by Subsection 11.6, continued
failure of Airco to maintain in any material respect the Service Standards which
will first be governed by Subsection 11.5) ("Disputes"), including any
amendments hereto, or breach hereof, will be determined and settled in
accordance with the laws of the State of New York as follows:
(a) Airco and Groundco will use their commercially reasonable efforts to
resolve any and all Disputes. If a Dispute cannot be resolved by the
representatives of the Parties hereto, it will be referred to the Chief
Executive Officers of Airco and Groundco, or their respective designees, for
further negotiation. Only upon failure by Airco and Groundco to resolve the
Dispute through such negotiation either Party may prosecute such claim in a more
formal proceeding as provided in clause (b) below; provided that in the event
good faith negotiations are ensuing and a party reasonably believes that it will
forfeit claims as a result of statute of limitations, laches or other similar
defenses, then the Parties will enter into a customary tolling arrangement in
order to preserve any such claims during the informal dispute resolutions
procedures.
(b) If Disputes cannot be resolved as provided in Section 14.1(a), then the
Parties will submit to the binding arbitration procedures hereinafter set forth.
Such binding arbitration will take place in New York, New York, and will be in
accordance with the rules of the American Arbitration Association. The Parties
will each choose an arbitrator within thirty (30) days after the written request
by either of them, and the arbitrators so chosen will choose a third arbitrator
within thirty (30) days after their selection by the Parties hereto. The Parties
agree that within sixty (60) days after the selection, the arbitrators will
submit a written report of
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their determination of the Dispute. If such report is not unanimous, the
determination of two (2) of the arbitrators will nevertheless be binding upon
the Parties. Arbitrators designated hereunder will have substantial commercial
experience in the air transport or air express industry. The losing party shall
pay all costs of such arbitration; provided, that if neither party is clearly
the losing party, then the arbitrators shall allocate the arbitration costs
between the parties in an equitable manner, as the arbitrators may determine in
their sole discretion. Any decision, determination or award rendered as a result
of such arbitration will be final, conclusive and binding on the Parties hereto
and may be reduced to judgment in any appropriate court having jurisdiction
thereof.
14.2 Time is of the essence in this Agreement.
14.3 Neither Party may assign this Agreement, in whole of in part, without
the prior written consent of the other Party hereto (such consent not to be
unreasonably withheld), except that Groundco may assign this Agreement to Delta
WN, Delta Groundco or any other affiliated company without the prior written
consent of Airco, provided that the obligations of such assignee under this
Agreement continue to be guaranteed by Delta pursuant to the Guaranty.
14.4 A waiver of a default hereunder will not be deemed a waiver of any
other or subsequent default.
14.5 All notices and other communications authorized hereunder will be
given in writing to the person listed below by personal delivery to said person,
or by registered or certified mail, return receipt requested, by facsimile, or
overnight courier, and the date upon which any such notice is so delivered will
be deemed to be the date of such notice, irrespective of the date appearing
therein.
If to Groundco:
------------------------
------------------------
------------------------
Attn:
Facsimile to:
With a copy at the same address to the attention of Groundco's general
counsel.
If to Airco:
------------------------
------------------------
------------------------
Attn:
Facsimile to:
With a copy at the same address to the attention of Airco's general
counsel.
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Airco and Groundco may each change, from time to time, their named
representative and respective addresses for the purpose of this section by
written notice each to the other as herein provided.
14.6 This Agreement, including the Schedules hereto, constitutes the entire
agreement between the Parties. Any modification of this Agreement will be
invalid unless in writing signed by the Parties.
14.7 Airco will keep true and accurate accounting records with respect to
the Services provided hereunder in such manner and detail as to permit
verification thereof. Such records will be available for audit by Groundco, upon
reasonable notice, during reasonable business hours, during the term hereof.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
ABX AIR, INC.
By:
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Name:
--------------------------------
Title:
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AIRBORNE INC.
By:
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Name:
--------------------------------
Title:
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