Document:

Exhibit 10.3
    

    
      CONSENT AND FIFTH AMENDMENT TO NOTE PURCHASE AGREEMENTS
    

    
      THIS CONSENT AND FIFTH AMENDMENT TO NOTE PURCHASE AGREEMENTS,
      dated as of the 11th day of August, 2008 (this “Amendment”),
      is made by and between Culp, Inc., a North Carolina corporation (the “Company”),
      and the holders of Notes (as defined in the Note Purchase Agreements
      referred to below) set forth on the signature pages hereto (the “Noteholders”).
    

    
      RECITALS
    

    
      A.        The Company and certain financial institutions or entities
      have heretofore entered into separate and several Note Purchase
      Agreements, each dated as of March 4, 1998, as amended by that certain
      First Amendment to Note Purchase Agreements, dated as of January 31,
      2002, that certain Second Amendment to Note Purchase Agreements, dated
      as of December 6, 2006, that certain Third Amendment to Note Purchase
      Agreements, dated as of April 17, 2007, and that certain Fourth
      Amendment to Note Purchase Agreements, dated as of February 19, 2008
      (collectively, the “Note Purchase Agreements”), pursuant to
      which the Company has issued its $20,000,000 8.80% Series A Senior Notes
      due March 15, 2008 collectively (the “Series A Notes”) and
      its $55,000,000 8.80% Series B Senior Notes due March 15, 2010
      (collectively, the “Series B Notes”, and together with the
      Series A Notes, the “Notes”).  The Series A Notes matured
      on March 15, 2008, were repaid in full and are no longer
      outstanding.  Capitalized terms used herein without definition shall
      have the meanings given to them in the Note Purchase Agreements.
    

    
      B.        The Company has requested that the Noteholders consent to the
      Company’s purchase of certain assets and the assumption of certain
      liabilities of Bodet & Horst USA, L.P., a New York limited partnership,
      which assets and liabilities relate to the seller’s business of the
      manufacture and sale of running meters of certain textiles, in the
      United States, Canada and Mexico (the “B&H Acquisition”)
      and, in consideration for such consent, the Company has offered to amend
      the Note Purchase Agreements as set forth herein.
    

    
      C.        The Noteholders have agreed to grant such consent and effect
      such amendments upon the terms and conditions set forth herein.
    

    
      STATEMENT OF AGREEMENT
    

    
      The parties hereto agree as follows:
    

    
                1. Consent.  Notwithstanding
      the terms of Section 10.10 of the Note Purchase Agreements, the
      Noteholders hereby consent to the B&H Acquisition; provided
      that (a) such sale occurs on or prior to August 22, 2008 and (b) the
      gross sales price paid in respect thereof does not exceed
      $11,500,000.  The foregoing consent shall extend only to the matters
      expressly set forth above and not to any other provisions of the Note
      Purchase Agreements, all of which shall, except as hereinafter expressly
      provided, remain in full force and effect.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
                2. Incorporation
      of Additional Financial Covenants.  In consideration of the Consent
      provided by the Noteholders pursuant to Section 1 hereof, the Company
      agrees that the following financial covenants (including, solely for
      purposes of such financial covenants, the defined terms used therein),
      which are forth in that certain Note Purchase Agreement, dated as of
      August 11, 2008, between the Company, United of Omaha Life Insurance
      Company and the other Purchaser named in Schedule A thereto (the “2008
      Note Purchase Agreement”), as in effect on the date of this
      Amendment, are hereby incorporated by reference as if set forth in full
      in the Note Purchase Agreements.  Failure of the Company to comply with
      any of the incorporated covenants shall constitute an Event of Default
      under Section 11(c) of the Note Purchase Agreements.  
    

