Exhibit 10.4 Amended and Restated CHQ Jet Service Agreement


     

    EXHIBIT
      10.4

    CONFIDENTIAL
      TREATMENT

    REQUESTED
      PURSUANT TO RULE 24b-2

     

    Execution
      Copy

     

    


    


    


    


    


    


    ______________________________________________________________________________

    


    


    


    


    AMENDED
      AND RESTATED

    


    CHAUTAUQUA
      JET SERVICE AGREEMENT

    


    Between

    


    US
      AIRWAYS, INC.

    


    And

    


    CHAUTAUQUA
      AIRLINES, INC.

    


    


    


    ______________________________________________________________________________

    


    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.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
              TABLE
                OF CONTENTS

            
	 	 	 
	
              ARTICLE
                1

            	
              COMPLIANCE
                WITH REGULATIONS

            	
              2

            
	 	 	 
	
               

              ARTICLE
                2

            	
               

              AIR
                TRANSPORTATION SERVICES TO BE PROVIDED BY
                CHAUTAUQUA

            	
               

              3

            
	
              SECTION
                2.1

            	
              SCHEDULE
                REQUIREMENTS

            	
              3

            
	
              SECTION
                2.2

            	
              SCHEDULING
                PARAMETERS

            	
              3

            
	
              SECTION
                2.3

            	
              TECHNICAL
                OPERATIONS

            	
              3

            
	
              SECTION
                2.4

            	
              REGULATIONS

            	
              4

            
	
              SECTION
                2.5

            	
              OPERATING
                PROCEDURES

            	
              4

            
	
              SECTION
                2.6

            	
              AIRCRAFT
                REGISTRATION

            	
              4

            
	
              SECTION
                2.7

            	
              CHAUTAUQUA
                RESPONSIBILITIES

            	
              4

            
	
              SECTION
                2.8

            	
              SUBSTITUTE
                AIRCRAFT

            	
              5

            
	
              SECTION
                2.9

            	
              SPARE
                AIRCRAFT AND SPARE ENGINES

            	
              5

            
	
              SECTION
                2.10

            	
              JETS
                FOR JOBS

            	
              5

            
	
              SECTION
                2.11

            	
              IN-FLIGHT
                SALES

            	
              6

            
	
              SECTION
                2.12

            	
              PASS
                AGREEMENT

            	
              6

            
	
              SECTION
                2.13

            	
              PROCESSING
                CODE-SHARE PASSENGERS

            	
              6

            
	 	 	 
	
              ARTICLE
                3

            	
              OPERATION
                UNDER THE “US AIRWAYS EXPRESS” NAME

            	
              6

            
	
              SECTION
                3.1

            	
              SERVICEMARKS

            	
              6

            
	
              SECTION
                3.2

            	
              SIGNAGE

            	
              6

            
	 	 	 
	
              ARTICLE
                4

            	
              US
                AIRWAYS’ SUPPORT SERVICES AND FACILITIES

            	
              7

            
	
              SECTION
                4.1

            	
              FUEL

            	
              7

            
	
              SECTION
                4.2

            	
              RESERVATIONS

            	
              7

            
	
              SECTION
                4.3

            	
              STATION
                FACILITIES AND GROUND SUPPORT SERVICE

            	
              8

            
	
              SECTION
                4.4

            	
              CARGO,
                COMPANY MATERIALS (“COMAT”) AND MAIL HANDLING SERVICES

            	
              9

            
	
              SECTION
                4.5

            	
              TERMS
                OF TRANSPORTATION, SALES AND PROMOTION

            	
              9

            
	 	 	 
	
              ARTICLE
                5

            	
              PURCHASE
                OF AVAILABLE SEAT MILES (“ASMA”)

            	
              10

            
	
              SECTION
                5.1

            	
              PRICING
                MODEL

            	
              10

            
	
              SECTION
                5.2

            	
              DIRECT
                COSTS AND PASS THROUGH COSTS

            	
              10

            
	
              SECTION
                5.3

            	
              INVOICING
                AND PAYMENTS

            	
              11

            
	
              SECTION
                5.4

            	
              PROFIT

            	
              12

            
	
              SECTION
                5.5

            	
              PAYMENTS

            	
              12

            
	
              SECTION
                5.6

            	
              TRUE-UP
                INVOICES

            	
              12

            
	
              SECTION
                5.7

            	
              AUDIT
                AND INSPECTION RIGHTS

            	
              12

            
	 	 	 
	
              ARTICLE
                6

            	
              LIABILITY,
                INDEMNIFICATION AND INSURANCE

            	
              14

            
	
              SECTION
                6.1

            	
              CHAUTAUQUA
                IS AN INDEPENDENT CONTRACTOR

            	
              14

            
	
              SECTION
                6.2

            	
              LIABILITY
                AND INDEMNIFICATION

            	
              14

            
	
              SECTION
                6.3

            	
              INSURANCE
                COVERAGE

            	
              16

            
	
              SECTION
                6.4

            	
              CARGO
                LIABILITY INSURANCE

            	
              18

            
	 	 	 
	
              ARTICLE
                7

            	
              TERM
                AND TERMINATION

            	
              18

            
	
              SECTION
                7.1

            	
              EFFECTIVE
                DATE AND TERM

            	
              18

            
	
              SECTION
                7.2

            	
              REGULATORY
                CHANGES

            	
              19

            
	
              SECTION
                7.3

            	
              TERMINATION
                FOR CAUSE BY US AIRWAYS

            	
              19

            
	
              SECTION
                7.4

            	
              OTHER
                TERMINATION RIGHTS

            	
              21

            
	
              SECTION
                75

            	
              TERMINATION
                BY CHAUTAUQUA

            	
              23

            
	 	 	 
	
              ARTICLE
                8

            	
              PERFORMANCE
                ADJUSTMENTS

            	
              25

            
	
              SECTION
                8.1

            	
              [INTENTIONALLY
                OMITTED]

            	
              25

            
	
              SECTION
                8.2

            	
              PERFORMANCE
                PLAN METRICS

            	
              25

            
	
              SECTION
                8.3

            	
              PERFORMANCE
                PLAN PENALTIES AND INCENTIVES

            	
              25

            
	
              SECTION
                8.4

            	
              PERFORMANCE
                EXCEPTIONS

            	
              26

            
	 	 	
              26

            
	
              ARTICLE
                9

            	
              SERVICE
                MARK LICENSE FOR SERVICES PROVIDED_PURSUANT TO THIS
                AGREEMENT

            	
              27

            
	
              SECTION
                9.1

            	
              GRANT
                OF LICENSE

            	
              27

            
	
