EXHIBIT 10.4
CONFIDENTIAL TREATMENT
REQUESTED PURSUANT TO RULE 406
REPUBLIC JET
SERVICE AGREEMENT
BETWEEN
US AIRWAYS, INC
AND
REPUBLIC AIRLINE INC
DATED AS OF
DECEMBER 18, 2002
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933. THE OMITTED
MATERIALS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
TABLE OF CONTENTS
TABLE OF CONTENTS 1
REPUBLIC JET SERVICE AGREEMENT 2
ARTICLE 1 COMPLIANCE WITH REGULATIONS 3
ARTICLE 2 AIR TRANSPORTATION SERVICES TO BE PROVIDED BY REPUBLIC 4
Section 2.1 Schedule requirements 4
Section 2.2 Scheduling parameters 5
Section 2.3 Technical operations 5
Section 2.4 Regulations 6
Section 2.5 Operating Procedures 6
Section 2.6 Aircraft Registration 6
Section 2.7 Republic Responsibilities 6
Section 2.8 Substitute Aircraft 6
Section 2.9 Spare Aircraft 7
Section 2.10 Intentionally Left Blank 7
Section 2.11 Aircraft Type Substitution 7
Section 2.12 Jets for Jobs 8
ARTICLE 3 OPERATION UNDER THE "US AIRWAYS EXPRESS" NAME 8
Section 3.1 Service Trademarks 8
Section 3.2 Signage 9
ARTICLE 4 US AIRWAYS' SUPPORT SERVICES AND FACILITIES 9
Section 4.1 US Airways Services 9
Section 4.2 Reservations 9
Section 4.3 Station Facilities and Ground Support Service 10
Section 4.4 Cargo, Company Materials ("CoMat") and Mail Handling Services 11
Section 4.5 Terms of Transportation, Sales and Promotion 12
ARTICLE 5 PURCHASE OF AVAILABLE SEAT MILES ("ASMs") 13
Section 5.1 Pricing Model 13
Section 5.2 Republic Costs and Pass Through Costs 13
Section 5.3 Left intentionally blank 13
Section 5.4 Base Compensation Rate 14
Section 5.5 Profit 14
Section 5.6 Intentionally Left Blank 15
Section 5.7 Intentionally Left Blank 16
Section 5.8 Payments 16
Section 5.9 True-Up Invoices 16
Section 5.10 Audit and Inspection Rights 16
ARTICLE 6 LIABILITY, INDEMNIFICATION AND INSURANCE 16
Section 6.1 Republic is an Independent Contractor 17
Section 6.2 Liability and Indemnification 18
Section 6.3 Insurance Coverage 19
Section 6.4 Cargo Liability Insurance 23
ARTICLE 7 TERM AND TERMINATION 23
Section 7.1 Effective Date and Term 23
Section 7.2 Regulatory Changes 26
Section 7.3 Termination by US Airways 27
Section 7.4 Termination by Republic 28
Section 7.5 Return of Property 29
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ARTICLE 8 PERFORMANCE ADJUSTMENTS 29
Section 8.1 Weather Adjustment 29
Section 8.2 Other Performance Adjustments 30
ARTICLE 9 SERVICE MARK LICENSE FOR SERVICES PROVIDED PURSUANT TO THIS AGREEMENT 32
Section 9.1 Grant of License 33
Section 9.2 Terms and Conditions Governing Trademark License 33
ARTICLE 10 FORCE MAJEURE 34
Section 10.1 Force Majeure 34
Section 10.2 Resumption of Service 35
ARTICLE 11 NOTICES 35
ARTICLE 12 Intentionally Deleted 36
ARTICLE 13 MISCELLANEOUS 36
Section 13.1 Entire Agreement 36
Section 13.2 Headings 36
Section 13.3 Severability 36
Section 13.4 Waiver 37
Section 13.5 Assignability 37
Section 13.6 Governing Law 37
Section 13.7 No Franchise 38
Section 13.8 Additional US Airways Rights 38
Section 13.9 Republic Stock Options 38
ARTICLE 14 CONFIDENTIALITY 39
Section 14.1 Confidentiality of Agreement 39
Section 14.2 Confidential Information 40
Section 14.3 Exclusions from Confidential Information 41
Section 14.4 Information Shared with US Airways Group, Inc. 42
Section 14.5 Information Shared with RJET 42
Section 14.6 Return of Documents 42
Section 14.7 Remedies 43
ARTICLE 15 DISPUTE RESOLUTION 43
Section 15.1 Certain Disputes 43
Section 15.2 Dispute Resolution Proceedings 44
Exhibit 2.1 IMPLEMENTATION SCHEDULE OF AIRCRAFT DEPLOYMENT 46
Exhibit 2.1(a) SCHEDULE REQUIREMENTS 47
Exhibit 2.8 DIVISION OF RESPONSIBILITIES 50
Exhibit 5.1 PRICING MODEL 51
II
REPUBLIC JET
SERVICE AGREEMENT
This Agreement is made and entered as of this 18th day of December, 2002, by
and between US Airways, Inc. (herein referred to as "US Airways"), a Delaware
corporation having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ Airline Inc. (herein referred to as
"Republic"), a subsidiary of Republic Airways Holdings, Inc. ("RJET"), a
Delaware corporation, having a principal place of business at ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, US Airways holds a certificate of public convenience and necessity
issued by the Department of Transportation ("DOT") authorizing US Airways to
engage in the interstate and overseas air transportation of persons, property
and mail between all points in the United States, its territories and
possessions;
WHEREAS, Republic is seeking certification to allow it to engage in the
interstate air transportation of persons, property and mail in the United
States pursuant to an exemption under 14 C.F.R Part 298;
WHEREAS, US Airways owns various trademarks, service marks and logos, including
"US Airways," "US Airways Express," and distinctive exterior color decor and
patterns on its aircraft, hereinafter referred to individually and collectively
as the "US Airways Servicemarks";
WHEREAS, Republic desires to operate regional jets under the name "US Airways
Express" in the provision of its air transportation services as provided in this
Agreement and wishes to acquire a nonexclusive license for use of one or more of
US Airways' Servicemarks for use in connection with Republic's operation of such
services;
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WHEREAS, US Airways desires to contract for the operation of such regional jets
as scheduled air transportation services by Republic and does hereby grant
Republic the use of one or more of US Airways' Servicemarks in connection with
Republic's operation of such services; and
WHEREAS, both parties desire that Republic be compensated by US Airways for
operating such regional jets as air transportation services and that US Airways
assume certain of the business obligations associated with the marketing and
sale of such transportation services to the traveling public, in each case as
more particularly described herein;
NOW THEREFORE, for and in consideration of the foregoing premises and the mutual
covenants and obligations hereinafter set forth, the parties to this Agreement
hereby agree as follows:
ARTICLE 1 COMPLIANCE WITH REGULATIONS
Republic hereby represents, warrants and agrees that all air transportation
services performed by it pursuant to this Agreement or otherwise shall be
conducted in full compliance with any and all applicable statutes, orders,
rules, and regulations, whether now in effect or hereafter promulgated, of
all governmental agencies having jurisdiction over Republic's operations,
including, but not limited to the Federal Aviation Administration, the
Transportation Security Administration (the "TSA") and the DOT (for purposes
of this Agreement, any applicable regulatory authority, whether domestically
or internationally, shall be referred to as the "Regulatory Authority").
Republic hereby accepts the sole and exclusive responsibility for complying
with such governmental statutes, orders, rules, and regulations in connection
with the services to be provided by Republic hereunder, and the parties agree
that US Airways will have no obligations or responsibilities, whether direct
or indirect, with respect to such matters, except for sharing the costs
associated therewith as and to the extent provided herein, and for the
fulfillment of its responsibilities for emergency family assistance services
as defined in the US Airways and Republic Family Assistance Agreement.
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ARTICLE 2 AIR TRANSPORTATION SERVICES TO BE PROVIDED BY REPUBLIC
SECTION 2.1 SCHEDULE REQUIREMENTS
At all times during the term of this Agreement and any amendment or extension
thereof, Republic will schedule and operate, in accordance with the terms and
conditions hereof, US Airways Express air transportation service between
various U.S. domestic city-pairs and between various U.S.-Canadian city-pairs
selected in accordance with the immediately succeeding sentence (hereinafter
referred to as the "Service") using twenty-three (23) EMB-145LR fifty (50)
seat jet aircraft, configured with cold galley, LAV, and 3 crew personnel,
such mechanical configuration as shall be agreed to by the parties, bearing
the US Airways Express livery, and which have an engine performance rating at
least as high as the rating provided by the Rolls Royce engine with an AIP
rating. Republic represents that all aircraft shall be configured with the
AIP performance rating, subject to FAA certification. The Service provided by
such EMB-145LR aircraft, or such other aircraft as may be substituted thereto
pursuant to the terms of Section 2.11 of the Agreement, or otherwise as may
be mutually agreed by the parties to this Agreement (hereinafter referred to
as the "Aircraft"), shall be based on the implementation schedule set forth
in Exhibit 2.1, attached hereto and made a part hereof. To the extent that
the parties agree to substitute other types of aircraft to provide the
Service, the parties hereby agree that the costs of operation of such
aircraft shall be appropriately adjusted and the pricing model contained in
Exhibit 5.1 of this Agreement shall be amended in a manner consistent with
the principles used to reflect the costs of EMB-145LR aircraft herein for
such aircraft-specific items as pilot crew costs, landing fees, aircraft
ownership, maintenance, fuel, insurance, property taxes and the like;
provided, however, that the payment of "Profit" to Republic pursuant to
Section 5.5 of this Agreement shall not be modified as a result of such
substitution. The city-pairs from which the Service is to be provided by
Republic pursuant to this Agreement will be selected by US Airways, in its
sole discretion, subject only to operational and safety requirements, minimum
and maximum schedule requirements, and the other parameters set forth in
Exhibit 2.1(a). US Airways may, on [ * ] days advance written notice to
Republic, designate changes in the
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following: city-pairs served, aircraft routings or flight frequencies, provided
that the new city-pairs, aircraft routings, and flight frequencies continue to
satisfy the parameters set forth in Exhibit 2.1(a).