    
    	
          
            SECTION OF 
2008 NOTE PURCHASE AGREEMENT
          

        	
          
            COVENANT
          

        	

        
	

        	

        	
           
        
	
          Section 10.2(a)
        	
          
            Ratio of Consolidated Total
          

          
            Debt to Consolidated EBITDA
          

        	

        
	

        	

        	
           
        
	
          Section 10.2(b)
        	
          
            Ratio of Consolidated
          

          
            EBITDAR to Consolidated
          

          
            Fixed Charges
          

        	

        

    

    
      For purposes of clarity, (a) the foregoing covenants are in addition to,
      and do not amend or modify, the covenants, related definitions and
      agreements of the Company contained in the Note Purchase Agreements as
      in effect immediately prior to the effectiveness of this Amendment and
      (b) no amendment or other modification of the above referenced Sections
      10.2(a) and 10.2(b) of the 2008 Note Purchase Agreement shall constitute
      an amendment to the Note Purchase Agreements unless expressly agreed to
      in writing by the Required Holders.
    

    
                3. Amendment
      to Section 9.  Section 9 of each of the Note Purchase Agreements is
      amended by adding the following as new Section 9.7:
    

    
      Section 9.7.        Guaranty by Subsidiaries.  The
      Company will cause each Subsidiary which becomes a borrower or a
      guarantor in respect of Indebtedness of the Company outstanding under
      any facility or agreement in respect of which senior Indebtedness of the
      Company may be outstanding (including, without limitation, the Credit
      Agreement and that certain Note Purchase Agreement, dated as of
      August 11, 2008, between the Company and the Purchasers named in
      Schedule A thereto and any replacement of either thereof) to
      concurrently enter into a Subsidiary Guaranty, and within three Business
      Days thereafter will deliver to each of the holders of the Notes the
      following items:
    

    
      
        

        

      

      
        
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                                     (a) an executed counterpart of such
      Subsidiary Guaranty or joinder agreement in respect of an existing
      Subsidiary Guaranty, as appropriate; and
    

    
                                     (b) such other documents, certificates,
      legal opinions and information as the Required Holders reasonably may
      require regarding such Subsidiary, the authorization of the transactions
      contemplated by such Subsidiary Guaranty and the enforceability of such
      Subsidiary Guaranty, including without limitation an Intercreditor
      Agreement.
    

    
                4. Amendment
      to Section 10.1.  Paragraph (a) of Section 10.1 of each of the Note
      Purchase Agreements is hereby deleted in its entirety and is replaced
      with the following:
    

    
      (a)       Tangible Net Worth to be less than the sum of (a) $65,164,800,
      plus (b) an aggregate amount equal to 50% of its Consolidated Net Income
      (but, in each case, only if a positive number) for each completed fiscal
      quarter, beginning with the fiscal quarter ending August 3, 2008.
    

    
                5. Amendment
      to Section 10.7.  Section 10.7 of each of the Note Purchase
      Agreements is hereby deleted in its entirety and is replaced with the
      following:
    

    
      Section 10.7.       Sale and Lease-Back.  The
      Company will not, and will not permit any Subsidiary to, enter into or
      permit to remain in effect any Sale and Leaseback Transaction with any
      Person.  Notwithstanding the foregoing, the Company may enter into a
      Sale and Leaseback Transaction relating to its corporate headquarters
      located in High Point, North Carolina; provided that (i) the
      sales price received by the Company in connection with such transaction
      is not less than $5,500,000, (ii) the proceeds of such sale (less
      reasonable expenses and taxes paid in connection therewith) are applied
      to the repayment of the Indebtedness secured by such corporate
      headquarters, and (iii) to the extent such transaction involves a
      Capital Lease, the Indebtedness incurred by the Company and attributable
      to such transaction (consisting of the aggregate Rentals to become due
      under the related lease, discounted from the respective due dates at the
      interest rate implicit in such Rentals and otherwise in accordance with
      GAAP) shall constitute Priority Debt and shall, at the time of such
      transaction and after giving effect thereto, be permitted within the
      limitations of Section 10.2(c) hereof; and provided, further,
      that the Company may seek in good faith the prior written consent of the
      Required Holders for a Sale and Leaseback Transaction relating to its
      corporate headquarters with a sales price of less than $5,500,000, it
      being understood that the manner in which the Company proposes to payoff
      all existing Indebtedness secured by such corporate headquarters must be
      acceptable to the Required Holders.
    