              SECTION
                9.2

            	
              TERMS
                AND CONDITIONS GOVERNING TRADEMARK LICENSED

            	
              27

            
	 	 	 
	
              ARTICLE
                10

            	
              FORCE
                MAJEURE

            	
              28

            
	
              SECTION
                10.1

            	
              FORCE
                MAJEURE

            	
              28

            
	
              SECTION
                10.2

            	
              RESUMPTION
                OF SERVICE

            	
              28

            
	 	 	 
	
              ARTICLE
                11

            	
              NOTICES

            	
              29

            
	 	 	 
	
              ARTICLE
                12

            	
              MISCELLANEOUS

            	
              29

            
	
              SECTION
                12.1

            	
              ENTIRE
                AGREEMENT/AMENDMENTS/COUNTERPARTS

            	
              29

            
	
              SECTION
                12.2

            	
              HEADINGS

            	
              30

            
	
              SECTION
                12.3

            	
              SEVERABILITY

            	
              30

            
	
              SECTION
                12.4

            	
              WAIVER

            	
              30

            
	
              SECTION
                12.5

            	
              ASSIGNMENTS

            	
              30

            
	
              SECTION
                12.6

            	
              GOVERNING
                LAW/JURY TRIAL WAIVER

            	
              31

            
	
              SECTION
                12.7

            	
              NO
                FRANCHISE

            	
              31

            
	
              SECTION
                12.8

            	
              ADDITIONAL
                US AIRWAYS RIGHTS

            	
              31

            
	 	 	 
	
              ARTICLE
                13

            	
              CONFIDENTIALITY

            	
              31

            
	
              SECTION
                13.1

            	
              CONFIDENTIALITY
                OF AGREEMENT

            	
              31

            
	
              SECTION
                13.2

            	
              CONFIDENTIAL
                INFORMATION

            	
              32

            
	
              SECTION
                13.3

            	
              EXCLUSIONS
                FROM CONFIDENTIAL INFORMATION

            	
              33

            
	
              SECTION
                13.4

            	
              INFORMATION
                SHARED WITH US AIRWAYS GROUP, INC

            	
              33

            
	
              SECTION
                13.5

            	
              INFORMATION
                SHARED WITH WEXFORD AND REPUBLIC

            	
              33

            
	
              SECTION
                13,6

            	
              RETURN
                OF DOCUMENTS

            	
              33

            
	
              SECTION
                13.7

            	
              REMEDIES

            	
              34

            
	 	 	 
	
              ARTICLE
                14

            	
              DISPUTE
                RESOLUTION

            	
              34

            
	14.1        	 CERTAIN
              DISPUTES	34 
	14.2    	 DISPUTE
              RESOLUTION PROCEEDINGS	34
	 	 	 
	
              EXHIBIT
                2.2

            	
              SCHEDULE
                REQUIREMENTS

            	
              37

            
	
              EXHIBIT
                2.7

            	
              DIVISION
                OF RESPONSIBILITIES

            	
              39

            
	
              EXHIBIT
                5.1

            	
              PRICING
                MODEL

            	
              40

            
	
              EXHIBIT
                7.4

            	
              TERMINATION
                DATES FOR AIRCRAFT IN SERVICE

            	
              42

            


    


    


     

     

    


     

     

     

    



    
      
        
          
            	 	 	 


          

          


        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    



    AMENDED
      AND RESTATED

    CHAUTAUQUA
      JET SERVICE AGREEMENT

    


    


    This
      Amended and Restated Chautauqua Jet Service Agreement (this “Agreement”) is made
      and entered as of this 26th
      day of
      April, 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 Chautauqua Airlines, Inc. (herein
      referred to as “Chautauqua”), an Indiana corporation, having a principal place
      of business at 8909 Purdue Road, Suite 300, Indianapolis, Indiana 46268 (each
      of
      US Airways and Chautauqua, 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,
      Chautauqua holds a certificate of public convenience and necessity issued by
      the
      DOT authorizing Chautauqua 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,
      Chautauqua and US Airways have entered into that certain Chautauqua Jet Service
      Agreement, dated as of March 19, 1999, as amended by the First Amendment, dated
      as of September 6, 2000, the Second Amendment, dated as of December 20, 2000,
      the Third Amendment, dated as of July 11, 2001, and the Fourth Amendment, dated
      as of December 18, 2002 (the “Original Jet Services Agreement”) pursuant to
      which Chautauqua operates regional jets under the name “US Airways Express” in
      the provision of its air transportation services as provided in the Original
      Agreement and acquired a nonexclusive license for use of one or more of US
      Airways’ Servicemarks for use in connection with Chautauqua’s operation of such
      services;

    


    WHEREAS,
      US
      Airways and Chautauqua desire to amend and restate the Original Agreement,
      as
      amended to date, by executing and delivering this Agreement; 

    


    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 (“Republic,” and together with Wexford, the “Investor”) 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 (i) US Airways has the
      right, prior to the effective date of US Airways’ plan of reorganization (the
“Plan”) in the current Bankruptcy Proceedings (the “Case”), to sell to and
      license back from the Investor certain slots (the “Slot Option”) and gates, (ii)
      upon the occurrence of certain events, the Investor will purchase or assume
      the
      leases of certain EMB-170 aircraft (the “Additional Aircraft”), (iii) the
      Investor has agreed to invest, subject to satisfaction of certain conditions,
      $125 million in connection with the Plan (the “Equity Commitment”), and (iv)
      Republic may purchase additional EMB-170 and EMB-190 aircraft (the “Growth
      Aircraft”), which together with the Additional Aircraft will be operated in US
      Airways Express service pursuant to a separate jet service agreement (the
“EMB-170/EMB-190 Jet Service Agreement”), 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.

    


    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:

    


    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 Chautauqua
      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 Chautauqua in
      connection with the Original Jet Services Agreement.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      2 - AIR TRANSPORTATION SERVICES TO BE PROVIDED BY
      CHAUTAUQUA

    


    Section
      2.1 - Schedule Requirements

    


    At
      all
      times during the Term (as defined in Section 7.1 hereof), Chautauqua 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 a maximum of [*]
      Embraer
      ERJ-145 fifty (50) seat regional jet aircraft (“ERJ Aircraft”), or such other
      aircraft as may be substituted thereto 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
      ERJ 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 Chautauqua 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 Chautauqua,
      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 Chautauqua’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 Chautauqua 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 Chautauqua for effecting such change, including the reimbursement
      by
      US Airways of costs reasonably incurred by Chautauqua 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, Chautauqua 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. Chautauqua 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, Chautauqua
      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. Chautauqua
      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
      Chautauqua’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.