SECTION 2.2 SCHEDULING PARAMETERS
US Airways shall control and direct the scheduled use of the Aircraft. US
Airways agrees to take into consideration Republic's operational requirements
for ▇▇▇ maintenance and crew productivity and legality. The pricing model
attached as Exhibit 5.1 will be based on a minimum Block Hour utilization of
[ * ] per day per Aircraft in revenue service and a maximum Block Hour
utilization of [ * ] per day per Aircraft in revenue service. The baseline
Block Hour utilization will be assumed to be an average of [ * ] per day per
Aircraft. The parties to this Agreement will determine mutually acceptable
locations for maintenance and crew domiciles as provided in Exhibit 2.1(a).
SECTION 2.3 TECHNICAL OPERATIONS
During the term of this Agreement, Republic will be responsible for the
technical operation of the Aircraft and the safe performance of the flights
in accordance with all applicable laws and regulations (such laws and
regulations of any jurisdiction and/or agency having authority, the
"Regulations"). Republic shall retain full authority, operational control and
possession of the Aircraft to enable it to do so. In particular, Republic or
its agents or employees will, for the purpose of the safe performance of such
flights, have absolute discretion in all matters concerning the preparation
of the Aircraft for flight, the flight, the load carried and its distribution
in so far as such matters affect the safety of the Aircraft, the decision
whether or not such flight shall be undertaken, and all other matters
relating to the technical operation of the Aircraft. Republic will be solely
responsible for, and US Airways will have no obligations or duties with
respect to the dispatch of Republic's flights operated pursuant to this
Agreement or otherwise. For the purpose of this Section 2.3, the term flight
dispatch will include, but will not be limited to, all planning of flight
itineraries and flight paths, fueling and flight release.
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SECTION 2.4 REGULATIONS
The operation of the Aircraft shall be carried out in accordance with the
Regulations and the approved standards and practices of Republic thereunder.
SECTION 2.5 OPERATING PROCEDURES
Republic will furnish to US Airways a copy of relevant operating
specifications, operational regulations, manuals and calculations in respect
of the Aircraft and will also furnish to US Airways a copy of all flight
statistics in respect of the flights operated within ten (10) days after the
end of each calendar month during the term of this Agreement. Further US
Airways agrees to facilitate any changes required to US Airways or US Airways
Express manuals, operating procedures, or tariffs that may need to be revised
to support the Republic operation.
SECTION 2.6 AIRCRAFT REGISTRATION
During the term of this Agreement, the Aircraft will remain registered in the
United States of America in accordance with the Regulations.
SECTION 2.7 REPUBLIC RESPONSIBILITIES
Republic will be responsible for providing, at its own cost, in connection with
the services to be provided by Republic under this Agreement, all services and
materials identified under the heading "To Republic" in Exhibit 2.8, attached
hereto and made a part hereof (collectively, the "Republic Services").
SECTION 2.8 SUBSTITUTE AIRCRAFT
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In addition to the Aircraft described in Section 2.1, Republic may in its
discretion arrange for, and may have substitute regional jet aircraft in US
Airways Express or neutral livery or another regional jet aircraft, provided
that in the case of another type of regional jet aircraft, US Airways' prior
approval shall be required and provided that such approval shall not be
unreasonably withheld or delayed, as may be required to maintain effectively
the seat miles which US Airways will purchase under this Agreement, during
periods when Republic's primary aircraft may be out of service due to
unforeseen and irregular maintenance requirements. Republic will be paid for
the ASMs flown by such substituted aircraft in the same manner that it is
paid for ASMs flown by the Aircraft. In the event no regional jet aircraft is
available to Republic for use as a substitute aircraft, Republic may
substitute a SAAB 340-A cabin class aircraft in US Airways Express livery. In
such event, Republic will be paid as follows: [ * ] completed by such
substitute aircraft. For all other amounts payable by US Airways for Republic
Services involving non-regional jet substitute aircraft, Republic will be
compensated in accordance with specific rates mutually agreed upon between
Republic and US Airways. If a substitute aircraft is to be utilized for more
than a two (2) day period, Republic and US Airways will mutually agree upon
the route that will be covered by the substitute aircraft.
SECTION 2.9 SPARE AIRCRAFT
Aircraft No. [ * ] will be a "Spare Aircraft". For the purposes of calculating
the payment to Republic as described in Section 5 of this Agreement, the Spare
Aircraft will not be included as an Aircraft in service, but has certain
associated fixed costs as detailed in the pricing model set forth in Exhibit 5.1
to this Agreement. For the purposes of calculating the schedule requirements as
described in Exhibit 2.1(a) of the Agreement, the Spare Aircraft will not be
included.
SECTION 2.10 INTENTIONALLY LEFT BLANK.
SECTION 2.11 AIRCRAFT TYPE SUBSTITUTION
Republic agrees that US Airways may, at its sole option, provide written notice
to Republic not less than 9 months before the scheduled delivery date for an
Aircraft to elect to receive an ERJ-
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135 37-seat regional jet aircraft instead of an ERJ -145 50-seat regional jet
aircraft, subject to availability of such aircraft for delivery, the
availability of financing for such aircraft and subject to appropriate cost
adjustments as described in Section 2.1 above.
SECTION 2.12 JETS FOR JOBS
Republic will comply with the applicable provisions of the "Jets for Jobs"
protocol as ratified by US Airways ALPA on August 8, 2002 and amended
December 13, 2002, with respect to the services to be provided under this
Agreement. All additional costs associated with such compliance (i.e.,
excluding normal pilot costs that would otherwise be paid as Republic Costs
in the absence of requirements associated with "Jets for Jobs") will be
treated as Pass Through Costs under Section 5.2 hereof.
ARTICLE 3 OPERATION UNDER THE "US AIRWAYS EXPRESS" NAME
SECTION 3.1 SERVICE TRADEMARKS
The Aircraft utilized by Republic pursuant to this Agreement will bear US
Airways Servicemarks, presently consisting of the red, white, gray and blue
aircraft exterior color decor and pattern provided by US Airways and the name
"US Airways Express." At any time during the term of this Agreement, and at
the sole discretion of US Airways, Republic shall use such new or different
servicemarks and exterior color decor and patterns on its Aircraft as US
Airways may determine. Interior color schemes must also be approved by US
Airways. Upon written notice from US Airways, which will include the
specifications for any such changes in servicemarks and/or exterior aircraft
decor and patterns, Republic will effect such changes as promptly as is
reasonably practicable. Republic will not be required to implement changes in
the exterior color decor and pattern more than once in any consecutive
three-year period. Any out-of-pocket expenses to repaint or to redecorate the
Aircraft or reconfigure or redecorate the
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interior of the Aircraft as a result of changes required by US Airways, other
than routine maintenance, shall be paid for by US Airways.
SECTION 3.2 SIGNAGE
In addition to use of the US Airways Servicemarks on the Aircraft, Republic
will use and display suitable signs on the interior and exterior of the
Aircraft identifying Republic as the operator of the services being provided
pursuant to this Agreement. The location of the signs will be subject to the
prior written approval, such approval not to be unreasonably withheld or
delayed, of US Airways as to nature, size and location on Republic's Aircraft
provided that the signs will satisfy the FAA Regulations.
ARTICLE 4 US AIRWAYS' SUPPORT SERVICES AND FACILITIES
SECTION 4.1 US AIRWAYS SERVICES
US Airways and/or third party providers, at the discretion of US Airways,
will provide at US Airways' cost and expense, marketing, reservations, ground
support services, station facilities, and cargo and mail handling services,
to the extent and in the manner set forth in the subsequent sections of this
Article 4 (collectively, and together with the responsibilities of US Airways
under Exhibit 2.8 hereof, the "US Airways Services"). Such services and
facilities will be furnished only with respect to Republic's Services offered
under this Agreement.
SECTION 4.2 RESERVATIONS
(a) All reservations will be requested and confirmed for passengers traveling
on the Aircraft operated by Republic under this Agreement through US Airways'
internal reservations services. Connecting reservations to US Airways or to
other air carriers will be requested and confirmed
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through US Airways' internal reservations system in accordance with currently
established methods and procedures utilized by US Airways for its passengers.
For passengers originating their travel at points other than those served by
Republic under this Agreement, either on US Airways' internal reservations
system or on the reservations systems of other airlines, connecting
reservations to the services of Republic will also be made in accordance with
currently established methods and procedures utilized by US Airways for its
passengers. In all cases, US Airways will confirm the reservations of
passengers traveling on Aircraft operated by Republic in the Service through
the entire itinerary of their scheduled trips. When a contact number is
supplied by the passengers making such reservations, US Airways will assume
the responsibility of notifying passengers of any changes in Republic's
schedules or operations, provided that Republic furnishes US Airways with
sufficient advance notice of such changes.
(b) In the event of flight delays, cancellations or other schedule
irregularities affecting Republic's scheduled services, and as soon as
information concerning such irregularities is available, Republic will notify
US Airways' reservations control center in a manner prescribed by US Airways
and furnish such information in as much detail as is reasonably practicable.
All schedule changes and passenger re-accommodations for passengers traveling
on Aircraft operated by Republic in the Service will be performed in the same
manner as they would for US Airways passengers.
(c) From time to time, and solely upon the request of Republic or its flight
crews, US Airways may furnish Republic's flight crew with such U.S. weather
bureau information or data as may be available to US Airways; provided, that
in furnishing any such weather information or data to Republic, neither US
Airways nor its employees or agents will be responsible or liable for the
accuracy, or the accuracy of the transmission, thereof.
SECTION 4.3 STATION FACILITIES AND GROUND SUPPORT SERVICE
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US Airways and/or third party providers, at the discretion of US Airways, will
provide, at US Airways' cost and expense, the following services at locations
where Republic provides air transportation services pursuant to this Agreement:
(a) check-in and ticketing of passengers [ * ] ;
(b) use of US Airways' passenger facilities [ * ] ;
(c) [ * ] ;
(d) [ * ] ;
(e) [ * ] ;
(f) [ * ] ;
(g) [ * ] ;
(h) [ * ] ;
(i) [ * ] ;
(j) [ * ] ; and
(k) [ * ] .