    
                6. Addition
      of New Section 10.12.  Section 10 of each of the Note Purchase
      Agreements is amended by adding the following as new Section 10.12:
    

    
      
        

        

      

      
        
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      Section 10.12.   Liens and Reserves.  The
      Company will not and will not permit and Subsidiary to (a) allow any
      Liens to exist on any of their respective properties securing the
      obligations of the Company or any Subsidiary under the Credit Agreement
      or (b) establish any liquidity reserves in connection with the Credit
      Agreement or otherwise.
    

    
                7. Amendment
      to Schedule B.  Schedule B is hereby amended by replacing the
      definitions of “Priority Debt” and “Tangible Net
      Worth” with the following:
    

    
      “Priority Debt” means, without duplication, the sum
      of (i) all Indebtedness of the Company secured by any Lien with respect
      to any property owned by the Company or any of its Subsidiaries other
      than Liens permitted by paragraphs (a) through (k), both inclusive, of
      Section 10.3, (ii) all Indebtedness of Subsidiaries (except
      (x) Indebtedness held by the Company or a Wholly-Owned Subsidiary and
      (y) Guaranties and joint obligations of a Subsidiary with respect to
      Indebtedness of the Company, provided that such Subsidiary has
      delivered to the holders of the Notes a Subsidiary Guaranty and the
      other documents required by Section 9.7(b)), and (iii) Indebtedness
      described in clause (iii) of Section 10.7 attributable to a Sale and
      Leaseback Transaction involving the Company’s corporate headquarters.
    

    
      “Tangible Net Worth” means, at any time, Adjusted Consolidated
      Net Worth, less the amount of any intangible items as determined in
      accordance with GAAP, at such time.
    

    
                8. New
      Definitions.  The following defined terms and definitions are herby
      inserted in appropriate alphabetical order in Schedule B to each of the
      Note Purchase Agreements:
    

    
      “Adjusted Consolidated Net Worth” means, at
      any time,
    

    
                                     (a) the sum of (i) the par value (or
      value stated on the books of the corporation) of the capital stock (but
      excluding Redeemable Preferred Stock, treasury stock and capital stock
      subscribed but unissued) of the Company and its Subsidiaries plus (ii)
      the amount of paid-in capital and retained earnings of the Company and
      its Subsidiaries, plus (iii) the amount equal to all Adjusted
      Restructuring Charges for all completed fiscal quarters, commencing with
      the fiscal quarter ended August 3, 2008, in each case as such amounts
      would be shown on a consolidated balance sheet of the Company and its
      Subsidiaries as prepared in accordance with GAAP, minus  
    

    
                                     (b) to the extent included in clause (a),
      all amounts properly attributable to minority interests, if any, in the
      stock and surplus of Subsidiaries.
    

    
      “Adjusted Restructuring Charges” means, collectively,
      (a) from and after the effective date of the Consent and Fifth Amendment
      to this Agreement dated as of August 11, 2008, through the term of this
      Agreement, (i) up to $1,000,000 in the aggregate in cash restructuring
      expenses and restructuring-related costs, and (ii) all non-cash
      restructuring expenses and restructuring-related costs, and (b) non-cash
      write-downs of deferred tax assets of the Company accounted for as
      “valuation allowances”, in each case, as such amounts would be shown on
      consolidated financial statements of the Company and its Subsidiaries as
      prepared in accordance with GAAP.  For purposes of clarity, it is
      understood and agreed that restructuring expenses and
      restructuring-related costs, as such terms are used in this definition,
      are expenses and costs related solely to the disposal of plants and
      other tangible assets of the Company and its Subsidiaries or the
      reduction in the work force or layoffs and not to the write-off or
      write-down of assets, impaired or otherwise.
    

    
      
        

        

      

      
        
          4
        

        
          

        

      

      
        

        

      

    

    
      “Intercreditor Agreement” means an agreement,
      in form and substance reasonably satisfactory to the Required Holders,
      among the holders of the Notes and each creditor of the Company to which
      a Subsidiary is then becoming obligated as a co-borrower or guarantor
      giving rise the requirements of Section 9.7, providing that payments
      received from any such Subsidiary following agreed upon enforcement
      events shall be shared on an equal and ratable basis.
    