    _____

    *
      Confidential

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      2.4 - Regulations

    


    The
      operation of the Aircraft shall be carried out in accordance with all
      Regulations and the standards and practices of Chautauqua approved by the
      applicable Regulatory Authority thereunder. Chautauqua shall notify US Airways
      in writing within two business days after receipt of any notice from any
      Regulatory Authority that asserts any noncompliance by Chautauqua with any
      Regulation, initiates an investigation of Chautauqua’s operations or otherwise
      asserts any wrongdoing by Chautauqua. Chautauqua 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 Chautauqua shall be considered “material”
      only if such noncompliance or other wrongdoing, if proven or admitted by
      Chautauqua, could reasonably be expected to lead to the suspension or revocation
      of Chautauqua’s operating certificate.

    


    Section
      2.5 - Operating Procedures

    


    Chautauqua
      has previously delivered to US Airways and US Airways acknowledges receipt
      of a
      copy of all relevant operating specifications, operational regulations, manuals
      and calculations for all of the Aircraft. Chautauqua shall also 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 Chautauqua
      operation. 

    


    Section
      2.6 - Aircraft Registration

    


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

    


    Section
      2.7 - Chautauqua Responsibilities

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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


     

    Section
      2.8 - Substitute Aircraft

    


    In
      addition to the ERJ Aircraft specified in Section 2.1, Chautauqua may in its
      discretion arrange for and utilize substitute ERJ 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 ERJ Aircraft may
      be
      out of service due to unforeseen and irregular maintenance requirements,
      provided that Chautauqua may only utilize regional jet aircraft other than
      ERJ
      Aircraft to the extent that US Airways has permitted such use in advance in
      writing. Chautauqua shall be paid for the use of such substitute aircraft in
      the
      same manner that it is paid for the use of ERJ Aircraft in accordance with
      Article 5 hereof. If a substitute aircraft shall be utilized for more
      than
      two (2) consecutive days, Chautauqua 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 ERJ 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) Chautauqua
      shall designate [*]
      of the
      ERJ Aircraft as “Spare Aircraft.” The Spare Aircraft may be in neutral livery.
      For the purposes of calculating the payment to Chautauqua as described in
      Article 5 of this Agreement, Spare Aircraft shall not be included as Aircraft
      in
      Service, but US Airways shall pay to Chautauqua certain associated Direct Costs
      as detailed in the Pricing Model, such as insurance 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) Chautauqua
      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). It being hereby agreed that
      Chautauqua shall maintain [*]
      spare
      engines with respect to a fleet of [*]
      Aircraft
      flown in the Service.

    


    Section
      2.10 - Jets for Jobs

    


    Chautauqua
      shall continue to 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. 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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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

     

    


    Chautauqua
      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.

    


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

    


    Section
      3.1 - Servicemarks

    


    Aircraft
      utilized by Chautauqua 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 Chautauqua to use such
      new
      or different US Airways Servicemarks and exterior color decor and patterns
      on
      the Aircraft as US Airways may identify to Chautauqua in writing, and Chautauqua
      will implement such changes in accordance with a schedule mutually agreed to
      by
      the Parties. Chautauqua 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. Chautauqua 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 Chautauqua 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, Chautauqua shall use and display
      signs that satisfy applicable Regulations on the interior and exterior of the
      Aircraft that identify Chautauqua 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, Chautauqua seeks to change any such signs,
      Chautauqua 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. 

    


    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 Chautauqua
      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 Chautauqua for its actual
      cost of fuel as a Pass Through Cost, as detailed in Exhibit 5.1 hereto; or
      (2)
      provide fuel to Chautauqua for Services provided under this Agreement. To the
      extent that US Airways provides fuel to Chautauqua, the cost of such fuel shall
      be paid for by US Airways and shall not be considered a Pass Through Cost to
      Chautauqua. 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 Chautauqua 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 Chautauqua),
      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 Chautauqua under this Agreement,
      either using US Airways’ reservations system or the reservations systems of
      other airlines, connecting reservations to the Services of Chautauqua 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 Chautauqua 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 Chautauqua’s schedules or operations, provided that
      Chautauqua has provided US Airways with sufficient advance notice of any such
      changes.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) As
      soon
      as reasonably practicable after Chautauqua learns of any flight delay,
      cancellation or other schedule irregularity affecting its scheduled services,
      Chautauqua 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 Chautauqua
      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 Chautauqua or its flight crews, US
      Airways may furnish Chautauqua’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 Chautauqua, 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 Chautauqua
      provides the Service:

    


    
      	
              (a)

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

            


    

    


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

    


    
      	
              (c)

            	
               
                [*]

            


    

    


    
      	
              (d)

            	
               
                [*]

            


    

    


    
      	
              (e)

            	
               
                [*]

            


    

    


    
      	
              (f)

            	
               
                [*]
                and

            


    

    


    
      	
              (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 Chautauqua personnel.

    


    If
      Chautauqua 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 Chautauqua’s operations, US Airways agrees to reimburse
        Chautauqua for all direct and reasonable costs incurred by Chautauqua in
        making
        such arrangements, provided that Chautauqua furnishes US Airways with an
        invoice
        and adequate supporting documentation therefor.

    

    _____

    *
      Confidential

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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. Chautauqua 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 Chautauqua CoMat that Chautauqua transports on
      Aircraft that are providing the Service. 

    


    (c) Chautauqua
      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) Chautauqua
      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 Terms of Transportation shall at all times be available
      for public inspection at Chautauqua’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 [*].
      

    _____

    *
      Confidential

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) US
      Airways shall include the scheduled air services provided by Chautauqua pursuant
      to Article 2 in its public timetables (including Chautauqua’s connecting
      schedules on the same basis as it does its own), if published. All references
      in
      US Airways’ public timetables to Chautauqua’s US Airways Express services shall
      also contain notations indicating that such scheduled services shall be
      performed by Chautauqua as an independent contractor under the appropriate
      US
      Airways Servicemarks, and all such references shall comply with all
      Regulations.

    


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

    


    Section
      5.1 - Pricing Model

    


    US
      Airways and Chautauqua 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 Chautauqua, 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 Chautauqua
      hereunder, is divided into two categories, (1) “Direct Costs” and (2) “Pass
      Through Costs.” US Airways shall reimburse Chautauqua 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 provided the Service and have been placed
      into
      active revenue service for US Airways Express operation under this Agreement,
      as
      well as certain costs associated with Spare Aircraft and Spare
      Engines;

    


    (b) with
      respect to the Per Block Hour costs, Direct Costs shall be payable with respect
      to the Block Hours for revenue flights actually flown by the Aircraft to provide
      the Service;

    


    (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.


