Exhibit 10.14(a)
CONFIDENTIAL
CONFIDENTIAL TREATMENT
REQUESTED PURSUANT TO RULE 406
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.
AMENDMENT NUMBER 1 TO AMENDED
AND RESTATED LETTER AGREEMENT GCT-026/98
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This Amendment Number 1 to Amended and Restated Letter Agreement GCT-026/98,
dated as of June 7, 2002 ("Amendment No. 1") relates to the Amended and Restated
Letter Agreement GCT-026/98 (the "Letter Agreement") between Embraer - Empresa
Brasileira de Aeronautica S.A. ("Embraer") and Republic Airways Holdings, Inc.
("Buyer") dated April 19, 2002, which concerns the Amended and Restated Purchase
Agreement GCT-025/98 (the "Purchase Agreement"), as amended from time to time
(collectively referred to herein as the "Agreement"). This Amendment No. 1 is
between Embraer and Buyer, collectively referred to herein as the "Parties".
This Amendment No. 1 sets forth further agreements between Embraer and Buyer
relative to the incorporation of 22 firm aircraft and 30 option aircraft to the
Purchase Agreement with certain specifics and exclusives conditions, as provided
in Amendment No. 1 to the Purchase Agreement, dated as of the date hereof.
This Amendment No. 1 constitutes an amendment and modification of the Letter
Agreement. All terms defined in the Agreement and not defined herein shall have
the meaning given in the Agreement when used herein, and in case of any conflict
between this Amendment No. 1 and the Agreement, the terms of this Amendment No.
1 shall control.
WHEREAS, in connection with the Parties' agreements as described above, the
Parties have agreed to modify the Letter Agreement as provided below;
NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Embraer and Buyer do hereby agree as follows:
1. LETTER AGREEMENT APPLIES TO DELTA AIRCRAFT: The terms of the Letter Agreement
shall apply to the Delta Aircraft except as otherwise provided in this Amendment
No. 1 to the Letter Agreement.
2. [*]
3. SPARE PARTS CREDIT: Article 2 of the Letter Agreement is hereby deleted and
replaced with the following:
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"Embraer will provide Buyer a spare parts (except engines, engine
related parts and APU) and ground support equipment credit of [*] This
spare parts credit shall be made available to Buyer upon [*]If for any
reason the Purchase Agreement is partially terminated in relation to
any Aircraft, then Buyer shall pay [*] [*]per each applicable
terminated EMB-145 Aircraft and/or [*]per each EMB-140 Aircraft and/or
[*]per each EMB-135 Aircraft for which such Spare Parts Credit for any
reason has already been provided to Buyer. Each Spare Part Credit 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 [*] for such Spare Parts Credit. Such Spare
Parts Credit shall be applied against [*]
4. FINANCING: Article 4 of the Letter Agreement shall not apply to the Delta
Aircraft. Embraer shall provide financing assistance for the Delta Aircraft
pursuant to the Finance Term Sheet attached hereto as Schedule "7" to the Letter
Agreement.
5. AIRCRAFT ESCALATION PRICE: Article 5 of the Letter Agreement shall not apply
to the Delta Aircraft. The following escalation limits shall apply to the Delta
Aircraft:
A. The Delta Aircraft Basic Prices are subject to Embraer's
standard escalation formula [*].
B. The result of the Escalation Formula application to each Delta
Aircraft delivery is [*] The Delta Aircraft Purchase Price
shall be the result of the [*] times [*]of the Escalation
Factor [*]. However, in the event that [*]shall be fully [*].