SECTION 4.4 CARGO, COMPANY MATERIALS ("COMAT") AND MAIL HANDLING SERVICES
(a) US Airways' personnel and/or third party personnel, at the discretion of
US Airways, will process appropriate tickets and/or bills of lading and US
Airways airwaybills, accepted for transportation, and US Airways personnel
and/or third party personnel will load on the regularly scheduled air
transportation services operated by Republic under this Agreement, such cargo
and U. S. mail as will be tendered to it by the United States Postal Service
("USPS") and by cargo customers, provided that no Hazardous Materials may be
accepted and transported on Republic Aircraft, except as permitted by the
Department of Transportation pursuant to regulations contained in 49 C.F.R.
Parts 171 through 180. Republic acknowledges that, notwithstanding anything
to the contrary contained herein, (i) it will obtain independent authority to
carry animals and (ii) it will comply with such restrictions as US Airways
may impose on the carriage of animals provided that such restrictions apply
to at least one other of the carriers operating under a US Airways
Servicemark and are not inconsistent with applicable requirements of a
Regulatory Authority for the carriage of animals.
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(b) US Airways will observe and comply with all applicable regulations,
instructions and procedures with respect to mail, CoMat and cargo packages.
(c) Subject to subpart (b) of Section 4.4, above, US Airways will process any
Republic CoMat that Republic may desire to send on Republic Aircraft.
(d) Republic personnel will comply with US Airways' applicable instructions and
procedures with respect to CoMat packages tendered to US Airways pursuant to
this Agreement.
SECTION 4.5 TERMS OF TRANSPORTATION, SALES AND PROMOTION
(a) US Airways' Terms of Transportation, with certain exceptions listed therein,
including procedures with respect to schedule change and passenger
re-accommodation procedures, will be applicable to Republic Services provided
pursuant to this Agreement. Such Terms of Transportation will at all times be
available for public inspection at Republic's corporate offices and at each
airport ticket counter and sales office maintained and operated by US Airways in
connection with the Services provided under this Agreement.
(b) All tickets issued for air passenger transportation, and all bills of
lading, US Airways airway bills and invoices issued for U. S. mail and cargo
shipments, provided on the Republic Services offered under this Agreement, will
bear the "US Airways" airline designator code.
(c) US Airways is responsible for all pricing, inventory management and
associated support services for the Republic Services under this Agreement.
(d) US Airways will include the scheduled air services provided by Republic
pursuant to Article 2 of this Agreement in its public timetables (including
Republic's connecting schedules on the same basis as it does its own), if
published. All references in US Airways' public timetables to Republic's US
Airways Express services will also contain notations indicating that
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such scheduled services are performed by Republic as an independent contractor
under the appropriate US Airways Servicemarks and will comply with all
regulatory disclosure requirements.
ARTICLE 5 PURCHASE OF AVAILABLE SEAT MILES ("ASMs")
SECTION 5.1 PRICING MODEL
US Airways and Republic have developed a certain model, hereinafter referred to
as "the Pricing Model" and set forth in Exhibit 5.1, which will be used to
determine the compensation to be paid by US Airways for city-pairs flown by
Republic pursuant to this Agreement.
SECTION 5.2 REPUBLIC COSTS AND PASS THROUGH COSTS
The Pricing Model, which will be used to compensate Republic, divides
compensation into two categories, (1) "Republic Costs" and (2) "Pass Through
Costs."
(a) Republic will be reimbursed for "Republic Costs" according to the rates set
forth in Exhibit 5.1 based upon the following:
(i) with respect to the Per Aircraft costs set forth therein, the number of
Aircraft in Republic's fleet that have become subject to this Agreement and
have been placed into active revenue service for US Airways Express
operation under this Agreement, as well as certain costs associated with
Spare Aircraft;
(ii) with respect to the Per Block Hour costs set forth therein, the Block
Hours for revenue flights actually flown by the Aircraft;
(iii) with respect to the Per Flight Hour costs set forth therein, the
number of revenue Flight Hours actually flown by the Aircraft;
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(iv) with respect to the Per Departure costs set forth therein, the number
of actual revenue departures; and
(v) with respect to the Fixed Costs set forth therein, the amount of such
fixed costs. After [ * ] of the implementation of Service with the [ * ]
Aircraft under this Agreement, and every [ * ] thereafter, the parties will
review in good faith the [ * ] . To the extent that the [ * ] is not on
average, equal to [ * ] and such [ * ] is not attributable to [ * ] , the
Per Block Hour Cost set forth in Exhibit 5.1 shall be adjusted to reflect
the actual [ * ] and the resultant [ * ] required by Republic. Any disputes
relating to an adjustment of the Per Block Hour Costs in Exhibit 5.1 shall
be resolved in accordance with the dispute resolution procedure set forth in
Article 15.
For purposes of this Agreement revenue flights and revenue service shall include
any diverted flights.
(b) Each cost component will be adjusted annually at the beginning of each
calendar year within the Term of this Agreement based upon the escalation factor
set forth in Exhibit 5.1.
(c) Republic will be reimbursed for "Pass Through Costs" based upon the actual
costs incurred by Republic, provided Republic furnishes US Airways with adequate
supporting documentation therefor. The Pass Through Costs shall include fuel,
landing fees, aircraft ownership costs, insurance and all other costs indicated
as pass through costs on Exhibit 5.1 or agreed to by the parties.
SECTION 5.3 LEFT INTENTIONALLY BLANK
SECTION 5.4 BASE COMPENSATION RATE
(a) US Airways will pay to Republic on each of the 1st, 10th and 20th day of
each calendar month 33 1/3 % of the amount based upon the Pricing Model's
estimated figures, such amount being referred to as the Base Compensation Rate,
provided that US Airways receives from Republic an invoice for each such payment
no less than [ * ] days prior to the due date of such
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payment, provided that in the event US Airways does not receive an invoice on a
timely basis, it shall pay Republic within [ * ] days after its receipt of an
invoice.
(b) After the end of the month, US Airways will pay Republic an amount based
upon the Pricing Model's figures using actual statistics and replacing the
model's Pass Through Costs with actual amounts as discussed in Section 5.2 less
the estimated amounts previously paid by US Airways per Section 5.4(a). If it is
determined that US Airways' estimated payment is more than the amount calculated
after the end of the month, Republic will be required to refund the overpayment
amount promptly.
(c) INTENTIONALLY LEFT BLANK.
(d) Notwithstanding the provisions set forth in this Article 5, in the event
that Republic is unable to provide the Republic Services due to the grounding
of the Aircraft as a result of a defect in the design or manufacture of the
Aircraft or as a result of a strike by employees of Republic, US Airways
shall only be responsible for payment of Republic's Fixed Costs and Per
Aircraft costs as set forth in Exhibit 5.1 during such period for [ * ]. In
the event that Republic is unable to provide the Republic Services as a
result of Republic's failure to properly maintain the Aircraft, or to
otherwise comply with Regulations associated with the maintenance and/or
operation of the Aircraft, US Airways' payment obligation shall be fully
suspended during such time period. In the event Republic is unable to provide
the Republic Services as a result of any other reason, including without
limitation, due to a US Airways strike, US Airways shall pay Republic its
Fixed Costs and Per Aircraft Costs as set forth in Exhibit 5.1 plus its
Profit (as defined in Section 5.5 below) for such period.
SECTION 5.5 PROFIT
The Pricing Model set forth in Exhibit 5.1 includes a "Profit" payment of [ * ]
per Aircraft in revenue service per day (i.e., totaling [ * ] ) and such
profit payments shall be included in the payments made pursuant to Section
5.4 hereof. The Profit for the Aircraft will be escalated [ * ] at the
beginning of [ * ] , and thereafter, by [ * ] .
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SECTION 5.6 INTENTIONALLY LEFT BLANK
SECTION 5.7 INTENTIONALLY LEFT BLANK
SECTION 5.8 PAYMENTS
All payments due under this Article will be paid directly to Republic, or US
Airways, as the case may be, within ten (10) business days of the calculation of
any payment that is due under this Agreement, except as provided in Section
5.4(a). In the event that any payment is due from one party to the other party,
then the party entitled to such payment may deduct such amount from any amount
payable to the other party.
SECTION 5.9 TRUE-UP INVOICES
The parties agree that all true-up invoices for any month shall be submitted no
later than 120 days after the last day of such month.
SECTION 5.10 AUDIT AND INSPECTION RIGHTS
(a) Upon not less than ten (10) days' prior written notice, and not more than
once each calendar year unless Republic is in default hereunder, authorized
representatives of US Airways may audit, review and copy Republic's books,
records, accounts and other documents relating to the Pass Through Costs and to
any non-CPI based increase in the Republic Costs.
(b) Upon not less than five (5) days' prior written notice, authorized
representatives of US Airways may review Republic's aircraft maintenance
facilities and review and copy Republic's aircraft maintenance records with
respect to the Aircraft, at reasonable times during Republic's normal business
hours and in a manner that does not disrupt Republic's business or operations
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provided Republic is not in default hereunder. Republic shall make available to
US Airways' authorized representatives knowledgeable representatives of Republic
to answer questions and otherwise assist in any such review and upon the
conclusion of such review US Airways shall provide Republic with a written
report of its material findings.
(c) All information provided to or observed by US Airways in connection with any
audit, review or inspection under this Section 5.10 shall be treated an
Confidential Information under Article 14.
ARTICLE 6 LIABILITY, INDEMNIFICATION AND INSURANCE
SECTION 6.1 REPUBLIC IS AN INDEPENDENT CONTRACTOR
(a) The employees, agents, and/or independent contractors of Republic engaged in
performing any of the services Republic is to perform pursuant to this Agreement
will be employees, agents, and independent contractors of Republic for all
purposes, and under no circumstances will be deemed to be employees, agents or
independent contractors of US Airways. In its performance under this Agreement,
Republic will act, for all purposes, as an independent contractor and not as an
agent for US Airways. US Airways will have no supervisory power or control over
any employees, agents or independent contractors engaged by Republic in
connection with its performance hereunder, and all complaints or requested
changes in procedures will, in all events, be transmitted by US Airways to a
designated officer of Republic. Nothing contained in this Agreement is intended
to limit or condition Republic's control over its operations or the conduct of
its business as an air carrier, and Republic and its principals assume all risks
of financial losses which may result from the operation of the air
transportation services to be provided by Republic hereunder.