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    In
      addition to the costs described above, all airport PFCs, TSA fees or other
      similar governmental assessments assessed against Chautauqua for provision
      of
      the Service shall be considered Pass Through Costs to US Airways under Section
      5.2 hereof. US Airways shall also be responsible for all NAV-Canada fees or
      assessments as a Pass Through Cost. 

    


    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. 

    


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

    


    Section
      5.3 - Invoicing and Payments

    


    (a)
       During
      the Term, US Airways shall pay to Chautauqua 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 Chautauqua 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 Chautauqua estimates in good faith will
      be
      payable pursuant to Section 5.4 with respect to the Service provided during
      the
      applicable month. If US Airways does not receive an invoice from Chautauqua
      at
      least [*]
      days
      prior to the due date for a payment as set forth above, US Airways shall pay
      Chautauqua within [*]
      days
      after actual receipt of such invoice. 

    


    (b) As
      soon
      as reasonably practicable after the end of each calendar month, Chautauqua
      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 Chautauqua an amount
      equal to such difference as provided in Section 5.5 hereof, without any set
      off.
      If the total of Estimated Monthly Compensation amounts previously paid by US
      Airways under Section 5.3(a) exceeds the Actual Monthly Compensation, Chautauqua
      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 Chautauqua
      is
      unable to provide the Chautauqua 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 Chautauqua, US Airways
      shall only be responsible for payment of Chautauqua’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 Chautauqua is unable to provide the Chautauqua
      Services as a result of Chautauqua’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 Chautauqua pursuant to this Article 5 with respect to
      such
      period.

    


    _____

    *
      Confidential

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) In
      the
      event Chautauqua is unable to provide the Chautauqua 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 Chautauqua [*].

    


    Section
      5.4 - Profit

    


    US
      Airways shall pay Chautauqua the Profit shown in Exhibit 5.1 per actual
      Available Seat Mile (ASM) flown by Chautauqua 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 [*],
      Chautauqua 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 Chautauqua, or US
      Airways, as the case may be. Payments due hereunder shall be made within ten
      (10) business days of the calculation of any such payment. 

    


    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 Chautauqua. All true-up invoices shall be accompanied by appropriate
      calculations and adequate supporting documentation for the amounts
      invoiced.

    


    Section
      5.7 - Audit and Inspection Rights

    


    (a) Upon
      not
      less than thirty (30) days’ 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 Chautauqua’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 Chautauqua is in default hereunder and such audit
      relates to matters giving rise to or otherwise relating to such default, such
      audit shall be at Chautauqua's cost and expense and US Airways shall not be
      bound by the notice and frequency restrictions set forth above. 

    


    _____

    *
      Confidential

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    


    (b) In
      the
      event that US Airways has a reasonable basis for a concern with respect to
      the
      quality or adequacy of Chautauqua’s Aircraft maintenance program or crew
      training program or Chautauqua’s compliance with Regulations, upon not less than
      five (5) days’ prior written notice, authorized representatives of US Airways,
      at its cost and expense, may inspect Chautauqua’s aircraft maintenance and crew
      training facilities and review and copy Chautauqua’s aircraft maintenance
      records with respect to the Aircraft or crew training records, and such other
      records as relate to Chautauqua’s compliance with Regulations, at reasonable
      times during Chautauqua’s normal business hours and in a manner that does not
      materially disrupt Chautauqua’s business or operations; provided that if
      Chautauqua is in default hereunder and such inspection relates to matters giving
      rise to or otherwise relating to such default, such inspection shall be at
      Chautauqua’s cost and expense and US Airways shall not be bound by the notice
      requirements set forth above. Chautauqua shall make available to US Airways’
      authorized representatives knowledgeable representatives of Chautauqua to answer
      questions and otherwise assist in any such inspection, review, and upon the
      conclusion of such review US Airways shall provide Chautauqua with a written
      report of its material findings,
      with
      recommendations for corrective actions to be taken by Chautauqua specifying
      the
      reasons for such corrective action, including any alleged non-compliance with
      Regulations. Chautauqua may object to such recommendations by providing US
      Airways with a detailed written objection within five (5) days after
      Chautauqua’s receipt of such report. If Chautauqua so objects, the Parties shall
      negotiate in good faith to determine appropriate action to be taken by
      Chautauqua. US Airways’ recommendations may address any matter related to
      Chautauqua’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 Chautauqua
      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. 

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      6 - LIABILITY, INDEMNIFICATION AND INSURANCE

    


    Section
      6.1 - Chautauqua is an Independent Contractor

    


    (a) In
      its
      performance under this Agreement, Chautauqua 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 Chautauqua engaged
      in
      performing any of the Services Chautauqua is to perform pursuant to this
      Agreement shall be employees, agents, and independent contractors of Chautauqua
      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 Chautauqua 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 Chautauqua. Nothing
      contained in this Agreement is intended to limit or condition Chautauqua’s
      control over its operations or the conduct of its business as an air carrier
      and
      Chautauqua assumes all risks of financial losses which may result from the
      operation of the air transportation services to be provided by Chautauqua
      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 Chautauqua. Chautauqua
      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 Chautauqua 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.

    


    (b) Chautauqua
      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 Chautauqua 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. Chautauqua
      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
      Chautauqua.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) 
      US
      Airways shall indemnify, defend, protect, save, and hold harmless Chautauqua,
      its affiliates, directors, officers, employees, and agents (the “Chautauqua
      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 Chautauqua Indemnitee,
      except for claims to the extent resulting from the gross negligence or willful
      misconduct of a Chautauqua Indemnitee. US Airways shall further indemnify,
      defend, protect, save, and hold harmless Chautauqua from and against all fines
      or civil penalties incurred by Chautauqua that relate to Chautauqua’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.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      6.3 - Insurance Coverage

    


    (a) Chautauqua
      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 Chautauqua
      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	 
	  
              Bodily Injury Passengers and Non-Passengers	 $[*]
              Each Occurrence /Aggregate
	   Personal
              Injury- Passengers	 $[*]
              Each Occurrence /Aggregate
	   Personal
              Injury - Non-Passengers	 $[*]
              Each Offense/Aggregate
	  
Property
              Damage	 $[*]
              Each Offense/Aggregate
	
              Worker’s
                Compensation Insurance

              (Chautauqua’s
                Employees)

            	
              [*]

            
	
              Employer’s
                Liability 

              (Chautauqua’s
                Employees)   

            	
              $[*]  

            
	
              “All
                Risk Hull and Aviation Hull War and 

              Associated
                Perils (or equivalent) insurance on Aircraft performing Chautauqua
                Services hereunder 

            	
              [*]
                or
                such lesser amount as may be consented to by US
                Airways

            


    

    


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

    


    (c)
       Chautauqua
      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
      Chautauqua Claims for which Chautauqua is obligated to indemnify such US Airways
      Indemnitees hereunder;

    


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    (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 Chautauqua 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 Chautauqua
      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 Chautauqua’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. 

