Document:

Exhibit
10.40(a)

 

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

 

AMENDMENT No. 1 TO LETTER AGREEMENT DCT-015/2004

 

This Amendment No. 1 to Letter Agreement DCT-015/2004, dated as of July 8,
2004 (“Amendment No. 1”) relates to the Letter Agreement DCT-015/2004 (the “Letter
Agreement”) between Embraer - Empresa Brasileira de Aeronáutica S.A. (“Embraer”)
and Republic Airline, Inc. (“Buyer”) dated March 19, 2004 and which
concerns the Purchase Agreement DCT-014/2004 (the “Purchase Agreement”), as
amended from time to time (collectively referred to herein as “Agreement”).  This Amendment No. 1 is between Embraer and
Buyer, collectively referred to herein as the “Parties”.

 

This Amendment No. 1 sets forth additional agreements between Embraer
and Buyer relative to certification and Mutual Support in Schedule 5 to
the Letter Agreement.

 

Except as otherwise provided for herein all terms of the Letter
Agreement shall remain in full force and effect. All capitalized terms used in
this Amendment No. 1 that are not defined herein shall have the meaning given
in the Letter Agreement. In the event of any conflict between this Amendment
No. 1 and the Letter Agreement the terms, conditions and provisions of this
Amendment No. 1 shall control.

 

WHEREAS, in
connection with the Parties’ agreements with respect to certification and
Mutual Support, the Parties have now agreed to amend the Letter Agreement as
provided for below:

 

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

 

1.                [*]

 

1.1.                              In
connection with the assignments to Chautauqua pursuant to Article 14.2A of
the Purchase Agreement, Buyer and Chautauqua have [*] assigned to [*].

 

1.2.                              Embraer
shall [*] by [*] or by such other date as is otherwise
agreed to between Buyer and Embraer.

 

1.3.                              Until
the date on which [*], all
Aircraft shall [*], and Buyer
shall [*]. All Aircraft that are [*] shall be [*].

 

1.4.                              Promptly
after [*], Embraer shall [*]. 
Buyer shall [*] and in
accordance with [*].  Embraer’s [*]
shall be [*] in accordance with [*].

 

* Confidential

 

 

2.                 Schedule 5 Revisions

 

2.1.                              The Section entitled
“Borrower/Buyer” in Schedule 5 shall be amended by deleting the last
sentence and replacing replaced by the following:

 

 “Notwithstanding
anything to the contrary in Article 14 of the Purchase Agreement, other
than the specific assignment to Chautauqua Airlines, Inc. and Republic Airline
Inc. specified in Article 14.2A thereof, Buyer shall [*] pursuant to this Financing Term Sheet.”

 

2.2.                              The section entitled
[*] in Schedule 5 shall be [*].

 

2.3.                              A
new section entitled [*]
shall be added to Schedule 5 as follows:

 

	
  “[*]

  	
  [*]

  

 

 

3.              Miscellaneous: All
other provisions of the Letter Agreement which have not been specifically
amended or modified by this Amendment No. 1 shall remain valid in full force
and effect without any change.

 

[Remainder of
page intentionally left in blank]

 

Amendment No. 1 to Letter Agreement DCT-015/2004

 

* Confidential

 

2

 

IN WITNESS WHEREOF, EMBRAER and
BUYER, by their duly authorized officers, have entered into and executed this
Amendment No. 1 to Letter Agreement to be effective as of the date first
written above.

 

	
  EMBRAER –
  Empresa Brasileira de Aeronáutica S.A.

  	
  Republic Airline Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Antonio
  Luiz Pizano Manso

  	
   

  	
  By

  	
  /s/ Bryan Bedford

  	
   

  
	
  Name:

  	
  Antonio Luiz
  Pizano Manso

  	
  Name:

  	
  Bryan Bedford

  
	
  Title:

  	
  Executive Vice-President Corporate &
  CFO

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Flavio Rimoli

  	
   

  	
  Date:

  	
   

  
	
  Name:

  	
  Flavio Rimoli

  	
  Place:

  	
   

  
	
  Title:

  	
  Sr. Vice President Airline Market

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
  Place:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Witness:

  	
   

  	
   

  	
  Witness:

  	
  /s/ Lars-Erik Arnell

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
  Lars-Erik ArnellExhibit
10.40(b)

 

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.

 

Execution version

 

CONFIDENTIAL

 

AMENDMENT No. 2 TO LETTER AGREEMENT
DCT-015/2004

 

This Amendment No. 2 to Letter Agreement DCT-015/2004, dated as of December 23,
2004 (“Amendment No. 2”) relates to the Letter Agreement DCT-015/2004 (the “Letter
Agreement”) between Embraer - Empresa Brasileira de Aeronáutica S.A. (“Embraer”)
and Republic Airline Inc. (“Buyer”) dated March 19, 2004 and which
concerns the Purchase Agreement DCT-014/2004 (the “Purchase Agreement”), as
amended from time to time (collectively referred to herein as “Agreement”).  This Amendment No. 2 is between Embraer and
Buyer, collectively referred to herein as the “Parties”.

 

This Amendment No. 2 sets forth additional agreements between Embraer
and Buyer relative to, among other things, certain conditions on the spare
parts credit, progress payments cap and terms for some of the Aircraft.

 

Except as otherwise provided for herein all terms of the Letter
Agreement shall remain in full force and effect. All capitalized terms used in
this Amendment No. 2 that are not defined herein shall have the meaning given
in the Letter Agreement. In the event of any conflict between this Amendment
No. 2 and the Letter Agreement the terms, conditions and provisions of this
Amendment No. 2 shall control.

