Document:

Exhibit 10.39

CONFIDENTIAL TREATMENT

REQUESTED PURSUANT TO RULE 406

 

EMBRAER-170

 

PURCHASE AGREEMENT DCT-
014/2004

 

between

 

EMBRAER - EMPRESA BRASILEIRA DE AERONÁUTICA S.A.

 

and

 

REPUBLIC AIRLINE, INC.

 

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.

 

 

	
  INDEX

  
	
   

  	
  ARTICLE

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
   

  
	
  2.

  	
  SUBJECT

  	
   

  
	
  3.

  	
  PRICE

  	
   

  
	
  4.

  	
  PAYMENT

  	
   

  
	
  5.

  	
  DELIVERY

  	
   

  
	
  6.

  	
  CERTIFICATION

  	
   

  
	
  7.

  	
  ACCEPTANCE AND TRANSFER OF OWNERSHIP

  	
   

  
	
  8.

  	
  STORAGE CHARGE

  	
   

  
	
  9.

  	
  DELAYS IN DELIVERY

  	
   

  
	
  10.

  	
  INSPECTION AND QUALITY CONTROL

  	
   

  
	
  11.

  	
  CHANGES

  	
   

  
	
  12.

  	
  WARRANTY

  	
   

  
	
  13.

  	
  PRODUCT SUPPORT PACKAGE

  	
   

  
	
  14.

  	
  ASSIGNMENT

  	
   

  
	
  15.

  	
  RESTRICTIONS AND PATENT INDEMNITY

  	
   

  
	
  16.

  	
  MARKETING PROMOTIONAL RIGHTS

  	
   

  
	
  17.

  	
  TAXES

  	
   

  
	
  18.

  	
  APPLICABLE LAW

  	
   

  
	
  19.

  	
  ARBITRATION

  	
   

  
	
  20.

  	
  SOVEREIGN IMMUNITY, VENUE AND FORUM NON
  CONVENIENS

  	
   

  
	
  21.

  	
  TERMINATION

  	
   

  
	
  22.

  	
  RIGHT TO PURCHASE THE CONDITIONAL AIRCRAFT

  	
   

  
	
  23.

  	
  OPTION FOR THE PURCHASE OF ADDITIONAL
  AIRCRAFT

  	
   

  
	
  24.

  	
  NOTICES

  	
   

  
	
  25.

  	
  CONFIDENTIALITY

  	
   

  
	
  26.

  	
  INTEGRATED AGREEMENT

  	
   

  
	
  27.

  	
  NEGOTIATED AGREEMENT

  	
   

  
	
  28.

  	
  COUNTERPARTS

  	
   

  
	
  29.

  	
  ENTIRE AGREEMENT

  	
   

  
	
  30.

  	
  NO WAIVER

  	
   

  
	
  31.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
					

 

ATTACHMENTS

 

“A” - AIRCRAFT CONFIGURATION, FINISHING AND
REGISTRATION MARKS

 

“B” - FERRY EQUIPMENT AND PRODUCT SUPPORT
PACKAGE

 

“C” - WARRANTY CERTIFICATE - MATERIAL AND
WORKMANSHIP

 

“D”- PRICE ESCALATION FORMULA

 

 

“E” - DIRECT MAINTENANCE COST GUARANTEE

 

“F” - SCHEDULE RELIABILITY GUARANTEE

 

“G” - SERVICE LIFE GUARANTEE

 

“H” - PERFORMANCE GUARANTEE

 

“I” - AUTHORIZED REPRESENTATIVE APPOINTMENT

 

“J” - FORM OF WARRANTY BILL OF SALE

 

“K” - FORM OF GUARANTEE

 

 

PURCHASE AGREEMENT DCT-014/2004

 

THIS AGREEMENT IS ENTERED INTO THIS 19th DAY
OF MARCH 2004, BY AND BETWEEN EMBRAER - EMPRESA BRASILEIRA DE AERONÁUTICA
S.A. AND REPUBLIC AIRLINE, INC., FOR THE PURCHASE AND SALE OF EMBRAER AIRCRAFT.

 

THE SALE COVERED BY THIS AGREEMENT SHALL BE
GOVERNED SOLELY BY THE TERMS AND CONDITIONS HEREIN SET FORTH, AS WELL AS BY THE
PROVISIONS SET FORTH IN THE ATTACHMENTS HERETO.

 

THIS AGREEMENT SHALL NOT BE EFFECTIVE UNLESS
AND UNTIL IT IS SIGNED BY AN AUTHORIZED OFFICER OF REPUBLIC AIRLINE, INC. AND
EXECUTED BY TWO AUTHORIZED OFFICERS OF EMBRAER - EMPRESA BRASILEIRA DE
AERONÁUTICA S.A.

 

1.                                       DEFINITIONS

 

For the purpose of this Agreement, the
Parties hereby adopt the following definitions and, unless otherwise expressly
provided, the singular includes the plural and the masculine includes the
feminine and neutral genders:

 

1.1                     “Actual Delivery Date”: shall mean, with
respect to each Aircraft, the date on which Buyer obtains title to that
Aircraft in accordance with Article 7.

 

1.2                     “AD’s”: shall mean Airworthiness Directives
issued by either the CTA or the Aviation Authority, in connection with and with
respect to the Aircraft.

 

1.3                     “Agreement”: shall mean this Purchase
Agreement DCT-014/2004, its Attachments and any Letter Agreement between the
Parties executed on the date hereof.

 

1.4                     “Aircraft”: shall mean the EMBRAER 170 LR
aircraft (certification designation ERJ 170-100 LR) (the “EMBRAER 170
Aircraft”) or, where there is more than one of such Aircraft, each of the
EMBRAER 170 Aircraft, manufactured by Embraer for sale to Buyer pursuant to
this Agreement (which for the avoidance of doubt shall include Firm Aircraft,
Conditional Aircraft and Option Aircraft) according to the Preliminary
Technical Description PTD 170 – Rev.4 dated as of May 2003 (which, although not
attached hereto, is incorporated herein by reference) and the Aircraft
configuration described in Attachment “A”, and as may be amended from time to
time as specified in Article 11.  [*]

 

1.5                     “Aviation Authority”: shall mean United
States Federal Aviation Administration or FAA.

 

1.6                     “Basic Price”: shall mean the Aircraft total
price, effective on the date of execution of this Agreement contained in
Article 3.1 or, in case of revision thereof, on the date of its revision.

 

1.7                     “Buyer”: shall mean Republic Airline, Inc.,
a Delaware corporation with its principal place of business at 2500 S. High
School Road, Indianapolis, Indiana 46241, United States or its assignee
pursuant to Article 14.

 

*   Confidential

 

1.8                     “Business Day(s)”: shall mean days on which
the banks in each of New York, New York, United States and São Paulo, and São
José dos Campos, S.P. Brazil are open for the normal transaction of business.

 

1.9                     “Conditional Aircraft”: shall be the
additional EMBRAER-170 LR aircraft that Buyer shall have the right to purchase
as per the terms of Article 22.

 

1.10               “Contractual Delivery Date”: shall mean for
any Firm Aircraft the delivery date referred to in Article 5 for such Firm
Aircraft.

 

1.11               “CTA”: shall mean the Aerospace Technical
Center of the Brazilian Ministry of Aeronautics.

 

1.12               “Embraer”: shall mean Embraer - Empresa
Brasileira de Aeronáutica S.A., a Brazilian corporation with its principal
place of business at Av. Brigadeiro Faria Lima, 2170 - Putim, São José
dos Campos, São Paulo, Brazil.

 

1.13               “Excusable Delay”: shall have the meaning assigned
to such term in Article 9.1.1.

 

1.14               “FAA”: shall mean the Federal Aviation
Administration of the United States of America.

 

1.15               “Firm Aircraft”: shall mean the Aircraft
specified in Article 2.1.

 

1.16               “Non-Excusable Delay”: any delay in the
delivery of an Aircraft or in the performance of any act by Embraer under this
Agreement that is not an Excusable Delay.

 

1.17               “Option Aircraft”: shall be the additional
EMBRAER-170 LR aircraft that Buyer shall have the option to purchase as per the
terms of Article 23.

 

1.18               “Parties”: shall mean Embraer and Buyer.

 

1.19               “Product Support Package”: shall mean the
products and Services to be provided by Embraer as per Article 13.

 

1.20               “Purchase Price”: shall mean the Aircraft
total price, effective on the relevant Aircraft Contractual Delivery Date,
resulting from the application of the escalation formula contained in
Attachment “D” to the Basic Price as set forth in Article 3.3.

 

1.21               “Services”: shall mean the familiarization
and on-site support for the Aircraft, part of the Product Support Package, as
specified in Attachment “B”.

 

1.22               “Technical Publications”: shall mean the
technical documentation pertaining and related to the Aircraft as listed in
Exhibit 1 to Attachment “B”.

 

References to Articles or Attachments in the
main body of this Purchase Agreement shall be deemed to be references to
Articles of or Attachments to this Agreement, respectively, except as the
context requires otherwise.

 

 

2.              SUBJECT

 

Subject to the terms and conditions of this
Agreement:

 

2.1                     Embraer shall sell and deliver and Buyer
shall purchase and take delivery of thirteen (13) Aircraft;

 

2.2                     Embraer shall provide to Buyer the Services
and the Technical Publications;

 

2.3                     Buyer shall have the right to purchase up to
twelve (12) Conditional Aircraft, in accordance with Article 22; and

 

2.4                     Buyer shall have the option to purchase up
to twenty-five (25) Option Aircraft, in accordance with Article 23.

 

3.              PRICE

 

Subject to the terms and conditions of this
Agreement:

 

3.1                     Buyer agrees to pay Embraer, in United
States dollars, for each Aircraft the per unit Basic Price of [*]
economic conditions.

 

3.2                     The Services and Technical Publications are
to be provided [*] Additional technical publications as well as other
services shall be billed to Buyer in accordance with Embraer’s rates prevailing
at the time Buyer places a purchase order for such additional technical
publications or other services.

 

3.3                     The Basic Price for an Aircraft shall be
escalated according to the escalation formula contained in Attachment “D”. Such
price as escalated shall be the Aircraft Purchase Price and it will be provided
by Embraer to Buyer [*] prior to each Aircraft Contractual
Delivery Date.

 

4.              PAYMENT

 

4.1                     To secure the Firm Aircraft delivery
positions set forth in Article 5.1 and to ensure delivery of the Firm
Aircraft in accordance with the Contractual Delivery Dates, Buyer shall pay
Embraer for each Firm Aircraft in accordance with the terms and conditions
contained in this Article 4. The Parties acknowledge that each of the Firm
Aircraft and the corresponding delivery positions have been reserved for
purchase by Buyer and such Firm Aircraft have been removed from the market.
Buyer has already paid to Embraer prior to the execution of this Agreement a [*]
deposit per Firm Aircraft (the “Initial Deposit”). Upon execution of this
Agreement by the Parties the Initial Deposit shall be [*] and shall be considered
part of the progress payment for each relevant Firm Aircraft. The amounts
specified in this Article 4.1 shall be paid by Buyer by wire transfer in
immediately available United States dollars funds, to such bank account in the
United States as directed by Embraer to Buyer [*] prior to the date of
payment, as follows:

 

4.1.1                        A [*] progress payment [*] shall become due and
payable [*]
prior to the relevant Contractual Delivery Date for such Aircraft.

 

4.1.2                        A [*] progress payment [*] shall become due and
payable [*]
prior to the relevant Contractual Delivery Date for such Aircraft.

 

*   Confidential

 

4.1.3                        A [*] progress payment of the Basic Price for
each Firm Aircraft shall become due and payable [*] prior to the relevant
Contractual Delivery Date for such Aircraft.

 

4.1.4                        The balance of the Purchase Price for a Firm
Aircraft shall become due and payable at the time Buyer is required to accept
delivery of such Firm Aircraft pursuant to Article 7.

 

Progress payments shall be due on the dates
specified in Articles 4.1.1 through 4.1.3 except if any such date is not a
Business Day in which case the progress payment shall be due [*].  Any progress payment that would otherwise be
due [*]
shall be due [*].  Progress payments
shall be nonrefundable, except as otherwise expressly provided in this
Agreement.

 

4.2                     Late Payments: Interest will accrue at the
rate of [*]
percent [*]
per month or pro rated on any part thereof on any amount not paid to Embraer as
set forth in Articles 4.1.1 through 4.1.4, from the date on which such payments
should have been made as therein set forth, until (and excluding) the actual
receipt by Embraer of such amounts. 
Without prejudice to Embraer’s rights set forth in Article 4.3,
interest accrued will be invoiced by Embraer on a monthly basis, beginning one
month after date on which payments should have been made, and payment thereof
shall be made by Buyer in accordance with the instructions contained therein.

 

4.3                     Termination for failure to make payments:

 

In case of a late payment as per the terms
and conditions contained in Article 4.2, Embraer shall grant Buyer a [*]
period within which to make the required payment and shall refrain from sending
out the termination notice referred to below for the [*] period. Such [*]
period shall apply only to the [*]. 
Such [*] period shall under no circumstances apply to payments due
pursuant to Article 4.1.4.  If
Buyer fails [*] to make any progress payment for any Aircraft when due,
Embraer shall be entitled to exercise its termination right pursuant to this
paragraph without waiting for the expiration of the above referenced [*]
period. In the event Embraer does not receive any payment required by Articles
4.1.1 through 4.1.3 within [*] after Buyer receives written notice
from Embraer of its failure to receive the payment, Embraer shall have the
right to either (i) postpone, at its sole criteria, the relevant Aircraft’s
Contractual Delivery Date; or (ii) terminate this Agreement in relation to the
affected Aircraft in accordance with Article 21.3.

 

5.              DELIVERY

 

5.1                     Aircraft: Subject to payment in accordance
with Article 4 and the provisions of Articles 7 and 9, Embraer shall offer
the Firm Aircraft to Buyer for inspection, acceptance and subsequent delivery
in fly away factory (“FAF”) condition, with the Aircraft to be flown away from
Embraer’s facilities by Buyer) in compliance with this Agreement, at São José
dos Campos, Brazil [*] pursuant to Article 7.1 (the
“Contractual Delivery Date”):

 

*   Confidential

 

	
  Firm

  A/C

  	
   

  	
  Delivery

  Month

  
	
  1

  	
   

  	
  Jun 2004

  
	
  2

  	
   

  	
  [*]

  
	
  3

  	
   

  	
  [*]

  
	
  4

  	
   

  	
  [*]

  
	
  5

  	
   

  	
  [*]

  
	
  6

  	
   

  	
  [*]

  
	
  7

  	
   

  	
  [*]

  
	
  8

  	
   

  	
  [*]

  
	
  9

  	
   

  	
  [*]

  
	
  10

  	
   

  	
  [*]

  
	
  11

  	
   

  	
  [*]

  
	
  12

  	
   

  	
  [*]

  
	
  13

  	
   

  	
  Mar 2005

  

 

6.              CERTIFICATION

 

6.1                     The Aircraft shall be “Type Certified”
pursuant to the Aviation Authority airworthiness requirement FAR Part 25 amendment
25-1 through 25-98 effective on 10/March/99. The Aircraft shall
comply with the operational requirements of the Aviation Authority, except for
the items that are under Buyer’s regulatory responsibility pursuant to the
operational requirements of the FAR’s which are not otherwise required to be
provided by Embraer under this Agreement.

 

6.2                     The Aircraft shall be delivered to Buyer
with an export certificate of airworthiness issued by the CTA stating that the
aircraft meets the “Type Design” approved by the Aviation
Authority. The condition of the Aircraft on delivery and the documentation
delivered with the Aircraft, including the above mentioned export certificate
of airworthiness, shall enable Buyer to obtain an Aviation Authority
certificate of airworthiness. Subject to the above, it shall be Buyer’s
responsibility to obtain such certificate of airworthiness for the registration
of the Aircraft with the Aviation Authority, at Buyer’s sole expense.  Embraer shall assist Buyer, at Buyer’s
request and expense, in obtaining such certificate of airworthiness from the
Aviation Authority.  [*]

 

7.              ACCEPTANCE
AND
TRANSFER OF OWNERSHIP

 

7.1                     Unless Embraer notifies Buyer otherwise, the
Aircraft shall be delivered in accordance with the provisions and
schedule specified in Article 5 herein. Embraer shall give Buyer [*]
advance notice of the date on which Embraer considers that each Aircraft will
be ready for delivery in the condition specified herein. Upon successful
completion of ground and flight tests performed by Embraer, Embraer will give
Buyer [*]
advance notice of the day that the Aircraft concerned is ready for inspection
by Buyer.

 

7.2                     Buyer shall be allowed a reasonable period
of time to conduct a ground inspection and an acceptance flight or flights
(together, the “Inspection”) of each Aircraft prior to its delivery. [*].
After such acceptance flight and if Buyer accepts the Aircraft in accordance
with this Article 7, such Aircraft will be delivered by Embraer to Buyer
in accordance with Article 6 hereof [*].

 

7.3                     Buyer shall accept the Aircraft provided, in
the reasonable determination of Buyer, the Aircraft meets the terms and
conditions of this Agreement. 
Immediately after such acceptance, Buyer shall make the payments due, if
any, with respect to such Aircraft according to Article 4 and accept
delivery of such

 

*   Confidential

 

Aircraft, whereupon [*] title and risk of loss
will be transferred by Embraer to Buyer and Embraer shall execute the necessary
title and risk transfer documents required in order to effect title transfer,
including but not limited to an FAA form Bill of Sale and a Warranty Bill of Sale
substantially in the form attached hereto as Attachment “J”.  [*]

 

7.4                     If Buyer declines to accept an Aircraft
after its Inspection because the Aircraft failed to meet the terms of this
Agreement, Buyer shall promptly give Embraer notice of all specific reasons for
such refusal and Embraer shall have [*] commencing on the first Business Day
after receipt of such notice, to take all necessary actions [*]
in order to resubmit the Aircraft to Buyer for re-inspection

 

7.5                     Subsequent to a refusal of acceptance pursuant
to Article 7.4, Buyer shall inspect the Aircraft, as provided for in
Article 7.2, within [*] after [*] from Embraer that all
necessary actions were taken (“Reinspection”). All costs of such Reinspection [*].

 

7.6                     Should Buyer or Embraer fail to comply with
the procedures specified in this Article 7, the other party shall not be
held liable for any delays in delivery resulting from such failure.

 

7.7                     Should Buyer not perform its obligations in
accordance with this Article 7 within [*], 
Embraer shall be entitled to [*] its obligations in accordance with this
Article 7, [*].  Embraer shall be
entitled to [*] pursuant to Article 21.3.

 

7.8                     Embraer agrees to indemnify and hold
harmless Buyer and Buyer’s officers, directors, agents, employees and assignees
from and against all liabilities, damages, losses, judgments, claims and suits,
including costs and expenses incident thereto, which may be suffered by,
accrued against, be charged to or recoverable from Buyer and/or Buyer’s
officers, directors, agents, employees and assignees by reason of loss or
damage to property, or injury or death of any person, resulting from or in any
way connected with the tests on the ground or in flight on or prior to Actual
Delivery Date of each Aircraft, except to the extent attributable to the gross
negligence or willful misconduct of Buyer, its officers, directors, agents,
employees and assignees.

 

7.9                     Buyer shall be permitted to delegate its
duties in this Article 7 as to the physical inspection, reinspection, and
acceptance and delivery of the Aircraft to its authorized representative in the
form attached hereto as Attachment “I”.

 

7.10               In the event that Buyer has otherwise
complied with provisions of this Agreement, [*] and Buyer has not
received prior to the relevant Aircraft’s Contractual Delivery Date the
following:  

 

i) a
material portion of the Services provided for in [*]  

 

ii) at
least one copy of each technical publication referred to in Article 2.2 of
Attachment “B” [*] and  

 

iii) a
material portion of IP Spares (as defined in Attachment “B”),

 

then Buyer [*] until Buyer receives such
things, unless otherwise agreed by the Parties.  

 

*   Confidential

 

In the event an Aircraft delivery is delayed
by Buyer under the terms and conditions of this Article 7.10, [*].

 

[*]

 

8.              STORAGE CHARGE

 

8.1                     A storage charge equal to [*]
per day shall be charged by Embraer to Buyer commencing on:

 

8.1.1                        Buyer’s failure to perform Inspection or
Reinspection of an Aircraft, per the date or time period specified in writing
by Embraer, according to Article 7 until such Inspection or Reinspection
is performed.

 

8.1.2                        Buyer’s default in taking title to such
Aircraft when required and making the payment then due, until such payment is
made.

 

8.1.3                        Buyer’s failure within [*] after title transfer to
remove an Aircraft from Embraer’s facilities.

 

Storage charges shall end as provided above
or, if earlier on i) Buyer’s and Embraer’s agreement to end such storage
charge, ii) removal of the relevant Aircraft from Embraer’s facilities or iii)
in the event this Agreement with respect to such Aircraft is terminated in
accordance with Article 21.3.

 

If however, Buyer notifies Embraer in writing
[*]
days in advance of its expected delay in the performance of its obligations set
forth in this Article 8, the storage charge shall commence [*]
day after the occurrence of the events set forth in this Article 8.1.

 

8.2                     In the event that an Aircraft’s Contractual
Delivery Date must be extended by Embraer from that which is designated in
Article 5, due to Buyer’s failure to perform any action or provide any
information required to be performed or provided by Buyer by this Agreement
other than the ones specified in the preceding items, and the Aircraft
otherwise was to be delivered on the Contractual Delivery Date, the storage
charge shall commence [*] day after the Contractual Delivery Date
relative to such Aircraft.

 

8.3                     Buyer shall pay the storage charge set forth
in Article 8.1 and 8.2, as applicable, per each month of delay or part
thereof, within [*] after the presentation of each invoice by Embraer.

 

9.              DELAYS
IN
DELIVERY

 

9.1                     Excusable Delays:

 

9.1.1                        Embraer shall not be held liable or be found
in default for any delays in the delivery of an Aircraft or in the performance
of any act to be performed by Embraer under this Agreement, resulting from the
following events or occurrences, hereinafter referred to as “Excusable Delays”:
(a) force majeure [*], or (b) any delay to the extent
resulting from any failure by Buyer to perform any action or provide any information
contemplated by this Agreement.

 

*   Confidential

 

9.1.2                        Within [*] after the occurrence of any of the
above mentioned events which constitute causes of Excusable Delays in delivery
of an Aircraft or in the performance of any act to be performed by Embraer
under this Agreement, Embraer shall send a notice to Buyer, with a requested
acknowledgment of receipt, including a description of details involved and an
estimate of the effects expected upon the timing of the performance of its
contractual obligations.

 

9.1.3                        Any such Excusable Delays shall extend the
time for delivery of an Aircraft [*]. 
Embraer undertakes to use all commercially reasonable efforts whenever
possible to avoid or remove any such cause of delay and to minimize its effect
on the Contractual Delivery Date of an Aircraft.

 

9.1.4                        If the cause of such Excusable Delay is such
as to last longer than [*] days or to render the performance of
this Agreement impossible, then Buyer shall have the option to terminate this
Agreement without liability to either Party, in accordance with
Article 21.2.

 

9.2                     Non-Excusable Delays:

 

9.2.1                        If the delivery of an Aircraft is delayed,
not as a result of an Excusable Delay, by more than [*] days after the
Contractual Delivery Date for such Aircraft, Buyer will be entitled to elect to
receive in accordance with Article 9.2.3 from Embraer liquidated damages
as compensation for such delay equal to [*], for each day of delay in excess of the
above mentioned [*] calendar days, up to the date that the Aircraft is ready
for delivery and available to Buyer by means of confirmation of the successful
completion of ground and flight tests performed by Embraer, to be provided per
Article 7.1, it being understood that such liquidated damages will not, in
any event, exceed [*] and that it will only be due and
payable by Embraer to Buyer after Buyer pays to Embraer the total Aircraft
Purchase Price.  [*]

 

9.2.2                        The grace period of [*], granted by Buyer to
Embraer as mentioned in Article 9.2.1 shall only apply if Embraer provides
notice to Buyer advising of the expected delay [*].