    
      “Subsidiary Guaranty” means any Guaranty of
      the obligations of the Company under this Agreement executed by a
      Subsidiary of the Company in connection with the requirements of
      Section 9.7 or otherwise, in form and substance reasonably satisfactory
      to the Required Holders, as the same has been and may be amended,
      restated, replaced or otherwise modified from time to time.
    

    
                9. Conditions
      to Effectiveness of this Amendment.  Notwithstanding any other
      provisions of this Amendment and without affecting in any manner the
      rights of the Noteholders hereunder, it is understood and agreed that
      this Amendment shall not become effective, and the Company shall have no
      rights under this Amendment, until the Noteholders shall have received
      each of the following:
    

    
      (a)       executed counterparts to this Amendment from the Company and
      Noteholders constituting the Required Holders;
    

    
      (b)       evidence satisfactory to the Noteholders of the consummation
      of the B&H Acquisition and the closing of the transaction under the 2008
      Note Purchase Agreement;
    

    
      (c)       a copy of the 2008 Note Purchase Agreement; and
    

    
      (d)       a copy of the consent and waiver delivered under the Credit
      Agreement.
    

    
               10. Representations
      and Warranties.  To induce the Noteholders to enter into this
      Amendment, the Company represents and warrants to the Noteholders that:
    

    
      
        

        

      

      
        
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      (a)       the execution, delivery and performance by the Company of this
      Amendment and the consummation of the B&H Acquisition (i) are within its
      corporate power and authority; (ii) have been duly authorized by all
      necessary corporate action; (iii) will not contravene, result in a
      breach of, or constitute any default under, or result in the creation of
      any Lien in any property of the Company or any Subsidiary under, any
      indenture, mortgage, deed of trust, loan, purchase or credit agreement,
      lease, corporate charter or by-laws, or any other agreement or
      instrument to which the Company or any Subsidiary is bound or by which
      the Company or any Subsidiary or any of their respective properties may
      be bound or by which the Company or any Subsidiary or any of its
      respective properties may be bound or affected, or (iv) conflict with or
      result in a breach of any of the terms, conditions or provisions of any
      order, judgment, decree or ruling of any court, arbitrator or
      Governmental Authority applicable to the Company or any Subsidiary;
    

    
      (b)       this Amendment has been duly executed and delivered for the
      benefit of or on behalf of the Company and constitutes a legal, valid
      and binding obligation of the Company, enforceable against the Company
      in accordance with its terms;
    

    
      (c)       after giving effect to this Amendment and to the consummation
      of the B&H Acquisition, the representations and warranties contained in
      Section 5 of each of the Note Purchase Agreements are true and correct
      in all material respects (except for any representations or warranties
      that speak only as of a specific earlier date), and no Default or Event
      of Default has occurred and is continuing as of the date hereof;
    

    
      (d)       neither the Company nor any Person on behalf of the Company
      has agreed to, directly or indirectly, pay any consideration or
      remuneration, whether by way of supplemental or additional interest, fee
      or otherwise, to any creditor of the Company as consideration for or as
      an inducement to the consent of any such creditor to the B&H
      Acquisition; and
    

    
      (e)       attached hereto as Exhibit
      A is a true, correct and complete copy of the 2008 Note Purchase
      Agreement as in effect on the date hereof.
    

    
               11. Miscellaneous.
    

    
              11.1 Counterparts;
      Effectiveness.  This Amendment may be executed in any number of
      counterparts and by different parties hereto on separate counterparts,
      each of which when so executed and delivered shall be an original, but
      all of which shall together constitute one and the same
      instrument.  Delivery of an executed signature page to this Amendment by
      facsimile or electronic mail transmission shall be effective as delivery
      of a manually executed counterpart thereof.  This Amendment shall become
      effective on the date on which all conditions set forth in Section 2
      above have been satisfied.
    

    
      
        

        

      

      
        
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              11.2 Effect of
      Amendment.  From and after the Effective Date, all references in any
      Note Purchase Agreement to “this Agreement,” “hereunder,” “hereof,”
      “herein” or words of like import referring to such Note Purchase
      Agreement shall mean and be a reference to such Note Purchase Agreement
      as amended by this Amendment.  This Amendment is limited as specified
      and shall not constitute or be deemed to constitute an amendment,
      modification or waiver of any provision of any Note Purchase Agreement
      except as expressly set forth herein.  Except as expressly amended
      hereby, the Note Purchase Agreements shall remain in full force and
      effect in accordance with their terms.
    

