Document:

Exhibit
10.31(c)

 

CONFIDENTIAL
TREATMENT

REQUESTED PURSUANT TO
RULE 406

 

AMENDMENT NUMBER
THREE TO

DELTA CONNECTION AGREEMENT

 

This Amendment
Number Three (this “Third Amendment”), dated and effective the
     day of March, 2004, to the Delta Connection Agreement
dated and effective June 7, 2002 as previously amended (the “Agreement”), is
among Delta Air Lines, Inc., 1030 Delta Boulevard, Atlanta, Georgia  30320 (“Delta”), Chautauqua Airlines, Inc.
(“Chautauqua” or  “Operator”), 2500 S.
High School Road, Suite 160, Indianapolis, Indiana 46241 and Republic Airways
Holdings, Inc. (“Republic”), 2500 S. High School Road, Suite 160, Indianapolis,
Indiana 46241.

 

WHEREAS,
Delta, Chautauqua and Republic are parties to the Agreement; and

 

WHEREAS, the
parties desire to further amend the Agreement;

 

NOW,
THEREFORE, for and in consideration of the mutual undertakings set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Delta, Operator and Republic, intending to be legally
bound, hereby agree as follows:

 

1.                                      Defined
Terms.  All terms capitalized
used, but not defined, herein shall have the meaning ascribed to such terms in
the Agreement.

 

2.                                      Addition
/ Replacement of Aircraft.

 

A.                                   Pursuant
to Article 1(A) of the Agreement, eight (8) additional Embraer ERJ 145 aircraft
(the “Third Additional Aircraft”) shall be included as “Aircraft” under the
terms of the Agreement.  Exhibit A
of the Agreement is hereby amended and supplemented by adding the Third Additional
Aircraft with the delivery and in-service dates reflected on Exhibit A-2
attached hereto as Appendix 1.

 

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN
OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE
SECURITIES ACT OF 1933.  THE OMITTED
MATERIALS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

1

 

B.                                     Seven
(7) Embraer ERJ 145 aircraft that are currently in service under the terms of
the Agreement (the “Replaced Aircraft”) shall be taken out of service and
replaced on a permanent basis with a new Embraer ERJ 145 aircraft (the
“Substitute Aircraft”), in some cases after being first replaced on an interim
basis with a temporary substitute aircraft (the “Temporary Substitute
Aircraft”), in each case as provided on Exhibit A-3 attached hereto as Appendix
2.  Exhibit A of the
Agreement is hereby further amended and supplemented by such Exhibit A-2.  As each Replaced Aircraft is taken out of
service it shall no longer constitute an “Aircraft” under the terms of the
Agreement.  As each Substitute Aircraft
is placed into service, it shall be included as an “Aircraft” under the terms
of the Agreement.  Each Temporary
Substitute Aircraft shall be included as an “Aircraft” under the terms of the
Agreement only during the period that it is operated under the terms of this
Agreement.  Each of the Replaced
Aircraft and Temporary Substitute Aircraft shall be deemed to be a Repositioned
Aircraft at such time as each such aircraft is taken out of service under the
terms of this Agreement, and Delta waives its rights under Article 2.D(i) of
the Agreement with respect to such aircraft.

 

3.                                      Other
Reimbursable Costs.

 

Article 3.B(2) of the Agreement shall be
deleted and replaced with the following:

 

“Start-Up Training Costs
associated with operating the Aircraft; provided, however, in no event shall
Delta be required to reimburse Chautauqua for such costs in the aggregate in
excess of (a) [ * ] multiplied by (b) the maximum number of Aircraft in service
at any time during the Term; provided, however, that Chautauqua shall not be
entitled to receive Start-Up Training Costs in respect of the Substitute
Aircraft or the Temporary Substitute Aircraft.”

 

4.                                      Annual
Operating Plan.

 

A.                                   The
provisions of the first five sentences of Article 3(E) of the Agreement shall
not apply to the Annual Operating Plan for calendar years 2005, 2006, 2007 or
2008.  In lieu of the annual rate
setting procedure, and except as provided below with respect to the Third
Additional Aircraft, (i) for calendar year 2005 the Base Rate Costs to be paid
by Delta to Operator shall be as set forth on Appendix 1 of Amendment Number
Two to the Agreement; and (ii) for each of calendar years 2006, 2007 and 2008,
effective January 1 of such year, the Base Rate Costs shall increase from the
Base Rate Costs (as escalated) applicable to the prior calendar year by the
prior calendar year’s CPI [ * ].

