8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):  September 7, 2005

SKYWEST, INC.

(Exact name of registrant as specified in its charter)

Utah	0-14719	87-0292166
(State or other jurisdiction of	(Commission	(I.R.S. Employer
incorporation or organization)	File Number)	Identification No.)

444 South River Road
St. George, Utah	84790
(Address of principal executive offices)	(Zip Code)

(435) 634-3000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01Entry into a Material Definitive Agreement.

On September 7, 2005, SkyWest, Inc. (the “Company”) completed its acquisition of all of the issued and outstanding capital stock of Atlantic Southeast Airlines, Inc. (“ASA”) from ASA Holdings, Inc. (“ASA Holdings”), a subsidiary of Delta Air Lines, Inc. (“Delta”).  ASA is a regional airline with market positions in the East Coast, Southeastern and Western United States markets.  More information with respect to the Company’s acquisition of ASA is set forth below in Item 2.01 of this Form 8-K.

In connection with the acquisition of ASA, the Company’s wholly-owned subsidiary, SkyWest Airlines, Inc. (“SkyWest Airlines”), and Delta entered into an Amended and Restated Delta Connection Agreement and ASA and Delta entered into a Second Amended and Restated Delta Connection Agreement (collectively, the “Delta Connection Agreements”), whereby SkyWest Airlines and ASA have agreed to provide regional airline service in the Delta flight system.  The Delta Connection Agreements became effective September 8, 2005.  Copies of the Delta Connection Agreements are attached hereto, and incorporated herein by this reference, as Exhibit 1.1, with respect to SkyWest Airlines, and Exhibit 1.2, with respect to ASA.

Each of the Delta Connection Agreements provides for a fifteen-year term, subject to early termination by Delta or SkyWest Airlines or ASA, as applicable, upon the occurrence of certain events.  Delta’s termination rights include cross-termination rights between the two Delta Connection Agreements, the right to terminate each of the Delta Connection Agreements upon the occurrence of certain force majeure events, including certain labor-related events, that prevent SkyWest Airlines or ASA from performance for certain periods, and (iii) the right to terminate the ASA Delta Connection Agreement if ASA fails to maintain competitive base rate costs, subject to certain adjustment rights.  In addition to the termination rights, Delta has the right to extend the term of the Delta Connection Agreements upon the occurrence of certain events or at the expiration of the initial term.  SkyWest Airlines and ASA have the right to terminate their respective Delta Connection Agreements upon the occurrence of certain breaches by Delta, including the failure to cure payment defaults.  SkyWest Airlines and ASA also have cross-termination rights between the two Delta Connection Agreements.

Under the terms of the SkyWest Airlines Delta Connection Agreement, Delta agrees to compensate SkyWest Airlines on a monthly basis for its direct costs associated with operating the Delta Connection flights, plus a payment based on block hours flown.  Under the terms of the ASA Delta Connection Agreement, Delta agrees to compensate ASA on a monthly basis for its direct costs associated with operating the Delta Connection flights, plus, if ASA completes a certain minimum percentage of its Delta Connection flights, an additional percentage of such costs.  Additionally, ASA’s Delta Connection Agreement provides for monthly and quarterly incentive compensation upon satisfaction of certain performance goals.  Under the ASA Delta Connection Agreement, excess margins over certain percentages must be returned or shared with Delta, depending on various conditions.  The parties to the Delta Connection Agreements make customary representations, warranties and covenants, and the agreements contain other provisions typical of agreements of this kind, including with respect to various operational, marketing and administrative matters.

The foregoing paragraphs provide a brief summary of selected provisions of the Delta Connection Agreements.  This summary is not complete and is qualified in its entirety by reference to the copies of the SkyWest Airlines Delta Connection Agreement, attached hereto as Exhibit 1.1, and the ASA Delta Connection Agreement, attached hereto as Exhibit 1.2.  The Delta Connection Agreements have been attached to provide investors with information regarding their terms and are not intended to provide investors with factual information about the current state of affairs of the Company, SkyWest Airlines or ASA.  The Delta Connection Agreements contain representations and warranties and other statements that are solely for the benefit of the parties to those agreements and are designed to allocate business and other risks among the parties.  Additionally, such representations and warranties and other statements (i) speak only as to the date on which they were made, and may be modified or qualified by confidential schedules or other disclosures, agreements or understandings among the parties, which the parties believe are not required by the securities laws to be publicly disclosed, and (ii) may be subject to a different materiality standard than the standard that is applicable to disclosures to investors.  Moreover, information concerning the subject matter of the representations and warranties and other statements made in the Delta Connection Agreements will likely change after the execution date of the Delta Connection Agreements, and subsequent information may or may not be fully reflected in the Company’s public disclosures.  Accordingly, investors should not rely upon representations and warranties and other statements in the

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Delta Connection Agreements as factual characterizations of the actual state of affairs of the Company, SkyWest Airlines or ASA.  Investors should instead look to disclosures contained in the Company’s reports under the Securities Exchange Act of 1934, as amended.

ITEM 2.01Completion of Acquisition or Disposition of Assets.

On September 7, 2005, the Company completed its acquisition of all of the issued and outstanding capital stock of ASA.  ASA is a regional airline with market positions in the East Coast, Southeastern and Western United States markets.  The Company previously announced on August 15, 2005 that it had entered into an agreement to acquire ASA.  A copy of the Stock Purchase Agreement (the “Purchase Agreement”), dated as of August 15, 2005, among the Company, Delta and ASA Holdings is attached hereto as Exhibit 2.1 and incorporated herein by this reference.

Pursuant to the terms of the Purchase Agreement, the Company paid approximately $350 million to Delta at the closing, representing approximately $330 million of purchase price and $20 million relating to certain aircraft financing deposits.  An additional $125 million, representing $95 million of purchase price and $30 million relating to certain aircraft financing deposits, will be payable to Delta at the earlier of (i) the assumption by Delta of each of the SkyWest Airlines and ASA Delta Connection Agreements, along with other bankruptcy-related conditions, should Delta file for reorganization under Chapter 11 of the U.S. Bankruptcy Code, or (ii) four years after the closing.  The Company deposited $95 million toward this amount into an escrow account at the closing.  The purchase price is subject to certain post-closing adjustments related to ASA’s working capital as of the closing of the transaction.

Under the terms of the Purchase Agreement, Delta and ASA Holdings have agreed to indemnify SkyWest, and SkyWest have agreed to indemnify Delta and ASA Holdings from damages suffered due to breaches of representations, warranties or covenants made in the Purchase Agreement.  Recoveries under the indemnification provisions of the Purchase Agreement are subject to certain minimum losses per event, and an aggregate minimum for all losses.  Recoveries are also subject to an aggregate cap on all losses.  Notwithstanding the terms of the Purchase Agreement, it is unclear whether, or to what extent, the Company would be able to recover amounts it is due from Delta under the indemnification provisions of the Purchase Agreement if Delta files for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

The foregoing paragraphs provide a brief summary of selected provisions of the Purchase Agreement.  This summary is not complete and is qualified in its entirety by reference to the copy of the Purchase Agreement attached hereto as Exhibit 2.1.  The Purchase Agreement has been attached to provide investors with information regarding its terms and is not intended to provide investors with factual information about the current state of affairs of the Company, SkyWest Airlines or ASA.  The Purchase Agreement contains representations and warranties and other statements that are solely for the benefit of the parties to such agreement and are designed to allocate business and other risks among the parties.  Additionally, these representations and warranties and other statements (i) speak only as to the date on which they were made, and may be modified or qualified by confidential schedules or other disclosures, agreements or understandings among the parties, which the parties believe are not required by the securities laws to be publicly disclosed, and (ii) may be subject to a different materiality standard than the standard that is applicable to disclosures to investors.  Moreover, information concerning the subject matter of the representations and warranties and other statements made in the Purchase Agreement may have changed since the date of the Purchase Agreement, and will likely further change in the future.  Subsequent information that has changed may or may not be fully reflected in the Company’s public disclosures.  Accordingly, investors should not rely upon representations and warranties and other statements in the Purchase Agreement as factual characterizations of the actual state of affairs of the Company, SkyWest Airlines or ASA.  Investors should instead look to disclosures contained in the Company’s reports under the Securities Exchange Act of 1934, as amended.

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*       *       *

Forward-Looking Statements

In addition to historical information, this report and the exhibits attached hereto contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include statements regarding the timing and benefits of the proposed transaction, expected synergies, and anticipated future financial operating performance and results.  Such statements encompass the Company’s beliefs, expectations, hopes or intentions regarding future events.  Words such as “expects,” “intends,” “believes,” “anticipates,” “should,” “likely” and similar expressions identify forward-looking statements.  All forward-looking statements included in this report and the exhibits attached hereto are made as of the date hereof and are based on information available to the Company as of such date.  The Company assumes no obligation and does not intend to update any forward-looking statement. Actual results will vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of reasons, including, among others: potential bankruptcy or restructuring proceedings involving Delta; Delta’s failure to assume the Delta Connection Agreements in bankruptcy proceedings; the failure to integrate the operations and employees of the Company and ASA and achieve the anticipated synergies as a result of the acquisition; the failure to successfully operate as anticipated under the terms of the Delta Connection Agreements; the impact of negotiations with ASA’s organized labor forces and the impact of the costs of such labor forces on ASA’s and the Company’s operations and financial condition; the failure to accurately forecast acquisition-related costs; and the challenges of competing successfully in a highly competitive and rapidly changing industry.  Other factors that may cause actual results to vary from the Company’s expectations include developments associated with fluctuations in the economy and the demand for air travel; bankruptcy proceedings involving United Airlines, Inc.; ongoing negotiations between the Company and its major partners regarding their contractual relationships; variations in market and economic conditions; employee relations and labor costs; rapidly escalating fuel costs; the degree and nature of competition; potential fuel shortages in markets where SkyWest Airlines or ASA operate; the impact of Hurricane Katrina, other weather-related disasters, or other natural disasters on air travel and airline costs; the ability of SkyWest Airlines and ASA to expand services in new and existing markets and to maintain profit margins in the face of pricing pressures; aircraft deliveries; the Company’s ability to obtain financing; and other unanticipated factors.  Risk factors, cautionary statements and other conditions which could cause actual results to differ from the Company’s current expectations are contained in the Company’s filings with the Securities and Exchange Commission, including the risk factors set forth in the Company’s most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q.  All forward-looking statements are qualified in their entirety by this cautionary statement.

ITEM 8.01.Other Events.

On September 8, 2005, the Company issued a press release announcing the closing of the purchase of ASA from ASA Holdings, and the entry by SkyWest Airlines and ASA into the Delta Connection Agreements with Delta.  A copy of this press release is attached hereto as Exhibit 99.1.

ITEM 9.01Financial Statements and Exhibits.

(a)Financial statements of businesses acquired.

The financial statements of ASA required to be filed in connection with the transaction described in Item 2.01 above will be filed by amendment to this Form 8-K not later than 71 days following the date this Form 8-K was required to be filed.

(b)Pro forma financial information.

The pro forma financial information required to be filed in connection with the transaction described in Item 2.01 above will be filed by amendment to this Form 8-K not later than 71 days following the date this Form 8-K was required to be filed.

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(c)Exhibits.

Exhibit Number	Title of Document	Location
1.1	Amended and Restated Delta Connection Agreement, dated as of September 8, 2005, by and between SkyWest Airlines, Inc. and Delta Air Lines, Inc. (Confidential treatment has been requested for this exhibit and the confidential portions have been filed with the Securities and Exchange Commission)	Attached
1.2	Second Amended and Restated Delta Connection Agreement, dated as of September 8, 2005, by and between Atlantic Southeast Airlines, Inc. and Delta Air Lines, Inc. (Confidential treatment has been requested for this exhibit and the confidential portions have been filed with the Securities and Exchange Commission)	Attached
2.1	Stock Purchase Agreement, dated as of August 15, 2005, by and among SkyWest, Inc., Delta Air Lines, Inc., and ASA Holdings, Inc.	Attached
99.1	Press release dated September 8, 2005	Attached

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SKYWEST, INC.
Date: September 13, 2005	By:	/s/ Bradford R. Rich
		Bradford R. Rich, Executive Vice President,
		Chief Financial Officer and Treasurer

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EXHIBIT INDEX

Exhibit No.	Description
1.1	Amended and Restated Delta Connection Agreement, dated as of September 8, 2005, by and between SkyWest Airlines, Inc. and Delta Air Lines, Inc. (Confidential treatment has been requested for this exhibit and the confidential portions have been filed with the Securities and Exchange Commission)
1.2	Second Amended and Restated Delta Connection Agreement, dated as of September 8, 2005, by and between Atlantic Southeast Airlines, Inc. and Delta Air Lines, Inc. (Confidential treatment has been requested for this exhibit and the confidential portions have been filed with the Securities and Exchange Commission)
2.1	Stock Purchase Agreement dated as of August 15, 2005, by and among SkyWest, Inc., Delta Air Lines, Inc., and ASA Holdings, Inc.
99.1	Press release dated September 8, 2005.

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EX-1.1

Exhibit 1.1

Execution Copy

[Certain portions of this exhibit have been omitted pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended, and are subject to a confidential treatment request.  Copies of this exhibit containing the omitted information have been filed separately with the Securities and Exchange Commission.  The omitted portions of this document are parted with a ***.]

AMENDED AND RESTATED

DELTA CONNECTION

AGREEMENT

This Amended and Restated Delta Connection Agreement (this “Agreement”), dated and effective at 12:01 AM on the 8th day of September, 2005 (the “Effective Date”), is between Delta Air Lines, Inc., whose principal address is 1030 Delta Boulevard, Atlanta, Georgia 30320 (“Delta”) and SkyWest Airlines, Inc. (“SKYW” or “Operator”), whose principal address is 444 South River Road, St. George, Utah 84790.

WHEREAS, Delta and SKYW are parties to that certain Delta Connection Agreement, dated as of July 1, 1990, as amended from time to time (the “Original Delta Connection Agreement”); and

WHEREAS, Delta offers scheduled air transportation services through regional aircraft operators currently operating as “Delta Connection” (“Delta Connection Program”); and

WHEREAS, SKYW desires for Delta to perform and provide various marketing, schedule and fare related, and other services for SKYW in connection with the Delta Connection Program; and

WHEREAS, Delta is willing to perform and provide various marketing, schedule and fare related, and other services for SKYW in connection with the Delta Connection Program; and

WHEREAS, this Agreement will enhance the ability of SKYW and Delta to serve the public and the communities that they serve or may choose to serve; and

WHEREAS, the parties desire to amend and restate the Original Delta Connection Agreement in its entirety; and

WHEREAS, SKYW is a wholly-owned subsidiary of SkyWest, Inc. (“SI”); and

WHEREAS, pursuant to the terms of that certain Stock Purchase Agreement (the “Stock Purchase Agreement”) dated as of August 15, 2005, by and among SI, Delta and ASA Holdings, Inc., concurrently with the execution of this Agreement, Atlantic Southeast Airlines, Inc. (“ASA”) will become a wholly-owned subsidiary of SI (the “ASA Acquisition”); and

WHEREAS, concurrently with the execution and delivery of this Agreement, Delta and ASA, as a wholly-owned subsidiary of SI, are amending and restating the Amended and Restated Delta Connection Agreement between Delta and ASA dated as of January 1, 2003,

as amended from time to time, pursuant to which ASA will operate as a Delta Connection Carrier (the “ASA Delta Connection Agreement”); and

WHEREAS, SI will guaranty the obligations of SKYW as provided herein pursuant to the terms and conditions set forth in that certain Guaranty Agreement of even date herewith delivered by SI to Delta (the “Guaranty Agreement”) in connection herewith.

NOW, THEREFORE, for and in consideration of the foregoing premises and the mutual undertakings set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Delta and SKYW, intending to be legally bound, hereby amend and restate the Original Delta Connection Agreement in its entirety, effective as of the Effective Date, as follows:

ARTICLE 1.  FARES AND RULES PUBLICATION.

A.Delta Connection Program and Appointment of Delta as Agent.  Subject to Section 1(B) below, SKYW hereby appoints Delta as SKYW’s agent to publish its fares, schedules and related information under Delta’s two letter flight designator code in city pairs specified by Delta on the (i) [***] aircraft set forth on Exhibit A attached hereto under the heading “Current Aircraft,” (ii) any aircraft subject to the ASA Delta Connection Agreement that ASA subsequently designates as an “Aircraft” (as defined below) in accordance with the terms and conditions of the ASA Delta Connection Agreement (“ASA Aircraft”) and becomes subject to this Agreement and (iii) any other aircraft subsequently agreed by the parties to be operated by SKYW (“Other Aircraft,” and collectively with Current Aircraft and ASA Aircraft, the “Aircraft”), and Delta hereby accepts such appointment.  Delta hereby grants SKYW the authority to operate as a Delta Connection Carrier, and SKYW hereby accepts such grant, to conduct air transportation operating the Aircraft utilizing certain services together with certain trademarks and service marks owned by Delta or which Delta has the right to use, all as provided herein.

B.Aircraft Rent/Ownership Costs.  Prior to any aircraft other than a Current Aircraft becoming an Aircraft under the terms and scope of this Agreement, Delta shall have the right to approve the “Aircraft Rent/Ownership Cost” (as defined herein) with respect to such aircraft, such approval not to be unreasonably withheld or delayed.

Subject to the prior written consent of Delta, which shall not be unreasonably withheld or delayed, SKYW may designate and transfer, from time to time, upon the prior written consent of ASA, any Aircraft as an aircraft subject to the ASA Delta Connection Agreement to be operated thereafter by ASA pursuant to the terms and conditions thereof; provided that any such designation and transfer does not (i) create an undue burden on Delta, (ii) interfere with Delta’s performance requirements or schedule of published flights, or (iii) otherwise increase the cost to Delta hereunder and under the ASA Delta Connection Agreement, in the aggregate.  Further, subject to the prior written consent of Delta, which shall not to be unreasonably withheld or delayed, and the satisfaction of the conditions set forth in the ASA Delta Connection Agreement, SKYW, with the prior written consent of ASA, may designate and cause ASA to transfer an ASA Aircraft as an Aircraft hereunder; provided, however, that any such designation and

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transfer does not create an undue burden on Delta, interfere with Delta’s performance requirements or schedule of published flights, or otherwise increase the cost to Delta hereunder and under the ASA Delta Connection Agreement, in the aggregate.  If one or more Aircraft is removed from the scope of this Agreement as provided herein or one or more aircraft are added to this Agreement pursuant to the terms of the ASA Delta Connection Agreement and this Agreement, Exhibit A and Exhibit B attached hereto shall be modified and amended to account for such aircraft removal or addition, as the case may be, subject to the mutual satisfaction of the parties hereto.

C.Fares, Rules and Seat Inventory.  Delta, in its sole discretion, shall establish and publish all fares and related tariff rules for all seats, cargo and freight on the Aircraft, including fares and rules for local traffic in the city pairs served by such Aircraft.  In addition, Delta will control all seat inventory and revenue management decisions for the Aircraft.

D.Schedules Publication.  Delta, in its sole discretion, shall establish and publish all schedules for the Aircraft, including city-pairs served, frequencies, and timing of scheduled departures.  Where practical, Delta will collaborate with SKYW to determine mutually optimal schedules.  SKYW shall operate the Aircraft in the city pairs designated by Delta, subject to the frequency, scheduling and other requirements established by Delta from time to time.  In addition, it is agreed and understood that Delta may utilize and schedule any of the Aircraft to perform various charter operations on behalf of Delta as can be reasonably accommodated by SKYW.

Delta will notify SKYW of schedule times, frequencies and related information for the Aircraft as sufficiently in advance of the schedule publication date so that the information can be properly disseminated to SKYW for pilot and flight attendant staffing, and related operational requirements.

ARTICLE 2.  EXCLUSIVITY.

A.SKYW agrees that, except as otherwise directed or approved in writing by Delta, in Delta’s sole discretion, (i) the Aircraft may be used only to provide the air services contemplated by this Agreement (the “Delta Connection Flights”) and (ii) the Aircraft may not be used by SKYW for any other purpose including, without limitation, flying for any other airline, providing charter services other than pursuant to Section 1(D) hereof, or on SKYW’s own account.

B.[***].

C.[***].

D.Neither SKYW, nor any affiliate of SKYW, shall use any of the services, facilities or equipment provided by Delta, or an affiliate of Delta, to SKYW in connection with the Aircraft or the Delta Connection Flights outside the scope of this Agreement without the prior written consent of Delta.  With respect to any ancillary facilities or equipment used by SKYW, or an affiliate of SKYW, in connection with providing the services contemplated by this Agreement, such use for the benefit of Delta shall have priority over any other use contemplated by SKYW,

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or any affiliate of SKYW. With respect to facilities or equipment owned, leased or otherwise used by SKYW, Delta shall have the right to designate from time to time which property shall be used to carry out SKYW’s obligations under this Agreement; provided, however, that such request does not conflict with any other contractual obligation of SKYW then applicable.

ARTICLE 3.  COMPENSATION.

A.Compensation.

In exchange for the flying and operation of the Aircraft, Delta shall pay SKYW [***] of the “Base Rate Costs” and the “Pass Through Costs” (each as such term is defined below, and collectively, the “Direct Costs”) in each case, as relates to the operation of the Delta Connection Flights and as provided for in this Agreement. It is understood that Direct Costs shall be based on market based, direct operating costs and generally accepted accounting principles (“GAAP”), but specifically shall exclude any pre-paid expenses except as expressly provided herein.

(i)The “Base Rate Costs” shall include all direct operating costs recorded in accordance with GAAP (but specifically excluding any prepayments except as expressly provided in this Agreement and any accruals for reserve items relating to pending or threatened litigation, regulatory claims, undetermined labor rates or any other reserve item not regularly made in Operator’s ordinary course of business) based upon (a) the model attached hereto as Exhibit B (as modified from time to time), and (b) a minimum utilization of the Aircraft of an average of [***] block hours per day (measured on a monthly average of all of the in-revenue service Aircraft during such month) (the “Minimum Utilization Average”).  If the actual utilization average is less than the Minimum Utilization Average for more than [***] consecutive months, then the Base Rate Costs shall be subject to adjustment based on the actual utilization average.  SKYW covenants and agrees that with respect to any direct operating costs only a portion of which are allocated as Base Rate Costs hereunder, such allocation shall not be made in a manner that is economically disadvantageous to Delta vis-a-vis SKYW or any other codeshare partner of SKYW to whom such direct operating costs are also allocated.

At all times during the Term, Operator shall use its best efforts to reduce its Base Rate Costs and achieve profitability improvement targets established by Delta from time to time to reduce Operator’s Direct Costs.

(ii)The “Pass Through Costs” shall include the following variable costs for which Delta shall bear the risk of price and volume fluctuations; provided that such costs shall be reconciled on a monthly basis to reflect the actual costs incurred by Operator:

[***]

Notwithstanding the foregoing, Pass Through Costs shall not include any late payment charges, penalties and/or fees which SKYW incurs in connection with the payment of the expenses listed above, except to the extent such late payment charges, penalties and/or fees is attributable to any action or omission principally caused by Delta or an affiliate of Delta.

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At all times during the Term, Operator shall use best efforts to control and reduce its Pass Through Costs.  [***]

B.Non-Reimbursable Costs.

The parties hereby acknowledge and agree that Operator shall be solely responsible and Delta shall not be responsible, nor reimburse Operator, for any of the following costs:

(1)any and all FAA, DOT or any other government agency fines administered or levied against Operator due to any action or omission not principally caused by Delta or an affiliate of Delta; and

(2)Passenger amenities costs and other interrupted trip expenses, including, without limitation denied boarding compensation, food and lodging expenses and other transportation costs incurred by Operator due to any action or omission principally caused by Operator or an affiliate of Operator.

C.Delta Costs.

The parties acknowledge and agree that the following costs related to SKYW’s services hereunder shall be paid directly by Delta and shall not be included in the Direct Costs:

[***]

D.Block Hour Payment.

In addition to the payment by Delta of Direct Costs, Delta shall pay Operator an amount equal to [***] per block hour, subject to an annual escalation of [***] (“Block Hour Payment”).

E.Accounting Provisions.

Delta shall retain all revenues (including, without limitation, passenger, cargo, mail, food, beverage and duty-free services or any other revenue including, without limitation, any guaranteed or incentive payments from airport, local or municipal authorities in connection with scheduling flights to such airport or locality or any federal funds payments) in connection with the operation of the Delta Connection Flights.  Operator shall promptly remit to Delta all monies with respect to all airline ticket sales, on-board sales, baggage charges, passenger charges, cargo sales and all other revenue collected by SKYW or any agent or employee of SKYW in connection with the operation of the Aircraft (including credit card transactions).

On the [***] day of each month (or if not a business day, on the following business day) Delta will advance to SKYW via wire transfer [***] of the estimated monthly Direct Costs and Block Hour Payment (each, a “Provisioning Payment”).  SKYW shall calculate the amount of the advance, using projected fuel costs, estimated number of weekly revenue block hours, departures and passengers based on the most recent Delta schedule for the Delta Connection Flights and

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assuming SKYW’s actual completion rate will be equal to [***], and SKYW shall submit a written invoice (together with the estimates and calculation referenced in the prior sentence) to Delta no later than the [***] day of the preceding month (or if not a business day, on the following business day).  Delta shall be entitled to review and verify SKYW’s invoice and accompanying estimates and calculations prior to making any advance payment pursuant to this paragraph; provided, however, any such review or payment by Delta shall not be deemed as Delta’s final approval of SKYW’s invoice and accompanying estimates and calculations, and such information shall still be subject to potential audit and reconciliation pursuant to this Article 3; provided, further, Delta’s review of any invoice and accompanying estimates and calculations shall not extend beyond the due date of the first payment for the month at issue.

Nothing in this Agreement shall relieve Delta or Operator of any of their respective obligations under the Original Delta Connection Agreement arising prior to the Effective Date.  [***]

Within [***] days following the end of each month and upon the termination of this Agreement, SKYW will reconcile the actual Direct Costs and Block Hour Payment earned by SKYW for the Delta Connection Flights and the final operating results of, and actual revenue block hours flown by, SKYW with the Provisioning Payments made as described above and submit a final written invoice (together with the relevant data with respect to the actual Base Rate Costs and Block Hour Payment earned and final actual operating results) to Delta; provided, however, that for the month of the Term that includes the Effective Date, such reconciliation shall include the reconciliation of amounts paid as described in the immediately preceding paragraph. Within [***] business days of receipt of such invoice, Delta will review and verify such final invoice and data, and Delta or Operator, as the case may be, shall pay, via wire transfer, to an account designated by the other party, monies equal to the agreed to reconciled amount.  Delta shall be entitled to review and verify SKYW’s final written invoice (together with the relevant data with respect to the actual Base Rate Costs and Block Hour Payment earned and final actual operating results); provided, however, any such review or payment shall still be subject to potential audit and reconciliation pursuant to this Article 3.  With respect to a reconciliation upon a termination of this Agreement that is not effective at the end of a calendar year, Direct Costs which are paid on an annual basis shall be allocated on a pro rata basis assuming a [***] day calendar year.  Further, with respect to Pass Through Costs associated with engine maintenance and overhauls, upon termination of this Agreement, such Pass Through Costs shall be calculated by multiplying the number of engine block hours flown since the last engine overhaul by an engine block hour rate reasonably determined, in good faith, by the parties.  Upon such calculation, Delta shall, at its sole option, either (i) pay such calculated amount to SKYW as part of the final reconciliation, (ii) perform (or have a third party perform) the requisite engine maintenance or overhauls or (iii) a combination of (i) and (ii).

Notwithstanding anything herein to the contrary, if SKYW is unable to operate any of the Aircraft, or any of the Delta Connection Flights, due to a strike, labor dispute, work stoppage or similar event or any other event; provided in each such case that such event is substantially within the control of, or caused by, some action or inaction of SKYW or an affiliate of SKYW or relates to the Aircraft, Delta shall not be obligated to pay SKYW any Direct Costs, Block Hour Payment, or any other amounts, in connection with such non-operated Aircraft and Delta

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Connection Flights.  However, if SKYW is unable to operate any of the Aircraft, or any of the Delta Connection Flights, due to a strike, labor dispute, work stoppage, or similar event or any other event, that is substantially within the control of, or caused by, some action or inaction of Delta or an affiliate of Delta, Delta shall be obligated to pay SKYW Direct Costs and Block Hour Payments based on the Minimum Utilization Average.  If SKYW is unable to operate any of the Aircraft, or any of the Delta Connection Flights, due to an event that is not substantially within the control of, or caused by, some action or inaction of either SKYW or Delta, Delta shall be obligated to pay SKYW’s Fixed Costs on Exhibit B attached hereto, as well as crew costs (provided SKYW shall use best efforts to mitigate and minimize such crew costs in a commercially reasonable manner), Aircraft Rent/Ownership Costs, hull insurance, property taxes and heavy inspection costs for maintenance already in process prior to any such event, but not any other variable costs or Block Hour Payment with respect to such non-operated Aircraft and Delta Connection Flights during the period that SKYW is unable to operate such Aircraft or the Delta Connection Flights.

F.Audit of Costs, Operations and Service Levels.

Operator shall maintain complete and accurate books and records to support and document all revenues, costs and expenses related to the Aircraft and its Delta Connection Program operations hereunder in accordance with GAAP.  Delta’s in-house finance staff and any independent consultants selected by Delta shall be entitled, following reasonable notice to Operator, to audit and inspect Operator’s books and records with respect to services provided hereunder, the service levels achieved, and the determination of charges due pursuant to this Agreement for the purpose of (i) prospectively adjusting the Base Rate Costs in connection with any annual review pursuant to Section 3(G) hereof or (ii) auditing Direct Costs or Block Hour Payment due or paid hereunder.  Any such audit will be conducted during regular business hours and be paid for by Delta unless such audit determines that Operator owes Delta in excess of $[***], then Operator shall pay Delta the costs and expenses incurred by Delta in connection with such audit.

G.Rate Setting.  The parties agree that on or after [***], 2010, but in no event later than [***], 2010 (and each 5 years thereafter on the same applicable dates), the parties shall reset the Base Rate Costs to reflect Operator’s actual Base Rate Costs for 2010 (and each 5th year thereafter) and amend Exhibit B.  In the event that the parties are unable to agree on the reset Base Rate Costs, the parties further agree that (i) at the request of either party, and at the expense of the requesting party, the parties shall engage a mutually agreed independent consultant, to determine the reset Base Rate Costs. Any such determination by the independent consultant shall be binding on and implemented by the parties.  Until the parties are able to agree upon the reset Base Rate Costs to be set forth in Exhibit B (or such are determined by the independent consultant), the Base Rate Costs of the year immediately prior to the reset year shall govern until such time as the parties agree upon the reset Base Rate Costs.  Upon agreement, the reset Base Rate Costs and the provisions of Exhibit B as so amended shall be applied retroactively to the beginning of the reset period for which the amendment applies.  The Base Rate Costs will apply for all Delta Connection Flights during the year applicable to such Base Rate Costs, and Operator will bear any risks of additional expenses not reflected therein.  Operator will use its best efforts to minimize its costs to operate the Aircraft in accordance with this Agreement, and Operator and

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Delta each agree to notify the other as soon as reasonably practicable of any anticipated or potentially substantial change of cost or operational performance.

H.Right of Set-off.  Delta may offset against the next scheduled payment(s) to be made pursuant to Section 3(E) above (i) the undisputed amount of any payment that SKYW or an affiliate of SKYW owes to Delta or an affiliate of Delta but has not made when due or (ii) if SI fails to deposit the applicable Deposit Amount (as defined in Schedule 2.01 of the Purchase Agreement), on any Deposit Date (as defined in Schedule 2.01 of the Purchase Agreement) an amount up to the applicable Deposit Amount and (iii) if SI fails to pay the Top-Up Amount (as defined in Schedule 2.01 of the Purchase Agreement) when due and payable, an amount up to the Top-Up Amount. SKYW may offset against a payment due Delta pursuant to Section 3(E) above the undisputed amount of any payment that Delta or an affiliate of Delta owes to SKYW or an affiliate of SKYW but has not made when due.  If a party makes a corrective payment after the other party has exercised its right of offset with respect to such corrective payment, such offset shall be reversed in the next scheduled payment from the other party to such party having made the corrective payment.

I.Pro Rate Resolution. [***]

ARTICLE 4. TICKETING SERVICES; SIGNAGE; FACILITIES; SLOTS AND ROUTES.

A.Ticketing Services.  Either Delta or Operator will provide primary airport ticketing services in connection with the Delta Connection Flights, and, if applicable, the other party will provide supplemental ticketing services for the Delta Connection Flights at Delta’s airport ticketing locations and will use Delta ticket stock for such purposes.

B.Signage.  Unless otherwise agreed by the parties, Delta will design, provide and pay for appropriate airport and other signage installed after the Effective Date to reflect the Delta Connection Flights and the relationship between SKYW and Delta.  The nature and type of such signage will be in the sole discretion of Delta, subject to any airport, governmental or quasi-governmental restrictions or requirements.  Delta will be responsible for installing and maintaining all such signage, but the parties will mutually determine which party will obtain any necessary formal or informal approvals from appropriate airport or other authorities to install such signage.  The parties will fully cooperate with each other in all endeavors relating to such signage and any necessary approvals.

C.Facilities.

(1)In connection with the Delta Connection Flights, SKYW shall use the gates and facilities designated by Delta from time to time at the locations in which SKYW operates such Delta Connection Flights, and, except for gates and facilities used by SKYW for both Delta Connection Flights and its United Express service as of the Effective Date, no other use of such gates and other facilities by SKYW or parties other than Delta or Delta’s designee shall be allowed without Delta’s express written consent.

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(2)Delta may, at its option, elect to enter into a lease, sublease, permit, license or other agreement in lieu of SKYW entering into such agreement for any facilities to be used by SKYW at any new or existing city to be served by SKYW pursuant to this Agreement, and in the event Delta exercises this option (i) Delta shall enter into a lease, sublease, permit, license or other agreement with the lessor of such facilities, (ii) SKYW shall utilize such facilities pursuant to a sublease, license agreement, permit, facilities use agreement or ground handling agreement with Delta as Delta elects, (iii) at Delta’s option, the sublease, license agreement, permit, facilities use agreement or ground handling agreement shall terminate when SKYW ceases to operate Delta Connection Flights at the airport and as otherwise provided in such agreement, sublease or permit, and (iv) Delta shall enter into agreements for facilities which are reasonably suitable for SKYW’s operational needs. Delta’s right to designate gates and other facilities to be used by SKYW in connection with providing Delta Connection Flights shall include the right at each airport, in Delta’s discretion, to either: (a) provide for use of some or all of the needed facilities to SKYW through mutually acceptable subleases, license agreements, permits, facilities use agreements or ground handling agreements; or (b) require SKYW to obtain use of such facilities from the airport operator or other lessors.  If for any reason Delta fails to provide such facilities, such failure shall not be deemed a breach hereof and SKYW shall be obligated to secure such facilities.  Delta and SKYW agree that Delta may relocate SKYW to comparable facilities at the service locations; provided that Delta pays SKYW’s reasonable relocation expenses.

(3)[***]

(4)Delta shall have the right from time to time to direct SKYW to handle or allow Delta to handle other carriers designated by Delta at airport facilities used by SKYW in connection with SKYW’s operation of Delta Connection Flights; provided that in the event SKYW handles such other carrier, the cost for providing such services shall be the then fair market value for such services subject to any applicable lease limitations on such charges.

(5)Provided that at time of any proposed assignment, transfer, sublease, alteration, amended, modification or termination of a “Delta Connection Gate Lease” as defined below such Delta Connection Gate Lease is then used by SKYW in connection with Delta Connection Flights, SKYW shall not assign, transfer, sublease or materially alter, amend, or modify or terminate any Facilities Lease, any other lease, sublease, permit, license and other use agreement of airport facilities being used in connection with Delta Connection Flights, or any master lease superior thereto (each a “Delta Connection Gate Lease” and collectively, the “Delta Connection Gate Leases”) to which it is a party without the prior written consent of Delta.

(6)At any location in which SKYW is the signatory carrier of the applicable Delta Connection Gate Lease, SKYW shall vote as directed in writing by Delta on any matters submitted to the signatory carriers for a vote.

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D.Slots and Route Authorities.  [***]

ARTICLE 5.  CUSTOMER SERVICES.

A.Operator will handle all customer related services in connection with the Delta Connection Flights in a professional, businesslike and courteous manner.  In order to insure a high level of customer satisfaction for the Delta Connection Flights, Operator will (i) establish and maintain customer handling procedures and policies that are substantially similar to those utilized by Delta (“Customer Service Policies”) and (ii) establish, maintain and enforce employee conduct, appearance and training standards and policies that are substantially similar to those used by Delta.  All uniforms worn by SKYW employees on the Delta Connection Flights and by any SKYW employees providing support services in connection with such flights shall be subject to the approval of Delta and shall, unless otherwise agreed by Delta, at all times be consistent with Delta’s existing uniform standards.

B.Operator and Delta will periodically meet to discuss and review Operator’s customer handling procedures and policies to insure compliance with this Article 5.  Each party will seek to set forth concerns and complaints under this Article 5 in writing to the other party.  To the extent Delta advises Operator of any deviation from Article 5(A) hereof, the parties shall meet to mutually determine appropriate solutions and to agree to the terms of a corrective action plan and the timing of its implementation.  In the event Operator shall fail, in any material respect, to adopt or implement any such agreed corrective action plan in the time period described therein, any such failure may be deemed a material breach of this Agreement.

C.SKYW shall adopt as its own Delta’s Terms and Conditions of Contract of Carriage (“Contract of Carriage”), baggage liability policies and denied boarding compensation policies, each as amended from time to time, and be bound by their respective terms with respect to its operation of Delta Connection Flights.

D.SKYW shall reimburse Delta for any expenses incurred as a result of SKYW’s non-compliance with any of the Customer Service Policies, Contract of Carriage, baggage liability policies and denied boarding compensation policies.

ARTICLE 6.  TRAFFIC DOCUMENTS AND RELATED PROCEDURES.

To the extent that the parties subsequently agree that SKYW will handle traffic documents or passenger handling services in connection with any Delta Connection Flights, the following terms and conditions shall apply:

A.Pursuant to mutually acceptable procedures, Delta will provide SKYW with, Delta machine and manual ticket stock, miscellaneous charges orders, credit card refund drafts, credit card refund vouchers, FIMS, expense vouchers, expense checks, travel credit vouchers and other related documents (collectively referred to as “Traffic Documents”).  Delta will maintain a supply of Traffic Documents at a suitable location and, upon written request from SKYW, will provide SKYW with appropriate supplies of Traffic Documents.

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B.Unless otherwise agreed to by Delta in writing, Traffic Documents may be used, completed, validated and issued only by SKYW and only in connection with transactions related to Delta Connection Flights and for no other purpose.

C.SKYW will promptly surrender and return all Traffic Documents to Delta upon Delta’s written request.

D.SKYW will maintain records of the Traffic Documents in a manner and format acceptable to Delta.  SKYW will acknowledge receipt in writing of all Traffic Documents in the manner prescribed by Delta.

E.SKYW will conform with and abide by all of Delta’s rules and regulations regarding the Traffic Documents.

F.SKYW will take all reasonable and necessary measures to safeguard the Traffic Documents as of the time of receipt and thereafter and will maintain the Traffic Documents in accordance with mutually agreed upon security procedures.  SKYW shall be responsible for all risk of loss, use, misuse, misappropriation or theft of Traffic Documents as of the time SKYW takes possession of the Traffic Documents.

G.Reporting and Remitting With Respect to Traffic Documents.

1.On a daily basis, SKYW will provide Delta with a report for each SKYW ticketing location of all ticketing and related transactions on Traffic Documents for the prior day.  Such report will be in a format determined by Delta and will include, without limitation, all credit card transactions and supporting documentation.

2.SKYW will issue all Traffic Documents, and will collect appropriate charges, in accordance with the tariffs, fares, rates, rules and regulations of Delta and any other applicable carriers.  Operator shall be responsible for all undercharges and incorrect fares, rates and charges on Traffic Documents caused by Operator’s failure to comply with established policy.

H.Refund Vouchers.

1.Delta will use Delta refund vouchers for all refund transactions handled by Delta involving SKYW.

2.SKYW will use Delta refund vouchers, and Delta credit card refund vouchers for credit card sales refunds, and will comply with Delta’s rules and regulations for handling and processing such refunds.

ARTICLE 7.  FREQUENT FLYER PARTICIPATION.

During the Term, the parties agree that passengers on SKYW’s Delta Connection Flights will be eligible to participate in the Delta SkyMiles frequent flyer program, as may be amended from time to time, or any other similar program developed by Delta (the “Program”) and all

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Program award tickets will be honored for travel on Delta Connection Flights on the following terms and conditions:

A.Administration.  Administration of the Program shall be performed by and at the cost of Delta.  Delta will promote and administer the Program.