    
              11.3 Governing Law.  This
      Amendment shall be governed by and construed and enforced in accordance
      with the laws of the State of New York, excluding choice-of-law
      principles of such laws that would require the application of the laws
      of a jurisdiction other than the State of New York.
    

    
              11.4 Severability.  To
      the extent any provision of this Amendment is prohibited by or invalid
      under the applicable law of any jurisdiction, such provision shall be
      ineffective only to the extent of such prohibition or invalidity and
      only in any such jurisdiction, without prohibiting or invalidating such
      provision in any other jurisdiction or the remaining provisions of this
      Amendment in any jurisdiction.
    

    
              11.5 Successors and
      Assigns.  This Amendment shall be binding upon, inure to the benefit
      of and be enforceable by the respective successors and permitted assigns
      of the parties hereto and of all other holders of Notes (including,
      without limitation, any subsequent holder of a Note).
    

    
              11.6 Construction.  The
      headings of the various sections and subsections of this Amendment have
      been inserted for convenience only and shall not in any way affect the
      meaning or construction of any of the provisions hereof.
    

    
             11.7. Legal Fees.  As
      required by Section 15 of the Note Purchase Agreements, the Company
      agrees to pay the fees and disbursements of the Noteholders’ special
      counsel, Chapman and Cutler LLP, incurred in connection with the
      negotiation, preparation, execution and delivery of this Amendment and
      the transactions contemplated hereby.
    

    
      [Signatures Follow on Next Page]
    

    
      
        

        

      

      
        
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      IN WITNESS WHEREOF, the parties hereto have caused this Amendment
      to be executed by their duly authorized officers as of the date first
      above written.
    

    
    	
           
        	
          CULP, INC.
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          By:
        	
          /s/ Kenneth R. Bowling
        
	

        	
          Name:
        	
          Kenneth R. Bowling
        
	

        	
          Title:
        	
          Vice President and Chief Financial Officer
        

    

    
      

      

      

      

      

      

      

      Culp, Inc.
Consent and Fifth Amendment
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
    	
           
        	
          
            LIFE INSURANCE COMPANY OF NORTH 
          

          
            AMERICA
          

        
	

        	
           
        
	

        	
          By:
        	
          CIGNA INVESTMENTS, INC.
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          By:
        	
          
            /s/ Lori E. Hopkins
          

        
	

        	
          Name:
        	
          Lori E. Hopkins
        
	

        	
          Title:
        	
          Managing Director
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          
            CONNECTICUT GENERAL LIFE 
          

          
            INSURANCE COMPANY, on behalf of one or
          

          
            more separate accounts
          

        
	

        	
           
        
	

        	
          By:
        	
          CIGNA INVESTMENTS, INC.
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          By:
        	
          
            /s/ Lori E. Hopkins
          

        
	

        	
          Name:
        	
          Lori E. Hopkins
        
	

        	
          Title:
        	
          Managing Director
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          CONNECTICUT GENERAL LIFE
        
	

        	
          
            INSURANCE COMPANY
          

        
	

        	
           
        
	

        	
          By:
        	
          CIGNA INVESTMENTS, INC.
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          By:
        	
          
            /s/ Lori E. Hopkins
          

        
	

        	
          Name:
        	
          Lori E. Hopkins
        
	

        	
          Title:
        	
          Managing Director
        

    

    
      

      

      

      Culp, Inc.
Consent and Fifth Amendment
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
    	
           
        	
          BEACHSIDE & CO.
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          By:
        	
          
            /s/ Lawrence Perreirn
          

        
	

        	
          Name:
        	
          Lawrence Perreirn
        
	

        	
          Title:
        	
          State Street Officer
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          MONY LIFE INSURANCE COMPANY
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          By:
        	
          
            /s/ Amy Judd
          

        
	

        	
          Name:
        	
          Amy Judd
        
	

        	
          Title:
        	
          Investment Officer
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          
            UNITED OF OMAHA LIFE INSURANCE 
          

          
            COMPANY
          

        
	

        	

        	
           
