Exhibit 10.3
* TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTION 200.80(B)(4),
200.83 AND 240.24b-2
Execution Copy
REIMBURSEMENT AGREEMENT
               This Reimbursement Agreement (this “Agreement”), dated and
effective the ___day of May, 2005, is between Delta Air Lines, Inc., whose
principal address is 1030 Delta Boulevard, Atlanta, Georgia 30320 (“Delta”),
Freedom Airlines, Inc. (“Operator”), a wholly-owned subsidiary of Mesa Air
Group, Inc., holding a Certificate of Public Convenience and Necessity issued by
the Federal Aviation Administration (“FAA”), whose principal address is 410
North 44th Street, Suite 700, Phoenix, Arizona 85008, and Mesa Air Group, Inc.
(“Parent” and together with Operator, “Mesa”), parent company and sole
shareholder of Operator, whose principal address is 410 North 44th Street,
Suite 700, Phoenix, Arizona 85008.
               WHEREAS, Delta operates the Delta Connection program; and
               WHEREAS, Delta is party to certain aircraft leases and other
agreements (the “FRJ Leases”) whereby Delta leases thirty (30) Dornier 328
regional jets (the “FRJ Aircraft”); and
               WHEREAS, Mesa desires to operate regional jets under Delta’s
flight designator code, “DL,” as a Delta Connection operator; and
               WHEREAS, to be a Delta Connection operator, Mesa is willing to
reimburse Delta for certain of its obligations under the FRJ Leases.
               NOW, THEREFORE, for and in consideration of the foregoing
premises and the mutual undertakings set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Delta and Mesa, intending to be legally bound, hereby agree to
enter into this Agreement as follows:
1. Reimbursement of FRJ Expenses.
1.1 Mesa hereby covenants and agrees to pay to Delta the sum of [*] Dollars
($[*]) per FRJ Aircraft per month as reimbursement for certain lease rent costs
incurred by Delta relating to such aircraft. Mesa’s payment obligations
hereunder shall commence with respect to each FRJ Aircraft upon the earlier of
(1) in accordance with the schedule attached hereto as Exhibit 1.1 and (2) the
actual in-service date of each “RJ50 Aircraft” (as defined below); provided,
however, if the initial RJ50 Aircraft actual in-service date is delayed beyond
October 1, 2005 due solely to the actions or inactions of Delta, Mesa’s payment
obligations hereunder shall be temporarily suspended until such initial RJ50
Aircraft are actually placed into Delta Connection service. Mesa’s payment
obligation with respect to the FRJ Leases rent expense shall continue until the
earlier of the: (1) Delta’s full release from all of its rights and obligations
with respect to each of the thirty
 

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(30) FRJ Aircraft including, without limitation, all of the rights and
obligations of Delta in, under and with respect to the participation agreements,
the FRJ Leases, and all other operative documents relating thereto under which
Delta has any right or obligation with respect to each of the FRJ Aircraft
(collectively, the “FRJ Obligations”); (2) the expiration of the term of the
applicable FRJ Lease, (3) termination of the “RJ50 Delta Connection Agreement”
(as defined below) by Mesa pursuant to Sections 11(C) or 11(D) thereof,
(4) subject to Section 4.3 hereof, termination of the RJ50 Delta Connection
Agreement by Delta pursuant to Sections 11(F) or 11(G) thereof; or (5) Delta
filing a petition in bankruptcy or reorganization under any federal or state
bankruptcy or similar law.
1.2 Each monthly payment required pursuant to Section 1.1 hereof shall be due
and payable on the 15th day of each applicable month; provided, however, in lieu
of such payment, at Delta’s sole option, so long as the RJ50 Delta Connection
Agreement is in effect, Delta may off set and deduct a given’s month’s payment
due from Mesa from any payments due Mesa from Delta during such month under the
RJ50 Delta Connection Agreement.
2. Assumption of FRJ Aircraft Obligations.
2.1 Mesa hereby covenants and agrees to diligently pursue a full release of
Delta from all of the FRJ Obligations, all on terms and conditions that are
reasonably satisfactory to Delta.
2.2 If Mesa identifies a potential sublease for the FRJ Leases, then, subject to
the terms and conditions thereof, Delta agrees to negotiate sublease
documentation with such potential sublessee on terms and conditions reasonably
satisfactory to Delta. Any and all reasonable fees and expenses (including
attorneys’ fees) incurred by Delta in connection with any such sublease or
similar transaction, whether or not consummated, shall be promptly reimbursed by
Mesa.
2.3 (a) In the event that, subject to Delta’s reasonable satisfaction with
respect to the terms and conditions thereof, the release of Delta from the FRJ
Obligations requires a monetary payment to one or more of the other parties
thereto (a “Financial Settlement”), Delta hereby agrees to participate in such
Financial Settlement on a dollar-for-dollar basis with Mesa, up to a maximum
contribution by Delta of [*] Dollars ($[*]) (the “Delta Contribution”);
provided, however, if any such Financial Settlement is in any way related to or
part of any other non-FRJ Aircraft-related transaction, series of transactions,
agreement or series of agreements involving Mesa or any affiliate of Mesa, and
not Delta, Delta shall not be obligated to participate in such Financial
Settlement.
       (b) Commencing on the first anniversary date of the 25th (or 30th, if
applicable) RJ50 Aircraft being placed into revenue service pursuant to the RJ50
Delta Connection Agreement, Delta shall pay to Mesa the Delta Contribution in
equal annual installments based on the remaining years of the initial term of
the RJ50 Delta Connection Agreement.
       (c) If, prior to the second anniversary of the 25th (or 30th, if
applicable) RJ50
 

