EXHIBIT 10.2
CONFIDENTIAL TREATMENT
REQUESTED PURSUANT TO RULE 24b-2

Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities exchange Act of 1934.
The omitted materials have been filed separately with the Securities and
Exchange Commission.

 
______________________________________________________________________________

REPUBLIC JET SERVICE AGREEMENT

Between

US AIRWAYS, INC.

And

REPUBLIC AIRLINE, INC.

______________________________________________________________________________

 
 
   

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TABLE OF CONTENTS

 
ARTICLE 1 - COMPLIANCE WITH REGULATIONS 
 
ARTICLE 2 - AIR TRANSPORTATION SERVICES TO BE PROVIDED BY REPUBLIC 
 
Section 2.1 - Schedule Requirements 
Section 2.2 - Scheduling Parameters 
Section 2.3 - Technical Operations 
Section 2.4 - Regulations 
Section 2.5 - Operating Procedures 
Section 2.6 - Aircraft Registration 
Section 2.7 - Republic Responsibilities 
Section 2.8 - Substitute Aircraft 
Section 2.9 - Spare Aircraft and Spare Engines 
Section 2.10 - Jets for Jobs 
Section 2.11 - In-flight Sales 
Section 2.12 - Pass Agreement 
Section 2.13 - Processing Code-Share Passengers 
Section 2.14 - In Service Dates 
 
ARTICLE 3 - OPERATION UNDER THE “US AIRWAYS EXPRESS” NAME 
 
Section 3.1 - Servicemarks 
Section 3.2 - Signage 
 
ARTICLE 4 - US AIRWAYS’ SUPPORT SERVICES AND FACILITIES 
 
Section 4.1 - Fuel 
Section 4.2 - Reservations 
Section 4.3 - Station Facilities and Ground Support Service 
Section 4.4 - Cargo, Company Materials (“CoMat”) and Mail Handling Services 
Section 4.5 - Terms of Transportation, Sales and Promotion 
 
ARTICLE 5 - PURCHASE OF AVAILABLE SEAT MILES (“ASMS”) 
 
Section 5.1 - Pricing Model 
Section 5.2 - Direct Costs and Pass Through Costs 
Section 5.3 - Invoicing and Payments 
Section 5.4 - Profit 
Section 5.5 - Payments 
Section 5.6 - True-Up Invoices 
Section 5.7 - Audit and Inspection Rights 
Section 5.8 - Prepaid Rent Credit 
 
ARTICLE 6 - LIABILITY, INDEMNIFICATION AND INSURANCE 
 
Section 6.1 - Republic is an Independent Contractor 
Section 6.2 - Liability and Indemnification 
Section 6.3 - Insurance Coverage 
Section 6.4 - Cargo Liability Insurance 
 
ARTICLE 7 - TERM AND TERMINATION 
 
Section 7.1 - Effective Date and Term 
Section 7.2 - Regulatory Changes 
Section 7.3 - Termination for Cause by US Airways 
Section 7.4 - [Intentionally Omitted] 
Section 7.5 - Termination by Republic 
 
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ARTICLE 8 - PERFORMANCE ADJUSTMENTS 
 
Section 8.1 - [Intentionally Omitted] 
Section 8.2 - Performance Plan Metrics 
Section 8.3 - Performance Plan Penalties and Incentives 
Section 8.4 - Performance Exceptions 
 
ARTICLE 9 - SERVICE MARK LICENSE FOR SERVICES PROVIDED PURSUANT TO THIS
AGREEMENT 
 
Section 9.1 - Grant of License 
Section 9.2 - Terms and Conditions Governing Trademark License 
 
ARTICLE 10 - FORCE MAJEURE 
 
Section 10.1 - Force Majeure 
Section 10.2 - Resumption of Service 
 
ARTICLE 11 - NOTICES 
 
ARTICLE 12 - MISCELLANEOUS 
 
Section 12.1 - Entire Agreement/Amendments/Counterparts 
Section 12.2 - Headings 
Section 12.3 - Severability 
Section 12.4 - Waiver 
Section 12.5 - Assignments 
Section 12.6 - Governing Law / Jury Trial Waiver 
Section 12.7 - No Franchise 
Section 12.8 - Additional US Airways Rights 
 
ARTICLE 13 - CONFIDENTIALITY 
 
Section 13.1 - Confidentiality of Agreement 
Section 13.2 - Confidential Information 
Section 13.3 - Exclusions from Confidential Information 
Section 13.4 - Information Shared with US Airways Group, Inc. 
Section 13.5 - Information Shared with Wexford and Republic 
Section 13.6 - Return of Documents 
Section 13.7 - Remedies 
Section 13.8 - Survival 
 
ARTICLE 14 - DISPUTE RESOLUTION 
 
Section 14.1 - Certain Disputes 
Section 14.2 - Dispute Resolution Proceedings 
 
EXHIBIT 2.2 - SCHEDULE REQUIREMENTS 
 
Exhibit 2.7 - DIVISION OF RESPONSIBILITIES 
 
Exhibit 5.1 - Pricing Model 
 

 
   

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REPUBLIC JET SERVICE AGREEMENT

This Republic Jet Service Agreement (this “Agreement”) is made and entered as of
this 2nd day of September, 2005, by and between US Airways, Inc. (herein
referred to as “US Airways”), a Delaware corporation having its principal place
of business at 2345 Crystal Drive, Arlington, Virginia 22227, and Republic
Airline, Inc. (herein referred to as “Republic”), an Indiana corporation, having
a principal place of business at 8909 Purdue Road, Suite 300, Indianapolis,
Indiana 46268 (each of US Airways and Republic, a “Party” and collectively, the
“Parties”).

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 holds a certificate of public convenience and necessity issued
by the DOT authorizing Republic to engage in the interstate air transportation
of persons, property and mail in the United States;

WHEREAS, US Airways owns various trademarks, trade dress, service marks and
logos, including, but not limited to, “US Airways,”“US Airways Express,” and
distinctive exterior color decor and patterns on its aircraft (each, a “US
Airways Servicemark” and collectively, 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 under the terms
hereof and 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;

WHEREAS, US Airways desires to have Republic operate regional jets in US Airways
Express Service and in connection therewith to provide Republic with a
nonexclusive license for use of one or more of US Airways’ Servicemarks;

WHEREAS, on September 12, 2004, US Airways and certain of its affiliates filed
voluntary petitions for reorganization relief pursuant to Chapter 11 of the
Title 11 of the United States Code, 11 U.S.C. § 101 et seq., as amended
(Title 11, the “Bankruptcy Code”) in the United States Bankruptcy Court for the
Eastern District of Virginia, Alexandria Division (the “Bankruptcy Court”) in
the matter entitled, In re US Airways, Inc., et al., Case No. 04-13819 (the
“Bankruptcy Proceedings”);

WHEREAS, US Airways, US Airways Group, Inc. (“Group”), Wexford Capital LLC and
its affiliated entities (“Wexford”) and Republic Airways Holdings, Inc. and its
affiliated entities (“RJET”) have entered into that certain Investment
Agreement, dated as of March 15, 2005 (as such agreement may be amended from
time to time, or any successor investment agreement, the “Investment
Agreement”), pursuant to which US Airways was granted the following rights,
which rights US Airways subsequently exercised: (i) to sell to and license back
from RJET certain slots (the “Slot Option”) and, upon the occurrence of certain
events, certain gates, (ii) to sell to RJET and lease back on an interim basis
10 EMB 170 aircraft owned by US Airways (the “Owned Aircraft”); (iii) to assign
to Republic the leases to 15 EMB 170 aircraft that are leased by US Airways (the
“Leased Aircraft”); (iv) to cause RJET to purchase 3 undelivered EMB 170
aircraft contracted for by US Airways (the “Other Aircraft” and collectively
with the Owned Aircraft and the Leased Aircraft, the “EMB Aircraft”); and (v) to
sell certain other assets to RJET, in each case subject to the terms and
conditions of the Investment Agreement and to such further documents as the
parties may execute relating to such transactions;

WHEREAS, the Owned Aircraft, the Leased Aircraft and the Other Aircraft are all
to be placed into service under the terms of this Agreement.