17
(b) The employees, agents, and/or independent contractors of US Airways engaged
in performing any of the services US Airways is to perform pursuant to this
Agreement will be employees, agents, and/or independent contractors of US
Airways for all purposes, and under no circumstance will they be deemed to be
employees, agents, and/or independent contractors of Republic. Republic will
have no supervision or control over any such US Airways employees, agents,
and/or independent contractors and any complaint or requested change in
procedure will be transmitted by Republic to US Airways' designated
representative.
SECTION 6.2 LIABILITY AND INDEMNIFICATION
(a) Each party hereto assumes full responsibility for any and all liability to
its own directors, officers, employees, or agents arising from injury, or death
resulting from or sustained in the performance of its respective services under
this Agreement.
(b) Republic will indemnify, defend, protect, save, and hold harmless US
Airways, its directors, officers, employees, and agents from and against any and
all liabilities, claims, demands, suits, judgments, damages, and losses
(including the reasonable costs, fees, and expenses in connection therewith and
incident thereto), brought against US Airways, its directors, officers,
employees or agents to the extent caused by or arising out of any act or
omission of Republic (collectively "Republic Claims") occurring during the term
of this Agreement except for claims based on matters for which US Airways is
responsible under the terms of this Agreement or claims arising solely from the
gross negligence or willful misconduct of US Airways. US Airways will give
Republic prompt and timely written notice of any claim made or suit instituted
against US Airways which in any way results in indemnification hereunder, and
Republic will have the right to compromise or participate in the defense of same
to the extent of its own interest, including the selection of counsel to
represent its interest in the matter.
(c) Each party, with respect to its own employees, accepts full and exclusive
liability for the payment of worker's compensation and/or employer's liability
insurance premiums with respect
18
to such employees, and for the payment of all taxes, contributions or other
payments for unemployment compensation or retirement benefits, pensions or
annuities now or hereafter imposed upon employers by the government of the
United States or by any state or local governmental body with respect to such
employees measured by the wages, salaries, compensation or other remuneration
paid to such employees, or otherwise, and each party further agrees to make such
payments and to make and file all reports and returns, and to do everything
necessary to comply with the laws imposing such taxes, contributions or other
payments.
(d) US Airways will indemnify, defend, protect, save, and hold harmless
Republic, its directors, officers, employees, and agents from and against any
and all reasonable liabilities, claims, demands, suits, judgments, damages, and
losses (including all reasonable costs, fees and expenses in connection
therewith or incident thereto), brought against Republic, its directors,
officers, employees or agents to the extent caused by or arising out of any act
or omission of US Airways (collectively "US Airways Claims") occurring during
the term of this Agreement except for claims based on matters for which Republic
is responsible under the terms of this Agreement or claims arising solely from
the gross negligence or willful misconduct of Republic. Republic will give US
Airways prompt and timely notice of any claim made or suit instituted against
Republic which in any way results in indemnification hereunder, and US Airways
will have the right to compromise or participate in the defense of same to the
extent of its own interest, including the selection of counsel to represent its
interest in the matter.
SECTION 6.3 INSURANCE COVERAGE
(a) Republic will, at all times during the effectiveness of this Agreement, have
and maintain in full force and effect, policies of insurance satisfactory to US
Airways, of the types of coverage, and in the minimum amounts stated below with
companies reasonably satisfactory to US Airways and under terms and conditions
reasonably satisfactory to US Airways, including coverage on all Aircraft from
which Republic Services are to be provided pursuant to this Agreement. Unless
otherwise specified, the minimum amounts of insurance coverage required
19
under this paragraph will be $500,000,000 per occurrence, combined single limit
for all coverage required under this paragraph.
TYPE OF INSURANCE COVERAGE MINIMUM AMOUNT OF INSURANCE COVERAGE
(U.S. CURRENCY-PER OCCURRENCE)
1. Comprehensive Airline Liability
Insurance (including Premises
Liability Products and Completed Operations
Liability Insurance
a. Bodily Injury - Passengers
and Non-Passengers [ * ] Each Occurrence
b. Personal Injury- Passengers [ * ] Each Occurrence
c. Personal Injury - Non-Passengers [ * ] Each Occurrence
d. Property Damage [ * ] Each Occurrence
2. Worker's Compensation Insurance Statutory
(Republic's Employees)
3. Employer's Liability [ * ]
(Republic's Employees)
4. "All Risk Hull and Aviation Hull War and [ * ] or such
Associated Perils (or equivalent) insurance on lesser amount as may be
Aircraft performing consented to by US Airways
Republic Services hereunder
(b) The parties hereby agree that from time to time during the life of this
Agreement, US Airways may require Republic to have and maintain amounts
different from those set forth in paragraph (a) above, should the circumstances
and conditions of Republic's operations under this Agreement be deemed in US
Airways' reasonable judgment, to require reasonable increases in any or all of
the foregoing minimum insurance coverage.
(c) Republic agrees, in addition, that all policies of insurance which it
maintains pursuant to this Agreement, will:
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(i) provide that any waiver of rights of subrogation against other parties
by Republic will not affect the coverage provided hereunder with respect to
US Airways;
(ii) with respect to the Services performed by the parties pursuant to this
Agreement, provide that Republic's underwriters will waive any and all
subrogation rights against US Airways, its directors, officers, agents and
employees, except for claims based solely upon the gross negligence or
willful misconduct of US Airways or any such person; and
(iii) be duly and properly endorsed to provide that each such policy or
policies or any part or parts thereof will not be canceled, terminated, or
materially altered, changed or amended by Republic's insurance underwriters,
until after thirty (30) days' (seven (7) days or such lesser period as may
from time to time be applicable in the case of any war and allied/associated
hull coverage) written notice to US Airways which thirty (30) days written
notice will commence to run from the date such notice is mailed via
reputable overnight carrier to the attention of US Airways.
(d) With respect to policies of insurance described in subsection numbered 1 of
Section 6.3(a) of this Agreement, Republic will provide that such policies:
(i) endorse US Airways, its directors, officers, agents, and employees as
Additional Insureds thereunder;
(ii) constitute primary insurance for such claims and acknowledge that any
other insurance policy or policies of US Airways will be secondary or excess
insurance;
(iii) cover US Airways' costs of defending against such insured claims to
the extent that such a defense is not otherwise provided to US Airways; and
(iv) provide cross-liability and severability of interest clauses
acceptable to US Airways, and a specific contractual liability insurance
provision covering liability assumed by Republic under this Agreement.
(e) With respect to policies of insurance for coverage described in subsections
1 and 4 of Section 6.3(a) of this Agreement, a breach of warranty clause
reasonably acceptable to US Airways must be provided by Republic's insurers.
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(f) All aircraft hull insurance provided pursuant to subsection 4 of Section
6.3(a) of this Agreement will be provided on an agreed value basis, and, except
with the consent of US Airways, will not be subject to more than the standard
market deductibles, as certified by a recognized broker in the event of loss,
settled on the basis of a total loss, all losses will be payable in full.
(g) In the event that any of Republic's insurance policies under this Agreement
are obtained directly from foreign underwriters, US Airways must be allowed to
maintain against such foreign underwriters, a direct action in the United States
upon said insurance policies and to provide for service of process to an
attorney located within the United States, who maintains an office in
Washington, D. C., or
New York,
New York.
(h) Upon the effective date of this Agreement, and from time to time thereafter
upon request by US Airways, Republic will furnish to US Airways certificates of
insurance satisfactory to US Airways of the aforesaid insurance coverage, limits
and endorsements. In addition to the certificates of insurance, Republic's
insurance broker will provide their written opinion that the policy or policies
of insurance carried by Republic are in full compliance with all of the
insurance requirements set forth herein and are in full force and effect.
Initially, this evidence will be provided by certified copies of the policies
required hereunder. In the event of a change of broker by Republic, such
certificates will be supplied to US Airways from broker reasonably satisfactory
to US Airways.
(i) In the event Republic fails to maintain in full force and effect any
of the insurance and endorsements described in this Section 6.3, US
Airways will have the right (but not the obligation) to procure and
maintain such insurance or any part thereof. The cost of such
insurance will be payable by Republic to US Airways upon demand by US
Airways. The procurement of such insurance or any part thereof by US
Airways does not discharge or excuse Republic's obligation to comply
with the provisions of this Section. Republic agrees not to cancel,
terminate or materially alter, change or amend any of the policies
referred to in this Section until after providing thirty (30) days'
advance written notice to US Airways, of its intent to so cancel,
terminate or
22
materially alter, change or amend said policies or insurance, which
thirty (30) day notice period will commence to run from the date
notice is mailed via reputable overnight carrier to the attention of
US Airways.
SECTION 6.4 CARGO LIABILITY INSURANCE
US Airways will maintain cargo liability insurance coverage, in types and
amounts required by law, for all air freight transported by Republic under a US
Airways airway bill on flights operated pursuant to the Services provided by
Republic under this Agreement.
ARTICLE 7 TERM AND TERMINATION
SECTION 7.1 EFFECTIVE DATE AND TERM
(a) This Agreement shall become effective upon the date of the entry (the
"Effective Date") of a final order (the "Order") of the bankruptcy court in a
case under the Bankruptcy Code in which US Airways is a debtor (the "Case") (i)
approving the terms of such Agreement and authorizing and directing US Airways
to enter into and be bound by such Agreement; (ii) authorizing and directing US
Airways to assume under Section 365 of the Bankruptcy Code (A) the Chautauqua
Jet
Service Agreement dated as of March 19, 1999 as amended (the "CAI
Agreement") with Chautauqua Airlines, Inc. ("CAI"), and (B) the
Service
Agreement between US Airways and Shuttle Acquisition LLC dated as of October 4,
2001 and assigned by Shuttle Acquisition LLC to Shuttle America Corporation (the
"Shuttle Agreement"), and (iii) approving the terms of Amendment Four to the CAI
Agreement and authorizing and directing US Airways to enter into and be bound by
such amendment. In the event the Order is not entered on or before February 3,
2003 (subject to extension by Republic in its sole discretion), this Amendment
shall be null and void and of no force or effect.