 

9.2.3                        If, with respect to a delayed Aircraft,
Embraer does not receive notice for [*] as mentioned in paragraph 9.2.1, from
Buyer within [*] after the Actual Delivery Date of such Aircraft, Buyer
shall be deemed to have fully waived its right to such liquidated damages.

 

[*]                                 If as a result of [*] agreed to in writing by
the Parties, [*] will not apply [*].

 

[*]                                 Embraer hereby acknowledges that [*]
inducement to Buyer [*] it hereby represents and warrants to [*]
will not be [*] not be considered [*]. 
In the event of Embraer’s breach of the representation and warranty
provided for herein, Buyer may terminate this Agreement in accordance with
Article 21.2.1 and/or may seek damages for Embraer’s breach in accordance
with Article 21.1.

 

*   Confidential

 

9.3                     Delay Due to Loss or Structural Damage of
the Aircraft: Should any Aircraft be destroyed or damaged before acceptance by
Buyer to the extent that it becomes commercially useless, Buyer may, at its
sole discretion take a replacement Aircraft under the same terms and conditions
of this Agreement at a later delivery date to be agreed by the Parties.

 

Within one (1) month after such loss, Embraer
will provide Buyer with a new delivery date for a replacement Aircraft.  If Buyer in its sole discretion rejects the
new delivery date after further consultation with Embraer on scheduling the
delivery of the Aircraft, Buyer may terminate this Agreement with respect to
such Aircraft, [*].  In the event Embraer
[*].

 

10.       INSPECTION AND QUALITY CONTROL

 

10.1               Buyer is hereby permitted to have one or
more authorized representatives at Embraer’s facilities for a period commencing
[*]
prior to the Contractual Delivery Date of each Aircraft in order to assure that
the Aircraft was developed in accordance with the procedures specified in this
Agreement and according to all applicable quality control standards. Buyer may
communicate its concerns as to the production of the Aircraft to Embraer.
Buyer’s representatives shall be allowed to observe certain intermediate stages
of the Aircraft assembly during its manufacture.

 

10.2               Buyer shall notify Embraer of the name of
each of such authorized representative at least fifteen (15) days prior to the
intended arrival at Embraer’s facilities and which Aircraft it desires to
follow and which phase of the production process it desires to observe. Buyer’s
representatives shall not interfere with or hinder the production or
manufacture of any Aircraft. Buyer may substitute authorized representatives,
provided written notice is given to Embraer fifteen (15) calendar days prior to
effectivity.

 

10.3               Such representatives may also be authorized
to sign the acceptance and transfer of title and risk documents and accept
delivery of the Aircraft pursuant to Article 7.

 

10.4               With respect to this Article 10,
Embraer shall provide for use in accordance with the Agreement at no cost to
Buyer, communication facilities (telephone and facsimile) for Buyer’s
authorized representatives, as well as the necessary tools, measuring devices,
test equipment and technical assistance as may be necessary to perform
acceptance tests.

 

10.5               Buyer’s authorized representatives shall
observe Embraer’s administrative rules and instructions while at Embraer’s facilities,
and Buyer’s representatives will be provided with all appropriate rules and
regulations upon arrival.

 

10.6               Buyer’s authorized representatives shall be
allowed exclusively in those areas related to the subject matter hereof and
Buyer agrees to hold harmless Embraer from and against all and any kind of
liabilities in respect to such representatives, for whom Buyer is solely and
fully responsible under all circumstances and in any instance except to the
extent caused by the gross

 

*   Confidential

 

negligence or willful misconduct of Embraer,
its officers, directors, employees or agents.

 

11.       CHANGES

 

11.1               At delivery each Aircraft will comply with
the standards defined in Attachment “A” and shall incorporate all modifications
which are classified as Airworthiness Directives (AD’s) mandatory by CTA or FAA
and shall also at the Actual Delivery Date incorporate any change agreed upon
by Buyer and Embraer in accordance with this Article 11.

 

[*]

 

11.2               Embraer can make changes in the design of
the Aircraft in accordance with the terms and conditions set forth in Articles
11.2 through 11.7. The definition of which and its respective classification
shall be in compliance to the Aircraft type specification, as follows:

 

11.2.1                  Minor Changes: defined as those
modifications which shall not adversely affect the Aircraft in any of the
following characteristics:

 

[*]

 

11.2.2                  Major Changes: defined as those
modifications, which affect at least one of the topics mentioned in
Article 11.2.1.

 

11.3               Embraer shall have the right, but not the
obligation, to incorporate Minor Changes in the Aircraft still in the
production line at its own cost, without the prior consent of Buyer.

 

11.4               Embraer shall provide Buyer with written
notice (the “Proposal of Major Change – or PMC”) of those Major Changes that
are classified as AD’s by means of service bulletins approved by the Aviation
Authority and/or CTA, as appropriate. Service bulletins that implement such
AD’s shall be referred to as Mandatory Service Bulletins (“MSB”). Embraer shall
incorporate Mandatory Service Bulletins as follows:

 

11.4.1                  Compliance required before Contractual
Delivery Date: Embraer shall incorporate MSB in undelivered Aircraft at
Embraer’s expense in a reasonable period of time if the compliance time for
such MSB is before the Aircraft’s Contractual Delivery Date. Embraer shall not
be liable for any delays resulting from incorporation of MSB when the Aircraft
has already passed the specific production stage affected by the incorporation
of said change but Embraer shall [*] to incorporate such changes prior to
the Aircraft’s Contractual Delivery Date [*]. In the event of delay caused by
incorporation of any Embraer Service Bulletin (other than an MSB), [*].

 

11.4.2                  Compliance required after Contractual Delivery
Date: During the applicable Aircraft warranty coverage periods as specified in
the Aircraft Warranty that is the subject of Attachment “C”, Embraer shall [*].
When flight safety is affected, such changes shall be immediately incorporated.

 

*   Confidential

 

If warranty coverage is not available or
applicable pursuant to Attachment “C”, the provisions of Article 11.5
shall apply.

 

11.5               Except for the Major Changes referred to in
Article 11.4, any other Major Change, such as (i) any change developed by
Embraer as product improvement, (ii) any change requested by Buyer in relation
to the Aircraft configuration, or (iii) any change required by the Aviation
Authority as a consequence of alterations, amendments and/or innovations of its
present applicable regulations, shall be considered as optional and, pursuant
to Buyer’s request, Embraer shall submit to Buyer a Proposal of Major Change
(“PMC”), which shall describe all possible impacts on the provisions contained
in this Agreement, including but not limited to Aircraft pricing, weight, etc.
Should Buyer not approve such PMC, the change shall not be incorporated in the
Aircraft.

 

11.6               Any Major Change to the Aircraft, made in
accordance with the foregoing paragraphs that affect the provisions of Attachment
“A”, shall be incorporated in said Attachment by means of an amendment. The
amendment shall be submitted to Buyer for signature thirty (30) days prior to
the relevant Aircraft’s Contractual Delivery Date, a copy of which shall be
received by Embraer, duly signed, prior to such Aircraft’s Actual Delivery
Date.

 

11.7               Except [*], should an Aircraft not comply with the
terms and conditions of Attachment “A”, Buyer shall be entitled to either [*].  Determination of such compliance shall be
made by Buyer pursuant to Article 7.

 

12.       WARRANTY

 

The materials and workmanship relative to the
Aircraft subject to this Agreement will be warranted in accordance with the
terms and conditions specified in Attachment “C”. Embraer hereby guarantees to
Buyer direct maintenance costs, schedule reliability, service life, and
performance of and with respect to the Aircraft in accordance with the terms
and conditions specified in Attachments “E”, “F”, “G” and “H”.

 

13.       PRODUCT SUPPORT PACKAGE

 

Embraer shall supply to Buyer the Product
Support Package described in Article 2 of Attachment “B”, which includes
Embraer’s spare parts policy, the Technical Publications and the Services.

 

14.       ASSIGNMENT

 

14.1               Buyer may request, and Embraer will take,
any action reasonably necessary for the purpose of causing an Aircraft at the
time of delivery to be subject to an equipment trust, conditional sale, lien,
lease or other arrangement for the initial financing of the Aircraft in
connection with the delivery of such Aircraft to Buyer, provided however that
Buyer’s rights and obligations contained in Attachments “E”, “F”, “G” and “H”
shall not be assignable and that the assignment of its rights and obligations
contained in Attachment C shall be governed by the provisions of Attachment C.

 

*   Confidential

 

14.2               Buyer may assign its rights with respect  to Aircraft to another wholly-owned subsidiary
of Republic Airways Holdings Inc. (such subsidiary, the “Sibling”) as provided
in this Article 14.2. Such assignment and the Sibling’s exercise of such
rights shall be subject to [*].

14.2               Except as expressly permitted by this
Article 14, neither Embraer’s nor Buyer’s rights and obligations hereunder
may be assigned, conveyed, subcontracted, transferred or delegated, without the
other party’s prior written consent.

14.3               Republic Airways Holdings Inc. shall
guarantee the obligations of Buyer hereunder pursuant to a guarantee in the
form attached hereto as Attachment “K”, and it shall be a breach of this
Agreement by Buyer if such guarantee is at any time not effective in accordance
with its terms or if Republic Airways Holdings Inc. breaches, defaults, or
fails to perform under such guarantee.

15.       RESTRICTIONS AND PATENT INDEMNITY

 

15.1               Claims Against Buyer. Embraer shall indemnify and hold Buyer,
its subsidiaries and affiliates, and their officers, directors, agents and
employees (collectively, for purposes of this Article 15, “Buyer”)
harmless from and against any and all royalties, liabilities, damages,
settlement costs and expenses, losses, claims, actions, lawsuits, demands,
fines, penalties, and all expenses (including but not limited to costs of
investigation and defense and reasonable fees incurred for attorneys, expert
witnesses, consultants and litigation support services) associated with any of
the foregoing (collectively, the “Damages”) based upon, caused by, arising
from, or in any manner connected with, directly or indirectly, any suit,
action, proceeding, allegation, assertion or claim that

(x) any article or service purchased or
supplied hereunder or any portion thereof (including without limitation any
accessory, equipment or part supplied to Embraer from any other manufacturer,
or supplier) (collectively, “Item”) and/or the use or operation thereof
constitutes an infringement of any United States or foreign patent, design or
model duly granted or registered (“Claim”), provided that from the time of
design of such Item and until such Claim is resolved, such foreign country in
which any foreign patent is held and the flag country of the Aircraft is each a
party to (1) the International Convention for the Protection of International
Property (Paris Convention) in any of its revised forms or (2) Article 27
of the Chicago Convention on International Civil Aviation of December 7,
1944, or

 

(y) Aircraft software or materials, or any
part of such Aircraft software or materials as furnished by Embraer, and used
within the scope of the license granted by Embraer, constitutes an alleged or
actual infringement of any copyright of the United States or misappropriates
any third party trade secret (“Copyright Claim”), provided that from the time
of design of such item and until such Copyright Claim is resolved, any such
foreign country in which the

 

*   Confidential

 

infringement claim is made and the flag
country of the Aircraft is each a member of The Berne Union.

 

The indemnification by Embraer provided in
this Paragraph 15.1 shall not apply to Buyer furnished or installed equipment,
engines, or APUs and their related parts.

 

15.2               Buyer’s Remedies and Judgments.  In
connection with the foregoing, Embraer agrees to defend at its expense any suit
or action in respect of any claim or copyright claim.  Buyer’s remedy and Embraer’s obligation and liability under this
Article 15 are conditional upon Buyer giving Embraer written notice
promptly after Buyer receives notice of a suit or action against Buyer alleging
infringement or after Buyer receives a written claim of infringement, whichever
is earlier.  Failure to notify Embraer
as provided in the foregoing sentence shall relieve Embraer of liability that
it may have to Buyer only to the extent that the defense of any such claim is
prejudiced thereby. Embraer’s obligations hereunder with respect to any actual
or alleged infringement are also conditioned upon (i) Buyer’s promptly
furnishing to Embraer all the data, papers, records and other assistance within
the control of Buyer material to the resistance of or defense against any such
charge or suits for infringement, (ii) upon Embraer’s reasonable request, Buyer’s
use of diligent efforts in full cooperation with Embraer to reduce royalties,
liabilities, damages, costs and expenses involved, and (iii) Embraer’s prior
approval of Buyer’s payment, assumption or admission of any liabilities, or
royalties for which Embraer is asked to indemnify Buyer hereunder.  [*] 
Embraer shall have the option but not the obligation at any time to
conduct negotiations with the party or parties charging infringement and may
intervene in any suit commenced. Whether or not Embraer intervenes in any such
suit, it shall be entitled at any stage of the proceedings to assume control
and conduct the defense and/or settlement of such suit or action either in the
name of Embraer or of Buyer, or both. 
Buyer shall cooperate with Embraer and shall, upon Embraer’s reasonable
request and at Embraer’s expense, arrange for attendance of representatives of
Buyer at hearings and trial and assist in effecting settlements, securing and
giving evidence, obtaining the attendance of witnesses and in the conduct of
the defense of such suits or actions. 
Embraer shall assume and pay any and all [*] assessed against Buyer in
a judgment of any such suit or action, and Embraer will pay any payments in
settlement imposed upon or incurred by Buyer with Embraer’s approval, together
with all interest accruing after entry of any such judgment or after the making
of any such settlement, [*].

 

15.3               Continuing Use. In the event any Item purchased or
supplied hereunder, or any portion thereof, becomes the subject of any Claim or
Copyright Claim, or if Embraer in its reasonable judgment at any time decides
that the item purchased or supplied hereunder, or any portion thereof, shall
become the subject of such a Claim or Copyright Claim, Embraer shall promptly,
but, in any event, no more than thirty (30) days after receipt of written
notice from Buyer of a Claim, Copyright Claim or the entry of any order or
decree permanently or temporarily enjoining the use of the Item purchased or
supplied hereunder, or any portion thereof, at its own expense and option
either: (i) obtain for Buyer the right to use the infringing Item, or portion
thereof; or (ii) replace, modify, substitute, or update the infringing article,
or portion thereof, so that it becomes non-infringing.

 

*   Confidential

 

In the event that any such suit or action
results in an order, decree or judgment enjoining or otherwise prohibiting
Buyer from effectively using any Item for its intended purposes, or any
settlement made or approved by Embraer has such result, Embraer agrees at its
option and expense to promptly either: (i) procure for Buyer the right to
continue using said Item; or (ii) modify said Item so that it becomes
non-infringing and otherwise complies with the provisions of this Agreement; or
(iii) replace said item with a non-infringing Item suitable for Buyer’s
requirements and in a condition equivalent to that of the Item removed.  The foregoing provisions hereof shall apply
in case of any such order, decree, judgment or settlement prohibiting Buyer
from effectively using any component or part of the Item.

 

If the party or parties making a claim or
copyright claim for which Embraer has agreed to indemnify Buyer hereunder
obtains an injunction restraining Buyer’s use of the Item and a bond or other
security will be necessary and efficacious to void same, Embraer shall promptly
pay to Buyer the amount of premium for any bond or the costs of any other
security given by Buyer to release or void such injunction, or alternatively at
Embraer’s election shall furnish such bond or other security in Buyer’s behalf.

15.4               Exemptions.  [*] from all damages caused
by, arising from or in any way connected with in the event of any suit or
action relative to Buyer furnished designs, equipment, materials or data, or
any design which is imposed by Buyer on Embraer as an alternative to Embraer’s
suggested design, or any Buyer modification of the Embraer supplied Item, or
any component or part thereof, or any new designs, equipment, materials or data
incorporated, after delivery and acceptance of the Item, by Buyer without the
involvement of Embraer.

15.5               Modifications. The foregoing indemnity shall not extend
to any claim of infringement based on any modification, change or combination
not in accordance with Embraer’s written procedures or without Embraer’s
written approval or consent thereto, provided that the claim for infringement
relates to the combination, change or modification as opposed to solely the
article itself. However, the exclusion set forth in this subparagraph
shall not relieve Embraer of its obligation under this Article 15 if the
Item continues to be infringing after the removal, as the case may be, of any
changes, modifications or combinations, or after-incorporated designs,
equipment, materials or data.

15.6               Restrictions. The sales contemplated by this Agreement
do not include the transfer of the right to use, or any ownership of, design,
copyrights, patents, and other similar rights of Buyer.

 

16.       MARKETING PROMOTIONAL RIGHTS

 

Embraer shall have the right to show for
marketing purposes, free of any charge, the image of the Aircraft, painted with
Buyer’s colors and emblems, affixed in photographs, drawings, films, slides,
audiovisual works, models or any other medium of expression (pictorial,
graphic, and sculptural works), through all mass communications media such as
billboards, magazines, newspaper, television, movie, theaters, as well as in
posters, catalogues, models and all other kinds of promotional material. In the
event such Aircraft is sold to or operated by or for another company or person,
Embraer shall be

 

*   Confidential

 

entitled to continue to show the image of the
Aircraft, free of any charge, for marketing purposes, with the original colors
and emblems, unless otherwise notified by Buyer, provided that any prohibition
shall in no way apply to the promotional materials or pictorial, graphic or
sculptural works already existing or to any contract for the display of such
materials or works already binding Embraer at the time of receipt of the
notification.  If the Aircraft is sold
to or operated by or for another company or person, Buyer shall upon Embraer’s
request seek the approval of such other company or person to show the image of
the Aircraft as described above.

 

17.       TAXES

 

Embraer shall pay all taxes [*].  All other taxes [*] impost, fees, withholding
taxes, stamp taxes, documentary taxes and any other similar or dissimilar
taxes, as well as any duties as may be imposed on the sale subject of this
Agreement (“Taxes”), shall be borne by Buyer. 
[*]

 

18.       APPLICABLE LAW

 

This Agreement, and the rights and
obligations of the Parties hereunder, shall in all respects be governed by, and
construed and interpreted in accordance with, the laws of the State of New York
including all matters of construction, validity and performance.

 

19.       ARBITRATION

 

19.1               The Parties each irrevocably submit to the
exclusive jurisdiction of arbitration and expressly and irrevocably waive its
right to bring suit against the other Party in any court of law except for the
limited purposes of enforcing an arbitral award obtained with respect to a
dispute, or for obtaining any injunctive, temporary or preventative order or
similar order available to it under the laws of any jurisdiction for a breach
or threatened breach by the other Party of this Agreement which threatens
irreparable damage.

 

19.2               Any dispute submitted for arbitration must
be finally settled by binding and confidential arbitration according to the
Rules of the American Arbitration Association (the “Rules”), except as may be
modified by mutual agreement of Embraer and Buyer. The arbitration, including
the rendering of the award, will be conducted by arbitrators (selected as set
forth below) who are fluent in the English language. The arbitration proceeding
will be conducted with discovery in accordance with the Federal Rules of Civil
Procedure. The arbitrators will be appointed in accordance with the Rules
except as otherwise provided for herein. The arbitration proceedings will take
place in New York, New York, and will be conducted in the English language.

 

19.3               The Arbitrator will be selected as
follows:  within fifteen (15) Business
Days of the referral of any matter to arbitration, each Party will select an
arbitrator.  Thereafter, within fifteen
(15) Business Days of each party’s selection of an arbitrator, the two
arbitrators selected by the Parties shall meet to select a mutually agreeable
third arbitrator. In the event a Party fails to select an arbitrator with in
the time period specified above, the Party that has timely complied with the
selection of an arbitrator shall select a second arbitrator.

 

*   Confidential

 

These two arbitrators shall within seven (7)
Business Days after the time in which the other Party should have selected an
arbitrator, meet to select a mutually agreeable third arbitrator. These three
arbitrators shall comprise the arbitral panel and all arbitral proceedings
shall be conducted in the presence of all three arbitrators.

 

19.4               If there is a dispute submitted to arbitration,
any subsequent additional disputes referred for arbitration (including
counterclaims between the Parties) will be consolidated in the same arbitration
proceeding.

 

19.5               The arbitral proceeding will not exceed one
hundred (100) days commencing on the date the last arbitrator accepts his or
her appointment. If the arbitral award is not issued within this time, then the
arbitration proceeding will be automatically renewed for another one hundred
(100) days. Evidence may not be taken in the arbitral proceeding except in the
presence of both Parties and all witnesses, if any, may be questioned by both
Parties. The only evidence which may be considered by the arbitrators in
reaching their decision is that which is otherwise admissible in accordance
with the then current United States Federal Rules of Evidence.

 

19.6               Any decision or award of the arbitrators
must be based solely on the terms of this Agreement and the substantive
governing law applicable to this Agreement. 
The decision of the arbitrators must be issued in writing with an
explanation of its reasoning, and will be final and conclusive when
issued.  Judgment upon the award
rendered in the arbitration may be entered and enforced by the Court specified
in Article 19.7.

 

19.7               Each Party irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Southern
District of New York sitting in the County of New York for purposes of
enforcing any arbitral award or for other legal proceedings arising out of this
Agreement or any transactions contemplated in this Agreement as provided for
herein. However nothing contained in this Agreement shall be deemed to prevent
either Party from enforcing any decision of the United States District Court
for the Southern District of New York sitting in the County of New York for
purposes of enforcing or collecting any such award in any court or jurisdiction
as such party deems necessary or prudent.

 

19.8               Each Party shall bear its own costs and
expenses of arbitration. The Parties shall share equally the costs, expenses
and fees of any arbitral panel designated pursuant to this Agreement.

 

20.       SOVEREIGN
IMMUNITY,
VENUE AND FORUM NON CONVENIENS

 

Embraer represents and warrants that, under
the laws of the United States or of any other jurisdiction affecting Embraer,
it is subject to private commercial law and suit, and is not entitled to
sovereign immunity under any such laws, for its performance of its obligations
under this Agreement.  Embraer’s
performance of its obligations hereunder constitute commercial acts done for
commercial purposes. The Parties furthermore waive to the extent permitted by
law any objections to venue of the United States District Court for the
Southern District of New York sitting in the County of New York for

 

 

purposes of enforcing any arbitral award and
any right or claim to any transfer or dismissal of any enforcement proceeding
in the United States District Court for the Southern District of New York
sitting in the County of New York on the grounds of forum non conveniens.

 

21.       TERMINATION

 

21.1               Should either Party fail to comply partially
or completely with its obligations hereunder, the other Party shall be entitled
to give notice of such failure and to require that such failure be remedied
within the period specified in that notice, which period shall not be less than
[*]
days. Should such failure not be remedied within the period so specified, then
the Party who gave notice of such failure shall be entitled to terminate this
Agreement. Should termination occur in accordance with the foregoing, the
defaulting Party shall pay to the non-defaulting Party, as damages, an amount
determined by agreement or by law. The foregoing provision shall not apply in
any circumstance where an express right of termination is available or will be
available under this Agreement upon the expiration of a specific period of time
whether or not such termination rights are exercised, except with respect to
Buyer’s right to terminate this Agreement in accordance with Article 21.2
in case of termination for a Non-Excusable Delay of [*] or longer [*].