NOW THEREFORE, for and in consideration of the foregoing premises and the mutual
covenants and obligations hereinafter set forth, the Parties hereby agree as
follows:

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ARTICLE 1 - COMPLIANCE WITH REGULATIONS

Each Party agrees that all services, including air transportation services,
performed by it, and any of its agents, pursuant to this Agreement or otherwise
shall be conducted in full compliance with any and all applicable laws,
statutes, orders, rules and regulations, whether now in effect or hereafter
promulgated, of all applicable governmental agencies or authorities (such laws,
statutes, orders, rules and regulations, “Regulations”), including, but not
limited to the Federal Aviation Administration (the “FAA”), the Transportation
Security Administration (the “TSA”) and the DOT (for purposes of this Agreement,
any applicable governmental agency or authority, whether domestic or foreign,
shall be referred to as a “Regulatory Authority”). Each Party shall be solely
and exclusively responsible for complying with all Regulations in connection
with the services to be provided by it hereunder, and the Parties agree that
neither Party shall have any obligation or responsibility, whether direct or
indirect, with respect to such compliance by the other Party, except that US
Airways shall be responsible for sharing the costs associated with such
compliance by Republic as and only to the extent expressly provided herein, and
for fulfilling its responsibilities for emergency family assistance services as
defined in the Emergency Assistance Agreement, executed by US Airways and
Republic in connection with the Original Jet Services 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 (as defined in Section 7.1 hereof), Republic will
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 Section 2.2
(hereinafter referred to as the “Service”) using the EMB Aircraft, or such other
aircraft as may be substituted therefor pursuant to the terms of Section 2.8
hereof, (all such aircraft providing the Service pursuant to the terms hereof,
including substitute aircraft used pursuant to Section 2.8, the “Aircraft”). The
EMB Aircraft shall be configured in single class service with 72 seats. The EMB
Aircraft shall be configured with such mechanical configuration as has been
specified by US Airways, bearing the US Airways Express livery.

Section 2.2 - Scheduling Parameters

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
to operational and safety requirements, minimum and maximum schedule
requirements, and the other parameters set forth in this Section 2.2 and Exhibit
2.2. US Airways may, on sixty (60) days advance written notice to Republic,
designate changes in any or all of the following: city-pairs served, aircraft
routings or flight frequencies, provided that the new city-pairs, aircraft
routings, and flight frequencies shall continue to satisfy the parameters set
forth in this Section 2.2 and Exhibit 2.2. In establishing schedules, US Airways
agrees to take into consideration Republic’s operational requirements for remain
overnight (“RON”) maintenance and crew productivity and legality. The Parties
shall determine mutually acceptable locations for maintenance bases and crew
domiciles as provided in Exhibit 2.2. If Republic and US Airways subsequently
agree to any change in the location of any maintenance base or crew domicile,
then the Parties shall also agree on appropriate compensation by US Airways to
Republic for effecting such change, including the reimbursement by US Airways of
costs reasonably incurred by Republic that are associated with the establishment
of a new maintenance base or crew domicile and the closing of any existing
maintenance base or crew domicile.

Section 2.3 - Technical Operations

During the Term, Republic shall be solely responsible for the technical
operation of the Aircraft and the safe performance of the flights undertaken in
connection with the Service in accordance with all Regulations. Republic shall
retain full authority, operational control and possession of the Aircraft to
enable it to perform its obligations under this Section 2.3. In particular,
Republic or its agents or employees shall, 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 shall be solely
responsible for, and US Airways shall have no liability, obligation or duty with
respect to, the flight dispatch and/or conduct of Republic’s flights operated
pursuant to this Agreement or otherwise. For the purpose of this Section 2.3,
the term “flight dispatch” shall include, but shall not be limited to, all
planning of flight itineraries and flight paths, fueling, payload capabilities
and flight release.

Section 2.4 - Regulations

The operation of the Aircraft shall be carried out in accordance with all
Regulations and the standards and practices of Republic approved by the
applicable Regulatory Authority thereunder. Republic shall notify US Airways in
writing within two business days after receipt of any notice from any Regulatory
Authority that asserts any noncompliance by Republic with any Regulation,
initiates an investigation of Republic’s operations or otherwise asserts any
wrongdoing by Republic. Republic shall cooperate promptly and fully with US
Airways in responding to any request for information or data concerning such
non-compliance. For purposes of this Section 2.4, an asserted noncompliance or
other wrongdoing by Republic shall be considered “material” only if such
noncompliance or other wrongdoing, if proven or admitted by Republic, could
reasonably be expected to lead to the suspension or revocation of Republic’s
operating certificate.

Section 2.5 - Operating Procedures

To the extent not previously provided to US Airways, Republic shall deliver to
US Airways a copy of all relevant operating specifications, operational
regulations, manuals and calculations for each EMB Aircraft not later than the
date that such Aircraft becomes subject to this Agreement. Republic shall
deliver to US Airways, within ten (10) days after the end of each month during
the Term, a report of the number of departures, Block Hours, flight hours,
passengers, Available Seat Miles and revenue passenger miles with respect to the
flights operated by the Aircraft during such month in the Service. US Airways
agrees to facilitate any changes to US Airways or US Airways Express manuals,
operating procedures, or tariffs that may be necessary to support the Republic
operation.

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Section 2.6 - Aircraft Registration

During the Term, Republic shall ensure that the Aircraft remain properly
registered in the United States of America in accordance with all Regulations.

Section 2.7 - Republic Responsibilities

Republic shall be responsible for providing, at its own cost, in connection with
the Service to be provided by Republic under this Agreement, all services and
materials identified under the heading “To Republic” in Exhibit 2.7 attached
hereto and made a part hereof (collectively, the “Republic Services”).
Section 2.8 - Substitute Aircraft

In addition to the EMB Aircraft specified in Section 2.1, Republic may in its
discretion arrange for and utilize substitute EMB aircraft or another type of
regional jet aircraft in US Airways Express or neutral livery to provide the
Service under this Agreement during those periods when any EMB Aircraft may be
out of service due to unforeseen and irregular maintenance requirements,
provided that Republic may only utilize regional jet aircraft other than EMB
Aircraft to the extent that US Airways has permitted such use in advance in
writing. Republic shall be paid for the use of such substitute aircraft in the
same manner that it is paid for the use of EMB Aircraft in accordance with
Article 5 hereof. If a substitute aircraft shall be utilized for more than two
(2) consecutive days, Republic and US Airways shall mutually agree upon the
route that shall be covered by the substitute aircraft. In addition, Direct
Costs (defined in Section 5.2) contained in the Pricing Model with respect to
any substitute aircraft shall be adjusted (upward or downward) in a manner
consistent with the principles used to reflect the differences between the costs
of such substitute aircraft and the costs of EMB Aircraft for such
aircraft-specific items as pilot and flight attendant crew costs, maintenance,
aircraft ownership, insurance, and overheads; provided that the payment of
“Profit” pursuant to Section 5.4 shall not be adjusted in connection with any
such substitution.

Section 2.9 - Spare Aircraft and Spare Engines

(a) Republic shall designate [*] of the EMB Aircraft as “Spare Aircraft.” The
Spare Aircraft may be in neutral livery. For the purposes of calculating the
payment to Republic as described in Article 5 of this Agreement, Spare Aircraft
shall not be included as Aircraft in Service, but US Airways shall pay to
Republic certain associated Direct Costs as detailed in the Pricing Model, such
as insurance, property taxes and aircraft ownership costs. For the purposes of
calculating the schedule requirements as described in Exhibit 2.2 to this
Agreement, the Spare Aircraft shall not be included.

(b) Republic shall maintain, with respect to Aircraft flown in the Service, a
pool of spare engines in an amount equal to [*] of the total number of engines
attached to such Aircraft so flown in the Service (rounded up or down to the
nearest whole number).

Section 2.10 - Jets for Jobs

Republic shall comply with the applicable provisions of the “Jets for Jobs”
protocol as ratified by the US Airways Airline Pilots Association (“ALPA”) in
Letter of Agreement #91 to the US Airways - ALPA Collective Bargaining
Agreement, or as subsequently amended, with respect to the Services to be
provided under this Agreement, provided that Republic shall not be required to
use more than commercially reasonable efforts to comply with any such
amendments. All additional, direct and reasonable costs associated with such
compliance (excluding normal pilot costs that would otherwise be paid as Direct
Costs in the absence of requirements associated with “Jets for Jobs”) shall be
treated as Pass Through Costs under Section 5.2 hereof.
_____
* Confidential

  
 
   

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Section 2.11 - In-flight Sales

US Airways will be responsible for the direct costs associated with sales of
liquor or other goods on flights included in the Service and shall be entitled
to all revenues generated from such in-flight sales.

Section 2.12 - Pass Agreement

The Parties will enter into a separate agreement, consistent with agreements
between US Airways and other US Airways Express Carriers, governing passes and
reduced rate travel privileges.
 
Section 2.13 - Processing Code-Share Passengers
 
Republic shall use commercially reasonable efforts to facilitate the handling of
code-share passengers and the processing of alliance partner frequent flyer
miles pursuant to domestic and international code-share alliance relationships
entered into by US Airways.
 
Section 2.14 - In Service Dates

The Other Aircraft shall be subject to this Agreement as of the date hereof.
Each Owned Aircraft and each Leased Aircraft shall be subject to this Agreement
on the date that such aircraft has been added to Republic’s operating
certificate. Such aircraft shall be transitioned to Republic in the following
order - first the Owned Aircraft and finally the Leased Aircraft. The parties
agree to cooperate in the transition of such aircraft to Republic. Republic will
use commercially reasonable efforts to transition the respective aircraft at a
rate of three aircraft per month, subject to pilot training constraints.