(b) The Order shall also provide that, except as provided herein, US Airways'
obligations under this Agreement shall be post-petition, administrative
obligations of US Airways under
23
Section 503 of the Bankruptcy Code. Notwithstanding the foregoing, in the event
that (i) US Airways fails to confirm a chapter 11 plan of reorganization in the
Case (a "Plan") under which US Airways will operate (either directly, through
subsidiaries or through code share partners) regional jet aircraft, or (ii) the
Case is dismissed or converted to a case under chapter 7 of the Bankruptcy Code
and as a result thereof, US Airways suspends or terminates flight operations, or
(iii) if, prior to, or upon or in connection with the consummation of a Plan, US
Airways consummates a sale or sales of a material portion of its assets (whether
pursuant to a plan of reorganization or otherwise) and such sale or sales causes
the number of jets in US Airways' mainline fleet to fall below the threshold of
233 jets (whether through the assumption and assignment of leases, the sale of
jets subject to mortgages, the rejection of leases or the abandonment of jets,
in each case, previously used in connection with sold assets) and US Airways
cases to offer (either directly, through subsidiaries or through code share
partners) any regional jet services (any such event, a "Termination Event"), US
Airways may terminate this Agreement by providing 10 business days prior written
notice to Republic of such termination. In such event, US Airways shall be
deemed to have breached the Agreement as of the effective date of such
termination (the "Breach Date") and Republic shall be entitled to an allowed
administrative claim in respect of (iii) one-half the amount of all start up
costs incurred in organizing and seeking FAA and/or DOT certification with
respect to Republic, such one-half not to exceed $1,000,000 and, (iv) all other
costs incurred through the Breach Date in organizing and starting up Republic
and preparing for Republic's performance under this Agreement, as set forth on
Schedule 7.1(b) hereto. In each case the amount of the respective claim shall be
determined in accordance with the claims administration process set forth by the
court in the Case or under applicable law, including the right of parties in
interest to object to the amount (but only the amount) of the claim.
(c) Republic shall have no obligation to make firm commitments for the
acquisition of the Aircraft or to place any Aircraft into service under this
Agreement until (i) the Order has been entered and (ii) the parties have entered
into an agreement providing for the financing of the aircraft under Section
13.10 hereof and such agreement has been approved pursuant to a subsequent final
order of the bankruptcy court in the Case (the "Subsequent Order"). The
Subsequent Order shall provide that all at risk deposits, progress payments and
other amounts
24
required to be paid by Republic, and all costs or expenses required to be
incurred by Republic in connection with the acquisition of such Aircraft which
have been approved in writing in advance by US Airways shall be treated as
allowed administrative expenses in the Case in the event of the occurrence of a
Termination Event. If the parties do not enter into such agreement, or if the
Subsequent Order is not entered, Republic shall have no obligation to make firm
commitments for the acquisition of the Aircraft or to commit to costs or
expenses in connection with the acquisition of the Aircraft or to place any
Aircraft into service under this Agreement.
(d) Republic shall have no obligation to accept the delivery of any Aircraft or
to commence flight operations under this Agreement until such time as the Order
has been entered.
(e) This Agreement is subject to approval by the Board of Directors of US
Airways and by the Board of Directors of Republic, such approvals to be obtained
prior to the Effective Date.
(f) Republic's obligations under this Agreement are subject to its obtaining
certification from the DOT as a commuter air carrier engaged in air
transportation of persons and property pursuant to Part 298 of the DOT's
Economic Regulations, by no later than July 1, 2003, provided that if Republic
does not obtain such certification by August 1, 2003, then: (1) if Republic
provides US Airways written notice of its inability to obtain such certificate
at least sixty (60) days prior to July 15, 2003 as well as the date on which it
expects to obtain such certificate, it shall pay US Airways a daily penalty of [
* ] for each day commencing August 1, 2003 until it obtains such certificate,
such penalty not to exceed [ * ] in the aggregate, and; (2) if Republic does not
provide US Airways written notice of its inability to obtain such certificate at
least sixty (60) days prior to July 15, 2003, it shall pay US Airways a daily
penalty of [ * ] for each day commencing August 1, 2003 until it obtains such
certificate, such penalty not to exceed [ * ] in the aggregate, and; (3) if
Republic has not obtained such certificate by October 1, 2003, US Airways shall
have the right to terminate this Agreement by giving Republic written notice
thereof, which termination shall be effective upon receipt of such notice,
subject to the payment by US Airways to Republic of the expenses set forth in
Section 7.1(b)(iii) hereof unless such failure to obtain certification resulted
principally from events within the direct control of Republic.
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(g) This Agreement is effective as of the Effective Date and Services provided
hereunder will continue without interruption until ten (10) years from the
in-service date of the last Aircraft (the "Termination Date") unless terminated
on an earlier date pursuant to the provisions of this Article 7 of the
Agreement.
(h) US Airways will have the right, at its sole option, to extend the term of
this Agreement by three (3) years upon not less than twelve (12) months' written
notice to Republic prior to the Termination Date.
(i) To accomplish an orderly termination of this Agreement, the parties agree
that any termination of this Agreement shall be on an aircraft-by-aircraft basis
with no more than three (3) Aircraft terminated hereunder each month, and, to
the extent necessary, the parties agree to extend the term of this Agreement
with respect to the Aircraft until all such Aircraft are terminated.
SECTION 7.2 REGULATORY CHANGES
In the event of any change in the statutes and/or regulations governing the
provision of the Services to be provided pursuant to this Agreement that
materially and adversely affects the economic value of this Agreement, taken as
a whole, to either US Airways or Republic, or both, then the parties hereto will
consult within thirty (30) days after any of the occurrences described herein in
order to determine what, if any, changes to this Agreement are necessary or
appropriate to preserve the essence of the Agreement. If the parties hereto are
unable to agree whether any change or changes to this Agreement are necessary
and proper, or as to the terms of such change or changes, or whether this
Agreement should be canceled in light of the occurrences as described above, and
such failure to reach agreement will continue for a period of thirty (30) days
following the commencement of the consultations provided for by this Section
7.2, then this Agreement may be canceled by the party materially and adversely
affected in such manner upon by providing the other party a minimum of ninety
(90) days written notice of such cancellation.
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SECTION 7.3 TERMINATION BY US AIRWAYS
US Airways may terminate this Agreement for cause, upon not less than ninety
(90) days written notice to Republic should any of the following conditions set
forth in subparts (1) through (5) of this Section 7.3 occur during the term of
this Agreement, subject to Republic's rights to cure such condition as set forth
herein. After notice of termination is given, US Airways will meet with Republic
for the purpose of resolving the conditions so occurring. Should such conditions
not be corrected within ninety (90) days (or action taken to begin correcting
the problem if correction cannot be completed within ninety (90) days), then the
termination is effective. If the conditions are corrected (or all steps to
remedy the situation were promptly taken if the correction cannot be completed
reasonably within ninety (90) days), the termination notice shall be deemed
rescinded. The conditions are:
(1) If Republic materially fails to perform or observe any material covenant or
condition or agreement to be performed or observed by it, provided that if
Republic breaches any payment obligation, US Airways shall have the right to
terminate this Agreement on ten (10) days' prior written notice unless Republic
has cured such breach prior to the expiration of such period; or
(2) During any six month performance measurement period, commencing with the
performance measurement period January 1, 2004 to June 30, 2004 and continuing
thereafter semi-annually, from January 1 to June 30 and from July 1 to December
31 of each calendar year, in which Republic operates [ * ] or more Aircraft in
the Service for at least three months (a "Performance Measurement Period"), if
Republic's flight completion factor falls below [ * ] for, other than for
cancellations attributable to operational factors that are beyond the direct
control of Republic (including, without limitation, weather, air traffic
control, ground stops, or aircraft damage caused by US Airways personnel or
contractors other than affiliates of Republic, or Acts of God) under this
Agreement and excluding cancellations caused by any Performance Exception; or
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(3) If Republic's departures within [ * ] minutes of scheduled departure time
falls below [ * ] for any Performance Measurement Period, excluding delays
attributable to operational factors that are beyond the direct control of
Republic (including, without limitation, weather, air traffic control, ground
stops, taxi/parking delays, delays caused by US Airways personnel, or
aircraft damage caused by US Airways personnel, or Acts of God) under this
Agreement and excluding cancellations caused by any Performance Exception; or
(4) If Republic admits liability or is found liable for safety infractions
(other than routine ministerial fines) by the Federal Aviation Administration
which could reasonably be expected to lead to the suspension or revocation of
Republic's operating certificate, or in US Airways' reasonable opinion, is not
complying in any material respect with applicable safety and operational
requirements; or
(5) If Republic does not comply with the applicable provisions of the "Jets for
Jobs" protocol as ratified by US Airways ALPA on August 8, 2002, and as amended
on December 13, 2002, or as subsequently amended, provided that US Airways
provides Republic with any such amendments within [ * ] business days of
execution, and further provided that Republic shall not be required to exert
other than its [ * ] efforts to comply with any such further amendments.
SECTION 7.4 TERMINATION BY REPUBLIC
Republic shall have the right to terminate this Agreement on ninety (90) days
prior written notice to US Airways should any of the following conditions set
forth in subparts (1) and (2) of this Section 7.4 occur during the term of the
Agreement, subject to US Airways' rights to cure such condition set forth
herein:
(1) US Airways materially fails to perform or observe any material covenant or
condition or agreement to be performed or observed by it under this Agreement,
provided that if US Airways breaches any payment obligation, Republic shall have
the right to terminate this Agreement on
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ten (10) days prior written notice unless US Airways has cured such breach prior
to the expiration of such period, or
(2) If US Airways terminates the CAI Agreement for reasons other than due to a
material breach or non-performance on the part of CAI, or
(3) If CAI terminates the CAI Agreement based upon a material breach or
non-performance on the part of US Airways.