    


    (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 Chautauqua’s insurers.

    


    (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 Chautauqua’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.

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    (g) 
      Upon the
      Effective Date, and from time to time thereafter upon request by US Airways,
      Chautauqua 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, Chautauqua’s
      insurance broker shall provide its written opinion that the policy or policies
      of insurance carried by Chautauqua 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 Chautauqua, Chautauqua 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 Chautauqua 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 Chautauqua
      and
      shall be payable by Chautauqua 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 Chautauqua’s obligation to comply with the provisions of
      this Section 6.3. Chautauqua 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 Chautauqua under a US Airways
      airway bill as part of the Service.

    


    ARTICLE
      7 - TERM AND TERMINATION

    


    Section
      7.1 - Effective Date and Term 

    


    (a) The
      effectiveness of this Agreement shall be conditioned on and subject to the
      entry
      of a final order (the “Order”) of the Bankruptcy Court (a) authorizing and
      directing US Airways to assume the Agreement under Section 365 of the Bankruptcy
      Code, and (b) approving the terms of the Agreement and authorizing and directing
      US Airways to enter into and be bound by the Agreement. The Order shall provide
      that, except as provided herein, US Airways’ obligations under the Agreement
      shall be 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 Chautauqua and US Airways shall
      be deemed to have breached this Agreement as of the effective date of the notice
      (the “Breach Date”) and Chautauqua 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, Chautauqua 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 upon entry of the Order approving this Agreement and the assumption
      hereof by US Airways (the “Effective Date”) and shall continue until
[*]
      except
      to the extent that the term with respect to one or more Aircraft is terminated
      on an earlier date pursuant to the provisions of this Article 7 (the
“Termination Date,” and the period from the date of the Order until 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
      Chautauqua, 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 Chautauqua, 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 Chautauqua’s rights to cure such Termination Event as set forth herein. After
      notice of termination is given, US Airways shall meet with Chautauqua for the
      purpose of resolving the Termination Event. Should such Termination Event not
      be
      cured or corrected within ninety (90) days after Chautauqua’s receipt of the
      notice of termination (or

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    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) Chautauqua
      materially fails to perform or observe any material covenant or condition or
      agreement to be performed or observed by it hereunder, provided that if
      Chautauqua breaches any payment obligation, US Airways shall have the right
      to
      terminate this Agreement on ten (10) days’ prior written notice unless
      Chautauqua 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,
      with the first such period commencing January 1, 2005 (a “Performance
      Measurement Period”), Chautauqua’s Controllable Completion Percentage (as
      defined in Section 8.2) is below [*]
      and no
      Performance Exception or Force Majeure Event has occurred. 

    


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

    


    (e) In
      US
      Airways’ reasonable opinion, Chautauqua 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) Chautauqua
      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 Chautauqua as provided in Section 2.10 hereof, provided
      that US Airways provides Chautauqua with any such amendments within fifteen
      (15)
      business days of execution, and further provided that Chautauqua shall not
      be
      required to use more than commercially reasonable efforts to comply with any
      such amendments.

    


    (g) Chautauqua’s
      operating certificate is suspended or revoked.

    


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    (h) In
      the
      event that (1) Republic or an Affiliate (as defined in the Investment Agreement)
      of Republic (the "170/190 Operator") shall have commenced the provision of
      flight services under the EMB 170/190 Jet Service Agreement and the EMB 170/190
      Jet Service Agreement shall have been terminated by US Airways in accordance
      with the terms of such agreement or (2) the Investment Agreement shall have
      been
      terminated pursuant to Section 9.01(c)(i) (or any similar successor provision)
      or (3) the 170/190 Operator or Wexford 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 Chautauqua.
      “Material Breach” with respect to the 170/190 Operator or Wexford shall have the
      respective meanings set forth in the Slots/Gates Transaction Agreements and
      Aircraft Transaction Agreements, as applicable.

    


    Section
      7.4 - Other Termination Rights

    


    (a) If
      US
      Airways does not exercise the Slots Option (as defined in the Recitals of this
      Agreement), US Airways shall have the one time right, upon sixty (60) days’
      advance written notice to Chautauqua, to terminate up to five (5) Aircraft
      hereunder. Such written notice shall be delivered prior to the effective date
      of
      the Plan (after which date such right shall expire) and shall specify the
      termination dates for each Aircraft so terminated.

    


    (b) If
      US
      Airways does exercise the Slots Option, US Airways shall have the right to
      terminate five (5) Aircraft hereunder. One (1) Aircraft may be terminated on
      the
      date that is the later of (x) the date each fifth Additional Aircraft (as
      defined in the Recitals of this Agreement), collectively, is placed into service
      under the EMB-170/EMB-19 Jet Service Agreement or (y) the applicable date for
      such termination rights set forth in Exhibit 7.4 attached hereto.

    


    (c) If
      US
      Airways exercises its option to cause Republic to acquire the Growth Aircraft
      (as defined in the Recitals of this Agreement) and such Growth Aircraft are
      actually placed into service under the EMB-170/EMB-190 Jet Service Agreement,
      US
      Airways shall have the right, to terminate two (2) Aircraft hereunder for every
      five (5) Growth Aircraft placed in service under the EMB-170/EMB-190 Jet Service
      Agreement. For each such group of five (5) Growth Aircraft, one (1) Aircraft
      may
      be terminated on the date that is the later of (i) the date that the third
      Growth Aircraft in such group is placed into service under the EMB-170/EMB-190
      Jet Service Agreement, and (ii) the applicable date set forth in Exhibit 7.4
      attached hereto, and one (1) Aircraft may be terminated on the date that is
      the
      later of (iii) the date that the fifth such Growth Aircraft is placed in service
      under the EMB-170/EMB-190 Jet Service Agreement and (iv) the applicable date
      set
      forth in Exhibit 7.4 attached hereto. 