B.Program Information.  Title and full and complete ownership rights to Program membership data and information developed by Delta, wherever located, shall remain with Delta or an affiliate of Delta.  Operator understands and agrees that such data and information constitutes Delta’s (or its affiliates’) proprietary information.  Any membership lists, labels, data, or other compiled membership information supplied to Operator in any form and any and all copies thereof are to be used by Operator exclusively in the performance of its obligations under this Agreement and will not be otherwise used, sold, licensed, leased, transferred, stored, duplicated or transmitted, in any form or by any means, without Delta’s prior written consent.  All such information will either be returned to Delta or destroyed at Delta’s request.

C.Accrual and Redemption.  Passengers on the Delta Connection Flights shall be eligible to accrue and redeem Program mileage on such flights, and SKYW shall carry all passengers traveling pursuant to award travel under the Program at no additional charge to Delta.

ARTICLE 8.  SUPPORT SERVICES.

[***]

Delta may assist SKYW in obtaining goods and services in connection with operating the Aircraft and/or the Delta Connection Flights in a more economical manner, including, without limitation, via bulk purchasing and inventory management systems and processes.  If Delta initiates or identifies any such initiatives, SKYW is obligated to participate in any such initiative; provided such initiative does not unreasonably interfere with the operational standards or performance requirements of SKYW.

ARTICLE 9.  AUTOMATION SERVICES.

Delta will, if necessary, provide SKYW the following automation and related services for the Delta Connection Flights, and if provided by Delta, SKYW agrees to participate in such services in the manner described below.

A.Internal Reservations Equipment.  Delta shall provide or arrange for the provision to SKYW of an electronic reservations system (currently referred to as “Deltamatic” but including any successor reservations system adopted by Delta) and shall provide SKYW with: (i) the ability to access passenger name records, (ii) automated ticketing capabilities, (iii) operational messaging switching capabilities, (iv) the ability to update Delta Connection Flight information, (v) the ability to distribute flight releases and weather packages, and (vi) perform other reservations-related functions for the Delta Connection Flights (Deltamatic and any successor system are hereinafter referred to as the “Res System”).  Delta reserves the right to modify the

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functionality of the Res System at any time.  SKYW will use the Res System made available by Delta for the Delta Connection Flights only.

B.Delta’s Rights and Obligations.

1.Delta has installed or caused to be installed the equipment previously requested by SKYW and shall provide SKYW connection to the Res System.  Such equipment (and any additional equipment installed after the Effective Date) and any software installed on such equipment at the time of its delivery to SKYW is hereinafter referred to as the “Equipment.”  SKYW understands and agrees that: (i) all Equipment shall remain the sole property of Delta; (ii) SKYW shall not remove any identifying marks from the Equipment; (iii) SKYW shall not subject the Equipment to any lien; and (iv) Delta may enter SKYW’s premises to remove the Equipment immediately upon termination of this Agreement.

2.Delta will provide initial and recurrent training to SKYW training staff and other key designated personnel in the use of the Res System, at Delta’s training centers unless otherwise agreed.  Delta may remove from a training program any SKYW employee who is not satisfactorily participating therein.

3.Delta will provide, or arrange to provide, all repairs and maintenance services required for the Equipment and will use reasonable business efforts to keep the Equipment and the Res System in good repair and condition.  SKYW will not perform or attempt to perform repairs or maintenance of any kind on the Equipment without prior consultation with Delta and will promptly contact Delta regarding the need for repairs or maintenance.

C.SKYW’s Rights and Obligations.

1.SKYW will not for any reason relocate or remove any of the Equipment without Delta’s prior written consent.  Delta will pay all costs associated with the installation, relocation or removal of Equipment.

2.SKYW will use the Equipment and the Res System in strict conformity with the training and operating instructions provided by, or arranged to be provided by, Delta.  Without limiting the generality of the foregoing, unless authorized by Delta, SKYW will not use the Res System to develop or publish any reservation, ticketing, sales, cargo, tariff or other guide, to provide services not authorized by this Agreement to third parties, to train persons other than SKYW’s employees in the use of the Equipment or the Res System, or for other uses designated by Delta in writing as prohibited.  SKYW may not publish, disclose or otherwise make available to any third party the compilations of air carrier service or fares obtained from the Res System; provided, however, that SKYW may use specific air carrier service and fare data for the benefit of its customers.

3.SKYW will encourage and allow its employees to attend training sessions related to the Res System, and it is SKYW’s responsibility to insure that each employee receives full and adequate training on the Res System.

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4.SKYW will protect the Equipment from loss, damage or theft and shall prevent its unauthorized use or improper operation.  SKYW will make no alterations to the Equipment and will return the Equipment to Delta upon the termination of this Agreement in the same condition as received, excepting only ordinary wear and tear in the normal course of SKYW’s operations.  SKYW will obtain and maintain insurance for the Equipment against all risks of damage and loss, including without limitation loss by fire, theft and such other risks of loss as are customarily insured in a standard all-risk policy.  Such insurance shall also provide the following:

(a)Full replacement value coverage for the Equipment (subject to policy deductibles);

(b)An endorsement naming Delta as the loss payee to the extent of its interest in the Equipment; and

(c)An endorsement requiring the insurer to give SKYW at least thirty (30) days prior written notice of any intended cancellation, nonrenewal or material change of coverage; provided that only ten (10) days prior written notice of cancellation, nonrenewal or material change of coverage need be given in the event that such cancellation, nonrenewal or material change in coverage is caused solely by failure to make a premium payment.  SKYW covenants to promptly provide Delta a copy of any such notice received by SKYW.

Upon request by Delta, Operator will promptly provide satisfactory evidence of the insurance required pursuant to this Section 9(C)(4).  Notwithstanding the foregoing, Operator shall be liable to Delta for any loss or damage to the Equipment, regardless of cause, occurring while the Equipment is in the possession, custody or control of Operator.

5.Operator waives any proprietary rights that it may have with respect to information entered into the Res System.

D.Entry and Inspection.  Delta personnel and persons designated or authorized by Delta may enter Operator’s premises during normal business hours for the purposes of (a) monitoring, inspecting, and reviewing Operator’s use of and operations with respect to the Res System, (b) performing repairs or maintenance on the Equipment, (c) installing, removing, replacing or relocating the Equipment (unless otherwise permitted by this Agreement), or (d) training or retraining Operator’s employees in the use of the Res System; provided that such activities may not unreasonably interfere with Operator’s business.

E.Limitations on Liability.  In addition to any other limitations on liability set forth herein:

1.Delta is not responsible for errors or inaccuracies in the availability records, fare quotes, or other information contained in the Res System at any time, for any planned or unplanned interruptions, delays or malfunctions in the operation of the Res System or the Equipment or for the merchantability or fitness for a particular purpose of any of the data or Equipment made available to Operator.

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2.OPERATOR HEREBY WAIVES AND RELEASES DELTA AND ITS AFFILIATES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM ANY AND ALL OBLIGATIONS AND LIABILITIES AND ALL RIGHTS, CLAIMS AND REMEDIES OF OPERATOR AGAINST DELTA OR ITS AFFILIATES OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, DUE TO ANY DEFECTS OR INTERRUPTIONS OF SERVICE IN, OR ERRORS OR MALFUNCTIONS BY, SOFTWARE, THE EQUIPMENT OR THE RES SYSTEM, INCLUDING ALL LIABILITY, OBLIGATION, RIGHT, CLAIM, OR REMEDY IN TORT, AND INCLUDING ALL LIABILITY, OBLIGATION, RIGHT, CLAIM OR REMEDY FOR LOSS OF REVENUE OR PROFIT OR ANY OTHER DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES.  FURTHER, DELTA DISCLAIMS AND OPERATOR HEREBY WAIVES ANY WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE RELATING TO THE RES SYSTEM, THE EQUIPMENT, DATA, OR SERVICES FURNISHED HEREUNDER.

F.Patent and Copyright Indemnity.  Delta will defend or settle, at its own expense, any action brought against Operator to the extent that it is based on a claim that the Res System or Equipment provided by Delta pursuant to this Agreement, in its normal use, or any part thereof, infringes any U.S. copyright or patent; and Delta will pay those costs, damages and attorney’s fees finally awarded against Operator in any such action attributable to any such claim, but such defense, settlements and payments are conditioned on the following:  (1) that Delta shall be notified promptly in writing by Operator of any such claim; (2) that Delta shall have sole control of the defense of any action on such claim and of all negotiations for its settlement or compromise; provided that the Operator’s prior written consent (which may not be unreasonably withheld or delayed) must be obtained prior to settling any such third party claim;  (3) that Operator shall cooperate with Delta in a reasonable way to facilitate the settlement or defense of such claim; provided that Delta shall pay all of Operator’s reasonable expenses in connection with any such cooperation requested by Delta; and (4) should such Res System or Equipment become, or in Delta’s opinion be likely to become, the subject of such claim of infringement, then Operator shall permit Delta, at Delta’s option and expense, either to (a) procure for Operator the right to continue using the Res System or Equipment, or (b) replace or modify the same so that it becomes noninfringing and functionally equivalent, or (c) upon failure of (a) and (b) above despite the reasonable efforts of Delta, accept immediate termination of this Agreement as it relates to such system.  This paragraph (F) states the entire liability of Delta with respect to the infringement of copyrights and patents by the Res System or Equipment provided hereunder or the operation thereof.

ARTICLE 10.  OPERATIONAL PERFORMANCE.

A.SKYW agrees to provide the following information to Delta for each day during the Term within three (3) days after the applicable day; provided, however, the information in sub-paragraph (iv) below shall be provided monthly within ten (10) days after the last day of each such month:

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(i)The number of mishandled bags per 1,000 passengers (including, without limitation, international and non-revenue passengers) flown on Delta Connection Flights during such month. SKYW understands that it is Delta’s current objective, as of the Effective Date, that participants in the Delta Connection Program maintain a number of mishandled bags as set forth on Schedule 10 attached hereto and made a part hereof.

(ii)The completion rate (actual) of the Delta Connection Flights during such month. SKYW understands that it is Delta’s current objective, as of the Effective Date, that participants in the Delta Connection Program maintain a completion rate as set forth on Schedule 10 attached hereto and made a part hereof.  For purposes of this Agreement, Delta Connection Flights operated with no revenue passengers or completed over four (4) hours late shall be considered as cancelled.

(iii)The number of scheduled Delta Connection Flights that do not arrive at their scheduled destination prior to 15 minutes after their respective scheduled arrival times during such month. SKYW understands that it is Delta’s current objective, as of the Effective Date, that participants in the Delta Connection Program maintain a percentage of on-time arrivals as set forth on Schedule 10 attached hereto and made a part hereof.

(iv)SKYW’s overall customer satisfaction rating as compiled and reported by the Customer Satisfaction Monitor, or any successor thereto or replacement thereof.  SKYW understands that it is Delta’s current objective, as of the Effective Date, that participants in the Delta Connection Program maintain a customer satisfaction rating as set forth on Schedule 10 attached hereto and made a part hereof .

B.If Delta is concerned about SKYW’s performance in connection with any of the performance standards set forth in Section 10(A), Operator agrees to discuss with Delta such performance and potential ways to improve such performance at Delta’s request.  The parties shall have ten (10) days to determine appropriate solutions and/or a corrective action plan, and SKYW agrees to diligently comply with the terms and conditions of any such solutions and corrective action plans.

C.The parties recognize and agree that the performance standards objectives set forth on Schedule 10 may be modified or adjusted by Delta from time to time during the Term; provided, in no event shall the standards exceed the equivalent standards of Delta mainline operations.

ARTICLE 11.  TERM AND TERMINATION.

A.This Agreement is effective as of the Effective Date and shall continue until the fifteenth (15th) anniversary of such date (such period, and any extension or renewal thereof, the “Term”).  At the end of such initial fifteen-year term, Delta shall have the right to extend the term of this Agreement for up to four (4) additional five (5) year terms (each, an “Extension Term”) on the same terms and conditions (as amended from time to time in accordance with this Agreement) of this Agreement.  To exercise its right to extend the initial term or an Extension Term, as the case may be, Delta shall provide SKYW with written notice of such extension not later than 180 days prior to the end of the initial term or Extension Term that is, at the time of such notice, in force.

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In the event of a “Merger” (as defined below) or “Change of Control” (as defined below) of SKYW or SI, Delta shall have the right to either (i) add two (2) additional Extension Terms on the same terms and conditions (as amended from time to time in accordance with this Agreement) as provided in this Agreement, or (ii) terminate this Agreement in accordance with Section 11(E)(1) below, by written notice to SKYW within the later of 180 days of the Merger or Change of Control.

B.Notwithstanding the provisions of Section 11(A), either party may terminate this Agreement immediately if the other party files a voluntary petition in bankruptcy, makes an assignment for the benefit of creditors, fails to secure dismissal of any involuntary petition in bankruptcy within sixty (60) days after the filing thereof, or petitions for reorganization, liquidation, or dissolution under any federal or state bankruptcy or similar law.

C.Notwithstanding the provisions of Section 11(A), in the event of a material breach of this Agreement by either party remaining uncured for more than [***] days after receipt of written notification of such breach by the nonbreaching party, then the nonbreaching party may immediately terminate this Agreement at its sole option; provided, however, that if the breaching party shall have commenced to cure any such material breach, and, notwithstanding the reasonable diligence of the breaching party in attempting to cure such failure, such failure is not cured within said [***] period but is curable with future due diligence, there shall exist no cause for termination so long as the breaching party is proceeding with due diligence to cure such failure and shall in fact cure such failure within [***] following such notice.

D.(1)If either party reasonably believes that there is a substantial likelihood of an occurrence of a “Force Majeure Event” (as defined in Article 21) in the near term, upon notice from such party to the other party, the parties shall meet and mutually develop a preemptive strategy to manage and mitigate the risks and expenses expected to be incurred as a result of such Force Majeure Event, including, without limitation, adjusting the schedule of Delta Connection Flights scheduled at such time.  The parties covenant and agree to implement such mutually developed strategy.  Delta shall reimburse SKYW for the reasonable costs incurred by SKYW as a result of SKYW’s participation in the implementation of such strategy in accordance with the terms of Article 3 of this Agreement.

(2)If a Force Majeure Event occurs, SKYW’s obligation under Section 2(A) (the “SKYW Exclusivity Covenant”) shall be immediately suspended until such time as provided in Section 11(D)(3) below.  If Delta is the non-affected party, Delta shall notify ASA of Delta’s strategy to mitigate the financial impact to Delta of the Force Majeure Event (the “Delta Notice”).  If such strategy includes the transfer or reallocation of some or all of the Delta Connection Flights operated by SKYW, ASA shall have a right of first refusal to operate some or all of such Delta Connection Flights, provided ASA must affirmatively exercise such right of refusal by notifying Delta of such election in writing within twenty-four (24) hours of ASA receiving the Delta Notice (the “ASA Affirmative Notice”).  If Delta does not receive an ASA Affirmative Notice within such 24-hour period, ASA shall be deemed to have not exercised its right of first refusal to operate such Delta Connection Flights.  ASA’s right of first refusal shall be subject to (i) ASA being a Delta Connection Program operator at the time of such Force Majeure Event occurring and (ii) ASA being able to operate the transferred Delta Connection

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Flights in a time period acceptable to Delta.  All flying by ASA of such transferred Delta Connection Flights shall be flown pursuant to the terms and conditions of the ASA Delta Connection Agreement.

If SKYW is the non-affected party, SKYW shall notify Delta of SKYW’s strategy to mitigate the financial impact to Delta of the Force Majeure Event.

(3)Upon the termination of a Force Majeure Event, Delta and SKYW (and ASA if necessary, which SKYW shall cause) shall meet and develop an orderly transition plan to restore the Delta Connection Flights operated by SKYW prior to such Force Majeure Event (a “Restoration Plan”).  Such Restoration Plan shall take into account, without limitation, the operational needs and capabilities of each party, the impact on Delta customers and the cost to each of the parties, and shall further include a reasonable time period by which the SKYW Exclusivity Covenant shall each be reinstated.  The parties covenant and agree to implement such Restoration Plan.  With respect to the costs incurred by each of SKYW and Delta in connection with the implementation of a Restoration Plan (respectively, “Restoration Costs”), (i) if Delta is the non-affected party, SKYW shall be responsible for, and Delta shall have no obligation to reimburse SKYW for, each of Delta’s and SKYW’s Restoration Costs and (ii) if SKYW is the non-affected party, Delta shall be responsible for each of Delta’s and SKYW’s Restoration Costs.

(4)If a Force Majeure Event substantially prevents one party’s performance of its obligations pursuant to this Agreement for a period of [***] or more consecutive days, the other party may terminate this Agreement in its entirety upon [***] days prior written notice (“Termination Notice”) to the affected party.

E.(1)Notwithstanding the provisions of Sections 11(A), (B), (C) and (D), Delta shall have the right to terminate this Agreement immediately and at its sole option upon the occurrence of one or more of the following:

(i)SKYW or SI agrees to merge into or with any entity, agrees to be acquired by any entity, agrees to sell substantially all of its assets or enters into a letter of intent, or similar document, to merge into or with any entity, to be acquired by any entity, or to sell substantially all of its assets (each such event, a “Merger”); unless SI is the surviving or acquiring entity or the ultimate beneficial owner of the surviving or acquiring entity immediately following such transaction.

(ii)The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than [***] of either (a) the then outstanding shares of common stock of SKYW or SI, or (b) the combined voting power of the then outstanding voting securities of SKYW or SI entitled to vote generally in the election of such party’s directors (each such event, a “Change of Control” and each such acquiring individual, entity or group, collectively, the “Acquiring Person”); unless, in the case of any acquisition relating solely to SKYW, SI beneficially owns, at all times after giving effect to such acquisition, at least [***] of the

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outstanding voting power entitled to vote in the election of the Acquiring Person’s directors or other persons performing similar governance functions;

(iii)SKYW’s level of safety with respect to its operation of the Aircraft or the Delta Connection Flights is not reasonably satisfactory to Delta;

(iv)a breach by SKYW of Section 19(H) hereof;

(v)SKYW fails to maintain a completion rate of [***] with respect to the Delta Connection Flights during any [***] months during any consecutive [***] month period.  For purposes of this Agreement, Delta Connection Flights operated with no revenue passengers or completed over [***] hours late shall be considered as not completed;

(vi)a material breach of any representation or warranty by SKYW of Section 16(A)(3);

(vii)SKYW’s failure to comply with the insurance provisions of Articles 13 and 14 hereof;

(viii)SKYW’s FAA or DOT Certification is for any reason suspended or revoked or otherwise not in full force and effect so as to permit SKYW to operate the Delta Connection Flights required under this Agreement;

(ix)SKYW shall commence operating an aircraft type that causes Delta to be in violation of its collective bargaining agreement with its pilots, unless such operation is at the request of Delta; and

(x)Delta has a right to terminate the ASA Delta Connection Agreement [***]

(xi)[***]

(2)Notwithstanding the provisions of Section 11(A), (B), (C) and (D), SKYW shall have the right to terminate this Agreement immediately and at its sole option if ASA has the right to terminate the ASA Delta Connection Agreement.

F.Partial Termination.  Notwithstanding anything herein to the contrary, effective at any time after the tenth (10th) anniversary of the Effective Date, Delta shall have the right to remove from the scope of this Agreement each Aircraft effective upon the date that the lease, mortgage or other financing arrangement with respect to such Aircraft in effect as of the Effective Date expires by providing SKYW with at least eighteen (18) months’ prior written notice.  If Delta so removes an Aircraft from the scope of this Agreement as provided in this Article 11(F) (“Removed Aircraft”) and if Delta has in place at any time during the period commencing on the notice date and ending on the date of actual removal of the Aircraft from the scope of this Agreement an announced committed fleet growth plan or a request for proposal for additional regional aircraft operation under the Delta Connection Program (“Growth Aircraft”), then during

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such period Delta agrees to offer to SKYW the opportunity to bid on such Growth Aircraft to the extent of the Removed Aircraft (not to exceed the regional aircraft available).  [***]

G.Termination of this Agreement for any reason shall not relieve either party of rights and obligations incurred prior to the effective date of termination.  A party’s right to terminate this Agreement shall be in addition to any other rights or remedies, in law or equity, available to such party.

H.If any foreign route authority is removed from SKYW as a result of the ASA Acquisition, such loss of route authority shall not be a breach of this Agreement by SKYW, and following such loss Delta will reschedule the Aircraft operating such lost route.

ARTICLE 12.  INDEPENDENT CONTRACTORS; LIABILITY PROVISIONS.

A.SKYW shall act as an independent contractor.  The employees, agents and/or independent contractors of SKYW engaged in performing any of the services SKYW is obligated to perform pursuant to this Agreement shall be employees, agents and independent contractors of SKYW for all purposes and under no circumstances shall employees, agents or independent contractors of SKYW be deemed to be employees, agents or independent contractors of Delta.  In its performance of obligations under this Agreement, SKYW shall act, for all purposes, as an independent contractor and not as an agent for Delta.  Delta shall have no supervisory power or control over any employees, agents or independent contractors engaged by SKYW in connection with SKYW’s performance of its obligations hereunder, and all complaints or requested changes in procedure shall, in all events, be transmitted by Delta to a designated representative of SKYW.  Nothing contained in this Agreement is intended to limit or condition SKYW’s control over its operation or the conduct of its business as an air carrier, and SKYW assumes all risks of financial losses which may result from the operation of the air services to be provided by SKYW hereunder.

B.Delta shall act as an independent contractor. The employees, agents and/or independent contractors of Delta engaged in performing any of the services Delta is to perform pursuant to this Agreement shall be employees, agents and independent contractors of Delta for all purposes and under no circumstances shall employees, agents and independent contractors of Delta be deemed to be employees, agents or independent contractors of SKYW.  In performing its obligations under this Agreement, Delta shall act, for all purposes, as an independent contractor and not as an agent for SKYW.  SKYW shall have no supervisory power or control over any employees, agents or independent contractors engaged by Delta in connection with the performance of its obligations hereunder, and all complaints or requested changes in procedure shall, in all events, be transmitted by SKYW to a designated representative of Delta.  Nothing contained in this Agreement is intended to limit or condition Delta’s control over its operation or the conduct of its business as an air carrier.

C.Except as otherwise expressly provided herein, SKYW shall be liable for and hereby agrees fully to defend, release, discharge, indemnify, and hold harmless Delta and its affiliates, and each of their respective directors, officers, employees and agents (each, a “Delta Indemnitee”) from and against any and all claims, demands, damages, liabilities, suits,

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judgments, actions, causes of action, losses, costs and expenses of any kind, character or nature whatsoever (in each case whether groundless or otherwise), including reasonable attorneys’ fees, costs and expenses in connection therewith and expenses of investigation and litigation thereof (collectively, a “Loss”), which may be suffered by, accrued against, charged to, or recoverable from any Delta Indemnitee in any manner arising out of, connected with, or attributable to the performance, improper performance, or nonperformance of any and all obligations to be undertaken by Operator pursuant to this Agreement, the loss, theft, use, misuse or misappropriation of Traffic Documents, or the operation, non-operation, or improper operation of Operator’s aircraft, equipment or facilities at any location, excluding only claims, demands, damages, liabilities, suits, judgments, actions, causes of action, losses, costs and expenses resulting from the gross negligence or willful misconduct of Delta, its affiliates, and their respective directors, officers, agents or employees.  Operator will do all things necessary to cause and assure, and will cause and assure, that Operator  or its agent will at all times be and remain in custody and control of all aircraft, equipment, and facilities of Operator used in connection with its performance under the terms of this Agreement, and no Delta Indemnitee shall, for any reason, be deemed to be in custody or control, or a bailee, of Operator’s aircraft, equipment or facilities except and only to the extent Operator’s rights to any aircraft, equipment or facility is derived from Delta.

D.Delta shall be liable for and hereby agrees fully to defend, release, discharge, indemnify, and hold harmless SKYW, and each of its directors, officers, employees, and agents (each, an “Operator Indemnitee”) from and against any Loss suffered by, accrued against, charged to, or recoverable from any Operator Indemnitee in any manner arising out of, connected with, or attributable to Delta’s performance, improper performance or nonperformance of any and all obligations to be undertaken by Delta pursuant to this Agreement, or the operation, non-operation or improper operation of Delta’s or its affiliate’s aircraft, equipment or facilities at any location, in each case (except to the extent attributable to a Delta flight or a flight of a Delta affiliate to which the “SW” code has been designated pursuant to a request by Delta as provided for in Article 19(A) hereof) to the extent, but only to the extent, caused by Delta’s gross negligence or willful misconduct.   Delta will do all things necessary to cause and assure, and will cause and assure, that Delta will at all times be and remain in custody and control of any aircraft, equipment and facilities of Delta used in connection with performance of this Agreement, and no Operator Indemnitee shall, for any reason, be deemed to be in the custody or control, or a bailee, of such Delta aircraft, equipment or facilities.

E.Operator and Delta agree to comply in all material respects with all lawful rules, regulations, directives and similar instructions of appropriate governmental, judicial and administrative entities including, but not limited to, airport authorities, the Federal Aviation Administration and the Department of Transportation (and any successor agencies) with respect to operations covered by this Agreement.

F.OTHER THAN ANY WARRANTIES SPECIFICALLY CONTAINED IN THIS AGREEMENT, EACH PARTY DISCLAIMS AND THE OTHER PARTY HEREBY WAIVES ANY WARRANTIES, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS AGREEMENT OR ITS PERFORMANCE OF ITS OBLIGATIONS HEREUNDER INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR

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FITNESS FOR INTENDED USE RELATING TO ANY EQUIPMENT, DATA, INFORMATION OR SERVICES FURNISHED HEREUNDER.  EACH PARTY AGREES THAT THE OTHER PARTY IS NOT LIABLE TO IT OR ANY OTHER PERSONS FOR CONSEQUENTIAL OR PUNITIVE DAMAGES UNDER ANY CIRCUMSTANCES.

G.Indemnification Claims.  A party (the “Indemnified Party”) entitled to indemnification from the other party under the terms of this Agreement (the “Indemnifying Party”) shall provide the Indemnifying Party with prompt written notice (an “Indemnity Notice”) of any third party claim which the Indemnified Party believes gives rise to a claim for indemnity against the Indemnifying Party hereunder, and the Indemnifying Party shall be entitled, if it accepts financial responsibility for the third party claim, to control the defense of or to settle any such third party claim at its own expense and by its own counsel; provided that the Indemnified Party’s prior written consent (which may not be unreasonably withheld or delayed) must be obtained prior to settling any such third party claim.  If the Indemnifying Party does not accept financial responsibility for the third party claim or fails to defend against the third party claim that is the subject of an Indemnity Notice within thirty (30) days of receiving such notice (or sooner if the nature of the third party claim so requires), or otherwise contests its obligation to indemnify the Indemnified Party in connection therewith, the Indemnified Party may, upon providing written notice to the Indemnifying Party, pay, compromise or defend such third party claim.  The Indemnified Party shall provide the Indemnifying Party with such information as the Indemnifying Party shall reasonably request to defend any such third party claim and shall otherwise cooperate with the Indemnifying Party in the defense of any such third party claim.  Except as set forth above in this Section 12(G), the Indemnified Party shall not enter into any settlement or other compromise or consent to a judgment with respect to a third party claim as to which the Indemnifying Party has an indemnity obligation hereunder without the prior written consent of the Indemnifying Party (which may not be unreasonably withheld or delayed), and the entering into any settlement or compromise or the consent to any judgment in violation of the foregoing shall constitute a waiver by the Indemnified Party of its right to indemnity hereunder to the extent the Indemnifying Party was prejudiced thereby.  Any Indemnifying Party shall be subrogated to the rights of the Indemnified Party to the extent that the Indemnifying Party pays for any Loss suffered by the Indemnified Party hereunder.  Notwithstanding anything contained in this Section 12(G) to the contrary, SKYW and Delta will cooperate in the defense of any claim imposed jointly against them or as the result of the conduct of the other.

ARTICLE 13.  WORKERS’ COMPENSATION AND EMPLOYERS’ LIABILITY INSURANCE PROVISIONS.

A.For purposes of workers’ compensation insurance, Delta’s employees, agents and independent contractors under no circumstances shall be deemed to be, or shall be, employees, agents or independent contractors of Operator.

B.For purposes of workers’ compensation insurance, Operator’s employees, agents and independent contractors under no circumstances shall be deemed to be, or shall be, the employees, agents or independent contractors of Delta.

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C.Each party assumes full responsibility for, and liability to, its own employees on account of injury, or death resulting therefrom, sustained in the course of their employment.  Each party, with respect to its own employees, accepts full and exclusive liability for the payment of applicable workers’ compensation and employers’ liability insurance premiums with respect to such employees, and for the payment of all taxes, contributions or other payments for unemployment compensation and old age benefits, and other similar benefits now or hereafter imposed upon employers by any government or agency thereof having jurisdiction in respect of such employee.  Each party also agrees to make such payments and to make and file all reports and returns and to do all things necessary to comply with all applicable laws at any time imposing such taxes, contributions, or payments.

D.Each party will have its workers’ compensation insurance carrier endorse its policy to provide a waiver of subrogation against the other party.

ARTICLE 14.  INSURANCE PROVISIONS.

A.Operator shall procure and maintain in full force and effect during the Term policies of insurance of the types and in the minimum amounts set forth below, with such insurers and under such terms and conditions as are reasonably satisfactory to Delta:

1.All risk hull insurance on an agreed value basis, not to exceed replacement value, except as required by financing agreements.

2.Comprehensive aviation liability (including premises, products and completed operations) covering bodily injury, personal injury and property damage in an amount not less than [***] per occurrence and in the annual aggregate with respect to Products and Completed Operations, Property Damage for Contractual Liability and Personal Injury; provided, however, that non-passenger personal injury coverage may be limited to [***] per occurrence and in the annual aggregate.

3.Workers’ compensation for statutory limits.

4.Employer’s liability in an amount not less than [***].

5.Baggage liability in an amount not less than [***] per occurrence.

6.Cargo liability in an amount not less than [***] per loss, casualty or disaster.

7.Automobile liability in an amount not less than [***] combined single limit per occurrence.

8.War, Hijacking and Other Allied Perils insurance protecting against the perils in AVN52D, as amended from time to time, or its U.S. equivalent in an amount not less than [***] per occurrence.  Such insurance may be maintained through a combination of primary and excess layers.

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9.Insurance required by any lease, sublease, permit, license or other use agreement of airport facilities.

B.Operator shall cause the policies of insurance described in Article 14(A) above to be duly and properly endorsed by Operator’s insurance underwriters as follows:

1.As to the policies of insurance described in Articles 14(A)(1), (A)(2), (A)(3), (A)(4), (A)(5), (A)(6), (A)(7) and (A)(8):  (a) to provide that any waiver of rights of subrogation against other parties by Operator will not affect the coverage provided hereunder with respect to Delta, its affiliates, and their directors, officers, employees and agents; and (b) to provide that Operator’s underwriters shall waive all subrogation rights arising out of this Agreement against Delta, its affiliates, and their directors, officers, employees and agents without regard to any breach of warranty on the part of Operator.

2.As to the policies of insurance described in Articles 14(A)(2), (A)(5), (A)(6), (A)(7) and (A)(8):  (a) to provide that Delta, its affiliates, and their directors, officers, employees and agents shall be named as additional insured parties thereunder, but only as respect operations of the Named Insured as their interests may appear; and (b) to provide that such insurance shall be primary insurance as respects any insurance carried by Delta.

3.As to the policies of insurance described in Articles 14(A)(2) and (A)(7):  (a) to provide a cross-liability clause as though separate policies were issued for Delta and Operator and their respective affiliates, and their directors, officers, employees and agents; and (b) to provide contractual liability insurance coverage for liability assumed by Operator under this Agreement subject to policy terms, conditions, limitations and exclusions.

4.As to any insurance obtained from foreign underwriters, to provide that Delta may maintain against such underwriters a direct action in the United States upon such insurance policies and, to this end, to include a standard service of process clause designating a United States attorney in Washington, D.C. or New York, New York.

5.All insurance policies shall provide that the insurance shall not be invalidated by any action or inaction of Operator.

C.            Operator shall cause each of the insurance policies to be duly and properly endorsed to provide that such policy or policies or any part or parts thereof shall not be canceled, terminated or materially altered, changed or amended by Operator’s insurance underwriters until after thirty (30) days’ written notice to SKYW, which thirty (30) days’ notice shall commence to run from the date such notice is actually received by SKYW.  SKYW covenants to promptly provide to Delta any such notice received by SKYW.

D.            Not later than the Effective Date, and upon renewal thereafter or upon request by Delta, Operator shall furnish Delta evidence satisfactory to Delta of the aforesaid insurance coverages and endorsements, including certificates certifying that the aforesaid insurance policy or policies with the aforesaid limits are duly and properly endorsed as aforesaid and are in full force and effect.

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E.In the event Operator fails to maintain in full force and effect any of the insurance and endorsements required to be maintained by Operator pursuant to Article 14(A), Delta shall have the right (but not the obligation) to procure and maintain such insurance or any part thereof on behalf of Operator.  The cost of such insurance shall be payable by Operator to Delta upon demand by Delta.  The procurement of such insurance or any part thereof by Delta does not discharge or excuse Operator’s obligation to comply with the provisions set out herein.  Operator agrees not to cancel, terminate or materially alter, change or amend any of the policies until after providing thirty (30) days’ advance written notice to Delta of Operator’s intent to so cancel, terminate or materially alter, change or amend such policies of insurance, which thirty (30) day notice period shall commence to run from the date notice is actually received by Delta.

F.With respect to all claims against Operator (but not against Delta) with respect to which Operator is not entitled to be indemnified by Delta pursuant to Article 12(D), whether or not covered by the insurance policies set forth in this Article 14 or otherwise, Delta is responsible only for filing an initial report and has no other obligations with respect to such claims, and Operator is fully responsible for handling all adjustments, settlements, negotiations, litigation and similar activities in any way related to or connected with such claims.

G.The parties hereby agree that from time to time during the Term Delta may require Operator to procure and maintain insurance coverages in other reasonable amounts than the minimum amounts set forth in Article 14(A), any such alteration being deemed reasonable if readily available and it becomes the general custom of the U.S. regional airline industry.

ARTICLE 15.  OPERATIONS OF SKYW AS A DELTA CONNECTION CARRIER.

A.Delta and Operator agree that, subject to the provisions of this Agreement, SKYW will operate the Delta Connection Flights exclusively as a Delta Connection Program carrier.  Unless otherwise agreed by Delta, SKYW will operate all Delta Connection Flights and the Aircraft with the passenger seat capacity as determined by Delta from time to time.

B.Operator acknowledges and agrees that participation in the Delta Connection Program obligates SKYW to offer and maintain a professional, high quality level of service in terms of schedules, customer service and the like.  Accordingly, at the request of Delta, the parties will:  (a) meet to mutually review and discuss the services, operations and plans of Operator and Delta for the Delta Connection Program; and (b) jointly develop a written business plan for the Delta Connection Program operations and services of SKYW.  Operator will comply with the business plans so developed and all reasonable recommendations of Delta in this area.

C.Delta shall have the right, from time to time, to inspect SKYW’s Delta Connection Service, including without limitation SKYW’s in-flight service, flight, maintenance, technical operations, gate-check in service, ground operations, Aircraft cleaning and any and all other services and operations performed by SKYW in connection with the Delta Connection Flights.  Such inspections may be announced or unannounced, but under no circumstances shall they interfere with the operation of SKYW’s business. Failure on the part of Delta to conduct such

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inspections shall not relieve SKYW of its obligations to conform with the service and performance standards set forth in this Agreement.

ARTICLE 16.  REPRESENTATIONS AND WARRANTIES.

A.Representations and Warranties of Operator.  SKYW represents and warrants to Delta as of the date hereof as follows:

(1)Organization and Qualification.  SKYW is a duly organized and validly existing corporation in good standing under the laws of the State of Utah and has the corporate power and authority to own, operate and use its assets and operate the Delta Connection Flights.

(2)Authority Relative to this Agreement.  SKYW has the corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby in accordance with the terms hereof.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of SKYW.  This Agreement has been duly and validly executed and delivered by SKYW and is, assuming due execution and delivery thereof by Delta, a valid and binding obligation of SKYW, enforceable against SKYW in accordance with its terms.

(3)Compliance.  All air transportation services performed pursuant to this Agreement or otherwise shall be conducted in compliance in all material respects with all applicable statutes, orders, rules, regulations and notifications, whether now in effect or hereafter promulgated, of all governmental agencies having jurisdiction over its operations, including, but not limited to, the FAA, DOD, and DOT. SKYW’s compliance with such governmental statutes, orders, rules, regulations and notifications will be the sole and exclusive obligation of SKYW, and Delta will have no obligation, responsibility, or liability, whether direct or indirect, with respect to such matters.

B.Representations and Warranties of Delta.  Delta represents and warrants to SKYW and SI (as an express third party beneficiary for purposes of this Section 16(B) only) as of the date hereof as follows:

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

(2)Authority Relative to this Agreement.  Delta has the corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby in accordance with the terms hereof.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Delta.  This Agreement has been duly and validly executed and delivered by Delta and is, assuming due execution and delivery thereof by SKYW, a valid and binding obligation of Delta, enforceable against Delta in accordance with its terms.

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(3)Conflicts; Defaults.  Neither the execution or delivery of this Agreement nor the performance by Delta of the transactions contemplated hereby will (i) violate, conflict with, or constitute a default under any of the terms of Delta’s articles of incorporation, by-laws, or any provision of, or result in the acceleration of any obligation under, any contract, sales commitment, license, purchase order, security agreement, mortgage, note, deed, lien, lease, agreement or instrument, including without limitation, any order, judgment or decree relating to the Delta Connection Flights, (ii) result in the creation or imposition of any liens in favor of any third person or entity, (iii) violate any law, statute, judgment, decree, order, rule or regulation of any governmental authority, or (iv) constitute any event which, after notice or lapse of time or both, would result in such violation, conflict, default, acceleration or creation or imposition of liens.

ARTICLE 17.  RIGHT OF FIRST REFUSAL ON AIRCRAFT AND OTHER PROPERTY.

If at any time during the Term, Operator receives a bona fide offer, bid, inquiry or other expression of interest from a third party (“Offer”) to purchase, lease, sublease, encumber or otherwise acquire any interest in (excluding any ordinary course re-financing or sale/leaseback transaction) (i) any Aircraft; or (ii) any slots, gates or other facilities then used by SKYW in connection with its performance of services hereunder (each of (i) and (ii), an “ROFR Property” and collectively, the “ROFR Property”), which Offer Operator desires to accept, Operator will, within ten (10) business days of receiving such Offer, notify Delta in writing of such Offer and the material terms and conditions thereof (the “Offer Notice”) and offer Delta the right of first refusal to consummate the transaction described in the Offer Notice.  Upon receipt of an Offer Notice, Delta will have fifteen (15) days to either (i) notify Operator that it wishes to consummate the transaction for or in connection with the ROFR Property set forth in the Offer Notice (the “Offered Property”) on the same financial terms and conditions as are in such Offer Notice, or (ii) notify Operator that it does not wish to consummate such transaction (failure to reply in such 15 day period shall be deemed to be an election by Delta not to consummate such transaction).  If Delta elects to consummate the transaction involving the Offered Property, Operator and Delta shall consummate the transaction contemplated in the Offer Notice as soon as reasonably practicable but no later than sixty (60) days after any and all governmental approvals required for such transaction have been obtained (Delta and Operator agree to use their commercially reasonable efforts to obtain such approvals as soon as practicable).  If Delta elects not to consummate the transactions contemplated in the Offer Notice, Operator may consummate such transaction with the third party or parties making the Offer.

ARTICLE 18.  {Reserved.}

ARTICLE 19.  COVENANTS OF OPERATOR.  Operator hereby covenants and agrees that:

A.If requested by Delta at any time during the Term, SKYW shall place its flight designator code, “SW,” on certain flights operated by Delta or an affiliate of Delta.

B.[***]

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C.SKYW shall not enter into any binding agreement or arrangement (or series of agreements or arrangements) with any third party (excluding any employee collective bargaining units) for the procurement of any goods or services relating to SKYW, the Aircraft or operation of any of the Delta Connection Flights that may materially increase SKYW’s Direct Costs to perform its services hereunder without the prior written consent of Delta.

D.If Delta (or an affiliate of Delta) incurs any cost or expense on account of SKYW’s failure (unless such ASA failure is directly the result of some act or omission of Delta) to comply with any provision in any aircraft or airport lease, sublease, mortgage or other related agreement, including, but not limited to, failure to comply with provisions of return conditions, obligations of maintenance or operation of aircraft, engines and parts, airport facilities, insurance requirements, operational restrictions and indemnity obligations, SKYW shall pay or reimburse Delta in full for all such undisputed costs or expenses within thirty (30) days of receipt of an invoice from Delta setting forth the amount and background detail thereof; provided that SKYW will have no right to claim from Delta payment or reimbursement under this Agreement for any increased cost which Delta incurs as a result thereof .

E.At the request of Delta, SKYW agrees to enter into such agreement(s) with another air carrier as may be necessary to implement share code-sharing on the Delta Connection Flights with such other air carrier.