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ARTICLE 3 - OPERATION UNDER THE “US AIRWAYS EXPRESS” NAME

Section 3.1 - Servicemarks

Aircraft utilized by Republic to provide Service pursuant to this Agreement
(other than Spare Aircraft or substitute aircraft utilized pursuant to Section
2.8) shall bear certain US Airways Servicemarks. The Parties acknowledge that as
of the Effective Date, all Aircraft in Service bear US Airways Servicemarks
consisting of the red, white, gray and blue aircraft exterior color décor and
pattern provided by US Airways and the name “US Airways Express”. At any time
during the Term, US Airways may, at its sole discretion, require Republic to use
such new or different US Airways Servicemarks and exterior color decor and
patterns on the Aircraft as US Airways may identify to Republic in writing, and
Republic will implement such changes in accordance with a schedule mutually
agreed to by the Parties. Republic shall only use interior color schemes on the
Aircraft (other than substitute aircraft utilized pursuant to Section 2.8) that
have been approved in advance in writing by US Airways. Republic shall not be
required to implement changes in the exterior color decor and pattern on the
Aircraft more than once in any consecutive three-year period. Any amounts
actually expended by Republic to repaint or to redecorate the Aircraft or
reconfigure or redecorate the interior of the Aircraft as a result of changes
required by US Airways, shall be reimbursed by US Airways.

Section 3.2 - Signage

In addition to use of the US Airways Servicemarks, Republic shall use and
display signs that satisfy applicable Regulations on the interior and exterior
of the Aircraft that identify Republic as the operator of the Services being
provided pursuant to this Agreement. US Airways has previously approved the
design and placement on the Aircraft of all such signs that are currently
displayed. In the even that after the date hereof, Republic seeks to change any
such signs, Republic shall obtain US Airways’ prior written approval (not to be
unreasonably withheld or delayed) of the design and placement on the Aircraft of
such changed signs displayed pursuant to this Section 3.2.

The use of US Airways Servicemarks as set forth in this Article 3 shall be
subject to the terms and conditions of this Agreement, including Article 9.

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ARTICLE 4 - US AIRWAYS’ SUPPORT SERVICES AND FACILITIES

US Airways shall provide, or at its option shall cause third parties to provide,
at US Airways’ cost and expense, all services and materials identified under the
heading “To US Airways, Inc.” in Exhibit 2.7 attached hereto and made a part
hereof, and all fuel, marketing, reservations, ground support services, station
facilities, and cargo and mail handling services, to the extent and in the
manner set forth in this Article 4 (collectively, the “US Airways Services”). US
Airways shall provide the US Airways Services with respect to the Republic
Services provided pursuant to and in accordance with the terms of this
Agreement.

Section 4.1 - Fuel

US Airways, at its sole option, may either (1) reimburse Republic for its actual
cost of fuel as a Pass Through Cost, as detailed in Exhibit 5.1 hereto; or (2)
provide fuel to Republic for Services provided under this Agreement. To the
extent that US Airways provides fuel to Republic, the cost of such fuel shall be
paid for by US Airways and shall not be considered a Pass Through Cost to
Republic. For purposes of this Agreement the cost of fuel includes the cost of
all aircraft fuel and oil, plus fuel flow charges, into-plane fees, third party
administrative charges, and de-fueling charges, and all applicable taxes on any
of the foregoing.

Section 4.2 - Reservations

(a) All reservations shall be requested and confirmed for passengers traveling
on Aircraft operated by Republic under this Agreement through US Airways’
reservations services. Reservations that connect to other flights operated by US
Airways or other air carriers (including other flights operated by Republic),
including for travel that originates at locations other than those served
hereunder, shall be requested and confirmed through US Airways’ reservations
system in accordance with methods and procedures utilized by US Airways for its
passengers as may be in use from time to time. For passengers originating their
travel at points other than those served by Republic under this Agreement,
either using US Airways’ reservations system or the reservations systems of
other airlines, connecting reservations to the Services of Republic shall also
be made in accordance with methods and procedures utilized by US Airways for its
passengers. US Airways shall confirm the reservations of passengers traveling on
Aircraft operated by Republic hereunder through the entire itinerary of their
scheduled trips. When contact information is supplied by the passengers making
such reservations, US Airways shall assume the responsibility of notifying
passengers of any changes in Republic’s schedules or operations, provided that
Republic has provided US Airways with sufficient advance notice of any such
changes.

(b) As soon as reasonably practicable after Republic learns of any flight delay,
cancellation or other schedule irregularity affecting its scheduled services,
Republic shall notify US Airways’ operations control center of the existence,
cause and anticipated duration of such flight delay, cancellation or other
schedule irregularity in a manner prescribed by US Airways with as much detail
as can be reasonably provided. The Parties shall coordinate all schedule changes
as a result of any flight delay, cancellation or other schedule irregularity
affecting the Service, and US Airways shall perform all passenger
re-accommodations for passengers traveling on Aircraft operated by Republic
hereunder in the same manner that US Airways would perform such services for its
own passengers.

(c) From time to time, and solely upon the request of Republic or its flight
crews, US Airways may furnish Republic’s flight crews 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 shall be responsible or liable for the accuracy
thereof or the accuracy of the transmission thereof.

Section 4.3 - Station Facilities and Ground Support Service

US Airways shall provide, or at its option cause third parties to provide, at US
Airways’ cost and expense, the following services at locations where Republic
provides the Service:

(a)
check-in and ticketing of passengers that are utilizing the Service [*]

(b) use of US Airways’ passenger facilities by [*]

(c)
[*]

(d)
[*]

(e)
[*]

(f)
[*] and

_____
* Confidential

  
 
   

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(g)
[*] 

If US Airways is unable to provide (or cause third parties to provide) the
services listed in this Section 4.3 at US Airways’ own facilities, US Airways
may provide (or cause third parties to provide) such services at any other
facilities selected and deemed suitable by US Airways. Such alternative
facilities shall be identified with signage and directional marking to be
provided by US Airways to minimize passenger confusion and complaints and shall
provide reasonable working space for Republic personnel.

If Republic is required to make arrangements for alternative transportation,
meals, lodging, lost baggage delivery or other accommodations for passengers
utilizing the Service due to schedule irregularities in Republic’s operations,
US Airways agrees to reimburse Republic for all direct and reasonable costs
incurred by Republic in making such arrangements, provided that Republic
furnishes US Airways with an invoice and adequate supporting documentation
therefor.

Section 4.4 - Cargo, Company Materials (“CoMat”) and Mail Handling Services

(a) US Airways’ personnel, and/or at US Airways’ option third party providers,
shall process tickets and/or bills of lading and US Airways airway bills,
accepted for transportation, and US Airways personnel and/or third party
personnel shall load on Aircraft providing the Service, such cargo and U. S.
mail as properly tendered by the United States Postal Service (“USPS”) and by
cargo customers; provided that no Hazardous Materials may be accepted and
transported on Aircraft, except as permitted by Regulations. Republic
acknowledges that, notwithstanding anything to the contrary contained herein,
(i) it shall obtain independent authority for the appropriate Regulatory
Authority to carry animals and (ii) it shall comply with such restrictions as US
Airways may impose on the carriage of animals in connection with the Service
provided that such restrictions apply to at least one other carrier operating
under a US Airways Servicemark pursuant to a jet services agreement (a “US
Airways Express Carrier”) and are not inconsistent with Regulations.

(b) US Airways shall process any Republic CoMat that Republic transports on
Aircraft that are providing the Service.

(c) Republic personnel shall comply with all US Airways’ 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) Republic shall comply with US Airways’ customer service standards and with
US Airways’ Terms of Transportation, as modified or amended from time to time in
accordance with this Section 4.5(a), including procedures with respect to
schedule change and passenger re-accommodation procedures, when providing all
Services pursuant to this Agreement. Such

_____
* Confidential

 
 
   

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Terms of Transportation shall 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. US Airways agrees that its customer service standards and
Terms of Transportation, as applicable to the Service from time to time, shall
not be inconsistent with standard industry practice for regional jet carriers,
shall be consistent with those prescribed for other US Airways Express Carriers,
shall comply with all Regulations, and shall be consistent with 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 that are provided on the Aircraft providing the Service shall bear the
“US Airways” airline designator code.

(c) US Airways shall be responsible [*].

(d) US Airways shall include the scheduled air services provided by Republic
pursuant to Article 2 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 shall
also contain notations indicating that such scheduled services shall be
performed by Republic as an independent contractor under the appropriate US
Airways Servicemarks, and all such references shall comply with all Regulations.

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ARTICLE 5 - PURCHASE OF AVAILABLE SEAT MILES (“ASMs”)

Section 5.1 - Pricing Model

US Airways and Republic have developed that certain cost model set forth in
Exhibit 5.1 hereto (the “Pricing Model”) which shall be used to determine the
compensation to be paid by US Airways for the Service to designated city-pairs
flown by Republic, subject to adjustments pursuant Article 8.