 

B.                                     For
the Third Additional Aircraft only, the Base Rate Costs (i) for calendar year
2005 shall be the amounts set forth on Appendix 3 hereto under the
column “2005 – ERJ 145 – 8,” (ii) for calendar year 2006 shall be the amounts
set forth on Appendix 3 hereto under the column “2006 – ERJ 145 – 8,”
increased by CPI for calendar year 2005 [ * ], and (iii) for calendar year 2007
shall be the amounts set forth on Appendix 3 hereto under the column
“2007 – ERJ 145 – 8,” increased by CPI for calendar year 2005 [ * ], and such
increased amount further increased by CPI for calendar year 2006 [ * ].  Beginning on January 1, 2008, the Base Rate
Costs for the Third Additional Aircraft shall be [ * ] as the Base Rate Costs
for the other Aircraft.

 

* Confidential

 

2

 

C.                                     For
purposes of this provision, “CPI” shall mean the Consumer Price Index, U.S.
City Average, Urban Wage Earners and Clerical Workers, All Items (base index
year 1982-1984 = 100) as published by the U.S. Department of Labor, Bureau of
Labor Statistics.  If the manner in
which the Consumer Price Index as determined by the Bureau of Labor Statistics
shall be substantially revised, including, without limitation, a change in the
base index year, an adjustment shall be made by the parties in such revised
index which would produce results equivalent, as nearly as possible, to those
which would have been obtained if such Consumer Price Index had not been so
revised.  If the Consumer Price Index
shall become unavailable or in information is not readily available to enable
the parties to make the adjustment referred to in the preceding sentence, the
parties shall mutually agree to substitute therefore a comparable index based
upon changes in the cost of living or purchasing power of the consumer dollar
published by any other U.S. governmental agency or, if no such index shall be
available, a comparable index published by a major bank or other financial
institution or by a university or a recognized financial publication.  Notwithstanding anything herein to the
contrary, for purposes of this Third Amendment and the Agreement, CPI shall
not, in any event, exceed [ * ] per year.

 

5.                                      Term
& Termination.

 

A.                                   The
first two sentences of Article 11.A of the Agreement shall be deleted and
replaced with the following:

 

“This Agreement is effective on
the date first written above and shall continue until May 31, 2014 (such
period, and any extension or renewal thereof, the “Term”).  At the end of such initial Term, Delta shall
have the right to extend the term of the Agreement for an additional five (5)
years on the same terms and conditions.”

 

B.                                     The
first sentence of Article 11.F of the Agreement shall be deleted and replaced
with the following:

 

“Notwithstanding the provisions
of Sections 11(A), (B), (C), (D) and (E) hereof, Delta may terminate this
Agreement, with or without cause, in its sole discretion, in whole or in part,
on not less than one hundred eighty (180) days’ prior written notice to
Operator; provided, however, that such notice shall not be given prior to
November 30, 2008, and provided further, that Delta may not reduce the number
of Aircraft in service to a number that is less than twelve (12) other than
through a complete termination of the Agreement.”

 

6.                                      Warrant.  Pursuant to Article 19(D) of the Agreement,
simultaneously with the execution of this Third Amendment, Republic shall issue
to Delta a warrant to purchase 480,000 shares of Republic Common Stock in the
form attached hereto as Appendix 4 (the “Third Additional Warrant”).

 

7.                                      Future
Additional Aircraft.                                             The
parties agree that in the event that any additional aircraft are added to the
Aircraft to be operated by Chautauqua pursuant to the terms and conditions of
the Agreement, a mutually agreed upon productivity slider shall be incorporated
into any corresponding and subsequent annual rate setting procedure and Annual
Operating Plan.

 

* Confidential

 

3

 

8.                                      Miscellaneous.

 

A.                                   This Third
Amendment, together with the Appendices attached hereto, and the Third
Additional Warrant, constitute the entire understanding of the parties with
respect to the subject matter hereof, and any other prior or contemporaneous
agreements, whether written or oral, are expressly superseded hereby.