    


    (d) If
      (i)
      the Company exercises its option to require the Investor to purchase New Common
      Stock under Section 2.01 of the Investment Agreement and in connection
      therewith, exercises the Slot Option, to be consummated upon the Investor’s
      purchase of the New Common Stock, (ii) the Investor has not consummated the
      purchase of New Common Stock other than as a result 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    of
      a
      failure of a condition to be satisfied or waived by the Investor under Section
      8.01 of the Investment Agreement (other than the condition that the Investor
      shall have approved the Initial Business Plan and any Amended Business Plan,
      or
      the condition that Group shall have consummated the Slot Option, to the extent
      that such failure to consummate the Slot Option results from the Investor’s
      election not to consummate the purchase of the New Common Stock), (iii) the
      sale
      of New Common Stock is completed with a third party investor in connection
      with
      the consummation of the Plan on terms and conditions substantially identical,
      in
      all material respects, or on terms more favorable to the investor to those
      contained in the Investment Agreement and, if more favorable, that were offered
      to the Investor under Section 6.09(c) of the Investment Agreement and that
      the
      Investor declined to accept, and (iv) the Slot Option is not and has not been
      consummated with the Investor, then US Airways shall have the one time right
      to
      terminate up to ten (10) additional Aircraft, subject to six (6) month’s prior
      written notice to Chautauqua, which notice shall specify the number of aircraft
      to be terminated and the dates of such terminations, and upon US Airways’
      exercise of such aircraft termination right, US Airways shall have no further
      right to exercise or consummate the Slot Option.

    


    (e) At
      any
      time until such time as US Airways no longer has the right to terminate any
      Aircraft under Sections 7.4(a), (b), (c) or (d), Chautauqua shall have the
      right
      to deliver to US Airways written notice (a “Preliminary Chautauqua Termination
      Notice”) that it desires to terminate up to an aggregate number of Aircraft that
      does not exceed fifteen (15) less any Aircraft that have been previously
      terminated under Sections 7.4(a), (b), (c) or (d) or this Section 7.4(e). Within
      10 Business Days after receipt of a Preliminary Chautauqua Termination Notice,
      US Airways shall have the right to notify Chautauqua as to whether it accepts
      or
      rejects (which acceptance or rejection may be as to all, some or none of the
      Aircraft designated for termination in such Preliminary Chautauqua Termination
      Notice) such Preliminary Chautauqua Termination Notice. The failure of US
      Airways to deliver such notification within such 10 Business Day period shall
      be
      deemed an acceptance of Chautauqua’s Preliminary Chautauqua Termination Notice.
      In the event US Airways gives timely written notice to Chautauqua that it
      rejects Chautauqua’s Preliminary Chautauqua Termination Notice as to any or all
      of the Aircraft designated for termination, then the total number of Aircraft
      that US Airways may terminate under Section 7.4(a), (b), (c) or (d) shall be
      reduced by the number of Aircraft so rejected by US Airways (it being understood
      and agreed that the Aircraft shall be reduced in the chronological order in
      which they are then eligible for termination under any of Section 7.4(a), (b),
      (c) or (d)). In the event US Airways accepts (or is deemed to accept)
      Chautauqua’s Preliminary Chautauqua Termination Notice, then Chautauqua shall
      have the right to give US Airways a further written notice (a “Final Chautauqua
      Termination Notice”), within not more than sixty (60) days from the date of
      acceptance or deemed acceptance of the Preliminary Chautauqua Termination
      Notice, specifying the date(s) on which some or all of the Aircraft designated
      for termination in the Preliminary Chautauqua Termination Notice will be removed
      from Service under this Agreement, and the number of such Aircraft to be removed
      on each such date, provided, however, that the removal of the first of such
      Aircraft shall commence no earlier than sixty (60) days, and no later than
      one
      hundred twenty (120) days, from the date of the Final Chautauqua Termination
      Notice, and this Agreement shall terminate as to each such Aircraft on the
      date
      of removal of such Aircraft from the Service. If Chautauqua does not give such
      Final Chautauqua Termination Notice within the required sixty (60) day period,
      then Chautauqua may not terminate the Aircraft subject to the Preliminary
      Chautauqua Termination Notice unless it again 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    complies
      with the provisions of this Section 7.4(e). In the event Chautauqua issues
      a
      timely Final Chautauqua Termination Notice, then the total number of aircraft
      that US Airways may terminate under Section 7.4(a), (b), (c) or (d) shall be
      reduced by the number of Aircraft specified in such Final Chautauqua Termination
      Notice (it being understood and agreed that the Aircraft shall be reduced in
      the
      chronological order in which they are then eligible for termination under any
      of
      Section 7.4(a), (b), (c) or (d)). In the event that Chautauqua exercises its
      right under this Section 7.4(e), US Airways will not be required to terminate
      more than two (2) Aircraft in any thirty (30) day period.

    


    (f) US
      Airways shall not have the right to terminate any Aircraft pursuant to
      sub-clauses (b) and (c) of this Section 7.4 if and for so long as US Airways
      is
      then flying regional jet aircraft directly or indirectly owned or operated
      by
      any regional jet provider flying as “US Airways Express” other than (x) Air
      Wisconsin Airlines Corporation (“Air Wisconsin”), under that certain Air
      Wisconsin Jet Service Agreement, effective as of February 28, 2005, between
      US
      Airways and Air Wisconsin (but only with respect to up to 70 regional jets
      or
      such lesser number as Air Wisconsin irrevocably commits to operate for US
      Airways prior to the Effective Date), or (y) any other such regional jet
      provider flying 50 seat regional jet aircraft that has made an equity investment
      in US Airways which equates to at least $3.57 million in each aircraft in such
      regional jet provider’s fleet then flying for US Airways; provided, however,
      that with respect to any such other regional jet provider, at such time as
      US
      Airways has reduced the size of such other regional jet provider’s 50 seat
      regional jet aircraft fleet being operated by US Airways to a point where such
      other regional jet provider’s investment in US Airways equates to at least $3.57
      million per aircraft, then US Airways may thereafter terminate Aircraft pursuant
      to sub-clauses (b) and (c) of this Section 7.4 in proportion to the rate at
      which US Airways terminates the remaining 50 seat regional jet aircraft fleet
      of
      such other regional jet provider. 

    


    (g) Notwithstanding
      anything in this Section 7.4 or Schedule 7.4 to the contrary, (i) in no event
      may US Airways terminate, in the aggregate, more than two (2) Aircraft in any
      thirty (30) day period and (ii) Chautauqua will have the right to designate
      the
      specific Aircraft to be terminated by either party.

    


    (h) All
      capitalized terms used in this Section 7.4, but not defined in this Agreement,
      shall have the meanings set forth in the Investment Agreement.