F.SKYW agrees that any pilot furloughed by Delta will be given preferential new hire opportunities at SKYW if such pilot completes all new hire paper work, meets all new hire airman and medical qualifications, satisfies background checks and successfully completes an interview and employment process.  SKYW and Delta shall determine and implement mutually acceptable procedures and processes to effectuate the new hire opportunity commitment set forth above.  Delta agrees to offer preferential interviews for employment to airmen employed by SKYW.

G.SKYW shall file all reports and plans relating to its operations with the DOD, DOT, FAA, NTSB or any state or airport authority, and SKYW shall promptly furnish Delta with copies of all such reports and such other available traffic and operating reports as Delta may request from time to time.  Additionally, SKYW will promptly furnish Delta with a copy of every report and plan that SKYW prepares, whether or not such report is filed with the FAA, NTSB or any other governmental agency, relating to any accident or incident involving an Aircraft when such accident or incident is claimed to have resulted in the death or injury to any person or the loss of, damage to or destruction of any property.

H.All flight operations, dispatch operations and flights and all other operations undertaken by SKYW pursuant to this Agreement shall be conducted and operated by SKYW in compliance in all material respects with all applicable governmental regulations, including, without limitation, those relating to airport security, the use and transportation of hazardous materials, flight crew and mechanic qualifications and licensing requirements, crew training and hours.  All Aircraft shall be operated and maintained by SKYW in compliance in all material respects with all applicable governmental regulations, SKYW’s own operations manuals and maintenance manuals and procedures, and all applicable equipment manufacturer’s instructions.

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I.In the event SI is no longer a public reporting company, SKYW shall cause SI to furnish to Delta (1) within 45 days after the end of each of the three interim calendar quarters, unaudited consolidated financial statements including SI’s then current corporate balance sheet and profit and loss statement and (2) within 91 days after the end of SI’s fiscal year, SI’s then current, audited consolidated financial statements including, either separately or on a consolidated basis, the balance sheet and the profit and loss statement, together with associated footnotes, and a copy of the independent auditor’s report.  Notwithstanding the reporting status of SI, Operator shall furnish to Delta (1) within 45 days after the end of each of the three interim calendar quarters, a profit and loss statement with respect to Operator’s Delta Connection Program operations for such applicable interim calendar quarter prepared by SEC line-item and certified by Operator’s or SI’s chief financial officer and (2) within 91 days after the end of Operator’s fiscal year, a profit and loss statement with respect to Operator’s Delta Connection Program operations for such fiscal year prepared by SEC line-item and certified by Operator’s or SI’s chief financial officer.

J.SKYW shall interview any graduate of the Delta Connection Academy who desires to interview with SKYW for a pilot or first officer position.

K.At all times, SKYW shall operate with the highest standards of care.

ARTICLE 20.  CONTRACT INTERPRETATION.

A.This Agreement is subject to, and will be governed by and interpreted in accordance with, the laws of the State of Georgia, excluding conflicts of laws principles, and of the United States of America.  Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may only be brought in the courts of the State of Georgia in Fulton County, or, if it has or can acquire jurisdiction, in the United States District Court for the Northern District of Georgia, and each of the parties hereto irrevocably consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives, to the fullest extent permitted by law, any objection to venue laid therein.  Process in any action or proceeding referred to in the proceeding sentence may be served on any party anywhere in the world.  Each party further agrees to waive any right to a trial by jury.

B.The descriptive headings of the several articles and sections of this Agreement are inserted for convenience only, confer no rights or obligations on either party, and do not constitute a part of this Agreement.

C.Time is of the essence in interpreting and performing this Agreement.

D.This Agreement (including the Exhibits and Schedules hereto), the Stock Purchase Agreement, the Confidentiality Agreement (as defined in the Stock Purchase Agreement) and the Related Agreements (as defined in the Stock Purchase Agreement) constitute the entire agreement between the parties with respect to the subject matter of this Agreement, and supersedes all prior agreements, both written or oral, between the parties with respect to the subject matter of this Agreement.

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E.If any part of any provision of this Agreement shall be invalid or unenforceable under applicable law, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of such provision or the remaining provisions.

F.This Agreement may be executed in any number of counterparts, including via facsimile, each of which shall be deemed to be an original and all of which, taken together, shall constitute one and the same instrument.

G.Because a breach of the provisions of this Agreement could not adequately be compensated by money damages, any party shall be entitled to an injunction restraining such breach or threatened breach and to specific performance of any provision of this Agreement and, in either case, no bond or other security shall be required in connection therewith, and the parties hereby consent to the issuance of such injunction and to the ordering of specific performance.

H.NO PARTY SHALL BE LIABLE FOR ANY INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING LOST REVENUES, LOST PROFITS, OR LOST PROSPECTIVE ECONOMIC ADVANTAGE, ARISING FROM THIS AGREEMENT OR ANY BREACH HEREOF.

ARTICLE 21.  CIRCUMSTANCES BEYOND THE PARTIES’ CONTROL.

With the exception of outstanding rights and obligations, and subject to Section 3(H) hereof, each party will be relieved of its obligations under this Agreement in the event, to the extent and for the period of time that performance is delayed, prevented or caused by any acts of God, acts of terrorism or hostilities, war, strike, labor disputes, work stoppage, fire, act of government, court order, or any other act reasonably beyond the control of that party, including but not limited to, non-delivery or delay in delivery of the Aircraft or delay in the completion of required training of the Operator’s employees by the Aircraft manufacturer (each, a “Force Majeure Event”).  If SKYW is the non-affected party of a Force Majeure Event, and if, during such Force Majeure Event, (y) SKYW uses the Aircraft for any purposes other than to operate the Delta Connection Flights and (z) earns a net profit in connection with all such uses, SKYW shall pay [***] of such net profit to Delta.

ARTICLE 22.  NO LICENSE GRANTED.

A.This Agreement is not, and shall not be construed to be, a license for either party to use the trade names, trademarks, service marks, or logos of the other party, or its affiliates, without such party’s prior written consent.

B.Operator will conduct all operations described herein under the service mark “Delta Connection.”  Delta hereby grants to Operator a nonexclusive, nontransferable, non-sublicensable license to use certain trademarks, service marks, logos and trade names that Delta owns or has the right to use, including, “Delta,” “Delta Connection,” “SkyMiles,” and the Delta widget design (collectively, the “Delta Marks”) in connection with the services to be rendered by

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Operator pursuant to this Agreement; provided, however, that at any time during the Term, Delta may alter, amend or revoke the license hereby granted and require Operator’s use of a new or different Delta Mark in connection with the services provided hereunder as Delta may determine in its sole discretion.

C.Operator hereby acknowledges Delta’s right to use the Delta Marks, further acknowledges the validity of the Delta Marks, and agrees that it will not do anything in any way to infringe or abridge Delta’s, or any of its affiliates’, rights in the Delta Marks or directly or indirectly to challenge the validity of the Delta Marks.

D.Operator shall not use any of the Delta Marks without Delta’s prior written consent.

E.Nothing in this Agreement shall be construed to give Operator the exclusive right to use any of the Delta Marks, or to abridge Delta’s right to use or license any of its trademarks, service marks, trade names or logos(collectively, “Identification”) and to license such other uses of such Identification as Delta or its affiliates may desire.

F.Should this Agreement be canceled or otherwise terminated for any reason as set forth in Article 11 hereof, all right to use the Delta Marks shall revert to Delta and shall not thereafter be used by Operator in any form or fashion.

G.Branding.

1.Livery.  Unless otherwise agreed by Delta, each of the Aircraft shall be in the color scheme, including exterior paint and interior upholstery and appointments (“Livery”) of the Delta Connection Livery, as provided by Delta to SKYW from time to time.  Any changes to the Livery of any of the Aircraft shall be done on a schedule as mutually agreed by the parties.

2.On Board Branding.  Unless otherwise agreed by Delta, Delta shall control all on board branding and in-flight materials including, without limitation, in-flight publications, food and beverage products, paper goods and service ware.  In the event of any change to the on-board branding or in-flight materials, Delta shall be responsible for reimbursing SKYW for any reasonable costs and expenses incurred by SKYW in connection therewith.  SKYW shall be solely responsible for maintaining all licenses necessary for the serving of in-flight food and beverages on the Delta Connection Flights.

3.After the Effective Date, the parties hereto agree to work together in good faith to investigate and analyze opportunities to lower Direct Costs in all operational areas including, without limitation, uniforms, in-flight materials, aircraft equipment and facilities; provided the implementation of any such opportunities shall be subject to Delta’s sole discretion.

ARTICLE 23.  MODIFICATION AND WAIVER.

No amendment, modification, supplement, termination or waiver of any provision of this Agreement, and no consent to any departure by either party therefrom, shall in any event be

31

effective unless in writing signed by authorized representatives of both parties, and then only in the specific instance and for the specific purpose given.

ARTICLE 24.  NOTICES.

Unless otherwise provided herein, all notices, requests and other communications required or provided for hereunder shall be in writing (including telecopy or similar teletransmission or writing) and shall be given at the following addresses:

(1)  If to Delta:

Delta Air Lines, Inc.

1030 Delta Boulevard

Atlanta, GA  30354

Dept. 034

Attention: Senior Vice President and Chief Officer of Operations

Telecopy:  (404) 715-7352

with copies to:

Delta Connection, Inc.

1030 Delta Blvd.

Atlanta, GA  30354

Dept. 009

Attn: President

Telecopy:  (404) 677-6247

Delta Air Lines, Inc.

1030 Delta Boulevard

Atlanta, GA  30354

Dept. 981

Attn: Sr. V.P. and General Counsel

Telecopy:  (404) 715-2233

(2)  If to SkyWest:

SkyWest Airlines, Inc.

444 South River Road

St. George, Utah  84790

Attn:  Chief Financial Officer

Telephone:  (435) 634-3200

Facsimile:  (435) 634-3205

Any such notice, request or other communication shall be effective (i) if given by mail, upon the earlier of receipt or the third business day after such communication is deposited in the United States mails, registered or certified, with first class postage prepaid, addressed as aforesaid or (ii)

32

if given by any other means including, without limitation, by air courier, when delivered at the address specified herein.  Delta or Operator may change its address for notice purposes by notice to the other party in the manner provided herein.

ARTICLE 25.  ASSIGNMENT.

This Agreement shall bind and inure to the benefit of Delta and Operator and their respective successors and permitted assigns; provided, however, except as expressly provided herein, no party may assign or transfer this Agreement or any portion hereof to any person or entity without the express written consent of the other parties.  Any assignment or transfer, by operation of law or otherwise, without such consent or as expressly provided herein shall be null and void and of no force or effect.

ARTICLE 26.  GOOD FAITH.

Each party shall exercise good faith in its dealings with the other party hereto and in performance of its obligations under this Agreement.

ARTICLE 27.  CONFIDENTIALITY.

A.Except as otherwise provided below, each party shall, and shall ensure that its directors, officers, employees, affiliates and professional advisors (collectively, the “Representatives”), at all times, maintain strict confidence and secrecy in respect of all Confidential Information (as defined below) of the other party (including its affiliates) received directly or indirectly as a result of this Agreement.  If a party (the “Disclosing Party”) in good faith determines that it is required to disclose any Confidential Information of other party (the “Affected Party”) in order to comply with any applicable law or government regulation, or under the terms of a subpoena or order issued by a court or governmental body, it shall (a) notify the Affected Party immediately of the existence, terms and circumstances surrounding such request, (b) consult with the Affected Party on the advisability of taking legally available steps to resist or narrow such request and (c) if any disclosure of Confidential Information is required to prevent the Disclosing Party from being held in contempt or subject to other legal penalty, furnish only such portion of the Confidential Information as it is legally compelled to disclose and use commercially reasonable efforts (at the cost of the party whose Confidential Information is being protected) to obtain an order or other reliable assurance that confidential treatment shall be accorded to the disclosed Confidential Information.  Each party agrees to transmit Confidential Information only to such of its Representatives as required for the purpose of implementing and administering this Agreement, and shall inform such Representatives of the confidential nature of the Confidential Information and instruct such Representatives to treat such Confidential Information in a manner consistent with this Article 27.

For purposes of this Agreement, “Confidential Information” shall mean (a) all confidential or proprietary information of a party, including, without limitation, trade secrets, information concerning past, present and future research, development, business activities and affairs, finances, properties, methods of operation, processes and systems, customer lists, customer information (such as passenger name record or “PNR” data) and computer procedures

33

and access codes; and (b) the terms and conditions of this Agreement and any reports, invoices or other communications between the parties given in connection with the negotiation or performance of this Agreement; and (c) excludes (i) information already in a party’s possession prior to its disclosure by other party; (ii) information obtained from a third person or entity that is not prohibited from transmitting such information to the receiving party as a result of a contractual, legal or fiduciary obligation to the party whose information is being disclosed; (iii) information that is or becomes generally available to the public, other than as a result of disclosure by a party in violation of this Agreement; or (iv) information that has been or is independently acquired or developed by a party, or its affiliate, without violating any of its obligations under this Agreement.

B.Each party acknowledges and agrees that in the event of any breach of this Article 27, the Affected Party shall be irreparably and immediately harmed and could not be made whole by monetary damages.  Accordingly, it is agreed that, in addition to any other remedy at law or in equity, the Affected Party shall be entitled to an injunction or injunctions (without the posting of any bond and without proof of actual damages) to prevent breaches or threatened breaches of this Article 27 and/or to compel specific performance of this Article 27.

C.The confidential obligations of the parties under this Article 27 shall survive the termination or expiration of this Agreement.

ARTICLE 28.  ADDITIONAL DOCUMENTS.

A.The parties hereby covenant and agree, contemporaneously with the execution of this Agreement, to execute and deliver the following additional documents in connection with this Agreement:

1.The Guaranty Agreement; and

2.The ASA Delta Connection Agreement.

B.The parties hereby covenant and agree, to the extent not already in effect, promptly after the Effective Date, to execute and deliver the following additional document in connection with this Agreement: A Free and Reduced Rate Travel Agreement between Delta and SKYW as mutually agreed upon among the parties.

ARTICLE 29.  SKYW RIGHTS UNDER ASA DELTA CONNECTION AGREEMENT.

Notwithstanding anything contained herein or in the ASA Delta Connection Agreement, SKYW shall have the right to exercise the rights of first refusal described in Section 11(D) of the ASA Delta Connection Agreement.

[remainder of page intentionally left blank – signature page follows]

34

IN WITNESS WHEREOF, the parties have executed this Agreement by their undersigned duly authorized representatives:

SkyWest Airlines, Inc.	Delta Air Lines, Inc.
By:	By:
Name:	Name:
Title:	Title:

35

EXHIBIT A

The Aircraft

[***]

36

EXHIBIT B

The Costs Model

Annual Rate Plan - 2005

[***]

37

Schedule 10

MIMIMUM PERFORMANCE REQUIREMENTS

[***]

38

EX-1.2

Exhibit 1.2

Executed Copy

[Certain portions of this exhibit have been omitted pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended, and are subject to a confidential treatment request.  Copies of this exhibit containing the omitted information have been filed separately with the Securities and Exchange Commission.  The omitted portions of this document are parted with a ***.]

SECOND AMENDED AND RESTATED

DELTA CONNECTION

AGREEMENT

This Second Amended and Restated Delta Connection Agreement (this “Agreement”), dated and effective as of 12:01 on the 8th day of September, 2005 (the “Effective Date”), is between Delta Air Lines, Inc., whose principal address is 1030 Delta Boulevard, Atlanta, Georgia 30320 (“Delta”) and Atlantic Southeast Airlines, Inc. (“ASA” or “Operator”), whose principal address is 100 Hartsfield Centre Parkway, Atlanta, GA 30354.

WHEREAS, Delta and ASA are parties to that certain Amended and Restated Delta Connection Agreement, dated as of January 1, 2003, as amended from time to time (the “Original Delta Connection Agreement”); and

WHEREAS, Delta offers scheduled air transportation services through regional aircraft operators currently operating as “Delta Connection (the “Delta Connection Program”); and

WHEREAS, ASA desires for Delta to perform and provide various marketing, schedule and fare related, and other services for ASA in connection with the Delta Connection Program; and

WHEREAS, Delta is willing to perform and provide various marketing, schedule and fare related, and other services for ASA in connection with the Delta Connection Program; and

WHEREAS, this Agreement will enhance the ability of ASA and Delta to serve the public and the communities that they serve or may choose to serve; and

WHEREAS, the parties desire to amend and restate the Original Delta Connection Agreement in its entirety; and

WHEREAS, ASA is a wholly-owned subsidiary of SkyWest, Inc. (“SI”); and

WHEREAS, pursuant to the terms of that certain Stock Purchase Agreement (the “Stock Purchase Agreement”) dated as of August 15, 2005, by and among SI, Delta and ASA Holdings, Inc., concurrently with the execution of this Agreement, ASA will become a wholly-owned subsidiary of SI (the “ASA Acquisition”); and

WHEREAS, concurrently with the execution and delivery of this Agreement, Delta and SkyWest Airlines, Inc. (“SkyWest”), a wholly-owned subsidiary of SI, are amending

and restating the Delta Connection Agreement between Delta and SkyWest dated as of July 1, 1990, as amended from time to time, pursuant to which SkyWest will operate as a Delta Connection Carrier (the “SkyWest Delta Connection Agreement”); and

WHEREAS, SI will guaranty the obligations of ASA as provided herein pursuant to the terms and conditions set forth in that certain Guaranty Agreement of even date herewith delivered by SI to Delta (the “Guaranty Agreement”) in connection herewith.

NOW, THEREFORE, for and in consideration of the foregoing premises and the mutual undertakings set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Delta and ASA, intending to be legally bound, hereby amend and restate the Original Delta Connection Agreement in its entirety, effective as of the Effective Date, as follows:

ARTICLE 1.  FARES AND RULES PUBLICATION.

A.Delta Connection Program and Appointment of Delta as Agent.  Subject to Section 1(B) below, ASA hereby appoints Delta as ASA’s agent to publish its fares, schedules and related information under Delta’s two letter flight designator code in city pairs specified by Delta on the (i) [***] aircraft set forth on Exhibit A attached hereto under the heading “Current Aircraft,” (ii) the [***] aircraft set forth on Exhibit A under the heading “Committed Growth Aircraft,” (iii) any aircraft subject to the SkyWest Delta Connection Agreement that SkyWest subsequently designates as an “Aircraft” (as defined below) in accordance with the terms and conditions of the SkyWest Delta Connection Agreement (“SW Aircraft”) and becomes subject to this Agreement and (iv) any other aircraft subsequently agreed by the parties to be operated by ASA (“Other Aircraft,” and collectively with Current Aircraft, Committed Growth Aircraft and SW Aircraft, the “Aircraft”), and Delta hereby accepts such appointment.  Delta hereby grants ASA the authority to operate as a Delta Connection Carrier, and ASA hereby accepts such grant, to conduct air transportation operating the Aircraft utilizing certain services together with certain trademarks and service marks owned by Delta or which Delta has the right to use, all as provided herein.

B.Committed Growth Aircraft Rent/Ownership Costs.

(1)Prior to any aircraft other than a Current Aircraft becoming an Aircraft under the terms and scope of this Agreement, Delta shall have the right to approve the “Aircraft Rent/Ownership Cost” (as defined herein) with respect to such aircraft, such approval not to be unreasonably withheld or delayed.

(2)Subject to the prior written consent of Delta, which shall not be unreasonably withheld or delayed, ASA may designate and transfer, from time to time, upon the prior written consent of SkyWest, any Aircraft as an aircraft subject to the SkyWest Delta Connection Agreement to be operated thereafter by SkyWest pursuant to the terms and conditions thereof; provided that any such designation and transfer does not (i) create an undue burden on Delta, (ii) interfere with Delta’s performance requirements or schedule of published flights, or (iii) otherwise increase the cost to Delta hereunder and under the SkyWest Delta Connection

2

Agreement, in the aggregate.  Further, subject to the prior written consent of Delta, which shall not to be unreasonably withheld or delayed, and the satisfaction of the conditions set forth in the SkyWest Delta Connection Agreement, ASA, with the prior written consent of SkyWest, may designate and cause SkyWest to transfer a SW Aircraft as an Aircraft hereunder; provided, however, that any such designation and transfer does not create an undue burden on Delta, interfere with Delta’s performance requirements or schedule of published flights, or otherwise increase the cost to Delta hereunder and under the SkyWest Delta Connection Agreement, in the aggregate.  If one or more Aircraft is removed from the scope of this Agreement as provided herein or one or more aircraft are added to this Agreement pursuant to the terms of the SkyWest Delta Connection Agreement and this Agreement, Exhibit A and Exhibit B attached hereto shall be modified and amended to account for such aircraft removal or addition, as the case may be, subject to the mutual satisfaction of the parties hereto.  Additionally, if one or more of the Aircraft is removed from the scope of this Agreement as provided herein, the parties acknowledge and agree that the “ATL Departure Percentages” (as defined below) may need to be reduced, and, in such event, the parties covenant and agree to work in good faith to determine the appropriate equitable reduction to the “ATL Departure Percentages” (as defined below) and amend this Agreement accordingly.

(3)[***]

C.Fares, Rules and Seat Inventory.  Delta, in its sole discretion, shall establish and publish all fares and related tariff rules for all seats, cargo and freight on the Aircraft, including fares and rules for local traffic in the city pairs served by such Aircraft.  In addition, Delta will control all seat inventory and revenue management decisions for the Aircraft.

D.Schedules Publication.  Delta, in its sole discretion, shall establish and publish all schedules for the Aircraft, including city-pairs served, frequencies, and timing of scheduled departures.  Where practical, Delta will collaborate with ASA to determine mutually optimal schedules.  ASA shall operate the Aircraft in the city pairs designated by Delta, subject to the frequency, scheduling and other requirements established by Delta from time to time.  In addition, it is agreed and understood that Delta may utilize and schedule any of the Aircraft to perform various charter operations on behalf of Delta as can be reasonably accommodated by ASA.  Notwithstanding the above, but subject to reduction as provided elsewhere in this Agreement, Delta covenants and agrees that during each year of the “Term” (as defined in Article 11 hereof), (i) ASA shall be scheduled to operate not less than [***] of all Delta Connection Program departures scheduled at Hartsfield-Jackson Atlanta International Airport (“Hartsfield”) and (ii) [***] ((i) and (ii) above, collectively, the “ATL Departure Percentages.”)

Delta will notify ASA of schedule times, frequencies and related information for the Aircraft as sufficiently in advance of the schedule publication date so that the information can be properly disseminated to ASA for pilot and flight attendant staffing, and related operational requirements.

[***]

3

ARTICLE 2.  EXCLUSIVITY.

A.ASA agrees that, except as otherwise directed or approved in writing by Delta, in Delta’s sole discretion, (i) the Aircraft may be used only to provide the air services contemplated by this Agreement (the “Delta Connection Flights”) and (ii) the Aircraft may not be used by ASA for any other purpose including, without limitation, flying for any other airline, providing charter services other than pursuant to Section 1(D) hereof, or on ASA’s own account.

B.[***]

C.[***]

D.Neither ASA, nor any affiliate of ASA, shall use any of the services, facilities or equipment provided by Delta, or an affiliate of Delta, to ASA in connection with the Aircraft or the Delta Connection Flights outside the scope of this Agreement without the prior written consent of Delta.  With respect to any ancillary facilities or equipment used by ASA, or an affiliate of ASA, in connection with providing the services contemplated by this Agreement, such use for the benefit of Delta shall have priority over any other use contemplated by ASA, or any affiliate of ASA. With respect to facilities or equipment owned, leased or otherwise used by ASA, Delta shall have the right to designate from time to time which property shall be used to carry out ASA’s obligations under this Agreement; provided, however, that such request does not conflict with any other contractual obligation of ASA then applicable.

ARTICLE 3.  COMPENSATION.

A.Base Compensation.

In exchange for the flying and operation of the Aircraft, Delta shall pay ASA [***] of the “Base Rate Costs” and the “Pass Through Costs” (each as such term is defined below, and collectively, the “Direct Costs”) and [***] of the “Reimbursable Costs” (as such term is defined below), in each case, as relates to the operation of the Delta Connection Flights and as provided for in this Agreement (“Direct Costs” and “Reimbursable Costs” collectively, the “Base Compensation”). It is understood that Direct Costs and Reimbursable Costs shall be based on market based, direct operating costs and generally accepted accounting principles (“GAAP”), but specifically shall exclude any pre-paid expenses except as expressly provided herein.  In addition, in any month in which (i) ASA achieves a completion rate for the Delta Connection Flights of at least [***]% or (ii) neither ASA with respect to its Delta Connection Flights, nor Delta with respect to its domestic mainline operations achieves a completion rate of [***]%, Delta shall pay ASA a mark-up (the “Base Mark-up”) of [***] of such Direct Costs incurred during such month, subject to certain limitations and adjustments set forth below.  [***]

(i)The “Base Rate Costs” shall include all direct operating costs recorded in accordance with GAAP (but specifically excluding any prepayments except as expressly provided in this Agreement and any accruals for reserve items relating to pending or threatened litigation, regulatory claims, undetermined labor rates or any other reserve item not regularly made in Operator’s ordinary course of business) based upon (a) the model attached hereto as Exhibit B (as modified from time to time), and (b) a minimum utilization of the Aircraft of an average of [***] block hours per day (measured on a monthly average of all of the in-revenue

4

service Aircraft during such month) (the “Minimum Utilization Average”).  If the actual utilization average is less than the Minimum Utilization Average for more than [***] consecutive months, then the Base Rate Costs shall be subject to adjustment based on the actual utilization average.  ASA covenants and agrees that with respect to any direct operating costs only a portion of which are allocated as Base Rate Costs hereunder, such allocation shall not be made in a manner that is economically disadvantageous to Delta vis-a-vis ASA or any other codeshare partner of ASA to whom such direct operating costs are also allocated.

At all times during the Term, Operator shall use its best efforts to reduce its Base Rate Costs and achieve profitability improvement targets established by Delta from time to time to reduce Operator’s Direct Costs. [***]

(ii)The “Pass Through Costs” shall include the following variable costs for which Delta shall bear the risk of price and volume fluctuations, provided that such costs shall be reconciled on a monthly basis to reflect the actual costs incurred by Operator:

[***]

Notwithstanding the foregoing, Pass Through Costs shall not include any late payment charges, penalties and/or fees which ASA incurs in connection with the payment of the expenses listed above, except to the extent such late payment charges, penalties and/or fees is attributable to any action or omission principally caused by Delta or an affiliate of Delta.

At all times during the Term, Operator shall use best efforts to control and reduce its Pass Through Costs.  [***]

B.Reimbursable Costs not Subject to Mark-up.

Delta shall reimburse ASA for [***] of the costs incurred for the following items (“Reimbursable Costs”), but it is expressly agreed that no “Mark-up” (as defined below) of such costs shall be paid by Delta:

[***]

C.Non-Reimbursable Costs.

The parties hereby acknowledge and agree that Operator shall be solely responsible and Delta shall not be responsible, nor reimburse Operator, for any of the following costs:

(1)any other executive bonuses and/or incentive compensation received by ASA officers other than (x) the Executive Incentive Compensation described in Section 3(B)(3) above, (y) severance payments described in Section 3(B)(4) above or (z) the ASA officer transaction bonus payments described in Section 3(B)(5) above; and

5

(2)any and all FAA, DOT or any other government agency fines administered or levied against Operator due to any action or omission not principally caused by Delta or an affiliate of Delta; and

(3)Passenger amenities costs and other interrupted trip expenses, including without limitation denied boarding compensation, food and lodging expenses and other transportation costs incurred by Operator due to any action or omission principally caused by Operator or an affiliate of Operator.

D.Delta Costs.

The parties acknowledge and agree that the following costs related to ASA’s services hereunder shall be paid directly by Delta and shall not be included in the Base Compensation or any incentive compensation calculation or payment:

[***]

E.Incentive Compensation.

1.Definitions.  The parties agree that for purposes of this Agreement the following terms shall have the respective meanings as set forth below:

a.“Monthly Incentive Goal” shall mean, with respect to each month during the Term, the monthly goals set forth on Schedule 3 attached hereto and incorporated herein with respect to each of:  (i) completion rate (“Completion Rate”) (ii) on-time arrival (“A-15”), and (iii) customer satisfaction (“Customer Satisfaction”) (collectively, the “Performance Categories”).

b.“Quarterly Incentive Goal” shall mean, with respect to each of Completion Rate, A-15 and Customer Satisfaction, the quarterly goals set forth on Schedule 3 attached hereto and incorporated herein.

2.Monthly Incentive Compensation.  In addition to the Base Compensation, ASA shall have the opportunity to earn additional compensation (the “Monthly Incentive Compensation”) based upon its actual performance in the Performance Categories as compared to the applicable Monthly Incentive Goal.  For each month during the Term, Delta shall pay ASA the following mark-up of the Direct Costs (as calculated monthly based on the established annual rate plan as per Exhibit B hereto, as amended from time to time in accordance with this Agreement) for each of the following performance goals that ASA achieves during such month:

(i)If actual Completion Rate (excluding cancellations due to charter flights pursuant to Section 1(D) hereof and weather related and ATC related cancellations (collectively, “Uncontrollable Cancellations”)) for its Delta Connection Flights is equal to or greater than the applicable Monthly Incentive Goal, the mark-up shall be [***];

(ii)If actual A-15 rate (excluding late arrivals attributable to weather related and ATC related delays (collectively, “Uncontrollable Cancellations”)) for its Delta Connection

6

Flights is equal to or greater than the applicable Monthly Incentive Goal, the mark-up shall be [***]; and

(iii)if actual Customer Satisfaction rating for its Delta Connection Flights is greater than the applicable Monthly Incentive Goal, the mark-up shall be [***].

3.Quarterly Incentive Compensation.  In addition to the Base Compensation and the Monthly Incentive Compensation, ASA shall have the opportunity to earn additional compensation (the “Quarterly Incentive Compensation”) based upon its quarterly performance in the Performance Categories as compared to the Quarterly Incentive Goal for each Performance Category.  During each three-month period (measured from each January 1 through March 31, April 1 through June 30, July 1 through September 30 and October 1 through December 31) during each year of the Term, Delta shall pay ASA the following mark-up of Direct Costs (as calculated quarterly based on the established annual rate plan as per Exhibit B hereto, as amended from time to time in accordance with this Agreement) for each of the following performance goals that ASA achieves during the applicable three-month period (Monthly Incentive Compensation, Quarterly Incentive Compensation and Base Rate Mark-up collectively, “Mark-up”):

(i)If actual Completion Rate (excluding Uncontrollable Cancellations) for its Delta Connection Flights is equal to or greater than the applicable Quarterly Incentive Goal, the mark-up shall be [***];

(ii)If actual A-15 rate (excluding Uncontrollable Delays) for its Delta Connection Flights is equal to or greater than the applicable Quarterly Incentive Goal, the mark-up shall be [***]; and

(iii)If actual Customer Satisfaction rating for its Delta Connection Flights is greater than the applicable Quarterly Incentive Goal, the mark-up shall be [***].

F.Margin Cap; Margin Sharing.

1.Margin Cap.  (a)  Within sixty (60) days after the end of each calendar quarter during Margin Cap Period, Operator shall provide Delta a certificate (the “Margin Cap Certificate”), signed on behalf of Operator by its chief financial officer, that states the actual total margin that Operator earned on operating the Delta Connection Flights (and any charter operations pursuant to Section 1(D) hereof) (the “Margin Cap Margin”) during such calendar quarter.  Such Margin Cap Certificate shall include an exhibit that fully sets forth Operator’s actual amount for each of the variables set forth in the formula set forth below and the calculation of its Margin Cap Margin and certification as to the accuracy of the Margin Cap Margin.  Margin Cap Margin for any given calendar quarter shall be determined, on a pre-tax basis, by applying the following formula:

[***]

Where:

[***]

7

If Operator’s Actual Margin Cap Margin is greater than [***], Operator shall pay Delta an amount equal to the amount necessary to reduce the Total Payments such that the Margin Cap Margin for such calendar quarter will equal [***].  In addition, Operator shall pay Delta the Synergy Savings for the applicable calendar quarter.

(b)If for the applicable quarter, Operator has earned the Monthly Incentive Compensation for each month of the applicable quarter and the Quarterly Incentive Compensation for such quarter, then the references to [***] referenced in Section 3(F)(1)(a) above shall be amended for such quarter to be [***]; provided, however, that for purposes of this Section 3(F)(1)(b) only, during each of the first [***] calendar quarters of the Term, in order for the [***] reference to be amended to [***] for each such quarter, ASA’s actual Completion Rate and actual A-15 rate during each applicable month and quarter must be equal to or better than the actual completion rate and A-15 rate, respectively, achieved by Delta mainline operations during the applicable month or quarter.

2.Margin Sharing.  Commencing with the first calendar quarter after the fifth (5th) anniversary of the Effective Date, within sixty (60) days after the end of each calendar quarter during the Term, Operator shall provide Delta a certificate (the “Margin Certificate”) signed on behalf of Operator by its chief financial officer, that states the actual total margin that Operator earned on operating the Delta Connection Flights (and any charter operations pursuant to Section 1(D) hereof) (the “Actual Margin”) during such calendar quarter.  Such Margin Certificate shall include an exhibit that fully sets forth Operator’s actual amount for each of the variables set forth in the formula set forth below and the calculation of its Actual Margin and certify to the accuracy of the Actual Margin.  Actual Margin for any given calendar quarter shall be determined, on a pre-tax basis, by applying the following formula:

[***]

Where:

[***]

If Operator’s Actual Margin is greater than [***], Operator shall pay Delta an amount equal to [***] of the amount of the Total Payments attributable to that portion of Operator’s Actual Margin exceeding [***] for such calendar quarter.

3.Any payment made pursuant to this Section 3. F. shall be made within thirty (30) days of Delta receiving the Margin Cap Certificate or the Margin Certificate.

G.Assumptions.  Base Rate Costs and Schedule 3 have been prepared based on the data described in Exhibit C attached hereto.  In addition, Base Rate Costs and Schedule 3 have been negotiated based on the assumption that if ASA performs in accordance with the terms and conditions set forth in this Agreement, ASA could reasonably achieve an [***] Margin Cap Margin on an annual basis.  If at any time prior to the nine (9) month anniversary of the Effective Date, ASA or Delta reasonably determines in good faith that the data described in Exhibit C

8

hereto is materially incorrect or materially incomplete, and as a result thereof an [***] Margin Cap Margin is not reasonably achievable, ASA or Delta, as applicable, shall provide written notice to the other party of such matter.  Thereafter, the parties shall correct the incorrect information and complete the incomplete information and adjust Base Rate Costs and Schedule 3, if necessary, based on the corrected or completed information as reasonably and mutually determined by the parties hereto in such a manner such that ASA could reasonably achieve an [***] Margin Cap Margin if ASA performs in accordance with the terms and conditions set forth in this Agreement on an annual basis for each year during the Margin Cap Period.

H.Accounting Provisions.

Delta shall retain all revenues (including, without limitation, passenger, cargo, mail, food, beverage and duty-free services or any other revenue including, without limitation, any guaranteed or incentive payments from airport, local or municipal authorities in connection with scheduling flights to such airport or locality or any federal funds payments) in connection with the operation of the Delta Connection Flights.  Operator shall promptly remit to Delta all monies with respect to all airline ticket sales, on-board sales, baggage charges, passenger charges, cargo sales and all other revenue collected by ASA or any agent or employee of ASA in connection with the operation of the Aircraft (including credit card transactions).

On the [***] day of each month (or if not a business day, on the following business day) Delta will advance to ASA via wire transfer [***] of the estimated monthly Base Compensation and Base Mark-up (each, a “Provisioning Payment”).  ASA shall calculate the amount of the advance, using projected fuel costs, estimated number of weekly revenue block hours, departures and passengers based on the most recent Delta schedule for the Delta Connection Flights and assuming ASA’s actual completion rate will be equal to ASA’s actual completion rate for the same period in the previous calendar year for such estimated departures, and ASA shall submit a written invoice (together with the estimates and calculation referenced in the prior sentence) to Delta no later than the [***] day of the preceding month (or if not a business day, on the following business day).  Delta shall be entitled to review and verify ASA’s invoice and accompanying estimates and calculations prior to making any advance payment pursuant to this paragraph; provided, however, any such review or payment by Delta shall not be deemed as Delta’s final approval of ASA’s invoice and accompanying estimates and calculations, and such information shall still be subject to potential audit and reconciliation pursuant to this Article 3; provided, further, Delta’s review of any invoice and accompanying estimates and calculations shall not extend beyond the due date of the first payment for the month at issue.

Nothing in this Agreement shall relieve Delta or Operator of any of their respective obligations under the Original Delta Connection Agreement arising prior to the Effective Date.  .  In connection with the reconciliation described below for the first month of the Term, the parties shall also conduct and include a final reconciliation of Operator’s actual performances with prior provisioning payments received from Delta under and pursuant to the Original Delta Connection Agreement.

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Within [***] days following the end of each month and upon the termination of this Agreement, ASA will reconcile the actual Base Compensation and Base Mark-up earned by ASA for the Delta Connection Flights and the final operating results (including actual performance in the Performance Categories) of, and actual revenue block hours flown by, ASA with the Provisioning Payments made as described above and submit a final written invoice (together with the relevant data with respect to the actual Base Compensation and Base Mark-up earned and final actual operating results) to Delta; provided, however, that for the month of the Term that includes the Effective Date, such reconciliation shall also include the reconciliation of amounts paid as described in the immediately preceding paragraph. Within [***] business days of receipt of such invoice, Delta will review and verify such final invoice and data, and Delta or Operator, as the case may be, shall pay, via wire transfer, to an account designated by the other party, monies equal to the agreed to reconciled amount.  Delta shall be entitled to review and verify ASA’s final written invoice (together with the relevant data with respect to the actual Base Compensation and Base Mark-up earned and final actual operating results); provided, however, any such review or payment shall still be subject to potential audit and reconciliation pursuant to this Article 3.  Further, within [***] business days of receipt by Delta of the foregoing described invoice, Delta shall pay, via wire transfer, the Monthly Incentive Compensation, if any, for the month of such invoice.  Payment of the Quarterly Incentive Compensation, if any, shall be made at the time the Monthly Incentive Compensation for March, June, September and December are due, as the case may be.  With respect to a reconciliation upon a termination of this Agreement that is not effective at the end of a calendar year, Direct Costs which are paid on an annual basis shall be allocated on a pro rata basis assuming a [***] day calendar year.  Further, with respect to Pass Through Costs associated with engine maintenance and overhauls, upon termination of this Agreement, such Pass Through Costs shall be calculated by multiplying the number of engine block hours flown since the last engine overhaul by an engine block hour rate reasonably determined, in good faith, by the parties.  Upon such calculation, Delta shall, at its sole option, either (i) pay such calculated amount to ASA as part of the final reconciliation, (ii) perform (or have a third party perform) the requisite engine maintenance or overhauls or (iii) a combination of (i) and (ii).

Notwithstanding anything herein to the contrary, if ASA is unable to operate any of the Aircraft, or any of the Delta Connection Flights, due to a strike, labor dispute, work stoppage or similar event or any other event, provided in each such case that such event is substantially within the control of, or caused by, some action or inaction of ASA or an affiliate of ASA or relates to the Aircraft, Delta shall not be obligated to pay ASA any Base Compensation, Mark-up, or any other amounts, in connection with such non-operated Aircraft and Delta Connection Flights.  However, if ASA is unable to operate any of the Aircraft, or any of the Delta Connection Flights, due to a strike, labor dispute, work stoppage, or similar event or any other event, that is substantially within the control of, or caused by, some action or inaction of Delta or an affiliate of Delta, Delta shall be obligated to pay ASA Base Compensation based on the Minimum Utilization Average, and ASA’s eligibility for any Monthly Incentive Compensation or Quarterly Incentive Compensation shall be calculated without regard to any cancellations, delays or complaints caused by or relating to such events.  If ASA is unable to operate any of the Aircraft, or any of the Delta Connection Flights, due to an event that is not substantially within the control of, or caused by, some action or inaction of either ASA or Delta, Delta shall be obligated to pay ASA’s Fixed Costs on Exhibit B attached hereto, as well as crew costs (provided

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ASA shall use best efforts to mitigate and minimize such crew costs in a commercially reasonable manner), Aircraft Rent/Ownership Costs, hull insurance, property taxes and heavy inspection costs for maintenance already in process prior to any such event, but not any other variable costs, Base Mark-Up or Incentive Compensation, with respect to such non-operated Aircraft and Delta Connection Flights during the period that ASA is unable to operate such Aircraft or the Delta Connection Flights.  For purposes of this paragraph, all Disproportionate ATL Cancellations shall assume to have been operated by ASA.

I.Audit of Costs, Operations and Service Levels.