 

21.2               Buyer shall have the right but not the
obligation to terminate this Agreement in respect to the relevant Aircraft,
upon the occurrence of any Excusable Delay of [*] or longer, as provided
for in Article 9.1.4, or any Non-Excusable Delay in accordance with
Article 9.2.1 of [*] or longer after such Aircraft’s
Contractual Delivery Date, such right to be exercisable by notice from Buyer to
Embraer to such effect no earlier than the [*], as applicable, of impossibility,
reasonably thereafter, as applicable. 
Upon receipt of such notice of termination, Embraer shall, within [*]
after Embraer receives the notice referred to above, return to Buyer an amount
equal to the amounts previously paid by Buyer relative to the relevant Aircraft
[*]
in effect as of the time such amounts were paid, less the value of equipment
and services previously delivered or performed by Embraer with respect to such
terminated Aircraft and not paid for by Buyer valued in accordance with
Embraer’s list price for such equipment and services at time of such
termination in accordance with this Article 21.2. In the event the
equipment referred to above in the immediately preceding sentence has not been
used, it may be returned to Embraer at the Buyer’s sole cost and expense and
subject to Embraer’s reasonable right to inspect such equipment, and in the
event of such return and acceptance of the condition of the equipment, the
value of such returned equipment shall not be deducted from the amounts payable
by Embraer as provided for above. No other penalty or indemnity shall be due
from Embraer in this case, except in the case of a termination for a
Non-Excusable Delay of [*] or longer [*].  In the event Embraer fails to return the
deposits and progress payments [*] to Buyer as provided for herein,
Embraer shall also pay to Buyer [*] on such outstanding amounts not paid by
Embraer from the date on which such payments were to have been made until
receipt by Buyer.

 

*   Confidential

 

[*]                                 In the event that Embraer breaches the
representations and warranties contained in Article 9.2.5, Buyer may
terminate this entire Agreement [*], less the value of equipment and
services previously delivered or performed by Embraer with respect to such terminated
Aircraft and not paid for by Buyer valued in accordance with Embraer’s list
price for such equipment and services at time of such termination in accordance
with this Article 21.2.1. In the event the equipment referred to above in
the immediately preceding sentence has not been used, it may be returned to
Embraer at the Buyer’s sole cost and expense and subject to Embraer’s
reasonable right to inspect such equipment, and in the event of such return and
acceptance of the condition of the equipment, the value of such returned
equipment shall [*]. In the [*] to Buyer as provided for herein,
Embraer shall also [*]. In addition to and not in lieu of this
remedy [*].

 

21.3               If Buyer terminates this Agreement before an
Aircraft Actual Delivery Date for any reason not attributable to Embraer’s
default under this Agreement or, if Embraer terminates this Agreement as to any
Aircraft or in its entirety pursuant to Article 7.7, Article 4.3 or
Article 25, Buyer shall pay to Embraer [*] and shall indemnify
Embraer for the value of equipment and services previously delivered and/or
performed by Embraer and for the reasonable costs and expenses of reconfiguring
Aircraft for sale to another customer. 
Such costs and expenses shall be based on Embraer ́s then prevailing price
list.  For these purposes Embraer may,
in its sole discretion, retain all amounts previously paid by Buyer to apply as
part of the payments of the damages resulting from such default on the part of
Buyer.

 

21.4               If Buyer terminates this Agreement in respect
to an Aircraft or all Aircraft, as the case may be, pursuant to
Article 9.3 or 11.7, Embraer, upon Buyer’s request, shall [*]
Embraer receives the notice of termination referred to above, return to Buyer
all amounts previously paid by Buyer with respect to the relevant Aircraft [*]
in effect on the date of receipt of such amounts. No other penalty or indemnity
shall be due from Embraer in this case. In the event Embraer fails to return
the deposits and progress payments [*] to Buyer as provided for herein,
Embraer shall also pay to Buyer [*] on such outstanding amounts not paid by
Embraer from the date on which such payments were to have been made until
receipt by Buyer.

 

21.5               In the case of a termination of this
Agreement or as to any Aircraft, the indemnities set forth in Article 7.8
and 15 of this Agreement, Article 2.3.2.i of Attachment “B”, and the
warranty as provided for in Attachment “C “ (and as such warranty may have been
assigned pursuant to Article 14.1), the ferry equipment and product support
package provided for in Attachment “B”, and the guarantees provided for in
Attachments “E” (subject to adjustment as provided therein), “F” (subject to
adjustment as provided therein) and “G”, with respect to any delivered Aircraft
shall survive the termination of this Agreement or the termination of this
Agreement with respect to one or more Aircraft.

 

*   Confidential

 

22.       RIGHT
TO PURCHASE
THE CONDITIONAL AIRCRAFT

 

Subject to confirmation by Buyer as described
below, Buyer shall have the right to purchase up to twelve (12) additional
Aircraft (the “Conditional Aircraft”), to be delivered on the last day of the
applicable month set forth below or such earlier date in such month specified
pursuant to Article 7.1:

 

	
  Conditional

  A/C

  	
   

  	
  Delivery

  Month

  
	
  14

  	
   

  	
  Apr 2005

  
	
  15

  	
   

  	
  [*]

  
	
  16

  	
   

  	
  [*]

  
	
  17

  	
   

  	
  [*]

  
	
  18

  	
   

  	
  [*]

  
	
  19

  	
   

  	
  [*]

  
	
  20

  	
   

  	
  [*]

  
	
  21

  	
   

  	
  [*]

  
	
  22

  	
   

  	
  [*]

  
	
  23

  	
   

  	
  [*]

  
	
  24

  	
   

  	
  [*]

  
	
  25

  	
   

  	
  Sep 2006

  

 

22.1               Buyer’s right to purchase [*]
shall be subject to Buyer giving notice to Embraer of its election to purchase [*]
on or before [*] in relation to [*], and on or before [*] in relation to the [*].
Buyer shall be allowed to confirm the acquisition of all or part of [*]
in either such group.

 

If Buyer does not exercise its purchase right
with respect to [*] on or before the dates above referred to, then Buyer’s
rights to purchase such [*] shall be considered terminated and
Embraer shall [*].  In the event
Embraer fails to [*].

 

22.2               To secure the Conditional Aircraft delivery
positions set forth in this Article 22 and to ensure delivery of the
Conditional Aircraft in accordance with its delivery schedule, Buyer shall pay
Embraer the purchase price of each Conditional Aircraft as to which Buyer
exercises its purchases right in accordance with the terms and conditions
contained in this Article 22.2. The Parties acknowledge that each of the
Conditional Aircraft and the corresponding delivery positions have been
reserved for purchase by Buyer and such Conditional Aircraft have been removed
from the market. Buyer has paid to Embraer prior to the execution of this
Agreement a [*] deposit per Conditional Aircraft (the “Conditional
Aircraft Deposit”).  The Conditional
Aircraft Deposit with respect to a Conditional Aircraft shall [*]
at the time Buyer’s purchase right for such Conditional Aircraft is exercised
by Buyer pursuant to Article 22.1. The same terms and conditions
applicable to Firm Aircraft as specified in Articles 4.1.1 through 4.1.4 shall
apply to the Conditional Aircraft as if they were Firm Aircraft, provided that
any progress payment that would otherwise be due before the exercise of such
purchase right for such Conditional Aircraft shall instead be due [*].  Any Payments shall be paid by Buyer by wire
transfer in immediately available United States dollars funds, to such bank
account in the United States as directed by Embraer to Buyer in writing at
least [*]
prior to the date of payment, as described in Articles 4.1.1 through 4.1.4.

 

22.3               Unless [*].

 

*   Confidential

 

23.       OPTION
FOR THE
PURCHASE OF ADDITIONAL AIRCRAFT

 

Buyer shall have the option to purchase [*],
to be delivered on the last day of the applicable month set forth below or such
earlier date in such month specified pursuant to Article 7.1:

 

	
  Option

  Aircraft

  	
   

  	
  Delivery

  Month

  
	
  01

  	
   

  	
  Aug 2006

  
	
  02

  	
   

  	
  [*]

  
	
  03

  	
   

  	
  [*]

  
	
  04

  	
   

  	
  [*]

  
	
  05

  	
   

  	
  [*]

  
	
  06

  	
   

  	
  [*]

  
	
  07

  	
   

  	
  [*]

  
	
  08

  	
   

  	
  [*]

  
	
  09

  	
   

  	
  [*]

  
	
  10

  	
   

  	
  [*]

  
	
  11

  	
   

  	
  [*]

  
	
  12

  	
   

  	
  [*]

  
	
  13

  	
   

  	
  [*]

  
	
  14

  	
   

  	
  [*]

  
	
  15

  	
   

  	
  [*]

  
	
  16

  	
   

  	
  [*]

  
	
  17

  	
   

  	
  [*]

  
	
  18

  	
   

  	
  [*]

  
	
  19

  	
   

  	
  [*]

  
	
  20

  	
   

  	
  [*]

  
	
  21

  	
   

  	
  [*]

  
	
  22

  	
   

  	
  [*]

  
	
  23

  	
   

  	
  [*]

  
	
  24

  	
   

  	
  [*]

  
	
  25

  	
   

  	
  May 2008

  

 

The Option Aircraft will be supplied in
accordance with the following terms and conditions:

 

23.1               To secure the Option Aircraft delivery
schedule, Buyer shall [*] per Option Aircraft upon signature of
this Agreement.

 

23.2               The unit basic price of each Option Aircraft
shall be equal to [*], unless otherwise modified by the
Parties and the costs for such changes shall be in addition to the Basic Price.

 

23.3               The unit basic price of each relevant Option
Aircraft above mentioned shall be escalated according to the escalation formula
subject of Attachment “D”, determining the Option Aircraft Purchase Price.

 

23.4               To secure the Option Aircraft delivery
positions set forth in this Article 23 and to ensure delivery of the
Option Aircraft in accordance with its delivery schedule, Buyer shall pay
Embraer the purchase price of each Option Aircraft in accordance with the terms
and conditions contained in this Article 23.4. The Parties acknowledge
that each of the Option Aircraft and the corresponding delivery positions have
been reserved for purchase by Buyer and such Option Aircraft have been removed
from the market.

 

[*] shall apply toward the purchase price of
the relevant Option Aircraft and shall be considered non-refundable  (except as expressly provided in this
Agreement) with respect to an Option Aircraft upon Buyer’s written notice
informing Embraer that Buyer is exercising its option to purchase such Option
Aircraft.

 

The same terms and conditions applicable to
Firm Aircraft as specified in Articles 4.1.1 through 4.1.4 shall apply to the
Option Aircraft, provided that for any progress payment that would otherwise be
due before the exercise by

 

*   Confidential

 

Buyer of its purchase option for such Option
Aircraft shall be due within two (2) Business Days after the date that Buyer
exercises its option to purchase such  Option Aircraft. Any Payments
shall be paid by Buyer by wire transfer in immediately available United States
dollars funds, to such bank account in the United States as directed by Embraer
to Buyer in writing at least two (2) Business Days prior to the date of payment,
as described in Articles 4.1.1 through 4.1.4.

 

23.5               CONFIRMATION OF OPTION AIRCRAFT: The option
to purchase [*] shall be exercised in [*] of [*] per group (the “Option Groups”) no
later than [*] prior to the delivery of the first Option Aircraft in each
group. Each Option Group may be partially or completely exercised by Buyer.
Exercise of the option to purchase the Option Aircraft shall be accomplished by
means of a written notice from Buyer delivered to Embraer by mail, express
delivery or facsimile, return receipt requested.

 

23.6               FAILURE TO CONFIRM; RETURN OF DEPOSIT: In the event an Option Group is not
exercised by its option exercise date as specified in the preceding paragraph,
Buyer shall lose all rights to said Option Group. In the event two Option
Groups are not exercised by their option exercise date, Buyer shall also lose
all rights to the remaining Option Groups. Any Option Aircraft not exercised by
Buyer as per the terms and conditions of this paragraph will be considered
relinquished and the relevant [*] in effect on the date of receipt of [*].  In the event Embraer fails to [*].

 

23.7               If the options are confirmed by Buyer as
specified above, an amendment to this Agreement shall be executed by and
between the Parties within thirty (30) calendar days following the Option
Aircraft option exercise date, setting forth the terms and conditions
applicable to, if any, exclusively to the Option Aircraft.

 

23.8               The product support package to be applied to
the Option Aircraft is described in Article 2 of Attachment “B”.

 

24.       NOTICES

 

All notices permitted or required hereunder
shall be in writing in the English language and sent, by registered mail,
express courier or facsimile, to the attention of the Director of Contracts as
to Embraer and of the President as to Buyer, to the addresses indicated below
or to such other address as either Party may, by written notice, designate to
the other. In the event notice is issued by registered mail or express courier,
it shall be deemed received on the day on which the Party receiving such notice
executes the delivery receipt.  In the
event notice is issued by facsimile, it shall be deemed received on the day on
which the sender of such notice receives a facsimile confirmation receipt of
such facsimile notice.

 

24.1               EMBRAER:

 

EMBRAER
- Empresa Brasileira de Aeronáutica S.A.

Av.
Brigadeiro Faria Lima, 2170

12.227-901
São José dos Campos - SP

Brasil

 

*   Confidential

 

Telephone:
(+55-12) 3927-1410

Facsimile:
(+55-12) 3927-1257

 

24.2               BUYER:

 

Republic Airline, Inc.

2500 S. High School Road

Indianapolis, Indiana  46241

Attention: 
President

Tel: 
317-484-6047

Fax: 
317-484-6060

 

With a Copy to:

 

Wexford Capital LLC

411 West Putnam Avenue

Greenwich, Connecticut  06830

Attention: 
Jay Maymudes

Tel: 
203-862-7050

Fax: 
203-862-7350

 

and

 

Republic Airways Holdings Inc.

2500 S. High School Road

Indianapolis, Indiana  46241

 

Attention: 
President

Tel: 
317-484-6000

Fax: 
317-484-6040

 

25.       CONFIDENTIALITY

 

Neither Party shall have the right to
disclose the terms of this Agreement except as required by law. To the fullest
extent permitted by law, except as aforesaid, neither Party shall disclose any
portion of this Agreement or its Attachments, amendments or any other
supplement, to any third party, other than to its accountants, attorneys,
agents, consultants or permitted assignees without the other Party’s prior
written consent, and a Party shall cause its accountants, attorneys, agents
consultants or permitted assignees to comply with the terms of this
Article 25.  Without limiting the
foregoing, in the event either Party is legally required to disclose the terms
of this Agreement, the Parties agree to exert their reasonable best efforts to
request confidential treatment of the clauses and conditions of this Agreement
relevantly designated by either Party as confidential.  Without limiting its obligations pursuant to
the preceding sentence, Buyer agrees that if it is required, in the opinion of
counsel, to file publicly or otherwise disclose the terms of this Agreement under
applicable federal and/or state securities or other laws, it shall promptly
(but in no case less than ten (10) Business Days prior to the proposed filing
in question) notify Embraer so that Embraer has a reasonable opportunity to
contest or limit the scope of such required disclosure, and Buyer shall
request, and shall use its best reasonable efforts to obtain, confidential

 

 

treatment for such sections of this Agreement
as Embraer may designate. Buyer further agrees that it shall not in any
circumstances file publicly or otherwise disclose the terms of this Agreement
under applicable federal and/or state securities or other laws if it has not
complied with its obligations pursuant to the previous sentence. Embraer shall
have the right to terminate this Agreement pursuant to Article 21.3 if
Buyer fails to comply with its obligations pursuant to the previous two
sentences (e.g., to notify Embraer that Buyer is require to file or otherwise
disclose terms of this Agreement, to request and use its best reasonable
efforts to obtain confidential treatment of sections designated by Embraer as
confidential, or to file publicly or otherwise disclose the terms of this
Agreement if it has not complied with its obligations).

 

26.       INTEGRATED AGREEMENT

 

All Attachments referred to in this Agreement
and attached hereto are, by such reference and attachment, incorporated in this
Agreement. This Agreement, including all Attachments and all amendments,
modifications and supplements, is herein and hereinafter called the “Agreement”
or the “Purchase Agreement”.

 

27.       NEGOTIATED AGREEMENT

 

This Agreement, including all of its
Attachments, has been the subject of discussion and negotiation and is fully
understood by the Parties, and the rights, obligations and other agreements of
the Parties contained in this Agreement are the result of complete discussion
and negotiation between the Parties.

 

28.       COUNTERPARTS

 

This Agreement may be signed by the Parties
in any number of separate counterparts with the same effect as if the signatures
thereto and hereto were upon the same instrument and all of which when taken
together shall constitute one and the same instrument.

 

29.       ENTIRE AGREEMENT

 

This Agreement constitutes the entire
agreement of the Parties with respect to the sale described as its subject and
supersedes all previous and connected negotiations, representations and
agreements between the Parties. This Agreement may not be altered, amended or
supplemented except by a written instrument executed by the Parties.

 

30.       NO
WAIVER

 

Any Party’s forbearance from exercising any
claim or remedy provided for herein shall not be deemed a waiver of such claim
or remedy, and shall not relieve the other Party from the performance of such
obligation at any subsequent time or from the performance of any of its other
obligations hereunder.

 

31.       REPRESENTATIONS AND WARRANTIES

 

31.1               Effective as of the date of this Agreement
and as of the Actual Delivery Date of each Aircraft, Embraer represents and
warrants that:

 

 

31.1.1                  Embraer is a corporation duly organized,
validly existing and in good standing under the laws of Brazil, is the
manufacturer of the EMBRAER-170 model aircraft and has all necessary corporate
power and authority to conduct the business in which it is currently engaged
and to enter into and perform its obligations under this Agreement.

 

31.1.2                  Embraer has taken, or caused to be taken,
all necessary corporate action to authorize the execution and delivery of this
Agreement and the performance of its obligations hereunder.

 

31.1.3                  The execution and delivery by Embraer of
this Agreement, the performance by Embraer of its obligations hereunder and the
consummation by Embraer of the transactions contemplated hereby, do not and
will not (A) violate or conflict with any provision of the constitutional
documents of Embraer, (B) violate or conflict with any law, rule, or regulation
applicable to or binding on Embraer or (C) violate or constitute any breach or
default (other than a breach or default that would not (x) result in a material
adverse change to Embraer or (y) adversely affect Embraer’s ability to perform
any of its obligations hereunder),under any agreement, instrument or document
to which Embraer is a party or by which Embraer or any of its properties is or
may be bound or affected.

 

31.1.4                  The execution and delivery by Embraer of
this Agreement, the performance by Embraer of its obligations hereunder and the
consummation by Embraer of the transactions contemplated hereby do not and will
not require the consent, approval or authorization of, or the giving of notice
to, or the registration with, or the recording or filing of any documents with,
or the taking of any other action in respect of, (A) any trustee or other
holder of any indebtedness or obligation of Embraer, (B) any national, state or
municipal government regulatory, judicial, or administrative entity of
competent jurisdiction, or (C) any other party.

 

31.1.5                  This Agreement has been duly authorized,
executed and delivered by Embraer and, assuming the due authorization, execution
and delivery hereof by the other Party constitutes the legal, valid and binding
obligation of Embraer enforceable against Embraer in accordance with the terms
hereof, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.

 

31.1.6                  Each of the foregoing representations and
warranties shall survive the execution and delivery of this Agreement and any
termination hereof.

 

31.2                           Effective as of the date of this Agreement
and as of the Actual Delivery Date of each Aircraft, Buyer represents and
warrants that:

 

 

31.2.1                  Buyer is a corporation duly organized and
validly existing under the laws of the its state of incorporation in the United
States and has all necessary corporate power and authority to conduct the
business in which it is currently engaged and to enter into and perform its
obligations under this Agreement.

 

31.2.2                  Buyer has taken, or caused to be taken, all
necessary corporate action to authorize the execution and delivery of this
Agreement and the performance of its obligations hereunder.

 

31.2.3                  The execution and delivery by Buyer of this
Agreement, the performance by Buyer of its obligations hereunder and the
consummation by Buyer of the transactions contemplated hereby, do not and will
not (A) violate or conflict with any provision of the constitutional documents
of Buyer, (B) violate or conflict with any law, rule, or regulation applicable
to or binding on Buyer or (C) violate or constitute any breach or default
(other than a breach or default that would not (x) result in a material adverse
change to Buyer or (y) adversely affect Buyer’s ability to perform any of its
obligations hereunder),under any agreement, instrument or document to which
Buyer is a party or by which Buyer or any of its properties is or may be bound
or affected.

 

31.2.4                  The execution and delivery by Buyer of this Agreement,
the performance by Buyer of its obligations hereunder and the consummation by
Buyer of the transactions contemplated hereby do not and will not require the
consent, approval or authorization of, or the giving of notice to, or the
registration with, or the recording or filing of any documents with, or the
taking of any other action in respect of, (A) any trustee or other holder of
any indebtedness or obligation of Buyer, (B) any national, federal, state or
local government regulatory, judicial, or administrative entity of competent
jurisdiction (other than recordation of the Aircraft with FAA) or (C) any other
party.

 

31.2.5                  This Agreement has been duly authorized,
executed and delivered by Buyer and, assuming the due authorization, execution
and delivery hereof by the other Party constitutes the legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with the terms
hereof, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.

 

31.2.6                  Each of the foregoing representations and
warranties shall survive the execution and delivery of this Agreement and any
termination hereof.

 

 

IN WITNESS WHEREOF, the Parties have caused
this Agreement to be duly executed and delivered by their proper and duly
authorized officers and to be effective as of the day and year first above
written.

 

	
  EMBRAER
  - Empresa Brasileira

  de Aeronáutica S.A.

  	
  BUYER – Republic Airline, Inc.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Frederico Fleury Curado

  	
   

  	
  By:

  	
  /s/ Bryan Bedford

  	
   

  
	
  Name: Frederico Fleury Curado

  	
  Name: Bryan Bedford

  
	
  Title: Executive Vice
  President Civil Aircraft

  	
  Title: Chairman & CEO

  
	
   

  	
   

  
	
  By:

  	
  /s/ Flavio Rimoli

  	
   

  	
   

  
	
  Name: Flavio Rimoli

  	
   

  
	
  Title: Sr. Vice President
  Airline Market

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  Date:

  
	
  Place:

  	
  Place:

  
	
   

  	
   

  
	
  Witnesses:

  	
   

  
	
   

  	
   

  	
  /s/ Robert H. Cooper

  	
   

  
	
  Name:

  	
  Name: Robert H. Cooper

  
	
  ID:

  	
  ID: EVP & CFO

  
								

 

 

ATTACHMENT“A” - AIRCRAFT CONFIGURATION

 

1.             EMBRAER 170
CONFIGURATION

 

1.1.               EMBRAER 170 Standard
Aircraft

 

The Aircraft EMBRAER 170 shall be manufactured according to (i) the
standard configuration specified in the Preliminary Technical Description
PTD-170 Rev. 4 dated May 2003, which although not attached hereto, is
incorporated herein by reference, and (ii) the characteristics described in the
items below.

 

1.2.               EMBRAER 170 Optional
Equipment

 

The Aircraft will also be fitted with the following options selected by
Buyer:

 

1.2.1.                Aircraft Model and
Engines

a. EMBRAER 170 LR

b. GE CF34-8E5 Engine

 

1.2.2.                Options By Ata
Chapter

 

	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  

 

*   Confidential

 

1.2.3.                EMBRAER 170 Basic
Interior Configuration (70 seats)

 

 

	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  

 

2.             EMBRAER 170 First
Aircraft (SN 007) Configuration

 

2.1.               EMBRAER 170 Standard
Aircraft

 

The Aircraft EMBRAER 170 shall be manufactured according to (i) the
standard configuration specified in the Preliminary Technical Description
PTD-170 Rev. 4 dated May 2003, which although not attached hereto, is
incorporated herein by reference, and (ii) the characteristics described in the
items below.

