exv10w3



 






Exhibit 10.3




* TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

UNDER 17 C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2




Execution Copy




REIMBURSEMENT AGREEMENT




               This Reimbursement Agreement (this “Agreement”), dated and effective the ___day of May,
2005, is between Delta Air Lines, Inc., whose principal address is 1030 Delta Boulevard, Atlanta,
Georgia 30320 (“Delta”), Freedom Airlines, Inc. (“Operator”), a wholly-owned subsidiary of Mesa Air
Group, Inc., holding a Certificate of Public Convenience and Necessity issued by the Federal
Aviation Administration (“FAA”), whose principal address is 410 North 44th Street, Suite 700,
Phoenix, Arizona 85008, and Mesa Air Group, Inc. (“Parent” and together with Operator, “Mesa”),
parent company and sole shareholder of Operator, whose principal address is 410 North 44th Street,
Suite 700, Phoenix, Arizona 85008.



               WHEREAS, Delta operates the Delta Connection program; and



               WHEREAS, Delta is party to certain aircraft leases and other agreements (the “FRJ Leases”)
whereby Delta leases thirty (30) Dornier 328 regional jets (the “FRJ Aircraft”); and



               WHEREAS, Mesa desires to operate regional jets under Delta’s flight designator code, “DL,” as
a Delta Connection operator; and



               WHEREAS, to be a Delta Connection operator, Mesa is willing to reimburse Delta for certain of
its obligations under the FRJ Leases.



               NOW, THEREFORE, for and in consideration of the foregoing premises and the mutual undertakings
set forth herein and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Delta and Mesa, intending to be legally bound, hereby agree to enter into
this Agreement as follows:




1. Reimbursement of FRJ Expenses. 




1.1 Mesa hereby covenants and agrees to pay to Delta the sum of [*] Dollars ($[*]) per FRJ
Aircraft per month as reimbursement for certain lease rent costs incurred by Delta relating
to such aircraft. Mesa’s payment obligations hereunder shall commence with respect to each
FRJ Aircraft upon the earlier of (1) in accordance with the schedule attached hereto as
Exhibit 1.1 and (2) the actual in-service date of each “RJ50 Aircraft”
(as defined below); provided, however, if the initial RJ50 Aircraft actual in-service date
is delayed beyond October 1, 2005 due solely to the actions or inactions of Delta, Mesa’s
payment obligations hereunder shall be temporarily suspended until such initial RJ50
Aircraft are actually placed into Delta Connection service. Mesa’s payment obligation with
respect to the FRJ Leases rent expense shall continue until the earlier of the: (1) Delta’s
full release from all of its rights and obligations with respect to each of the thirty





 




	
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(30)
FRJ Aircraft including, without limitation, all of the rights and obligations of Delta in,
under and with respect to the participation agreements, the FRJ Leases, and all other
operative documents relating thereto under which Delta has any right or obligation with
respect to each of the FRJ Aircraft (collectively, the “FRJ Obligations”); (2) the
expiration of the term of the applicable FRJ Lease, (3) termination of the “RJ50 Delta
Connection Agreement” (as defined below) by Mesa pursuant to Sections 11(C) or 11(D)
thereof, (4) subject to Section 4.3 hereof, termination of the RJ50 Delta Connection
Agreement by Delta pursuant to Sections 11(F) or 11(G) thereof; or (5) Delta filing a
petition in bankruptcy or reorganization under any federal or state bankruptcy or similar
law.




1.2 Each monthly payment required pursuant to Section 1.1 hereof shall be due and payable on
the 15th day of each applicable month; provided, however, in lieu of such
payment, at Delta’s sole option, so long as the RJ50 Delta Connection Agreement is in
effect, Delta may off set and deduct a given’s month’s payment due from Mesa from any
payments due Mesa from Delta during such month under the RJ50 Delta Connection Agreement.




2. Assumption of FRJ Aircraft Obligations.




2.1 Mesa hereby covenants and agrees to diligently pursue a full release of Delta from all
of the FRJ Obligations, all on terms and conditions that are reasonably satisfactory to
Delta.




2.2 If Mesa identifies a potential sublease for the FRJ Leases, then, subject to the terms
and conditions thereof, Delta agrees to negotiate sublease documentation with such potential
sublessee on terms and conditions reasonably satisfactory to Delta. Any and all reasonable
fees and expenses (including attorneys’ fees) incurred by Delta in connection with any such
sublease or similar transaction, whether or not consummated, shall be promptly reimbursed by
Mesa.




2.3 (a) In the event that, subject to Delta’s reasonable satisfaction with respect to the
terms and conditions thereof, the release of Delta from the FRJ Obligations requires a
monetary payment to one or more of the other parties thereto (a “Financial Settlement”),
Delta hereby agrees to participate in such Financial Settlement on a dollar-for-dollar basis
with Mesa, up to a maximum contribution by Delta of [*] Dollars ($[*]) (the “Delta
Contribution”); provided, however, if any such Financial Settlement is in any way related to
or part of any other non-FRJ Aircraft-related transaction, series of transactions, agreement
or series of agreements involving Mesa or any affiliate of Mesa, and not Delta, Delta shall
not be obligated to participate in such Financial Settlement.