        
	

        	
          By:
        	
          
            /s/ Curtis R. Caldwell
          

        
	

        	
          Name:
        	
          Curtis R. Caldwell
        
	

        	
          Title:
        	
          Senior Vice President
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          
            MUTUAL OF OMAHA INSURANCE 
          

          
            COMPANY
          

        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          By:
        	
          
            /s/ Curtis R. Caldwell
          

        
	

        	
          Name:
        	
          Curtis R. Caldwell
        
	

        	
          Title:
        	
          Senior Vice President
        

    

    
      

      

      

      Culp, Inc.
Consent and Fifth Amendment
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    

    

    
    	
           
        	
          
            PRUDENTIAL RETIREMENT INSURANCE 
          

          
            AND ANNUITY COMPANY
          

        
	

        	

        	
           
        
	

        	
          
            By: Prudential Investment Management, Inc., as
          

          
            Investment Manager
          

        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          By:
        	
          
            /s/ Jay White
          

        
	

        	

        	
          Vice President
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          PRUCO LIFE INSURANCE COMPANY
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          By:
        	
          
            /s/ Jay White
          

        
	

        	

        	
          Assistant Vice President
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          
            THE PRUDENTIAL INSURANCE COMPANY 
          

          
            OF AMERICA
          

        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          By:
        	
          
            /s/ Jay White
          

        
	

        	

        	
          Vice President
        

    

    
      

      

      

      

      

      Culp, Inc.
Consent and Fifth Amendmentexhibit10_31g.htm

    
       

      
         

        
          EXHIBIT
10.31(g)

          CONFIDENTIAL
TREATMENT

          REQUESTED
PURSUANT TO RULE 24b-2

          Certain
portions of this exhibit have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.
The omitted materials have been filed separately with the Securities and
Exchange Commission. 

          

        

      

    

    DELTA AIR LINES, INC.

     

    

     

    July 28,
2008

     

    Republic
Airways Holdings, Inc.

    8909
Purdue Road

    Indianapolis,
Indiana  46468

     

    Chautauqua
Airlines, Inc.

    8909
Purdue Road

    Indianapolis,
Indiana  46468

     

    Shuttle
America Corp.

    8909
Purdue Road

    Indianapolis,
Indiana  46468

     

    Ladies
and Gentlemen:

     

    Reference
is made to each of (x) the Delta Connection Agreement (the “Chautauqua
Agreement”), dated as of June 7, 2002 by and among Delta Air Lines, Inc.
(“Delta”),
Chautauqua Airlines, Inc. (“Chautauqua”) and
Republic Airways Holdings, Inc. (“Republic”), as
amended from time to time including pursuant to that certain Amendment Number
Six to Delta Connection Agreement dated as of March 12, 2007 (the “Sixth Amendment”) and
(y) the Delta Connection Agreement dated and effective January 13, 2005 (as
previously amended from time to time, the “Shuttle Agreement”;
together with the Chautauqua Agreement, the “Agreements”), between
Delta, Shuttle America Corp. (“Shuttle America”), as
assignee of Republic Airline, Inc., and Republic. Capitalized terms used and not
otherwise defined herein shall have the respective meanings given thereto in the
Chautauqua Agreement, the Sixth Amendment or the Shuttle Agreement, as
applicable.

     

    1.           Advanced Removal of
ERJ135s.  Each of Delta, Chautauqua, and Republic hereby agrees
that, notwithstanding Section 2 of the Sixth Amendment, the Removal Months for
the final eleven (11) ERJ135s to be removed from the Delta Connection program
and the terms of the Chautauqua Agreement shall be as follows:  (x)
[*] the Removal Month
for three (3) aircraft shall be July 2008 and the date of such removal shall be
July 31, 2008 (at the close of business on such date); (y) [*] the Removal Month for four
(4) additional aircraft shall be August 2008 and the date of such removal shall
be August 31, 2008 (at the close of business on such date); and (z) [*] the Removal Month for the
remaining four (4) aircraft shall be September 2008 and the date of such removal
shall be September 30, 2008 (at the close of business on such
date).  Chautauqua and Delta shall mutually agree as to which ERJ135s
shall be removed during any such Removal Month.