 

2.2.               EMBRAER 170 First
Aircraft Optional Equipment

 

The First Aircraft will also be fitted with the following options at
the time of delivery:

 

2.2.1.                First Aircraft
Model and Engines

 

[*]

[*]

 

2.2.2.                Options By Ata
Chapter

 

	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  

 

2.2.3.                First Aircraft
Interior Configuration

 

 

	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  

 

*   Confidential

 

The first Firm
Aircraft to be delivered to Buyer will be the [*] (the “First Aircraft”),
which, by the time of its delivery to Buyer, will have [*] interior configuration
and optional equipment specified in this Article 3 of this Attachment “A”. The
First Aircraft shall have installed [*].

 

The Parties
shall mutually agree on a scheduled date to [*] the First Aircraft to the
definitive interior lay-out and avionics configuration as specified in Article
1 of this Attachment “A”.  Embraer
shall be responsible for [*] including but not limited to [*]
the First Aircraft as specified in Article 1 of this Attachment “A”. Embraer
shall not be responsible for [*].

 

Embraer shall [*]
the First Aircraft to comply with the configuration described in Article 1 of
this Attachment A. The Parties acknowledge, however, [*] as reasonably determined
by Embraer, [*] the First Aircraft [*].

 

3.            FINISHING

 

The Aircraft
will be delivered to Buyers as follows:

 

3.1 EXTERIOR FINISHING:

 

The fuselage of the Aircraft shall be painted according to Buyer’s
color and paint scheme which shall be supplied to Embraer by Buyer on or before
six (6) months prior to the relevant Aircraft Contractual Delivery Date.

 

The First Aircraft will be delivered to Buyer in June 2004 [*]
such First Aircraft, [*].  

 

The wings and the horizontal stabilizer of all Aircraft shall be
supplied in the standard colors, i.e., gray BAC707.

 

3.2               INTERIOR FINISHING:

 

Buyer shall inform Embraer on or before [*] months prior to the
relevant Aircraft Contractual Delivery Date of its choice of materials and
colors of all and any item of interior finishing such as seat covers, carpet,
floor lining on galley areas, side walls and overhead lining, galley lining and
curtain. The above-mentioned schedule for definition of interior finishing
shall only be applicable if Buyer selects its materials from the choices
offered by and available at Embraer. In case Buyer opts to use different
materials and or patterns, such schedule shall be mutually agreed between the
Parties at the time of signature of the Purchase Agreement.

 

3.3               BUYER FURNISHED AND
BUYER INSTALLED EQUIPMENT (BFE and BIE):

 

Buyer may choose to have carpets, tapestries, seat covers and curtain
fabrics supplied to Embraer for installation in the Aircraft as BFE. Materials
shall conform to the required standards and comply with all applicable
regulations and airworthiness requirements. Delays in the delivery of BFE
equipment or quality restrictions that prevent the installation thereof in the
time frame required by the Aircraft manufacturing process shall entitle Embraer
to either

 

*   Confidential

 

delay the delivery of the Aircraft or present the Aircraft to Buyer
without such BFE, in which case Buyer [*] of the Aircraft. All BFE equipment
shall be delivered to Embraer in DDP – Embraer facilities in São José dos
Campos, SP, Brazil (Incoterms 2000) conditions.

 

The Aircraft galleys have provisions for the following BIE items that,
unless timely agreed by the Parties, are not supplied or installed by Embraer:
Trolleys, ovens, coffee makers, hot jugs and standard units.

 

4.              REGISTRATION MARKS
AND TRANSPONDER CODE

 

The Aircraft
shall be delivered to Buyer with the registration marks painted on them. The
registration marks and the transponder code shall be supplied to Embraer by Buyer
no later than ninety (90) Days before each relevant Aircraft Contractual
Delivery Date.

 

IT
IS HEREBY AGREED AND UNDERSTOOD BY THE PARTIES THAT IF THERE IS ANY CONFLICT
BETWEEN THE TERMS OF THIS ATTACHMENT “A” AND THE TERMS OF THE TECHNICAL
DESCRIPTION ABOVE REFERRED, THE TERMS OF THIS ATTACHMENT “A” SHALL PREVAIL.

 

*   Confidential

 

ATTACHMENT B - FERRY EQUIPMENT AND PRODUCT
SUPPORT PACKAGE

 

1. FERRY EQUIPMENT AND ASSISTANCE

 

1.1           If it is necessary for any ferry equipment
to be installed by Embraer in the Aircraft for the ferry flight between Brazil
and the United States of America, Embraer will make available a standard ferry
equipment to Buyer (hereinafter the “Kit”), at no charge to Buyer, except as
set forth below. In this case, Buyer shall immediately upon the Aircraft’s
arrival at Embraer Marketing Aircraft Corporation (“EMAC”) facilities in Fort
Lauderdale – Fl, remove the Kit from the Aircraft and EMAC shall return the Kit
to Embraer in Brazil at [*], including the necessary insurance.

 

If Embraer provides the Kit to Buyer and if the Kit is either utilized,
whether totally or not, or if the Kit is not returned by Buyer, in Embraer’s
reasonable discretion, complete and in the same condition as it was delivered
to Buyer, Buyer shall pay Embraer the value of a new Kit. In such case, the
original Kit shall [*], and the above-mentioned payment shall
be made to Embraer by Buyer upon [*].

 

1.2           [*]

 

1.3           At no additional charge to Buyer and at
Buyer’s request, Embraer shall make a technical representative available on
board of the Aircraft during the ferry flight in order to assist Buyer’s flight
crew with any possible technical problem with the Aircraft and also to assist
Buyer with the communication with Brazilian custom clearances and Aircraft refueling
individuals. Such representative shall remain on board of the Aircraft until
the last stop in Brazilian territory. Any other arrangement shall be requested
by Buyer with [*] days prior to the relevant Aircraft Contractual Delivery
Date and Embraer will inform Buyer the terms and conditions to provide such
additional service to Buyer.

 

2. PRODUCT SUPPORT PACKAGE

 

2.1 MATERIAL SUPPORT

 

2.1.1        Spares Parts General Policy: Embraer guarantees
the supply of line replaceable units, spare parts, ground support equipment and
tooling, except engines and engine accessories, hereinafter referred to as
“Spare(s)”, for the Aircraft for a period of [*] years after production of
the last aircraft of the same type. Such Spares shall be supplied according to
the prevailing availability, sale conditions, delivery schedule and
effective price on the date of acceptance by Embraer of the purchase order. The
Spares may be supplied either by Embraer in Brazil or through its subsidiaries
or distribution centers located abroad.

 

Embraer’s spare parts policy is to provide the following categories of
spares as specified in the respective Embraer publications and available to be
purchased through Embraer:

 

•      Line Replaceable Units
(LRU’s);

 

•      Parts to repair and overhaul
components manufactured under Embraer specification to be used only on the
Aircraft;

 

•      Parts to line maintenance;

 

*   Confidential

 

•      Parts to fulfill all
maintenance tasks per maintenance manual and/or maintenance plan issued by
Embraer;

 

•      Embraer-made parts;

 

•      Aircraft Ground Equipment
(AGE);

 

•      Aircraft Ground Equipment
spare parts manufactured under Embraer specifications;

 

•      Special tools; and

 

•      Bulk materials.

 

2.1.2        Recommended Spare Parts List (“RSPL”):
Upon Buyer’s request, Embraer shall present to Buyer a recommended Spare
provisioning list (the “RSPL”). The objective of the RSPL is to provide Buyer
with a detailed list of Spares that will be necessary to support the initial
operation and maintenance of the Aircraft by Buyer. Such recommendation will be
based on the experience of Embraer and on the operational parameters
established by Buyer.

 

Embraer will provide a qualified team to attend pre-provisioning
conferences, as necessary, to discuss Buyer requirements and the RSPL as well
as any available spare parts support programs offered by Embraer. Such meeting
shall be held at a mutually agreed upon place and time, [*] prior to the Contractual
Delivery Date of the first Firm Aircraft.

 

Buyer may elect to acquire all the items contained in the RSPL or to
combine a partial acquisition of the RSPL items with a participation in the
special spare parts support programs, available from Embraer.

 

Buyer may acquire the items contained in the RSPL directly from Embraer
or directly from Embraer’s vendors. For the items contained in the RSPL that
Buyer elects to purchase directly from Embraer (the “IP Spares”). If Buyer
places a IP Spares purchase order on or before [*] days prior to the first
Firm Aircraft Contractual Delivery Date, [*]. 
For purchase orders placed by Buyer after the schedule set forth
above, the IP Spares shall be provided to Buyer in accordance with the quoted
lead times.

 

Embraer will deliver the IP Spares in FCA (Free Carrier - Incoterms
2000) condition, at the port of clearance indicated by Embraer [*].

 

If requested by Buyer, Embraer will update the data of the RSPL
incorporating engineering and price changes. Embraer will maintain a master
copy of the RSPL updated [*].

 

2.1.3        Credit for surplus IP Spares: Embraer offers to
Buyer a program for certain surplus IP Spares manufactured by Embraer and which
were recommended in writing by Embraer limited to the quantities, part numbers
and serial numbers (if applicable) identified in the relevant invoices. Such
program will provide terms no less favorable than the following:

 

*   Confidential

 

a.     Credit Program: During the period commencing [*]
after delivery of the first Aircraft under the Purchase Agreement of which this
is an Attachment and ending [*] after such delivery, Embraer will, [*],
offer a credit for new and unused IP Spares manufactured by Embraer (i) which
have been supplied by Embraer as IP Spares for the Aircraft subject of this
Agreement and (ii) which are surplus to Buyer ́s needs. Such credit may be used
toward the purchase of Spares manufactured by Embraer, Technical Publications
or Services (excluding training) offered by Embraer.

 

a.1       Exceptions: Embraer will not issue credits for
IP Spares which were purchased by Buyer in excess to or differently from the IP
Spares recommended in writing by Embraer to Buyer by the IPL as initial
provisioning for the Aircraft and for IP Spares which have become obsolete or
have been superseded by another part as a result of (i) Buyer’s modification of
an Aircraft for which the IP Spares were purchased; (ii) Embraer design
improvements (except for IP Spares which have become obsolete because of a
defect in design); (iii) IP Spares which are shelf-life limited; (iv) damaged
IP Spares; or (v) IP Spares that were not properly stored.

 

a.2       Credit values: The credit for each IP Spare to
be issued by Embraer will be: (i) an amount equal to [*] or (ii) an amount equal
to [*]
whichever is less.

 

a.3       Delivery of surplus IP Spares: IP Spares for
which a credit has been requested shall be delivered by Buyer, freight and
insurance prepaid, to Embraer’s plant in São José dos Campos, SP, Brazil, or
any other destination as Embraer may reasonably designate. All returned IP
Spares are subject to Embraer’s quality control inspection and acceptance. All
IP Spares which are rejected by Embraer’s quality control and/or are included
in the exceptions set forth in paragraph a.1 hereinabove, will be returned to
Buyer at Buyer’s expense, no credit being due in this case.

 

a.4       Credit issue: After Embraer’s acceptance of those
IP Spares suitable for the credit program, under the terms of this Agreement,
Embraer will notify the available credit amount to Buyer and provide all
relevant information as to credit utilization.

 

2.1.4        Other Spare Parts Services:

 

a.     AOG services: Embraer will maintain a call center
for the AOG services, twenty-four (24) hours a day, seven (7) days a week. All
the contacts with the call center can be made through TOLL FREE numbers (phone
and fax), e-mail [*] Embraer will also maintain the regular direct lines (phone
and fax), in case of failures. The information concerning TOLL FREE, regular
lines and e-mail address can be obtained through the Customer Account Manager
designated to Buyer by Embraer or through Embraer’s Customer Service offices.
Embraer will deliver parts under AOG from Buyer nearest location, provided that
the part is available at this location at the moment of the

 

*   Confidential

 

request, in FCA condition - Embraer’s facility, respecting Buyer’s
shipping instructions.

 

Other than AOG orders, Buyer may expedite spare parts orders as spare
parts critical orders (imminent AOG or work stoppage situation) or as spare
parts routine expedite orders (urgent stock replenishment – “USR”). [*]

 

	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  

 

b.     Routine and/or Critical Spares: Embraer will
deliver routine and/or critical Spares (other than AOG Spares) in [*],
depending on where the purchase order was placed with or otherwise agreed
between Embraer and Buyer. Routine and/or critical Spares shall be delivered
according to their lead times, depending upon the purchase order priority and
with the respective authorized release certificate or any similar document
issued by a duly authorized person.

 

2.1.5        Parts Exchange Program: According to its
prevailing availability, Embraer may offer an “exchange program” for repairable
parts whenever the vendor does not have its own exchange program.

 

2.1.6        Parts Repair Program: For any repair
required by Chautauqua on any Embraer or vendor repairable item, Embraer may assist
Chautauqua to perform such repair in order to ensure the shortest turn around
time (TAT).

 

2.1.7        Pricing: Embraer will maintain a spare
parts price list updated periodically. Items not shown on the list will be
quoted on request.

 

2.2 AIRCRAFT TECHNICAL
PUBLICATIONS:

 

2.2.1        Aircraft Publications: Embraer shall supply, at
no additional charge to Buyer, [*] complete sets of operational and
maintenance publications (as defined in Exhibit 1 hereto), plus one (1)
operational set (as defined in Exhibit 1 hereto) on board of each Aircraft to
be delivered to Buyer, in the English language. The list of manuals is
specified in Exhibit “1” to this Attachment “B”. Such publications are issued
under the applicable specification and are [*]. The revision service for these
publications is provided, [*], including mailing services (except for
air cargo shipping) and the software license fee [*].

 

2.2.2        Vendor’s items Publications: With
respect to vendor items installed in the Aircraft which have their own
publications, Buyer will receive them in the same quantity specified in
paragraph 2.2.1, in their original content and printed form, directly from the
suppliers, which are also responsible to keep them continuously updated through
a direct communication system with Buyer.

 

2.2.3        All Embraer Operational and Maintenance
Technical Publications are available [*] except for [*] that are available [*].

 

*   Confidential

 

Maintenance Technical Publications, [*] will be provided [*].

 

2.2.4        The Parties further understand and agree that
in the event Buyer elects not to take all or any one of the publications above
mentioned, or revisions thereof, no refund or other financial adjustment of the
Aircraft Basic Price will be made since such publications are offered at no
charge to Buyer.

 

2.2.5        The terms and conditions of this
Article 2.2 do not apply to [*] except for [*] that Embraer shall [*].

 

2.3 SERVICES

 

Embraer shall provide familiarization programs and on-site support for
the Aircraft (the “Services”) in accordance with the terms and conditions
described below:

 

2.3.1        Aircraft familiarization program:

 

a.     The familiarization program specified in paragraph
“e” below (the “Training Package”) is being offered at [*], except for the [*],
which are used in flight training to be performed in the Aircraft, if any, as
well as, travel and board & lodging expenses of Buyer’s trainees, [*].
The Training Package shall be conducted in accordance with Buyer’s training
program and with all applicable regulations and requirements of the Aviation
Authority.

 

b.     Notwithstanding the eventual use of the term
“training” in this paragraph 2.3.1, the intent of this program is solely to
familiarize Buyer’s pilots, mechanics, employees or representatives, duly
qualified per the governing body in the country of Buyer’s operation, with the
operation and maintenance of the Aircraft. It is not the intent of Embraer to
provide basic training (“ab-initio”) to any representatives of Buyer.

 

c.     The Training Package, as applicable, shall occur
prior to the [*] Aircraft Actual Delivery Date, as it shall be previously
agreed upon by Buyer and Embraer, [*].

 

Buyer must give written notification to Embraer [*] days in advance of
Buyer’s expected training schedule (including the full name and
identification of each attendee) and Buyer shall [*].  Substitutions will not be accepted for
training within this period.

 

[*]
should Buyer not take all or any portion of the Training Package on or before [*],
Buyer shall be deemed to have fully waived its rights to such service, no
refund or indemnity being due by Embraer to Buyer in this case.

 

d.     The Training Package shall be conducted by
Embraer’s designated trainer provider in United States, or at such other
location, as Embraer shall reasonably designate [*].

 

e.     The Training Package covers:

 

e.1       One (1) Pilot Familiarization Program for up to [*]
including (i) ground familiarization as regards Aircraft systems, weight and
balance, performance and normal/emergency procedures and, (ii) flight simulator

 

*   Confidential

 

training in [*] in accordance with the Aviation
Authority’s approved Flight Operations Training Program.

 

e.2       One (1) Maintenance Familiarization Course for
up to [*].
This course shall consist of classroom familiarization with Aircraft systems
and structures and shall be in accordance with ATA specification 104, level
III.

 

e.3       One (1) Flight Attendant Familiarization Course
for up to [*].
This course shall consist of classroom familiarization, including a general
description of Aircraft and systems to be used by flight attendants.

 

e.4       In addition to the above, the following
individuals shall be trained:

 

•      Up to [*] which received [*]
to be trained [*]

 

•      Up to [*] which received [*]
to be trained [*]

 

•      Up to [*] which received [*]
to be trained [*]

 

•      Up to [*]

 

•      Up to [*]

 

•      Up to [*] to be trained [*]

 

•      Up to [*]

 

f.      Buyer shall be solely responsible for submitting
its training programs to the Aviation Authority for approval.

 

g.     The presence of Buyer’s authorized trainees shall
be allowed exclusively in those areas related to the subject matter hereof and
Buyer agrees to hold harmless Embraer from and against all and any kind of
liabilities in respect of such trainees to the extent permitted by law.

 

Any other service will be subject to a specific agreement to be
negotiated by the Parties and will be charged by Embraer accordingly.

 

2.3.2                        [*] support:

 

a.     Embraer shall identify in its sole discretion, and
provide a technical support representative (the “TSR”) [*].

 

b.     TSR shall assist and advise Buyer on the Aircraft
maintenance during its initial operation and act as liaison between Buyer and
Embraer.

 

c.     At no charge to Embraer, Buyer shall provide each
such TSR with communication services (telephone, facsimile) as well as office
space and facilities at Buyer’s designated maintenance base. Buyer shall also
(a) arrange all necessary work permits and airport security clearances required
for Embraer employees, to permit the accomplishment of the services mentioned
in this item 2.3.2, in due time; and (b) obtain all necessary custom clearances
both to enter and depart from Buyer’s country for Embraer’s employees and their
personal belongings and professional tools.

 

*   Confidential

 

d.     During the [*], Buyer shall permit access to the
maintenance and operation facilities as well as to the data and files of
Buyer’s Aircraft fleet. It is hereby agreed and understood that Buyer shall
make available [*], one (1) set of updated Technical Publications as referred
to in Article 2.2 above, it being Buyer’s responsibility to perform the
revision services in order to maintain such publications updated within the
period [*].

 

e.     Buyer shall bear all expenses related to [*].

 

f.      Without a previous written authorization from
Embraer, TSR shall not participate in test flights or flight demonstrations. In
case Buyer obtains such previous authorization, Buyer shall include the TSR in
Buyer’s insurance policy. Embraer reserves the right to halt the services
mentioned in this item 2.3.2, should any of the following situations occur at
Buyer’s base: a) there is a labor dispute or work stoppage in progress; b) war
or war like operations, riots or insurrections; c) any conditions which is
dangerous to the safety or health of Embraer’s employee; or d) the government
of Buyer’s country refuses permission to Embraer’s employee to enter the
country.

 

g.     The Parties further understand and agree that in
the event Buyer elects not to take all or any portion of the [*]
support provided for herein, [*]. Any other additional on site support
shall depend on mutual agreement between the Parties and shall be charged by
Embraer accordingly.

 

h.     The presence of TSR shall be allowed exclusively
in those areas related to the subject matter hereof and Embraer agrees to hold
harmless Buyer from and against all and any kind of liabilities in respect of
such TSR to the extent permitted by law.

 

i.      Buyer agrees to indemnify and hold harmless
Embraer and Embraer’s officers, agents, employees and assignees from and
against all liabilities, damages, losses, judgments, claims and suits,
including costs and expenses incident thereto, which may be suffered by,
accrued against, be charged to or recoverable from Embraer and/or Embraer’s
officers, agents, employees and assignees by reason of loss or damage to
property or by reason of injury or death of any person resulting from or in any
way connected with the performance of services by employees, representatives or
agents of Embraer for or on behalf of Buyer related to Aircraft delivered by
Embraer to Buyer, including, but not limited to, the Services and any other
services such as technical operations, maintenance, and training services and
assistance performed while on the premises of Embraer or Buyer, while in flight
on Buyer-owned Aircraft or while performing such activities, at any place, in
conjunction with the Aircraft operations of Buyer, [*].

 

2.3.3        [*]

 

*   Confidential

 

[*] the following technical publications
covering Aircraft operation and maintenance, plus [*], shall be delivered to Buyer in accordance with the following list:

 

OPERATIONAL SET

 

	
  1.
  Airplane Flight Manual (AFM)(*)

  
	
  2.
  Weight & Balance Manual (WB)(*)

  
	
  3.
  Airplane Operations Manual (AOM)(*)

  
	
  4.
  Quick Reference Handbook (QRH)(*)

  
	
  5.
  Dispatch Deviation Procedures Manual (DDPM)(*)

  
	
  6.
  Supplementary Performance Manual (SPM)(*)

  
	
  7.
  Operational Bulletins Set (OB)

  
	
  8.
  Master Minimum Equipment List CTA (MMEL)

  
	
  9.
  Standard Operating Procedures Manual (SOPM)

  
	
  10.
  Flight Attendant Manual (FAM)

  

 

MAINTENANCE SET

	
  1.
  Aircraft Maintenance Manual (AMM)

  
	
  2.
  Aircraft Illustrated Parts Catalog (AIPC)

  
	
  3.
  Fault Isolation Manual (FIM)

  
	
  4.
  Non Destructive Testing Manual (NDI)

  
	
  5.
  Maintenance Planning Document (MPD)

  
	
  6.
  Wiring Manual (WM)

  
	
  7.
  Structural Repair Manual (SRM)

  
	
  8.
  Service & Information Bulletins Set (SB/IB)

  
	
  9.
  Service Newsletters (SNL)

  
	
  10.
  Parts Information Letter (PIL)

  
	
  11.
  System Schematic Manual (SSM)

  
	
  12.
  Instructions for Ground Fire Extinguishing and Rescue (IGFER)

  
	
  13.
  Airport Planning Manual (APM)

  
	
  14.
  Illustrated Tool & Equipment Manual (ITEM)

  
	
  15.
  Task Card System CDROM (TCS)

  
	
  16.  Ramp Maintenance Manual (RMM)

  
	
  17.
  Power plant Build-up Manual (PPBM) (**)

  
	
  18.
  Corrosion Prevention Manual (CPM)

  
	
  19.
  Component Maintenance Manual (CMM) (**)

  
	
  20.
  Airplane Recovery Manual (ARM)

  
	
  21.
  Maintenance Facility and Equipment Planning (MFEP)

  
	
  22.
  Standard Wiring Practices Manual (SWPM)

  
	
  23.
  Standard Manual (SM)

  
	
  24.
  Consumable Products Catalog (CPC)

  
	
  25.
  Maintenance Review Board Report (MRB)

  

 

(*)           One extra copy on board each Aircraft

(**)         To be delivered by the suppliers directly to Buyer.

 

*   Confidential

 

ATTACHMENT “C” - WARRANTY - MATERIAL AND
WORKMANSHIP

 

1)              Embraer, subject to the conditions and
limitations hereby expressed, warrants the EMBRAER 170 Aircraft subject of the
Purchase Agreement to which this is an Attachment, as follows:

 

a.               For a period of [*] months from the date of delivery to Buyer,
each Aircraft will be free from:

 

•                  Defects in materials, workmanship and
manufacturing processes in relation to parts manufactured by Embraer or by its
subcontractors holding an Embraer part number;

 

•                  Defects inherent to the design of the
Aircraft and its parts designed or manufactured by Embraer or by its
subcontractors holding an Embraer part number.