       (b) Commencing on the first anniversary date of the 25th (or
30th, if applicable) RJ50 Aircraft being placed into revenue service pursuant to
the RJ50 Delta Connection Agreement, Delta shall pay to Mesa the Delta Contribution in equal
annual installments based on the remaining years of the initial term of the RJ50 Delta
Connection Agreement.




       (c) If, prior to the second anniversary of the 25th (or 30th, if
applicable) RJ50





 




	
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Aircraft being placed into revenue service pursuant to the RJ50 Delta
Connection Agreement, Delta files a petition in bankruptcy or reorganization under any
federal or state bankruptcy or similar law, Mesa shall, no later than five (5) days after
such filing, re-pay to Delta that portion of the Delta Contribution which Delta had
previously paid to Mesa prior to such filing and, pursuant to Section 1.1 hereof, Mesa’s
payment obligations with respect to the FRJ Leases shall cease.




3. RJ50 Delta Connection Operations.




3.1 Concurrently with the execution of this Agreement, Mesa and Delta agree to execute and
enter into a Delta Connection Agreement in the form attached hereto as Exhibit 3.1
and incorporated herein by reference (the “RJ50 Delta Connection Agreement”) for the
operation by Mesa of up to thirty (30) 50-Seat regional jet aircraft (the “RJ50 Aircraft”).




4. Default.




4.1 In the event of a material breach of this Agreement by either party remaining uncured
for more than five (5) days after receipt of written notification of such breach by the
nonbreaching party, then the nonbreaching party may immediately terminate this Agreement at
its sole option. If a notice of breach is delivered under this Section and a notice of
termination is not delivered within sixty (60) days thereafter, then the nonbreaching party
shall be deemed to have waived its right to terminate under this Section for such
occurrence.




4.2 Termination of this Agreement for any reason shall not relieve either party of rights
and obligations incurred prior to the effective date of termination. A party’s right to
terminate this Agreement shall be in addition to any other rights or remedies, in law or
equity, available to such party.




4.3 In the event that Delta terminates the RJ50 Delta Connection Agreement pursuant to
Sections 11(F) thereto and Mesa’s payment obligation required pursuant to Section 1.1 hereof
is terminated in accordance with such section, Mesa shall immediately pay to Delta the
appropriate amount set forth in the table on Exhibit 4.3 attached hereto and
incorporated herein.




5. Miscellaneous.




5.1 This Agreement is subject to, and will be governed by and interpreted in accordance
with, the laws of the State of New York, excluding conflicts of laws principles, and of the
United States of America. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement may only be
brought in the courts of the State of Georgia in Fulton County, or, if it has or can acquire
jurisdiction, in the United States District Court for the Northern District of Georgia, and
each of the parties hereto irrevocably consents to the exclusive jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and waives, to
the fullest extent permitted by law, any objection to venue laid therein.





 




	
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Process in any
action or proceeding referred to in the proceeding sentence may be served on any party
anywhere in the world. EACH PARTY FURTHER AGREES TO WAIVE ANY RIGHT TO A TRIAL BY JURY.




5.2 The descriptive headings of the several articles and sections of this Agreement are
inserted for convenience only, confer no rights or obligations on either party, and do not
constitute a part of this Agreement.




5.3 Time is of the essence in interpreting and performing this Agreement.




5.4 This Agreement (including the Exhibits hereto), together with the RJ50 Delta Connection
Agreement, constitutes the entire understanding between the parties with respect to the
subject matter hereof, and any other prior or contemporaneous agreements, whether written or
oral, are expressly superseded hereby.




5.5 If any part of any provision of this Agreement shall be invalid or unenforceable under
applicable law, such part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts of such provision or
the remaining provisions.




5.6 This Agreement may be executed in any number of counterparts, including via facsimile,
each of which shall be deemed to be an original and all of which, taken together, shall
constitute one and the same instrument.




5.7 Because a breach of the provisions of this Agreement could not adequately be compensated
by money damages, any party shall be entitled to an injunction restraining such breach or
threatened breach and to specific performance of any provision of this Agreement and, in
either case, no bond or other security shall be required in connection therewith, and the
parties hereby consent to the issuance of such injunction and to the ordering of specific
performance. NO PARTY SHALL BE LIABLE FOR ANY INCIDENTAL, PUNITIVE OR CONSEQUENTIAL
DAMAGES, INCLUDING LOST REVENUES, LOST PROFITS, OR LOST PROSPECTIVE ECONOMIC ADVANTAGE,
ARISING FROM THIS AGREEMENT OR ANY BREACH HEREOF.




5.8 No amendment, modification, supplement, termination or waiver of any provision of this
Agreement, and no consent to any departure by either party therefrom, shall in any event be
effective unless in writing signed by authorized representatives of both parties, and then
only in the specific instance and for the specific purpose given.




5.9 Unless otherwise provided herein, all notices, requests and other communications
required or provided for hereunder shall be in writing (including telecopy or similar
teletransmission or writing) and shall be given at the following addresses:




(1) If to Delta:



	 	 	 
	 

	 	Delta Air Lines, Inc.








