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(h) "Flying Pay Purposes" means hours and mileage on scheduled and extra section flights and the following non-scheduled flights, namely: Publicity, charters, scenic, attempts, re-routed flights, ferries, engine, instrument, plane, and radio test flights, experimental and airway aid test flights, for which pilots receive pay in accordance with pay differentials, outlined in this agreement. PAY FIRST PILOTS: Sec. 3. (a) First pilots shall be paid a minimum base pay payable monthly, at the following rates: First year ................... $1,600.00 per annum Second year................... 1,800.00 per annum Third year.................... 2,000.00 per annum Fourth year................... 2,200.00 per annum Fifth year.................... 2,400.00 per annum Sixth year.................... 2,600.00 per annum Seventh year.................. 2,800.00 per annum Eighth year and there after... $3,000.00 per annum (b) Pilots who have been receiving more than the amounts set forth above at the time this agreement becomes effective shall not have their base pay reduced by operation of this section. (c) The computation of a first pilot's pay shall be in accordance with the aggregate amount of time in the service of the Company on first pilot's base pay status and, in addition, all co-pilot time spent in the service of the Company in excess of four years. (d) Time of reserve pilots with less than four years' service with the company, while acting as first pilots, shall for the purpose of establishing longevity for base pay purposes, be credited on the basis of the ratio of the hours flown by a reserve pilot as first pilot, to the total hours flown by him during the month, such month or fraction thereof shall be counted in his aggregate length of service as first pilot. (e) When a first pilot is reduced to co-pilot status all of his time spent as a designated pilot with the Company shall be credited for co-pilot pay computation purposes. Page Three