    


    Section
      7.5 - Termination by Chautauqua

    


    (a) Chautauqua
      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 

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    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
      Chautauqua 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 Chautauqua, 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 Chautauqua, 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;

    


    (iii)  upon
      written notice in the event that (1) the 170/190 Operator shall have commenced
      the provision of flight services under the EMB 170/190 Jet Service Agreement
      and
      the EMB 170/190 Jet Service Agreement shall have been terminated by the 170/190
      Operator in accordance with the terms of such agreement, or (2) US Airways
      shall
      have exercised the Slot Option and either (A) the 170/190 Operator 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 (B) the 170/190 Operator 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 EMB 170/190
      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 the 170/190 Operator or
      Wexford shall have the 

    


    _____

    *
      Confidential

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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 Chautauqua 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.

    


    ARTICLE
      8 - PERFORMANCE ADJUSTMENTS

    


    Section
      8.1 - [Intentionally
      Omitted]

    


    Section
      8.2 - Performance Plan Metrics

    


    Chautauqua’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 [*]
      minutes
      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 [*]
      minutes
      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 Chautauqua a summary statement showing
      the operating performance of Chautauqua.

    


    _____

    *
      Confidential

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    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 Chautauqua operates
      twenty-five (25) or more Aircraft in the Service, and no Performance Exception
      or Force Majeure Event has occurred for any such month, then Chautauqua shall
      pay to US Airways [*]
      each
      calendar month during such period:

    


      (i)
       Chautauqua’s
      Controllable Fleet Launch Percentage is less than [*];
      

    (ii) Chautauqua’s
      Controllable On-Time Departure Percentage is less than [*];

    (iii)
       Chautauqua’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 Chautauqua [*]
      for each
      calendar month during such period:

    


    (i)
       Chautauqua’s
      Controllable Fleet Launch Percentage is greater than [*];
      

    (ii) Chautauqua’s
      Controllable On-Time Departure Percentage is greater than [*];

    (iii)
       Chautauqua’s
      Controllable Completion Percentage is greater than [*].

    


    Section
      8.4 - Performance Exceptions

    


    A
      “Performance Exception” with respect to the failure on the part of Chautauqua 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:

    


    (a) Chautauqua’s
      performance, [*].
      

    


    (b) The
      failure to achieve the performance metric is directly attributable to
[*],
      Chautauqua 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 Chautauqua
      of
      the date by which such event is expected to be cured and shall adjust
      Chautauqua’s affected performance metrics to the extent affected by such event
      during the period prior to such cure taking effect. 

    


    _____

    *
      Confidential

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    


    Section
      9.1 - Grant of License

    


    US
      Airways hereby grants to Chautauqua 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 Chautauqua 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, Chautauqua’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) Chautauqua
      acknowledges that its use of the US Airways Servicemarks creates in Chautauqua
      no rights in those marks and that all use of the US Airways Servicemarks by
      Chautauqua inures to the benefit of US Airways.

    


    Chautauqua
      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
      Chautauqua and the Services provided by Chautauqua 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. 

    


    (b) Chautauqua
      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 Chautauqua. 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 Chautauqua 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 Chautauqua or
      any
      other entity.

    


    (d) Nothing
      in this Agreement shall be construed to give Chautauqua 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 Chautauqua shall cease, and Chautauqua 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.

    


    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. 

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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 to US Airways shall be addressed
      to:


     

     

    


    
      	 US
              Airways,
              Inc.:                     	 Chautauqua
              Airlines, Inc.:
	 	 
	 N.
              Bruce
              Ashby                     	 Bryan
              Bedford 
	 EVP,
              Marketing &
              Planning                	 Chief
              Executive Officer
	 	 
	 US
              Airways, Inc.	 Chautauqua
              Airlines Inc.
	 2345
              Crystal
              Drive                 	 8909
              Purdue Road, Suite 300
	 Arlington,
              VA
              22227                 	 Indianapolis,
              IN 46268
	 Email:
              bruce.ashby@usairways.com	 
	 Telephone:
              703-
              872-5635                	 Telephone:
              (317) _484-6047
	 Facsimile:
              703-872-6929	  Facsimile:
              (317) _484-6060
	 	 
	 with
              copies delivered at the same address	 with
              copies delivered to:
	 to
              the attention of:	 Arthur
              Amron
	 Lee
              McElrath	 Principal
              and General Counsel
	 US
              Airways Express,	 WExford
              Capital LLC
	 Managing
              Director Finance	 411
              West Purnam Avenue
	 Telephone 
              703-872-5192	 Greenwick,
              CT 06830
	 Facsimile:  
              703-872-6929	 Telephone  
              203-862-7012
	 	 Facsimile:   
              203-862-7312
	 Elizabeth
              K. Lanier	 
	 EVP,
              General Counsel	 
	 US
              Airways, Inc.	 
	 Email:
              liz_lanier@usairways.com	 
	 Telephone:  
              703-872-6424	 
	 Facsimile:    
              703-872-5208	 
	 	 


    

     

     

    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 Chautauqua, 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) Chautauqua
      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 Chautauqua, Republic or Wexford. Any such assignment
      by Chautauqua 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 Chautauqua 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 Chautauqua 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 Chautauqua, its
      lenders and aircraft lessors instead of paying Chautauqua for such
      coverage.

     

    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 Chautauqua’s certification process,
      including representatives of the DOT and FAA if requested by any such parties;
      or

    


    (f) to
      prospective financial investors conducting due diligence with respect to the
      business and operations of US Airways in connection with the Bankruptcy
      Proceeding.

    


    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 Chautauqua 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, Chautauqua 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.

    


    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 Chautauqua pursuant to this
      Agreement may be shared by Chautauqua 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 Chautauqua 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.

     

    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.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

    


    IN
      WITNESS WHEREOF, US
      Airways and Chautauqua have caused this Agreement to be executed by their duly
      authorized representatives on the day and year first above written.

    


    


    CHAUTAUQUA
      AIRLINES, INC.                                                US
      AIRWAYS, INC.

    


    


    
      	 	 	 	 
	/s/ Bryan
              Bedford	 	 	/s/ Bruce
              Ashby
	
            	 	 	
            
	
              By:    
                Bryan Bedford

              Title:   
                Chief Executive Officer

            	 	 	
              By:   
                Bruce Ashby

              Title:   
                Executive Vice President - Marketing &
                Planning

            


    

    


    
       

      
        
          
          

        

        
          
          

          
            

          

        

         

      

    

    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

    For
      operations at US Airways designated hubs (for purposes of this Agreement only,
      Pittsburgh, Boston, Washington-National, New York LaGuardia, Charlotte,
      Philadelphia, and Dulles and any other hubs that US Airways may establish)
      the
      minimum turn time (defined as the time from Aircraft blocking to Aircraft
      unblocking) shall be [*]
      minutes.
      For operations at a non US Airways hub, the minimum turn time shall be
[*]
      minutes.