 




	
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	 	1030 Delta Boulevard
	 

	 	Atlanta, GA 30354
	 

	 	Dept. 034
	 

	 	Attention; Senior Vice President and Chief Officer of Operations
	 

	 	Telecopy: (404)715-7352







with copies to:



	 	 	 
	 

	 	Delta Connection, Inc.
	 

	 	1025 Virginia Avenue Suite 410
	 

	 	Atlanta, GA 30354
	 

	 	Dept, 009
	 

	 	Attn: Chief Financial Officer
	 

	 	Telecopy: (404) 677-6247
	 
	 	 
	 

	 	Delta Air Lines, Inc.
	 

	 	1030 Delta Boulevard
	 

	 	Atlanta, GA 30354
	 

	 	Dept. 981
	 

	 	Attn: Sr. V.P. and General Counsel
	 

	 	Telecopy: (404)715-2233







(2) If to Operator and Parent:



	 	 	 
	 

	 	Mesa Air Group, Inc.
	 

	 	410 North 44th Street, Suite 700
	 

	 	Phoenix, AZ S5008
	 

	 	Attention: President
	 

	 	Telecopy: (602)685-4350







with copies to:



	 	 	 
	 

	 	Mesa Air Group, Inc.
	 

	 	410 North 44th Street, Suite 700
	 

	 	Phoenix, AZ 85008
	 

	 	Attn: Chief Financial Officer
	 

	 	Telecopy: (602) 685-4352
	 
	 	 
	 

	 	Mesa Air Group, Inc.
	 

	 	410 North 44th Street, Suite 700
	 

	 	Phoenix, AZ 85008
	 

	 	Attn: Vice President & General Counsel
	 

	 	Telecopy: (602)685-4352







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





 




	
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by
air courier, when delivered at the address specified herein. Delta or Operator may change
its address for notice purposes by notice to the other party in the manner provided herein.




5.10 This Agreement shall bind and inure to the benefit of Delta, Operator and Parent and
their respective successors and assigns; provided, however, neither party may assign or
transfer this Agreement or any portion hereof to any person or entity without the express
written consent of the other party. Any assignment or transfer, by operation of law or
otherwise, without such consent shall be null and void and of no force or effect.




5.11 Each party hereby agrees and acknowledges that the existence and contents of this
Agreement are regarded by the other party as being confidential, sensitive, trade secret
information. Accordingly, each party hereby agrees it shall not disclose nor use any such
information without such other party’s prior written consent, which consent may be withheld
in such other party’s sole discretion.



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IN WITNESS WHEREOF, the parties have executed this Agreement by their undersigned duly authorized
representatives:




	 	 	 	 	 	 	 	 	 
	Mesa Air Group, Inc.	 	 	 	Delta Air Lines, Inc.
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Freedom Airlines, Inc.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 







 




	
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EXHIBIT 1.1




Commencement of Payment Obligations




	 	 	 	 	 	 	 
	 	 	 	 	 	 	AGGREGATE
	 	 	 	 	 	 	AMOUNT OF
	 	 	AIRCAFT IN	 	CUMULATIVE	 	MONTHLY PAYMENT
	DATE	 	SERVICE DATE	 	AIRCRAFT	 	OBLIGATION
	July 2005

	 	[*]
	 	[*]
	 	$ [*]
	August 2005

	 	[*]
	 	[*]
	 	$ [*]
	September 2005

	 	[*]
	 	[*]
	 	$ [*]
	October 2005

	 	[*]
	 	[*]
	 	$ [*]
	November 2005

	 	[*]
	 	[*]
	 	$ [*]
	December 2005

	 	[*]
	 	[*]
	 	$ [*]
	January 2006

	 	[*]
	 	[*]
	 	$ [*]
	February 2006

	 	[*]
	 	[*]
	 	$ [*]
	March 2006

	 	[*]
	 	[*]
	 	$ [*]
	April 2006

	 	[*]
	 	[*]
	 	$ [*]
	May 2006

	 	[*]
	 	[*]
	 	$ [*]
	June 2006

	 	[*]
	 	[*]
	 	$ [*]
	July 2006

	 	[*]
	 	[*]
	 	$ [*]
	August 2006 and
thereafter

	 	[*]
	 	[*]
	 	$ [*]








 




	
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EXHIBIT 3.1




 Form of RJ50 Delta Connection Agreement




{see attached}






 




	
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EXHIBIT 4.3




Payment Amounts




	 	 	 	 	 
	Period in which RJ50 Delta Connection Agreement is Terminated	 	Amount of Payment from Mesa to Delta
	1.

	 	Effective Date through 4th Anniversary of Effective Date
	 	$ [*]
	 
	 	 	 	 
	2.

	 	1 Day after 4th Anniversary of Effective Date through
7th Anniversary of Effective Date
	 	$ [*]
	 
	 	 	 	 
	3.

	 	1 Day after 7th Anniversary of Effective Date through
10th Anniversary of Effective Date
	 	$ [*]
	 
	 	 	 	 
	4.

	 	1 Day after the 10th Anniversary of Effective Date
and beyond
	 	$ [*]








 




	
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