Section 5.2 - Direct Costs and Pass Through Costs

The Pricing Model, which shall be used to determine compensation due to Republic
hereunder, is divided into two categories, (1) “Direct Costs” and (2) “Pass
Through Costs.” US Airways shall reimburse Republic for “Direct Costs” at the
rates set forth in Exhibit 5.1 in accordance with the following:

(a) with respect to the Per Aircraft costs, Direct Costs shall be payable with
respect to the number of Aircraft that have been delivered to Republic and have
become subject to this Agreement, whether or not such Aircraft have been placed
into active revenue service for US Airways Express operation under this
Agreement, as well as certain costs associated with Spare Aircraft and Spare
Engines;
_____
* Confidential

(c) with respect to the Per Flight Hour costs, Direct Costs shall be payable
with respect to the number of Flight Hours for revenue flights actually flown by
the Aircraft to provide the Service under this Agreement;

(d) with respect to the Per Departure costs, Direct Costs shall be payable with
respect to the number of actual revenue departures by Aircraft to provide the
Service.

(e) with respect to Fixed Costs set forth therein, the amount of such fixed
costs.

[*] 

Each cost component in Exhibit 5.1 shall be adjusted at the appropriate date of
each calendar year based upon the escalation factors and dates set forth in
Exhibit 5.1.

Republic shall be reimbursed for “Pass Through Costs” set forth in Exhibit 5.1
based upon the actual costs incurred by Republic, provided Republic furnishes US
Airways with adequate supporting documentation therefor.

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Section 5.3 - Invoicing and Payments

(a)  During the Term, US Airways shall pay to Republic on each of the [*] days
of each calendar month an amount equal to one third of the Estimated Monthly
Compensation; provided that US Airways receives an invoice for each such payment
not less than [*] days prior to the due date therefor. The “Estimated Monthly
Compensation” shall be equal to the amount that Republic estimates in good faith
shall result from application of the Pricing Model to the Service provided
during the applicable month, plus the amount of Profit that Republic estimates
in good faith will be payable pursuant to Section 5.4 with respect to the
Service provided during the applicable month, minus the amount of the Estimated
Prepaid Rent Credit or the Prepaid Rent Credit as the case may be calculated in
accordance with Section 5.8 hereof. If US Airways does not receive an invoice
from Republic at least [*] days prior to the due date for a payment as set forth
above, US Airways shall pay Republic within [*] days after actual receipt of
such invoice.

(b) As soon as reasonably practicable after the end of each calendar month,
Republic shall calculate the actual amount (the “Actual Monthly Compensation”)
that results from application of the Pricing Model and Section 5.4 to the
Service provided during such month using the actual statistics for such month
and the actual Pass Through Costs incurred for such month. If the Actual Monthly
Compensation exceeds the total of Estimated Monthly Compensation amounts
previously paid by US Airways under Section 5.3(a), US Airways shall pay to
Republic an amount equal to such difference as provided in Section 5.5 hereof,
without any set off. If the

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* Confidential

total of Estimated Monthly Compensation amounts previously paid by US Airways
under Section 5.3(a) exceeds the Actual Monthly Compensation, Republic shall
refund the overpayment amount promptly as provided in Section 5.5 hereof,
without any set off.

(c) Notwithstanding the provisions set forth in this Article 5, (i) in the event
that Republic is unable to provide the Republic Services during any period 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
[*] days; and (ii) 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
otherwise comply with Regulations associated with the maintenance and/or
operation of the Aircraft, US Airways shall have no obligation to pay any
compensation to Republic pursuant to this Article 5 with respect to such period.

(d) In the event Republic is unable to provide the Republic Services during any
period due to any cause not described in Section 5.3(c), including action or
inaction by US Airways (including due to a strike by US Airways personnel), US
Airways shall pay Republic [*].

Section 5.4 - Profit

US Airways shall pay Republic the Profit shown in Exhibit 5.1 per actual
Available Seat Mile (ASM) flown by Republic to provide the Service during the
month provided that, if during the course of any year during the Term of this
Agreement, the actual number of ASMs flown is less than [*], Republic shall be
paid a Profit for the lesser of (a) [*], and (b) [*]. The Profit will be
escalated [*], by [*].

Section 5.5 - Payments

All payments due under this Article shall be paid directly to Republic, or US
Airways, as the case may be. Payments due hereunder shall be made within [*]
days of the calculation of any such payment.

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Section 5.6 - True-Up Invoices

The Parties agree that, insofar as practicable, all true-up invoices for any
month shall be submitted no later than [*] days after the last day of
such month. US Airways shall not be obligated to accept for payment or
reimbursement of Pass Through Costs any invoice not submitted within [*] days
after the later of (i) the last day of the month in which such Pass Through Cost
was incurred or (ii) the date on which the amount of such Pass Through Cost was
invoiced to Republic. All true-up invoices shall be accompanied by appropriate
calculations and adequate supporting documentation for the amounts invoiced.
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* Confidential
 
Section 5.7 - Audit and Inspection Rights

(a) Upon not less than [*] prior written notice, and not more than once each
calendar year, authorized representatives of US Airways, at its cost and
expense, may audit, review and copy Republic’s books, records, accounts and
other documents relating to the Pass Through Costs and to any increase in the
Direct Costs payable by US Airways that is not based on the Consumer Price
Index, provided that if Republic is in default hereunder and such audit relates
to matters giving rise to or otherwise relating to such default, such audit
shall be at Republic's cost and expense and US Airways shall not be bound by the
notice and frequency restrictions set forth above. 

(b) In the event that US Airways has a reasonable basis for a concern with
respect to the quality or adequacy of Republic’s Aircraft maintenance program or
crew training program or Republic’s compliance with Regulations, upon not less
than [*] prior written notice, authorized representatives of US Airways, at its
cost and expense, may inspect Republic’s aircraft maintenance and crew training
facilities and review and copy Republic’s aircraft maintenance records with
respect to the Aircraft or crew training records, and such other records as
relate to Republic’s compliance with Regulations, at reasonable times during
Republic’s normal business hours and in a manner that does not materially
disrupt Republic’s business or operations; provided that if Republic is in
default hereunder and such inspection relates to matters giving rise to or
otherwise relating to such default, such inspection shall be at Republic’s cost
and expense and US Airways shall not be bound by the notice requirements set
forth above. Republic shall make available to US Airways’ authorized
representatives knowledgeable representatives of Republic to answer questions
and otherwise assist in any such inspection, review, and upon the conclusion of
such review US Airways shall provide Republic with a written report of its
material findings, with recommendations for corrective actions to be taken by
Republic specifying the reasons for such corrective action, including any
alleged non-compliance with Regulations. Republic may object to such
recommendations by providing US Airways with a detailed written objection within
[*] after Republic’s receipt of such report. If Republic so objects, the Parties
shall negotiate in good faith to determine appropriate action to be taken by
Republic. US Airways’ recommendations may address any matter related to
Republic’s provision of the Service so long as such recommendations are not
inconsistent with standard industry practice for regional jet carriers, are
consistent with those prescribed for other US Airways Express Carriers, with all
Regulations, and with this Agreement. All proprietary information of Republic
provided to or observed by US Airways in connection with any audit, review or
inspection under this Section 5.7 shall be treated as Confidential Information
under Article 13.

Section 5.8 - Prepaid Rent Credit

(a) [*]

(b) [*] 
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* Confidential

(c) [*]

(d) US Airways shall have the right in good faith to review and verify the
calculations made by Republic under Sections 5.8(b) and (c). In the event of any
disagreement between the parties with respect to any such calculation, the
parties shall negotiate in good faith to resolve such disagreement.

(e)  [*] 

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ARTICLE 6 - LIABILITY, INDEMNIFICATION AND INSURANCE

Section 6.1 - Republic is an Independent Contractor

(a) In its performance under this Agreement, Republic shall act, for all
purposes, as an independent contractor and not as an agent for US Airways, and
nothing in this Agreement is intended or shall be deemed to create an
association, partnership, joint venture, agency or employer and employee
relationship between the Parties. The employees, agents, and/or independent
contractors of Republic engaged in performing any of the Services Republic is to
perform pursuant to this Agreement shall be employees, agents, and independent
contractors of Republic for all purposes, and under no circumstances shall be
deemed to be employees, agents or independent contractors of US Airways. US
Airways shall 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 shall, 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 assumes all risks of financial losses which may result from the
operation of the air transportation services to be provided by Republic
hereunder.

(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 shall be employees, agents, and/or independent contractors of US
Airways for all purposes, and under no circumstance shall they be deemed to be
employees, agents, and/or independent contractors of Republic. Republic shall
have no supervision or control over any such US Airways employees, agents,
and/or independent contractors and any complaint, discipline or requested change
in procedure shall be transmitted by Republic to US Airways’ designated
representative.