Operator shall maintain complete and accurate books and records to support and document all revenues, costs and expenses related to the Aircraft and its Delta Connection Program operations hereunder in accordance with GAAP.  Delta’s in-house finance staff and any independent consultants selected by Delta shall be entitled, following reasonable notice to Operator, to audit and inspect Operator’s books and records with respect to services provided hereunder, the service levels achieved, and the determination of charges due pursuant to this Agreement for the purpose of (i) prospectively adjusting the Base Rate Costs in connection with any annual review pursuant to Section 3(J) hereof or (ii) auditing Base Compensation or Incentive Compensation due or paid hereunder, the Margin Cap Margin, and the Actual Margin.  Any such audit will be conducted during regular business hours and be paid for by Delta unless such audit determines that Operator owes Delta in excess of [***], then Operator shall pay Delta the costs and expenses incurred by Delta in connection with such audit.

J.Rate Setting.  The parties agree that on or after [***] 2010, but in no event later than [***] 2010 (and each 5 years thereafter on the same applicable dates), the parties shall reset the Base Rate Costs to reflect Operator’s actual Base Rate Costs for 2010 (and each 5th year thereafter) and amend Exhibit B, and review, and revise, if appropriate, Schedule 3.  Notwithstanding the previous sentence, the parties agree that on the second anniversary of the Effective Date, the parties shall review and revise, if applicable, Operator’s direct maintenance expense within the Base Rate Costs attributable to Airworthiness Directives to reflect Operator’s actual direct maintenance expense within the Base Rate Costs attributable to Airworthiness Directives for the remaining [***].

In the event that the parties are unable to agree on the reset Base Rate Costs, the parties further agree that (i) at the request of either party, and at the expense of the requesting party, the parties shall engage a mutually agreed independent consultant, to determine the reset Base Rate Costs. Any such determination by the independent consultant shall be binding on and implemented by the parties.  Until the parties are able to agree upon the reset Base Rate Costs to be set forth in Exhibit B (or such are determined by the independent consultant), the Base Rate Costs of the year immediately prior to the reset year shall govern until such time as the parties agree upon the reset Base Rate Costs.  Upon agreement, the reset Base Rate Costs and the provisions of Exhibit B as so amended shall be applied retroactively to the beginning of the reset period for which the amendment applies.  The Base Rate Costs will apply for all Delta Connection Flights during the year applicable to such Base Rate Costs, and Operator will bear any risks of additional expenses not reflected therein.  Operator will use its best efforts to minimize its costs to operate the Aircraft in accordance with this Agreement, and Operator and

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Delta each agree to notify the other as soon as reasonably practicable of any anticipated or potentially substantial change of cost or operational performance.

With respect to the review and revision, if applicable, of Schedule 3, the parties agree to (i) mutually and reasonably review and discuss, in good faith, the applicable data relating to ASA’s actual completion rates and A-15 rates of its Delta Connection Flights and (ii) reasonably adjust, amend or modify Schedule 3 in accordance with such review and discussion.

K.Right of Set-off.  Delta may offset against the next scheduled payment(s) to be made pursuant to Section 3(H) above (i) the undisputed amount of any payment that ASA or an affiliate of ASA owes to Delta or an affiliate of Delta but has not made when due or (ii) if SI fails to deposit the applicable Deposit Amount (as defined in Schedule 2.01 of the Purchase Agreement), on any Deposit Date (as defined in Schedule 2.01 of the Purchase Agreement) an amount up to the applicable Deposit Amount and (iii) if SI fails to pay the Top-Up Amount (as defined in Schedule 2.01 of the Purchase Agreement) when due and payable, an amount up to the Top-Up Amount. ASA may offset against a payment due Delta pursuant to Section 3(H) above the undisputed amount of any payment that Delta or an affiliate of Delta owes to ASA or an affiliate of ASA but has not made when due.  If a party makes a corrective payment after the other party has exercised its right of offset with respect to such corrective payment, such offset shall be reversed in the next scheduled payment from the other party to such party having made the corrective payment.

ARTICLE 4.  TICKETING SERVICES; SIGNAGE; FACILITIES; SLOTS AND ROUTES.

A.Ticketing Services.  Either Delta or Operator will provide primary airport ticketing services in connection with the Delta Connection Flights, and, if applicable, the other party will provide supplemental ticketing services for the Delta Connection Flights at Delta’s airport ticketing locations and will use Delta ticket stock for such purposes.

B.Signage.  Unless otherwise agreed by the parties, Delta will design, provide and pay for appropriate airport and other signage installed after the Effective Date to reflect the Delta Connection Flights and the relationship between ASA and Delta.  The nature and type of such signage will be in the sole discretion of Delta, subject to any airport, governmental or quasi-governmental restrictions or requirements.  Delta will be responsible for installing and maintaining all such signage, but the parties will mutually determine which party will obtain any necessary formal or informal approvals from appropriate airport or other authorities to install such signage.  The parties will fully cooperate with each other in all endeavors relating to such signage and any necessary approvals.

C.Facilities.

(1)In connection with the Delta Connection Flights, ASA shall use the gates and facilities designated by Delta from time to time at the locations in which ASA operates such Delta Connection Flights. No other use of such gates and other facilities by ASA or parties other than Delta or Delta’s designee shall be allowed without Delta’s express written consent.

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(2)Delta may, at its option, elect to enter into a lease, sublease, permit, license or other agreement in lieu of ASA entering into such agreement for any facilities to be used by ASA at any new or existing city to be served by ASA pursuant to this Agreement, and in the event Delta exercises this option (i) Delta shall enter into a lease, sublease, permit, license or other agreement with the lessor of such facilities, (ii) ASA shall utilize such facilities pursuant to a sublease, license agreement, permit, facilities use agreement or ground handling agreement with Delta as Delta elects, (iii) at Delta’s option, the sublease, license agreement, permit, facilities use agreement or ground handling agreement shall terminate when ASA ceases to operate Delta Connection Flights at the airport and as otherwise provided in such agreement, sublease or permit, and (iv) Delta shall enter into agreements for facilities which are reasonably suitable for ASA’s operational needs. Delta’s right to designate gates and other facilities to be used by ASA in connection with providing Delta Connection Flights shall include the right at each airport, in Delta’s discretion, to either: (a) provide for use of some or all of the needed facilities to ASA through mutually acceptable subleases, license agreements, permits, facilities use agreements or ground handling agreements; or (b) require ASA to obtain use of such facilities from the airport operator or other lessors.  If for any reason Delta fails to provide such facilities, such failure shall not be deemed a breach hereof and ASA shall be obligated to secure such facilities.  Delta and ASA agree that Delta may relocate ASA to comparable facilities at the service locations; provided that Delta pays ASA’s reasonable relocation expenses.

(3)[***]

(4){Reserved.}

(5)Delta shall have the right from time to time to direct ASA to handle or allow Delta to handle other carriers designated by Delta at airport facilities used by ASA in connection with ASA’s operation of Delta Connection Flights; provided that in the event ASA handles such other carrier, the cost for providing such services shall be the then fair market value for such services subject to any applicable lease limitations on such charges.

(6)In the event of an ASA For Cause Termination Event, ASA agrees to use commercially reasonable efforts to assign all of its rights in the “ASA Atlanta Gates” (as defined below) to Delta promptly following such termination.

(7)Provided that at any time of any proposed assignment, transfer, sublease, alteration, amendment, modification or termination of a “Delta Connection Gate Lease” (as defined below) such Delta Connection Gate Lease is then used by ASA in connection with Delta Connection Flights, ASA shall not assign, transfer, sublease, or materially alter, amend, or modify, or terminate any Facilities Lease, any other lease, sublease, permit, license and other use agreement of airport facilities being used in connection with Delta Connection Flights, or any master lease superior thereto (each a “Delta Connection Gate Lease” and collectively, the “Delta Connection Gate Leases”) to which it is a party without the prior written consent of Delta.

(8)At any location in which ASA is the signatory carrier of the applicable Delta Connection Gate Lease, ASA shall vote as directed in writing by Delta on any matters submitted to the signatory carriers for a vote.

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(9)[***]

(10)For purposes of this Agreement, an “ASA For Cause Termination Event” shall mean the termination of this Agreement by Delta pursuant to Article [***].

(11)During the Term, Delta covenants and agrees to cooperate and assist ASA with maintaining its leasehold interests in the ASA Atlanta Gates in effect as of the Effective Date.

D.Slots and Route Authorities.  [***]

ARTICLE 5.  CUSTOMER SERVICES.

A.Operator will handle all customer related services in connection with the Delta Connection Flights in a professional, businesslike and courteous manner.  In order to insure a high level of customer satisfaction for the Delta Connection Flights, Operator will (i) establish and maintain customer handling procedures and policies that are substantially similar to those utilized by Delta (“Customer Service Policies”) and (ii) establish, maintain and enforce employee conduct, appearance and training standards and policies that are substantially similar to those used by Delta.  All uniforms worn by ASA employees on the Delta Connection Flights and by any ASA employees providing support services in connection with such flights shall be subject to the approval of Delta and shall, unless otherwise agreed by Delta, at all times be consistent with Delta’s existing uniform standards.

B.Operator and Delta will periodically meet to discuss and review Operator’s customer handling procedures and policies to insure compliance with this Article 5.  Each party will seek to set forth concerns and complaints under this Article 5 in writing to the other party.  To the extent Delta advises Operator of any deviation from Article 5(A) hereof, the parties shall meet to mutually determine appropriate solutions and to agree to the terms of a corrective action plan and the timing of its implementation.  In the event Operator shall fail, in any material respect, to adopt or implement any such agreed corrective action plan in the time period described therein, any such failure may be deemed a material breach of this Agreement.

C.ASA shall adopt as its own Delta’s Terms and Conditions of Contract of Carriage (“Contract of Carriage”), baggage liability policies and denied boarding compensation policies, each as amended from time to time, and be bound by their respective terms with respect to its operation of Delta Connection Flights.

D.Except as otherwise provided in Article 3(B), ASA shall reimburse Delta for any expenses incurred as a result of ASA’s non-compliance with any of the Customer Service Policies, Contract of Carriage, baggage liability policies and denied boarding compensation policies.

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ARTICLE 6.  TRAFFIC DOCUMENTS AND RELATED PROCEDURES.

To the extent that the parties subsequently agree that ASA will handle traffic documents or passenger handling services in connection with any Delta Connection Flights, the following terms and conditions shall apply:

A.Pursuant to mutually acceptable procedures, Delta will provide ASA with, Delta machine and manual ticket stock, miscellaneous charges orders, credit card refund drafts, credit card refund vouchers, FIMS, expense vouchers, expense checks, travel credit vouchers and other related documents (collectively referred to as “Traffic Documents”).  Delta will maintain a supply of Traffic Documents at a suitable location and, upon written request from ASA, will provide ASA with appropriate supplies of Traffic Documents.

B.Unless otherwise agreed to by Delta in writing, Traffic Documents may be used, completed, validated and issued only by ASA and only in connection with transactions related to Delta Connection Flights and for no other purpose.

C.ASA will promptly surrender and return all Traffic Documents to Delta upon Delta’s written request.

D.ASA will maintain records of the Traffic Documents in a manner and format acceptable to Delta.  ASA will acknowledge receipt in writing of all Traffic Documents in the manner prescribed by Delta.

E.ASA will conform with and abide by all of Delta’s rules and regulations regarding the Traffic Documents.

F.ASA will take all reasonable and necessary measures to safeguard the Traffic Documents as of the time of receipt and thereafter and will maintain the Traffic Documents in accordance with mutually agreed upon security procedures.  ASA shall be responsible for all risk of loss, use, misuse, misappropriation or theft of Traffic Documents as of the time ASA takes possession of the Traffic Documents.

G.Reporting and Remitting With Respect to Traffic Documents.

1.On a daily basis, ASA will provide Delta with a report for each ASA ticketing location of all ticketing and related transactions on Traffic Documents for the prior day.  Such report will be in a format determined by Delta and will include, without limitation, all credit card transactions and supporting documentation.

2.ASA will issue all Traffic Documents, and will collect appropriate charges, in accordance with the tariffs, fares, rates, rules and regulations of Delta and any other applicable carriers.  Operator shall be responsible for all undercharges and incorrect fares, rates and charges on Traffic Documents caused by Operator’s failure to comply with established policy.

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H.Refund Vouchers.

1.Delta will use Delta refund vouchers for all refund transactions handled by Delta involving ASA.

2.ASA will use Delta refund vouchers, and Delta credit card refund vouchers for credit card sales refunds, and will comply with Delta’s rules and regulations for handling and processing such refunds.

ARTICLE 7.  FREQUENT FLYER PARTICIPATION.

During the Term, the parties agree that passengers on ASA’s Delta Connection Flights will be eligible to participate in the Delta SkyMiles frequent flyer program, as may be amended from time to time, or any other similar program developed by Delta (the “Program”) and all Program award tickets will be honored for travel on Delta Connection Flights on the following terms and conditions:

A.Administration.  Administration of the Program shall be performed by and at the cost of Delta.  Delta will promote and administer the Program.

B.Program Information.  Title and full and complete ownership rights to Program membership data and information developed by Delta, wherever located, shall remain with Delta or an affiliate of Delta.  Operator understands and agrees that such data and information constitutes Delta’s (or its affiliates’) proprietary information.  Any membership lists, labels, data, or other compiled membership information supplied to Operator in any form and any and all copies thereof are to be used by Operator exclusively in the performance of its obligations under this Agreement and will not be otherwise used, sold, licensed, leased, transferred, stored, duplicated or transmitted, in any form or by any means, without Delta’s prior written consent.  All such information will either be returned to Delta or destroyed at Delta’s request.

C.Accrual and Redemption.  Passengers on the Delta Connection Flights shall be eligible to accrue and redeem Program mileage on such flights, and ASA shall carry all passengers traveling pursuant to award travel under the Program at no additional charge to Delta.

ARTICLE 8.  SUPPORT SERVICES.

[***]

Delta may assist ASA in obtaining goods and services in connection with operating the Aircraft and/or the Delta Connection Flights in a more economical manner, including, without limitation, via bulk purchasing and inventory management systems and processes.  If Delta initiates or identifies any such initiatives, ASA is obligated to participate in any such initiative; provided such initiative does not unreasonably interfere with the operational standards or performance requirements of ASA.

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ARTICLE 9.  AUTOMATION SERVICES.

Delta will, if necessary, provide ASA the following automation and related services for the Delta Connection Flights, and if provided by Delta, ASA agrees to participate in such services in the manner described below.

A.Internal Reservations Equipment.  Delta shall provide or arrange for the provision to ASA of an electronic reservations system (currently referred to as “Deltamatic” but including any successor reservations system adopted by Delta) and shall provide ASA with: (i) the ability to access passenger name records, (ii) automated ticketing capabilities, (iii) operational messaging switching capabilities, (iv) the ability to update Delta Connection Flight information, (v) the ability to distribute flight releases and weather packages, and (vi) perform other reservations-related functions for the Delta Connection Flights (Deltamatic and any successor system are hereinafter referred to as the “Res System”).  Delta reserves the right to modify the functionality of the Res System at any time.  ASA will use the Res System made available by Delta for the Delta Connection Flights only.

B.Delta’s Rights and Obligations.

1.Delta has installed or caused to be installed the equipment previously requested by ASA and shall provide ASA connection to the Res System.  Such equipment (and any additional equipment installed after the Effective Date) and any software installed on such equipment at the time of its delivery to ASA is hereinafter referred to as the “Equipment.”  ASA understands and agrees that: (i) all Equipment shall remain the sole property of Delta; (ii) ASA shall not remove any identifying marks from the Equipment; (iii) ASA shall not subject the Equipment to any lien; and (iv) Delta may enter ASA’s premises to remove the Equipment immediately upon termination of this Agreement.

2.Delta will provide initial and recurrent training to ASA training staff and other key designated personnel in the use of the Res System, at Delta’s training centers unless otherwise agreed.  Delta may remove from a training program any ASA employee who is not satisfactorily participating therein.

3.Delta will provide, or arrange to provide, all repairs and maintenance services required for the Equipment and will use reasonable business efforts to keep the Equipment and the Res System in good repair and condition.  ASA will not perform or attempt to perform repairs or maintenance of any kind on the Equipment without prior consultation with Delta and will promptly contact Delta regarding the need for repairs or maintenance.

C.ASA’s Rights and Obligations.

1.ASA will not for any reason relocate or remove any of the Equipment without Delta’s prior written consent.  Delta will pay all costs associated with the installation, relocation or removal of Equipment.

2.ASA will use the Equipment and the Res System in strict conformity with the training and operating instructions provided by, or arranged to be provided by, Delta.  Without limiting the generality of the foregoing, unless authorized by Delta, ASA will not use the Res

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System to develop or publish any reservation, ticketing, sales, cargo, tariff or other guide, to provide services not authorized by this Agreement to third parties, to train persons other than ASA’s employees in the use of the Equipment or the Res System, or for other uses designated by Delta in writing as prohibited.  ASA may not publish, disclose or otherwise make available to any third party the compilations of air carrier service or fares obtained from the Res System; provided, however, that ASA may use specific air carrier service and fare data for the benefit of its customers.

3.ASA will encourage and allow its employees to attend training sessions related to the Res System, and it is ASA’s responsibility to insure that each employee receives full and adequate training on the Res System.

4.ASA will protect the Equipment from loss, damage or theft and shall prevent its unauthorized use or improper operation.  ASA will make no alterations to the Equipment and will return the Equipment to Delta upon the termination of this Agreement in the same condition as received, excepting only ordinary wear and tear in the normal course of ASA’s operations.  ASA will obtain and maintain insurance for the Equipment against all risks of damage and loss, including without limitation loss by fire, theft and such other risks of loss as are customarily insured in a standard all-risk policy.  Such insurance shall also provide the following:

(a)Full replacement value coverage for the Equipment (subject to policy deductibles);

(b)An endorsement naming Delta as the loss payee to the extent of its interest in the Equipment; and

(c)An endorsement requiring the insurer to give ASA at least thirty (30) days prior written notice of any intended cancellation, nonrenewal or material change of coverage; provided that only ten (10) days prior written notice of cancellation, nonrenewal or material change of coverage need be given in the event that such cancellation, nonrenewal or material change in coverage is caused solely by failure to make a premium payment.  ASA covenants to promptly provide Delta a copy of any such notice received by ASA.

Upon request by Delta, Operator will promptly provide satisfactory evidence of the insurance required pursuant to this Section 9(C)(4).  Notwithstanding the foregoing, Operator shall be liable to Delta for any loss or damage to the Equipment, regardless of cause, occurring while the Equipment is in the possession, custody or control of Operator.

5.Operator waives any proprietary rights that it may have with respect to information entered into the Res System.

D.Entry and Inspection.  Delta personnel and persons designated or authorized by Delta may enter Operator’s premises during normal business hours for the purposes of (a) monitoring, inspecting, and reviewing Operator’s use of and operations with respect to the Res System, (b) performing repairs or maintenance on the Equipment, (c) installing, removing, replacing or relocating the Equipment (unless otherwise permitted by this Agreement), or (d) training or

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retraining Operator’s employees in the use of the Res System; provided that such activities may not unreasonably interfere with Operator’s business.

E.Limitations on Liability.  In addition to any other limitations on liability set forth herein:

1.Delta is not responsible for errors or inaccuracies in the availability records, fare quotes, or other information contained in the Res System at any time, for any planned or unplanned interruptions, delays or malfunctions in the operation of the Res System or the Equipment or for the merchantability or fitness for a particular purpose of any of the data or Equipment made available to Operator.

2.OPERATOR HEREBY WAIVES AND RELEASES DELTA AND ITS AFFILIATES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM ANY AND ALL OBLIGATIONS AND LIABILITIES AND ALL RIGHTS, CLAIMS AND REMEDIES OF OPERATOR AGAINST DELTA OR ITS AFFILIATES OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, DUE TO ANY DEFECTS OR INTERRUPTIONS OF SERVICE IN, OR ERRORS OR MALFUNCTIONS BY, SOFTWARE, THE EQUIPMENT OR THE RES SYSTEM, INCLUDING ALL LIABILITY, OBLIGATION, RIGHT, CLAIM, OR REMEDY IN TORT, AND INCLUDING ALL LIABILITY, OBLIGATION, RIGHT, CLAIM OR REMEDY FOR LOSS OF REVENUE OR PROFIT OR ANY OTHER DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES.  FURTHER, DELTA DISCLAIMS AND OPERATOR HEREBY WAIVES ANY WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE RELATING TO THE RES SYSTEM, THE EQUIPMENT, DATA, OR SERVICES FURNISHED HEREUNDER.

F.Patent and Copyright Indemnity.  Delta will defend or settle, at its own expense, any action brought against Operator to the extent that it is based on a claim that the Res System or Equipment provided by Delta pursuant to this Agreement, in its normal use, or any part thereof, infringes any U.S. copyright or patent; and Delta will pay those costs, damages and attorney’s fees finally awarded against Operator in any such action attributable to any such claim, but such defense, settlements and payments are conditioned on the following:  (1) that Delta shall be notified promptly in writing by Operator of any such claim; (2) that Delta shall have sole control of the defense of any action on such claim and of all negotiations for its settlement or compromise; provided that the Operator’s prior written consent (which may not be unreasonably withheld or delayed) must be obtained prior to settling any such third party claim;  (3) that Operator shall cooperate with Delta in a reasonable way to facilitate the settlement or defense of such claim; provided that Delta shall pay all of Operator’s reasonable expenses in connection with any such cooperation requested by Delta; and (4) should such Res System or Equipment become, or in Delta’s opinion be likely to become, the subject of such claim of infringement, then Operator shall permit Delta, at Delta’s option and expense, either to (a) procure for Operator the right to continue using the Res System or Equipment, or (b) replace or modify the same so that it becomes noninfringing and functionally equivalent, or (c) upon failure of (a) and (b) above despite the reasonable efforts of Delta, accept immediate termination of this Agreement as it

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relates to such system.  This paragraph (F) states the entire liability of Delta with respect to the infringement of copyrights and patents by the Res System or Equipment provided hereunder or the operation thereof.

ARTICLE 10.  OPERATIONAL PERFORMANCE.

A.ASA agrees to provide the following information to Delta for each day during the Term within three (3) days after the applicable day; provided, however, the information in sub-paragraph (iv) below shall be provided monthly within ten (10) days after the last day of each such month:

(i)The number of mishandled bags per 1,000 passengers (including, without limitation, international and non-revenue passengers) flown on Delta Connection Flights during such month. ASA understands that it is Delta’s current objective, as of the Effective Date, that participants in the Delta Connection Program maintain a number of mishandled bags as set forth on Schedule 10 attached hereto and made a part hereof.

(ii)The completion rate (actual) of the Delta Connection Flights during such month. ASA understands that it is Delta’s current objective, as of the Effective Date, that participants in the Delta Connection Program maintain a completion rate as set forth on Schedule 10 attached hereto and made a part hereof.  For purposes of this Agreement, Delta Connection Flights operated with no revenue passengers or completed over four (4) hours late shall be considered as cancelled.

(iii)The number of scheduled Delta Connection Flights that do not arrive at their scheduled destination prior to 15 minutes after their respective scheduled arrival times during such month. ASA understands that it is Delta’s current objective, as of the Effective Date, that participants in the Delta Connection Program maintain a percentage of on-time arrivals as set forth on Schedule 10 attached hereto and made a part hereof.

(iv)ASA’s overall customer satisfaction rating as compiled and reported by the Customer Satisfaction Monitor, or any successor thereto or replacement thereof.  ASA understands that it is Delta’s current objective, as of the Effective Date, that participants in the Delta Connection Program maintain a customer satisfaction rating as set forth on Schedule 10 attached hereto and made a part hereof .

B.If Delta is concerned about ASA’s performance in connection with any of the performance standards set forth in Section 10(A), Operator agrees to discuss with Delta such performance and potential ways to improve such performance at Delta’s request.  The parties shall have ten (10) days to determine appropriate solutions and/or a corrective action plan, and ASA agrees to diligently comply with the terms and conditions of any such solutions and corrective action plans.

C.The parties recognize and agree that the performance standards objectives set forth on Schedule 10 may be modified or adjusted by Delta from time to time during the Term; provided, in no event shall the standards exceed the equivalent standards of Delta mainline operations.

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ARTICLE 11.  TERM AND TERMINATION.

A.This Agreement is effective as of the Effective Date and shall continue until the fifteenth (15th) anniversary of such date (such period, and any extension or renewal thereof, the “Term”).  At the end of such initial fifteen-year term, Delta shall have the right to extend the term of this Agreement for up to four (4) additional five (5) year terms (each, an “Extension Term”) on the same terms and conditions (as amended from time to time in accordance with this Agreement) of this Agreement.  To exercise its right to extend the initial term or an Extension Term, as the case may be, Delta shall provide ASA with written notice of such extension not later than 180 days prior to the end of the initial term or Extension Term that is, at the time of such notice, in force.  In the event of a “Merger” (as defined below) or “Change of Control” (as defined below) of ASA or SI, Delta shall have the right to either (i) add two (2) additional Extension Terms on the same terms and conditions (as amended from time to time in accordance with this Agreement) of this Agreement or (ii) terminate this Agreement in accordance with Section 11(E)(1) below, by written notice to ASA within the later of 180 days of the Merger or Change of Control.

B.Notwithstanding the provisions of Section 11(A), either party may terminate this Agreement immediately if the other party files a voluntary petition in bankruptcy, makes an assignment for the benefit of creditors, fails to secure dismissal of any involuntary petition in bankruptcy within sixty (60) days after the filing thereof, or petitions for reorganization, liquidation, or dissolution under any federal or state bankruptcy or similar law.

C.Notwithstanding the provisions of Section 11(A), in the event of a material breach of this Agreement by either party remaining uncured for more than [***] days after receipt of written notification of such breach by the nonbreaching party, then the nonbreaching party may immediately terminate this Agreement at its sole option; provided, however, that if the breaching party shall have commenced to cure any such material breach, and, notwithstanding the reasonable diligence of the breaching party in attempting to cure such failure, such failure is not cured within said [***] day period but is curable with future due diligence, there shall exist no cause for termination so long as the breaching party is proceeding with due diligence to cure such failure and shall in fact cure such failure within [***] days following such notice.

D.(1)If either party reasonably believes that there is a substantial likelihood of an occurrence of a “Force Majeure Event” (as defined in Article 21) in the near term, upon notice from such party to the other party, the parties shall meet and mutually develop a preemptive strategy to manage and mitigate the risks and expenses expected to be incurred as a result of such Force Majeure Event, including, without limitation, adjusting the schedule of Delta Connection Flights scheduled at such time.  The parties covenant and agree to implement such mutually developed strategy.  Delta shall reimburse ASA for the reasonable costs incurred by ASA as a result of ASA’s participation in the implementation of such strategy in accordance with the terms of Article 3 of this Agreement.

(2)If a Force Majeure Event occurs, (a) Delta’s covenant with respect to the ATL Departure Percentages set forth in Section 1(D) (the “ATL Percentage Covenant”) and (b) ASA’s obligation under Section 2(A) (the “ASA Exclusivity Covenant”) shall, in each case, be

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immediately suspended until such time as provided in Section 11(D)(3) below.  If Delta is the non-affected party, Delta shall notify SkyWest of Delta’s strategy to mitigate the financial impact to Delta of the Force Majeure Event (the “Delta Notice”).  If such strategy includes the transfer or reallocation of some or all of the Delta Connection Flights operated by ASA, SkyWest shall have a right of first refusal to operate some or all of such Delta Connection Flights; provided SkyWest must affirmatively exercise such right of refusal by notifying Delta of such election in writing within twenty-four (24) hours of SkyWest receiving the Delta Notice (the “SkyWest Affirmative Notice”).  If Delta does not receive a SkyWest Affirmative Notice within such 24-hour period, SkyWest shall be deemed to have not exercised its right of first refusal to operate such Delta Connection Flights.  SkyWest’s right of first refusal shall be subject to (i) SkyWest being a Delta Connection Program operator at the time of such Force Majeure Event occurring and (ii) SkyWest being able to operate the transferred Delta Connection Flights in a time period acceptable to Delta.  All flying by SkyWest of such transferred Delta Connection Flights shall be flown pursuant to the terms and conditions of the SkyWest Delta Connection Agreement.

If ASA is the non-affected party, ASA shall notify Delta of ASA’s strategy to mitigate the financial impact to Delta of the Force Majeure Event.

(3)Upon the termination of a Force Majeure Event, Delta and ASA (and SkyWest if necessary, which ASA shall cause) shall meet and develop an orderly transition plan to restore the Delta Connection Flights operated by ASA prior to such Force Majeure Event (a “Restoration Plan”).  Such Restoration Plan shall take into account, without limitation, the operational needs and capabilities of each party, the impact on Delta customers and the cost to each of the parties, and shall further include a reasonable time period by which the ATL Percentage Covenant and the ASA Exclusivity Covenant shall each be reinstated.  The parties covenant and agree to implement such Restoration Plan.  With respect to the costs incurred by each of ASA and Delta in connection with the implementation of a Restoration Plan (respectively, “Restoration Costs”), (i) if Delta is the non-affected party, ASA shall be responsible for, and Delta shall have no obligation to reimburse ASA for, each of Delta’s and ASA’s Restoration Costs and (ii) if ASA is the non-affected party, Delta shall be responsible for each of Delta’s and ASA’s Restoration Costs.

(4)If a Force Majeure Event substantially prevents one party’s performance of its obligations pursuant to this Agreement for a period of [***] or more consecutive days, the other party may terminate this Agreement in its entirety upon [***] days prior written notice (“Termination Notice”) to the affected party.  [***]

E.(1)Notwithstanding the provisions of Sections 11(A), (B), (C) and (D), Delta shall have the right to terminate this Agreement immediately and at its sole option upon the occurrence of one or more of the following:

(i)ASA or SI agrees to merge into or with any entity, agrees to be acquired by any entity, agrees to sell substantially all of its assets or enters into a letter of intent, or similar document, to merge into or with any entity, to be acquired by any entity, or to sell substantially all of its assets (each such event, a “Merger”); unless SI is the surviving or acquiring entity or the ultimate beneficial owner of the surviving or acquiring entity immediately following such transaction.

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(ii)The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than [***] of either (a) the then outstanding shares of common stock of ASA or SI, or (b) the combined voting power of the then outstanding voting securities of ASA or SI entitled to vote generally in the election of such party’s directors (each such event, a “Change of Control” and each such acquiring individual, entity or group, collectively, the “Acquiring Person”); unless, in the case of any acquisition relating solely to ASA, SI beneficially owns, at all times after giving effect to such acquisition, at least [***] of the outstanding voting power entitled to vote in the election of the Acquiring Person’s directors or other persons performing similar governance functions;

(iii)ASA’s level of safety with respect to its operation of the Aircraft or the Delta Connection Flights is not reasonably satisfactory to Delta;

(iv)a breach by ASA of Section 19(H) hereof;

(v)ASA fails to maintain a completion rate of [***] with respect to the Delta Connection Flights during any [***] months during any consecutive [***] month period, unless Delta fails to maintain a completion rate of [***] with respect to its domestic mainline operations during the same [***] months as ASA’s failures during the same [***] period.  For purposes of this Agreement, (a) Delta Connection Flights operated with no revenue passengers or completed over [***] hours late shall be considered as not completed and (b) Disproportionate ATL Cancellations shall be excluded from ASA’s completion rate calculation;

(vi)a material breach of any representation or warranty by ASA of Section 16(A)(3);

(vii)ASA’s failure to comply with the insurance provisions of Articles 13 and 14 hereof;

(viii)ASA’s FAA or DOT Certification is for any reason suspended or revoked or otherwise not in full force and effect so as to permit ASA to operate the Delta Connection Flights required under this Agreement;

(ix)ASA shall commence operating an aircraft type that causes Delta to be in violation of its collective bargaining agreement with its pilots, unless such operation is at the request of Delta; and

(x)Delta has a right to terminate the SkyWest Delta Connection Agreement; and

(xi)[***]

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(2)Notwithstanding the provisions of Section 11(A), (B), (C) and (D), ASA shall have the right to terminate this Agreement immediately and at its sole option if SkyWest has the right to terminate the Skywest Delta Connection Agreement.

F.Partial Termination.  Notwithstanding anything herein to the contrary, effective at any time after the seventh (7th) anniversary of the Effective Date, Delta shall have the right to remove from the scope of this Agreement each Aircraft effective upon the date that the lease, mortgage or other financing arrangement with respect to such Aircraft in effect as of the Effective Date expires by providing ASA with at least twelve (12) months’ prior written notice.

G.Termination of this Agreement for any reason shall not relieve either party of rights and obligations incurred prior to the effective date of termination.  A party’s right to terminate this Agreement shall be in addition to any other rights or remedies, in law or equity, available to such party.

H.[***]

ARTICLE 12.  INDEPENDENT CONTRACTORS; LIABILITY PROVISIONS.

A.ASA shall act as an independent contractor.  The employees, agents and/or independent contractors of ASA engaged in performing any of the services ASA is obligated to perform pursuant to this Agreement shall be employees, agents and independent contractors of ASA for all purposes and under no circumstances shall employees, agents or independent contractors of ASA be deemed to be employees, agents or independent contractors of Delta.  In its performance of obligations under this Agreement, ASA shall act, for all purposes, as an independent contractor and not as an agent for Delta.  Delta shall have no supervisory power or control over any employees, agents or independent contractors engaged by ASA in connection with ASA’s performance of its obligations hereunder, and all complaints or requested changes in procedure shall, in all events, be transmitted by Delta to a designated representative of ASA.  Nothing contained in this Agreement is intended to limit or condition ASA’s control over its operation or the conduct of its business as an air carrier, and ASA assumes all risks of financial losses which may result from the operation of the air services to be provided by ASA hereunder.

B.Delta shall act as an independent contractor. The employees, agents and/or independent contractors of Delta engaged in performing any of the services Delta is to perform pursuant to this Agreement shall be employees, agents and independent contractors of Delta for all purposes and under no circumstances shall employees, agents and independent contractors of Delta be deemed to be employees, agents or independent contractors of ASA.  In performing its obligations under this Agreement, Delta shall act, for all purposes, as an independent contractor and not as an agent for ASA.  ASA shall have no supervisory power or control over any employees, agents or independent contractors engaged by Delta in connection with the performance of its obligations hereunder, and all complaints or requested changes in procedure shall, in all events, be transmitted by ASA to a designated representative of Delta.  Nothing contained in this Agreement is intended to limit or condition Delta’s control over its operation or the conduct of its business as an air carrier.

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C.Except as otherwise expressly provided herein, ASA shall be liable for and hereby agrees fully to defend, release, discharge, indemnify, and hold harmless Delta and its affiliates, and each of their respective directors, officers, employees and agents (each, a “Delta Indemnitee”) from and against any and all claims, demands, damages, liabilities, suits, judgments, actions, causes of action, losses, costs and expenses of any kind, character or nature whatsoever (in each case whether groundless or otherwise), including reasonable attorneys’ fees, costs and expenses in connection therewith and expenses of investigation and litigation thereof (collectively, a “Loss”), which may be suffered by, accrued against, charged to, or recoverable from any Delta Indemnitee in any manner arising out of, connected with, or attributable to the performance, improper performance, or nonperformance of any and all obligations to be undertaken by Operator pursuant to this Agreement, the loss, theft, use, misuse or misappropriation of Traffic Documents, or the operation, non-operation, or improper operation of Operator’s aircraft, equipment or facilities at any location, excluding only claims, demands, damages, liabilities, suits, judgments, actions, causes of action, losses, costs and expenses resulting from the gross negligence or willful misconduct of Delta, its affiliates, and their respective directors, officers, agents or employees.  Operator will do all things necessary to cause and assure, and will cause and assure, that Operator or its agent will at all times be and remain in custody and control of all aircraft, equipment, and facilities of Operator used in connection with its performance under the terms of this Agreement, and no Delta Indemnitee shall, for any reason, be deemed to be in custody or control, or a bailee, of Operator’s aircraft, equipment or facilities except and only to the extent Operator’s rights to any aircraft, equipment or facility is derived from Delta.

D.Delta shall be liable for and hereby agrees fully to defend, release, discharge, indemnify, and hold harmless ASA, and each of its directors, officers, employees, and agents (each, an “Operator Indemnitee”) from and against any Loss suffered by, accrued against, charged to, or recoverable from any Operator Indemnitee in any manner arising out of, connected with, or attributable to Delta’s performance, improper performance or nonperformance of any and all obligations to be undertaken by Delta pursuant to this Agreement, or the operation, non-operation or improper operation of Delta’s or its affiliate’s aircraft, equipment or facilities at any location, in each case (except to the extent attributable to a Delta flight or a flight of a Delta affiliate to which the “EV” code has been designated pursuant to a request by Delta as provided for in Article 19(A) hereof) to the extent, but only to the extent, caused by Delta’s gross negligence or willful misconduct.  Delta will do all things necessary to cause and assure, and will cause and assure, that Delta will at all times be and remain in custody and control of any aircraft, equipment and facilities of Delta used in connection with performance of this Agreement, and no Operator Indemnitee shall, for any reason, be deemed to be in the custody or control, or a bailee, of such Delta aircraft, equipment or facilities.

E.Operator and Delta agree to comply in all material respects with all lawful rules, regulations, directives and similar instructions of appropriate governmental, judicial and administrative entities including, but not limited to, airport authorities, the Federal Aviation Administration and the Department of Transportation (and any successor agencies) with respect to operations covered by this Agreement.

F.OTHER THAN ANY WARRANTIES SPECIFICALLY CONTAINED IN THIS AGREEMENT, EACH PARTY DISCLAIMS AND THE OTHER PARTY HEREBY WAIVES

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ANY WARRANTIES, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS AGREEMENT OR ITS PERFORMANCE OF ITS OBLIGATIONS HEREUNDER INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE RELATING TO ANY EQUIPMENT, DATA, INFORMATION OR SERVICES FURNISHED HEREUNDER.  EACH PARTY AGREES THAT THE OTHER PARTY IS NOT LIABLE TO IT OR ANY OTHER PERSONS FOR CONSEQUENTIAL OR PUNITIVE DAMAGES UNDER ANY CIRCUMSTANCES.

G.Indemnification Claims.A party (the “Indemnified Party”) entitled to indemnification from the other party under the terms of this Agreement (the “Indemnifying Party”) shall provide the Indemnifying Party with prompt written notice (an “Indemnity Notice”) of any third party claim which the Indemnified Party believes gives rise to a claim for indemnity against the Indemnifying Party hereunder, and the Indemnifying Party shall be entitled, if it accepts financial responsibility for the third party claim, to control the defense of or to settle any such third party claim at its own expense and by its own counsel; provided that the Indemnified Party’s prior written consent (which may not be unreasonably withheld or delayed) must be obtained prior to settling any such third party claim.  If the Indemnifying Party does not accept financial responsibility for the third party claim or fails to defend against the third party claim that is the subject of an Indemnity Notice within thirty (30) days of receiving such notice (or sooner if the nature of the third party claim so requires), or otherwise contests its obligation to indemnify the Indemnified Party in connection therewith, the Indemnified Party may, upon providing written notice to the Indemnifying Party, pay, compromise or defend such third party claim.  The Indemnified Party shall provide the Indemnifying Party with such information as the Indemnifying Party shall reasonably request to defend any such third party claim and shall otherwise cooperate with the Indemnifying Party in the defense of any such third party claim.  Except as set forth above in this Section 12(G), the Indemnified Party shall not enter into any settlement or other compromise or consent to a judgment with respect to a third party claim as to which the Indemnifying Party has an indemnity obligation hereunder without the prior written consent of the Indemnifying Party (which may not be unreasonably withheld or delayed), and the entering into any settlement or compromise or the consent to any judgment in violation of the foregoing shall constitute a waiver by the Indemnified Party of its right to indemnity hereunder to the extent the Indemnifying Party was prejudiced thereby.  Any Indemnifying Party shall be subrogated to the rights of the Indemnified Party to the extent that the Indemnifying Party pays for any Loss suffered by the Indemnified Party hereunder.  Notwithstanding anything contained in this Section 12(G) to the contrary, ASA and Delta will cooperate in the defense of any claim imposed jointly against them or as the result of the conduct of the other.

ARTICLE 13.  WORKERS’ COMPENSATION AND EMPLOYERS’ LIABILITY INSURANCE PROVISIONS.

A.For purposes of workers’ compensation insurance, Delta’s employees, agents and independent contractors under no circumstances shall be deemed to be, or shall be, employees, agents or independent contractors of Operator.

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B.For purposes of workers’ compensation insurance, Operator’s employees, agents and independent contractors under no circumstances shall be deemed to be, or shall be, the employees, agents or independent contractors of Delta.

C.Each party assumes full responsibility for, and liability to, its own employees on account of injury, or death resulting therefrom, sustained in the course of their employment.  Each party, with respect to its own employees, accepts full and exclusive liability for the payment of applicable workers’ compensation and employers’ liability insurance premiums with respect to such employees, and for the payment of all taxes, contributions or other payments for unemployment compensation and old age benefits, and other similar benefits now or hereafter imposed upon employers by any government or agency thereof having jurisdiction in respect of such employee.  Each party also agrees to make such payments and to make and file all reports and returns and to do all things necessary to comply with all applicable laws at any time imposing such taxes, contributions, or payments.