 

b.              For a period of [*] months from the date of delivery to Buyer,
each Aircraft will be free from:

 

•                  Defects in operation of vendor (Embraer’s
supplier) manufactured parts, not including the Engines, Auxiliary Power Unit
(APU) and their accessories (“Vendor Parts”), as well as failures of mentioned
parts due to incorrect installation or installation not complying with the
instructions issued or approved by their respective manufacturers.

 

•                  Defects due to non-conformity of Vendor
Parts to the technical specification referred to in the Purchase Agreement of
the Aircraft.

 

Once the above-mentioned periods have
expired, Embraer will transfer to Buyer the original Warranty issued by the
vendors, if it still exists.

 

2)              Embraer, subject to the conditions and
limitations hereby expressed, warrants that:

 

a.               All spare parts or ground support equipment,
not including Engines, APU and their Accessories, which have been manufactured
by Embraer or by its subcontractors holding an Embraer part number, which will
permit their particular identification and which have been sold by Embraer or
its representatives will, for a period of [*] months from the date of the invoice, be free from defects of material,
workmanship, manufacturing processes and defects inherent to the design of the
above mentioned parts or ground support equipment.

 

b.              All spare parts or ground support equipment,
which have been designed and manufactured by vendors, not including Engines,
APU and their related accessories, and stamped with a serial number which will
permit their particular identification and which have been sold by Embraer or
its representatives will, for a period of [*] months from the date of the invoice, be free from malfunction, defect
of material and manufacture.

 

3)              The obligations of Embraer as expressed in
this Warranty are limited to replace or repair defective parts, depending
solely upon its own judgment. The defective parts shall be returned to Embraer
or its representatives within a period of [*] days after the later of either the occurrence of the defect, or after
Buyer should reasonably have been aware of the defect, whichever is longer, at
Buyer’s own expense

 

*   Confidential

 

(including but not limited to, freight,
insurance, customs duties), adequately packed, provided that such components
are actually defective and that the defect has occurred within the periods
stipulated in this certificate. Should the defective part not be returned to
Embraer within such [*] period, Embraer may have the right, at its sole discretion, to deny the
warranty claim. In the event that it is not practical in the international
commercial transportation industry to return the part or component which is the
subject of a warranty claim under this Attachment C, to Embraer, because of
either its extremely large size or its relationship to the Airframe, [*].
 Embraer shall thereafter send [*] for the alleged defect. In the event that Embraer in its sole judgment
finds [*] is defective, Embraer
shall either repair, rework, or replace the defective [*].

 

NOTE:            Notification of any defect claimed under
this item 3 must be given to Embraer within [*] after such defect is found.

 

Freight, insurance, taxes and other costs
incurred by Embraer or its representative for the return of the part to Buyer,
as well as the associated costs with the reinstallation and adjustments are
Buyer’s responsibility.

 

Parts supplied to Buyer as replacement for
defective parts are warranted for the balance of the warranty period still
available from the original warranty of the exchanged parts.

 

4)              Embraer will accept no warranty claims under
any of the circumstances listed below unless it can be demonstrated in
accordance with the standards of the international aircraft manufacturing
industry that such operation or maintenance or other circumstance did not cause
the defect:

 

a.               When the Aircraft has been used in an
attempt to break records, or subjected to experimental flights, or in any other
way not in conformity with the flight manual or the airworthiness certificate,
or subjected to any manner of use in contravention of the applicable aerial
navigation or other regulations and rules, issued or recommended by government
authorities of whatever country in which the Aircraft is operated, when
accepted and recommended by I.C.A.O.;

 

b.              When the Aircraft or any of its parts have
been altered or modified by Buyer, without prior approval from Embraer or from
the manufacturer of the parts through a service bulletin;

 

c.               Whenever the Aircraft or any of its parts
have been involved in an accident, or when parts either defective or not
complying to manufacturer’s design or specification have been used;

 

d.              Whenever parts have had their identification
marks, designation, seal or serial number altered or removed;

 

e.               In the event of negligence, misuse or
maintenance services done on the Aircraft, or any of its parts not in
accordance with the respective maintenance manual;

 

f.                 In cases of deterioration, wear, breakage,
damage or any other defect resulting from the use of inadequate packing methods
when returning items to Embraer or its representatives.

 

*   Confidential

 

5)              This Warranty does not apply to defects
presented by expendable items, arising after the applicable service life or
maintenance cycle for such item, and to materials or parts subjected to
deterioration.

 

6)              The Warranty hereby expressed is established
between Embraer and Buyer, and it cannot be transferred or assigned to others,
unless by written consent of Embraer, according to Article 14 of the
Purchase Agreement of which this is an Attachment.

 

7)              THE WARRANTIES, OBLIGATIONS AND LIABILITIES
OF EMBRAER AND REMEDIES OF BUYER SET FORTH IN THIS WARRANTY CERTIFICATE ARE
EXCLUSIVE AND IN SUBSTITUTION FOR, AND BUYER HEREBY WAIVES, RELEASES AND
RENOUNCES, ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF EMBRAER AND ANY
ASSIGNEE OF EMBRAER AND ALL OTHER RIGHTS, CLAIMS AND REMEDIES OF BUYER AGAINST
EMBRAER OR ANY ASSIGNEE OF EMBRAER, EXPRESS OR IMPLIED, ARISING BY LAW OR
OTHERWISE, WITH RESPECT TO ANY NON-CONFORMANCE OR DEFECT OR FAILURE OR ANY
OTHER REASON IN ANY AIRCRAFT OR OTHER THING DELIVERED UNDER THE PURCHASE
AGREEMENT OF WHICH THIS IS AN ATTACHMENT, INCLUDING DATA, DOCUMENT, INFORMATION
OR SERVICE, INCLUDING BUT NOT LIMITED TO:

 

a.               ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS;

 

b.              ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE;

 

c.               ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR
REMEDY IN TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OR OTHER RELATED
CAUSES OF EMBRAER OR ANY ASSIGNEE OF EMBRAER, WHETHER ACTIVE, PASSIVE OR
IMPUTED; AND

 

d.              ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR
REMEDY FOR LOSS OF OR DAMAGE TO ANY AIRCRAFT, FOR LOSS OF USE, REVENUE OR
PROFIT WITH RESPECT TO ANY AIRCRAFT OR FOR ANY OTHER DIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES.

 

8)              No representative or employee of Embraer is
authorized to establish any other warranty than the one hereby expressed, nor
to assume any additional obligation, relative to the matter, in the name of
Embraer and therefore any such statements eventually made by, or in the name of
Embraer, shall be void and without effect.

 

9)              Provided the provisions hereof are still
effective in accordance with their terms, then Buyer may assign Buyer’s rights
pursuant to this warranty to any entity (but for entities or air carriers which
are owned, effectively controlled or managed by any other airframe manufacturer
which competes in the thirty seven (37) to one hundred ten (110) seat turbo jet
market (“Transferee”)) provided Buyer notifies Embraer of the identity of such
Transferee prior to such transaction. In the event such Transferees or Other
Transferees (as defined herein) subsequently transfer any Aircraft, any
Transferees’ or Other Transferees’ rights which remain pursuant to this
Warranty with respect to such Aircraft may also be transferred to any other
entity (but for entities or air carriers which are owned, effectively
controlled or managed by

 

 

any other airframe manufacturer which
competes in the thirty seven (37) to one hundred ten (110) seat turbo jet
market) (“Other Transferees”)) provided that the Transferees or Other
Transferees notify Embraer of the identity of such other entity prior to such
transaction.

 

 

ATTACHMENT  “D” - EMBRAER 170 ESCALATION FORMULA

 

[*]

 

*   Confidential

 

ATTACHMENT  “E”
- DIRECT MAINTENANCE COST GUARANTEE

 

I.      Embraer, subject to the terms, conditions
and limitations contained in this Attachment, shall guarantee the incurred
direct maintenance cost (the “Maintenance Cost Guarantee”) for the fleet of
Aircraft subject of the Purchase Agreement as follows:

 

a.      The Maintenance Guarantee for the Aircraft
shall be for the period that begins at [*] (“Guarantee Term”). [*]

 

b.      For the first [*] period commencing with
the first Aircraft Actual Delivery Date, the Achieved cumulative Maintenance
Cost - AMC for replacement, repair, overhauls and inspections of Buyer’s
Aircraft, shall not exceed a Maintenance
Cost Guarantee ("MCG1")
rate of:

 

	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  

 

c.      For the first [*] period commencing with the first Aircraft Actual Delivery Date, the
Achieved cumulative Maintenance Cost - AMC for replacement, repair, overhauls
and inspections of Buyer’s Aircraft, shall not exceed a Maintenance Cost
Guarantee ("MCG2") rate of:

 

	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  

 

d.      The [*] shall be [*]
in accordance with [*].

 

e.      Measurement will be computed annually on the
anniversary date of [*].  The results will be reconciled
year by year until [*]

 

f.       In the event at the end of each annual
measurement period, the AMC is higher than the MCG, Embraer shall provide [*] to Buyer as provided for below:

 

[*]

 

g.      Buyer shall use [*] efforts to calculate and submit to Embraer the AMC quarterly, in
electronic format, [*]
after the end of each quarter during the Guarantee Term. In the event that
Buyer fails to submit such data to Embraer as described in the preceding
sentence, Embraer shall send a written notice to Buyer requesting such data,
and the guarantee contained in this Attachment shall terminate in the event
Buyer fails to submit the AMC to Embraer within [*] of such written notice.  

 

The Parties shall use [*] efforts to reach an agreement over the data
annually within [*]
after the submission of AMC in regard to any fourth quarter. In the event that
the AMC contains [*]
that is out of the reasonable control of [*], the Parties shall also discuss the reasons for such [*] and whether it should be included in the
calculation of the AMC. Any credit amount will be credited to Buyer [*] after the agreement regarding the annual
period. Such credit may be used by Buyer only toward [*].

 

*   Confidential

 

h.      This Maintenance Guarantee is based upon the
following assumptions, and any change to the assumptions shall result in an
appropriate recalculation of the MCG rate specified in items “b” and “c” above,
at Embraer criteria.

 

Fleet Size 01: A minimum fleet size of [*] Aircraft delivered in accordance with
Article 5 of the Purchase Agreement.

 

Fleet Size 02: A minimum fleet size of [*] Aircraft delivered in accordance with
Article 22 of the Purchase Agreement.

 

[*]

1      Economic condition: [*] 

 

2      Utilization: The guarantee covers a minimum
of [*] flight hours per cycle, [*] APU hour per flight hour plus or minus [*] APU hour per flight hour and [*] APU cycle per flight cycle plus or minus [*] APU cycle per flight cycle. Buyer’s
fleet-wide average annual Aircraft utilization shall be [*] flight hours, plus or
minus [*]

 

3      Labor rate: [*] per man-hour [*]

 

4      Maintenance Review Board Report: MRB 170.

 

[*]

 

5      Economic condition: [*] 

 

6      Utilization: The guarantee covers a minimum
of [*] flight hours per cycle, [*] APU hour per flight hour plus or minus [*] APU hour per flight hour and [*] APU cycle per flight cycle plus or minus [*] APU cycle per flight cycle. Buyer’s
fleet-wide average annual Aircraft utilization shall be [*] flight hours, plus or minus [*]

 

7      Labor rate: [*] per man-hour [*]

 

8      Maintenance Review Board Report: MRB 170.

 

i.       The following are the elements covered under
this Maintenance Guarantee: 

 

1.      Material cost for non-repairable parts
purchased from or through Embraer and / or Embraer approved vendors.

 

2.   Overhaul/repair costs incurred at Embraer
approved repair facilities.

 

3.   Expendable which can be accounted for on an
unit basis, i.e. filters, gaskets, excluding wire, rivets, nuts, bolts,
washers, pins, brackets, tie wraps.

 

4.   Parts and materials consumed through
scheduled maintenance according to the Maintenance Review Board Report (MRB).

 

j.       The following elements are not covered under
this guarantee: 

 

1.   Costs associated with taxes, levies,
imposts, customs fees.

 

2.   Shipping, receiving, ferry, packing,
storage, warehousing and insurance expenses.

 

3.   General administrative and overhead
expenses.

 

4.   Restoration expenses incurred due to damage
to or failure of Aircraft, components or parts caused by accident, incident,
FOD or Acts of God, negligence, abuse, misuse and/or maintenance errors.

 

*   Confidential

 

5.      When the Aircraft or any of its parts
has/have been altered or modified by Buyer, without prior approval from Embraer
or from the manufacturer of the parts through a service bulletin, provided such
approvals have not been unreasonably withheld. 

 

6.      Consumables including but not limited to
fluids, water, oils, sealants, washing compounds, cleansers, solvents, and
lubricants.

 

7.      Labor costs (excluding the [*] related to [*] and [*]
service bulletins implementation, provided that [*] have been [*]
in writing [*]
in order [*]

 

8.      Normal line operations activities (i.e.
Aircraft servicing) including but not limited to walkaround (i.e. visual
inspection), fueling, parking, washing, lavatory servicing and gallery
servicing.

 

9.      Service bulletins and or airworthiness
directives.

 

10.    Parts or components returned from vendors
with “no-fault” found, i.e., re-certification charges without any repair and
associated labor. Any part removed and replaced from an Aircraft which does not
solve the Aircraft problem (poor troubleshooting) and associated labor.

 

11.    Leasing or loan fees related to the aircraft
or any of its parts which are being used in place of an unserviceable unit.

 

12.    Any part supplied on a “no-charge basis” or
for which a warranty credit or replacement part has been supplied.

 

13.    Aircraft downtime costs.

 

14.    Any parts that are changed during scheduled
or unscheduled maintenance, due to failure, which are still under the warranty
period and, are not submitted to Embraer or the suppliers for warranty credit.

 

15.    Cabin equipment and furnishing materials,
such as but not limited to carpets, seat covers, galley equipment and passenger
commodities.

 

16.    Spare parts prices that exceed the prices
obtainable from Embraer, provided, in the event that [*] in a reasonable time frame, [*] may [*] and [*]
will reasonably agree on [*]

 

17.    In cases of deterioration, wear, breakage,
damage or any other defect resulting from the use of inadequate packing methods
when returning items to Embraer or its representatives.

 

18.    Maintenance problems caused by Buyer’s
negligence or misuse of parts or Buyer’s failure to take all maintenance
actions on the Aircraft as recommended in all applicable maintenance manuals.

 

19.    Maintenance problems involving Aircraft or
parts that has / have been involved in an accident, or when parts either
defective or not complying to manufacturer’s design or specification have been
used.

 

20.    Maintenance problems involving parts that
have had their identification marks, designation, seal or serial number altered
or removed.

 

21.    Extraordinary costs incurred as a result of
any labor disruption or dispute involving a significant work action that
affects in whole or part the Aircraft’s normal operation or maintenance.

 

22.    Engines, related parts and related LRU
costs.

 

23.    Nacelle and Thrust Reverser.

 

*   Confidential

 

24.    BFE (Buyer Furnished Equipment) and / or BIE
(Buyer Installed Equipment) costs.

 

25.    Maintenance reserves.

 

26.    GSE (Ground Support Equipment) costs.

 

II.    The foregoing maintenance guarantee is
provided subject to Buyer’s adherence to the following general conditions:

 

a.       Airplane Operation: Aircraft shall be
operated in airline service in accordance with the applicable Air Authority
regulations and as recommended by Embraer through the official and updated
Operations and Airplane Flight Manual.

 

b.      Inspection Program: The Aircraft shall be
maintained in accordance with the current Maintenance Review Board Report –
(MRB), and the checks shall in no event occur at a time [*] Buyer’s Maintenance Program must have
provisions for escalating the checks interval as soon as the applicable Air
Authority allows. Buyer’s program should also include the use of task cards to
assist the maintenance personnel in performing inspection task.

 

c.       Aircraft Manuals: Buyer shall keep a
complete set of Embraer recommended manuals up-to-date and available to airline
personnel for assisting them with the maintenance and operation of the
Aircraft. A set of recommended manuals or a electronic link to the data should
be available at all maintenance bases (line or heavy) and shall be maintained
with the latest revisions at all times.

 

d.      Warranty: Buyer shall have at minimum, one
person which will be dedicated to the. Aircraft warranty program. This
person(s) will be trained by Embraer warranty department on the correct
procedures for filing Buyer warranty claims in accordance with mutually agreed
format. This person(s) shall also be responsible for the filing of warranty
claims directly to suppliers for credit, repair or replacement.

 

e.       Parts Repair: All shop repairs shall be
performed in Embraer’s or Embraer’s suppliers’ authorized repair shops.

 

f.       Staff levels: Buyer shall have available
reasonable staff to properly maintain the Aircraft during scheduled and
unscheduled maintenance. This shall include, but not be limited to, mechanics,
electricians, avionics specialists, inspectors, cleaners, ground personnel and
flight crews licensed or certified by the applicable Air Authority as required
by the applicable Air Authority regulations.

 

g.      Training: Buyer is required to put in place
a training program approved by the local airworthiness authority, which, at a
minimum, shall include the following items:

 

1.      initial and recurrent training for pilots in
the Aircraft;

 

2.      initial and recurrent training for flight
attendants in the Aircraft; and

 

3.      initial and recurrent training for the
maintenance staff (airframe, powerplant, electric avionics specialists) in the
Aircraft.

 

A reasonable number of maintenance specialist
will require supplier’s training.

 

Buyer is required to train to the above
standards a reasonable number of new hired employee who will work in or on the
Aircraft.

 

*   Confidential

 

h.      Spare Parts Limitation: Spare parts price
shall not exceed the prices obtainable from Embraer. In the event that Embraer
cannot supply a part to Buyer in a reasonable time frame, Embraer may authorize
the purchase of such part by Buyer from a third party at a price in excess of
Embraer’s price, Embraer and Buyer will mutually agree on the portion of such
price to be included in this guarantee provided Buyer maintained the minimum
stock level recommended by Embraer.

 

i.        Buyer will be required to provide Embraer an
every three month service bulletin status report, containing service bulletin
number, Aircraft serial number, Aircraft total time and total cycles.

 

j.        Ground Support Equipment: Embraer shall
provide Buyer a list of tooling and ground support equipment required to
maintain the Aircraft, this list shall be subject to Buyer’s reasonable
approval. Buyer will be required to maintain these levels of required tooling
and ground support equipment in good working order at all times.

 

k.       Reliability Reporting: Buyer is to provide
monthly to Embraer a Aircraft reliability report. This report shall include
Aircraft total time and cycles, component removals, shop finding reports and
tear down reports (for each failure completed) by authorized agencies and SDR’s
(Service Difficult Report) with date, Aircraft registration, problem
description, maintenance action, and part number and serial number of the
components removed and installed. Buyer shall use the ATA 100 chapter breakdown
format for all reports.

 

l.      Accounting System:

 

1.      Buyer shall have an accounting system,
subject to Embraer’s reasonable approval, which demonstrates the ability to
discriminate between chargeable and non-chargeable costs and expenses. Buyer’s
accounting system shall be presented to Embraer, upon Embraer’s written
request, [*] before [*]

 

2.      Upon Embraer’s written request, Buyer shall
also provide on a [*]
basis an activity and expenditure report satisfactory to Embraer, in electronic
format and in accordance with Embraer’s Service News Letter for data exchange. 

 

3.      Upon Embraer’s written request, Embraer and
Buyer may convene frequently meetings to address issues concerning the AMC and
to identify methods to decrease Buyer’s maintenance costs. At a minimum,
Embraer and Buyer shall have two meetings per year to confirm and compute all
costs claimed by Buyer. Buyer shall permit Embraer access to all Buyer data
which can be used to verify any reports produced pursuant to this Attachment. 

 

m.    Duplicated Guarantee: If Buyer negotiates
directly with any of Embraer’s suppliers/vendors a particular maintenance cost
guarantee or equivalent program (including fleet hour agreements), or an
alternative support program with Embraer, the Parties shall negotiate in good
faith and agree on the portion of cost related to this equipment/system that
shall be excluded from the MCG rate, specified in Article I.b and I.c, and
shall result in an appropriate recalculation of the MCG.

 

*   Confidential

 

III.   Buyer shall not unreasonably reject
Embraer’s recommendations, changes or solutions to elements of maintenance that
would result in cost savings, as reasonably determined by the Parties.

 

IV.   EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT THE GUARANTEES, OBLIGATIONS AND LIABILITIES OF EMBRAER, AND REMEDIES
OF BUYER SET FORTH IN THIS AIRCRAFT MAINTENANCE COST GUARANTEE ARE EXCLUSIVE
AND IN SUBSTITUTION FOR, AND BUYER HEREBY WAIVES, RELEASES AND RENOUNCES, ALL
OTHER RIGHTS, CLAIMS, DAMAGES AND REMEDIES OF BUYER AGAINST EMBRAER OR ANY
ASSIGNEE OF EMBRAER, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH
RESPECT TO ANY GUARANTEED LEVEL OF AIRCRAFT MAINTENANCE COSTS.

 

V.    The guarantee hereby expressed is established
between Embraer and Buyer and it cannot be transferred or assigned to others,
unless stated in this Agreement or by previous written consent of Embraer.

 

 

ATTACHMENT “F” - SCHEDULE RELIABILITY
GUARANTEE

 

I.         Definitions.

 

a.     Available for Dispatch: An Aircraft which is
on the ground and cleared for dispatch by signature of Buyer’s responsible
maintenance personnel at least [*]
before the scheduled departure time of the initial flight in any given day
shall be deemed to be “available for dispatch”.

 

b.    Maintenance Interruption.

 

1.    A maintenance interruption occurs when the
malfunction of an item, or necessary checking and/or corrective actions, cause
a revenue flight not to take place or a flight delay exceeding [*]

 

2.    For the
purposes of this guarantee, only the initial Maintenance Interruption shall be
accounted as interruption. Maintenance Interruption of any or all flights on
subsequent days arising from the initial Maintenance Interruption shall not
constitute an additional Maintenance Interruption.

 

3.    Before a
flight may be considered as a Maintenance
Interruption for the purpose of this Schedule Reliability
Guarantee the Aircraft must be inspected for mechanical failure or malfunction.

 

4.    A
repetitive problem, which caused an actual maintenance interruption and was not previously corrected, shall not be
counted as a Maintenance
Interruption.

 

5.    To be
accounted as a Maintenance
Interruption, any malfunction reported, either verbal or written,
must result in maintenance corrective action. “No-trouble-found” or “could not
duplicate” or “reset” events shall not be accounted as Maintenance Interruption.

 

6.    A maintenance interruption that occurs due
to failures of systems or parts from suppliers or vendors that have a separate
maintenance interruption guarantee agreement with Buyer, and which is not
assigned to Embraer, shall not be considered as a Maintenance Interruption.

 

c.     Achieved Dispatch Reliability Percentage
(“ADRP”).

 

ADRP is the actual dispatch reliability
percentage obtained by Buyer’s fleet of Aircraft in regular revenue service,
which are the subject of this Agreement.

 

ADRP shall be computed monthly commencing
with [*] by Buyer, as follows:

 

[*] 

 

II.        Embraer, subject to the conditions and
limitations expressed herein, will guarantee the Aircraft’s
schedule reliability percentage as follows:

 

a.     The average ADRP for the first [*] period after [*] delivered under the Purchase Agreement, shall be [*]; for the [*] the ADPR shall be [*]
for the [*] the ADPR shall be
[*] for the [*] the ADPR shall be [*]
for the [*] (the “Final
Period”) the ADPR shall be [*]

 

b.    In the event that the ADRP in any of the [*] periods referred to above is lower than GDR
for the relevant period, Embraer shall diligently, after notification by Buyer:

 

1.    Make recommendations concerning Buyer’s
programs, publications and

 

*   Confidential

 

maintenance and operational policies to
improve ADRP.