    


    2. Aircraft
      Maintenance Requirements

    [*]
      of the
      Aircraft (rounded up to the nearest whole number) shall be scheduled for a
      minimum of [*]
      hours of
      overnight maintenance per Aircraft for [*]
      days per
      week. The Parties will agree to a reasonable number of Aircraft that shall
      be
      scheduled for [*]
      hours of
      continuous maintenance time per Aircraft each week beginning on Saturday
      afternoon. 

    


    3.
       Maintenance
      Base Operations

    


    US
      Airways will provide at all times during the term of this Agreement a schedule
      of regional jet departures, including frequencies and overnight turnarounds,
      that operate on behalf of US Airways from Columbus, Ohio (CMH), Indianapolis,
      Indiana (IND) and Louisville, Kentucky (SDF) to all other US Airways service
      points sufficient to support required maintenance activity for the Aircraft
      at
      Chautauqua’s primary maintenance based in CMH, IND and SDF.

    


    4. Maintenance
      Base

    The
      schedule will allow for the establishment by Chautauqua of primary maintenance
      bases in IND, CMH and SDF. 

    


    5. Crew
      Overnights

    The
      schedule shall allow for [*]
      of crews
      in outstations and shall not require Chautauqua to schedule [*].
      Any
      additional costs associated with continuous duty overnights or high-speed
      overnights shall be for the account of US Airways and shall be invoiced
      separately by Chautauqua as a Pass Through Cost.

    _____

    *
      Confidential

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6. Crew
      Bases

    The
      schedule shall allow for the operation by Chautauqua of the following crew
      bases: [*].

    


    7. Hub
      Arrivals/Departures

    At
      least
[*]
      of the
      scheduled flights will arrive at or depart from a hub or from SDF, IND or CMH.
      

    


    7. Consent
      to Schedule Changes

    To
      the
      extent that US Airways’ schedule falls outside of the criteria set forth herein,
      US Airways shall request Chautauqua to consent to such schedule and Chautauqua
      shall not unreasonably withhold such consent provided that the schedule being
      requested shall not impose additional costs upon Chautauqua and/or make
      Chautauqua’s compliance with its performance requirements more difficult,
      further provided that US Airways shall have the right to reimburse Chautauqua
      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


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    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 Chautauqua   	To US Airways, Inc. 
	5100 Flying
              Operations   	5500 Passenger
              Service1 
	5200 Direct
              Maintenance   	6200 Traffic
              Servicing
	5300 Maintenance
              Burden2    	6300 Related
              to Traffic Servicing
	6100 Aircraft
              Servicing 3	6500 Reservations
              and Sales
	6300 Related
              to Aircraft Servicing  	6600 Advertising
              and Publicity
	6800 Related
              to Aircraft Operations 	6800 Related
              to Passengers & Revenue
	7000
              Depreciation and Amortization related to aircraft and maintenance
              equipment	7000
              Depreciation and Amortization related airport facilities and ground
              facilities and equipment
	7100
              Transport Related Expenses as they relate to the above referenced
              items	7100
              Transport Related Expenses as they relate to the above referenced
              items


    

    


    (2) Chautauqua
      shall be responsible for providing, fuel (into plane), airport landing fees,
      passenger catering, passenger liability insurance, and property tax. Chautauqua
      shall be fully reimbursed for these items (the “Pass Through Costs”) as
      described in Section 5.4.

     

     

     

     

     

     

     

     

     

     

     

     

    ___________________________________

    
      1
        Except
        Flight Attendants which shall be the responsibility of Chautauqua

      2 Except
        Station Ground Equipment which shall be the responsibility of US
        Airways

      3 De-icing
        costs and overnight aircraft parking shall be the responsibility of US
        Airways

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit
      5.1 - Pricing Model

    


    Direct
      Costs:

    
      	 	
              [*][*]

            	
              [*]

            
	
              [*]

            	 	 
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	 
	
              [*]

            	
              [*]

            	 
	
              [*]

            	
              [*]

            	 
	 	 	 
	
              [*]

            	 	 
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	 
	 	 	 
	
              [*]

            	 	 
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	 
	 	 	 
	
              [*]

            	 	 
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	 
	 	 	 
	
              [*]

            	 	 
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	 
	 	 	 
	
              [*]

            	 	 
	
              [*]

            	
              [*]

            	 
	
              [*]

            	
              [*]

            	 
	 	 	 
	
              [*]

            	 	 
	
              [*]

            	
              [*]

            	 
	
              [*]

            	
              [*]

            	 
	 	 	 
	
              [*]

            	 	 
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	 
	 	 	 


    

    _____

    *
      Confidential

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    [*][*][*][*][*][*][*][*][*][*][*][*]

    


    _____

    *
      Confidential


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    Exhibit
      7.4 - Termination Dates for Aircraft in Service

     

    


    


    
      	
              Aircraft
                Type

            	
              End
                of Term Date

            	
              Early
                Termination Date for 

              Growth
                Aircraft

            	
              Early
                Termination Date for Owned/Leased Aircraft

            
	
              ERJ-145

            	
              March
                1, 2013

            	 	
              120
                days after effective date of POR

            
	
              ERJ-145

            	
              March
                1, 2013

            
	
              ERJ-145

            	
              March
                1, 2013

            	 	
              150
                days after effective date of POR

            
	
              ERJ-145

            	
              March
                1, 2013

            
	
              ERJ-145

            	
              March
                1, 2013

            	 	
              180
                days after effective date of POR

            
	
              ERJ-145

            	
              March
                1, 2013

            	
              270
                days after effective date of POR

            	 
	
              ERJ-145

            	
              March
                1, 2013

            
	
              ERJ-145

            	
              March
                1, 2013

            	
              360
                days after effective date of POR

            	 
	
              ERJ-145

            	
              March
                1, 2013

            
	
              ERJ-145

            	
              March
                1, 2013

            	
              390
                days after effective date of POR

            	 
	
              ERJ-145

            	
              March
                1, 2013

            
	
              ERJ-145

            	
              March
                1, 2013

            	
              420
                days after effective date of POR

            	 
	
              ERJ-145

            	
              March
                1, 2013

            
	
              ERJ-145

            	
              March
                1, 2013

            	
              450
                days after effective date of POR

            	 
	
              ERJ-145

            	
              March
                1, 2013

            


    

    


    Chautauqua
      has the right to select the particular Aircraft that are subject to
      termination.