D.Each party will have its workers’ compensation insurance carrier endorse its policy to provide a waiver of subrogation against the other party.

ARTICLE 14.  INSURANCE PROVISIONS.

A.Operator shall procure and maintain in full force and effect during the Term policies of insurance of the types and in the minimum amounts set forth below, with such insurers and under such terms and conditions as are reasonably satisfactory to Delta:

1.All risk hull insurance on an agreed value basis, not to exceed replacement value, except as required by financing agreements.

2.Comprehensive aviation liability (including premises, products and completed operations) covering bodily injury, personal injury and property damage in an amount not less than $[***] per occurrence and in the annual aggregate with respect to Products and Completed Operations, Property Damage for Contractual Liability and Personal Injury; provided, however, that non-passenger personal injury coverage may be limited to $[***] per occurrence and in the annual aggregate.

3.Workers’ compensation for statutory limits.

4.Employer’s liability in an amount not less than $[***].

5.Baggage liability in an amount not less than $[***] per occurrence.

6.Cargo liability in an amount not less than $[***] per loss, casualty or disaster.

7.Automobile liability in an amount not less than $[***] combined single limit per occurrence.

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8.War, Hijacking and Other Allied Perils insurance protecting against the perils in AVN52D, as amended from time to time, or its U.S. equivalent in an amount not less than $[***] per occurrence.  Such insurance may be maintained through a combination of primary and excess layers.

9.Insurance required by any lease, sublease, permit, license or other use agreement of airport facilities.

B.Operator shall cause the policies of insurance described in Article 14(A) above to be duly and properly endorsed by Operator’s insurance underwriters as follows:

1.As to the policies of insurance described in Articles 14(A)(1), (A)(2), (A)(3), (A)(4), (A)(5), (A)(6), (A)(7) and (A)(8):  (a) to provide that any waiver of rights of subrogation against other parties by Operator will not affect the coverage provided hereunder with respect to Delta, its affiliates, and their directors, officers, employees and agents; and (b) to provide that Operator’s underwriters shall waive all subrogation rights arising out of this Agreement against Delta, its affiliates, and their directors, officers, employees and agents without regard to any breach of warranty on the part of Operator.

2.As to the policies of insurance described in Articles 14(A)(2), (A)(5), (A)(6), (A)(7) and (A)(8):  (a) to provide that Delta, its affiliates, and their directors, officers, employees and agents shall be named as additional insured parties thereunder, but only as respect operations of the Named Insured as their interests may appear; and (b) to provide that such insurance shall be primary insurance as respects any insurance carried by Delta.

3.As to the policies of insurance described in Articles 14(A)(2) and (A)(7):  (a) to provide a cross-liability clause as though separate policies were issued for Delta and Operator and their respective affiliates, and their directors, officers, employees and agents; and (b) to provide contractual liability insurance coverage for liability assumed by Operator under this Agreement subject to policy terms, conditions, limitations and exclusions.

4.As to any insurance obtained from foreign underwriters, to provide that Delta may maintain against such underwriters a direct action in the United States upon such insurance policies and, to this end, to include a standard service of process clause designating a United States attorney in Washington, D.C. or New York, New York.

5.All insurance policies shall provide that the insurance shall not be invalidated by any action or inaction of Operator.

C.Operator shall cause each of the insurance policies to be duly and properly endorsed to provide that such policy or policies or any part or parts thereof shall not be canceled, terminated or materially altered, changed or amended by Operator’s insurance underwriters until after thirty (30) days’ written notice to ASA, which thirty (30) days’ notice shall commence to run from the date such notice is actually received by ASA.  ASA covenants to promptly provide to Delta any such notice received by ASA.

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D.Not later than the Effective Date, and upon renewal thereafter or upon request by Delta, Operator shall furnish Delta evidence satisfactory to Delta of the aforesaid insurance coverages and endorsements, including certificates certifying that the aforesaid insurance policy or policies with the aforesaid limits are duly and properly endorsed as aforesaid and are in full force and effect.

E.In the event Operator fails to maintain in full force and effect any of the insurance and endorsements required to be maintained by Operator pursuant to Article 14(A), Delta shall have the right (but not the obligation) to procure and maintain such insurance or any part thereof on behalf of Operator.  The cost of such insurance shall be payable by Operator to Delta upon demand by Delta.  The procurement of such insurance or any part thereof by Delta does not discharge or excuse Operator’s obligation to comply with the provisions set out herein.  Operator agrees not to cancel, terminate or materially alter, change or amend any of the policies until after providing thirty (30) days’ advance written notice to Delta of Operator’s intent to so cancel, terminate or materially alter, change or amend such policies of insurance, which thirty (30) day notice period shall commence to run from the date notice is actually received by Delta.

F.With respect to all claims against Operator (but not against Delta) with respect to which Operator is not entitled to be indemnified by Delta pursuant to Article 12(D), whether or not covered by the insurance policies set forth in this Article 14 or otherwise, Delta is responsible only for filing an initial report and has no other obligations with respect to such claims, and Operator is fully responsible for handling all adjustments, settlements, negotiations, litigation and similar activities in any way related to or connected with such claims.

G.The parties hereby agree that from time to time during the Term Delta may require Operator to procure and maintain insurance coverages in other reasonable amounts than the minimum amounts set forth in Article 14(A), any such alteration being deemed reasonable if readily available and it becomes the general custom of the U.S. regional airline industry.

ARTICLE 15.  OPERATIONS OF ASA AS A DELTA CONNECTION CARRIER.

A.Delta and Operator agree that, subject to the provisions of this Agreement, ASA will operate the Delta Connection Flights exclusively as a Delta Connection Program carrier.  Unless otherwise agreed by Delta, ASA will operate all Delta Connection Flights and the Aircraft with the passenger seat capacity as determined by Delta from time to time.

B.Operator acknowledges and agrees that participation in the Delta Connection Program obligates ASA to offer and maintain a professional, high quality level of service in terms of schedules, customer service and the like.  Accordingly, at the request of Delta, the parties will:  (a) meet to mutually review and discuss the services, operations and plans of Operator and Delta for the Delta Connection Program; and (b) jointly develop a written business plan for the Delta Connection Program operations and services of ASA.  Operator will comply with the business plans so developed and all reasonable recommendations of Delta in this area.

C.Delta shall have the right, from time to time, to inspect ASA’s Delta Connection Service, including without limitation ASA’s in-flight service, flight, maintenance, technical operations,

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gate-check in service, ground operations, Aircraft cleaning and any and all other services and operations performed by ASA in connection with the Delta Connection Flights.  Such inspections may be announced or unannounced, but under no circumstances shall they interfere with the operation of ASA’s business. Failure on the part of Delta to conduct such inspections shall not relieve ASA of its obligations to conform with the service and performance standards set forth in this Agreement.

ARTICLE 16.  REPRESENTATIONS AND WARRANTIES.

A.Representations and Warranties of Operator.  ASA represents and warrants to Delta as of the date hereof as follows:

(1)Organization and Qualification.  ASA is a duly organized and validly existing corporation in good standing under the laws of the State of Georgia and has the corporate power and authority to own, operate and use its assets and operate the Delta Connection Flights.

(2)Authority Relative to this Agreement.  ASA has the corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby in accordance with the terms hereof.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of ASA.  This Agreement has been duly and validly executed and delivered by ASA and is, assuming due execution and delivery thereof by Delta, a valid and binding obligation of ASA, enforceable against ASA in accordance with its terms.

(3)Compliance.  All air transportation services performed pursuant to this Agreement or otherwise shall be conducted in compliance in all material respects with all applicable statutes, orders, rules, regulations and notifications, whether now in effect or hereafter promulgated, of all governmental agencies having jurisdiction over its operations, including, but not limited to, the FAA, DOD, and DOT. ASA’s compliance with such governmental statutes, orders, rules, regulations and notifications will be the sole and exclusive obligation of ASA, and Delta will have no obligation, responsibility, or liability, whether direct or indirect, with respect to such matters.

B.Representations and Warranties of Delta.  Delta represents and warrants to ASA and SI (as an express third party beneficiary for purposes of this Section 16(B) only) as of the date hereof as follows:

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

(2)Authority Relative to this Agreement.  Delta has the corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby in accordance with the terms hereof.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly

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authorized by all necessary corporate action on the part of Delta.  This Agreement has been duly and validly executed and delivered by Delta and is, assuming due execution and delivery thereof by ASA, a valid and binding obligation of Delta, enforceable against Delta in accordance with its terms.

(3)Conflicts; Defaults.  Neither the execution or delivery of this Agreement nor the performance by Delta of the transactions contemplated hereby will (i) violate, conflict with, or constitute a default under any of the terms of Delta’s articles of incorporation, by-laws, or any provision of, or result in the acceleration of any obligation under, any contract, sales commitment, license, purchase order, security agreement, mortgage, note, deed, lien, lease, agreement or instrument, including without limitation, any order, judgment or decree relating to the Delta Connection Flights, (ii) result in the creation or imposition of any liens in favor of any third person or entity, (iii) violate any law, statute, judgment, decree, order, rule or regulation of any governmental authority, or (iv) constitute any event which, after notice or lapse of time or both, would result in such violation, conflict, default, acceleration or creation or imposition of liens.

(4)To the extent not effectuated prior to the Effective Date, promptly following the Effective Date, on a date or dates mutually agreed, Delta and ASA hereby covenant and agree (i) to use best efforts to perform or cause their respective affiliates to perform, as applicable, the actions set forth in paragraphs (3), (4) and (7) to the extent such actions actions relate to GECAS aircraft on Schedule 16(B)(4) attached hereto (including obtaining any applicable third party or regulatory consents required to perform the actions set forth in such paragraphs of Schedule 16(B)(4)), and (ii) to use reasonable best efforts to perform or cause their respective affiliates to perform, as applicable, the actions set forth in the remaining paragraphs of Schedule 16(B)(4) attached hereto (including obtaining any applicable third party or regulatory consents required to perform the actions set forth in such paragraphs of Schedule 16(B)(4)), in each case, pursuant to agreements in form and substance reasonably satisfactory to the parties; provided that in all events any lease or sublease of aircraft to be entered into by ASA or SkyWest as contemplated by such Schedule 16(B)(4) shall provide that ASA or SkyWest, as the case may be, shall have the right to terminate such lease or sublease upon the termination of this Agreement by ASA pursuant to Sections 11(B), 11(C), 11(D) or 11(E)(2) of this Agreement.  Notwithstanding anything to the contrary contained in Schedule 16(B)(4), Delta, ASA and their respective affiliates, as applicable, shall have the right to reasonably substitute any aircraft intended to be transferred therein with substantially similar aircraft in the event that the aircraft specified in such schedule are damaged or destroyed, cannot be transferred or cannot be transferred in a timely manner.

ARTICLE 17.  RIGHT OF FIRST REFUSAL ON AIRCRAFT AND OTHER PROPERTY.

If at any time during the Term, Operator receives a bona fide offer, bid, inquiry or other expression of interest from a third party (“Offer”) to purchase, lease, sublease, encumber or otherwise acquire any interest in (excluding any ordinary course re-financing or sale/leaseback transaction) (i) any Aircraft; or (ii) any slots, gates or other facilities then used by ASA in connection with its performance of services hereunder (each of (i) and (ii), an “ROFR Property” and collectively, the “ROFR Property”), which Offer Operator desires to accept, Operator will,

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within ten (10) business days of receiving such Offer, notify Delta in writing of such Offer and the material terms and conditions thereof (the “Offer Notice”) and offer Delta the right of first refusal to consummate the transaction described in the Offer Notice.  Upon receipt of an Offer Notice, Delta will have fifteen (15) days to either (i) notify Operator that it wishes to consummate the transaction for or in connection with the ROFR Property set forth in the Offer Notice (the “Offered Property”) on the same financial terms and conditions as are in such Offer Notice, or (ii) notify Operator that it does not wish to consummate such transaction (failure to reply in such 15 day period shall be deemed to be an election by Delta not to consummate such transaction).  If Delta elects to consummate the transaction involving the Offered Property, Operator and Delta shall consummate the transaction contemplated in the Offer Notice as soon as reasonably practicable but no later than sixty (60) days after any and all governmental approvals required for such transaction have been obtained (Delta and Operator agree to use their commercially reasonable efforts to obtain such approvals as soon as practicable).  If Delta elects not to consummate the transactions contemplated in the Offer Notice, Operator may consummate such transaction with the third party or parties making the Offer.

ARTICLE 18.  {Reserved.}

ARTICLE 19.  COVENANTS OF OPERATOR.  Operator hereby covenants and agrees that:

A.If requested by Delta at any time during the Term, ASA shall place its flight designator code, “EV”, on certain flights operated by Delta or an affiliate of Delta.

B.[***]

C.ASA shall not enter into any binding agreement or arrangement (or series of agreements or arrangements) with any third party (excluding any employee collective bargaining units) for the procurement of any goods or services relating to ASA, the Aircraft or operation of any of the Delta Connection Flights that may materially increase ASA’s Direct Costs to perform its services hereunder without the prior written consent of Delta.

D.If Delta (or an affiliate of Delta) incurs any cost or expense on account of ASA’s failure (unless such ASA failure is directly the result of some act or omission of Delta) to comply with any provision in any aircraft or airport lease, sublease, mortgage or other related agreement, including, but not limited to, failure to comply with provisions of return conditions, obligations of maintenance or operation of aircraft, engines and parts, airport facilities, insurance requirements, operational restrictions and indemnity obligations, ASA shall pay or reimburse Delta in full for all such undisputed costs or expenses within thirty (30) days of receipt of an invoice from Delta setting forth the amount and background detail thereof; provided that ASA will have no right to claim from Delta payment or reimbursement under this Agreement for any increased cost which Delta incurs as a result thereof.

E.At the request of Delta, ASA agrees to enter into such agreement(s) with another air carrier as may be necessary to implement share code-sharing on the Delta Connection Flights with such other air carrier.

32

F.ASA agrees that any pilot furloughed by Delta will be given preferential new hire opportunities at ASA if such pilot completes all new hire paper work, meets all new hire airman and medical qualifications, satisfies background checks and successfully completes an interview and employment process.  ASA and Delta shall determine and implement mutually acceptable procedures and processes to effectuate the new hire opportunity commitment set forth above.  Delta agrees to offer preferential interviews for employment to airmen employed by ASA.

G.ASA shall file all reports and plans relating to its operations with the DOD, DOT, FAA, NTSB or any state or airport authority, and ASA shall promptly furnish Delta with copies of all such reports and such other available traffic and operating reports as Delta may request from time to time.  Additionally, ASA will promptly furnish Delta with a copy of every report and plan that ASA prepares, whether or not such report is filed with the FAA, NTSB or any other governmental agency, relating to any accident or incident involving an Aircraft when such accident or incident is claimed to have resulted in the death or injury to any person or the loss of, damage to or destruction of any property.

H.All flight operations, dispatch operations and flights and all other operations undertaken by ASA pursuant to this Agreement shall be conducted and operated by ASA in compliance in all material respects with all applicable governmental regulations, including, without limitation, those relating to airport security, the use and transportation of hazardous materials, flight crew and mechanic qualifications and licensing requirements, crew training and hours.  All Aircraft shall be operated and maintained by ASA in compliance in all material respects with all applicable governmental regulations, ASA’s own operations manuals and maintenance manuals and procedures, and all applicable equipment manufacturer’s instructions.

I.In the event SI is no longer a public reporting company, ASA shall cause SI to furnish to Delta (1) within 45 days after the end of each of the three interim calendar quarters, unaudited consolidated financial statements including SI’s then current corporate balance sheet and profit and loss statement and (2) within 91 days after the end of SI’s fiscal year, SI’s then current, audited consolidated financial statements including, either separately or on a consolidated basis, the balance sheet and the profit and loss statement, together with associated footnotes, and a copy of the independent auditor’s report.  Notwithstanding the reporting status of SI, Operator shall furnish to Delta (1) within 45 days after the end of each of the three interim calendar quarters, a profit and loss statement with respect to Operator’s Delta Connection Program operations for such applicable interim calendar quarter prepared by SEC line-item and certified by Operator’s or SI’s chief financial officer and (2) within 91 days after the end of Operator’s fiscal year, a profit and loss statement with respect to Operator’s Delta Connection Program operations for such fiscal year prepared by SEC line-item and certified by Operator’s or SI’s chief financial officer.

J.ASA shall interview any graduate of the Delta Connection Academy who desires to interview with ASA for a pilot or first officer position.

K.At all times, ASA shall operate with the highest standards of care.

33

ARTICLE 20.  CONTRACT INTERPRETATION.

A.This Agreement is subject to, and will be governed by and interpreted in accordance with, the laws of the State of Georgia, excluding conflicts of laws principles, and of the United States of America.  Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may only be brought in the courts of the State of Georgia in Fulton County, or, if it has or can acquire jurisdiction, in the United States District Court for the Northern District of Georgia, and each of the parties hereto irrevocably consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives, to the fullest extent permitted by law, any objection to venue laid therein.  Process in any action or proceeding referred to in the proceeding sentence may be served on any party anywhere in the world.  Each party further agrees to waive any right to a trial by jury.

B.The descriptive headings of the several articles and sections of this Agreement are inserted for convenience only, confer no rights or obligations on either party, and do not constitute a part of this Agreement.

C.Time is of the essence in interpreting and performing this Agreement.

D.This Agreement (including the Exhibits and Schedules hereto), the Stock Purchase Agreement, the Confidentiality Agreement (as defined in the Stock Purchase Agreement) and the Related Agreements (as defined in the Stock Purchase Agreement) constitute the entire agreement between the parties with respect to the subject matter of this Agreement, and supersedes all prior agreements, both written or oral, between the parties with respect to the subject matter of this Agreement.

E.If any part of any provision of this Agreement shall be invalid or unenforceable under applicable law, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of such provision or the remaining provisions.

F.This Agreement may be executed in any number of counterparts, including via facsimile, each of which shall be deemed to be an original and all of which, taken together, shall constitute one and the same instrument.

G.Because a breach of the provisions of this Agreement could not adequately be compensated by money damages, any party shall be entitled to an injunction restraining such breach or threatened breach and to specific performance of any provision of this Agreement and, in either case, no bond or other security shall be required in connection therewith, and the parties hereby consent to the issuance of such injunction and to the ordering of specific performance.

H.NO PARTY SHALL BE LIABLE FOR ANY INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING LOST REVENUES, LOST PROFITS, OR LOST PROSPECTIVE ECONOMIC ADVANTAGE, ARISING FROM THIS AGREEMENT OR ANY BREACH HEREOF.

34

ARTICLE 21.  CIRCUMSTANCES BEYOND THE PARTIES’ CONTROL.

With the exception of outstanding rights and obligations, and subject to Section 3(H) hereof, each party will be relieved of its obligations under this Agreement in the event, to the extent and for the period of time that performance is delayed, prevented or caused by any acts of God, acts of terrorism or hostilities, war, strike, labor disputes, work stoppage, fire, act of government, court order, or any other act reasonably beyond the control of that party, including but not limited to, non-delivery or delay in delivery of the Aircraft or delay in the completion of required training of the Operator’s employees by the Aircraft manufacturer (each, a “Force Majeure Event”).  If ASA is the non-affected party of a Force Majeure Event, and if, during such Force Majeure Event, (y) ASA uses the Aircraft for any purposes other than to operate the Delta Connection Flights and (z) earns a net profit in connection with all such uses, ASA shall pay [***] of such net profit to Delta.

ARTICLE 22.  NO LICENSE GRANTED.

A.This Agreement is not, and shall not be construed to be, a license for either party to use the trade names, trademarks, service marks, or logos of the other party, or its affiliates, without such party’s prior written consent.

B.Operator will conduct all operations described herein under the service mark “Delta Connection.”  Delta hereby grants to Operator a nonexclusive, nontransferable, non-sublicensable license to use certain trademarks, service marks, logos and trade names that Delta owns or has the right to use, including, “Delta,” “Delta Connection,” “SkyMiles,” and the Delta widget design (collectively, the “Delta Marks”) in connection with the services to be rendered by Operator pursuant to this Agreement; provided, however, that at any time during the Term, Delta may alter, amend or revoke the license hereby granted and require Operator’s use of a new or different Delta Mark in connection with the services provided hereunder as Delta may determine in its sole discretion.

C.Operator hereby acknowledges Delta’s right to use the Delta Marks, further acknowledges the validity of the Delta Marks, and agrees that it will not do anything in any way to infringe or abridge Delta’s, or any of its affiliates’, rights in the Delta Marks or directly or indirectly to challenge the validity of the Delta Marks.

D.Operator shall not use any of the Delta Marks without Delta’s prior written consent.

E.Nothing in this Agreement shall be construed to give Operator the exclusive right to use any of the Delta Marks, or to abridge Delta’s right to use or license any of its trademarks, service marks, trade names or logos(collectively, “Identification”) and to license such other uses of such Identification as Delta or its affiliates may desire.

F.Should this Agreement be canceled or otherwise terminated for any reason as set forth in Article 11 hereof, all right to use the Delta Marks shall revert to Delta and shall not thereafter be used by Operator in any form or fashion.

35

G.Branding.

1.Livery.  Unless otherwise agreed by Delta, each of the Aircraft shall be in the color scheme, including exterior paint and interior upholstery and appointments (“Livery”) of the Delta Connection Livery, as provided by Delta to ASA from time to time.  Any changes to the Livery of any of the Aircraft shall be done on a schedule as mutually agreed by the parties.

2.On Board Branding.  Unless otherwise agreed by Delta, Delta shall control all on board branding and in-flight materials including, without limitation, in-flight publications, food and beverage products, paper goods and service ware.  In the event of any change to the on-board branding or in-flight materials, Delta shall be responsible for reimbursing ASA for any reasonable costs and expenses incurred by ASA in connection therewith.  ASA shall be solely responsible for maintaining all licenses necessary for the serving of in-flight food and beverages on the Delta Connection Flights.

3.After the Effective Date, the parties hereto agree to work together in good faith to investigate and analyze opportunities to lower Direct Costs in all operational areas including, without limitation, uniforms, in-flight materials, aircraft equipment and facilities; provided the implementation of any such opportunities shall be subject to Delta’s sole discretion.

ARTICLE 23.  MODIFICATION AND WAIVER.

No amendment, modification, supplement, termination or waiver of any provision of this Agreement, and no consent to any departure by either party therefrom, shall in any event be effective unless in writing signed by authorized representatives of both parties, and then only in the specific instance and for the specific purpose given.

ARTICLE 24.  NOTICES.

Unless otherwise provided herein, all notices, requests and other communications required or provided for hereunder shall be in writing (including telecopy or similar teletransmission or writing) and shall be given at the following addresses:

(1)  If to Delta:

Delta Air Lines, Inc.

1030 Delta Boulevard

Atlanta, GA  30354

Dept. 034

Attention: Senior Vice President and Chief Officer of Operations

Telecopy:  (404) 715-7352

with copies to:

Delta Connection, Inc.

1030 Delta Blvd.

Atlanta, GA  30354

36

Dept. 009

Attn: President

Telecopy:  (404) 677-6247

Delta Air Lines, Inc.

1030 Delta Boulevard

Atlanta, GA  30354

Dept. 981

Attn: Sr. V.P. and General Counsel

Telecopy:  (404) 715-2233

(2)  If to ASA:

Atlantic Southeast Airlines, Inc.

100 Hartsfield Centre Parkway,

Suite 800

Atlanta, GA 30354

Attention:  President

Telecopy:  (435) 634-3205

with copies to:

SkyWest, Inc.

444 South River Road

St. George, Utah  84790

Attn:  Chief Financial Officer

Telephone:  (435) 634-3200

Facsimile:  (435) 634-3205

Any such notice, request or other communication shall be effective (i) if given by mail, upon the earlier of receipt or the third business day after such communication is deposited in the United States mails, registered or certified, with first class postage prepaid, addressed as aforesaid or (ii) if given by any other means including, without limitation, by air courier, when delivered at the address specified herein.  Delta or Operator may change its address for notice purposes by notice to the other party in the manner provided herein.

ARTICLE 25.  ASSIGNMENT.

This Agreement shall bind and inure to the benefit of Delta and Operator and their respective successors and permitted assigns; provided, however, except as expressly provided herein, no party may assign or transfer this Agreement or any portion hereof to any person or entity without the express written consent of the other parties.  Any assignment or transfer, by operation of law or otherwise, without such consent or as expressly provided herein shall be null and void and of no force or effect.

37

ARTICLE 26.  GOOD FAITH.

Each party shall exercise good faith in its dealings with the other party hereto and in performance of its obligations under this Agreement.

ARTICLE 27.  CONFIDENTIALITY.

A.Except as otherwise provided below, each party shall, and shall ensure that its directors, officers, employees, affiliates and professional advisors (collectively, the “Representatives”), at all times, maintain strict confidence and secrecy in respect of all Confidential Information (as defined below) of the other party (including its affiliates) received directly or indirectly as a result of this Agreement.  If a party (the “Disclosing Party”) in good faith determines that it is required to disclose any Confidential Information of other party (the “Affected Party”) in order to comply with any applicable law or government regulation, or under the terms of a subpoena or order issued by a court or governmental body, it shall (a) notify the Affected Party immediately of the existence, terms and circumstances surrounding such request, (b) consult with the Affected Party on the advisability of taking legally available steps to resist or narrow such request and (c) if any disclosure of Confidential Information is required to prevent the Disclosing Party from being held in contempt or subject to other legal penalty, furnish only such portion of the Confidential Information as it is legally compelled to disclose and use commercially reasonable efforts (at the cost of the party whose Confidential Information is being protected) to obtain an order or other reliable assurance that confidential treatment shall be accorded to the disclosed Confidential Information.  Each party agrees to transmit Confidential Information only to such of its Representatives as required for the purpose of implementing and administering this Agreement, and shall inform such Representatives of the confidential nature of the Confidential Information and instruct such Representatives to treat such Confidential Information in a manner consistent with this Article 27.

For purposes of this Agreement, “Confidential Information” shall mean (a) all confidential or proprietary information of a party, including, without limitation, trade secrets, information concerning past, present and future research, development, business activities and affairs, finances, properties, methods of operation, processes and systems, customer lists, customer information (such as passenger name record or “PNR” data) and computer procedures and access codes; and (b) the terms and conditions of this Agreement and any reports, invoices or other communications between the parties given in connection with the negotiation or performance of this Agreement; and (c) excludes (i) information already in a party’s possession prior to its disclosure by other party; (ii) information obtained from a third person or entity that is not prohibited from transmitting such information to the receiving party as a result of a contractual, legal or fiduciary obligation to the party whose information is being disclosed; (iii) information that is or becomes generally available to the public, other than as a result of disclosure by a party in violation of this Agreement; or (iv) information that has been or is independently acquired or developed by a party, or its affiliate, without violating any of its obligations under this Agreement.

B.Each party acknowledges and agrees that in the event of any breach of this Article 27, the Affected Party shall be irreparably and immediately harmed and could not be made whole by monetary damages.  Accordingly, it is agreed that, in addition to any other remedy at law or in equity, the Affected Party shall be entitled to an injunction or injunctions (without the posting of

38

any bond and without proof of actual damages) to prevent breaches or threatened breaches of this Article 27 and/or to compel specific performance of this Article 27.

C.The confidential obligations of the parties under this Article 27 shall survive the termination or expiration of this Agreement.

ARTICLE 28.  ADDITIONAL DOCUMENTS.

A.The parties hereby covenant and agree, contemporaneously with the execution of this Agreement, to execute and deliver the following additional documents in connection with this Agreement:

1.The Guaranty Agreement; and

2.The SkyWest Delta Connection Agreement.

B.The parties hereby covenant and agree, to the extent not already in effect, promptly after the Effective Date, to execute and deliver the following additional documents in connection with this Agreement:

1.A ground handling agreement, providing for ground handling by Delta at certain stations operated by Operator;

2.An agreement for the provision of emergency response services to be provided by Delta and ASA with respect to Delta Connection Flights; and

3.A Free and Reduced Rate Travel Agreement between Delta and ASA as mutually agreed upon among the parties.

ARTICLE 29.  ASA RIGHTS UNDER SKYWEST DELTA CONNECTION AGREEMENT.

Notwithstanding anything contained herein or in the SkyWest Delta Connection Agreement, ASA shall have the right to exercise the rights of first refusal described in Section 11(D) of the SkyWest Delta Connection Agreement.

[remainder of page intentionally left blank – signature page follows]

39

IN WITNESS WHEREOF, the parties have executed this Agreement by their undersigned duly authorized representatives:

Atlantic Southeast Airlines, Inc.	Delta Air Lines, Inc.
By:	By:
Name:	Name:
Title:	Title:

40

EXHIBIT A

The Aircraft

Current Aircraft

[***]

41

EXHIBIT B

The Costs Model

Annual Rate Plan – 2005 to 2009

[***]

42

EXHIBIT C

Base Rate Costs & Schedule 3 Data

[***]

43

Schedule 3

[***]

44

Schedule 3(A)(ii)(2)

[***]

Tail Number	MS#	Type
[***]

45

Schedule 3(B)(3)

[***]

46

Schedule 3(B)(4)

[***]

47

Schedule 10

MIMIMUM PERFORMANCE REQUIREMENTS

[***]

48

Schedule 16(B)(4)

[***]

49

EX-2.1

Exhibit 2.1

EXECUTION COPY

STOCK PURCHASE AGREEMENT

dated as of

August 15, 2005

among

SKYWEST, INC.,

DELTA AIR LINES, INC.,

and

ASA HOLDINGS, INC.,

relating to the purchase and sale

of

100% of the Common Stock

of

Atlantic Southeast Airlines, Inc.

TABLE OF CONTENTS

i

Section 5.02. Access to Information; Confidentiality

Section 5.03. Monthly Financial Statements

Section 5.04. Audited Financial Statements

Section 5.05. Notices of Certain Events

Section 5.06. Resignations

Section 5.07. Employee Stock Options

ARTICLE 6

Covenants of Buyer

Section 6.01. Confidentiality

Section 6.02. Delta Access; Confidentiality

Section 6.03. Trademarks; Tradenames

Section 6.04. Employee Stock Options

ARTICLE 7

Covenants of Buyer and the Sellers

Section 7.01. Best Efforts; Further Assurances

Section 7.02. Certain Filings

Section 7.03. Public Announcements

Section 7.04. Leases

Section 7.05. Workers’ Compensation; Surety Bonds

Section 7.06. Insurance

ii

ARTICLE 8

Tax Matters

Section 8.01. Section 338(h)(10) Election

Section 8.02. Returns Due after Closing and Refunds

Section 8.03. Tax Sharing

Section 8.04. Cooperation on Tax Matters

Section 8.05. Tax Indemnification

Section 8.06. Purchase Price Adjustment

ARTICLE 9

Employee Benefits

Section 9.01. Employee Benefits

ARTICLE 10

Conditions to Closing

Section 10.01. Conditions to Obligations of Buyer and the Sellers

Section 10.02. Conditions to Obligation of Buyer

Section 10.03. Conditions to Obligation of the Sellers

ARTICLE 11

Survival; Indemnification

Section 11.01. Survival

Section 11.02. Indemnification

Section 11.03. Procedures

Section 11.04. Calculation of Damages

Section 11.05. Exclusivity

Section 11.06. Knowledge

ARTICLE 12

Termination

Section 12.01. Grounds for Termination

Section 12.02. Effect of Termination

ARTICLE 13

Miscellaneous

Section 13.01. Notices

Section 13.02. Amendments and Waivers

Section 13.03. Expenses

Section 13.04. Successors and Assigns

Section 13.05. Governing Law

Section 13.06. Jurisdiction

Section 13.07. WAIVER OF JURY TRIAL

iii

Section 13.08. Specific Performance

Section 13.09. Counterparts; Effectiveness; Third-Party Beneficiaries

Section 13.10. Entire Agreement

Section 13.11. Severability

Section 13.12. Disclosure Schedules

Section 13.13. Construction

Exhibit A	–	Form of ASA Delta Connection Agreement
Exhibit B	–	Form of SkyWest Delta Connection Agreement
Exhibit C-1 to C-2		Forms of Guarantees
Exhibit D		Form of Master Services Agreement
Exhibit E	–	Form of Transition Administrative Services Agreement

iv

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is dated as of August 15, 2005, by and among SkyWest, Inc., a Utah corporation (“Buyer”), Delta Air Lines, Inc., a Delaware corporation (“Delta”), and ASA Holdings, Inc., a Georgia corporation (“ASAH”).

W  I  T  N  E  S  S  E  T  H :

WHEREAS, Delta, through its subsidiary ASAH, is the beneficial owner of the Shares (as defined herein) and desires to sell the Shares to Buyer, and Buyer desires to purchase the Shares from ASAH, upon the terms and subject to the conditions hereinafter set forth.

The parties hereto agree as follows:

ARTICLE 1
Definitions

Section 1.01.  Definitions.  (a) The following terms, as used herein, have the following meanings:

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person.

“Affiliated Group” means, with respect to federal income Taxes, any affiliated group of corporations (as defined in Section 1504(a) of the Code) of which the Company are members and, with respect to any state, local or foreign income, franchise or similar income-based Tax, the consolidated, combined or unitary group of which the Company is a member.

“ASA Delta Connection Agreement” means the agreement substantially in the form of Exhibit A amending and restating the Amended and Restated Delta Connection Agreement between Delta and the Company dated January 1, 2003, as amended.

“Auditor” means Deloitte & Touche LLP.

“Balance Sheet” means the unaudited balance sheet of the Company as of the Balance Sheet Date.

“Balance Sheet Date” means June 30, 2005.

“Base Cash” means $50,000,000.

“Base Intercompany Working Capital” means $(1,000,000).

5

“Base Working Capital” means $10,000,000 if the Closing Date occurs on or prior to August 31, 2005 and $5,000,000 if the Closing Date occurs on or after September 30, 2005 and for any date between August 31, 2005 and September 31, 2005, an amount that is pro rated for such date based on a linear interpolation.

“Business” means the business and operations of the Company as such are conducted by the Company as of the date hereof, including its airline operations.

“Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are required by law to close.

“Buyer Material Adverse Effect” means a material adverse effect on the financial condition or results of operations of Buyer and its subsidiaries taken as a whole, except that an effect resulting from any of the following shall not be considered when determining if a Buyer Material Adverse Effect has occurred: (i) any change in national or international political, regulatory, economic, business or market conditions generally or in the geographic markets served by Buyer and its subsidiaries; or (ii) any change in conditions affecting the air transportation industry generally or the commuter or regional air transportation industry specifically, excluding in the case of each of the above clauses any change which materially disproportionately affects Buyer and its subsidiaries, taken as a whole.

“Closing Cash” means the amount of cash (including restricted cash collateralizing letters of credit extended on behalf of the Company in respect of workers’ compensation insurance) held by the Company as of the close of business on the Closing Date.

“Closing Date” means the date of the Closing.

“Closing Intercompany Working Capital” means the excess of Intercompany Receivables over Intercompany Payables as of the close of business on the Closing Date.  As used in this definition of “Closing Intercompany Working Capital,” the accounting items identified by capitalized terms above shall consist of only the accounting components set forth under each such term on Schedule 1.01, which correspond to the accounting components of the same name included and identified within the applicable line items in the Balance Sheet.

“Closing Working Capital” means the excess of Current Assets over Current Liabilities as of the close of business on the Closing Date.

“Code” means the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

“Combined Tax” means federal income Tax and any income, franchise or similar income-based Tax payable to any state, local or foreign taxing jurisdiction

6

with respect to which the Company has filed or will file a Tax Return with a member of any Affiliated Group on an affiliated, consolidated, combined or unitary basis.

“Combined Tax Return” means any Tax Return reporting Combined Taxes of an Affiliated Group.

“Common Stock” means the common stock, par value $0.10 per share, of the Company.

“Company” means Atlantic Southeast Airlines, Inc., a Georgia corporation.

“Company Intellectual Property Rights” means all Intellectual Property Rights owned by, or licensed to, the Company.

“Company Material Adverse Effect” means a material adverse effect on the financial condition or results of operations of the Company, except that an effect resulting from any of the following shall not be considered when determining if a Company Material Adverse Effect has occurred: (i) any change in national or international political, regulatory, economic, business or market conditions generally or in the geographic markets served by the Company; or (ii) any change in conditions affecting the air transportation industry generally or the commuter or regional air transportation industry specifically, excluding in the case of each of the above clauses any change which materially disproportionately affects the Company.

“Current Assets” means the sum of the Company’s:

(x) Accounts Receivable, net of the Allowance for Doubtful Accounts,

(y) Spare Parts and Supplies; and

(z) Prepaid Expenses.

As used in this definition of “Current Assets,” the accounting items identified by capitalized terms above shall consist of only the accounting components set forth under each such term on Schedule 1.01, which correspond to the accounting components of the same name included and identified within the applicable line items in the Balance Sheet.  For the avoidance of doubt, the parties agree that “Current Assets” shall not include any amounts included in Closing Cash or Closing Intercompany Working Capital.

“Current Liabilities” means the sum of the Company’s:

(w) Payables,

(x) Accrued Salaries and Vacation Pay,

7

(y) Accrued Liabilities, and

(z) Accrued Taxes.

As used in this definition of “Current Liabilities,” the accounting items identified by capitalized terms above shall consist of only the accounting components set forth under each such term on Schedule 1.01, which correspond to the accounting components of the same name included and identified within the applicable line items in the Balance Sheet. For the avoidance of doubt, (i) “Accrued Taxes” shall not include Combined Taxes, separate state income Taxes resulting from the Section 338(h)(10) Election or any reserve for deferred Taxes established to reflect timing differences between book and Tax income and (ii) “Current Liabilities” shall not include any amounts included in the Closing Intercompany Working Capital.

“Delta Connection Agreements” means each of (i) the ASA Delta Connection Agreement and (ii) the SkyWest Delta Connection Agreement, in each case to be executed by the applicable parties on the Closing Date.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended and the rules and regulations promulgated thereunder.

“ERISA Affiliate” means Delta and any other entity which would be treated as a single employer with the Company under Section 414 of the Code.

“Escrow Agreement” means the escrow agreement to be entered into pursuant to the provisions of Schedule 2.01 of this Agreement.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Final Cash” means Closing Cash as shown in Delta’s calculation delivered pursuant to Section 2.03(a), if no notice of disagreement with respect thereto is duly delivered pursuant to Section 2.03(b); or, if such a notice of disagreement is delivered, as agreed by Buyer and Delta pursuant to Section 2.03(c) or, in the absence of such agreement, as shown in the Independent Firm’s calculation delivered pursuant to Section 2.03(c); provided that, in no event shall Final Cash be more than Delta’s calculation of Closing Cash delivered pursuant to Section 2.03(a) or less than Buyer’s calculation of Closing Cash delivered pursuant to Section 2.03(b).

“Final Intercompany Working Capital” means Closing Intercompany Working Capital as shown in Delta’s calculation delivered pursuant to Section 2.03(a), if no notice of disagreement with respect thereto is duly delivered pursuant to Section 2.03(b); or, if such a notice of disagreement is delivered, as agreed by Buyer and Delta pursuant to Section 2.03(c) or, in the absence of such agreement, as shown in the Independent Firm’s calculation delivered pursuant to

8

Section 2.03(c); provided that, in no event shall Closing Intercompany Working Capital be more than Delta’s calculation of Closing Intercompany Working Capital delivered pursuant to Section 2.03(a) or less than Buyer’s calculation of Closing Intercompany Working Capital delivered pursuant to Section 2.03(b).

“Final Working Capital” means Closing Working Capital as shown in Delta’s calculation delivered pursuant to Section 2.03(a), if no notice of disagreement with respect thereto is duly delivered pursuant to Section 2.03(b); or, if such a notice of disagreement is delivered, as agreed by Buyer and Delta pursuant to Section 2.03(c) or, in the absence of such agreement, as shown in the Independent Firm’s calculation delivered pursuant to Section 2.03(c); provided that, in no event shall Final Working Capital be more than Delta’s calculation of Closing Working Capital delivered pursuant to Section 2.03(a) or less than Buyer’s calculation of Closing Working Capital delivered pursuant to Section 2.03(b).

“GAAP” means generally accepted accounting principles in the United States.

“Governmental Authority” shall mean any federal, state, local or foreign government or any subdivision, agency, instrumentality, authority, department, commission, board or bureau thereof or any federal, state, local or foreign court, tribunal or arbitrator.

“Guarantees” means collectively, (A) a guarantee substantially in the form of Exhibit C-1 by Buyer guaranteeing the obligations of SkyWest under the SkyWest Delta Connection Agreement and (B) a guarantee substantially in the form of Exhibit C-2 by Buyer guaranteeing the obligations of the Company under the ASA Delta Connection Agreement.

“HSR Act” means the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended.

“Intellectual Property Right” means any trademark, service mark, trade name, invention, patent, trade secret, copyright, know how (including any registrations or applications for registration of any of the foregoing) or any other similar type of proprietary intellectual property right.