In the event of a termination of this Agreement by Republic pursuant to this
Section 7.4, Republic shall be entitled to an administrative claim in the same
amount and manner as if a Termination Event had occurred.
SECTION 7.5 RETURN OF PROPERTY
Upon final termination of this Agreement, each party will, as soon as
practicable, return any and all property of the other party to such other party.
ARTICLE 8 PERFORMANCE ADJUSTMENTS
SECTION 8.1 WEATHER ADJUSTMENT
If during any calendar quarter, the level of cancellations incurred by Republic,
exclusive of cancellations caused by factors beyond the direct control of
Republic (include ing, without limitation, weather, air traffic control, ground
stops, or aircraft damage caused by US Airways personnel or contractors other
than affiliates of Republic, or acts of God), exceeds more than [ * ] percentage
points of scheduled Block Hours, then US Airways shall pay Republic sixty
percent (60%) of the applicable average Block Hour rate for the calendar quarter
for the cancelled hours over and above the [ * ] percent [ * ] level.
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SECTION 8.2 PERFORMANCE PLAN METRICS
Republic's operating performance for the fleet of Aircraft in the Service under
this Agreement will be tracked by US Airways each day based upon the following
metrics:
FLEET LAUNCH: "Fleet Launch Percentage" is defined as the percent of the
Aircraft departing within [ * ] minutes of the scheduled departure time on its
first flight of the day, excluding delays and secondary delays attributable to
operational factors that are beyond the direct control of Republic (including,
without limitation, weather, air traffic control, ground stops, ground handling
delays, or aircraft damage caused by US Airways personnel or contractors, other
than affiliates of Republic, or acts of God) under this Agreement.
ON TIME DEPARTURE PERCENTAGE: "On Time Departure Percentage" is defined as
the percentage of Aircraft departures completed within [ * ] minutes of its
scheduled departure time, excluding delays and secondary delays attributable to
operational factors that are beyond the direct control of Republic (including,
without limitation, weather, air traffic control, ground stops, ground handling
delays, or aircraft damage caused by US Airways personnel or contractors, other
than affiliates of Republic, or acts of God) under this Agreement.
COMPLETION PERCENTAGE: Completion Percentage" is defined as the
percentage of scheduled Aircraft departures completed, excluding cancellations
and secondary cancellations attributable to operational factors that are beyond
the direct control of Republic (including, without limitation, weather, air
traffic control, ground stops, ground handling delays or aircraft damage caused
by US Airways personnel or contractors, other than affiliates of Republic, or
acts of God) under this Agreement.
Within sixty (60) days after the end of each calendar month during the term of
this Agreement, US Airways will compute the metrics defined above and provide to
Republic a summary statement showing the operating performance of Republic.
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SECTION 8.3 PERFORMANCE PLAN PENALTIES/INCENTIVES
(a) PERFORMANCE PENALTIES. If [ * ] or more of the following conditions are met
for a performance metric over any [ * ] period commencing with the period
[ * ] and continuing thereafter [ * ], from
[ * ] and from [ * ] of each [ * ] in
which Republic operates [ * ] or more Aircraft in the Service for at least
three months (a "Performance Measurement Period"), then Republic shall pay to US
Airways [ * ] each calendar month until cured (i.e.,
until [ * ] of the performance metrics exceed the condition established
below for such calendar month), unless the reason for such failure to meet such
condition qualifies as a Performance Exception as defined in Section 8.3 below:
(i) Republic's Fleet Launch Percentage is less than [ * ] %;
(ii) Republic's On Time Departure Percentage is less than [ * ] %;
(iii) Republic's Completion Percentage is less than [ * ] %.
(b) PERFORMANCE INCENTIVES. If [ * ] of the following conditions are met for
the performance metrics over any Performance Measurement Period, then US Airways
shall pay to Republic [ * ] each calendar month that
[ * ] such performance metrics are met.
(i) Republic's Fleet Launch Percentage is greater than [ * ] %;
(ii) Republic's On Time Departure Percentage is greater than [ * ] %;
(iii) Republic's Completion Percentage is greater than [ * ] %.
(c) Upon the fourth (4th) anniversary of this Fourth Amendment, the Measurement
Period with respect to Section 8.2(a) or Section 8.2(b) above shall be amended
from a [ * ] day period to a [ * ] day period.
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SECTION 8.4 PERFORMANCE EXCEPTIONS
A "Performance Exception" with respect to the a failure on the part of Republic
to achieve the performance metrics of Fleet Launch Percentage, On Time Departure
Percentage and Completion Percentage as defined in Section 8.3(a) and 8.3(b)
shall be deemed to have occurred if any of the following conditions are met:
(a) A performance metric of the same or lesser magnitude (as measured
on a percentage basis) was experienced by US Airways and/or other air carriers
performing flying in the same or comparable (i.e., geographically similar)
origin-destination points during the same time period and flying a similar
number of cycles per day;
(b) The failure to achieve the performance metric is directly
attributable to (i) a labor dispute, strike or slowdown, or (ii) the performance
of one or more specific aircraft within the Aircraft (including FAA action) or
one or more specific routes flown by the aircraft within the Aircraft, and such
performance is caused by aircraft scheduling decisions made by US Airways or
aircraft damage caused by US Airways personnel performing, or third party
personnel contracted by US Airways to perform, ground support services related
to this Agreement. In the event of such specific aircraft or route issue,
Republic shall promptly notify US Airways in writing of the issue and each party
shall promptly take steps to coordinate a commercially reasonable cure for such
issue. In the event US Airways receives written notice of an issue within its
control to correct, US Airways will promptly provide written notice to Republic
of the date by which such issue is expected to be cured and will adjust
Republic's affected performance metrics to the extent affected by such issue
during the period prior to such cure taking effect.
ARTICLE 9 SERVICE MARK LICENSE FOR SERVICES PROVIDED PURSUANT TO THIS
AGREEMENT
32
SECTION 9.1 GRANT OF LICENSE
US Airways hereby grants to Republic a nonexclusive, nontransferable license to
use such US Airways Servicemarks as US Airways may designate from time-to-time
in connection with the services to be rendered by Republic under this Agreement;
PROVIDED, HOWEVER, that at any time during the term of this Agreement, US
Airways may alter, amend or revoke the license hereby granted and require at US
Airways' expense, if directed by US Airways, Republic's use of any new or
different US Airways Servicemarks in conjunction with the air transportation
services provided hereunder as US Airways may determine in the exercise of its
sole discretion and judgment.
SECTION 9.2 TERMS AND CONDITIONS GOVERNING TRADEMARK LICENSE
(a) Republic hereby acknowledges US Airways' ownership of the US Airways
Servicemarks, further acknowledges the validity of the US Airways Servicemarks,
and agrees that it will not do anything in any way to infringe or abridge US
Airways' rights in its Servicemarks or directly or indirectly to challenge the
validity of the US Airways Servicemarks.
(b) Republic agrees that, in providing the Services contemplated under this
Agreement it will not advertise or make use of the US Airways Servicemarks
without the prior written approval of US Airways. US Airways will have absolute
discretion to withhold its consent concerning any and all such advertising and
use of the US Airways Servicemarks in advertising by Republic. In the event US
Airways approves the use of such US Airways Servicemarks in any advertising,
such advertising will identify US Airways as the owner of such servicemarks, and
conform with any additional requirements specified by US Airways.
(c) To the extent that Republic is licensed to use the US Airways Servicemarks,
they will only be used in conjunction with the Republic Services specifically
covered by this Agreement and not in connection with any other businesses or
activities of Republic or any other entity.
33
(d) Nothing in this Agreement will be construed to give Republic the exclusive
right to use the US Airways Servicemarks, or to abridge US Airways' right to use
and/or license its Servicemarks, and US Airways hereby reserves the right to
continue use of the US Airways Servicemarks and to license such other uses of
said Servicemarks as US Airways may desire.
(e) No term or provision of this Agreement will be construed to give Republic
the exclusive right to use the US Airways Servicemarks. US Airways hereby
reserves the right to continue use of the US Airways Servicemarks and to license
such other uses of said Servicemarks as US Airways may desire.
(f) No term or provision of this Agreement will be construed to preclude the use
of the Servicemarks "US Airways Express" or the aircraft exterior color decor
and patterns by other individuals or entities not covered by this Agreement.
(g) Upon the cancellation or termination of this Agreement, the license and use
of the US Airways Servicemarks by Republic will cease, and such use will not
thereafter occur except as appropriate in any phase-out of service of this
Agreement.
ARTICLE 10 FORCE MAJEURE
SECTION 10.1 FORCE MAJEURE
Notwithstanding anything to the contrary herein contained, it is agreed that
either Party will be relieved of its obligations hereunder in the event and to
the extent that performance hereof is delayed or prevented by any cause beyond
its control and not caused by the Party claiming relief hereunder, including,
without limitation, acts of God, public enemies, war, labor shortages, strikes,
insurrection, acts or orders of governmental authorities, fire, flood,
explosion, or riots or the recovery from such cause ("FORCE MAJEURE"), PROVIDED,
HOWEVER, that the foregoing will not apply to the obligations of the parties
under Article 6 or the obligations of US Airways to pay for the Republic
Services as and to the extent provided under Article 5 of this Agreement.
34
SECTION 10.2 RESUMPTION OF SERVICE
Republic agrees that where relief is obtained under this provision to make its
best efforts to resume Service. Republic further agrees to consult with and
advise US Airways of any anticipated delay or failure, as soon as it becomes
aware of such anticipated delay or failure or the possibility thereof, whether
for FORCE MAJEURE or otherwise, and where applicable, to re-establish applicable
timetables.