 

2.    Take all measures, as deemed necessary and
appropriate by Embraer when vendor action does not provide the required improvement
in the ADRP.

 

3.    [*] Embraer shall issue a proposal to Buyer
showing the price of the relevant Service Bulletin and the effectiveness of
such modification for Buyer.

 

c.     In the
event the average ADRP at the end of any of the [*] periods described
in paragraph “II.a.” is lower
than the GDR for such period, Embraer shall credit Buyer for Maintenance
Interruptions calculated according to the following formula:

 

[*] 

 

In the
event the average ADRP at the end of any of the [*] periods
described in paragraph “II.a.” above is [*] for such period,
the [*] calculated according to the formula above shall be [*]. 

 

Measurements will be calculated and submitted
by Buyer [*] after the end of each [*]
period referred to in Article II a. herein. The Parties shall do their
efforts to reach an agreement over the data [*] of the submission thereof. Any achieved credit amount will be credited
to Buyer or to Embraer [*]
after each agreement date for each of the [*] periods. Buyer may use such credit only toward [*].
 Embraer may use such credit only for [*].

 

The sum
of all credits under this Dispatch Reliability Guarantee shall not exceed [*] Buyer’s
entire Aircraft fleet for the [*] periods.

 

d.    This dispatch reliability guarantee is based
upon the following assumptions provided by Buyer, and any change to the
assumptions shall be cause for reevaluation or adjustments of this guarantee
upon the reasonable agreement of the Parties.

 

Fleet Size 1: Minimum of [*] Aircraft, delivered in accordance with
Article 5 of the Purchase Agreement.

 

Utilization for Fleet Size 1:  The guarantee covers a minimum of [*] flight hours per cycle, [*] APU hour per flight hour plus or minus [*] APU hour per flight hour and [*] APU cycle per flight cycle plus or minus [*] APU cycle per flight cycle. Buyer’s
fleet-wide average annual Aircraft utilization shall be [*] flight hours, plus or minus [*].

 

Fleet Size 2: Minimum of [*] Aircraft, delivered in accordance with
Articles 5 and 22 of the Purchase Agreement.

 

Utilization for Fleer Size 2: The guarantee
covers a minimum of [*] flight hours per cycle, [*]
APU hour per flight hour plus or minus [*] APU hour per flight hour and [*] APU cycle per flight cycle plus or minus [*] APU cycle per flight cycle. Buyer’s fleet-wide average annual Aircraft
utilization shall be [*]
flight hours, plus or minus [*].

 

e.     The following elements are not covered under
this guarantee:

 

•       Interruptions of scheduled flights due to reasons other than Aircraft
mechanical failures, including without limitation:

 

•       Air Traffic Control

 

*   Confidential

 

•       Weather, acts of God, FOD, wars, riots, third party criminal acts

 

•       Accidents

 

•       Incidents

 

•       Negligence

 

•       Conditions that exist prior to dispatch which lead to a flight
interruption and could have been prevented by maintenance prior to dispatch
(including but not limited to worn, flat and cut tires, servicing (ATA Chapter
12), dead batteries, and worn brakes)

 

•       Hard landing.

 

•       Late out of maintenance

 

•       Force majeure

 

•       Crew refusal

 

•       Optional equipment other than that identified on Attachment “A” to this
Agreement

 

•       Operational delays or cancellations not related to maintenance

 

•       Passenger and/or baggage loading

 

•       Non-availability of spares or equipment

 

•       Non-availability of personnel

 

•       Operation interruptions or Maintenance Interruptions, which occurred due
to items, related in the Minimum Equipment List (“MEL”) issued and/or approved
by the local regulatory authority was followed

 

•       If the Aviation Authority grounds Buyer’s fleet, or one of Buyer’s
Aircraft

 

•       Maintenance problems caused by Buyer’s negligence or misuse of parts or
Buyer’s failure to take all maintenance actions on the Aircraft as recommended
in all applicable maintenance manuals

 

•       Maintenance problems involving Aircraft or parts that has/have been
involved in an accident, or when parts either defective or not complying to
manufacturer’s design or specification have been used.

 

•       Maintenance problems involving parts that have had their identification
marks, designation, seal or serial number altered or removed

 

•       Maintenance problem resulting from inadequate packing for shipment and
storage

 

•       A flight interruption shall not be
considered as a Maintenance
Interruption if, at the time of the interruption, Buyer has a spare
aircraft in its fleet, even though for a different model, that could
commercially reasonable be used to avoid such interruption and is not otherwise
deployed in service

 

•       Regulatory changes compliance

 

•       Cancellations or delays caused by components repaired in non-approved
local airworthiness authority shop

 

•       Flight cancellation or delay occurred due to one same problem on the
same Aircraft within fourteen (14) consecutive days period.

 

III.      The foregoing dispatch reliability guarantee
is provided subject to Buyer’s adherence in all material respects to the
following general conditions:

 

a.     Airplane Operation: Aircraft shall be
operated in airline service in accordance

 

 

with the Aviation Authority regulations and
as recommended by Embraer through the official and most updated Operations and
Airplane Flight Manual. Buyer shall have available one spare Aircraft for each
twenty Aircraft at all times.

 

b.    Inspection Program: The Aircraft shall be
maintained in accordance with the most current MRB document. Buyer’s program
must have provisions for escalating the checks intervals as soon as the
Aviation Authority allows. Buyer’s program should also include the use of task
cards to assist the maintenance personnel in performing inspection tasks.

 

c.     Aircraft Manuals: Buyer shall keep a
complete set of Embraer recommended manuals up-to-date and available to airline
personnel for assisting them with the maintenance and operation of the
Aircraft. A set of recommended manuals should be available at all maintenance
bases (line or heavy) and shall be maintained with the latest revisions at all
times.

 

d.    MEL: Buyer shall keep its MEL up to date,
with the most current issue.

 

e.     Stocking Levels: Buyer shall be responsible
to stock and maintain the recommended spare parts list (RSPL) in inventory,
throughout the guarantee period. There shall be a minimum inventory level at
each line maintenance base along with the major parts being stored at the heavy
maintenance facility. In the event during the ADR meetings, the Aircraft does
not achieve the guaranteed values, and if the cause of this non-performance is
the lack of spare parts initially recommended by Embraer for the RSPL and not
purchased by Buyer, this guarantee will not be applicable. Embraer is to
receive annually an inventory list from the Buyer that shows current stocking
levels and the locations of all Aircraft spare parts and will make any
recommendations on additional inventory if needed. 

 

f.     Parts Repair: All shop repairs shall be
performed in Embraer’s or Embraer’s suppliers’ authorized repair shops.

 

g.    Staff Levels: Buyer shall have available
reasonable staff to properly maintain the Aircraft during scheduled and
unscheduled maintenance. This shall include, but not be limited to, mechanics,
electricians, avionics specialists, inspectors, cleaners, ground personnel and
flight crews licensed or certified by the Aviation Authority as required by
Aviation Authority regulations.

 

h.    Training: Buyer is required to put in place
a training program approved by the Aviation Authority, which, at a minimum,
shall include the following items:

 

1.    Initial and recurrent training for pilots in
the Aircraft;

 

2.    Initial and recurrent training for flight
attendants in the Aircraft; and

 

3.    Initial and recurrent training for the
maintenance staff (airframe, power plant, electric avionics specialists) in the
Aircraft.

 

Any maintenance specialist (engine, APU,
avionics) will require suppliers’ training.

 

Buyer is required to train to the above
standards any new hired employee who will work in or on the Aircraft.

 

i.      Aircraft Cleaning: Buyer shall keep the
Aircraft reasonably clean, inside and out,

 

 

by commercial airline standards at all times.
This includes without limitation, the engines, wheel wells, nacelles, landing
gear and flight control areas.  

 

j.      Service Bulletins: When Embraer recommends
that Buyer implement a service bulletin which improves performance or dispatch
reliability, enhances flight operations or decreases maintenance costs, [*] and Buyer concludes by a cost benefit
analysis that the SB is commercially reasonable, Embraer Customer Support
Department shall contact Buyer’s Vice President of Maintenance, in writing,
with recommendations that the service bulletin be complied with.  Buyer will schedule the Aircraft for
incorporation of such service bulletin [*] but, subject to Embraer agreement which shall not be unreasonably
withheld, Buyer may schedule it for incorporation during a maintenance
check, so as to minimize interruption to scheduled service.

 

k.     Ground Support Equipment: Embraer shall
provide Buyer two lists of tooling and ground support equipment required to
maintain the Aircraft, which lists shall be subject to Buyer’s reasonable
approval. One list will cover line maintenance bases while the other will apply
to heavy maintenance facilities. Buyer will be required to maintain these
levels of required tooling and ground support equipment in good working order
at all times.

 

l.      Reliability Reporting: Buyer shall monthly
provide to Embraer, in electronic format, a reliability and maintenance cost
report in accordance with the latest revision of the Embraer’s Service News
Letter for data exchange.

 

m.    Rejection: Buyer shall not unreasonably
reject Embraer’s recommendations / changes / solutions which in Embraer’s
opinion, would result in an improvement in Buyer’s dispatch reliability. Any
such rejection shall be cause for re-evaluation and/or adjustment of this
guarantee. Anything in this Agreement to the contrary
notwithstanding, Buyer shall not be required to comply with or implement, and
the benefits and rights provided Buyer hereunder will not be adversely affected
by, Buyer’s not complying with or implementing any Embraer recommendation /
changes / solutions (including without limitation, recommended service
bulletins) or any provision of applicable product literature for which
compliance is not mandated by the local airworthiness authority rules and
regulations if Buyer has determined in good faith that such recommendation /
change / solution or provision of such product literature is not reasonably
expected to result in a net economic benefit to Buyer in light of all
applicable facts and circumstances, including, without limitation, the number
of man-hours reasonably estimated by Embraer to be required to accomplish such
recommendation / change / solution, the labor cost to be incurred, the
potential reduction in maintenance costs to be realized, the time value of
money and the period which would be required for such savings resulting from
the improvement in dispatch reliability to offset the labor and other costs
associated with such man-hours (provided that Buyer may not consider any
benefits to Buyer under any product guarantees to the extent resulting from
Buyer’s decision to comply or not to comply with or implement a recommendation,
change, or solution).

 

n.    Certification or Regulatory Changes: The
achieved maintenance interruption shall not take into account those
interruptions, which were originated by

 

*   Confidential

 

conformity to mandatory regulatory change.

 

o.    Achieved Dispatch Reliability Review
Meeting: An Achieved Dispatch Reliability Review Meeting shall be scheduled, if
necessary, and at the end of each six (6) month period of Buyer’s Aircraft
operation. Representatives of Buyer and Embraer shall participate in the
meetings and will:

 

1.    Review current Achieved Dispatch
Reliability;

 

2.    Eliminate irrelevant or
non-Aircraft-intrinsic interruption claims from computed cancellation rates;
and

 

3.    Review Buyer’s compliance with Service
Bulletins as required by Article III.j herein, review disputed claims, and
consider methods for improvement of Achieved Dispatch Reliability.

 

Buyer shall permit Embraer access to all
Buyer data which can be used in understanding and analyzing the dispatch
reliability failure.

 

p.    Duplicated Guarantee: If Buyer negotiates
directly with any of Embraer’s suppliers/vendors a particular dispatch or
completion reliability guarantee, or an alternative support program with
Embraer, this amount shall be excluded from the guarantee rate, specified in
Article III.a, and shall result in an appropriate recalculation of this
guarantee in accordance with Embraer criteria.

 

IV.      Suspension

 

a.     This guarantee shall be automatically
suspended and shall not apply during the period of any labor disruption or
dispute involving a significant work action, which affects in whole or in part
the Aircraft normal operation and maintenance.

 

b.     This guarantee shall be automatically
suspended and shall not apply during the computation period of which worldwide
EMBRAER 170 fleet (excluding Buyer’s Aircraft) average dispatch reliability
percentage is at least 1% higher than Buyer’s Aircraft dispatch reliability
percentage.

 

V.        Buyer will not include in the calculation of
the ADRP Maintenance Interruptions occurring under any of the circumstances
listed below:

 

a.     When the Aircraft has been used in an
attempt to break records, or subjected to experimental flights, or in any other
way not in conformity with the flight manual or the airworthiness certificate,
or subject to any manner of use in contravention of the applicable aerial
navigation or other regulations or rules, issued or recommended by government
authorities of whatever country in which the Aircraft is operated, when
accepted and recommended by ICAO; and

 

b.    When the Aircraft or any of its parts
has/have been altered or modified by Buyer, without prior approval from Embraer
or from the manufacturer of the parts through a service bulletin, provided such
approval has not been unreasonably withheld.

 

VI.      THE GUARANTEES, OBLIGATIONS AND LIABILITIES
OF EMBRAER, AND REMEDIES OF BUYER SET FORTH IN THIS SCHEDULE RELIABILITY
GUARANTEE ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND BUYER HEREBY WAIVES,
RELEASES AND RENOUNCES, ALL OTHER RIGHTS, CLAIMS, DAMAGES AND REMEDIES OF BUYER
AGAINST EMBRAER OR ANY

 

 

ASSIGNEE OF EMBRAER, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY ACHIEVED DISPATCH RELIABILITY.

 

VII.     The terms and conditions of this dispatch
reliability guarantee do not alter, modify or impair, in any way, the terms and
conditions of Attachment “C” (Aircraft Warranty Certificate) to the Purchase
Agreement.

 

VIII.    The guarantee hereby expressed is
established between Embraer and Buyer and it cannot be transferred or assigned
to others, unless by previous written consent of Embraer.

 

 

ATTACHMENT “G”
– SERVICE LIFE GUARANTEE

 

1.          If during the first [*] cycles, or [*]
after the relevant Aircraft Actual Delivery Date, whichever comes earlier,
during the Aircraft Service Life, any defects or material breakage related to
fatigue (a “Structural Defect”) occur in the Primary Structure of the
following:  

 

a)     Fuselage

 

b)    Wings, excluding the flight control surfaces

 

c)     Pylon

 

d)    Empennage, excluding flight controls
surfaces

 

e)     Landing gears

 

“Primary Structure” being defined as those
parts which are considered main structural elements, designed and directed to
carry the flight loads and inertial loads subject to occur during normal flight
operating conditions, as specified for in the approved Airplane Flight Manual
or other applicable approved Technical Publications, but not including the
fairings, wing tips, stabilizer tips, vertical stabilizer front fairing,
aileron, flaps, rudder and other secondary elements not having primary
structural function), Embraer shall provide to Buyer a design remedy and a
corrective modification kit or replacement item as appropriate, being such
costs borne by the Parties as described in the table below:

 

	
  Aircraft operation

  (Number of cycles)

  	
   

  	
  Embraer’s
  participation

  on the costs

  	
   

  	
  Buyer’s

  participation on

  the costs

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  

 

 

2           Landing gear restoration performed in
accordance with Buyer’s Aviation Authority approved maintenance program and
Embraer’s recommendations shall not be deemed to be a failure for purposes of
this Service Life Guarantee.

 

3           Embraer shall not have any obligation to
Buyer under this Service Life Guarantee to the extent that the Structural
Defect results directly and primarily from:

 

a.      Buyer failing to maintain, inspect or
operate the Aircraft substantially as required by applicable maintenance
manuals as amended from time to time or in accordance with the applicable
airworthiness regulation then in force and the most recently updated Aviation
Authority approved Operations and Airplane Flight Manual.

 

b.      Buyer operating the Aircraft in a manner
that differs in any significant respect from normal passenger service
operations.

 

c.      Structural Defects having been caused
directly and primarily by accidental or

 

*   Confidential

 

willful damage to the Aircraft, use of parts
or repairs not approved by Embraer, hard landings as defined in the Buyer’s
Maintenance Program, violent evasive action or similar abnormal use of the
Aircraft.

 

d.      Buyer not having adequately trained
personnel in structural inspection and detection techniques in Aircraft
structures and components.

 

4           This Service Life Guarantee is applicable
only to Structural Defects and shall not extend to any component in any
structural item incorporated in the Aircraft if such components are stated in
Embraer’s Technical Publications to have a safe life of less than [*]
cycles or [*]
and is subject to written notification having been given to Embraer by Buyer of
any claim hereunder within [*] of the determination by Buyer that said
Structural Defects exist.

 

5           THE GUARANTEES, OBLIGATIONS AND LIABILITIES
OF EMBRAER, AND REMEDIES OF BUYER SET FORTH IN THIS AIRCRAFT SERVICE LIFE
GUARANTEE ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND BUYER HEREBY WAIVES,
RELEASES AND RENOUNCES, ALL OTHER RIGHTS, CLAIMS, DAMAGES AND REMEDIES OF BUYER
AGAINST EMBRAER OR ANY ASSIGNEE OF EMBRAER, EXPRESS OR IMPLIED, ARISING BY LAW
OR OTHERWISE, SOLELY WITH RESPECT TO ANY GUARANTEED LEVEL OF AIRCRAFT SERVICE
LIFE.

 

6           The terms and conditions of this Service
Life Guarantee do not alter, modify or impair, in any way, the terms and
conditions of Embraer’s standard Aircraft Warranty Certificate, contained in
Attachment C to the Purchase Agreement.

 

7           This Service Life Guarantee is assignable
under the terms and conditions of Article 14 of the Purchase Agreement,
but is not transferable in a sale, sub-lease or other disposition of the
Aircraft.

 

*   Confidential

 

ATTACHMENT
“H” - EMBRAER 170 - PERFORMANCE GUARANTEE

 

1.                                      GUARANTEES

 

Embraer, subject to the conditions and
limitations hereby expressed, and considering the Aircraft EMBRAER 170 LR
version with a maximum takeoff weight of 82,011 lb (37,200 kg), equipped with
Embraer furnished General Electric CF34-8E5 engines, guarantees that each
Aircraft on the relevant Actual Delivery Date shall comply with the following
performance:

 

1.1                                  CRUISE SPECIFIC AIR RANGE

 

The cruise
specific air range at a gross weight of 69,444 lb (31,500 kg) in a standard day
(ISA), at an altitude of 35,000 ft, at 450 KTAS using not more than maximum
cruise thrust, shall not be less than the guarantee value:

 

	
  NOMINAL:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
  TOLERANCE:

  	
   

  	
  -  [*]

  
	
   

  	
   

  	
   

  
	
  GUARANTEE:

  	
   

  	
  [*]  NAM/lb

  

 

1.2                                  MISSION

 

1.2.1                        Mission Payload: the payload for a stage
length of 1,300 nautical miles in still air, shall not be less than the
guarantee value:

 

Guarantee:                                   [*] lb  ([*] kg)

 

Note: The
mission payload guaranteed value is subject to the same tolerance applicable to
the MEW pursuant to Paragraph 1.3 below.

 

The mission payload guarantee is based on the
following conditions and operating rules:

 

i.    Stage Length: The stage is defined as the
sum of the distances for climb, cruise and descent.

 

ii.                      Takeoff: The airport altitude is at sea
level. The takeoff weight is not limited by the airport conditions. Maximum
takeoff thrust is used for the takeoff.

 

iii.                   Climbout Maneuver: Following the takeoff to [*]
ft, the Aircraft accelerates to [*] KCAS while climbing to [*]
ft above the departure airport altitude and retracting flaps and landing gear.

 

iv.                  Climb: The Aircraft climbs from [*]
ft above the departure airport altitude to [*] ft altitude at [*] KCAS. The Aircraft then
accelerates to a speed of [*] KCAS. The climb continues at [*]
KCAS until [*] ft is reached. The climb continues at [*] Mach number to cruise
altitude. The temperature is [*] during the climb. Maximum climb thrust
is used throughout the climb.

 

v.                     Cruise: The Aircraft cruises at an average
speed of [*]
Mach number. The cruise altitude is [*] ft. The temperature is [*]
during cruise. The cruise thrust is not to exceed maximum cruise thrust.

 

vi.                  Descent: The Aircraft descends from the
cruise altitude at a speed of [*] Mach until [*] ft is reached and
continues at [*] KCAS until [*] ft

 

*   Confidential

 

altitude. The descent continues at [*]
KCAS to an altitude of [*] ft. The temperature is [*]
during descent.

 

vii.               Approach and Landing Maneuver: The Aircraft
decelerates to the final approach speed while extending landing gear and flaps,
then descends and lands. The elevation of the airport of destination is at sea
level.

 

viii.            Fixed                    Allowances: For the purpose of this
guarantee and for the purpose of establishing compliance with this guarantee,
the following shall be used as fixed quantities and allowances:

 

•                  Taxi-out fuel: [*] lb, [*]

 

•                  Takeoff and climbout maneuver fuel: [*]

 

•                  Approach and landing maneuver fuel: [*]

 

•                  Taxi-in fuel (shall be consumed from the
reserve fuel): [*]

 

•                  The usable reserve fuel remaining upon
completion of the landing: [*] lb.

 

1.2.2                        Operational Empty Weight Basis: Operational
Empty Weight (OEW) derived in accordance with Paragraph 1.2.3 shall be used as
the basis for the mission payload guarantees of Paragraph 1.2.1.

 

1.2.3                        EMBRAER 170 Weight Summary

 

	
  ITEMS

  	
   

  	
  WEIGHT

  (Kg)

  	
   

  	
  WEIGHT

  (Lb)

  
	
  1

  	
  -

  	
  M.E.W Standard EMBRAER 170
  Aircraft

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  2

  	
  -

  	
  Option to Standard EMBRAER
  Aircraft (*)

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  3

  	
  -

  	
  M.E.W.  Customer Configuration LR version

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  4

  	
  -

  	
  Operating Items

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  a

  	
  -

  	
  Pilot and Copilot (180 Lb each) (**)

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  b

  	
  -

  	
  Stewardess (2 at 140 Lb each) (**)

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  c

  	
  -

  	
  Engine oil

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  d

  	
  -

  	
  Hydraulic Fluid

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  e

  	
  -

  	
  Unusable Fuel

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  f

  	
  -

  	
  Apu Oil

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  g

  	
  -

  	
  Water Supply and Toilet Chemicals

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  i

  	
  -

  	
  Flight Kit

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  j

  	
  -

  	
  Crew Baggage

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  k

  	
  -

  	
  Weight Adjustment

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  l

  	
  -

  	
  Galley Inserts (1 oven + 2 water boilers)

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  m

  	
  -

  	
  Catering (Incl. Trolleys, SUs)

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  5

  	
  -

  	
  O.
  E. W.  Customer
  Configuration LR version

  	
   

  	
  [*]

  	
   

  	
  [*]

  

 

REMARKS:

(*) See Customer Options
Table (Item 1.2.4).

(**) In accordance with
Advisory Circular No: 120-27C (U.S. DOT/FAA)  

1.2.4
Customer Options Table:  

*   Confidential

 

	
   

  	
   

  	
  ITEMS

  	
   

  	
  WEIGHT

  (Kg)

  	
   

  	
  WEIGHT

  (Lb)

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  

 

(1)                                  Galley inserts
(Trolleys, SUs) and catering are not included

(2)                                  The above weight
shall be adjusted in accordance with the selected interior lay-out

 

1.3                                 Weight: the manufacturer’s empty weight
(MEW) for Buyer’s Aircraft

*   Confidential

 

configuration is guaranteed to be:

 

	
  NOMINAL:

  	
   

  	
  [*]
  Pounds ([*] Kg)

  
	
   

  	
   

  	
   

  
	
  TOLERANCE:

  	
   

  	
  [*]
  Pounds ([*] Kg)

  
	
   

  	
   

  	
   

  
	
  GUARANTEE:

  	
   

  	
  [*]
  Pounds ([*] Kg)

  

 

2.                                      AIRCRAFT CONFIGURATION

 

2.1                     The guarantees stated above are based on the
Aircraft configuration as defined in the Technical Description PTD-170 Rev. 4
dated May 2003, plus specific Buyer configuration options as defined at Attachment
“A” to the Purchase Agreement, (hereinafter referred to as the “Detail
Specification”). If necessary, appropriate adjustment to this Aircraft
Performance Guarantees shall be made for changes in such Detail Specification
(including but not limited to Buyer requests for changes, Proposal of Major
Changes or any other changes mutually agreed upon between the Buyer and
Embraer) approved in writing by the Buyer and Embraer. Such adjustments shall
be accounted for by Embraer in its evidence of compliance with the guarantees.