 

WHEREAS, in
connection with the Parties’ agreements with respect to certification and
Mutual Support, the Parties have now agreed to amend the Letter Agreement as
provided for below:

 

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

 

1.                         Spare
Parts Credit:

 

1.1                    Article 1(ii)
of the Letter Agreement shall be deleted and replaced by the following:

 

“(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 [*] credit
shall be made available to Buyer upon [*].  If for any reason [*],
then [*] Buyer shall [*].
The [*]credit with respect to an Aircraft shall only
be made available to Buyer in the event there is [*].  If [*]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

 

*
Confidential

 

 

been
waived by Buyer, and no further compensation shall be due from Embraer to Buyer
for such [*] credit(s). 
Such [*] credit(s) shall be
applied [*].”

 

1.2                       Embraer has
[*]. The [*] will be  [*].

 

2. 
Aircraft Purchase Price:

 

2.1 Article 2.4
of the Letter Agreement shall [*]
for [*].

 

3. 
Special [*] Condition: A new Article 8
shall be added to the Letter Agreement as following:

 

“8. Special [*] Condition:

 

Notwithstanding any provisions to the
contrary contained in this Purchase Agreement including but not limited to Article [*] of the Purchase Agreement, the [*], Buyer shall [*] shall be [*].

 

If at any time Embraer shall [*] and [*]
for [*], Embraer shall [*].”

 

4.                                  [*] for [*] Aircraft

 

4.1                   Schedule 5
to the Letter Agreement is hereby amended and restated pursuant to Exhibit A to
this Amendment.

 

4.2                   Commencing with
the delivery of the [*], Embraer shall  [*].

 

4.3                   As a result of
and commencing upon delivery of [*],
Embraer shall [*] and, if [*], Embraer shall [*].

 

4.4                   If a [*] prior to [*], Embraer shall [*]
as per Sections 3.2 and 3.3 above.

 

5.         [*]

 

5.1 The [*] is subject to [*].

 

6.         Miscellaneous: All other provisions of the
Letter Agreement which have not been specifically amended or modified by this
Amendment No. 2 shall remain valid in full force and effect without any change.

 

[intentionally left blank]

 

*
Confidential

 

2

 

IN WITNESS WHEREOF, EMBRAER and BUYER, by their duly authorized
officers, have entered into and executed this Amendment No. 2 to Letter
Agreement to be effective as of the date first written above.

 

	
  EMBRAER –
  Empresa Brasileira de Aeronáutica S.A.

  	
  Republic Airline Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Antonio
  Luiz Pizano Manso

  	
   

  	
  By

  	
  /s/ Bryan Bedford

  	
   

  
	
  Name:

  	
  Antonio Luiz
  Pizano Manso

  	
  Name:

  	
  Bryan Bedford

  
	
  Title:

  	
  Executive Vice-President Corporate &
  CFO

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Flavio Rimoli

  	
   

  	
  Date:

  	
   

  
	
  Name:

  	
  Flavio Rimoli

  	
  Place:

  	
   

  
	
  Title:

  	
  Sr. Vice President Airline Market

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
  Place:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Witness:

  	
   

  	
   

  	
  Witness:

  	
  /s/ Lars-Erik Arnell

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
  Lars-Erik Arnell

  	
   

  

 

 

SCHEDULE ”5” – MUTUAL SUPPORT-AMENDED
AND RESTATED

 

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 19, 2004, as
amended (including the Letter Agreement DCT–015/2004, as amended) 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
obtain[*]for[*]:

 

	
  Aircraft:

  	
  (a) [*]aircraft
  scheduled for delivery under the Agreement[*]and
  (b)[*].

  
	
   

  	
   

  
	
   

  	
  Buyer may [*].

  
	
   

  	
   

  
	
   

  	
  The [*] Aircraft shall be delivered to Buyer
  for operation under a code-share agreement with Delta Air Lines, Inc. (“Delta”).  If in accordance with the Purchase
  Agreement Buyer [*]shall[*].

  
	
   

  	
   

  
	
  [*]:

  	
  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 (other than Article 14.2A thereof), 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

  

 

Schedule 5
to Letter Agreement DCT-015/2004

 

* Confidential

 

 

	
   

  	
  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[*].

  
	
   

  	
   

  
	
  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 [*].

  
	
   

  	
   

  
	
   

  	
  For [*] shall have [*].

  
	
   

  	
   

  
	
   

  	
  Loan B: up
  to [*] years [*], payable in [*]with
  a[*]provided that[*].

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
  [*] Rate:

  	
  [*] for Loan A and Loan B [*]

  
	
   

  	
   

  
	
   

  	
  [*]. [*]. [*]

  
	
   

  	
   

  
	
  [*] 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 [*], (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 [*].

  

 

* Confidential

 

 

	
   

  	
   

  
	
  [*]:

  	
  Loan A [*] 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 [*].

  
	
   

  	
   

  
	
  [*]:

  	
  [*] 
  Buyer shall [*] a Loan A
  and a Loan B [*]  Buyer
  shall [*]  Buyer shall [*]  Parent shall [*] 
  Buyer shall [*].

  
	
   

  	
   

  
	
  [*]:

  	
  [*]

  
	
   

  	
   

  
	
   

  	
  (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.

  
	
   

  	
   

  
	
   

  	
  (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-

  

 

* Confidential

 

 

	
   

  	
  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 or 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 [*] is the only [*] that Embraer will provide Buyer under the terms and
conditions contained in this Agreement and the Purchase Agreement. Any
additional [*] may be requested by
Buyer shall be subject to Embraer analysis, and the conditions under which
Embraer may provide such additional [*](including
but not limited to additional costs to Buyer), will be communicated to Buyer by
Embraer.

 

* Confidential

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