Section 6.2 - Liability and Indemnification

(a) Each Party assumes full responsibility for any and all liability to its own
directors, officers, employees, or agents arising from property damage or bodily
injury, or death resulting from or sustained in the performance of its
respective services under this Agreement, including the Services.
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* Confidential
(b) Republic shall indemnify, defend, protect, save, and hold harmless US
Airways, its affiliates, directors, officers, employees, and agents (the “US
Airways Indemnitees”) from and against any and all liabilities, claims, demands,
suits, settlement payments, judgments, damages, expenses, fines and losses
(including, without limitation, reasonable attorneys’ fees, other professionals’
fees, and costs and expenses incurred in connection therewith) caused by,
resulting from or arising out of any goods or services, including the Services,
furnished or to be furnished by Republic under or pursuant to this Agreement,
whether or not arising in tort or occasioned in whole or in part by the
negligence of any US Airways Indemnitee, except for claims to the extent
resulting from the gross negligence or willful misconduct of a US Airways
Indemnitee. Republic shall further indemnify, defend, protect, save, and hold
harmless US Airways from and against all fines or civil penalties incurred by US
Airways that relate to US Airways’ actual or alleged non-compliance with
Regulations to the extent such non-compliance results from any action or
inaction by Republic.

(c)  US Airways shall indemnify, defend, protect, save, and hold harmless
Republic, its affiliates, directors, officers, employees, and agents (the
“Republic Indemnitees”) from and against any and all liabilities, claims,
demands, suits, settlement payments, judgments, damages, expenses, fines and
losses (including, without limitation, reasonable attorneys’ fees, other
professionals’ fees, and costs and expenses incurred in connection therewith)
caused by, resulting from or arising out of any goods or services, furnished or
to be furnished by US Airways under or pursuant to this Agreement, whether or
not arising in tort or occasioned in whole or in part by the negligence of any
Republic Indemnitee, except for claims to the extent resulting from the gross
negligence or willful misconduct of a Republic Indemnitee. US Airways shall
further indemnify, defend, protect, save, and hold harmless Republic from and
against all fines or civil penalties incurred by Republic that relate to
Republic’s actual or alleged non-compliance with Regulations to the extent such
non-compliance results from any action or inaction by US Airways.

(d) A person claiming indemnification (the “Indemnitee”) shall give the Party
from which indemnification is sought (the “Indemnitor”) written notice of any
claim or demand made or suit instituted against the Indemnitee which may give
rise to indemnification hereunder, provided that failure to provide such written
notice shall not relieve the Indemnitor of its indemnification obligations
hereunder, except to the extent of actual damage or prejudice to the Indemnitor
directly resulting from the failure to provide such notice. The Indemnitor, at
its sole expense, shall handle, resolve, settle or refer any and all claims,
demands or suits resulting or arising from the performance by the Indemnitor of
its obligations under or pursuant to this Agreement. The Indemnitor shall be
liable for the reasonable fees and expenses of one counsel selected and employed
by the Indemnitee in its sole discretion for any period during which the
Indemnitor has not assumed the defense of any third-party claim, demand or suit
(other than during any period in which the Indemnitee shall have failed to
provide written notice of such third-party claims, demands or suits as provided
above). The Parties agree to consult and cooperate in the handling, opposition,
settlement or defense of such claims, demands or suits but the final claims,
demands or suits handling authority rests with the Indemnitor and its insurers;
provided however, that, without the prior written consent of the Indemnitee, the
Indemnitor shall not consent to the entry of any judgment or enter into any
settlement that (i) by its terms fails to discharge the Indemnitee from the full
amount of liability in connection with such third-party claim, demand or suit,
(ii) provides for injunctive or other non-monetary relief affecting the
Indemnitee or (iii) does not include as an unconditional term thereof the
release of the Indemnitee that are or may be the subject of such third-party
claim, demand or suit from all liability with respect to such claim, demand or
suit by each claimant or plaintiff. The Parties’ obligations under this Section
6.2 shall survive the expiration or termination of this Agreement.

(e) Each Party shall be responsible for all employee-related tax, levy, benefit,
pension, withholding, accrual, payment, reporting, and other obligations of
employers pursuant to Regulations or contractual obligations for its respective
employees, including: (i) personal income, wage, earnings, occupation, social
security, workers’ compensation, unemployment, sickness and disability insurance
taxes; (ii) payroll levies; (iii) employee medical coverage benefit
requirements; (iv) air transportation travel pass benefits; and (v) pension
requirements, whether under ERISA, state law, or otherwise.

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Section 6.3 - Insurance Coverage

(a) Republic shall, at all times during the Term and, provided that US Airways
pays in advance the additional cost of such coverage as a Pass Through Costs,
for a “tail” period of one year after termination of this Agreement, maintain in
full force and effect, policies of insurance of the types of coverage, and in
the minimum amounts stated below with insurers reasonably satisfactory to US
Airways, including coverage on all Aircraft from or upon which Republic Services
are to be provided pursuant to this Agreement. Unless otherwise specified, the
minimum amounts of insurance coverage required under this Section shall be [*],
combined single limit for all coverage required under this paragraph.

Type of Insurance Coverage
Minimum Amount of Insurance Coverage (U.S. Currency-Per Occurrence)
Comprehensive Airline Liability Insurance (including Premises) Liability
Products and Completed Operation Liability Insurance.   
 
(a) Bodily Injury Passengers and Non-Passengers   $[*] Each Occurrence
/Aggregate (b) Personal Injury - Passengers   $[*] Each Offense/Aggregate (c)
Personal Injury - Non-Passengers   $[*] Each Offense/Aggregate (d) Property
Damage 
$[*] Each Occurrence/Aggregate
   
Worker’s Compensation Insurance
(Republic’s Employees)
[*]
Employer’s Liability 
(Republic’s Employees)   
$[*]  
“All Risk Hull and Aviation Hull War and
Associated Perils (or equivalent) insurance on Aircraft performing Republic
Services hereunder
[*] or such lesser amount as may be consented to by US Airways

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* Confidential

(b) US Airways may require Republic to maintain amounts different from those set
forth in paragraph (a) above, should US Airways reasonably deem such changes to
be appropriate.

(c)  Republic agrees, in addition, that all policies of insurance that it
maintains pursuant to this Agreement (other than worker’s compensation
insurance) shall:

(i) name all US Airways Indemnitees as additional assureds thereunder with
respect to Republic Claims for which Republic is obligated to indemnify such US
Airways Indemnitees hereunder;

(ii) ensure that that all such policies are primary without right of
contribution by any insurance carried by US Airways;

(iii) cover US Airways’ costs (including reasonable legal fees and expenses) of
defending against any insured claims to the extent that such a defense is not
otherwise provided to US Airways;

(iv) provide cross-liability and severability of interests clauses acceptable to
US Airways, and a specific contractual liability insurance provision covering
liability assumed by Republic under this Agreement, and provide that US Airways
shall have no responsibility for premiums, commissions, assessments or calls and
the insurers issuing the policies shall waive their rights to any set-off or
counter claim or any other deduction, whether by attachment or otherwise, in
respect of any liability to or on behalf of US Airways with respect to such
insurance required under this Section 6.3;

(v) provide that any waiver of rights of subrogation against other parties by
Republic shall not affect the coverage provided hereunder with respect to US
Airways Indemnitees;

(vi) with respect to all services performed by the Parties pursuant to this
Agreement, provide that Republic’s underwriters shall waive any and all
subrogation rights against all US Airways Indemnitees, except for claims based
solely upon the gross negligence or willful misconduct of US Airways
Indemnitiees; and

(vii) provide that US Airways shall be given written notice at least [*] or such
lesser period as may from time to time be applicable in the case of any war
risks and allied/associated hull coverage) in advance of any cancellation,
termination or material modification of any coverage contemplated by this
Section 6.3. 

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(d) With respect to Comprehensive Airline Liability and All Risk Hull and
Aviation Hull War and Associated Perils policies described in 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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* Confidential

(e) All aircraft hull insurance provided pursuant to this Section 6.3 shall be
provided on an agreed value basis, and, except with the consent of US Airways,
shall not be subject to more than the standard market deductibles as are agreed
to in advance in writing by US Airways, and as certified by a recognized broker
that in the event of loss, settled on the basis of a total loss, all losses
shall be payable in full.

(f)  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.

(g)  Upon the Effective Date, and from time to time thereafter upon request by
US Airways, Republic shall furnish to US Airways certificates of insurance
satisfactory to US Airways endorsed to show the aforesaid insurance coverage,
limits and endorsements. In addition to the certificates of insurance,
Republic’s insurance broker shall provide its written opinion that the policy or
policies of insurance carried by Republic are in full compliance with the
requirements set forth herein and are in full force and effect. In the event of
a change of broker by Republic, Republic will promptly notify US Airways of such
new broker. Thereafter, such certificates shall be supplied to US Airways by
such new broker.