“Knowledge of Delta,” “Delta’s Knowledge” or any other similar knowledge qualification in this Agreement means to the actual knowledge, without investigation, of the individuals listed on Schedule 1.02.

“Laws” means any law, regulation, rule, order, judgment or decree of a Governmental Authority.

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 “Lien” means, with respect to any property or asset, any and all liens, encumbrances, charges, security interests, options, mortgages, easements or pledges in respect of such property or asset.

“Master Services Agreement” means an agreement between Delta Technology, Inc. and the Company, substantially in the form of Exhibit D, to be executed on the Closing Date.

“Pension Plan” means any “employee pension benefit plan” within the meaning of Section 3(2) of ERISA that is subject to Title IV of ERISA or Section 412 of the Code.

“Permitted Liens” mean: (i) specific Liens reflected or reserved against in the Balance Sheet or disclosed in the notes thereto; (ii) Taxes and general and special assessments not in default and payable without penalty or interest or being contested in good faith; (iii) mechanic’s, materialman’s, carrier’s, repairer’s and other similar Liens arising or incurred in the ordinary course of business or that are not yet due and payable or are being contested in good faith; or (iv) Liens arising or incurred in the ordinary course of business since the Balance Sheet Date, which individually or in the aggregate do not have a Company Material Adverse Effect.

“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“Post-Closing Tax Period” means any Tax period beginning after the Closing Date; and, with respect to a Tax period that begins on or before the Closing Date and ends thereafter, the portion of such Tax period beginning after the Closing Date.

“Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date and, with respect to a Tax period that begins on or before the Closing Date and ends thereafter, the portion of such Tax period ending on the Closing Date.

“Real Property” means all real property that is owned or leased by the Company (other than leases of “gates” and related airport facilities at United States or foreign airports).

“Related Agreements” means, collectively, each of the Delta Connection Agreements, the Escrow Agreement, the Guarantees, the Transition Administrative Services Agreement and the Master Services Agreement.

“SEC” means the Securities and Exchange Commission.

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“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Sellers” means, collectively, Delta and ASAH.

“Shares” means 1,000 shares of Common Stock.

“SkyWest” means SkyWest Airlines, Inc., a Utah corporation.

“SkyWest Delta Connection Agreement” means the agreement substantially in the form of Exhibit B amending and restating the Delta Connection Agreement between Delta and SkyWest dated July 1, 1990, as amended.

“Subsidiary” means, as of any time, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at such time directly or indirectly owned by the Company.

“Tax” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty or addition thereto, and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other person.

“Tax Asset” means any net operating loss, net capital loss, investment tax credit, foreign tax credit, charitable deduction or any other credit or tax attribute that could be carried forward or back to reduce Taxes (including deductions and credits related to alternative minimum Taxes) and losses or deductions deferred by the Code or other applicable law (including pursuant to Section 163(e)(3) or Section 163(j) of the Code).

“Tax Audit” shall mean any notice of deficiency, proposed adjustment, adjustment, assessment, audit, examination or other administrative or court proceeding, suit, dispute or other claim regarding Taxes.

“Tax Return” means any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Taxing Authority” means any governmental authority (domestic or foreign) responsible for the imposition of any Tax.

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“Transition Administrative Services Agreement” means an agreement between Delta and the Company, substantially in the form of Exhibit E, to be executed on the Closing Date.

“Transportation Code” means 49 U.S.C. subtitle VII, as amended, and any successor statute thereto and the Federal Aviation Regulations issued or promulgated pursuant thereto.

(b)Each of the following terms is defined in the Section set forth opposite such term:

Term	Section
Allocation Report	8.01
ASAH	Preamble
Audited Financial Statements	3.08
Buyer	Preamble
CERCLA	3.20
Claim	11.03
Closing	2.02
Closing Adjustment Statement	2.03
Collective Bargaining Agreements	3.16
Company Permits	3.07
Company Securities	3.05
Contingent Additional Amount	2.01
Confidentiality Agreement	6.01
Damages	11.02
Delta	Preamble
Delta Equity Compensation	5.07
Delta Plans	3.15
DOT	3.03
DOT Exemption	3.03
Employee Plans	3.15
Environmental Laws	3.20
Environmental Permits	3.20
Estimated Purchase Price	2.01
Estimated Purchase Price Statement	2.01
FAA	3.03
FAA Notice	3.03
Financial Statements	3.08
Indemnified Party	11.03
Indemnifying Party	11.03
Independent Firm	2.03
Insurance Policies	3.26
Maintenance Schedule	3.29
Material Contracts	3.25
Materials of Environmental Concern	3.20

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Term	Section
Non-Income Taxes	8.02
PBGC	3.15
PCBs	3.20
Purchase Price	2.01
Related Party	3.17
Schedules	Article 3
Section 338(h)(10) Election	8.01
Tax Loss	8.05
Third Party Claim	11.03
Unaudited Financial Statements	3.08
Warranty Breach	11.02

Section 1.02.  Other Definitional and Interpretative Provisions.  Unless specified otherwise, in this Agreement the obligations of any party consisting of more than one Person are joint and several.  The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.  References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified.  All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein shall have the meaning as defined in this Agreement.  Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import.  “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.  References to any Person include the successors and permitted assigns of that Person.  References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.

ARTICLE 2
PURCHASE AND SALE

Section 2.01.  Purchase and Sale.  (a) Upon the terms and subject to the conditions of this Agreement, ASAH agrees to sell to Buyer, Delta agrees to cause ASAH to sell to Buyer, and Buyer agrees to purchase from ASAH, the Shares at the Closing.  The purchase price (the “Purchase Price”) is $425 million of which $330 million is payable at Closing and $95 million is payable as part of the Contingent Additional Amount. The following amounts will be paid by Buyer

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to ASAH or ASAH to Buyer, as applicable, under this Agreement: (1) $350 million in immediately available funds at the Closing payable by Buyer to ASAH (representing $330 million in Purchase Price and $20 million for certain aircraft financing deposits), (2) $125 million (representing $95 million in Purchase Price and $30 million for aircraft financing deposits) (the “Contingent Additional Amount”) which shall be payable by Buyer to ASAH only upon the satisfaction of the conditions, and in accordance with the terms, specified on Schedule 2.01 and terms specified in the Escrow Agreement and which Contingent Additional Amount shall be subject to reduction in accordance with the terms of this Agreement and the Escrow Agreement, (3) the excess of Closing Working Capital over Base Working Capital (from Buyer to ASAH) or the excess of Base Working Capital over Closing Working Capital (from ASAH to Buyer), as the case may be, (4)  the excess of Closing Cash over Base Cash (from Buyer to ASAH) or the excess of Base Cash over Closing Cash (from ASAH to Buyer), as the case may be and (5) the excess, if any, of Base Intercompany Working Capital over Closing Intercompany Working Capital from ASAH to Buyer.  The amounts payable hereunder shall be paid as provided in Section 2.02 and adjusted as set forth in Section 2.04. The provisions set forth in Schedule 2.01 are incorporated by reference in this Section 2.01 as if fully set forth herein, and each party agrees to perform and comply with each covenant and agreement applicable to it as set forth therein.

(b)No later than five Business Days prior to the Closing Date, and no earlier than ten Business Days prior to the Closing Date, Delta shall deliver to Buyer a statement setting forth its good faith estimate of (i) Closing Working Capital, Closing Cash and Closing Intercompany Working Capital and (ii) the corresponding amount of the Purchase Price based on such estimates (the “Estimated Purchase Price”), accompanied by a reasonably detailed computation of such estimates, including supporting schedules and other relevant information (such statement, the “Estimated Purchase Price Statement”). The Estimated Purchase Price Statement shall (x) be prepared in accordance with GAAP applied on a basis consistent with the accounting principles used in the preparation of the Balance Sheet, (y) include line items entitled “Cash” and all of the line items described in the definitions of “Current Assets”, “Current Liabilities” and “Closing Intercompany Working Capital” and (z) be prepared using the same accounting methods, practices and procedures used in the preparation of the Balance Sheet.

Section 2.02.  Closing.  The closing (the “Closing”) of the purchase and sale of the Shares hereunder shall take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York, as soon as possible, but in no event later than five Business Days, after satisfaction or waiver of the conditions set forth in Article 10 (other than those conditions which, by their nature, will be satisfied at the Closing), or at such other time or place as Buyer and ASAH may agree.  At the Closing:

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(a)Buyer shall deliver to ASAH (i) the Estimated Purchase Price plus (ii) $20 million (representing certain aircraft financing deposits) minus (iii) $95 million (representing the portion of the Purchase Price included in the definition of Contingent Additional Amount) in immediately available funds by wire transfer to an account of ASAH with a bank in New York City designated by ASAH, by notice to Buyer, which notice shall be delivered not later than two Business Days prior to the Closing Date (or if not so designated, then by certified or official bank check payable in immediately available funds to the order of ASAH in such amount). In addition, Buyer shall deposit $95 million in the Escrow Account as required pursuant to Schedule 2.01.

(b)ASAH shall, and Delta shall cause ASAH to, deliver to Buyer certificates for the Shares duly endorsed or accompanied by stock powers duly endorsed in blank, with any required transfer stamps affixed thereto.

(c)The Sellers and Buyer shall deliver the other certificates and documents contemplated by Article 10.

Section 2.03.  Closing Working Capital; Closing Cash; Closing Intercompany Working Capital.  (a) As promptly as practicable, but no later than 60 days, after the Closing Date, Delta and ASAH will cause to be prepared and delivered to Buyer a statement (the “Closing Adjustment Statement”) setting forth Delta’s calculation of Closing Working Capital, Closing Cash and Closing Intercompany Working Capital.  The Closing Adjustment Statement shall (x) be prepared in accordance with GAAP applied on a basis consistent with the accounting principles used in the preparation of the Balance Sheet, (y) include line items entitled “Cash” and all of the line items described in the definitions of “Current Assets”, “Current Liabilities” and “Closing Intercompany Working Capital” and (z) be prepared using the same accounting methods, practices and procedures used in the preparation of the Balance Sheet and the Estimated Purchase Price Statement. For the purposes of the purchase price adjustment provisions of this Agreement, in the event of any conflict between GAAP on the one hand and consistency of application of accounting principles used in the preparation of the Balance Sheet on the other hand, consistency shall override GAAP.

(b)If Buyer disagrees with Delta’s calculation of Closing Working Capital, Closing Cash or Closing Intercompany Working Capital, Buyer may, within 30 days after delivery of the Closing Adjustment Statement, deliver a notice to Delta disagreeing with such calculations and setting forth Buyer’s calculation of such amounts.  Any such notice of disagreement shall be in writing and shall specify in reasonable detail those items or amounts as to which Buyer disagrees, and Buyer shall be deemed to have agreed with all other items and amounts contained in the Closing Adjustment Statement and the calculation of Closing Working Capital, Closing Cash and Closing Intercompany Working Capital delivered pursuant to Section 2.03(a).

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(c)If a notice of disagreement shall be delivered pursuant to Section 2.03(b), Buyer and Delta shall, during the 30 days following such delivery, use their best efforts to reach agreement on the disputed items or amounts in order to determine, as may be required, the amount of Closing Working Capital, Closing Cash and Closing Intercompany Working Capital, which amount of Closing Working Capital, Closing Cash and Closing Intercompany Working Capital shall, in each case, not be less than the amount thereof shown in Buyer’s calculations delivered pursuant to Section 2.03(b) nor more than the amount thereof shown in Delta’s calculation delivered pursuant to Section 2.03(a).  If, during such period, Buyer and Delta are unable to reach such agreement, they shall promptly, and in no event more than thirty days, thereafter choose a mutually acceptable, nationally recognized accounting firm with no material relationship with any party hereto or its Affiliates (the “Independent Firm”) and cause the Independent Firm to review this Agreement and the disputed items or amounts for the purpose of calculating Closing Working Capital, Closing Cash and Closing Intercompany Working Capital.  In making such calculation, the Independent Firm shall consider only those items or amounts in the Closing Adjustment Statement as to which Buyer has disagreed.  The Independent Firm shall deliver to Buyer and Delta, as promptly as practicable, a report setting forth such calculation.  Such report shall be final and binding upon Buyer and the Sellers.  The cost of such review and report shall be borne equally by Buyer and Delta.

(d)Buyer and Delta agree that they will, and will cause their respective independent accountants and the Company and ASAH to, cooperate and participate in the preparation of the Estimated Purchase Price Statement and the Closing Adjustment Statement and the calculation of Closing Working Capital, Closing Cash and Closing Intercompany Working Capital and Final Working Capital, Final Cash and Final Intercompany Working Capital and in the conduct of the reviews referred to in this Section 2.03, including allowing Buyer and its representative independent accountants a reasonable opportunity to be present at Delta’s facility during such preparation and to request materials and information relating to preparation of the foregoing and making available as reasonably requested books, records, work papers and personnel, subject (in the case of access to independent accountants’ work papers) to the execution by the party seeking such access of a customary release from liability and indemnification of such independent accountants.

(e)Except for Intercompany Payables and Intercompany Receivables included in the calculation of Closing Intercompany Working Capital in accordance with Schedule 1.01, all intercompany indebtedness and obligations immediately prior to Closing between the Company on the one hand, and the Sellers and their Affiliates, on the other hand, shall be cancelled and terminated. Without limiting the foregoing, such cancellation and termination includes the cancellation and termination of all obligations of the Company to repay to Sellers or their Affiliates any aircraft deposits previously paid by Sellers or their Affiliates on behalf of the Company.

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Section 2.04.  Adjustment of Purchase Price.  (a) If Final Working Capital exceeds Closing Working Capital as shown in the Estimated Purchase Price Statement, Buyer shall pay to ASAH, in the manner and with interest as provided in Section 2.04(d), the amount of such excess. If Closing Working Capital as shown in the Estimated Purchase Price Statement exceeds Final Working Capital, the Contingent Additional Amount shall be reduced, as an adjustment to the Purchase Price, in the manner and with interest as provided in Section 2.04(e), by the amount of such excess.

(b)If Final Cash exceeds Closing Cash as shown in the Estimated Purchase Price Statement, Buyer shall pay to ASAH, as an adjustment to the Purchase Price, in the manner and with interest as provided in Section 2.04(d), the amount of such excess.  If Closing Cash as shown in the Estimated Purchase Price Statement exceeds Final Cash, the Contingent Additional Amount shall be reduced, as an adjustment to the Purchase Price, in the manner and with interest as provided in Section 2.04(e), by the amount of such excess.

(c)If Final Intercompany Working Capital exceeds Closing Intercompany Working Capital as shown in the Estimated Purchase Price Statement, Buyer shall pay to ASAH, as an adjustment to the Purchase Price, in the manner and with interest as provided in Section 2.04(d), the amount of such excess not to exceed the excess of Base Intercompany Working Capital over the Closing Intercompany Working Capital.  If Closing Intercompany Working Capital as shown in the Estimated Purchase Price Statement exceeds Final Intercompany Working Capital, the Contingent Additional Amount shall be reduced, as an adjustment to the Purchase Price, in the manner and with interest as provided in Section 2.04(e), by the lesser of (i) the excess of Closing Intercompany Working Capital over Final Intercompany Working Capital and (ii) the excess of Base Intercompany Working Capital over Final Intercompany Working Capital.

(d)Payments due to ASAH from Buyer pursuant to Section 2.04(a) or Section 2.04(b) shall be made at a mutually convenient time and place within ten days after Final Working Capital, Final Cash and Final Intercompany Working Capital, as applicable, have been finally determined pursuant to Section 2.03 above by delivery by Buyer, as the case may be, of a certified or official bank check payable in immediately available funds to ASAH or by causing such payments to be credited to such account of ASAH as it may designate.  The amount of any payment to be made pursuant to this Section shall bear interest from and including the Closing Date to but excluding the date of payment at a rate per annum equal to the Prime Rate as published in the Wall Street Journal, Eastern Edition in effect from time to time during the period from the Closing Date to the date of payment.  Such interest shall be payable at the same time as the payment to which it relates and shall be calculated daily on the basis of a year of 365 days and the actual number of days elapsed.

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(e)Reductions in the Contingent Additional Amount pursuant to Section 2.04(a) or Section 2.04(b) shall be made as of the day following the date that Final Working Capital, Final Cash and Final Intercompany Working Capital, as applicable, have been finally determined pursuant to Section 2.03 above.  The amount of any reduction in the Contingent Additional Amount made pursuant to this Section shall bear interest from and including the Closing Date to but excluding the date of payment at a rate per annum equal to the Prime Rate as published in the Wall Street Journal, Eastern Edition, in effect from time to time during the period from the Closing Date to the date of payment.  Such interest shall also be reduced from the Contingent Additional Amount at the same time as the reduction pursuant to Section 2.04(a) or Section 2.04(b) to which it relates and shall be calculated daily on the basis of a year of 365 days and the actual number of days elapsed. Notwithstanding anything to the contrary contained herein, if the Contingent Additional Amount has been released to ASAH pursuant to the provisions of Schedule 2.01 and the Escrow Agreement and the Withheld Amount (as defined in Schedule 2.01) is insufficient to satisfy ASAH’s obligations to Buyer under Section 2.04(a) or Section 2.04(b), then such obligations shall be settled in cash.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Subject to any exceptions set forth in the Disclosure Schedules to this Agreement (collectively, the “Schedules”), each of the Sellers makes the following representations and warranties to Buyer with respect to itself and the Company as of the date hereof (except to the extent expressly relating to a specific date, in which event such representation or warranty shall be made as of such date), which shall be unaffected by any investigation heretofore or hereafter made by or on behalf of Buyer:

Section 3.01.  Corporate Existence and Power.  Each of the Sellers and the Company is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers required to carry on its business as now conducted.  Each of the Sellers and the Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except for those jurisdictions where the failure to be so qualified would not have a Company Material Adverse Effect.  Attached as Schedule 3.01 are true and correct copies of the articles of incorporation and bylaws of the Company as in effect on the date hereof.

Section 3.02.  Corporate Authorization and Binding Effect.  The execution, delivery and performance by each Seller of this Agreement, and by each Seller and the Company of the Related Agreement to which it is a party, and

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the consummation by each of the Sellers and the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate and shareholder action by each of the Sellers and the Company.  Each of the Sellers and the Company has full power and authority to execute and deliver this Agreement and each Related Agreement to which it is a party and to perform its obligations hereunder and thereunder.  This Agreement and each Related Agreement to which it is a party has been duly executed and delivered by Sellers and the Company and, assuming due and valid authorization, execution and delivery thereof by Buyer, this Agreement and each Related Agreement is a valid and binding obligation of each of the Sellers and the Company party thereto, enforceable in accordance with its terms and conditions (subject to the laws of bankruptcy, insolvency, moratorium and similar laws and general equitable principles).

Section 3.03.  Governmental Authorization.  The execution, delivery and performance by the Sellers of this Agreement and the consummation by the Sellers of the transactions contemplated hereby require no action by or in respect of, or filing with, any Governmental Authority other than (i) compliance with any applicable requirements of the HSR Act, (ii) notice to the Federal Aviation Administration (“FAA”) pursuant to Title 14, Part 119, section 36 of the Code of Federal Regulations (the “FAA Notice”), (iii) the grant by the Department of Transportation (“DOT”) of an exemption from or approval under the provisions of Section 41105 of Title 49 of the United States Code (the “DOT Exemption”) and (iv) any such action or filing as to which the failure to make or obtain would not have a Company Material Adverse Effect.

Section 3.04.  Noncontravention.  The execution, delivery and performance by the Sellers of this Agreement and by each of the Sellers and the Company to each Related Agreement and the consummation by the Sellers and the Company of the transactions contemplated hereby and thereby do not and will not (i) contravene or conflict with the certificates or articles of incorporation or bylaws of any of the Sellers or the Company; (ii) assuming compliance with the matters referred to in Section 3.03, contravene or conflict with or constitute a violation of any provision of any Law binding upon or applicable to either of the Sellers or the Company or any of their respective properties or assets; (iii) result in a violation or a breach of, or constitute a default or require any consent under or give rise to a right of termination, cancellation or acceleration of any right or obligation of the Company or to a loss of any benefit to which the Company is entitled under any provision of any note, bond, mortgage, indenture, lease, agreement, contract, obligation or other instrument to which the Company is bound, or any license, franchise, permit or other similar authorization held by the Company; or (iv) result in the creation or imposition of any Lien on any asset of the Company, except for any Permitted Liens, except in the case of clauses (ii) and (iii), for such matters as would not have a Company Material Adverse Effect or materially impair or delay the ability of either of the Sellers to consummate the transactions contemplated by this Agreement.

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Section 3.05.  Capitalization.  The authorized capital stock of the Company consists of 100,000 shares of Common Stock.  There are outstanding 1,000 shares of Common Stock.  All outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid, nonassessable and free from preemptive rights.  Except as set forth in this Section 3.05, there are no outstanding (i) shares of capital stock or other voting securities of or other ownership interests in the Company; (ii)) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of or other ownership interests in the Company; or (iii) options or other rights to acquire from the Company, or any obligation of the Company to issue, transfer or sell, any capital stock or voting securities of or other ownership interests in the Company or securities convertible into or exchangeable for capital stock or voting securities of or other ownership interests in the Company (the items in clauses (i), (ii) and (iii) being referred to collectively as the “Company Securities”).  There are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any Company Securities.  The Company does not have any Subsidiaries.

Section 3.06.  Ownership of Shares.  ASAH is the record and beneficial owner of the Shares, free and clear of any Lien, and will transfer and deliver to Buyer at the Closing valid title to the Shares, free and clear of any Lien.  All of the capital stock and other voting securities of ASAH are beneficially owned by Delta.

Section 3.07.  Permits; Compliance.  (a) Except as would not have a Company Material Adverse Effect, the Company is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals, takeoff and landing authorizations (including “slots” or “gates” at United States and foreign airports), clearances and orders of any Governmental Authority necessary for the Company to operate its scheduled air transportation business as currently conducted, to own, lease and operate its properties and to carry on the Business (the “Company Permits”).  The use and operation by the Company of its properties and the conduct of the Business comply with the requirements and conditions of all Company Permits, including all applicable operating certificates and authorities, common carrier obligations and airworthiness directives, except where the failure to comply would not have a Company Material Adverse Effect.  Schedule 3.07 sets forth a list of jurisdictions outside the United States where the Company currently holds operating permits and authorities to operate flights to and from the listed foreign country.

(b)All of the Company Permits are valid and in full force and effect, except where the failure to have, or the suspension or cancellation of, any of the Company Permits would not have a Company Material Adverse Effect.  To the Knowledge of Delta, no suspension, cancellation or

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limitation of any of the Company Permits is threatened, except where such suspension, cancellation or limitation of any of the Company Permits would not have a Company Material Adverse Effect.

(c)A certificate of airworthiness for each aircraft of the Company has been duly issued pursuant to relevant federal aviation laws and is in full force and effect (except for the period of time any aircraft may be out of service and such certificate is suspended in connection therewith).  Each aircraft owned by the Company is duly registered in the name of the Company in accordance with federal aviation laws and is not registered under the laws of any other country.  Each aircraft used by the Company but owned by a third party is duly registered in the name of such third party in accordance with all applicable federal aviation laws and the Company is authorized to use such aircraft under all applicable federal aviation laws.

Section 3.08.  Financial Statements.  (a) The audited consolidated balance sheets of the Company as of December 31, 2004, 2003 and 2002 and the related audited consolidated statements of income, cash flows and stockholders equity for each of the years ended December 31, 2004, 2003 and 2002 (collectively, the “Audited Financial Statements”) and the unaudited interim consolidated balance sheets of the Company as of June 30, 2004 and the Balance Sheet Date, and the related unaudited interim consolidated statements of income, cash flows and stockholders equity for the six month periods ended on June 30, 2004 and the Balance Sheet Date (the “Unaudited Financial Statements” and, together with the Audited Financial Statements, the “Financial Statements”), in each case as previously delivered to Buyer, fairly present, in conformity with GAAP applied on a consistent basis (except as may be indicated in the notes thereto), the financial position of the Company as of the dates thereof and their consolidated results of operations, cash flows and stockholders equity for the periods then ended (except that the Unaudited Financial Statements have not been audited by an independent registered public accounting firm and do not contain all notes required in audited financial statements prepared in accordance with GAAP and may be subject to normal audit adjustments and normal annual adjustments).

(b)The Auditor has provided a letter to Delta’s Audit Committee stating that as of October 28, 2004, they are independent accountants with respect to Delta and its subsidiaries within the meaning of the securities laws administered by the Securities and Exchange Commission and Delta has no Knowledge of any facts arising since such date that would result in the Auditor being no longer considered independent with respect to Delta as aforesaid.

Section 3.09.  Books and Records.  The books of account, minute books and stock record books of the Company are complete and correct in all material respects and have been maintained in accordance with reasonable and customary business practices.  The minute books of the Company contain records that are complete and correct in all material respects of all meetings of, and corporate action taken by (including all actions by unanimous written consent), the shareholders and directors of the Company since January 1, 2000.  True and

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complete copies of all minute books and all stock record books of the Company have heretofore been made available to Buyer.

Section 3.10.  Absence of Certain Changes.  Except as disclosed in Schedule 3.10, since the Balance Sheet Date, the Company has conducted its business in the ordinary course consistent with past practices and there has not been:

(a)any event, occurrence or development which has had a Company Material Adverse Effect;

(b)any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company, or any repurchase, redemption or other acquisition by the Company of any outstanding shares of capital stock or other securities of, or other ownership interests in, the Company;

(c)any amendment of any material term of any outstanding security of the Company;

(d)any incurrence, assumption, amendment or guarantee by the Company of any indebtedness for borrowed money, or any foreign currency, hedging, financial derivatives or similar transactions, other than in the ordinary course of business and consistent with past practices;

(e)any creation or assumption by the Company of any Lien, other than Permitted Liens, on any asset of the Company;

(f)(i) any making of any loan, advance or capital contribution to or investment in any Person by the Company other than loans, advances, capital contributions or investments made in the ordinary course of business consistent with past practices or (ii) any amendment of the terms of any loan to executive officers or directors;

(g)any transaction or commitment made, or any contract or agreement entered into, by the Company relating to its assets or the Business (including the acquisition or disposition of any assets), in either case, material to the Company, other than transactions and commitments in the ordinary course of business consistent with past practices and those contemplated by this Agreement;

(h)any material change in any method of accounting or accounting practice by the Company, except for any such change required by reason of a concurrent change in GAAP or applicable law;

(i)any payment, discharge or satisfaction of any material claim, liability or obligation, except in the ordinary course of business or pursuant to the terms of any Material Contract;

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(j)any material modification to a Material Contract;

(k)except as required under applicable law or pursuant to existing agreements, any (i) grant of any severance or termination pay to any director, officer or employee of the Company, (ii) increase in compensation, bonus or other benefits payable under any severance or retirement or termination pay policies of the Company, (iii) entering into of any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any director, officer or employee of the Company or (iv) adoption of any new Employee Plan or modification of any Employee Plan, in the case of each of clauses (i) through (iv), other than in the ordinary course of business consistent with past practices; or

(l)any disposal or lapse of any rights to the use of any Intellectual Property Right, which would have a Company Material Adverse Effect.

Section 3.11.  No Undisclosed Material Liabilities.  There are no liabilities or obligations of the Company of any kind, other than:

(a)liabilities or obligations disclosed or provided for in the Balance Sheet or the notes thereto;

(b)liabilities or obligations incurred in the ordinary course of business since the Balance Sheet Date;

(c)liabilities or obligations under this Agreement;

(d)liabilities or obligations set forth on Schedule 3.11; and

(e)other liabilities or obligations which in the aggregate would not have a Company Material Adverse Effect.

Section 3.12.  Intercompany Accounts.  Schedule 3.12 contains a complete list of all intercompany balances as of the Balance Sheet Date between Delta and its Affiliates, on the one hand, and the Company, on the other hand.  Except as set forth in the Schedules, since the Balance Sheet Date there has not been any accrual of liability by the Company to Delta or any of its Affiliates, any waiver or release of any obligation or liability of Delta or its Affiliates to the Company or other transaction between the Company and Delta or any of its Affiliates, except in the ordinary course of business of the Company consistent with past practices.  All liabilities or obligations incurred by the Company to Delta or its Affiliates since the Balance Sheet Date in excess of $5,000,000 individually are set forth in Schedule 3.12.

Section 3.13.  Litigation.  As of the date of this Agreement, there is no judicial or administrative action, suit or proceeding pending, or to the Knowledge of Delta, threatened against ASAH or the Company or relating to the Business,

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any of the Company’s properties or any of the officers or directors of such companies before any court or arbitrator or before or by any Governmental Authority that would, individually or in the aggregate, have a Company Material Adverse Effect.  Neither ASAH nor the Company is subject to any judgment, order or decree that would result in a Company Material Adverse Effect.

Section 3.14.  Taxes.  (a) Each Affiliated Group has timely filed all Combined Tax Returns that it was required to file for each taxable period during which the Company was a member of the Affiliated Group.  All such Combined Tax Returns were correct and complete in all material respects, and prepared in substantial compliance with all applicable laws and regulations.  All income Taxes shown or required to be shown on such Combined Tax Returns have been paid.

(b)The Company has also separately filed all material Tax Returns (other than Combined Tax Returns) that it was required to file for each taxable period.  All such Tax Returns were timely filed, correct and complete in all material respects and were prepared in substantial compliance with all applicable laws and regulations.  The Company has paid all material Taxes shown or required to be shown on such separate Tax Returns.

(c)To the Knowledge of Delta, no claim has ever been made by an authority in a jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to taxation by that jurisdiction.  There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company.

(d)To the Knowledge of Delta, the Company has withheld and paid all employment, sales, use and other Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor or other third party.

(e)There is no pending or, to the Knowledge of Delta, any threatened dispute or claim concerning any material Tax liability of the Company for any taxable period during which the Company was a member of the Seller’s Affiliated Group.  Except as listed on Schedule 3.14(e), neither the Company nor any Affiliated Group has waived any statute of limitations in respect of any material Taxes or agreed to any extension of time with respect to a material income Tax assessment or deficiency.

(f)Delta has or will file a consolidated federal income Tax Return with ASAH and the Company for the Company’s taxable year immediately preceding the taxable year of Closing, and Sellers are eligible to make a Section 338(h)(10) Election with respect to the sale of the Shares.  Except as listed on Schedule 3.14(f), the Company has no liability for the Taxes of any other person (i) under Treasury Regulation Section 1.1502-6 or other similar provision of state, local, or foreign law, (ii) as a transferee or successor, (iii) by contract, or (iv) otherwise.

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Section 3.15.  Employee Plans.  (a) Schedule 3.15(a) contains a correct and complete list identifying each “employee benefit plan”, as defined in Section 3(3) of ERISA, each employment, severance or similar contract, plan, arrangement or policy and each other plan or arrangement (written or oral) providing for compensation, bonuses, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation (whether or not such plan or arrangement is qualified under Section 401(a) of the Code), vacation benefits, insurance coverage (including any self-insured arrangements), health or medical benefits, employee assistance program, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including pension, health, medical or life insurance benefits) which (i) is maintained, administered or contributed to by the Company or any ERISA Affiliate and (ii) covers any employee or former employee of the Company, or with respect to which the Company has any actual or potential liability.  Current and complete copies of such plans (and, if applicable, related trust or funding agreements or insurance policies and the most recent summary plan description) and all amendments thereto and written interpretations thereof have been made available to Buyer together with the three most recent annual reports (Form 5500 including, if applicable, Schedule B thereto) and tax returns (Form 990) prepared in connection with any such plan or trust.  Such plans are referred to collectively herein as the “Employee Plans”.

(b)The Company does not presently sponsor, maintain or contribute to, and has not in the past sponsored, maintained or contributed to, or agreed to sponsor, maintain or contribute to, any Pension Plan.

(c)Each Employee Plan (and all related trusts, insurance contracts and funds): (i) has been maintained, funded and administered in accordance with its terms; and (ii) complies with all applicable provisions of ERISA, the Code, and all other statutes, orders, laws, rules and regulations, except for instances in which failure to meet the requirements of clauses (i) or (ii) of this Section 3.15(c) do not individually or in the aggregate have a Company Material Adverse Effect.  No events have occurred with respect to any Employee Plan that could result in payment or assessment of any material excise taxes under the Code or any material penalties or liability under Title I or Title IV of ERISA.

(d)Each Employee Plan which is intended to be qualified under Section 401(a) of the Code or designated to qualify as tax exempt under Section 501(c)(9) of the Code is so qualified and has been so qualified during the period from its adoption to date, and each trust forming a part thereof is exempt from tax pursuant to Section 501(a) of the Code.  Sellers have made available to the Buyer copies of the most recent Internal Revenue Service determination or tax exemption letters with respect to each such Employee Plan.

(e)Except as set forth on Schedule 3.15(e), the consummation of the transactions contemplated by this Agreement will not (either alone or together

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with any other event) entitle any employee or director of the Company to severance pay or accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, or increase the amount payable or trigger any other material obligation pursuant to, any Employee Plan. There is no contract, agreement, plan or arrangement covering any employee or former employee of the Company that, individually or collectively, would give rise to the payment of any amount that would not be deductible pursuant to the terms of Sections 162(m) or 280G of the Code.

(f)Except as set forth on Schedule 3.15(f), the Company does not have any liability (accrued, absolute, contingent or otherwise) in respect of post-retirement health, medical or life insurance benefits or other welfare benefits for retired, former or current employees of the Company (or their spouses or dependents) except as required to avoid excise Taxes under Section 4980B of the Code.

(g)There has been no amendment to, written interpretation of or announcement (whether or not written) by the Company or any of its Affiliates relating to, or change in employee participation or coverage under, any Employee Plan which would increase materially the expense of maintaining such Employee Plan above the level of the expense incurred in respect thereof for the fiscal year ended December 31, 2004.

(h)There is no action, suit or proceeding pending, or to the Knowledge of Delta, threatened (and, to the Knowledge of Delta, there is no investigation pending or threatened) against or relating to any Employee Plan before any court or arbitrator or before or by any governmental body, agency or official that would have a Company Material Adverse Effect.

(i)Except for the Delta Air Lines, Inc. Delta Retirement Plan, Delta Air Lines, Inc. Pilots Retirement Plan, Western Airlines, Inc. Pilots Defined Benefit Pension Plan, Delta Pilot Defined Contribution Plan and Delta Airlines, Inc. Money Purchase Pension Plan (collectively, the “Delta Plans”), no ERISA Affiliate has sponsored, maintained, contributed to or incurred any obligation or liability (whether accrued, absolute, contingent or otherwise) under any Pension Plan.  No Pension Plan maintained by an ERISA Affiliate or to which an ERISA Affiliate has contributed or has any liability is a “multiemployer plan” within the meaning of Section 3(37) of ERISA.  In the case of any Pension Plan maintained or sponsored by an ERISA Affiliate or as to which any ERISA Affiliate has any obligation to contribute or liability: (i) such Pension Plan has not been completely or partially terminated or been the subject of a material “reportable event” within the meaning of Section 4043 of ERISA; (ii) no proceeding by the Pension Benefit Guaranty Corporation (“PBGC”) to terminate such Pension Plan is pending or to the Knowledge of Delta threatened; (iii) all minimum funding contributions (including required quarterly installments) required under Section 412 of the Code and Section 302(c) of ERISA for all plan years have been paid when due, and

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there is no waiver of the minimum funding standards in effect; (iv) no liens have been imposed under Section 412(n) of the Code or Section 302(f) of ERISA for any period in which the Company was a member of the ERISA Affiliate’s “controlled group” within the meaning of Code Section 412(n)(6)(B); and (v) neither the Company nor any of its employees or officers have incurred any liability to the PBGC or otherwise under Title IV of ERISA or the Code.

Section 3.16.  Labor Matters.  (a) Schedule 3.16 identifies all collective bargaining agreements (including any side letters, supplemental agreement or memorandum of understanding relating thereto) covering employees of the Company (collectively, the “Collective Bargaining Agreements”).  Delta has made available to Buyer copies of all such Collective Bargaining Agreements.

(b)Except as disclosed in Schedule 3.16(b), at the date of this Agreement:

(i)there are no controversies pending or, to the Knowledge of Delta, threatened between the Company and any of its employees that would have a Company Material Adverse Effect;

(ii)the Company has not breached in any material respect or otherwise failed to comply in any material respect with any provision of any Collective Bargaining Agreement applicable to persons employed by the Company, nor, to the Knowledge of Delta, has any such breach or failure been alleged, and there are no material grievances outstanding against the Company thereunder, in each case which would have a Company Material Adverse Effect;

(iii)to the Knowledge of Delta, there is no petition pending before the National Mediation Board seeking certification or any change in certification of a labor representative with respect to any craft or class of employees of the Company;

(iv)there is no strike, slowdown, work stoppage, labor action or lockout or, to the Knowledge of Delta, threat thereof, by or with respect to any employees of the Company; and

(v)there is no complaint for violation of the Railway Labor Act, 45 U.S.C. § 8, as amended, against the Company pending before any Governmental Authority.

Section 3.17.  Transactions with Affiliates.  Except as disclosed in Schedule 3.17, no Related Party (as defined below) of the Company is presently, or has been since January 1, 2004, a party to any transaction, contract, agreement, instrument, commitment, understanding or other arrangement or relationship with the Company (other than for services as an employee, officer and director) in which the amount involved exceeds $60,000 and in which such Related Party has,

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or will have, a direct or indirect material interest, whether for the furnishing of services to or by, providing for rental of real or personal property to or from or otherwise requiring payments or consideration to or from any such Related Party.  No Related Party (except for any Related Party under clause (i) of the definition below by virtue of ownership of the Company) has any direct or indirect material ownership interest in any Person in which the Company has any direct or indirect ownership interest.  A “Related Party” is (i) either of the Sellers or any of their Affiliates other than the Company; (ii) any director or executive officer of the Company or its Affiliates; (iii) any nominee for election as a director of the Company or its Affiliates; or (iv) any member of the “immediate family” of the foregoing persons (as defined in Item 404 of Regulation S-K promulgated under the Exchange Act).

Section 3.18.  Certain Business Practices.  To the Knowledge of Delta, neither the Company nor any of its directors, officers employees or any other person authorized to act on behalf of the Company has used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds, violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment to any foreign or domestic government official or employee from corporate funds.

Section 3.19.  Finder’s Fees.  Except for Goldman, Sachs & Co., whose fees shall be borne entirely by the Sellers, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of any of the Sellers or the Company who might be entitled to any fee or commission from Buyer or any of its Affiliates upon consummation of the transactions contemplated by this Agreement.

Section 3.20.  Environmental Matters.  (a) Except as to matters that would not have a Company Material Adverse Effect:

(i)no communication (written or oral), demand, request for information, citation, summons or order has been received, no complaint has been filed, no penalty has been assessed, and no third-party investigation, claim, suit, proceeding or review is pending or, to the Knowledge of Delta, is threatened by any Governmental Authority or other Person against the Company and, in each case, alleging or relating to any violation by the Company of any Environmental Law;

(ii)the Company is in compliance with all Environmental Laws and has obtained and is in compliance with all permits, licenses, franchises, certificates, approvals and other similar authorizations of any Governmental Authority (collectively, “Environmental Permits”) required by Environmental Laws to conduct the Business;

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(iii)there has been no environmental investigation, study or audit conducted of which Delta has Knowledge and possession in relation to the current or prior business of the Company or any property or facility now or previously owned or leased by the Company which has not been delivered or made available to Buyer prior to the date hereof;

(iv)to the Knowledge of Delta, there are no past or present actions, activities, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Materials of Environmental Concern, that could reasonably form the basis of any environmental investigation, claim, suit or proceeding against the Company, or against any Person whose liability for any environmental investigation, claim, suit or proceeding the Company has retained or assumed either contractually or by operation of law;

(v)without limiting the generality of the foregoing, to the Knowledge of Delta, there is no asbestos contained in or forming a part of any building, building component, structure or office space owned, operated or controlled by the Company and, to the Knowledge of Delta, no polychlorinated biphenyls (“PCBs”) or PCB-containing items are used or stored by the Company at any property owned, operated or controlled by the Company; and

(vi)the Company has not received any notice identifying it as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), or analogous state statutes and no property owned, leased or operated by the Company nor any property to which the Company has transported or arranged for the transportation of any Materials of Environmental Concern is listed or, to Delta’s Knowledge, proposed for listing on the National Priorities List (as defined in CERCLA) or any similar state list of sites requiring cleanup.

(b)Each Environmental Permit held by the Company as of the date hereof is set forth on Schedule 3.20(b).

(c)Schedule 3.20(c) sets forth, to the Knowledge of Delta, (i) all on-site and off-site locations to which the Company or ASAH has (previously or currently) disposed, or arranged for the disposal, of Materials of Environmental Concern; and (ii) all underground storage tanks, and the capacity and contents of such underground tanks, located on any property owned, leased, operated or controlled by the Company or ASAH for the use or benefit of the Company or ASAH.

(d)Except as set forth in this Section 3.20 no representations or warranties are being made with respect to any matters relating to any Environmental Laws.