     

    
    

    2.           [*]

     

    3.           Additional
ERJ170s.  Each of Delta, Shuttle America and Republic hereby
agrees that notwithstanding any other provisions of the Shuttle Agreement, the
total number of aircraft to be operated under the Delta Connection program
pursuant to the terms of the Shuttle Agreement during the following periods
shall be as follows, and during such periods each of the applicable aircraft
shall be considered an “Aircraft” for all purposes of the Shuttle
Agreement:

     

    
      	
              (i)  

            	
              August
      1, 2008 – August 18, 2008 – 18
aircraft

            

    

     

    
      	
              (ii)  

            	
              August
      19, 2008 – August 31, 2008 – 17
aircraft

            

    

     

    
      	
              (iii)  

            	
              September
      1, 2008 – Feb 28, 2009 – 16
aircraft

            

    

     

    
      	
              (iv)  

            	
              March
      1, 2009 – March 31, 2009 – 17
aircraft

            

    

     

    
      	
              (v)  

            	
              April
      1, 2009 – August 31, 2009 – 18
aircraft

            

    

     

    
      	
              (vi)  

            	
              September
      1, 2009 – September 30, 2009 – 17
aircraft

            

    

     

    
      	
              (vii)  

            	
              October
      1, 2009 through the end of Term – 16
aircraft

            

    

     

    To the
extent that the number of Aircraft during any such period exceeds the number of
Aircraft scheduled to be subject to the Shuttle Agreement prior to the
effectiveness of this letter, each such Additional Aircraft shall be an
ERJ170.

     

    4.           ERJ170
Removal.  Delta hereby agrees that Shuttle may remove up to two
ERJ170 Aircraft from the Delta Connection program and the terms of the Shuttle
Agreement (in addition to those ERJ170 Aircraft being replaced pursuant to the
terms of Amendment Number Two to the Shuttle Agreement dated as of August 21,
2007); provided
that, (x)
Shuttle shall provide Delta with at least sixty (60) days prior notice of any
such removal and (y) in no event shall any such removal be permitted if, after
giving effect thereto, there would be less than 16 Aircraft subject to the terms
of the Shuttle Agreement.

     

    5.           Chautauqua Agreement
Amendment.  Delta, Republic and Chautauqua further agree that
the Chautauqua Agreement is hereby amended by deleting the text of Article 17 in
its entirety and replacing it with “[Reserved.]”.

     

    6.           Shuttle Agreement
Amendment.  Delta, Republic and Shuttle America further agree
that the Shuttle Agreement is hereby amended by deleting the text of Article 17
in its entirety and replacing it with “[Reserved.]”.

     

    7.           The
parties further agree that, [*]
then this letter shall be null and void and the terms of the Chautauqua
Agreement in effect immediately prior to the dates of this letter agreement
shall govern in respect of the respective parties’ respective rights,
obligations and remedies against the other parties and that each such party
shall be entitled to and have the right to seek damages (as limited under the
Chautauqua Agreement) for the effect of the advanced removals contemplated by
Section 1 hereof.

     

    8.           This
letter agreement constitutes the entire understanding of the parties with
respect to the subject matter hereof, and any other prior or contemporaneous
agreements, whether written or oral, are expressly superseded
hereby.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

     

    Please
acknowledge your agreement with the foregoing by signing in the space provided
below.

     

     

     

     

    
      
        	 	Very
      truly yours,	 
	 	 	 
	 	DELTA
      AIR LINES, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Don
      Bornhorst	 
	 	 	Name:
      Don Bornhorst 	 
	 	 	Title:
      SVP-Delta Connection 	 
	 	 	 	 

      

    

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    Accepted
and Agreed to as of

    this 28th
day of July, 2008:

     

     

    Republic
Airways Holdings Inc.

     

    By: /s/ Bryan
Bedford

          Name:
Bryan Bedford

          Title:
President & CEO

     

    Chautauqua
Airlines, Inc.

     

    By: /s/ Bryan
Bedford

          Name:
Bryan Bedford

          Title:
President

     

    Shuttle
America Corp.

     

    By: /s/ Bryan
Bedford

          Name:
Bryan Bedford

          Title:
President

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