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 shall have
the right (but not the obligation) to procure and maintain such insurance or any
part thereof. The cost of such insurance shall be for the account of Republic
and shall 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 6.3. Republic shall not cancel, terminate or materially alter, change or
amend any of the policies required to be obtained and maintained under this
Section 6.3 without the prior written consent of US Airways, unless such policy
is replaced by another policy conforming to the requirements of this Section
6.3.

Section 6.4 - Cargo Liability Insurance

US Airways shall maintain cargo liability insurance coverage consistent with
applicable law, in such types and amounts it deems appropriate in its sole
discretion, for all air freight transported by Republic under a US Airways
airway bill as part of the Service.

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ARTICLE 7 - TERM AND TERMINATION

Section 7.1 - Effective Date and Term 

(a) This Agreement has been approved by a final order (the “Order”) of the
Bankruptcy Court authorizing and directing US Airways to enter into and be bound
by the Agreement. The Order provides that, except as provided herein, US
Airways’ obligations under the Agreement are post-petition, administrative
obligations of US Airways under Section 503 of the Bankruptcy Code.
Notwithstanding the foregoing, in the event that (i) US Airways consummates a
chapter 11 plan of reorganization in the Cases, including a liquidating chapter
11 plan, and neither it nor its successor under the plan continues to operate as
an airline, and substantially all of US Airways’ flight operations are,
therefore, discontinued, or (ii) US Airways’ Case is dismissed or converted to a
case under chapter 7 of the Bankruptcy Code, or US Airways is otherwise
liquidated, and as a result of such dismissal, conversion or liquidation,
substantially all of US Airways’ flight operations are discontinued, US Airways
may reject or terminate this Agreement by providing ten (10) business days prior
written notice to Republic and US Airways shall be deemed to be in material
payment breach of this Agreement as of the effective date of the notice (the
“Breach Date”) and Republic shall have, subject to objection as provided below:
(x) administrative expense claims under sections 503 and 507 of the Bankruptcy
Code for any obligations arising prior to the Breach Date with respect to this
Agreement, and (y) general unsecured pre-petition claims under section 502(g) of
the Bankruptcy Code for future damages resulting from such rejection or
termination and for obligations that arise after the Breach Date with respect to
this Agreement. In each case the amount of the respective claims shall be
subject to the ordinary claims process, including the right of parties in
interest to object to the amount (but only the amount) of such claims. In
addition, Republic agrees to refund to US Airways any amounts paid on account of
services to be performed after the Breach Date within 5 business days after
receipt of written demand from US Airways.

(b) The term of this Agreement with respect to Aircraft scheduled in the Service
shall commence on September 4, 2005 and shall continue until September 4, 2015,
or the expiration or termination of this Agreement pursuant to this Article 7
(the “Term”).

Section 7.2 - Regulatory Changes

In the event of any change in the 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 shall consult within
thirty (30) days after any of the occurrence of such Regulatory change 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 continues 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 by such Regulatory change upon providing the other Party a minimum of
ninety (90) days written notice of such cancellation.

Section 7.3 - Termination for Cause by US Airways

US Airways may terminate this Agreement for cause, upon not less than ninety
(90) days written notice to Republic, or on such shorter notice as may be
specified below, should any of the events set forth in subparts (a) through (h)
of this Section 7.3 (each a “Termination Event”) occur during the Term, subject
to Republic’s rights to cure such Termination Event as set forth herein. After
notice of termination is given, US Airways shall meet with Republic for the
purpose of resolving the Termination Event. Should such Termination Event not be
cured or corrected within ninety (90) days after Republic’s receipt of the
notice of termination (or action diligently undertaken to cure or correct the
Termination Event if cure or correction cannot be completed within ninety (90)
days), then the termination shall be effective on the ninetieth day following
delivery of such notice. If the Termination Event is cured or corrected (or all
steps to remedy the situation were promptly taken if the cure or correction
cannot be completed reasonably within ninety (90) days), the termination notice
shall be deemed rescinded. Each of the following events is a Termination Event:

(a) Republic materially fails to perform or observe any material covenant or
condition or agreement to be performed or observed by it hereunder, 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.

(b) For any six month period that commences on January 1 or July 1 of any
calendar year beginning with the first such period in which Republic operates 13
EMB Aircraft for the entire period (a “Performance Measurement Period”),
Republic’s Controllable Completion Percentage (as defined in Section 8.2) is
below [*] and no Performance Exception or Force Majeure Event has occurred.

(c) Republic’s Controllable On-Time Departure Percentage (as defined in Section
8.2) is below [*] for any Performance Measurement Period and no Performance
Exception or Force Majeure Event has occurred.

(d)  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; provided that US Airways’ right to terminate
this Agreement under this paragraph shall be stayed for so long as Republic is
negotiating in good faith with the FAA to return to compliance and maintain its
operating certificate.

(e) In US Airways’ reasonable opinion, Republic is not complying in any material
respect with applicable safety and operational Regulations or with safety and
safety related operational requirements imposed by US Airways pursuant to this
Agreement.

(f) Republic fails to comply with the applicable provisions of the “Jets for
Jobs” protocol as ratified by US Airways ALPA in Letter of Agreement #91 to the
US Airways - ALPA Collective Bargaining Agreement, or as subsequently amended,
as and to the extent applicable to Republic as provided in Section 2.10 hereof,
provided that US Airways provides Republic with any such amendments within
fifteen (15) business days of execution, and further provided that Republic
shall not be required to use more than commercially reasonable efforts to comply
with any such amendments.
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* Confidential
 
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(g) Republic’s operating certificate is suspended or revoked.

(h) In the event that (1) the Amended and Restated Chautauqua Jet Service
Agreement (the “Chautauqua Jet Service Agreement”) between US Airways and
Chautauqua Airlines, Inc. (“Chautauqua”) shall have been terminated by US
Airways in accordance with the terms of such agreement or (2) RJET shall have
committed a Material Breach under the Slots/Gates Transaction Agreements (as
defined in Section 7.5 (a) hereof) or the Aircraft Transaction Agreements (as
defined in Section 7.5(a) hereof) resulting in either a failure to consummate
the transactions contemplated by either the Slots/Gates Transaction Agreements
or the Aircraft Transaction Agreements or a termination of the Specified
Slots/Gates Transaction Agreements or the Specified Aircraft Transaction
Agreements (as defined in Section 7.5 (a) hereof). A termination under this
subsection (h) shall be effective at the time US Airways provides notice of
termination to Republic. “Material Breach” with respect to RJET shall have the
respective meanings set forth in the Slots/Gates Transaction Agreements and
Aircraft Transaction Agreements, as applicable.

Section 7.4 - [Intentionally Omitted]

Section 7.5 - Termination by Republic

(a) Republic may terminate this Agreement for cause, upon the occurrence of any
of the following events:

(i) upon written notice to US Airways, if US Airways fails to perform any
payment obligation to be performed or observed by it hereunder, provided that
the failure by US Airways to make a payment under Section 5.3(a) hereof or any
other payment or payments in excess of [*] in the aggregate shall require [*]
days written notice, and that the failure by US Airways to make any other
payment shall require [*] days written notice, and further provided that in the
event of a bona fide dispute as to an amount due, the parties will engage in
good faith efforts to resolve such dispute in not less than [*] days and
Republic shall not deliver such notice based upon US Airways’ failure to pay
such amount subject to bona fide dispute (but only such amount), if within such
[*] day period (x) the parties agree on the amount due and payable and US
Airways pays such amount to Republic, or (y) US Airways escrows any amount that
remains subject to bona fide dispute with a third party escrow agent pursuant to
an escrow agreement reasonably satisfactory to Republic, and the parties seek an
expedited resolution of such dispute pursuant to Section 14.2 hereof, without
requirement that the parties comply with the provisions of Section 14.1 hereof;

(ii) upon not less than ninety (90) days written notice to US Airways, if US
Airways materially fails to perform or observe any other material covenant or
condition or agreement to be performed or observed by it hereunder, subject to
US Airways’ rights to cure such breach as set forth herein;
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* Confidential
(iii)  upon written notice in the event that (1) the Chautauqua Jet Service
Agreement shall have been terminated by Chautauqua in accordance with the terms
of such agreement, (2) RJET shall have terminated the Specified Slot/Gates
Transaction Agreements (as defined in Section 7.5(a)(iv) below) as a result of a
Material Breach (as defined in Section 7.5(a)(iv) below) by US Airways, or (3)
RJET shall have terminated the Specified Aircraft Transaction Agreements (as
defined in Section 7.5(a)(iv) below) as a result of a Material Breach by US
Airways, provided that a termination under this subsection (iii) shall be
effective at the later of (y) the date of such notice, and (z) the date of such
termination of the Chautauqua Jet Service Agreement, the Specified Slots/Gates
Transaction Agreements or the Specified Aircraft Transaction Agreements, as the
case may be; and

(iv)  For purposes of Section 7.3(h) and subsection (iii) of this Section
7.5(a), (1) the Slots/Gates Transaction Agreements shall mean those agreements
to which US Airways or an affiliate is a party relating to the Slot Option, the
Gates Option, the Slots License, the Repurchase Option (as defined in the
Investment Agreement) and the other transactions related thereto, (2) the
Aircraft Transaction Agreements shall mean those agreements to which US Airways
or an affiliate is a party relating to the Republic Aircraft Transaction,
including without limitation, purchase of the Owned Aircraft, the Owned Aircraft
Leaseback, the assignment of leases relating to the Leased Aircraft (as defined
in the Investment Agreement) and the other transactions related thereto, (3)
Material Breach with respect to US Airways shall have the meaning provided in
the Slots/Gates Transaction Agreements or Aircraft Transaction Agreements, as
the case may be, (4) Material Breach with respect to RJET shall have the meaning
provided in such Slots/Gates Transaction Agreements or Aircraft Transaction
Agreements, as the case may be, (5) Specified Slot/Gates Transaction Agreements
shall have the meaning provided in the Slots/Gates Transaction Agreements, and
(6) Specified Aircraft Transaction Agreements shall have the meaning provided in
the Aircraft Transaction Agreements.