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(e)For purposes of this Section 3.20, the following terms shall have the meanings set forth below:

“Environmental Laws” means any and all federal, state, local and foreign laws, judicial decisions, regulations, rules, judgments, orders, decrees, injunctions, permits, licenses and governmental restrictions or any agreement or contract with any governmental authority, relating to human health as it relates to hazardous materials, the environment or to the use, maintenance, release or disposal of pollutants, contaminants, wastes or chemicals or any toxic, radioactive, ignitable, corrosive or reactive or otherwise hazardous substances, wastes or materials.

“Materials of Environmental Concern” means toxic or hazardous substances, materials and wastes defined in the Environmental Laws in effect on or prior to the Closing Date, including, without limitation, chemicals, pollutants, contaminants, petroleum, petroleum products, asbestos, asbestos-containing materials, polychlorinated biphenyls, lead, lead-based paints and materials, and radon.

Section 3.21.  Compliance With Laws and Court Orders. The Company is in compliance with all, and to the Knowledge of Delta is not under investigation with respect to and has not been threatened to be charged with or given notice of any violation of any, applicable Laws, except for failures to comply or violations that have not had and would not reasonably be expected to have, a Company Material Adverse Effect.

Section 3.22.  Employee Matters.  The Company is in compliance in all material respects with all applicable Laws respecting employment and employment practices, terms, and conditions of employment, and wages and hours and is not engaged in any unfair labor practice, except for failures to comply or violations or practices that have not had and would not reasonably be expected to have, a Company Material Adverse Effect.

Section 3.23.  Title to Assets; Liens.  Except for property and inventory sold since the Balance Sheet Date, the Company has good title to all the properties and assets reflected in the Balance Sheet and all assets purchased by the Company since the Balance Sheet Date free and clear of all Liens (other than Permitted Liens).  At the time of the Closing, the assets of the Company, taken together with the rights and benefits to Buyer arising under the Related Agreements, shall be adequate in all material respects to allow Buyer at such time to conduct the Business substantially as it is currently being conducted.

Section 3.24.  Real Property.  (a) Schedule 3.24(a) sets forth a complete list and the location of all Real Property.  True and correct copies of all leases affecting the Real Property have been made available to Buyer and are identified on Schedule 3.24(a).  There are no proceedings, claims, disputes, or conditions affecting any Real Property that would reasonably be expected to materially

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interfere with the Company’s use of such property, whether before or after the Closing Date, for the conduct of the Business as currently being conducted.  Neither the whole nor any portion of the Real Property is subject to any governmental decree or order to be sold or is being condemned, expropriated, or otherwise taken by any public authority, nor to the Knowledge of Delta has any such condemnation, expropriation, or taking been proposed.  All Real Property is leased free and clear of all Liens on such leasehold interests other than Permitted Liens.

(b)To Delta’s Knowledge, there is no structural defect in any of the Real Property or the improvements thereon which would have a Company Material Adverse Effect.

Section 3.25.  Material Contracts.  (a) Except as disclosed in Schedule 3.25, the Company is not a party to or bound by:

(i)any airport lease or lease of real property providing for annual rentals of $50,000 or more;

(ii)any agreement for the purchase of materials, supplies, goods, services, equipment or other assets (other than pursuant to purchase orders made in the ordinary course of business consistent with past practice) providing for annual payments by the Company of $350,000 or more;

(iii)any capacity purchase, alliance or similar agreement with another airline relating to the flying and operation of the Company’s aircraft for the benefit of such other airline that will not be terminated on or prior to Closing;

(iv)any material partnership, joint venture or other similar agreement or arrangement;

(v)any agreement relating to indebtedness for borrowed money or the deferred purchase price of property (in either case, whether incurred, assumed, guaranteed or secured by any asset), except any such agreement with an aggregate outstanding principal amount not exceeding $5,000,000;

(vi)any agreement that limits in any material respect the freedom of the Company to compete in any line of business, with any Person or in any area for any length of time;

(vii)any material agreement with Delta or any of its Affiliates or any director or officer of Delta or any of its Affiliates;

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(viii)any contract or commitment requiring, after the date hereof, the mortgage, pledge, sale, or disposal of assets with a value in excess of $5,000,000 or release, grant, or transfer of Company rights with a value in excess of $5,000,000; or

(ix)any agreement pursuant to which the Company is, or may become, obligated to pay any amount in respect of indemnification Claims in connection with any disposition of any material assets of the Company that were sold prior to the date hereof.

(b)Each agreement, contract, plan, lease, arrangement or commitment required to be disclosed pursuant to this Section (collectively, “Material Contracts”) is a valid and binding agreement of the Company and is in full force and effect, and none of the Company or, to the Knowledge of Delta, any other party thereto is in default or breach in any respect under the terms of any such agreement, contract, plan, lease, arrangement or commitment, except for any such defaults or breaches that would not have a Company Material Adverse Effect.

Section 3.26.  Insurance.  Seller has made available to Buyer copies of all material insurance policies providing coverage in favor of the Company or any of its properties, including “all risk” and hull insurance policies (collectively, the “Insurance Policies”).  There are no material claims by the Company pending under any of the Insurance Policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies or in respect of which such underwriters have reserved their rights.  As of the date hereof, all Insurance Policies are in full force and effect, all premiums due thereon have been paid and the Company is in compliance in all material respects with the terms and provisions of the Insurance Policies.  Schedule 3.26 sets forth the responsibilities of Sellers and Buyer under such policies for acts, claims or losses occurring prior to or after the Closing.

Section 3.27.  Intellectual Property.  (a) Schedule 3.27(a) contains a list of all registrations and applications for registration included in the Company Intellectual Property Rights.

(b)No Company Intellectual Property Right is subject to any outstanding judgment, injunction, order, decree or agreement restricting the use thereof by the Company or restricting the licensing thereof by the Company to any Person, except for any judgment, injunction, order, decree or agreement that would not have a Company Material Adverse Effect.

(c)Except as expressly disclosed on Schedule 3.27(c), the Company has the sole and exclusive right to use the Company Intellectual Property Rights, and no consent of any third party is required for the use thereof by the Company following Closing.  To the Knowledge of Delta, no claims have been asserted by any person challenging the use of any Company Intellectual Property Rights, or challenging or questioning the validity or effectiveness of any such license or

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agreement. Except as would not cause a Company Material Adverse Effect, no additional Intellectual Property Rights other than the Company Intellectual Property Rights are necessary or material to the conduct of the Business.

Section 3.28.  U.S. Citizen; Air Carrier.  The Company is a “citizen of the United States” as defined in the Transportation Code and is an “air carrier” within the meaning thereof operating under certificates issued pursuant to Sections 41101-41112 of the Transportation Code.

Section 3.29.  Aircraft.  The Company has made available records relating to the maintenance schedule of all aircraft operated by the Company and the status of maintenance with respect to each such aircraft as of such date (the “Maintenance Schedule”).  The Company is operating and maintaining such aircraft in the ordinary course of business consistent with past practices, and has not deferred in any material respect any of its maintenance obligations (as such obligations are set forth by the manufacturer or any lease agreements or any other agreements affecting aircraft) or materially deviated from the Maintenance Schedule with respect to such aircraft, except for deferrals and deviations that have been cured prior to the date hereof.  The Company’s maintenance records accurately reflect the conditions of the Company’s aircraft in all material respects.

Section 3.30.  No Other Representations or Warranties.  Except for the representations and warranties contained in this Article 3 and in Article 8 hereof or as expressly set forth as representations or warranties in any Related Agreement, neither the Sellers, the Company nor any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of the Company.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby makes the following representations and warranties to the Sellers as of the date hereof (except to the extent expressly relating to a specific date, in which event such representation or warranty shall be made as of such date), which shall be unaffected by any investigation heretofore or hereafter made.

Section 4.01.  Corporate Existence and Power.  Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers required to carry on its business as now conducted.  Except as would not have a Buyer Material Adverse Effect, Buyer has all governmental licenses, authorizations, consents, permits and approvals required to carry on its business as now conducted.

Section 4.02.  Corporate Authorization.  The execution, delivery and performance by Buyer of this Agreement and each Related Agreement to which it

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is a party and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate and shareholder action by Buyer.  Buyer has full power and authority to execute and deliver this Agreement and each Related Agreement and to perform its obligations hereunder and thereunder.  This Agreement and each Related Agreement has been duly executed and delivered by Buyer and, assuming due and valid authorization, execution and delivery thereof by each Seller party thereto, this Agreement and each Related Agreement is a valid and binding obligation of Buyer, enforceable in accordance with its terms and conditions (subject to the laws of bankruptcy, insolvency, moratorium and similar laws and general equitable principles).

Section 4.03.  Governmental Authorization.  The execution, delivery and performance by Buyer of this Agreement and each Related Agreement and the consummation by Buyer of the transactions contemplated hereby and thereby require no action by or in respect of, or filing with, any Governmental Authority other than: (i) compliance with any applicable requirements of the HSR Act, (ii) the making of the FAA Notice, (iii) the grant by the DOT of the DOT Exemption, (iv) compliance with any other applicable regulatory approvals required for Buyer and (v) any such action or filing as to which the failure to make or obtain would not have a Buyer Material Adverse Effect.

Section 4.04.  Noncontravention.  The execution, delivery and performance by Buyer of this Agreement and the consummation by Buyer of the transactions contemplated hereby do not and will not (i) contravene or conflict with the articles of incorporation or bylaws of Buyer, (ii) assuming compliance with the matters referred to in Section 4.03, contravene or conflict with or constitute a violation of any provision of any Law binding upon or applicable to Buyer, (iii) result in a violation or a breach of, or constitute a default or require any consent under or give rise to a right of termination, cancellation or acceleration of any right or obligation of Buyer or to a loss of any benefit to which Buyer is entitled under any provision of any note, bond, mortgage, indenture, lease, agreement, contract, obligation or other instrument to which Buyer is bound, or any license, permit or other similar authorization held by Buyer or (iv) result in the creation or imposition of any Lien on any asset of Buyer, except in the case of clauses (ii), (iii) and (iv), for such matters as would not have a Buyer Material Adverse Effect or materially impair or delay the ability of Buyer to consummate the transactions contemplated by this Agreement.

Section 4.05.  Finder’s Fees.  Except for Merrill Lynch, whose fees shall be borne entirely by Buyer, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Buyer who might be entitled to any fee or commission from the Company or any of its Affiliates upon consummation of the transactions contemplated by this Agreement.

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Section 4.06.  Financing.  Buyer has and will have at the Closing sufficient cash, available lines of credit or other sources of immediately available funds to enable it to make payment of the Purchase Price and any other amounts to be paid by it hereunder.

Section 4.07.  Purchase for Investment.  Buyer is purchasing the Shares for investment for its own account and not with a view to, or for sale in connection with, any distribution thereof.  Buyer (either alone or together with its advisors) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Shares and is capable of bearing the economic risks of such investment.

Section 4.08.  Litigation.  As of the date of this Agreement, there is no judicial or administrative action, suit or proceeding pending, or to the knowledge of Buyer, threatened against Buyer before any Governmental Authority which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement.

Section 4.09.  Inspections.  Buyer is an informed and sophisticated purchaser and has engaged expert advisors, experienced in the evaluation and purchase of companies such as the Company as contemplated hereunder.  Buyer has undertaken such investigation and has been provided with and has evaluated such documents and information as it has deemed necessary to enable it to make an informed decision with respect to the execution, delivery and performance of this Agreement.  Buyer will undertake prior to Closing such further investigation and request such additional documents and information as it deems necessary.  Subject to the terms and conditions of this Agreement, Buyer agrees to accept the Shares in the condition they are in on the Closing Date based upon its own inspection, examination and determination with respect thereto and to the Company as to all matters and without reliance upon any express or implied representations or warranties of any nature made by or on behalf of or imputed to the Sellers, except as expressly set forth in this Agreement or in any Related Agreement.

ARTICLE 5
COVENANTS OF THE SELLERS

Each of the Sellers agrees that:

Section 5.01.  Conduct of the Company.  Except as expressly contemplated by this Agreement or as otherwise consented to by Buyer in writing, during the period from the date hereof and continuing until the Closing, each of the Sellers shall cause the Company to:

(a)conduct its business in the usual, regular and ordinary course consistent with past practices;

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(b)not take any action that would make any representation or warranty of any Seller hereunder inaccurate in any material respect at the Closing Date such that the closing condition set forth in Section 10.02(a) shall not be satisfied as of such date;

(c)except as set forth on Schedule 3.25, not mortgage, pledge, sell or dispose of any assets with a value of $20,000,000 or more in the aggregate, and not waive, release, grant, transfer or permit to lapse any Company rights of value in excess of $20,000,000 in the aggregate;

(d)comply in all material respects with all provisions of any Material Contracts to which the Company is a party;

(e)use its reasonable best efforts to keep all aircraft in such condition as is necessary to enable the worthiness certification of such aircraft under the Federal Aviation Act to be maintained in good standing at all times;

(f)not take any action that would result in the representation set forth in Section 3.10(k) being untrue;

(g)not enter into any new or amended contract, agreement, side letter or memorandum of understanding with any unions representing employees of the Company;

(h)not enter into any agreement or understanding with any other Person outside of the ordinary course of business consistent with past practices involving expenditures in excess of $2,000,000 in the aggregate or involving terms of duration or commitments in excess of 12 months;

(i)not enter into any agreement or understanding with any other Person containing any exclusivity, non-competition or similar provisions that would materially restrict the ability of the Company to compete;

(j)not adopt or propose any change in its organizational documents (including bylaws); and

(k)not merge or consolidate with any other Person.

Section 5.02.  Access to Information; Confidentiality.  (a) From the date hereof until the Closing Date, Delta will (i) cause ASAH and the Company, respectively, to give Buyer and its counsel, financial advisors, auditors and other authorized representatives reasonable access to the offices, properties (including aircraft and engines but excluding any sampling of environmental media or building materials), books and records of the Company and to the books and records of ASAH relating to the Company (including log books and maintenance records), (ii) cause ASAH and the Company to furnish to Buyer and its counsel, financial advisors, auditors and other authorized representatives such financial

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and operating data and other information relating to the Company as such Persons may reasonably request and (iii) instruct the employees, counsel and financial advisors of the Sellers or the Company to cooperate with Buyer in its investigation of the Company.  Any investigation pursuant to this Section 5.02 shall be conducted during normal business hours and in such manner as not to interfere unreasonably with the conduct of the business of the Sellers or the Company.  Notwithstanding the foregoing, Buyer shall not have access to personnel records of the Company relating to individual performance or evaluation records, medical histories or other information which in Delta’s good faith opinion is sensitive or the disclosure of which could subject the Company to risk of liability.

(b)After the Closing, Sellers and their Affiliates will hold, and will use their best efforts to cause their respective officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning the Company, except to the extent that such information can be shown to have been (i) previously known on a nonconfidential basis by either Seller, (ii) in the public domain through no fault of Sellers or their Affiliates or (iii) later lawfully acquired by any Seller from sources other than those related to its prior ownership of the Company.  The obligation of Sellers and their Affiliates to hold any such information in confidence shall be satisfied if they exercise the same care with respect to such information as they would take to preserve the confidentiality of their own similar information.

(c)On and after the Closing Date, Delta will afford, and will cause ASAH to afford, promptly to Buyer and its agents reasonable access to its books of account, financial and other records (including accountant’s work papers), information, employees and auditors to the extent reasonably necessary for Buyer in connection with any audit, investigation, dispute or litigation (other than any dispute or litigation involving either of the Sellers) relating to the Business (but excluding any confidential information regarding Delta’s contractual arrangements with the Company); provided that any such access by Buyer shall be conducted during normal business hours and shall not unreasonably interfere with the conduct of the business of the Sellers, Buyer shall bear all of the out-of-pocket costs and expenses (including reasonable attorneys’ fees, but excluding reimbursement of Delta or ASAH for general overhead, salaries and employee benefits) reasonably incurred in connection with the foregoing.

Section 5.03.  Monthly Financial Statements.  Until the Closing Date, Delta shall, as promptly as practicable but in no event later than 20 days after the end of each calendar month, prepare and deliver to Buyer an unaudited balance sheet of the Company as of the last date of such calendar month and unaudited statement of operations of the Company for the period commencing on the first day of such calendar month and ending on the last day of such calendar month, in each case in forms consistent with the practice of Delta as of the date hereof.

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Such unaudited statements shall be prepared on a basis consistent with the preparation of the Unaudited Financial Statements.

Section 5.04.  Audited Financial Statements.  Sellers shall use their respective commercially reasonable efforts in good faith to obtain the required consents of the Auditor for the inclusion of its audit reports relating to the Audited Financial Statements in any reports filed by Buyer pursuant to the Exchange Act and any registration statements filed pursuant to the Securities Act.

Section 5.05.  Notices of Certain Events.  From the date hereof until the Closing Date, Delta shall promptly notify Buyer of:

(a)any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

(b)any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement;

(c)any actions, suits, claims, investigations or proceedings (i) commenced against ASAH or the Company or (ii) in respect of which ASAH or the Company has an indemnification obligation and as to which Delta has Knowledge that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.13;

(d)any material agreement or litigation, or consent or order of the FAA or DOT, related to the Company (other than those that apply generally to air carriers or companies in the airline industry); and

(e)any incidents or accidents occurring on or after the date hereof involving any property owned or operated by the Company that has resulted or would reasonably be expected to result in casualty damages or losses in excess of $250,000.

Section 5.06.  Resignations.  Delta will deliver to Buyer the resignations of all officers and directors of the Company who will be officers, directors or employees of Delta or any of its Affiliates after the Closing Date from their positions with the Company at or prior to the Closing Date.

Section 5.07.  Employee Stock Options.  With respect to all employee stock options, restricted shares and other equity-based compensation rights exercisable or exchangeable for or otherwise based on Delta common stock held by Company employees immediately prior to the Closing Date (the “Delta Equity Compensation”), Delta will take such actions as are necessary to prevent Company employees from forfeiting such Delta Equity Compensation as a result of the transactions contemplated herein, and maintain such Company employees in the same position with respect to their Delta Equity Compensation as if the

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Company were still a Delta subsidiary for the period of such Company employees’ period of employment with the Company.

ARTICLE 6
COVENANTS OF BUYER

Buyer agrees that:

Section 6.01.  Confidentiality.  Prior to the Closing Date and after any termination of this Agreement, Buyer and its Affiliates will hold, and will use their best efforts to cause their respective officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence all confidential documents and information concerning the Company furnished to Buyer or its Affiliates in connection with the transactions contemplated by this Agreement as and to the extent provided in the Confidentiality Agreement dated February 14, 2005, among Delta, the Company and Buyer (as it may be amended from time to time, the “Confidentiality Agreement”).

Section 6.02.  Delta Access; Confidentiality.  Buyer will cause the Company, on and after the Closing Date, to afford promptly to Delta and its agents reasonable access to its properties, books, records, employees and auditors to the extent necessary to permit Delta to determine any matter relating to its rights and obligations hereunder or to any period ending on or before the Closing Date; provided that, any such access by Delta be conducted during normal business hours and shall not unreasonably interfere with the conduct of the business of Buyer.  In addition, with respect to each Company employee who holds Delta Equity Compensation, Buyer will, no less frequently than monthly, cause the Company to provide Delta with a list of all such Company employees whose employment with the Company has terminated and indicate whether such termination was due to death, retirement or permanent disability.  The Sellers shall bear all of the out-of-pocket costs and expenses (including reasonable attorneys’ fees, but excluding reimbursement of Buyer or the Company for general overhead, salaries and employee benefits) reasonably incurred in connection with the foregoing.  Delta will hold, and will use its best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning the Company provided to it pursuant to this Section.

Section 6.03.  Trademarks; Tradenames.  Except as permitted by the Delta Connection Agreements, after the Closing, Buyer shall not permit the Company to use any of the marks or names set forth on Schedule 6.03.

Section 6.04.  Employee Stock Options.  Buyer shall promptly notify Delta upon the termination of employment with the Company of any Company

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employee who is entitled to Delta Equity Compensation. Delta shall provide to Buyer prior to Closing a list of all such employees.

ARTICLE 7
COVENANTS OF BUYER AND THE SELLERS

Buyer and the Sellers agree that:

Section 7.01.  Best Efforts; Further Assurances.  (a) Subject to the terms and conditions of this Agreement, Buyer and the Sellers will use their best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by this Agreement; provided that nothing in this Agreement shall obligate Buyer or the Company or any of Buyer’s Affiliates to agree to dispose of, agree to cease operating or agree to hold separate any business, properties or assets of the Company or of Buyer and its subsidiaries, except to the extent such agreements would not have a material adverse effect on the financial condition or results of operations of Buyer, its subsidiaries and the Company taken as a whole and provided further that, notwithstanding the immediately preceding proviso, if Buyer or the Company or any of Buyer’s Affiliates are obligated after Closing to hold separate the business of the Company from that of Buyer or any of its Affiliates as a condition to the receipt of the DOT Exemption, then Buyer or the Company or Buyer’s Affiliates, as applicable, shall agree to hold separate such businesses to the extent necessary to obtain the DOT Exemption.  Delta and Buyer shall, and the Sellers shall cause the Company prior to the Closing, and Buyer shall cause the Company after the Closing, to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement.

(b)In furtherance and not in limitation of the foregoing, each of Buyer and Delta shall make an appropriate filing of a Notification and Report Form pursuant to the HSR Act and an appropriate filing in respect of the DOT Exemption, in each case with respect to the transactions contemplated hereby, as promptly as practicable and in any event within ten Business Days following the date hereof and to supply as promptly as practicable any additional information and documentary material that may be requested pursuant to the HSR Act or the applicable regulations of the DOT, as the case may be.

Section 7.02.  Certain Filings.  The Sellers and Buyer shall cooperate with one another (i) in determining whether any action by or in respect of, or filing with, any Governmental Authority is required, or any actions, consents, approvals or waivers are required to be obtained from any Person, in connection with the consummation of the transactions contemplated by this Agreement and (ii) in

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taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers.

Section 7.03.  Public Announcements.  The parties agree to consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except for any press releases and public announcements the making of which may be required by applicable law or any listing agreement with any national securities exchange, will not issue any such press release or make any such public statement prior to such consultation.

Section 7.04.  Leases.  The Sellers and Buyer shall use their reasonable best efforts to complete, to the extent reasonably practicable, the transactions as set forth in Schedule 16(B)(4) attached to the ASA Delta Connection Agreement as contemplated therein.

Section 7.05.  Workers’ Compensation; Surety Bonds.  To the extent that Delta currently provides coverage for the Company’s workers’ compensation liabilities and surety bond obligations, the Company and Buyer shall, and Buyer and Delta shall cause the Company, on and after the date hereof, to take reasonable best efforts to assume full responsibility for such liabilities to be effective on the Closing Date. In addition, Buyer and the Company shall fully cooperate with Delta and shall take reasonable best efforts to ensure that any Delta collateral pledged in support of the Company’s workers’ compensation liabilities and surety bonds is released to Delta effective as of the Closing Date.

Section 7.06.  Insurance.  The parties agree to allocate responsibility for the Company’s insurance obligations as specified on Schedule 3.26 of this Agreement.

ARTICLE 8
TAX MATTERS

Section 8.01.  Section 338(h)(10) Election.  (a) Except as otherwise provided in this Section 8.01(a), Buyer and the Sellers agree to make a timely, effective and irrevocable election under Section 338(h)(10) of the Code and under any comparable statutes in any other jurisdiction with respect to the Company (the “Section 338(h)(10) Election”), and to file such election in accordance with applicable regulations.  The Sellers and Buyer will report the transfers under this Agreement consistent with the Section 338(h)(10) Election under any substantially similar state or local law, and shall take no position contrary thereto unless required to do so by a contrary “determination” (as defined in Section 1313 of the Code or similar provision of state and local laws).  Notwithstanding the foregoing, Buyer’s obligation to make the Section 338(h)(10) Election is contingent upon Sellers first paying to Buyer an amount equal to any additional

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state and local income taxes to be incurred by the Company as a result of the Section 338(h)(10) Election, with the amount of any such payment to be determined in the same manner as a tax indemnity payment to Buyer under Section 8.05 below.  Buyer shall have no obligation to file IRS Form 8023 with respect to the purchase transaction hereunder or otherwise make the Section 338(h)(10) Election unless Sellers make the foregoing payment to Buyer with respect to State and local income taxes within 240 days after the Closing Date.

(b)Within 90 days after the Closing Date, Buyer shall prepare at its own expense and deliver to Delta a report (the “Allocation Report”) allocating the “ADSP” (as such term is defined in Treasury Regulations Section 1.338-4) of the assets of the Company in accordance with the Treasury regulations promulgated under Section 338(h)(10).  The Allocation Report shall be provided to Delta not later than 90 days after Closing.  Delta shall have 30 days after receipt to review and comment upon the Allocation Report.  Any disagreements between the parties regarding the computations set forth in the Allocation Report shall be promptly resolved by the Independent Firm.  Once finalized hereunder, Buyer and Delta agree, and will cause the Company, to act in accordance with the Allocation Report in the preparation, filing and audit of any Tax Return, unless otherwise required by a contrary final “determination” as defined in Code Section 1313 or similar provision of state and local laws.

Section 8.02.  Returns Due after Closing and Refunds.  (a) The Sellers shall include the Company in the Seller’s Combined Tax Returns filed for the period that includes the Closing Date, which returns shall properly include and reflect the taxable income of the Company for the Pre-Closing Tax Period that ends on the Closing Date (including any deferred items triggered into income by Treasury Regulation Section 1.1502-13, any excess loss account taken into income under Treasury Regulation Section 1.1502-19 and any taxable income resulting from a Section 338(h)(10) Election) and Sellers shall pay any income Taxes due with respect to such Tax Returns.  Buyer shall cause the Company to furnish information to the Sellers as reasonably requested by the Sellers to allow the Sellers to satisfy their obligations under this Section 8.02 in accordance with past custom and practice.  Buyer covenants that it will not cause or permit the Company or any Affiliate of Buyer to: (i) take any action on the Closing Date other than in the ordinary course of business, including, but not limited to, the distribution of any dividend or the effectuation of any redemption that could give rise to any Tax liability or reduce any Tax Asset of the Sellers’ Affiliated Group, (ii) make any election or deemed election under Section 338 of the Code or any comparable provision under applicable law (other than the Section 338(h)(10) Election) that will adversely affect the Sellers; or (iii) change any prior Company Tax election in a manner that increases Tax liability or reduces any Tax Asset of any Seller or the Sellers’ Affiliated Group in respect of any Pre-Closing Tax Period.

(b)Buyer shall prepare or cause to be prepared and timely file or cause to be timely filed all separate Tax Returns for the Company (i.e., Tax Returns

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other than Combined Tax Returns described in Section 8.02), if any, that are first due and required to be filed after the Closing Date with respect to the operations of the Company for Pre-Closing Tax Periods and timely pay amounts shown as due on such Returns.  Sellers shall indemnify Buyer for all Taxes shown on such Tax Return to the extent provided in Section 8.05.  Any such Tax Return shall be prepared in a manner consistent with past practice and without a change of any election or any accounting method and shall be submitted by Buyer to each Seller (together with schedules, statements and, to the extent requested by any Seller, supporting documentation) at least 45 days prior to the due date (including extensions) of such Tax Return.  Sellers shall furnish Buyer access to information, in a manner consistent with access provided pursuant to Section 5.02(c), as reasonably requested by Buyer to allow Buyer to satisfy its obligations under this Section 8.02 in accordance with past custom and practice.  The Sellers shall have the right to review and comment with respect to such Returns and all work papers and procedures used to prepare any such Tax Returns.  If any Seller, within ten business days after delivery of any such Tax Returns, notifies Buyer in writing that it objects to any of the items in such Tax Return, the parties shall attempt in good faith to resolve the dispute prior to the due date for filing any such Tax Returns.  If the parties cannot resolve any such dispute, the dispute shall be resolved (within a reasonable time, taking into account the deadline for filing such Tax Return) by the Independent Firm.  Upon resolution of all such items, the relevant Tax Return shall be adjusted to reflect such resolution and shall be binding upon the parties without further adjustment.  The fees and expenses of the Independent Firm shall be borne equally by Buyer, on the one hand, and the Sellers, on the other hand.  Buyer shall also cause the Company to prepare and file separate income Tax Returns for all Post-Closing Tax Periods, or shall include the Company’s taxable income from Post-Closing Tax Periods in the Combined Tax Returns of Buyer or its Affiliates.

(c)For purposes of this Article 8, the taxable income of the Company shall be allocated between the Pre-Closing Tax Period and the Post-Closing Tax Period by closing the books of the Company as of the end of the Closing Date.  All income and gain resulting from the Section 338(h)(10) Election shall be allocated to the Pre-Closing Period.  For this purpose, the taxable year of any partnership or other pass-through entity in which the Company owns an interest shall be deemed to have ended at the end of the Closing Date.  In the case of any property Taxes or other periodic Taxes (excluding income and other income based Taxes) (“Non-Income Taxes”) imposed on the Company for a taxable period that includes, but does not end on, the Closing Date, the amount of such any such periodic Non-Income Taxes imposed for such period shall be allocated between the Pre-Closing Tax Period and the Post-Closing Tax Period in the ratio that the number of days in the Pre-Closing Tax Period bears to the number of days in the Post-Closing Tax Period.

(d)Buyer shall promptly pay or cause to be paid to each Seller all (i) refunds of Taxes received by Buyer, any Affiliate of Buyer or the Company of

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Taxes paid by such Seller with respect to any Pre-Closing Tax Period (except any such refunds receivable that are taken into account in the calculation of Final Working Capital) and (ii) without duplication, amounts representing the excess of any amounts taken into account as liabilities for Taxes in connection with the determination of Closing Working Capital over the amount of such Taxes actually paid by Buyer.  If, in lieu of receiving any such refund, the Company elects to reduce a Tax liability with respect to a Post-Closing Tax Period or elects to increase a Tax Asset that can be carried forward to a Post-Closing Tax Period, Buyer shall promptly pay or cause to be paid to the relevant Seller the amount of such reduction in Tax liability or the amount of any benefit resulting from such increase in Tax Assets, as the case may be.  The Sellers agree to indemnify Buyer for any Taxes resulting from a subsequent disallowance of such refund or Tax benefit to the extent paid or credited to the Sellers, on audit or otherwise.

(e)All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties and interest) incurred in connection with transactions contemplated by this Agreement (including any real property transfer Tax and any similar Tax, but excluding income Taxes) shall be borne and paid equally by Buyer, on the one hand, and the Sellers, on the other hand, and the parties will, at their own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes and fees, and, if required by applicable law, the parties will, and will cause the Company to, join in the execution of any such Tax Returns and other documentation.

Section 8.03.  Tax Sharing.  Any and all existing Tax sharing agreements between the Company and any member of the Sellers’ Affiliated Group shall be terminated as of the Closing Date.  After such date the Company shall not have any further rights or liabilities thereunder.  This Agreement shall be the sole Tax sharing agreement relating to the Company for all Pre-Closing Tax Periods.

Section 8.04.  Cooperation on Tax Matters.  Buyer and the Sellers agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information (including access to books and records) and assistance relating to the Company as is reasonably necessary for the filing of any Tax Return (including any report required pursuant to Section 6043 of the Code and all Treasury Regulations promulgated thereunder), for the preparation for any audit, and for the prosecution or defense of any claim, suit or proceeding relating to any proposed adjustment.  Buyer and the Sellers agree to retain or cause to be retained all books and records pertinent to the Company until the applicable period for assessment under applicable law (giving effect to any and all extensions or waivers) has expired, and to abide by or cause the abidance with all record retention agreements entered into with any Taxing Authority.  Each party shall give the other party reasonable notice prior to transferring, discarding or destroying any such books and records relating to Tax matters and, if the other party so requests, shall allow the other party to take possession of copies of such books and records.  Buyer and the Sellers shall cooperate with each other in the conduct of any audit or other proceedings involving the Company for any Tax

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purposes and each shall execute and deliver such powers of attorney and other documents as are necessary to carry out the intent of this subsection.

Section 8.05.  Tax Indemnification.  (a) Each of the Sellers shall indemnify the Company, Buyer and Buyer’s Affiliates, and hold them harmless from and against, any loss, claim, liability, expense or other damage, including reasonable attorneys’ fees and expenses and reasonable accountants’ fees and expenses (collectively a “Tax Loss”) resulting from or attributable to (i) all Taxes (or the non-payment thereof) of the Company for or allocable to all Pre-Closing Tax Periods, except for any interest or penalties attributable to Buyer’s failure to perform its obligations pursuant to Section 8.02(b), (ii) all Taxes of any Affiliated Group of which the Company (or any predecessor of any of the foregoing) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar state, local or foreign law or regulation, (iii) any and all Taxes of any person (other than the Company) imposed on the Company as a transferee or successor, by contract or under any law by reason of an event or transaction occurring before the Closing, and (iv) any breach or misrepresentation of the Sellers’ representations, warranties and covenants under Section 3.14 and this Article 8; provided, however, that in the case of clauses (i), (ii) and (iii)) above, the Sellers shall be liable only to the extent that such Taxes exceed the amount of liability, if any, for such Taxes included in the determination of Closing Working Capital as a Current Liability.

(b)Buyer shall indemnify the Sellers and the Sellers’ Affiliates, and hold them harmless from and against, any Tax Loss resulting from or attributable to (i) all Taxes (or the non-payment thereof) of the Company that are allocable to Post-Closing Tax Periods, and (ii) any breach of Buyer’s covenants under this Article 8.

(c)The determination of the amount payable to or by any party under Section 8.03 or this Section 8.05 shall be made in the first instance by the party seeking payment who (i) shall furnish the other party with a notice setting forth in reasonable detail the computations and methods used in computing such amount and (ii) shall provide such information with respect thereto as may reasonably be requested.  Any such notice pursuant to this Section 8.05(c) shall (A) be signed by an officer, (B) state in reasonable detail the basis upon which such amount or adjustment has been determined and (C) certify that such amount or adjustment has been determined pursuant to and in compliance with this Agreement.  Disputes arising under Section 8.03 or Section 8.05 and not resolved by mutual agreement within 30 days shall be resolved by the Independent Firm.  The Independent Firm shall resolve any disputed items as soon as reasonably practicable (and the parties shall use their best commercial efforts to cause such resolution to occur within 30 days) after having the item referred to it, pursuant to such procedures as it may require.  The costs, fees and expenses of the Independent Firm shall be borne equally by Buyer, on the one hand, and the Sellers, on the other hand.  The determination of the Independent Firm shall be conclusive and binding on the parties.

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(d)If Buyer or its Affiliates (including the Company after Closing) receive written notice from any Taxing Authority of a Tax Audit regarding potential liability for or with respect to Taxes for which the Sellers may be required to provide indemnity under Section 8.05 or which were taken into account in the determination of Closing Working Capital as a Current Liability, or receive any other written claim or demand for such Taxes from a Taxing Authority for which the Sellers may be required to provide indemnity under Section 8.05 or which were taken into account in the determination of Closing Working Capital as a Current Liability, Buyer shall promptly notify each Seller in writing of such Tax Audit, notice, demand or claim.  The Sellers may discharge, at any time, their indemnification obligation under this Section 8.05 with respect to such Tax Audit, demand or claim by paying to Buyer the amount payable pursuant to Section 8.05, calculated on the date of such payment. Alternatively, other than with respect to Buyer Combined Tax Returns, the Sellers may, at their own expense, participate in and, upon notice to Buyer, assume the defense of any such claim, suit, action, litigation or proceeding (including any Tax Audit).  If the Sellers assume such defense, the Sellers shall have the sole discretion as to the conduct of such defense but, other than in the case of any matter involving a Seller Combined Tax Return, shall consult with Buyer and keep Buyer reasonably informed as to the status of the Tax contest.  Whether or not any Seller chooses to defend or prosecute any claim, all of the parties hereto shall cooperate in the defense or prosecution thereof.  Except with respect to any Tax not in excess of the amount of liability for that Tax included in the determination of Closing Working Capital as a Current Liability, the Sellers shall not settle any Tax claim, other than in the case of any matter involving a Seller Combined Tax Return, that they are defending hereunder without obtaining the approval of Buyer, not to be unreasonably withheld.

(e)If any Seller receives written notice from any Taxing Authority of a Tax Audit regarding potential liability for or with respect to Taxes for which Seller may be entitled to payment from Buyer pursuant to Section 8.02(d) or Buyer may be required to provide indemnity under Section 8.05(b), or receives any other written claim or demand for such Taxes from a Taxing Authority for which Seller may be entitled to payment from Buyer pursuant to Section 8.02(d) or Buyer may be required to provide indemnity under Section 8.05(b), such Seller shall promptly notify Buyer in writing of such Tax Audit notice, demand or claim.  Buyer may discharge, at any time, its indemnification obligation under this Section 8.05 with respect to such Tax Audit, demand or claim by paying to the relevant Seller the amount payable pursuant to Section 8.05(b), calculated on the date of such payment.  Alternatively, other than with respect to Seller Combined Tax Returns, Buyer may, at its own expense, participate in and, upon notice to the relevant Seller, assume the defense of any such claim, suit, action, litigation or proceeding (including any Tax Audit).  If Buyer assumes such defense, Buyer shall have the sole discretion as to the conduct of such defense but shall, other than with respect to Buyer Combined Tax Returns, consult with the relevant Seller and keep such Seller reasonably informed as to the status of such Tax

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contest.  Whether or not Buyer chooses to defend or prosecute any claim, all of the parties hereto shall cooperate in the defense or prosecution thereof.  Buyer shall not settle any Tax claim, other than with respect to Buyer Combined Tax Returns, that it is defending hereunder without obtaining the approval of the relevant Seller, not to be unreasonably withheld.

(f)Any Tax indemnity payment made pursuant to this Section 8.05 shall be made within 30 days after final determination of the Tax Loss to be indemnified.

Section 8.06.  Purchase Price Adjustment.  Any amount paid under Article 8 or Article 11 will be treated as an adjustment to the Purchase Price.

ARTICLE 9
EMPLOYEE BENEFITS

Section 9.01.  Employee Benefits.  (a) Except to the extent otherwise prohibited by applicable law, during the period commencing on the Closing Date and ending 90 days thereafter, Buyer shall cause the Company to provide to all employees of the Company who continue to be employed by the Company or Buyer on and after the Closing Date rates of compensation (including base wages or salary and bonus opportunity, but excluding equity or long term incentives) no less favorable than the rates of compensation provided by the Company to such employees immediately prior to the Closing Date, and benefits no less favorable, in the aggregate, than the benefits provided by the Company to such continuing employees immediately prior to the Closing Date.  Nothing herein shall be construed, however, to require the Company or Buyer to continue after Closing the employment of any Company employee or to otherwise interfere with the Company’s right to terminate any such employees at any time after Closing.

(b)Following the Closing Date, except to the extent otherwise prohibited by applicable law, each employee of the Company shall receive service credit for purposes of eligibility to participate and vesting (but not for benefit accrual purposes) for all periods of employment with the Company and its Affiliates and predecessors thereto prior to the Closing Date under any employee benefit plan of Buyer or its Affiliates in which such employee is eligible to participate after the Closing Date, to the extent such credit existed immediately prior to the Closing Date under the corresponding Employee Plan maintained by the Company.  Buyer will cause each employee of the Company to receive credit immediately following the Closing Date for such employee’s accrued and unpaid vacation and/or unpaid leave balance as of the Closing Date.

(c)Except to the extent otherwise prohibited by applicable law, Buyer will cause to be waived all (i) pre-existing conditions and proof of insurability provisions for all conditions that are covered by any employee benefits plan of Buyer or its Affiliates in which any employee of the Company participates and

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that such employee or his or her covered dependents have as of the Closing Date, and (ii) waiting periods under each plan that would otherwise be applicable to newly hired employees, in each case with respect to any employee of the Company to the same extent waived or satisfied under the corresponding Employee Plan; provided the employee has no intervening separation of service from the Company or Buyer after Closing of more than 63 days.

(d)Buyer will cause any eligible expenses incurred by an employee of the Company and his or her covered dependents during the portion of the plan year of any Employee Plan ending on the date such employee’s participation in such Employee Plan ended to be accounted for in the corresponding new or existing employee benefit plan of Buyer or its Affiliates for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and/or his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such new or existing employee benefit plan.

ARTICLE 10
CONDITIONS TO CLOSING

Section 10.01.  Conditions to Obligations of Buyer and the Sellers.  The obligations of Buyer and the Sellers to consummate the Closing are subject to the satisfaction of the following conditions:

(a)any applicable waiting period under the HSR Act relating to the transactions contemplated hereby shall have expired or been terminated;

(b)no provision of any Law shall prohibit the consummation of the Closing;

(c)the DOT Exemption shall have been granted by the DOT;

(d)there shall not be in effect any Law enacted, enforced, promulgated, issued or deemed applicable to the transactions contemplated hereby of any Governmental Authority that makes illegal or otherwise materially restrains or prohibits the consummation of the transactions contemplated hereby; and

(e)the Escrow Agreement shall have been executed and delivered by the parties thereto and Buyer shall have deposited on or prior to Closing, the amounts required to be deposited by it in the Escrow Account (as defined in Schedule 2.01) as of the Closing Date.