 

B.                                     This Third
Amendment may be executed in any number of counterparts, each of which shall be
deemed an original and all of which, taken together, shall constitute one and
the same instrument.

 

C.                                     Except as
specifically stated herein, all other terms and conditions of the Agreement
shall remain in full force and effect.

 

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

 

 

	
  Chautauqua Airlines, Inc.

  	
  Delta Air Lines, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Bryan
  Bedford

  	
   

  	
  By:

  	
  /s/ Fred
  Buttrell

  	
   

  
	
  Name: Bryan
  Bedford

  	
  Name: Fred
  Buttrell

  
	
  Title:
  President

  	
  Title:
  President & CEO Delta Connection

  
						

 

 

	
  Republic Airways Holdings, Inc.

  
	
   

  
	
  By:

  	
  /s/ Bryan
  Bedford

  	
   

  
	
  Name: Bryan
  Bedford

  
	
  Title:
  Chairman

  

 

4

 

Appendix 1

 

Exhibit A-2

 

Third Additional Aircraft

 

	
  Aircraft No

  	
   

  	
  Model

  	
   

  	
  Delivery
  Date

  	
   

  	
  In Service
  Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DL-40

  	
   

  	
  145

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DL-41

  	
   

  	
  145

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DL-42

  	
   

  	
  145

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DL-43

  	
   

  	
  145

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DL-44

  	
   

  	
  145

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DL-45

  	
   

  	
  145

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DL-46

  	
   

  	
  145

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DL-47

  	
   

  	
  145

  	
   

  	
  Sept-05

  	
   

  	
  the month
  after delivery date

  

 

* Confidential

 

5

 

Appendix 2

 

Exhibit A-3

 

	
  Replaced

  Aircraft

  	
   

  	
  Out of

  Service

  Date

  	
   

  	
  Substitute
  Aircraft

  & In Service Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  N290SK

  	
   

  	
  [ * ]

  	
   

  	
  Replace with
  new ERJ 145 in [ * ].

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  N292SK

  	
   

  	
  [ * ]

  	
   

  	
  Replace
  temporarily (until [ * ]) with ERJ 135 in [ * ]; replace with new ERJ 145 in
  [ * ].

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  N294SK

  	
   

  	
  [ * ]

  	
   

  	
  Replace
  temporarily (until [ * ]) with ERJ 135 in [ * ]; replace with new ERJ 145 in
  [ * ].

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  N296SK

  	
   

  	
  [ * ]

  	
   

  	
  Replace with
  new ERJ 145 in [ * ].

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  N271SK

  	
   

  	
  [ * ]

  	
   

  	
  Replace with
  new ERJ 145 in [ * ].

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  N269SK

  	
   

  	
  [ * ]

  	
   

  	
  Replace with
  new ERJ 145 in [ * ].

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  N270SK

  	
   

  	
  Nov-04

  	
   

  	
  Replace with
  new ERJ 145 in Nov-04.

  

 

* Confidential

 

6

 

Appendix 3

 

Third Additional Aircraft - Base Rate Costs for 2005-07

 

 

	
   

  	
   

  	
  2005

  ERJ 145

  	
   

  	
  2006

  ERJ 145

  	
   

  	
  2007

  ERJ 145

  	
   

  
	
  # of Aircraft

  	
   

  	
  8

  	
   

  	
  8

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Per Scheduled AC Per Day

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Per BH

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Per FH

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Per Departure

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Per Day

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  

 

* Confidential

 

7

 

Appendix 4

 

Form of Third Additional Warrant

 

[see attached]

 

See Exhibit 10.28(c)

 

8Exhibit 10.32

 

REPUBLIC AIRWAYS HOLDINGS INC.

(FKA WEXFORD AIR HOLDINGS INC.)

(FKA WEXFORD III CORP.)