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Aircraft being placed into revenue service pursuant to the RJ50 Delta Connection
Agreement, Delta files a petition in bankruptcy or reorganization under any
federal or state bankruptcy or similar law, Mesa shall, no later than five
(5) days after such filing, re-pay to Delta that portion of the Delta
Contribution which Delta had previously paid to Mesa prior to such filing and,
pursuant to Section 1.1 hereof, Mesa’s payment obligations with respect to the
FRJ Leases shall cease.
3. RJ50 Delta Connection Operations.
3.1 Concurrently with the execution of this Agreement, Mesa and Delta agree to
execute and enter into a Delta Connection Agreement in the form attached hereto
as Exhibit 3.1 and incorporated herein by reference (the “RJ50 Delta Connection
Agreement”) for the operation by Mesa of up to thirty (30) 50-Seat regional jet
aircraft (the “RJ50 Aircraft”).
4. Default.
4.1 In the event of a material breach of this Agreement by either party
remaining uncured for more than five (5) days after receipt of written
notification of such breach by the nonbreaching party, then the nonbreaching
party may immediately terminate this Agreement at its sole option. If a notice
of breach is delivered under this Section and a notice of termination is not
delivered within sixty (60) days thereafter, then the nonbreaching party shall
be deemed to have waived its right to terminate under this Section for such
occurrence.
4.2 Termination of this Agreement for any reason shall not relieve either party
of rights and obligations incurred prior to the effective date of termination. A
party’s right to terminate this Agreement shall be in addition to any other
rights or remedies, in law or equity, available to such party.
4.3 In the event that Delta terminates the RJ50 Delta Connection Agreement
pursuant to Sections 11(F) thereto and Mesa’s payment obligation required
pursuant to Section 1.1 hereof is terminated in accordance with such section,
Mesa shall immediately pay to Delta the appropriate amount set forth in the
table on Exhibit 4.3 attached hereto and incorporated herein.
5. Miscellaneous.
5.1 This Agreement is subject to, and will be governed by and interpreted in
accordance with, the laws of the State of New York, excluding conflicts of laws
principles, and of the United States of America. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may only be brought in the courts of the State of Georgia in Fulton
County, or, if it has or can acquire jurisdiction, in the United States District
Court for the Northern District of Georgia, and each of the parties hereto
irrevocably consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives, to
the fullest extent permitted by law, any objection to venue laid therein.
 

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Process in any action or proceeding referred to in the proceeding sentence may
be served on any party anywhere in the world. EACH PARTY FURTHER AGREES TO WAIVE
ANY RIGHT TO A TRIAL BY JURY.
5.2 The descriptive headings of the several articles and sections of this
Agreement are inserted for convenience only, confer no rights or obligations on
either party, and do not constitute a part of this Agreement.
5.3 Time is of the essence in interpreting and performing this Agreement.
5.4 This Agreement (including the Exhibits hereto), together with the RJ50 Delta
Connection Agreement, constitutes the entire understanding between the parties
with respect to the subject matter hereof, and any other prior or
contemporaneous agreements, whether written or oral, are expressly superseded
hereby.
5.5 If any part of any provision of this Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective to the extent
of such invalidity or unenforceability only, without in any way affecting the
remaining parts of such provision or the remaining provisions.
5.6 This Agreement may be executed in any number of counterparts, including via
facsimile, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same instrument.
5.7 Because a breach of the provisions of this Agreement could not adequately be
compensated by money damages, any party shall be entitled to an injunction
restraining such breach or threatened breach and to specific performance of any
provision of this Agreement and, in either case, no bond or other security shall
be required in connection therewith, and the parties hereby consent to the
issuance of such injunction and to the ordering of specific performance. NO
PARTY SHALL BE LIABLE FOR ANY INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES,
INCLUDING LOST REVENUES, LOST PROFITS, OR LOST PROSPECTIVE ECONOMIC ADVANTAGE,
ARISING FROM THIS AGREEMENT OR ANY BREACH HEREOF.
5.8 No amendment, modification, supplement, termination or waiver of any
provision of this Agreement, and no consent to any departure by either party
therefrom, shall in any event be effective unless in writing signed by
authorized representatives of both parties, and then only in the specific
instance and for the specific purpose given.
5.9 Unless otherwise provided herein, all notices, requests and other
communications required or provided for hereunder shall be in writing (including
telecopy or similar teletransmission or writing) and shall be given at the
following addresses:
(1) If to Delta:

     
 
  Delta Air Lines, Inc.