(b) After notice of termination is given, US Airways shall meet with Republic
for the purpose of resolving the breach. Should such breach not be cured or
corrected prior to the effective date of such notice, or action diligently
undertaken to cure or correct the breach if cure or correction cannot be
completed prior to such effective date, then the termination shall be effective
on the date specified in the notice of termination. If the breach is cured or
corrected in a timely manner (or all steps to remedy the situation were timely
taken), the notice of termination shall be deemed rescinded.

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ARTICLE 8 - PERFORMANCE ADJUSTMENTS

Section 8.1 - [Intentionally Omitted]

Section 8.2 - Performance Plan Metrics

Republic’s operating performance for the fleet of Aircraft in the Service under
this Agreement shall be tracked by US Airways each day based upon the following
metrics:

(a) Controllable Fleet Launch:“Controllable Fleet Launch Percentage” is defined
as the percentage of the Aircraft fleet departing from the gate within [*] of
the scheduled departure time on its first flight of the day, excluding [*].

(b) Controllable On Time Departure Percentage:“Controllable On-Time Departure
Percentage” is defined as the percentage of Aircraft departures completed within
[*] of its scheduled departure time, excluding [*]. Any departure delay greater
than [*] shall be considered a cancellation for purposes of calculating
Controllable On-Time Departure Percentage, and a “departure” will not be deemed
to have occurred if a flight returns to the gate without leaving the air field.

(c) Controllable Completion Percentage:“Controllable Completion Percentage” is
defined as the percentage of scheduled Aircraft departures completed[*].

Within [*] days after the end of each calendar month during the Term, US Airways
shall compute the metrics defined above and provide to Republic a summary
statement showing the operating performance of Republic.

Section 8.3 - Performance Plan Penalties and Incentives 

(a) Performance Penalties. Upon the occurrence and continuance of [*] or more of
the following events for a period of [*] or more consecutive calendar months
during the Term in which Republic operates [*] or more Aircraft in the Service,
and no Performance Exception or Force Majeure Event has occurred for any such
month, then Republic shall pay to US Airways [*] each calendar month during such
period:

  (i)  Republic’s Controllable Fleet Launch Percentage is less than [*];
(ii) Republic’s Controllable On-Time Departure Percentage is less than [*];
(iii)  Republic’s Controllable Completion Percentage is less than [*].
(b) Performance Incentives. Upon the occurrence and continuance of [*] of the
following events for any period of two consecutive calendar months during the
Term, then US Airways shall pay to Republic [*] for each calendar month during
such period:

(i)  Republic’s Controllable Fleet Launch Percentage is greater than [*];
(ii) Republic’s Controllable On-Time Departure Percentage is greater than [*];
(iii)  Republic’s Controllable Completion Percentage is greater than [*].

Section 8.4 - Performance Exceptions

A “Performance Exception” with respect to the failure on the part of Republic to
achieve the performance metrics of Controllable Fleet Launch Percentage,
Controllable On-Time Departure Percentage and Controllable 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:
_____
* Confidential
(a) Republic’s performance, [*].

(b) The failure to achieve the performance metric is directly attributable to
[*], Republic shall promptly notify US Airways in writing of such event and each
party shall promptly take steps to coordinate a commercially reasonable cure for
such event. If US Airways receives written notice of an event within its control
to correct, US Airways shall promptly provide written notice to Republic of the
date by which such event is expected to be cured and shall adjust Republic’s
affected performance metrics to the extent affected by such event during the
period prior to such cure taking effect.

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ARTICLE 9 - SERVICE MARK LICENSE FOR SERVICES PROVIDED PURSUANT TO THIS
AGREEMENT

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 designates 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, at US
Airways sole discretion, US Airways may alter, amend or revoke the license
hereby granted. US Airways may require, at US Airways’ expense, 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 acknowledges that its use of the US Airways Servicemarks creates in
Republic no rights in those marks and that all use of the US Airways
Servicemarks by Republic inures to the benefit of US Airways.

Republic recognizes that US Airways has over the years built up a reputation as
a provider of the highest quality services and that US Airways’ reputation and
goodwill associated with the US Airways Servicemarks extend throughout the
United States and internationally. Use of the US Airways Servicemarks by
Republic and the Services provided by Republic shall conform in manner and style
with quality standards specified by US Airways, so long as such quality
standards are not inconsistent with standard industry practice for regional jet
carriers, are consistent with those prescribed for other carriers operating
under US Airways Servicemarks, comply with all Regulations, and are consistent
with this Agreement.
_____
* Confidential
 
(b) Republic agrees that, in providing the Services it shall not advertise or
make use of the US Airways Servicemarks without the prior written approval of US
Airways. US Airways shall 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 shall 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,
such Servicemarks shall only be used in conjunction with the Services and may
not be used in connection with any other businesses or activities of Republic or
any other entity.

(d) Nothing in this Agreement shall 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 shall 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.

(f) Upon the cancellation or termination of this Agreement, the license and use
of the US Airways Servicemarks by Republic shall cease, and Republic shall not
be permitted to use such Servicemarks thereafter, except as may be appropriate
in any phase-out of service of this Agreement as determined by US Airways in US
Airways’ sole discretion.

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ARTICLE 10 - FORCE MAJEURE

Section 10.1 - Force Majeure 

Notwithstanding anything to the contrary herein contained, neither party shall
be liable to the other for loss, injury, damage or failure to perform under this
Agreement caused by any of the following; provided that such events are beyond
the reasonable control of such party (such events are referred to herein as
“Force Majeure Events”): acts of God; acts of terrorism; governmental sanctions;
war; strikes; labor disputes (whether causing such loss, injury, damage or
failure to perform directly or indirectly); work stoppage; natural disaster,
earthquake, fire, flood, or other weather-related reason; subject to each
party’s obligation to use its commercially reasonable efforts to obtain and
maintain the governmental authorizations, licenses, approvals, registrations and
filings required under Regulations in order to execute or perform its
obligations under this Agreement, failure or refusal on the part of any
government or governmental agency to grant or issue necessary approvals or
authorizations or the revocation of any such approvals; mechanical difficulties
with, or damage to or destruction of, flight equipment; grounding of a
substantial number the Aircraft by any governmental agency; revocation of such
party’s operating certificate; activation of the U.S. Civil Reserve Air Fleet;
or other acts of government or any other cause which is beyond the reasonable
control of such party and which shall materially disrupt, delay, suspend, limit,
curtail or prevent performance of such Party’s obligations under this Agreement;
provided, however, that Force Majeure Events shall not excuse the obligations of
the Parties under Article 5 or Article 6 of this Agreement.

Section 10.2 - Resumption of Service

The party prevented from complying with its obligations hereunder as a result of
a Force Majeure Event shall promptly notify the other party thereof and, at the
request of the other Party, the Parties shall make all reasonable efforts to
meet within 48 hours of receipt of such notice by the other Party to discuss the
circumstances and potential solutions to such Force Majeure Event, including
mitigation of such Force Majeure Event. If either Party relies on the occurrence
of a Force Majeure Event as a basis for being excused from performance of its
obligations hereunder, the Party relying on the Force Majeure Event shall: (i)
provide an estimate of the expected duration of the Force Majeure Event and its
probable impact on the performance of such Party’s obligations under this
Agreement, (ii) exercise commercially reasonable efforts to continue to perform
its obligations under this Agreement, (iii) promptly use commercially reasonable
efforts to correct or cure the Force Majeure Event and mitigate any damages
related thereto and (iv) provide prompt notice to the other Party of the
cessation, if any, of the Force Majeure Event.