Section 10.02.  Conditions to Obligation of Buyer.  The obligation of Buyer to consummate the Closing is subject to the satisfaction of the following further conditions:

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(a)the Sellers shall have performed or complied with in all material respects all of the covenants and agreements required to be performed by it on or prior to the Closing Date under this Agreement, and the representations and warranties of the Sellers set forth in this Agreement shall be true at and as of the Closing Date as if made at and as of such time (except as to any representation or warranty which speaks as of a specific date, which must be true as of such date), with only such exceptions as would not in the aggregate have a Company Material Adverse Effect, and Buyer shall have received a certificate signed by Delta’s chief financial officer to the foregoing effect;

(b)there shall not have occurred any Company Material Adverse Effect after the date hereof which is continuing on the Closing Date;

(c)each of Delta and the Company shall have executed and delivered each Related Agreement to which it is a party and Delta Technology, Inc. shall have executed and delivered to Buyer the Transitional Technology Services Agreement;

(d)Sellers shall have executed and delivered to Buyer all necessary forms, including an IRS Form 8023 executed by Delta, in connection with the Section 338(h)(10) Election;

(e)Buyer shall have received all documents it may reasonably request relating to the existence of the Sellers and the authority of the Sellers for this Agreement, all in form and substance reasonably satisfactory to Buyer; and

(f)(i) There shall have been no change in Law (including amendments to statutes, issuance of proposed or final regulations, or other governmental rulings or published interpretations) with respect to Section 412 of the Code or Section 302 of ERISA that would result in the Company having a material liability after Closing under the Delta Plans, and (ii)  neither the Chief Counsel nor any other more senior officer of the PBGC shall have asserted or confirmed in writing to Sellers or the Company that the Company has or would have such material liability after Closing, and Buyer determines in reasonable good faith, upon advice of counsel, that such a claim by the PBGC would have a reasonable probability of success; and (iii) neither Delta nor the PBGC shall have terminated or instituted proceedings to terminate the Delta Plans.

Section 10.03.  Conditions to Obligation of the Sellers.  The obligation of the Sellers to consummate the Closing is subject to satisfaction of the following further conditions:

(a)Buyer shall have performed or complied with in all material respects all of the covenants and agreements required to be performed by it on or prior to the Closing Date under this Agreement, and the representations and warranties of Buyer set forth in this Agreement shall be true at and as of the Closing Date as if made at and as of such time (except as to any representation or warranty which

49

speaks as of a specific date, which must be true as of such date), with only such exceptions as would not in the aggregate result in a Buyer Material Adverse Effect, and the Sellers shall have received a certificate signed by Buyer’s chief financial officer to the foregoing effect;

(b)Each of Buyer and SkyWest shall have executed and delivered the Delta Connection Agreements and each other Related Agreement to which it is a party; and

(c)the Sellers shall have received all documents it may reasonably request relating to the existence of Buyer and the authority of Buyer for this Agreement, all in form and substance reasonably satisfactory to the Sellers.

ARTICLE 11
SURVIVAL; INDEMNIFICATION

Section 11.01.  Survival.  Except as specifically set forth below, the representations and warranties of the parties hereto contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall survive the Closing until the first anniversary of the Closing Date.  The covenants and agreements of the parties hereto contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall survive the Closing indefinitely or for the shorter period explicitly specified therein, except that for such covenants and agreements that survive for such shorter period, breaches thereof shall survive indefinitely or until the latest date permitted by law.  Notwithstanding the preceding sentences, any breach of representation, warranty, covenant or agreement in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to the preceding sentences, if notice of the inaccuracy or breach thereof giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time.

Section 11.02.  Indemnification.  (a) Effective at and after the Closing, each of the Sellers hereby indemnifies Buyer and its Affiliates against and agrees to hold each of them harmless from any and all damage, loss and expense (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses and any fines or penalties imposed) (“Damages”, which shall not include amounts subject to indemnification by the Sellers pursuant to Section 8.05) actually suffered by Buyer or any of its Affiliates arising out of any misrepresentation or breach of representation or warranty (each such misrepresentation and breach, a “Warranty Breach”) or breach of covenant or agreement made or to be performed by the Sellers pursuant to this Agreement (other than a covenant or agreement made or to be performed pursuant to Article 8); provided that with respect to indemnification by the Sellers for Warranty Breaches pursuant to this Section, (i) with respect to any individual Warranty

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Breach, no such Warranty Breach shall be deemed to have occurred unless the amount of Damages with respect thereto exceeds $37,500, (ii) the Sellers shall not be liable unless the aggregate amount of Damages with respect to Warranty Breaches exceeds $5 million and then only to the extent of such excess and (iii) the Sellers’ maximum liability for all Warranty Breaches shall not exceed $100 million.

(b)Effective at and after the Closing, Buyer hereby indemnifies Delta and its Affiliates against and agrees to hold each of them harmless from any and all Damages actually suffered by Delta or any of its Affiliates arising out of any Warranty Breach or breach of covenant or agreement made or to be performed by Buyer pursuant to this Agreement (other than a representation, warranty, covenant or agreement made or to be performed pursuant to Article 8); provided that, with respect to indemnification by Buyer for Warranty Breaches pursuant to this Section, (i) with respect to any individual Warranty Breach, no such Warranty Breach shall be deemed to have occurred unless the amount of Damages with respect thereto exceeds $37,500, (ii) Buyer shall not be liable unless the aggregate amount of Damages with respect to Warranty Breaches exceeds $5 million and then only to the extent of such excess and (iii) Buyer’s maximum liability for all Warranty Breaches shall not exceed $100 million.

Section 11.03.  Procedures.  (a) The party seeking indemnification under Section 11.02 (the “Indemnified Party”) agrees to give prompt notice to the party against whom indemnity is sought (the “Indemnifying Party”) of the assertion of any claim, or the commencement of any suit, action or proceeding (“Claim”) in respect of which indemnity may be sought under such Section and will provide the Indemnifying Party such information with respect thereto that the Indemnifying Party may reasonably request. The failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure shall have adversely affected the Indemnifying Party.

(b)The Indemnifying Party shall be entitled to participate in the defense of any Claim asserted by any third party (“Third Party Claim”) and, subject to the limitations set forth in this Section, shall be entitled to assume the control of and appoint lead counsel for such defense, in each case at its expense.

(c)If the Indemnifying Party shall assume the control of the defense of any Third Party Claim in accordance with the provisions of this Section 11.03, (i) the Indemnifying Party shall obtain the prior written consent of the Indemnified Party (which shall not be unreasonably withheld, delayed or conditioned) before entering into any settlement of such Third Party Claim, but only if the settlement does not release the Indemnified Party from all liabilities and obligations with respect to such Third Party Claim or if the settlement imposes injunctive or other equitable relief against the Indemnified Party, and (ii) the Indemnified Party shall be entitled to participate in the defense of such Third Party Claim and to employ separate counsel of its choice for such purpose.  The fees and expenses of such

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separate counsel shall be paid by the Indemnified Party.  The Indemnifying Party shall have no indemnification obligations with respect to any Third Party Claim that shall be settled by the Indemnified Party without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, delayed or conditioned.

(d)Each party shall cooperate, and cause their respective Affiliates to cooperate, in the defense or prosecution of any Third Party Claim and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith.  The Indemnified Party shall keep the Indemnifying Party fully informed of the defense of any Third Party Claim conducted by such Indemnified Party.

(e)Each Indemnified Party shall use reasonable efforts to collect any amounts available under insurance coverage, or from any other Person alleged to be responsible, for any Damages payable under Section 11.02.

Section 11.04.  Calculation of Damages.  (a) The amount of any Damages payable under Section 11.02 by the Indemnifying Party shall be net of any (i) amounts recovered or recoverable by the Indemnified Party under applicable insurance policies or from any other Person alleged to be responsible therefor and (ii) amounts relating to such Damages paid or payable by the Indemnifying Party or any of its Affiliates to the Indemnified Party or any of its Affiliates under either of the Delta Connection Agreements.  If the Indemnified Party receives any amounts under applicable insurance policies, or from any other Person alleged to be responsible for any Damages, or pursuant to either of the Delta Connection Agreements, subsequent to an indemnification payment by the Indemnifying Party, then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by such Indemnifying Party in connection with providing such indemnification payment up to the amount received by the Indemnified Party, net of any expenses incurred by such Indemnified Party in collecting such amount.

(b)The Indemnifying Party shall not be liable under Section 11.02 for any (i) Damages relating to any matter to the extent that there is included in the Balance Sheet a specific liability or reserve relating to such matter, (ii) consequential or punitive Damages or (iii) Damages for lost profits.

Section 11.05.  Exclusivity.  Except as specifically set forth in this Agreement or in any Related Agreement, effective as of the Closing, Buyer and the Company waive any rights and claims they may have against either of the Sellers, whether in law or in equity, relating to the Company or the Shares or the transactions contemplated hereby.  The rights and claims waived by Buyer and the Company include claims for contribution or other rights of recovery arising out of or relating to any Environmental Law (whether now or hereinafter in effect), claims for breach of contract, breach of representation or warranty,

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negligent misrepresentation and all other claims for breach of duty.  After the Closing, Section 8.05 and Section 11.02 will provide the exclusive remedy for any misrepresentation, breach of warranty, covenant or other agreement or other claim arising out of this Agreement or the transactions contemplated hereby.  Except as specifically set forth in this Agreement or in any Related Agreement, effective as of the Closing, the Sellers waive any rights and claims they may have against Buyer and the Company relating to the transactions contemplated hereby or thereby.  The foregoing limitations shall not apply to any claims based on fraud.

Section 11.06.  Knowledge.  Notwithstanding anything in this Agreement to the contrary, the rights of the parties to indemnification based on the representations and warranties set forth in this Agreement shall not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) about the accuracy or inaccuracy of or compliance with, any such representation or warranty.

ARTICLE 12
TERMINATION

Section 12.01.  Grounds for Termination.  This Agreement may be terminated at any time prior to the Closing:

(a)by mutual written agreement of Delta and Buyer;

(b)unless otherwise agreed to by Buyer and Delta, automatically if the Closing shall not have been consummated on or before October 31, 2005;

(c)by either Delta or Buyer if consummation of the transactions contemplated hereby would violate any nonappealable final order, decree or judgment of any Governmental Authority having competent jurisdiction; or

(d)by Buyer if (i) Delta shall have filed a petition for relief under the Bankruptcy Code prior to the Closing or (ii) an involuntary petition for relief under the Bankruptcy Code is filed against Delta prior to the Closing by any party other than (x) Buyer or its Affiliates or (y) any Person acting at the direction of or in concert with Buyer or its Affiliates and such petition is not dismissed prior to the Closing;

The party desiring to terminate this Agreement pursuant to clauses (b), (c) or (d) of this Section 12.01 shall give notice of such termination to the other party.

Section 12.02.  Effect of Termination.  If this Agreement is terminated as permitted by Section 12.01, such termination shall be without liability of any party (or any stockholder, director, officer, employee, agent, consultant or representative of such party) to any other party to this Agreement; provided that if

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such termination shall result from either party’s willful (i) failure to fulfill a condition to the performance of the obligations of the other party, (ii) failure to perform a covenant set forth in this Agreement or (iii) breach of any representation or warranty or agreement contained herein, such failing or breaching party shall be fully liable for any and all Damages incurred or suffered by the other party as a result of such failure or breach.  The provisions of Section 6.01, 13.03, 13.05, 13.06 and 13.07 shall survive any termination hereof pursuant to Section 12.01.

ARTICLE 13
MISCELLANEOUS

Section 13.01.  Notices.  All notices and other communications hereunder shall be in writing (including facsimile transmission, with confirmation of receipt) and shall be deemed to have been duly given (i) when delivered personally or by facsimile, (ii) when received by the addressee, if sent by Express Mail, Federal Express or other express delivery service (receipt requested), or (iii) three business days after being sent by registered or certified mail, return receipt requested, in each case to the other party at the following addresses (or to such other address for a party as shall be specified by like notice, provided that notices of a change of address shall be effective only upon receipt thereof):

if to Buyer to:

SkyWest, Inc.
444 South River Road
St. George, Utah 84790-2086
Attention: Chief Financial Officer
Facsimile No.: (435) 634-3305

with a copy to:

Parr Waddoups Brown Gee & Loveless
185 South State Street, Suite 1300
Salt Lake City, Utah 84111-1537
Attention: Kent H. Collins
Facsimile No.: (801) 532-7750

if to either of the Sellers, to:

Delta Air Lines, Inc.
1030 Delta Boulevard
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320-6001
Attention:  EVP & CFO
Facsimile No.: (404) 715-4098

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with a copy to:

Law Department (#981)
Delta Air Lines, Inc.
1030 Delta Boulevard
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320-6001
Attention:  SVP – General Counsel
Facsimile No.:  (404) 715-2233

with a copy to:

Davis Polk & Wardwell
450 Lexington Avenue
New York, New York  10017
Attention:  Paul R. Kingsley
Facsimile No.:  (212) 450 3800

; provided that any communication by facsimile shall be confirmed by a copy sent via overnight mail to the physical address of the recipient set forth above.  All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5 p.m. in the place of receipt and such day is a Business Day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.

Section 13.02.  Amendments and Waivers.  (a) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.

(b)No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

Section 13.03.  Expenses.  Except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense.

Section 13.04.  Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or

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otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto.

Section 13.05.  Governing Law.  This Agreement shall be governed by and construed in accordance with the law of the State of New York, without regard to the conflicts of law rules of such state.

Section 13.06.  Jurisdiction.  The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York or any New York State court sitting in New York, New York, so long as one of such courts shall have subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 13.01 shall be deemed effective service of process on such party.

Section 13.07.  WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 13.08.  Specific Performance.  The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal court located in the State of New York or any New York state court sitting in New York, New York, in addition to any other remedy to which they are entitled at law or in equity.

Section 13.09.  Counterparts; Effectiveness; Third-Party Beneficiaries.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other

56

party hereto.  Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication).  No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.

Section 13.10.  Entire Agreement.  This Agreement (including the Schedules and Exhibits hereto), the Confidentiality Agreement and the Related Agreements constitute the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement.

Section 13.11.  Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic and legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

Section 13.12.  Disclosure Schedules.  The parties acknowledge and agree that (i) the Schedules to this Agreement may include certain items and information solely for informational purposes for the convenience of Buyer, (ii) the disclosure by the Sellers of any matter in the Schedules shall not be deemed to constitute an acknowledgment by the Sellers that the matter is required to be disclosed by the terms of this Agreement or that the matter is material and (iii) matters disclosed on any Schedule to this Agreement shall be deemed disclosed and incorporated in any other Schedule where it is reasonably apparent that such information is relevant to such other Schedule.

Section 13.13.  Construction.  This Agreement shall be construed as though all parties had drafted it.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

SKYWEST, INC.
By:	/s/ Bradford R. Rich
	Name: Bradford R. Rich
	Title: EVP, CFO and Treasurer
DELTA AIR LINES, INC.
By:	/s/ Gerald Grinstein
	Name: Gerald Grinstein
	Title: Chief Executive Officer
ASA HOLDINGS, INC.
By:	/s/ William E. Barnette
	Name: William E. Barnette
	Title: President
SKYWEST, INC.
By:	/s/ Jerry C. Atkin
	Name: Jerry C. Atkin
	Title: President

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SCHEDULE 1.01

ACCOUNTING COMPONENTS

The accounting items identified by capitalized terms in the definitions of “Closing Intercompany Working Capital”, “Current Assets” and “Current Liabilities” shall consist of only the accounting components set forth under each such term below, which correspond to the accounting components of the same name included and identified within the applicable line items in the Balance Sheet.

1.“Accounts Receivable, net of the Allowance for Doubtful Accounts” shall only include:

(a)“AR_TRADE” (Accounts Receivable Trade)

(b)“AR_EMPLOYEE” (Accounts Receivable Employee)

(c)“AR_GOVT” (Accounts Receivable Government)

(d)“AR_NOTE_INT” (Accounts Receivable Notes Interest)

(e)“AR_OTH” (Other Accounts Receivable) and

(f)“AR_BD” (Bad Debt).

2.“Accrued Liabilities” shall only include:

(a)“AP_OTH_ACCR” (Other Accrued Expenses)

(b)“ACCR_RENT_ST” (Accrued Rent) and

(c)“AP_ACCR_INT” (Accrued Interest)

3.“Accrued Salaries and Vacation Pay” shall only include:

(a)“SAL_PAY” (Salaries Payable) excluding the amount accrued for potential pilot salary increases ($14,440,024.15 as of July 31, 2005 and growing at $382,053 per month)

(b)“AP_EE_BWA” (Employee Benefit Withholding Accrual) and

(c)“VAC_PAY” (Vacation Accrual).

4.“Accrued Taxes” shall only include:

(a)“2140110” (State Income Tax Accrual)

(b)“2140120” (Franchise Tax Accrual)

(c)“2140130” (Property Tax Accrual)

(d)“2140140” (Use Tax Approval)

(e)“2140175” (Sales Tax Collected) and

(f)“2140185” (Goods & Services Tax Payable-Canada).

5.“Intercompany Payables” shall only include:

(a)“2120510” (Intercompany Payable-Non-Auto. Postings)

(b)“2120550” (Intercompany Payable-Automatic Postings) and

(c)“2120104” (Intercompany AP-Reconciliation Account).

6.“Intercompany Receivables” shall only include:

(a)“1270050” (Intercompany Receivable-Automatic Posting)

(b)“1270060” (Intercompany Receivable-Non-Auto Posting) and

(c)“1270201” (A/R Intercompany Account Reconciliation).

7.“Payables” shall only include:

(a)“AP_TRADE” (Accounts Payable Trade)

(b)“AP_FUEL” (Accounts Payable Fuel and Fuel Tax)

(c)“AP_CONTRACT” (Contract Accruals)

(d)“AP_DIV_ACCR” (Divisional Accruals) and

(e)“AP_ACCR_PROF_FEE” (Accrued Professional Fees).

8.“Prepaid Expenses” shall only include:

(a)“PPD_FUEL” (Prepaid Fuel)

(b)“PPD_EXP” (Prepaid Expenses) including account “1410125” (Prepaid Rent -Aircraft Leases) and

(c)“OTH_CA” (Other Current Assets).

9.“Spare Parts and Supplies” shall only include “PPD_SPARES” (Spare Parts and Supplies).

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Schedule 2.01

Contingent Additional Amount and Escrow Agreement

Capitalized terms used but not defined in this Schedule 2.01 shall have the meanings given to them in the Stock Purchase Agreement (“Stock Purchase Agreement”) dated August 15, 2005 among SkyWest, Inc., Delta Air Lines, Inc. and ASA Holdings, Inc.

Definitions “Accredited Investor” has the meaning set forth in Rule 501 of Regulation D under the Securities Act. “Adjustment Amount” means the amount of any Purchase Price adjustment payment required to be made to Buyer in accordance with the provisions set forth in Section 2.04 of the Stock Purchase Agreement (together with any interest thereon). “Adjustment Date” means the date on which the payment contemplated by Section 2.04(d) of the Stock Purchase Agreement or the reduction contemplated in Section 2.04(e) of the Stock Purchase Agreement is made. “ASAH Account” means an account designated by ASAH with notice to Buyer and Escrow Agent. “ASAH Trigger Date” means the earlier of (a) the first Business Day, if ever, following the occurrence of a Delta Bankruptcy Event and an ASAH Bankruptcy Event on which (A) an order of the Bankruptcy Court approving the assumption by Delta pursuant to Section 365(a) of the Bankruptcy Code of each of the Delta Connection Agreements becomes a Final Order, which (i) provides, to the extent required by Section 365 of the Bankruptcy Code, for the cure of all defaults by Delta under the Delta Connection Agreements (other than, with respect to any such agreement, any alleged defaults of a type arising from time to time in the ordinary course of the administration of such agreement, e.g., alleged defaults arising from good faith disputes relating to the verification of factual matters relevant to such agreement or the interpretation of one or more terms of such agreement), (ii) waives, on behalf of Delta and its estate and ASAH and its estate, all avoidance actions pursuant to Chapter 5 of the Bankruptcy Code including under any state fraudulent transfer or similar laws

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against any of SkyWest, Buyer and ASA to the extent arising out of or in connection with the Stock Purchase Agreement or any of the Delta Connection Agreements, (iii) is in form reasonably satisfactory to the Buyer in the exercise of its reasonable judgment and (B) all defaults described in clause (A)(i) above shall have been cured, and (b) the Regular Release Date; provided that if, on or before the Regular Release Date, a Delta Bankruptcy Event or ASAH Bankruptcy Event occurs, then the Regular Release Date shall be extended to the later of the Regular Release Date and the applicable Extension Date. Notwithstanding anything to the contrary in this Schedule 2.01, the date of a Final Order for a Good Cause Termination shall be deemed to be an ASAH Trigger Date.

“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. §§ 101 et seq.), as amended from time to time, and any reference to a specific section of the Bankruptcy Code includes any successor provision thereto.

“Bankruptcy Court” means, with reference to any voluntary or involuntary case commenced by or against any Person under the Bankruptcy Code, the court presiding over such case.

“Bankruptcy Event” means, with respect to any Person:

(i)the commencement of a voluntary case or other proceeding by such Person seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or the consent by such Person to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or the making of a general assignment for the benefit of creditors by such Person (any such event, a “Voluntary Bankruptcy Event” with respect to such Person); or

(ii)the commencement of an involuntary case or other proceeding against such Person seeking

4

liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, which involuntary case or other proceeding shall, remain undismissed and unstayed for a period of 60 calendar days; or the entry of an order for relief against such Person under the Bankruptcy Code (any such event, an “Involuntary  Bankruptcy Event” with respect to such Person).

A Bankruptcy Event, Voluntary Bankruptcy Event or Involuntary Bankruptcy Event occurring with respect to Delta may be referred to as a “Delta Bankruptcy Event”, a “Delta Voluntary Bankruptcy Event” or a “Delta Involuntary Bankruptcy Event”, respectively.

A Bankruptcy Event, Voluntary Bankruptcy Event or Involuntary Bankruptcy Event occurring with respect to ASAH may be referred to as an “ASAH Bankruptcy Event”, an “ASAH Voluntary Bankruptcy Event” or an “ASAH Involuntary Bankruptcy Event”, respectively.

“Buyer Account” means an account designated by Buyer with notice to ASAH and Escrow Agent.

“Buyer Trigger Date I” means the date upon which any Adjustment Amount is required to be paid to the Buyer pursuant to the provisions of the Stock Purchase Agreement.

“Buyer Trigger Date II” means if, prior to the Regular Release Date, there has been a Judicial Termination, then the date of such Judicial Termination.

“Escrow Account” means an account to be maintained with the Escrow Agent pursuant to the Escrow Agreement.

“Escrow Account Earnings” means the amounts from time to time deposited in the Escrow Account as interest, earnings or other income arising out of Permitted Investments of the Escrow Amount by the Escrow Agent.

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“Escrow Agent” means a bank or other institution mutually acceptable to the Buyer and ASAH and acting as the escrow agent under the Escrow Agreement.

“Escrow Amount” means, on any date, the amount then deposited in the Escrow Account pursuant to the Buyer’s obligation to deposit amounts as specified below under “Deposits to the Escrow Account.”

“Extension Date” means (a) if a Delta Involuntary Bankruptcy Event has occurred, the second Business Day following the date on which the relevant involuntary case or other proceeding is dismissed without any order for relief having been granted therein, but only if (i) such date occurs no later than 60 calendar days after the occurrence of such Bankruptcy Event and (ii) during such case or proceeding, Delta has not successfully rejected any Delta Connection Agreement pursuant to Section 365(a) of the Bankruptcy Code, or (b) if either (i) a Delta Involuntary Bankruptcy Event has occurred and the relevant case or proceeding has remained undismissed for a period of more than 60 calendar days or an order for relief has been granted therein or (ii) a Delta Voluntary Bankruptcy Event has occurred, the date, if ever, that is the second Business Day following the occurrence of the conditions set forth in clause (a) of the definition of ASAH Trigger Date.

“Final Order” means an order of the Bankruptcy Court (or other court having jurisdiction) as to which the time to appeal, petition for certiorari or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari, or other proceeding for a new trial, reargument or rehearing is pending or, if an appeal, petition for certiorari, or other proceeding for a new trial, reargument or rehearing has been timely filed or taken, such order shall have been affirmed (or such appeal or petition has been dismissed as moot) by the highest court (or other tribunal having appellate jurisdiction over such order) to which the order was appealed or the petition for certiorari or motion for a new trial, reargument or rehearing has been denied, and the time to take any further appeal or to seek further certiorari or move for a new trial, reargument or rehearing has expired; provided however that for the determination of the ASAH Trigger Date, any order shall be deemed to be a Final Order hereunder if (i) the only

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appellant(s), petitioner(s) or movant(s) are acting pro se (other than a corporation or other legal entity represented by its in-house counsel or an individual who is an attorney or is an Accredited Investor), (ii) the only appellant(s), petitioner(s) or movant(s) are acting in concert with or at the behest of or with the support of the Buyer or SkyWest or any of their Affiliates or (iii) Buyer, SkyWest and their Affiliates are not actively and in good faith opposing any appeal, petition for certiorari, or other proceeding for a new trial, reargument or rehearing.

“Good Cause Termination” means the Final Order providing for or confirming a termination of any Delta Connection Agreement by Delta in accordance with the terms of such Delta Connection Agreement permitting such termination.

“Judicial Termination” means the termination, rejection or invalidation of any Delta Connection Agreement (i) by a Final Order entered pursuant to a motion, complaint or other legal process initiated or sought by Delta or (ii) by a Final Order under Section 365 of the Bankruptcy Code sought by Delta or any Person or Persons acting on behalf of its bankruptcy estate, provided that in each of the foregoing events, no person seeking such relief can be acting in concert with or at the behest of or with the support of the Buyer or SkyWest or any of their Affiliates. Notwithstanding anything to the contrary in this Schedule 2.01 a Good Cause Termination shall be deemed to not be a Judicial Termination.

“Permitted Investments” means (a) direct obligations of the United States of America; (b) obligations the principal of and interest on which are unconditionally guaranteed by the United States of America and that have a remaining term at the time of acquisition of not more than 90 days; (c) commercial paper rated at least “P-1” by Moody’s Investors Services, Inc. or at least “A-1” by Standard & Poor’s Ratings Group with a remaining term at the time of acquisition of not more than 90 days; or (d) certificates of deposit maturing within 90 days of acquisition thereof or demand deposits, in each case of a bank or trust company organized and doing business pursuant to the laws of the United States of America, or any state thereof, having combined capital surplus in excess of $500,000,000 and rated in one of the two highest rating categories (without

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regard to refinements within such rating categories) by Moody’s Investors Services, Inc. or Standard & Poor’s Ratings Group (a “United States Bank”), in each case at an account or accounts maintained at the Escrow Agent or such other United States Bank as is designated by Escrow Agent, subject to the written consent of ASAH and Buyer (which consent shall not be unreasonably withheld or delayed).  The Permitted Investments may be changed from time to time by the written notice of ASAH and Buyer to the Escrow Agent.

“Regular Release Date” means the fourth anniversary of Closing Date.

“Top-Up Amount” means, on any given date, the Contingent Additional Amount minus the Escrow Amount.

Escrow Agreement

Each of Buyer and ASAH shall make their best efforts to enter into an Escrow Agreement after the date of the Stock Purchase Agreement, and in all events on or prior to Closing, with a mutually satisfactory escrow agent. Such Escrow Agreement shall be in customary form and shall substantially reflect the terms and conditions specified in this Schedule 2.01.

Payment of Contingent Additional Amount

The Contingent Additional Amount (which includes the Escrow Amount payable from the Escrow Account and the Top-Up Amount payable by the Buyer) shall be paid,  discharged or cancelled in the following manner: (i)If the ASAH Trigger Date occurs, then immediately following the tenth Business Day following receipt by the Escrow Agent and Buyer of a notice from ASAH of the occurrence of the ASAH Trigger Date, (A) Buyer shall pay and transfer the Top-Up Amount to the ASAH Account and (B) the Escrow Agent shall transfer the Escrow Amount (together with any Escrow Account Earnings then held in the Escrow Account) less $5,000,000 (the “Withheld Amount”) to the ASAH Account, which Withheld Amount shall be retained by the Escrow Agent for the purpose of payment of the Adjustment Amount, if any, and such Withheld Amount shall be used first to satisfy the Adjustment Amount, if any, and if any portion of such Withheld Amount remains in the Escrow Account following the

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settlement of purchase price adjustment under Article 2 of the Stock Purchase Agreement, then the Withheld Amount or if the Buyer Trigger Date I has occurred, the excess amount, if any, shall be distributed to the ASAH Account. Upon the occurrence of (A) and (B), Buyer’s obligation to pay the Contingent Additional Amount under Section 2.01 of the Stock Purchase Agreement shall be deemed to be fully paid and discharged. Notwithstanding anything to the contrary contained herein, if the ASAH Trigger Date occurs after the Adjustment Date, then the Escrow Agent shall not withhold the Withheld Amount. (ii)If the Buyer Trigger Date I occurs, then immediately following the tenth Business Day following receipt by the Escrow Agent and ASAH of a notice from Buyer of the occurrence of Buyer Trigger Date I, the Escrow Agent shall transfer the Adjustment Amount to the Buyer Account. (iii)      If the Buyer Trigger Date II occurs, then immediately following the tenth Business Day following receipt by the Escrow Agent and ASAH of a notice from Buyer of the occurrence of Buyer Trigger Date II (A) the Escrow Agent shall transfer the Escrow Amount (together with any Escrow Account Earnings then held in the Escrow Account) to the Buyer Account and (B) ASAH shall pay and transfer an aggregate amount equal to all Escrow Account Earnings theretofore received by ASAH to the Buyer Account. Immediately upon the occurrence of the Buyer Trigger Date II, the Buyer’s obligation to pay the Contingent Additional Amount under Section 2.01 of the Stock Purchase Agreement shall be deemed to be cancelled and discharged.

Deposits to the Escrow Account

Until the earlier to occur of the ASAH Trigger Date and the Buyer Trigger Date II, the Buyer shall deposit the following amounts on the following dates into the Escrow Account (provided, however, Buyer’s obligation, if any, to pay Deposit Amounts into the Escrow Account automatically will be canceled and discharged upon the occurrence of the Buyer Trigger Date II):

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Deposit Date	Deposit Amount
Closing Date	$	95,000,000
February 28, 2006	$	3,000,000
March 31, 2006	$	6,000,000
April 30, 2006	$	6,000,000
May 31, 2006	$	6,000,000
June 30, 2006	$	6,000,000
July 31, 2006	$	3,000,000

Offset by Delta

Notwithstanding anything to the contrary in the Stock Purchase Agreement or any Related Agreement, (A) in the event that the Buyer fails to deposit the applicable Deposit Amount on any Deposit Date, Delta shall be entitled to offset amounts that it may owe the Buyer or the Company or any of their Affiliates under any Delta Connection Agreement up to the applicable Deposit Amount and to the extent of such offset, the Contingent Additional Amount shall be automatically reduced and (B) in the event Buyer fails to pay the Top Up Amount when due and payable, Delta shall be entitled to offset amounts that it may owe the Buyer or the Company under any Delta Connection Agreement up to the Top Up Amount and to the extent of such offset, the Top Up Amount payable by the Buyer shall be automatically reduced.

Releases from the Escrow Account

The Escrow Agent shall release and transfer the Escrow Amount and any Escrow Account Earnings thereon only as set forth above and below and under the following circumstances: (i)To the ASAH Account, (A) not later than the fifth Business Day following the crediting of the Escrow Account Earnings into the Escrow Account, the Escrow Account Earnings; provided that the Escrow Agent has not theretofore received a notice of either the ASAH Trigger Date or the Buyer Trigger Date II, and (B) immediately following the tenth Business Day following receipt of a notice by the Escrow Agent and the Buyer from ASAH of the occurrence of the ASAH Trigger Date, the Escrow Amount (together with the Escrow Account Earnings then held in the Escrow Account) provided that if the Adjustment Date has not theretofore occurred, the Escrow Agent shall withhold the Withheld Amount from the Escrow Amount and

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after the occurrence of the Adjustment Date, the Escrow Agent shall transfer the Withheld Amount (or the remaining portion thereof after payment of the Adjustment Amount). (ii)To the Buyer Account, (A) immediately following the tenth Business Day following receipt of a notice by the Escrow Agent and ASAH from Buyer that the Escrow Amount exceeds the Contingent Additional Amount (as determined from time to time under the Stock Purchase Agreement), such excess amount, (B) immediately following the tenth Business Day following receipt of a notice by the Escrow Agent and the ASAH from Buyer of the occurrence of Buyer Trigger Date I, the Adjustment Amount, and (C) immediately following the tenth Business Day following receipt of a notice by the Escrow Agent and ASAH from Buyer of the occurrence of the Buyer Trigger Date II, the Escrow Amount (together with the Escrow Account Earnings then held in the Escrow Account). (iii)In the event that the Escrow Agent receives a notice of a dispute with respect to the Escrow Amount (including the Adjustment Amount) from either the Buyer or ASAH, the Escrow Agent shall transfer the Escrow Amount (together with the Escrow Account Earnings then held in the Escrow Account and including the Adjustment Amount) only upon a Final Order of a court of competent jurisdiction to the party specified in such Final Order, or upon the joint instructions of the parties, subject to any applicable bankruptcy automatic stay.

Recoupment by Buyer

Notwithstanding anything to the contrary in the Stock Purchase Agreement or any Related Agreement, in the event that there is a Judicial Termination and in connection therewith the applicable court finds that the Contingent Additional Amount is nonetheless owed by the Buyer to ASAH, Delta and ASAH agree that the Buyer shall be entitled to the immediate release of the Escrow Amount to the Buyer Account and to recoup the Escrow Amount against any Damages found to be incurred or suffered by the Buyer and its Affiliates arising out of such Judicial Termination.  To the extent it is determined that any bankruptcy automatic stay may apply to such recoupment,

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	the parties agree to waive and release the automatic stay to permit recoupment by Buyer.
Investment of Escrow Amount	The Escrow Agreement shall contain appropriate provisions requiring the Escrow Agent to invest the Escrow Amount in Permitted Investments and transfer any Escrow Account Earnings in accordance with the provisions of this Schedule 2.01. The Escrow Agent shall provide ASAH and Buyer with periodic statements reflecting transactions executed with respect to the Escrow Amount.
Escrow Agent Fees	The Escrow Agreement shall contain customary provisions for payment of Escrow Agent fees which shall be jointly borne by ASAH and Buyer.
Outstanding Amounts	Delinquent payments by any party to the other party shall bear interest at a per annum rate of 10%, unless a lower rate of interest is required under applicable law.
Duty to Support Assumption	Buyer, SkyWest and their Affiliates shall, in good faith, oppose any appeal, petition for certiorari, or other proceeding for a new trial, reargument or rehearing that may be brought by any appellant(s), petitioner(s) or movant(s) against an order of the Bankruptcy Court approving the assumption of the Delta Connection Agreements by Delta pursuant to Section 365(a) of the Bankruptcy Code; provided, however, nothing contained herein shall prevent Buyer, SkyWest and/or their Affiliates from contesting in good faith the amount or nature of any cure payments due to them under Section 365 of the Bankruptcy Code.
Automatic Stay	Each party to the Escrow Agreement acknowledges and agrees that (i) the automatic stay set forth in Section 362 of the Bankruptcy Code does not, and shall not be deemed to, prevent the sending or filing of any notices, the taking of any actions, or the making of any payments permitted or required to be given hereunder, and (ii) it will vigorously oppose any motion or application seeking to have the automatic stay applied to the Escrow Agreement or any action taken hereunder or in connection herewith.

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EX-99.1

Exhibit 99.1

NEWS RELEASE

For more information contact:

Michael J. Kraupp

VP Finance and Asst. Treasurer

St. George, UT 84790

Telephone: (435) 634-3203

Fax: (435) 634-3205

FOR IMMEDIATE RELEASE: September 8, 2005

SKYWEST COMPLETES PURCHASE OF ATLANTIC SOUTHEAST AIRLINES

ST. GEORGE, UT,—(NASDAQ:SKYW) SkyWest, Inc., (“SkyWest”) announced today that it has completed the purchase of Atlantic Southeast Airlines, Inc.,(“ASA”) for a purchase price of $425 million.  As a result of the transaction, ASA is now a wholly-owned subsidiary of SkyWest.  Together with SkyWest Airlines, Inc., (“SkyWest Airlines”) SkyWest’s existing wholly-owned subsidiary, the two carriers will create the largest regional airline carrier network in the domestic United States.  The purchase transaction also resulted in the amendment and extension of existing Delta Connection operating agreements under which SkyWest Airlines and ASA obtained the rights to continue flying as Delta Connection carriers through 2020.

“The acquisition of ASA enhances our strategic position and accomplishes several key corporate objectives,” said Bradford R. Rich, SkyWest Executive Vice President, Chief Financial Officer and Treasurer.  “We are pleased that the deal has been consummated, but remain focused on the importance of serving our customers and providing a productive work environment for our employees” he continued.

SkyWest paid $350 million in cash at closing, consisting of $330 million of the purchase price and $20 million relating to certain aircraft financing deposits Delta had previously paid.   An additional $125 million representing $95 million of the purchase price and $30 million relating to the return of certain aircraft financing deposits is payable to Delta, pursuant to the terms of an escrow agreement, upon the earlier of the assumption by Delta of the ASA and SkyWest Airlines Delta Connection Agreements should Delta file for reorganization under Chapter 11, or four years after closing of the transaction.  SkyWest would be entitled to retain the escrow deposit if Delta files for reorganization under Chapter 11 and rejects its Delta Connection agreement with ASA or SkyWest Airlines prior to the fourth anniversary of the closing of this transaction.

Separate Operations

For the foreseeable future, SkyWest intends to operate SkyWest Airlines and ASA as wholly-owned subsidiaries, with separate labor groups and FAA operating certificates.

For the first year following the closing of the transaction, Delta has agreed to continue to provide to ASA certain transitional administrative and information technology services.  SkyWest expects those functions will be transitioned to SkyWest personnel over the course of the coming year.  As part of its planned transition, SkyWest intends to launch an intense “best practices” initiative to identify and capitalize on the strengths of each of SkyWest Airlines and ASA and to realize potential efficiencies.

Customers

SkyWest does not currently intend to make any significant changes to the operating schedules or aircraft deployment of either SkyWest Airlines or ASA.  Customers of both carriers can continue to expect to receive the superior high-quality service to which they have become accustomed.  Combined, SkyWest Airlines and ASA will have primary hubs in Atlanta, Cincinnati, Chicago, Los Angeles, San Francisco, Salt Lake City, Denver, Portland, and Seattle/Tacoma.

ASA and SWA Delta Connection Agreements

The new Delta Connection agreements provide for each of SkyWest Airlines and ASA to continue flying as Delta Connection Carriers for terms of 15 years.  These agreements will continue to be capacity purchase arrangements with both carriers being compensated in a manner substantially similar to their prior agreements.

Forward-Looking Statements

In addition to historical information, this release contains forward-looking statements.  SkyWest may, from time to time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements encompass SkyWest’s beliefs, expectations, hopes or intentions regarding future events.  Words such as “expects,” “intends,” “believes,” “anticipates,” “should,” “likely” and similar expressions identify forward-looking statements.  All forward-looking statements included in this release are made as of the date hereof and are based on information available to SkyWest as of such date.  SkyWest assumes no obligation and does not intend to update any forward-looking statement. Actual results will vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of reasons, including, among others: potential bankruptcy or restructuring proceedings involving Delta, the inability or failure of SkyWest to integrate the operations and employees of SkyWest Airlines and ASA and achieve the anticipated synergies as a result of the acquisition; the failure to accurately forecast acquisition-related costs; the effects of hurricanes, tropical storms and other weather-related events, particularly in the southeastern United States; and the challenges of competing successfully in a highly

competitive and rapidly changing industry. Other factors that may cause actual results to vary from SkyWest’s expectations include developments associated with fluctuations in the economy and the demand for air travel; bankruptcy proceedings involving United Airlines, Inc.; ongoing negotiations between SkyWest and its major partners regarding their contractual relationships; variations in market and economic conditions; employee relations and labor costs; rapidly escalating fuel costs; the degree and nature of competition; SkyWest’s ability to expand services in new and existing markets and to maintain profit margins in the face of pricing pressures; aircraft deliveries and SkyWest’s ability to obtain financing; and other unanticipated factors.  Risk factors, cautionary statements and other conditions which could cause actual results to differ from SkyWest’s current expectations are contained in SkyWest’s filings with the Securities and Exchange Commission, including the risk factors set forth in SkyWest’s most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q.  All forward-looking statements are qualified in their entirety by this cautionary statement.

This press release and additional information about SkyWest can be accessed online at www.skywest.com.