 

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  1030 Delta Boulevard
 
  Atlanta, GA 30354
 
  Dept. 034
 
  Attention; Senior Vice President and Chief Officer of Operations
 
  Telecopy: (404)715-7352

with copies to:

     
 
  Delta Connection, Inc.
 
  1025 Virginia Avenue Suite 410
 
  Atlanta, GA 30354
 
  Dept, 009
 
  Attn: Chief Financial Officer
 
  Telecopy: (404) 677-6247
 
   
 
  Delta Air Lines, Inc.
 
  1030 Delta Boulevard
 
  Atlanta, GA 30354
 
  Dept. 981
 
  Attn: Sr. V.P. and General Counsel
 
  Telecopy: (404)715-2233

(2) If to Operator and Parent:

     
 
  Mesa Air Group, Inc.
 
  410 North 44th Street, Suite 700
 
  Phoenix, AZ S5008
 
  Attention: President
 
  Telecopy: (602)685-4350

with copies to:

     
 
  Mesa Air Group, Inc.
 
  410 North 44th Street, Suite 700
 
  Phoenix, AZ 85008
 
  Attn: Chief Financial Officer
 
  Telecopy: (602) 685-4352
 
   
 
  Mesa Air Group, Inc.
 
  410 North 44th Street, Suite 700
 
  Phoenix, AZ 85008
 
  Attn: Vice President & General Counsel
 
  Telecopy: (602)685-4352

Any such notice, request or other communication shall be effective (i) if given
by mail, upon the earlier of receipt or the third business day after such
communication is deposited in the United States mails, registered or certified,
with first class postage prepaid, addressed as aforesaid or (ii) if given by any
other means including, without limitation,
 

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by air courier, when delivered at the address specified herein. Delta or
Operator may change its address for notice purposes by notice to the other party
in the manner provided herein.
5.10 This Agreement shall bind and inure to the benefit of Delta, Operator and
Parent and their respective successors and assigns; provided, however, neither
party may assign or transfer this Agreement or any portion hereof to any person
or entity without the express written consent of the other party. Any assignment
or transfer, by operation of law or otherwise, without such consent shall be
null and void and of no force or effect.
5.11 Each party hereby agrees and acknowledges that the existence and contents
of this Agreement are regarded by the other party as being confidential,
sensitive, trade secret information. Accordingly, each party hereby agrees it
shall not disclose nor use any such information without such other party’s prior
written consent, which consent may be withheld in such other party’s sole
discretion.
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IN WITNESS WHEREOF, the parties have executed this Agreement by their
undersigned duly authorized representatives:

                  Mesa Air Group, Inc.       Delta Air Lines, Inc.
 
               
By:
          By:    
 
               
 
               
Name:
          Name:    
 
               
 
               
Title:
          Title:    
 
               
 
                Freedom Airlines, Inc.            
 
               
By:
               
 
               
 
               
Name:
               
 
               
 
               
Title:
               
 
               

 

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EXHIBIT 1.1
Commencement of Payment Obligations

                          AGGREGATE             AMOUNT OF     AIRCAFT IN  
CUMULATIVE   MONTHLY PAYMENT DATE   SERVICE DATE   AIRCRAFT   OBLIGATION
July 2005
  [*]   [*]   $ [*]
August 2005
  [*]   [*]   $ [*]
September 2005
  [*]   [*]   $ [*]
October 2005
  [*]   [*]   $ [*]
November 2005
  [*]   [*]   $ [*]
December 2005
  [*]   [*]   $ [*]
January 2006
  [*]   [*]   $ [*]
February 2006
  [*]   [*]   $ [*]
March 2006
  [*]   [*]   $ [*]
April 2006
  [*]   [*]   $ [*]
May 2006
  [*]   [*]   $ [*]
June 2006
  [*]   [*]   $ [*]
July 2006
  [*]   [*]   $ [*]
August 2006 and thereafter
  [*]   [*]   $ [*]

 

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EXHIBIT 3.1
Form of RJ50 Delta Connection Agreement
{see attached}
 

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EXHIBIT 4.3
Payment Amounts

          Period in which RJ50 Delta Connection Agreement is Terminated   Amount
of Payment from Mesa to Delta
1.
  Effective Date through 4th Anniversary of Effective Date   $ [*]
 
       
2.
  1 Day after 4th Anniversary of Effective Date through 7th Anniversary of
Effective Date   $ [*]
 
       
3.
  1 Day after 7th Anniversary of Effective Date through 10th Anniversary of
Effective Date   $ [*]
 
       
4.
  1 Day after the 10th Anniversary of Effective Date and beyond   $ [*]

 

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