NOTE DUE MAY 13, 2004

$20,391,996.04                                                                                                                                               May
14, 2003

FOR THE VALUE RECEIVED of
full satisfaction of principal and interest due WexAir, LLC by Republic Airways
Holdings Inc. (FKA Wexford Air Holdings Inc., FKA Wexford III Corp.) under its
Note due May 13, 2004, the undersigned, Republic Airways Holdings Inc. (FKA
Wexford Air Holdings Inc., FKA Wexford III Corp.) (herein called the
“Company”), a corporation organized and existing under the laws of the State of
Delaware, hereby promises to pay to the order of WexAir, LLC the principal sum
of Twenty Million Three Hundred Ninety One Thousand, Nine Hundred Ninety Six
Dollars and Four Cents on May 13, 2004, or if such day is a Saturday, Sunday or
any day in which banks located in the State of New York are authorized or
obligated to close, then on the next day which is not a Saturday, Sunday or day
in which banks located in the State of New York are authorized or obligated to
close, or on such earlier date as the Company may specify in written notice to
WexAir, LLC, with interest (computed on the basis of a 360-day year of twelve
30-day months and compounded semiannually) (a) on the unpaid balance thereof at
the rate of 7.5% per annum from the date hereof, payable at maturity which
interest rate reflects the increased cash flow needs of the Company and its
subsidiaries, and (b) to the extent permitted by law, on any overdue payment
(including any overdue prepayment) of principal and any overdue payment of
interest, payable as aforesaid (or, at the option of the holder hereof, on
demand), at a rate per annum from time to time equal to the greater of (i) 15%
or (ii) 5% over the rate of interest publicly announced by the JPMorgan Chase
Bank from time to time in New York, New York as its “base” or “prime” rate.

Payments of principal of
and interest on this Note are to be made in lawful money of the United States
of America at the office of the Company or at such other place as the Company
shall have designated by written notice to the holder of this Note.

The Company agrees, and
the holder agrees that the indebtedness evidenced by this Note is subordinate
in right of payment, to the extent and in the manner provided in this paragraph,
to the prior payment in full of all Senior Debt, and that the subordination is
for the benefit of the holders of Senior Debt. “Senior Debt” means any
indebtedness for borrowed money, or any guarantee of such indebtedness, of the
Company outstanding at any time except debt that by its terms is not senior in
right of payment to this Note. Upon any distribution to creditors of the
Company in a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, (1) holders of Senior Debt shall be entitled to
receive payment in full in cash of the principal of and interest (including
interest accruing after the commencement of any such proceeding) to the date of
payment on the Senior Debt before the holder shall be entitled to receive any
payment of principal of or interest on this Note; and (2) until the Senior Debt
is paid in full in cash, any distribution to which the holder would be entitled
but for this paragraph shall be made to holders of Senior Debt as their
interests may appear. The Company may not pay principal of or interest on this
Note and may not acquire this Note for cash or property other than capital
stock of the 

 

Company if a default on
Senior Debt occurs and is continuing that permits holders of such Senior Debt
to accelerate its maturity, and if a distribution is made to the holder that
because of this paragraph should not have been made to it, the holder who
receives the distribution shall hold it in trust for holders of Senior Debt and
pay it over to them as their interests may appear. After all Senior Debt is
paid in full and until this Note is paid in full, the holder shall be
subrogated to the rights of holders of Senior Debt to receive distributions
applicable to Senior Debt to the extent that distributions otherwise payable to
the holders have been applied to the payment of Senior Debt. Nothing in this
paragraph shall impair, as between the Company and the holder, the obligation
of the Company, which is absolute and unconditional, to pay principal of and
interest on this Note in accordance with its terms.

The Company may prepay
this Note, in whole or in part, at any time together with interest accrued to
the date of such prepayment.

If the Company defaults
in the payment of any amount due hereon when due, and payable, the principal of
this Note together with all accrued and unpaid interest hereon may be declared
due and payable by the holder by notice to the Company.

This Note, and the rights
associated herewith, may be transferred by the Holder only by surrender to the
Maker for reissuance along with appropriate transfer instructions, The Maker
shall reissue this Note as and when requested by the Holder at any time prior
to its maturity in accordance with those instructions.

	
   

  	
  REPUBLIC AIRWAYS
  HOLDINGS INC.

  
	
   

  	
  (FKA WEXFORD AIR
  HOLDINGS INC.,

  
	
   

  	
  FKA WEXFORD III CORP.)

  
	
   

  	
   

  
	
   

  	
  By: /s/ Robert Hal
  Cooper         

  
	
   

  	
  Name: Hal Cooper

  
	
   

  	
  Title: Executive Vice
  President

  
	
   

  	
   

  

 

 

2

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