 

In the
event a change is made to any law, governmental regulation or requirement, or
in the interpretation of any such law, governmental regulation or requirement
that affects the certification basis for the Aircraft, and as a result thereof,
a change is made to the configuration and/or the performance of the Aircraft in
order to obtain certification, the guarantees set forth in this Aircraft
Performance Guarantee shall be appropriately modified to reflect any such
change.

 

2.2                     The performance guarantees of Article 1
of this Attachment shall be adjusted by Embraer for the following in its
evidence of compliance with such guarantees:

 

a.                           Changes to the Detail Specification
including Major Changes or any other changes mutually agreed upon between the
Buyer and Embraer.

 

b.                          The difference between the weight allowances
of optional items listed in the Detail Specification and the actual weights.

 

3.                                      GUARANTEE CONDITIONS

 

3.1                     All guaranteed performance data are based on
the ICAO International Standard Atmosphere (ISA) unless otherwise specified.
Altitudes are pressure altitudes.

 

3.2                     The FAA Regulations referred to in this
Attachment are, unless otherwise specified, the Certification Basis regulations
specified in the Aircraft Type Certificate Data Sheet.

 

3.3                     The cruise specific air range and the climb,
cruise and descent portions of the mission guarantees include allowances for
normal electrical power extraction and normal operation of the air conditioning
system. Normal power extraction shall be defined as not less than a 41 kW total
electrical

 

*   Confidential

 

and hydraulic loads. Normal operation of the
air conditioning system shall be defined as operation in the automatic mode,
with the temperature control set to maintain a nominal cabin temperature of 70 °F, and all air conditioning systems
operating normally. This operation nominally allows a maximum cabin pressure
differential of [*] lb per square inch, with a nominal Aircraft cabin
ventilation rate of [*] cu.ft per min at [*] ft including passenger
cabin recirculation (nominal recirculation is [*]%). The APU is turned off
unless otherwise specified.

 

3.5                     The cruise specific air range, speed and the
climb, cruise, and descent portions of the mission guarantees are based on an
Aircraft center of gravity location of [*]% of the mean aerodynamic chord.

 

3.6                     Performance, where applicable, is based on a
fuel Lower Heating Value (LHV) of 18,580 BTU per pound and a fuel density of
6.7 lb per U.S. gallon.

 

4.                                      PARTIES’ OBLIGATIONS
ACCORDING TO THIS GUARANTEE

 

4.1                     During the Aircraft acceptance to be
performed by Buyer in accordance with Article 7 of the Purchase Agreement,
Buyer shall check the Aircraft performance specified in Article 1 of this
Attachment H, by using the Aircraft Flight Manual (AFM) or by comparing the
flight test data, at the atmospheric conditions prevailing during the flight,
with the information presented in the Supplementary Performance Manual (SPM),
as applicable. All performance guarantee under this Attachment are in accordance
with both manuals above mentioned, taking into consideration the established
tolerances.

 

4.2                     Embraer’s obligations in respect to the
guarantees stated in Article 1 of this Attachment are limited to Buyer’s
right to [*],
should it be reasonably verified that such Aircraft, during the acceptance
procedure specified in Article 7 of the Purchase Agreement, cannot comply
with the performances guaranteed hereunder, after Embraer has had a reasonable
opportunity to cure such deficiencies in accordance with Article 7 of the
Purchase Agreement. [*]

 

4.3                     In case, during the above mentioned
acceptance procedure, it is proven that the Aircraft performance does not
comply with the performances specified in Article 1 of this Attachment,
but Buyer considers it satisfactory by accepting delivery of such Aircraft,
then Embraer shall not be liable to any claim or demand whatsoever from Buyer
with respect to such performance guarantees.

 

4.4                     Upon acceptance of the Aircraft by Buyer,
all obligations of Embraer regarding the Aircraft performance guarantees shall
cease.

 

5.                                      GUARANTEE COMPLIANCE

 

5.1                     Compliance with the guarantees of
Article 1 of this Attachment shall be based on the conditions specified in
that article, the Aircraft configuration contained in Attachment “A” to the
Purchase Agreement and the guarantee conditions of Article 3 above.

 

*   Confidential

 

5.2                     Compliance with the cruise specific air
range, and the climb, cruise and descent portions of the mission guarantees
shall be established by calculations based on the comparison mentioned in
paragraph 4.1 above.

 

5.3                     The data derived from tests shall be
adjusted as required by conventional methods of correction, interpolation or
extrapolation in accordance with established engineering practices to show compliance
with the performance guarantee.

 

5.4                     Compliance with the Equipped Empty Weight
guarantee shall be based on information in the appropriate approved weight and
balance manual, and associated document or report.

 

6.                                      EXCLUSIVE GUARANTEES

 

6.1                     The only performance guarantees applicable
to the Aircraft are those set forth in this document. The performance
guarantees set forth herein are established between Buyer and Embraer and may
not be transferred or assigned to others, unless by previous written consent of
Embraer.

 

6.2                     THE GUARANTEES, OBLIGATIONS AND LIABILITIES
OF EMBRAER, AND REMEDIES OF BUYER SET FORTH IN THIS PERFORMANCE GUARANTEE ARE
EXCLUSIVE AND IN SUBSTITUTION FOR, AND BUYER HEREBY WAIVES, RELEASES AND
RENOUNCES, ALL OTHER RIGHTS, CLAIMS, DAMAGES AND REMEDIES OF BUYER AGAINST
EMBRAER OR ANY ASSIGNED OF EMBRAER, EXPRESS OR IMPLIED, ARISING BY LAW OR
OTHERWISE, WITH RESPECT TO ANY ACHIEVED PERFORMANCE.

 

6.3                     The terms and conditions of this performance
guarantee do not alter, modify or impair, in any way, the terms and conditions
of Attachment “C” (Aircraft Warranty Certificate) to the Purchase Agreement.

 

 

ATTACHMENT “I”
– APPOINTMENT OF AUTHORIZED REPRESENTATIVE

 

(“Buyer”) hereby designates and appoints
                                  
as the authorized representative of Buyer for the purpose of inspecting,
reinspecting, and  accepting
delivery from EMBRAER - Empresa Brasileira de Aeronautica S.A. (“Embraer”), on
behalf of and in the name of Buyer, of the Embraer Model EMBRAER-170 LR aircraft having Manufacturer’s
Serial No. 170       (including the engines,
appliances and parts installed thereon, the “Aircraft”), as defined  in that certain Purchase Agreement
DCT-014/2004 between Republic Airline, Inc. and EMBRAER  dated March 19, 2004, to be delivered
by Embraer to Buyer pursuant to the Purchase Agreement Assignment to be dated
as of or about
            
    , 200   between                    
and Buyer, including the authority to accept delivery of said Aircraft, and to
execute and deliver any additional documents with respect to the delivery for
said Aircraft in such form as such authorized representative executing the same
shall deem appropriate.

 

Dated:                                                                                
    , 200  

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
   

  
	
  The foregoing appointment is
  hereby accepted

  
	
   

  
	
   

  	
   

  
	
  Name:

  
				

 

 

ATTACHMENT “J” – FORM OF WARRANTY BILL OF
SALE

 

KNOW
ALL MEN BY THESE PRESENTS THAT Embraer – Empresa Brasileira de Aeronáutica S.A.
(“SELLER”), a Brazilian company, whose address Av. Brigadeiro Faria Lima, 2170
- Putim, São José dos Campos, São Paulo, Brazil, is the owner of good and
marketable title to that certain EMBRAER-170 LR aircraft bearing Manufacturer’s
Serial No.
                      ,
with two General Electric CF34-8E5 Engines bearing manufacturer’s serial numbers
[            ] and
[                ],
and all appliances, parts, instruments, appurtenances, accessories, furnishings
and/or other equipment or property incorporated in or installed on or attached
to said aircraft and engines (hereinafter collectively referred to as the
“Aircraft”) to be sold by SELLER under the Purchase Agreement No. DCT-014/2004,
dated as of March 19, 2004, including Attachments, Exhibits, Letters,
Amendments and Agreements by and between SELLER and Republic Airline, Inc.

 

THAT
for and in consideration of the sum of US$ 10.00 and other valuable
consideration, receipt of which is hereby acknowledged, SELLER does this
                    
day of
                    ,
200  , grant, convey, transfer, bargain and sell, deliver and set over
to
                  
(“BUYER”) and unto its successors and assigns forever, all of SELLER’s rights,
title and interest in and to the Aircraft.

 

THAT
SELLER hereby represents and warrants to BUYER, its successors and assigns:

 

(i)                                     that SELLER has good and marketable title to
the Aircraft and the good and lawful right to the Aircraft and the good and
lawful right to sell the same; and

 

(ii)                                  that good and marketable title to the
Aircraft is hereby duly vested in BUYER free and clear of all claims, liens, encumbrances
and rights of others of any nature. 
SELLER hereby covenants and agrees to defend such title forever against
all claims and demands whatsoever.

 

This
Full Warranty Bill of Sale is governed by the laws of the state of New York,
United States of America.

 

IN
WITNESS WHEREOF, SELLER has caused this instrument to be executed and delivered
by its duly authorized officer and attorney in fact.

 

Date
as of
                                        ,
200  .

 

EMBRAER
– EMPRESA BRASILIERA DE AERONAUTICA S.A.

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

 

ATTACHMENT “K” - FORM OF GUARANTEE

 

FORM OF
GUARANTY

 

FOR VALUE RECEIVED, Republic Airways Holdings
Inc., a corporation organized under the laws of Delaware (“Guarantor”),
pursuant to Article 14.3 of that certain Purchase Agreement DCT-014/2004
dated as of March 19, 2004, between Republic Airline, Inc. (“Buyer”) and
EMBRAER-Empresa Brasileira de Aeronáutica S.A. (“Embraer”), as the same may be
amended from time to time (the “Purchase Agreement”), does hereby unconditionally
and irrevocably guarantee to Embraer (i) the due and punctual performance and
observance by Buyer of each covenant, agreement, undertaking, representation,
warranty and any other obligation or condition binding upon or to be performed
or observed by it under and in accordance with the terms of the Purchase
Agreement, and (ii) the due and punctual payment of each amount that Buyer is
or may become obligated to pay under and in accordance with the terms of the
Purchase Agreement (such payment and other obligations of Buyer being herein
referred to as the “Obligations”) and in the event of any nonpayment or
nonperformance, agrees to pay or perform or cause such payment or performance
to be made of such nonpayment or nonperformance. Guarantor further agrees to
pay all reasonable expenses (including, without limitations all reasonable fees
and disbursements of counsel) that may be paid or incurred in enforcing any
rights with respect to, or collecting, any or all of the Obligations and/or
enforcing any rights with respect to, or collecting against, Guarantor under
this Guaranty.  The obligations of
Guarantor to make any payments hereunder shall be subject to the terms and
conditions of the Purchase Agreement applicable to the Obligations.

 

Capitalized terms used but not defined herein
shall have the respective meanings set forth in, and shall be construed and
interpreted in the manner described in, the Purchase Agreement.

 

Guarantor hereby waives notice of acceptance
of this Guaranty, and agrees that, in its capacity as a guarantor, it shall not
be required to consent to, or to receive any notice of, any supplement to or
amendment of, or waiver or modification of the terms of, the Purchase
Agreement.

 

This Guaranty is being furnished to induce
Embraer to enter into the Purchase Agreement.

 

Guarantor represents and warrants that, as of
the date hereof:

 

a.                                       Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has all
necessary corporate power and authority to conduct the business in which it is
currently engaged and to enter into and perform its obligations under this
Guaranty.

 

b.                                      Guarantor has taken, or caused to be taken,
all necessary corporate action to authorize the execution and delivery of this
Agreement and the performance of its obligations hereunder.

 

 

c.                                       The execution and delivery by Guarantor of
this Guaranty, the performance by Guarantor of its obligations hereunder and
the consummation by Guarantor of the transactions contemplated hereby, do not
and will not (A) violate or conflict with any provision of the certificate of
incorporation or by-laws of Guarantor, (B) violate or conflict with any law,
rule, or regulation applicable to or binding on Guarantor or (C) violate or
constitute any breach or default (other than a breach or default that would not
(x) result in a material adverse change to Guarantor or (y) adversely
affect Guarantor’s ability to perform any of its obligations hereunder) under
any agreement, instrument or document to which Guarantor is a party or by which
Guarantor or any of its properties is or may be bound or affected.

 

d.                                      The execution and delivery by Guarantor of
this Guaranty, the performance by Guarantor of its obligations hereunder and
the consummation by Guarantor of the transactions contemplated hereby do not
and will not require the consent, approval or authorization of, or the giving
of notice to, or the registration with, or the recording or filing of any
documents with, or the taking of any other action in respect of, (A) any
trustee or other holder of any indebtedness or obligation of Buyer, (B) any
national, federal, state or local government regulatory, judicial, or
administrative entity of competent jurisdiction, or (C) any other party.

 

e.                                       This Guaranty has been duly authorized,
executed and delivered by Guarantor and constitutes the legal, valid and
binding obligation of Guarantor enforceable against Guarantor in accordance
with the terms hereof, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar laws affecting the rights of creditors generally and general principles
of equity, whether considered in a proceeding at law or in equity.

 

f.                                         Each of the foregoing representations and warranties
shall survive the execution and delivery of this Guaranty.

 

No failure or delay or lack of demand, notice
or diligence in exercising any right under this Guaranty shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right under this Guaranty.

 

This Guaranty is an absolute, unconditional
and continuing guaranty of payment and not of collection.  Guarantor waives any right to require that
any right to take action against Buyer be exhausted or that resort be made to
any security prior to action being taken against Guarantor.

 

In the event that this Guaranty or the
Purchase Agreement shall be terminated, rejected or disaffirmed as a result of
bankruptcy, insolvency, reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar proceedings with respect to

 

 

Buyer, Guarantor’s obligations hereunder to
Embraer shall continue to the same extent as if the same had not been so
terminated, rejected or disaffirmed. 
Guarantor shall and does hereby waive all rights and benefits that
might, in whole or in part, relieve it from the performance of its duties and
obligations by reason of any proceeding as specified in the preceding sentence,
and Guarantor agrees that it shall be liable for all sums guaranteed, in
respect of and without regard to, any modification, limitation or discharge of
the liability of Buyer that may result from any such proceedings and notwithstanding
any stay, injunction or other prohibition issued in any such proceedings.  Furthermore, the obligation of Guarantor
hereunder will not be discharged by: (a) any extension or renewal of any
obligation of Buyer under the Purchase Agreement; (b) any modification of, or
amendment or supplement to, any such Purchase Agreement; (c) any furnishing or
acceptance of additional security or any release of any security; (d) any
waiver, consent or other action or inaction or any exercise or non-exercise of
any right, remedy or power with respect to Buyer; (e) any change in the
structure of the Buyer, any change in ownership of the shares of capital stock
of Guarantor or Buyer or any merger or consolidation of either thereof into or
with any other person; (f) any assignment, transfer, sublease or other
arrangement by which Buyer transfers or loses control of the use of the
Aircraft or any part thereof; or (g) any other occurrence whatsoever, except
payment in full of all amounts payable by Buyer under the Purchase Agreement
and performance in full of all the Obligations in accordance with the terms and
conditions of the Purchase Agreement.

 

Guarantor understands and agrees that its
obligations hereunder shall be continuing, absolute and unconditional without
regard to, and Guarantor hereby waives any defense to, or right to seek a
discharge of, its obligations hereunder with respect to; (a) the validity,
legality or enforceability of the Purchase Agreement, any of the Obligations or
any collateral security therefor or guaranty or right of offset with respect
thereto at any time or from time to time held by Embraer; (b) any defense,
setoff or counterclaim (other than a defense of payment, performance (including
payment or performance attributable to a right of setoff provided for in the
Purchase Agreement that may at any time be available to or be asserted by
Buyer) or breach by either party to the Purchase Agreement until such breach is
resolved under the terms of the Purchase Agreement); or (c) any other
circumstances whatsoever (with or without notice to or knowledge of Buyer or
Guarantor) that constitutes, or might be construed to constitute, an equitable
or legal discharge of Buyer or the Obligations, or of Guarantor under this
Guaranty, in bankruptcy or in any other instance.

 

Notwithstanding any payment or payments made
by Guarantor hereunder or any set off or application of funds of Guarantor by
Embraer, Guarantor shall not be entitled to be subrogated to any of the rights
of Embraer against Buyer or any collateral, security or guaranty or right of
set off held by Embraer for the payment of the Obligations, nor shall Guarantor
seek or be entitled to seek any reimbursement from Buyer in respect of payments
made by Guarantor hereunder, until all amounts and performance owing to Embraer
by Buyer on account of the Obligations are paid and performed in full.  The obligations of Guarantor hereunder shall
be automatically reinstated if and to the extent that any payment by or on
behalf of Buyer in respect of any of the Obligations is

 

 

rescinded or must be otherwise restored by
any holder of any of the Obligations as a result of any proceedings in
bankruptcy or reorganization or similar proceedings and Buyer agrees that it
will reimburse such holders on demand for all reasonable expenses (including,
without limitation, all reasonable fees and disbursements of counsel) incurred
by such holders in connection with such rescission or restoration.

 

Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.

 

This Guaranty shall be binding upon the
successors and assigns of Guarantor; provided, that no transfer, assignment or
delegation by Guarantor, other than a transfer, assignment or delegation by
operation of law, without the consent of Embraer, shall release Guarantor from
its liabilities hereunder.  Subject to
the second preceding paragraph, this Guaranty shall terminate and be of no
further force and effect upon the performance and observance in full of the
Obligations.

 

All notices, requests and demands to or upon
Guarantor or any beneficiary shall be mailed to Buyer in accordance with the
terms of Article 24 of the Purchase Agreement. Guarantor hereby agrees to
be bound as if it were the Buyer by the provisions of Articles 18, 19, 20, 21,
and 25 of the Purchase Agreement, which are incorporated herein by reference as
if fully set forth herein.

 

Dated:
                
    ,  2004

 

	
  REPUBLIC AIRWAYS HOLDINGS INC.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:Exhibit 10.40

CONFIDENTIAL TREATMENT

REQUESTED PURSUANT TO RULE 406

 

LETTER AGREEMENT DCT-015/2004

 

This Letter of Agreement DCT-015/2004 (“Agreement”) dated
March 19, 2004, is an agreement between Republic Airline, Inc. (“Buyer”)
with its principal place of business at 2500 S. High School Road, Indianapolis,
Indiana  46241, United States, and
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A. (“Embraer”), with its
principal place of business at Sao Jose dos Campos, Sao Paulo, Brazil, relating
to the Purchase Agreement DCT-014/2004 dated March 19, 2004 (the “Purchase
Agreement”) for the purchase by Buyer of up to fifty (50) new ERJ 170 - 100 LR
aircraft (the “Aircraft”).

 

This Agreement constitutes an amendment and modification of the
Purchase Agreement, and it sets forth additional agreements of the Parties with
respect to the matters set forth in the Purchase Agreement. All terms defined
in the Purchase Agreement shall have the same meaning when used herein, and in
case of any conflict between this Agreement and the Purchase Agreement, this
Agreement shall govern.

 

NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, Embraer and Buyer agree as follows:

 

1.             PARTS ADDITIONAL SUPPORT

 

[*]

 

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.

 

* Confidential

 

 

(ii)           Spare Parts Credit:  Embraer will provide a spare parts
(except for engines, engine related parts and APU), ground support equipment
and test equipment credit of [*]. This spare parts credit shall be made
available to Buyer upon [*]. 
If for any reason the Purchase Agreement is terminated in relation to
any Aircraft, then [*] Buyer shall pay [*]. The spare parts credit
with respect to an Aircraft shall only be made available to Buyer in the event
there is [*].  If any such credit is not so made available
to Buyer because [*] such credit shall be made available [*].  Any portion of such credit which remains
unused [*]
shall be deemed to have been waived by Buyer, and no further compensation shall
be due from Embraer to Buyer for such spare parts credit(s).  Such spare parts credit(s) shall be applied
against [*].

 

(iii)           [*] Credit for the
First Firm Aircraft:  Embraer will provide [*] of [*] for the first Firm
Aircraft (in addition to the [*] provided under
Article 1(ii)).  In the event that for any reason (other than breach
by Embraer of its obligations) Buyer does not take delivery of at least [*]
Firm Aircraft, the amount of [*] per each non-delivered Firm Aircraft
shall be [*].  This [*] credit shall only be made available to
Buyer in the event there is [*]. 
If the [*] credit is not so made available to Buyer because [*]
such credit shall be made available at such time thereafter [*].  Any portion of such credit which remains
unused [*]
shall be deemed to have been waived by Buyer, and no further compensation shall
be due from Embraer to Buyer for such [*] credit.  Such [*] credit shall be applied [*].

 

 (iv)           Test Equipment and Tooling:
Embraer shall provide, [*].  Embraer shall also rent tooling and test
equipment for non-routine maintenance tasks at a daily rate of 1/365 of the
tooling or test equipment purchase price. In case Embraer [*] and Buyer, [*].

 

(v)              Spare Parts Special
Programs: Embraer shall
make available to Buyer a spare parts support program that shall include the
following elements:

 

A Fleet Hour Program - POOL, for repairable spares candidate to this
program.

 

A Consignment Program for other repairable spares and expendable parts.

 

A Rental Program for tools, ground support equipment and insurance
items.

 

The terms and conditions for making such programs available to Buyer
shall be further detailed by Embraer upon Buyer’s request and are subject to
Buyer and Embraer entering into a specific spares support agreement to be
negotiated in good faith by the Parties on or before the first Firm Aircraft
actual delivery date.

 

* Confidential

 

 

(vi)       Extension: The [*] for each Aircraft as described by [*]
shall be [*]
for a total [*] of [*] from the date of [*] provided that Buyer may
not [*].

 

2.         AIRCRAFT PURCHASE PRICE

 

The Basic Price applicable to each Aircraft and the MCG rate referred
to in Attachment “E” to the Purchase Agreement are subject to Embraer’s
standard escalation formula contained in Attachment “D” (the “Escalation
Formula”) to the Purchase Agreement, subject to the provisions set forth below.

 

2.1           The Escalation Formula applied to each Aircraft [*].  

 

[*]. 
However in the event that the Contractual Delivery Month provided for
any Aircraft is delayed for any reason not attributable to Embraer [*]
and the Basic Price of the relevant Aircraft shall be [*] in accordance with the
Escalation Formula (except as otherwise provided in the Purchase Agreement).

 

2.2           The calculation of [*] shall be made for the [*]
applicable for each relevant Aircraft [*] and the result so obtained [*]
shall be [*].