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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 (a)
shall be effective upon receipt, (b) shall be made in writing and (c) may be
sent by certified mail, postage prepaid, overnight courier, hand delivery,
facsimile or electronic mail. When sent by mail, such notices shall also be sent
by facsimile and by electronic mail. Notices shall be addressed as follows,
provided that each party shall have the right to update, supplement or change
such notice persons and/or addresses by providing written notice to the other
party:
                   
 

 US Airways, Inc.:                   Republic Airline, Inc.:     Andrew
Nocella                 
Bryan Bedford 
SVP, Marketing & Planning                 Chief Executive Officer US Airways,
Inc. 8909 Purdue Road, Suite 300 2345 Crystal Drive Indianapolis, IN 46268
Arlington, VA 22227                  Telephone: (317) 484-6047
Email: andrew_nocella@usairways.com
Facsimile: (317) 484-4547 Telephone: 703- 872-5222                   Facsimile:
703-872-5534                 with copies delivered to:   Tim Dooley with copies
delivered at the same address to the attention of:               Director FPA
General Counsel                  Telephone: (317) 487-4308 US Airways, Inc.
Facsimile: (317) 484-4580       Arthur Amron    Principal & General Counsel  
Wexford Capital LLC   411 West Putnam Avenue   Greenwich, CT 06830   Telephone:
(203) 862-7012   Facsimile: (203) 862-7312

 
-24-

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ARTICLE 12 - MISCELLANEOUS

Section 12.1 - Entire Agreement/Amendments/Counterparts

This Agreement constitutes the entire agreement between the parties hereto. This
Agreement may be amended only in writing, executed by a duly authorized
representative of each party. This Agreement may be executed by the Parties
hereto in one or more separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

Section 12.2 - Headings

The division of this Agreement into Articles, Sections and subsections are for
convenience of reference only and shall not affect the construction or
interpretation hereof.

Section 12.3 - Severability

Any provision of this Agreement which may be determined by a court of competent
jurisdiction to be invalid or unenforceable in such jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The Parties shall negotiate in good faith to replace such
provision with an appropriate legal provision. To the extent permitted by
Regulations, the Parties hereto hereby waive any provision thereof that renders
any term or provision hereof invalid or unenforceable in any respect.

Section 12.4 - Waiver

Except as otherwise specifically provided in this Agreement, a waiver by either
party of any breach of any provision of this Agreement by the other party, or
either party’s election not to exercise any remedy or enforce any right under
this Agreement, shall not be deemed a waiver of any subsequent breach or of any
right to exercise any remedy or enforce any right in the future under this
Agreement, and all provisions of this Agreement shall remain in full force and
effect.

Section 12.5 - Assignments

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 shall not be unreasonably withheld,
except as follows:

(a) US Airways may assign its rights and delegate its obligations hereunder,
without any prior approval of Republic, to US Airways Group, Inc., or any
subsidiary or affiliate of that company, or any successor through merger, sale
of substantially all of its assets, or by operation of law.

(b) Republic may assign its rights and delegate its obligations hereunder,
without any prior approval of US Airways, (i) to any certificated air carrier
owned or controlled by Republic or Wexford, or (ii) to any certificated air
carrier that is a subsidiary or affiliate of Republic, Republic or Wexford. 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 in Letter of Agreement
#91 to the US Airways - ALPA Collective Bargaining Agreement, or as further
amended before the date of such assignment, provided that neither Republic nor
any such assignee 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. Notwithstanding any
such assignment, the Parties agree that they shall remain responsible for their
financial obligations under this Agreement.

Section 12.6 - Governing Law / Jury Trial Waiver

This Agreement shall 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 made and to be 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 exclusive jurisdiction of the Courts of New York or the federal
courts located within the State of New York and waive any objection to
jurisdiction, including any objection based on forum non conveniens. The Parties
further agree to waive any right to trial by jury in any action or proceeding
relating to this Agreement or seeking to enforce any rights under this
Agreement.

Section 12.7 - 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 12.8 - Additional US Airways Rights

US Airways shall have the right, 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.

-25-

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ARTICLE 13 - CONFIDENTIALITY

Section 13.1 - Confidentiality of Agreement

The Parties agree that the terms of this Agreement and any other Confidential
Information (as defined in Section 13.2 hereof) furnished hereunder shall be
treated as confidential and shall not be 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 13.4 or 13.5
hereof); or

(b) to prospective financial institutions for the purposes of providing
financing of Aircraft; 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 any Regulations, 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; or

(e) to any Regulatory Authority in connection with Republic’s certification
process, including representatives of the DOT and FAA if requested by any such
parties.

In the event that a disclosure becomes necessary, as provided in this sub-clause
(d) or (e) of this Section 13.1, 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 shall be released. The disclosing
party shall make good faith efforts to minimize the portions to be disclosed and
shall 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 shall notify the other party, so that the other party shall have an
opportunity to contest, if it chooses to do so, the disclosure of the content of
this Agreement.

Section 13.2 - 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, including
information owned or provided by either Party to the other Party, except
otherwise as expressly provided in Section 13.3 hereof. Each Party agrees that
it shall 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 each Party shall use it solely
for purposes of its own business operations in accordance with the terms hereof.
Such Confidential Information shall 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 13.3 - Exclusions from Confidential Information

Notwithstanding the foregoing, Confidential Information shall 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
13 shall survive any termination of this Agreement for a period of three (3)
years.

Section 13.4 - 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 13.

-26-

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Section 13.5 - Information Shared with Wexford and Republic

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 Wexford
and Republic and entities that are wholly owned or controlled, directly or
indirectly, by Wexford or Republic, each of which shall be deemed an “Affiliate”
of Republic for the purposes of this Article 13.

Section 13.6 - Return of Documents 

(a) Upon the reasonable request of either Party, each party shall 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 shall 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
required to purge or destroy any Confidential Information for so long as such
Confidential Information 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 resolution of
disputes.

Section 13.7 - Remedies

Each party acknowledges and agrees that the Party disclosing Confidential
Information under this Agreement shall have no adequate remedy at law if there
is a breach or threatened breach of this Article 13 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 13 and the
disclosing Party may pursue any other such remedy, including the recovery of
damages.

Section 13.8 - Survival

The confidentiality obligations of the Parties contained in this Article 13
shall survive the termination of this Agreement.

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ARTICLE 14 - DISPUTE RESOLUTION

Section 14.1 - Certain Disputes

The Parties shall attempt to resolve any dispute, difference, controversy or
claim arising out of or relating to this Agreement through mutual negotiations,
consultation and discussions for a period of thirty (30) days.

Section 14.2 - Dispute Resolution Proceedings

In the event that the Parties are unable to settle their differences or disputes
which may arise between them under Section 14.1, above, then either Party may
submit such dispute (“Dispute”) for binding arbitration with the following
conditions:

(a)  the proceeding shall be held before a panel of three arbitrators where each
Party shall choose one arbitrator and the third shall 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 shall govern the arbitration;

(c) the proceeding shall be conducted in the State of New York;

(d) the law of the United States and the State of New York shall be applied
without regard to New York conflict of laws statutes;

(e) the proceeding shall 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 shall be kept
confidential by the Parties and shall only be disclosed as permitted by Article
13;

(g)  the arbitration shall be binding upon the parties unless mutually agreed
otherwise in writing; and

(h) each Party shall be responsible for its own costs and expenses 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 shall be shared
jointly by the Parties.

  
 
   

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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/ Bryan Bedford    
 By: Ronald E. Stanley

--------------------------------------------------------------------------------

   

--------------------------------------------------------------------------------

Name: Bryan Bedford
Title: Chief Executive Officer
    Name: Ronald E. Stanley
Title: EVP - Finance and CFO

  
 
   

-29-

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Exhibit 2.2 - 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 shall meet the following criteria in devising the schedule:

1. Aircraft Turn Times
[*]
2. Aircraft Maintenance Requirements
[*] 

3.  Maintenance Base Operations
[*]

4. Maintenance Base
[*] 

5. Crew Overnights
[*]

6. Crew Bases
The schedule shall allow for the operation by Republic of the following crew
bases: [*].

7. Hub Arrivals/Departures
[*] 

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 shall not impose additional costs upon Republic and/or make
Republic’s compliance with its performance requirements more difficult, 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.
_____
* Confidential

  
 
   

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Exhibit 2.7 - DIVISION OF RESPONSIBILITIES 

(1) The parties shall be responsible for providing, at their own cost, service
and materials, as set forth below, Assignment of services and materials to
categories shall 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 shall
be as follows:

To Republic   To US Airways, Inc.
[*][*][*][*][*][*][*][*][*][*][*][*][*][*]

_____
* Confidential

  
 
   

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Exhibit 5.1 - Pricing Model

 
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[*][*][*][*][*][*][*][*][*] 
 
_____
* Confidential
[*]   [*]
[*] [*]
[*][*][*][*][*][*][*] 

[*][*][*]

[*]

[*]

_____
* Confidential

  
 
   

-32-

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* Confidential
 
-33-

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