ARTICLE 11 NOTICES
Except where specified elsewhere in this Agreement, any and all notices,
approvals or demands required or permitted to be given by the Parties hereto
will be sufficient if made in writing and sent by certified mail, postage
prepaid, overnight courier or delivered by hand. When sent by mail, such notices
will also be sent by facsimile. Notices to US Airways will be addressed to:
US Airways, Inc.: Republic Airline Inc.:
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Vice President - US Airways Express Division President
US Airways, Inc. Republic Airline Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ [▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇]
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ [▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇]
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ [Telephone: (▇▇▇) ▇▇▇-▇▇▇▇]
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ [Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇]
with copies delivered at the same address with copies delivered to:
to the attention of US Airways' General Counsel,
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Principal and General Counsel
Wexford Capital, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
35
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
ARTICLE 12 INTENTIONALLY DELETED
ARTICLE 13 MISCELLANEOUS
SECTION 13.1 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties hereto
unless subsequently amended in writing, executed by duly authorized
representatives of both parties or their respective successors in interest.
SECTION 13.2 HEADINGS
Article titles and subheadings contained herein are inserted only as a matter of
convenience and for reference. Such titles in no way define, limit, or describe
the scope or extent of any provision of this Agreement.
SECTION 13.3 SEVERABILITY
If, for any reason, any portion of this Agreement will be deemed unenforceable
or determined by a court of competent jurisdiction to be in violation of or
contrary to any applicable statute, regulation, ordinance, order, or common law
doctrine, then that portion will be of no effect. Nevertheless, the balance of
the Agreement will remain in full force and effect as if such provision were
never included.
36
SECTION 13.4 WAIVER
Except as otherwise specifically provided in this Agreement, a waiver by either
Party of any breach of any provision of this Agreement, or either Party's
decision not to invoke or enforce any right under this Agreement, will not be
deemed a waiver of any right or subsequent breach, and all provisions of this
Agreement will remain in force.
SECTION 13.5 ASSIGNABILITY
The Parties agree that this Agreement and the rights and obligations established
hereunder, may not be assigned, in whole or in part, without the prior written
consent of the other, where such consent will not be unreasonably withheld,
except that US Airways may assign its rights, without any prior approval, to US
Airways Group, Inc., or any subsidiary of that company, or any successor through
merger, asset sale, operation of law or the like. Republic may assign its right
to RJET, or any subsidiary of that company, or any successor through merger,
asset sale, operation of law or the like with the prior written approval or US
Airways, which shall not be unreasonably withheld. Any such assignment by
Republic shall be to an entity in compliance with US Airways "Jets for Jobs"
protocol as ratified by US Airways ALPA on August 8, 2002 and as amended on
December 13, 2002, or as further amended before the date of such assignment,
provided that Republic shall not be required to exert other than its
commercially reasonable efforts to comply with any such further amendments. The
parties recognize that US Airways is obligated to pay as a Pass Through Cost any
additional cost incurred as a result of such compliance, and that Republic is
obligated to reduce its Pass Through Costs to reflect any decrease in cost
incurred. Notwithstanding any such assignment, the Parties agree that they will
remain responsible for their financial obligations under this Agreement.
SECTION 13.6 GOVERNING LAW
37
This Agreement will be governed by, construed and enforced in accordance with
the laws of the United States and the State of
New York, as though the entire
contract were performed in
New York and without regard to
New York's conflict of
laws, rules, or statutes. The parties further agree that they consent to the
jurisdiction of the Courts of
New York or the federal courts located within the
State of
New York and waive any claim of jurisdiction or FORUM NON CONVENIENS.
SECTION 13.7 NO FRANCHISE
Nothing is this Agreement is intended to imply or confer upon the arrangements
contemplated hereunder, any status as a "franchise" as recognized under any
state law. Accordingly, no franchiser-franchisee relationship exists between US
Airways and Republic as a result of this Agreement.
SECTION 13.8 ADDITIONAL US AIRWAYS RIGHTS
US Airways shall have the following rights in its sole discretion:
(a) On ninety (90) days prior written notice, to provide Aircraft Hull and
Liability Insurance at the levels specified in Section 6.3 hereof and on terms
otherwise reasonably acceptable to Republic, its lenders and aircraft lessors
instead of paying Republic for such coverage;
(b) On twenty (20) days prior written notice, to pay fuel costs directly to the
vendor instead of reimbursing Republic for fuel;
SECTION 13.9 REPUBLIC STOCK OPTIONS
Upon execution of this Agreement by Republic, Republic shall issue to US Airways
options (the "Options") to purchase five percent (5%) of the common stock of
Republic issued and outstanding on December 31, 2004 at an aggregate exercise
price equal to five percent (5%) of
38
the aggregate amount as determined by RJET of RJET's capital investment in
Republic as of the date of exercise of the Options. Republic shall provide to US
Airways documentation of such investments so that US Airways may reasonably
verify the exercise price calculation prior to the date of exercise of the
Options. The Options shall vest as follows: one-third (1/3) of the Options shall
vest and become exercisable on December 31, 2004 and each December 31st
thereafter through and including December 31, 2006. In the event this Agreement
is terminated prior to December 31, 2006 for any reason other than material
breach by Republic, all unvested Options as of the effective date of such
termination shall be forfeited. Any vested Options may be exercised by US
Airways at its discretion at any time within the earlier of (a) seven (7) years
after the date that such Options become vested and (b) one (1) year after the
termination of this Agreement, and if not exercised within such time period
shall be forfeited. Republic (i) represents that RJET owns all of the
outstanding stock of Republic, (ii) shall use its commercially reasonable
efforts to cause RJET to provide US Airways with customary "tag-along" rights in
connection with any liquidity event involving Republic capital stock, and (iii)
shall provide US Airways with anti-dilution protections for the Options pursuant
to an anti-dilution agreement that the parties will execute prior to January 16,
2003.
13.10 FINANCING AGREEMENT
The parties acknowledge that they have not entered into or reached agreement
with respect to the financing of the Aircraft and that Republic shall not have
any obligation to make any commitment with respect to the acquisition of any
Aircraft until the parties enter into such agreement.
ARTICLE 14 CONFIDENTIALITY
SECTION 14.1 CONFIDENTIALITY OF AGREEMENT
The Parties agree that the terms of this Agreement and any other Confidential
Information (as defined in Section 14.2 hereof) furnished hereunder will be
treated as confidential and will not be
39
disclosed to any other person or entity without the express written consent of
the other party; provided that each party may, without the consent of the other
party, disclose Confidential Information as expressly permitted below:
(a) to directors, officers, employees, permitted assigns and agents of
each party and their respective Affiliates (as defined in Section 14.4 or
14.5 hereof); or
(b) to prospective financial institutions for the purposes of providing
financing of Aircraft for; or
(c) to subcontractors, auditors, accountants or legal and financial
advisors of such party and its Affiliates; or
(d) to such other parties as may be required by law, by government
regulation or order, by subpoena or by any other legal process, including in
connection with any SEC or other regulatory filing by the parties or their
affiliates, including the filing of an S-1 registration statement and any
related documents. In the event that a disclosure becomes necessary, as
provided in this subclause (d) of this Section 14.1, each party shall
consult and cooperate with the other party to limit (to the extent
permissible) the scope and form of such disclosure. In the event of such
disclosure required by law, only those portions of this Agreement required
to be disclosed will be released. The disclosing party will make good faith
efforts to minimize the portions to be disclosed and will seek confidential
treatment by the receiving party or agency or any portions disclosed. In the
event of one party being served a subpoena or discovery request, prior to
responding to the subpoena or request, the party served will notify the
other party, so that the other party will have an opportunity to contest, if
it chooses to do so, the disclosure of the content of this Agreement.
SECTION 14.2 CONFIDENTIAL INFORMATION
"Confidential Information" means all restricted information having business
value, regardless of the form in which it exists, including, without limitation,
the terms of this Agreement, written documents, oral communications, recordings,
videos, software, databases, business plans, and electronic/magnetic media,
provided to or observed by either party pursuant to this Agreement,
40
including information owned or provided by either party to the other party,
except otherwise as expressly provided in Section 14.3 hereof. Each party agrees
that it will maintain all Confidential Information in confidence using the same
degree of care with respect to such Confidential Information as it uses in
protecting its own proprietary information, and will use it solely for purposes
of its own business operations in accordance with the terms hereof. Such
Confidential Information will be distributed within each party's company only to
personnel with a need to know such information for permitted purposes or in
compliance with a court order or statutory or regulatory requirements; PROVIDED,
HOWEVER, that prior to any such latter disclosure, the party shall inform all
such persons of the confidential nature of the information, and that it is
subject to this non-disclosure obligation, and shall further instruct such
persons to treat such information confidentially. The parties expressly
acknowledge and agree that the terms and conditions of this Agreement and any
reports, invoices, or other communications between US Airways and Republic given
hereunder or in connection herewith constitute Confidential Information of both
parties.
SECTION 14.3 EXCLUSIONS FROM CONFIDENTIAL INFORMATION
Notwithstanding the foregoing, Confidential Information will not be considered
confidential and each party and their respective Affiliates may disclose any
item of Confidential Information without restriction in any of the following
circumstances if such item:
(a) is publicly available (either to the general public or to any relevant
trade or industry) prior to either party's receipt of it from the other
party hereto;
(b) is thereafter made publicly available (either to the general public or
to any relevant trade or industry) by another party hereto or by a third
party which is entitled to make such item publicly available;
(c) becomes available to either party hereto on a non-confidential basis
from a source which has represented to such party that such source is
entitled to disclose it; or
(d) was known to either party hereto on a non-confidential basis prior to
its disclosure to such party by another party hereto. The provisions of this
Article 14 will survive any termination of this Agreement for a period of
three (3) years.
41
SECTION 14.4 INFORMATION SHARED WITH US AIRWAYS GROUP, INC.
Notwithstanding anything to the contrary herein, Republic acknowledges and
agrees that any Confidential Information shared or given to US Airways pursuant
to this Agreement may be shared by US Airways on a confidential basis with US
Airways Group, Inc., and US Airways Affiliates, where US Airways Affiliates is
defined as subsidiaries of US Airways Group, Inc., each of which shall be deemed
an "Affiliate" of US Airways for purposes of this Article 14.
SECTION 14.5 INFORMATION SHARED WITH RJET
Notwithstanding anything to the contrary herein, US Airways acknowledges and
agrees that any Confidential Information shared or given to Republic pursuant to
this Agreement may be shared by Republic on a confidential basis with RJET,
Wexford Capital LLC ("Wexford") and entities that are wholly owned or controlled
by RJET or Wexford, each of which shall be deemed an "Affiliate" of Republic for
the purposes of this Article 14.