 

2.3           The Aircraft Purchase Price shall be determined as follows:

 

(i)    If [*]
the Aircraft Purchase Price shall be equal to [*] or:

 

[*]

 

(ii)   If [*]
the [*]
shall be [*]
and the applicable Aircraft Purchase Price shall be equal to [*]
or:

 

[*]

 

(iii)      If [*]
the Aircraft Purchase Price shall be equal to [*] and the result so
obtained shall be [*]

 

[*]

 

2.4           The conditions described in this Article 2 shall only be applicable
in the event  [*]. In the event in any of the situations
described in Article 2.3 above [*] the Aircraft Purchase Price will be
equal to the Basic Price [*].  

 

3.             ADDITIONAL CUSTOMER SUPPORT
SERVICES

 

3.1           Start-up
team:

 

With respect to the Aircraft, Embraer shall provide a start-up team to take place at the
initial line operation and proving runs of the first Aircraft, composed of the
following individuals:

 

[*]
pilots for [*] days to [*]

[*]
for [*]
days

[*]
for [*]
days

 

* Confidential

 

 

[*]
days

 

The purpose of these specialists is to advise and assist with Buyer’s
start-up operations and operator’s certification proving runs, making Buyer’s
pilots and mechanics familiar with the operation and maintenance of the
Aircraft. The start-up team is in addition to the pilot and mechanic training,
and to the Technical Representative. During Buyer’s EMBRAER 170 Aircraft
proving runs, Embraer shall provide technical assistance to Buyer through the
start-up team defined above. This support shall be conditioned on Buyer giving
Embraer notice at least [*] before the start of such proving runs.

 

Embraer pilot and mechanic shall not shall not be authorized to perform
any direct flight or maintenance services on Buyer’s Aircraft. In the event
Buyer requests a team member to perform any services which would directly
affect the Aircraft and Embraer issues its prior written consent to such
services, Buyer shall cover such Embraer personnel under its insurance policy
in accordance with terms and conditions contained in Schedule ”2” to this Letter Agreement.

 

Buyer shall bear all expenses related to the transportation, board
& lodging of the Embraer personnel in the event such personnel is required
to render the services provided for herein in any place other than Buyer’s main
maintenance base, otherwise all costs of travel and accommodation for such
personnel shall be borne by Embraer.

 

At no charge to Embraer, Buyer shall provide Embraer pilots with
transportation means between Buyer’s main maintenance base and any airport
where such pilots will render the services, so that the pilots can report to
Buyer’s operation facilities or leave the airport in a timely manner according
to the schedule of the flights they are engaged in.

 

3.2 Aerochain:

 

AEROchain (www.aerochain.com) is an electronic marketplace that
provides value-added after-sales services and extended supply chain
collaboration, at no additional charge used on the aerospace community. The
AEROchain Technical Services section incorporates the features formerly
included in the Embraer CIS (Customer Integration System). Access to Aerochain
Technical Services section (former CIS) shall be [*] provided, however, that [*].

 

3.3           Technical
and Engineering Support:

 

Embraer shall provide remote technical and engineering support
services, twenty-four (24) hours a day and seven (7) days a week, for airframe
and systems. This service may be accessed by phone, fax and e-mail at the main
facilities of Embraer.

 

This remote technical support is intended to assist Buyer to identify
and investigate the causes of in-services issues, and during AOG situations, as
well to support daily operations, as required. This support is provided [*]
to Buyer, up to [*].

 

* Confidential

 

 

4.             CONVERSION

 

a)   General

 

Buyer shall have the flexibility to request the conversion of any
Option Aircraft  into the EMBRAER
175, the EMBRAER 190, or the EMBRAER 195 jet aircraft (collectively,
the “Conversion Aircraft”), provided [*].

 

To exercise the conversion of an Aircraft,
Buyer shall send a written notice to Embraer to such effect at least [*] prior to the scheduled delivery date of the
Aircraft that Buyer intends to convert, if the Conversion Aircraft is [*], or [*] prior to
the scheduled delivery date of the Aircraft that Buyer intend to convert, if
the Conversion Aircraft is [*] in which
case such scheduled delivery date shall be the scheduled delivery date of the
Conversion Aircraft.  

 

If a Conversion Aircraft is not available at
such scheduled delivery date due to unavailability in Embraer’s production
schedule, the alternative delivery date shall be scheduled on the earliest non-committed available
delivery date.

 

Following receipt by Embraer of Buyer’s
conversion request notification, Embraer shall confirm to Buyer if the
requested Conversion Aircraft is available for conversion as per Buyer’s
request (the “Confirmation Notice”) or, if not available on the scheduled
delivery date, specifying the available delivery date therefor.  If Embraer specifies an alternative delivery
date, Buyer shall have [*] to
revoke its conversion request notification with respect to such Aircraft by
sending written notice to Embraer.

 

Except as provided in this Section 4,
all terms and conditions applicable to Option Aircraft shall apply mutatis mutandis to the Conversion
Aircraft.

 

b)   EMBRAER 175 Conversion
Aircraft Offer Price:

 

The Basic Price for each Conversion Aircraft that is an EMBRAER 175 jet
aircraft (the “175 Conversion Aircraft”) [*].

 

c)   EMBRAER 190
Conversion Aircraft Offer Price:

 

The Basic Price for each Conversion Aircraft that is an EMBRAER 190 jet
aircraft (the “190 Conversion Aircraft”) [*].

 

d)   EMBRAER 195
Conversion Aircraft Offer Price:  

 

The Basic Price for each Conversion Aircraft that is an EMBRAER 195 jet
aircraft (the “195 Conversion Aircraft”) [*].

 

Each Conversion Aircraft shall be configured as per Exhibit 3,
considering the differences indicated in the table below and shall be available
to Buyer at each relevant Conversion Aircraft Basic Price, and in [*].

 

Any additional Buyer selected optional equipment and/or specific
interior configuration changes will affect the relevant Basic Price for each
applicable relevant Conversion Aircraft accordingly. The relevant Conversion
Aircraft Basic Price for each of the relevant Conversion Aircraft is subject to
the [*].

 

* Confidential

 

 

5.             ADDITIONAL ASSISTANCE AND
SUPPORT

 

Terms and conditions of certain additional assistance and support are
provided in               Schedules
“4” and “5”.

 

6.             MISCELLANEOUS

 

All terms and conditions of the Purchase Agreement that have not been
specifically altered or modified hereunder shall remain in full force and
effect.

 

7.             SURVIVAL

 

In the case of a termination of this Agreement or the Purchase
Agreement with respect to one or more Aircraft, [*].

 

[The remainder of this page has been left blank intentionally.]

 

* Confidential

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers and to be
effective as of the day and year first above written.

 

 

	
  EMBRAER – EMPRESA BRASILEIRA

  DE AERONAUTICA S.A.

  	
   

  	
  REPUBLIC AIRLINE, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Frederico Fleury Curado

  	
   

  	
  By:

  	
  /s/ Bryan Bedford

  
	
  Name:

  	
  Frederico Fleury Curado

  	
   

  	
  Name:

  	
  Bryan Bedford

  
	
  Title:

  	
  Executive Vice President Civil Aircraft

  	
   

  	
  Title:

  	
  Chairman and CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Flavio Rimoli

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Flavio Rimoli

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Sr. Vice President Airline Market

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Witness:

  	
   

  	
   

  	
  Witness:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  

 

 

SCHEDULES

 

“1”          EMBRAER
170 TEST EQUIPMENT LIST

 

“2”          INSURANCE
SPECIAL CLAUSE

 

“3”          CONVERSION
AIRCRAFT CONFIGURATION

 

“4”          ADDITIONAL
ASSISTANCE

 

“5”          MUTUAL
SUPPORT

 

 

SCHEDULE ”1” – EMBRAER 170 TEST EQUIPMENT LIST

 

Embraer shall provide, [*] (INCOTERMS 2000), the following
test/maintenance equipment:

 

	
  PART NUMBER

  	
   

  	
  DESCRIPTION

  	
   

  	
  ATA

  	
   

  	
  REC

  QTY

  	
   

  	
  APLIC.

  
	
  050-03281-0000

  	
   

  	
  KPA 900 CONFIGURATION MODULE PROGRAMMER

  	
   

  	
  34

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  130601

  	
   

  	
  TRIPOD

  	
   

  	
  34

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  2250

  	
   

  	
  TEST SET - LVDT / RVDT TESTER

  	
   

  	
  27

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  455-9010

  	
   

  	
  ELT TEST SET

  	
   

  	
  31

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  474084

  	
   

  	
  TEST BOX CARGO FIRE EXTINGUISHING SIMULATOR

  	
   

  	
  26

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  8800

  	
   

  	
  TEST
  SET - SYNCHRO/RESOLVER ANGLE POSITION INDICATORS

  	
   

  	
  27

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  954-2399REV

  	
   

  	
  LANDING
  COMPASS

  	
   

  	
  34

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  960-0308-016

  	
   

  	
  PLAYBACK
  AND TEST SYSTEM TO SSCVR (HARDWARE)

  	
   

  	
  23

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  964-0446-021

  	
   

  	
  HAND HELD DOWNLOAD UNIT TO SSFDR - HHDLU (HARDWARE)

  	
   

  	
  31

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  ADTS-401 Series or similar

  	
   

  	
  AIR DAT SMART PROBE - TEST SET

  	
   

  	
  34

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  AGE-00931-401

  	
   

  	
  KIT REFERENCE STANDARD, NDT

  	
   

  	
  57

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  LT-100

  	
   

  	
  EVCS SERVICE INTERFACE MODULE

  	
   

  	
  72

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  PATS-1560K99

  	
   

  	
  PORTABLE COM. MANAGEMENT UNIT (CMU) TEST STATION

  	
   

  	
  23

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  QB18

  	
   

  	
  TEST SET - STATIC DISCHARGER AND COAXIAL CABLE

  	
   

  	
  23

  	
   

  	
  [*]

  	
   

  	
  170

  
	
  RHLB-7

  	
   

  	
  TESTER - A.S.C.B. VERSION “D” DATABUS ANALYZER (TIU)

  	
   

  	
  22

  	
   

  	
  [*]

  	
   

  	
  170

  

 

* Confidential

 

 

SCHEDULE ”2” – INSURANCE SPECIAL CLAUSE

 

Buyer shall include the following endorsements in its Hull and
Comprehensive Airline Liability insurance policies:

 

1. Hull All Risks Policy, including War,
Hi-jacking and Other Perils.

 

“It is hereby understood and
agreed that Insurers agree to waive rights of subrogation against Embraer with
regard to the insured Aircraft.

 

This endorsement shall not
operate to prejudice Insurer’s rights of recourse against Embraer - Empresa
Brasileira de Aeronáutica S.A. as manufacturer, repairer, supplier or servicing
agent where such right of recourse would have existed had this endorsement not
been effected under this Policy.”

 

2. Comprehensive Airline Liability Policy,
based on the AVN53 - Additional Insured Endorsement

 

“It is hereby understood and agreed that Embraer - Empresa Brasileira
de Aeronáutica S.A. including any business entity owned by or subsidiaries to
Embraer, and all partners, executive officers, employees and stock holders, are
added as Additional Insureds only with respect to the operation of the Aircraft
by the Named Insured.

 

This endorsement does not provide coverage
for any Additional Insured with respect to claims arising out of its legal
liability as manufacturer, repairer, supplier or servicing agent and shall not
operate to prejudice Insurer’s right of recourse against any Additional Insured
as manufacturer, repairer, supplier or servicing agent.”

 

3. Notwithstanding anything to the contrary
as specified in the Policy or any endorsement thereof, the coverages stated in
paragraphs 1 and 2 above, shall not be cancelled or modified by the Insurer,
without 48 hours advance written notice to Embraer to such effect.

 

This Endorsement attaches to and forms part of Policy No.
                            ,
and is effective from the          day
of             ,
200  .

 

 

SCHEDULE ”3” – CONVERSION AIRCRAFT CONFIGURATION

 

1. EMBRAER 175
CONFIGURATION

 

1.1. EMBRAER 175
Standard Aircraft

 

The Conversion Aircraft EMBRAER 175 shall be
manufactured according to (i) the standard configuration specified in the
Preliminary Technical Description PTD-175 Rev. 4 dated May 2003, which although
not attached hereto, is incorporated herein by reference, and (ii) the
characteristics described in the items below.

 

2.2. EMBRAER
175 Optional Equipment

 

The 175 Conversion Aircraft will also be
fitted with the following options selected by Buyer:

 

2.2.1. 175 Conversion Aircraft Model and
Engines

 

[*]

[*]

 

2.2.2. Options By Ata Chapter

 

	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  

 

2.2.3. EMBRAER 175 Basic Interior
Configuration (78 seats)

 

	
  [*]

  	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  	
  [*]

  

 

 

* Confidential

 

 

2. EMBRAER 190
CONFIGURATION

 

2.1. EMBRAER
190 Standard Aircraft

 

The 190 Conversion Aircraft shall be
manufactured according to (i) the standard configuration specified in the Preliminary
Technical Description PTD-190/195 Rev. 4 dated May 2003, which although not
attached hereto, is incorporated herein by reference, and (ii) the
characteristics described in the items below.

 

2.2. EMBRAER
190 Optional Equipment

 

The 190 Conversion Aircraft will also be
fitted with the following options selected by Buyer:

 

2.2.1. 190 Conversion Aircraft Model and
Engines

 

[*]

[*]

 

2.2.2. Options By Ata Chapter

 

	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
   

  	
  [*]

  

 

3. EMBRAER 195
CONFIGURATION

 

3.1. EMBRAER
195 Standard Aircraft

 

The Conversion Aircraft EMBRAER 195 shall be
manufactured according to (i) the standard configuration specified in the Preliminary
Technical Description PTD-190/195 Rev. 4 dated May 2003, which although not
attached hereto, is incorporated herein by reference, and (ii) the
characteristics described in the items below.

 

* Confidential

 

 

3.2. EMBRAER
195 Optional Equipment

 

The 195 Conversion Aircraft will also be
fitted with the following options selected by Buyer:

 

3.2.1. 195 Conversion Aircraft Model and
Engines

 

[*]

[*]

 

3.2.2. Options By Ata Chapter

 

	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
  [*]

  	
  [*]

  
	
   

  	
  [*]

  

 

4. FINISHING

 

The Aircraft will be delivered to Buyers as
follows:

 

4.1  EXTERIOR FINISHING:

 

The fuselage of the Aircraft shall be painted
according to Buyer’s color and paint scheme which shall be supplied to Embraer
by Buyer on or before six (6) months prior to the relevant Aircraft Contractual
Delivery Date.

 

The wings and the horizontal stabilizer of
all Aircraft shall be supplied in the standard colors, i.e., gray BAC707.

 

4.2  INTERIOR FINISHING:

 

Buyer shall inform Embraer on or before eight
(8) months prior to the relevant Aircraft Contractual Delivery Date of its
choice of materials and colors of all and any item of interior finishing such
as seat covers, carpet, floor lining on galley areas, side walls and overhead
lining, galley lining and curtain. The above-mentioned schedule for
definition of interior finishing shall only be applicable if

 

* Confidential

 

 

Buyer selects its materials from the choices
offered by and available at Embraer. In case Buyer opts to use different
materials and or patterns, such schedule shall be mutually agreed between
the Parties at the time of signature of the Purchase Agreement.

 

The following items are not supplied or installed
by Embraer: Trolleys, ovens, coffee makers, hot jugs and standard units.

 

5.     REGISTRATION MARKS AND
TRANSPONDER CODE

 

The Aircraft shall be delivered to Buyer with
the registration marks painted on them. The registration marks and the
transponder code shall be supplied to Embraer by Buyer no later than ninety
(90) Days before each relevant Aircraft Contractual Delivery Date.

 

IT IS HEREBY AGREED AND UNDERSTOOD BY THE
PARTIES THAT IF THERE IS ANY CONFLICT BETWEEN THE TERMS OF THIS
SCHEDULE ”2” AND THE TERMS OF THE TECHNICAL DESCRIPTION ABOVE REFERRED,
THE TERMS OF THIS ATTACHMENT “A” SHALL PREVAIL.

 

 

SCHEDULE ”4” – ADDITIONAL ASSISTANCE

 

Embraer will grant Buyer a [*] in an amount equivalent to [*]
in accordance with and subject to the terms presented below, with respect to
each Aircraft (including the Firm Aircraft, Conditional Aircraft and Option
Aircraft irrespective of Aircraft model).  

 

Brazilian Export Support:

 

[*] shall secure availability of the Brazilian
Export Financing Programme [*] or any Brazilian Export Financing
Programme then available (the “Programme”) for the Aircraft on behalf of Buyer
by obtaining [*].  

 

Buyer shall be granted [*] in an amount equivalent to [*]
provided that Buyer shall comply in full with the conditions set forth in items
a) through c) below. Such [*] shall be granted to Buyer, by means of [*].

 

(a)                  Buyer shall cooperate to structure the
delivery documents and the financing of each relevant Aircraft [*]
provided that Buyer’s interest in connection with the purchase of the relevant
Aircraft or the financing related thereto would not be adversely affected or
interfered with, and [*].

 

(b)                  Buyer provides Embraer, no later than [*]
after execution of the relevant Purchase Agreement, all financial and corporate
data (which Buyer generally provides to financiers and export credit agencies)
as requested by Embraer [*].

 

(c)              All rights, benefits and interests to and in
regard to, any and all present and future Brazilian Export Support [*]
pursuant to documentation reasonably requested by [*].

 

* Confidential

 

 

SCHEDULE ”5” – MUTUAL SUPPORT

 

This schedule sets forth additional agreements of the Parties with
respect to the matters set forth in the Purchase Agreement DCT–014/2004) dated
as of March       , 2004 (including the
Letter Agreement DCT–015/2004) between Embraer and Buyer (the
“Agreement”).  All terms defined in the
Agreement shall have the same meaning when used herein, and in case of any
conflict between this [*] and the Agreement, this [*]
shall govern.

 

Embraer will use [*] to [*] debt [*]

 

	
  Aircraft:

  	
   

  	
  [*] aircraft scheduled for delivery under the
  Agreement (the “Aircraft”).

  
	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  Republic Airline, Inc., a wholly-owned subsidiary of Republic Airways
  Holdings Inc. (“Parent”), with a parent guarantee consistent with those
  generally offered in the US for airlines of same size and financial condition
  as Buyer, as Debt Providers may require with it being understood that there
  shall be [*].  Notwithstanding
  anything to the contrary in Article 14 of the Purchase Agreement, Buyer
  shall not be entitled to assign any support provided or to be provided
  pursuant to this Financing Term Sheet.

  
	
   

  	
   

  	
   

  
	
  Net Aircraft Purchase Price:

  	
   

  	
  The escalated Aircraft Purchase Price as defined in the Agreement, to
  be shown on the relevant invoice, and excluding BFE items, [*]
  as well as any and all taxes, VAT, imposts, levies, and duties accrued either
  in Brazil or USA.

  
	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
  [*] Provider:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
  Terms:

  	
   

  	
  Buyer agrees to cooperate reasonably and in good faith with Embraer
  and/or any prospective [*] Provider in documenting and closing
  the financing transactions on an expedited basis.  Buyer shall also provide financial and other information
  requested by such persons, subject to the execution of confidentiality
  agreements as appropriate.

  

  Loan A and Loan B shall be [*].

  

  [*]

  

  [*]

  

  If [*] provides [*] shall agree to [*]

  

 

* Confidential

 

 

	
  Financed Amount:

  	
   

  	
  [*] with Buyer to pay [*] at delivery.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Security:

  	
   

  	
  For each of Loan A and Loan B, the relevant [*] Provider shall receive
  a perfected security interest qualifying for the protections of
  Section 1110 of the Bankruptcy Code. The security interest shall be [*].

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [*] Term:

  	
   

  	
  Loan A: [*] years, payable in [*]
  having a maximum average [*].

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Loan B: [*] years [*] payable in [*]
  with a maximum [*] provided that [*].

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  At Embraer’s request, Loan A and Loan B may be [*].

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [*] Rate:

  	
   

  	
  [*] for Loan A and Loan B shall be [*].

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [*] Fees

  	
   

  	
  If required by [*] Buyer shall [*].  Buyer shall also [*].  Embraer may, [*] require Buyer to [*].  If Buyer [*] Embraer shall [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Financing Cooperation:

  	
   

  	
  Unless Buyer
  and Embraer agree [*] shall select a [*] to which Buyer [*]
  Loan A [*].  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The mandate for the [*] shall include (1) an [*]
  on terms consistent with [*] and for the other [*]
  on terms consistent with [*] for a term [*] or as the parties may
  otherwise agree [*] (2) an agreement that [*]
  may continue to [*] and that [*] (3) a requirement that [*]
  and (4) other terms reasonably agreed by [*]. 
  Embraer shall [*] to provide the Loan A [*].  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  During the term of [*] will not [*].  In addition, [*] will not [*].  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Buyer furthermore agrees that it shall [*].

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  Loan A for [*] has agreed to provide the Loan A [*]
  Embraer shall attempt to [*] whereby, if Buyer elects [*]
  Buyer may at that time [*]. 
  Embraer expects that [*]. 
  

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Other Loans: If Embraer or an affiliate of Embraer [*]
  Loan A [*]
  or Loan B [*] Buyer may [*].

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  The [*] Aircraft shall be delivered to Buyer pursuant to [*]
  Buyer shall [*] a Loan A and a Loan B [*] Buyer shall [*] Buyer shall [*] Once Buyer [*]
  Parent shall [*] Buyer shall [*].

  	
   

  

 

 

* Confidential

 

 

	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)           Absence of any material adverse change in
  the business, operations or financial condition of Parent or Buyer as
  reflected in Parent’s year-end audited financial statements for the year
  ended December 31, 2003.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   (2)          Absence of litigation by or against Buyer
  or any Buyer affiliate, which is reasonably expected to have a material
  adverse effect upon the operations of Buyer.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)           (a)  Embraer’s approval of Buyer’s [*]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b) No termination of any [*]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (4)           No changes or amendments to
  Section 1110 of the United States Bankruptcy Code as currently
  legislated and interpreted (“Section 1110”) in a manner that would
  materially adversely affect the financing parties in a United States aircraft
  financing, and that has had a materially adverse effect on the aircraft
  financing market.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (5)           Buyer shall be an air carrier eligible for
  the protections of Section 1110 [*].

  

 

* Confidential

 

 

	
   

  	
   

  	
  (6)           There shall not be a monetary or material
  default by Buyer or any affiliate with respect to the pertinent financing
  parties and Embraer or any affiliate at the time of financing, and no
  material  default under the
  EMB-145 Purchase Agreement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (7)           All reasonable legal fees, disbursements
  and out-of-pocket expenses of Embraer (excluding amounts associated with
  basic delivery documents such as bills of sale and partial assignments of
  rights under the relevant purchase agreement) and any party associated with
  the financing hereunder of such Aircraft relating to such financing
  (excluding amounts that Embraer is obligated to pay under this Financing Term
  Sheet) (“Expenses”), shall be paid by Buyer at closing or upon demand
  thereafter.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  After each financing and
  refinancing of a Loan A for any Aircraft and Conditional Aircraft hereunder,
  Embraer and Buyer shall determine [*]. 
  If the [*] Embraer shall at Buyer’s request [*] Buyer shall [*].

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (8)           Additional customary conditions precedent
  in aircraft financings as may be required by the lender, including but not
  limited to issuance of required legal opinions

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (9)           Parent shall continue to [*].

  
	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  

 

 

The above-mentioned Financing Term Sheet is the only financing support
that Embraer will provide Buyer under the terms and conditions contained in
this Agreement and the Purchase Agreement. Any additional financing support
that may be requested by Buyer shall be subject to Embraer analysis, and the
conditions under which Embraer may provide such additional financing support
(including but not limited to additional costs to Buyer), will be communicated
to Buyer by Embraer.

 

* Confidential

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}]]