SECTION 14.6 RETURN OF DOCUMENTS
(a) Upon the reasonable request of either party, each party will immediately
return to the other party, at its own expense, all documents of the requesting
party and all copies of such documents in its possession or under the control
either directly or indirectly of its agents. Each party acknowledges and agrees
that the other party will have the right to exercise this right as many times as
it deems necessary throughout the term of this Agreement.
(b) Upon termination of this Agreement, with or without cause and for any
reason, each party shall, within ninety (90) days of such termination, either
deliver to the other party, or destroy, all of such other party's Confidential
Information (including copies thereof encoded or stored on magnetic or other
electronic media or processors; PROVIDED, HOWEVER, that neither party shall be
42
required to purge or destroy any Confidential Information for so long as such
Confidential Information is reasonably necessary continued administration and
operation of their respective programs or is reasonably necessary in connection
with the resolution of any disputes which may have at the time arisen pursuant
to the terms of this Agreement; PROVIDED, FURTHER, that any Confidential
Information not purged or destroyed pursuant to the preceding proviso shall be
purged or destroyed as soon as it is no longer reasonably necessary for
continued administration or resolution of disputes.
SECTION 14.7 REMEDIES
Each party acknowledges and agrees that the party disclosing Confidential
Information under this Agreement will have no adequate remedy at law if there is
a breach or threatened breach of this Article 14 and accordingly, that the
disclosing party shall be entitled to an injunction or other equitable or
preventative relief against the other party or its representatives for such
breach or threatened breach. Nothing herein shall be construed as a waiver of
any other legal or equitable remedies which may be available to the disclosing
party in the event of a breach or threatened breach of this Article 14 and the
disclosing party may pursue any other such remedy, including the recovery of
damages.
ARTICLE 15 DISPUTE RESOLUTION
SECTION 15.1 CERTAIN DISPUTES
Any dispute, difference, controversy or claim arising out of or relating to (i)
a significant event that might affect or the adjustment of Per Block Hour Costs
under Section 5.2(a), or (ii) payments to be made by Republic or US Airways
under this Agreement, the breach or non-performance thereof shall first be
attempted to be resolved by US Airways and Republic through mutual negotiations,
consultation and discussions for a period of thirty (30) days.
43
SECTION 15.2 DISPUTE RESOLUTION PROCEEDINGS
In the event that the parties are unable to settle their differences or disputes
which may arise between them under Section 15.1, above, then either party may
submit such dispute ("Dispute") for binding arbitration with the following
conditions:
(a) the proceeding will be held before a panel of three arbitrators where
each party will choose one arbitrator and the third will be selected jointly
by the two appointed arbitrators and, where such agreement cannot be
reached, by appointment of the Administrator of the American Arbitration
Association or his or her designee;
(b) except as modified by this Article, the Arbitration Rules of the
American Arbitration Association will govern the arbitration;
(c) the proceeding will be conducted in the State of
New York;
(d) the law and common Law of the United States and the State of
New York
will be applied without regard to
New York conflict of laws statutes;
(e) the proceeding will be closed except to the parties, their attorneys,
representatives, witnesses and experts, all of whom must agree to maintain
the confidentiality of the dispute;
(f) the existence, proceeding and resolution of the Dispute will be kept
confidential by the parties and will only be disclosed to parties and
individuals with a need to know of its existence and who will agree to
maintain confidentiality;
(g) the arbitration will be binding upon the parties unless mutually agreed
otherwise in writing; and
(h) each party will be responsible for its own costs and expense incurred as
a result of, or in connection with the arbitration, including the costs,
fees, and expenses of its own representatives and designated arbitrator, in
the proceeding, except that the costs of the third arbitrator will be shared
jointly by the parties.
44
IN WITNESS WHEREOF, US Airways and Republic have caused this Agreement to be
executed by their duly authorized representatives on the day and year first
above written.
REPUBLIC AIRLINE INC. US AIRWAYS, INC.
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇.▇▇▇▇▇ ▇▇▇▇▇
------------------------------ -----------------------------
By: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: ▇. ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President Title: Senior Vice President
Corporate Development
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------ -----------------------------
Witness: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
45
EXHIBIT 2.1 IMPLEMENTATION SCHEDULE OF AIRCRAFT DEPLOYMENT
------------------------ --------------- -------------------------------
NUMBER OF CUMULATIVE NUMBER OF
DATE AIRCRAFT AIRCRAFT
---- --------- --------------------
July, 2003 [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
June, 2004 [ * ] 20
Note: Aircraft [ * ] will be designated a Spare Aircraft
---------
* Confidential
46
EXHIBIT 2.1(a) SCHEDULE REQUIREMENTS
The weekly schedules for the Aircraft specified by US Airways must meet the
following minimum and maximum schedule parameters.
MINIMUM MAXIMUM
------- -------
Scheduled Block Hours per Aircraft per Day [ * ] [ * ]
Scheduled Departures per Aircraft per Day [ * ] [ * ]
Available Seat Miles per Aircraft per Day [ * ] [ * ]
Note: the above minimum and maximum schedule parameters apply only to those
Aircraft scheduled in revenue service, not to spare aircraft.
US Airways will meet the following criteria in devising the schedule:
1. Aircraft Turn Times
For operations at US Airways designated hubs (for purposes of this Agreement
only, Pittsburgh, Boston, Washington-National, New York ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
Philadelphia, and Dulles and any other hubs that US Airways may establish) the
minimum turn time (defined as the time from Aircraft blocking to Aircraft
unblocking) will be [ * ] minutes. For operations at a non US Airways hub, the
minimum turn time will be [ * ] minutes.
2. Aircraft Maintenance Requirements
During the period Republic operates up to [ * ] Aircraft, [ * ] Aircraft will be
scheduled for overnight maintenance for a minimum period of [ * ] for [ * ] days
each week. In addition, [ * ] Aircraft will be scheduled for [ * ] of continuous
maintenance time each week beginning on Saturday afternoon. Once Republic
operates a minimum of [ * ] Aircraft, [ * ] Aircraft will be scheduled for a
minimum of [ * ] of overnight maintenance per Aircraft for [ * ] days per week.
Once Republic operates a minimum of [ * ] Aircraft, [ * ] Aircraft will be
scheduled for [ * ] of continuous maintenance time per Aircraft each week
beginning on Saturday afternoon.
---------
* Confidential
47
3. Maintenance Base
The schedule will allow for the establishment of a single maintenance base in [
* ] . On or before February 28, 2003, Republic shall designate one of such
locations as the location for such maintenance base. Subject to mutual
agreement, such agreement not to be unreasonably withheld by either party, the
parties may either relocate such maintenance base or establish a second
maintenance base such that maximum operational efficiencies are realized by the
parties.
4. Crew Overnights
The schedule will allow for single overnights of crews in outstations and will
not require Republic to schedule any continuous duty overnights. Any additional
costs associated with continuous duty overnights or high-speed overnights shall
be for the account of US Airways and shall be invoiced separately by Republic as
a pass through cost.
5. Crew Bases
During the period Republic operates up to five (5) Aircraft, the schedule will
allow for the establishment of [ * ] crew base for pilots and [ * ] crew base
for flight attendants, and once Republic operates more than five (5) Aircraft,
the schedule will allow for the establishment of up to [ * ] crew bases for
pilots and [ * ] crew bases for flight attendants.
6. Hub Arrivals/Departures
At least [ * ] of the scheduled flights will arrive at or depart from a US
Airways designated hub as defined in Paragraph 1 above or the maintenance base
selected by Republic as provided in Paragraph 3 above, or any other maintenance
base that may have been established by the parties pursuant to Paragraph 3
above.
7. Consent to Schedule Changes
To the extent that US Airways' schedule falls outside of the criteria set forth
herein, US Airways shall request Republic to consent to such schedule and
Republic shall not unreasonably withhold such consent provided that the schedule
being requested will not impose additional costs upon Republic and/or make
Republic's compliance with its performance requirements more difficult,
---------
* Confidential
48
further provided that US Airways shall have the right to reimburse Republic for
such additional costs and/or adjust the performance criteria so that the
immediately proceeding proviso shall no longer be applicable to the schedule
request in question.
49
EXHIBIT 2.8 DIVISION OF RESPONSIBILITIES
(1) The parties will be responsible for providing, at their own cost, service
and materials, as set forth below, Assignment of services and materials to
categories will be according to generally accepted accounting principals and in
keeping with Airline Industry Standard Functional Classifications as required
for reporting Form 41 data to the Department of Transportation. Except as
otherwise provided in Articles 4 and 5, the assignment of responsibility will be
as follows:
TO Republic TO US AIRWAYS, INC.
--- --------------------
5100 Flying Operations 5500 Passenger Service1
5200 Direct Maintenance 6200 Traffic Servicing
5300 Maintenance Burden2 6300 Related to Traffic Servicing
6100 Aircraft Servicing3 6500 Reservations and Sales
6300 Related to Aircraft Servicing 6600 Advertising and Publicity
6800 Related to Aircraft Operations 6800 Related to Passengers & Revenue
7000 Depreciation and Amortization 7000 Depreciation and Amortization
related to aircraft and maintenance related airport facilities and
equipment ground facilities and equipment
7100 Transport Related Expenses 7100 Transport Related Expenses
as they relate to the above as they relate to the above
referenced items referenced items
(2) Republic will be responsible for providing, fuel (into plane), airport
landing fees, passenger catering, passenger liability insurance, and property
tax. Republic will be fully reimbursed for these items (the "Pass Through
Costs") as described in Section 5.4.
----------
(1) Except Flight Attendants which will be the responsibility of Republic
(2) Except Station Ground Equipment which will be the responsibility of US
Airways
(3) De-icing costs and overnight aircraft parking shall be the responsibility of
US Airways
50
EXHIBIT 5.1
[ * ]
---------
* Confidential
51
Exhibit 7.1(b)
[ * ]
---------
* Confidential
52