C. The conditions described in this Article 10 shall only be
applicable in the event the [*]In the event the [*]the Delta
Aircraft Purchase Price will be equal to the Delta Aircraft
Basic Price[*]
In the event any Delta Aircraft shall be delivered after December 2007, the
Parties agree to, in addition to the Escalation Formula, enter into good faith
negotiations for the revision of the Aircraft Basic Prices for the Delta
Aircraft not yet delivered. Should the Parties not succeed in the negotiation
for revision of the relevant Basic Prices, then Embraer may terminate the
Purchase Agreement in regard to the Delta Aircraft not yet delivered. [*]
6. ADDITIONAL AIRCRAFT GUARANTEES: Article 7 of the Letter Agreement shall be
deleted and replaced with the following text:
"Embraer shall provide a direct maintenance cost guarantee and
scheduled dispatch reliability guarantee in accordance with the terms
and conditions specified in Schedules "4" and "5", respectively. These
guarantees shall apply to the forty-nine (49) EMB-145LR and EMB-135KL
aircraft previously delivered under the Original Purchase Agreement and
to the four (4) additional EMB-135KL aircraft currently scheduled for
delivery to Chautauqua by Solitair Corp.
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under the Original Purchase Agreement (effective at the time such
Aircraft are initially delivered to Chautauqua as buyer or lessee), and
to the twenty two (22) EMB-135 Delta Aircraft."
7. CONVERSION: Article 8 of the Letter Agreement shall not apply to the Delta
Aircraft. However, Buyer may, at Buyer's option, elect to convert each of the
Delta Option EMB-145 Aircraft to Delta Option EMB-135 Aircraft, provided that
Buyer informs Embraer by means of a written notice no later than the date which
Buyer confirms the exercise of its option to purchase such Option Aircraft,
according to Article 24 of the Purchase Agreement, of its intention to exercise
such conversion right. Upon conversion of an Aircraft pursuant to this Article
5, all relevant provisions of the Purchase Agreement and Letter Agreement shall
apply MUTATIS MUTANDI.
8. PROGRESS PAYMENTS: Article 9 of the Letter Agreement shall apply for all
Aircraft, except that Buyers obligations thereunder shall be limited as follows:
Notwithstanding anything to the contrary in the Purchase Agreement,
Buyers obligations to make progress payment and deposits shall be
limited as provided in this Section 8.
Within [*] after execution of this Amendment No. 1 to Letter Agreement,
Buyer shall make (by wire transfer) progress payments in an amount of
[*]for each Aircraft with a Contractual Delivery Date on or before [*],
and [*]for each Aircraft with a Contractual Delivery Date between
[*]and [*]After making such payments, Buyer shall not be obligated to
make any deposits or further progress payments until the earlier of (x)
[*]after the date Buyer issues shares pursuant to its initial public
offering and (y) [*](such earlier date, the "Catch Up Date").
On the Catch Up Date, Buyer shall make all additional progress payments
and all deposits that would otherwise have been due per Article 9 of
the Letter Agreement and the provisions of the Purchase Agreement. In
order to compensate Embraer for the delay in progress payments and
deposits, Interest shall accrue at a rate of [*] on the amount of each
progress payment and deposit that has been delayed for the duration of
such delay. Interest payments shall be made in accordance with the
provisions of Article 9.3 of the Letter Agreement, except that they
shall be paid on the Catch Up Date instead of the date of delivery of
an Aircraft.
9. OTHER AGREEMENTS: Article 10 of the Letter Agreement is hereby deleted and
replaced with the following:
"Any breach, default or failure to perform by Chautauqua or Buyer under
any other agreement between one or both of them and Embraer shall be a
breach of the Purchase Agreement. Any breach, default or failure to
perform by Buyer under the Purchase Agreement shall be a breach and
event of default by Buyer and Chautauqua under all other agreements
between one or both of them and Embraer.
10. CONSIGNMENT: Article 11 of the Letter Agreement is hereby deleted.
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11. MISCELLANEOUS: All other provisions of the 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.
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IN WITNESS WHEREOF, Embraer and Buyer, by their duly authorized officers, have
entered into and executed this Amendment No. 1 to be effective as of the date
first written above.
EMBRAER - Empresa Brasileira de Republic Airways Holdings, Inc.
Aeronautica S.A.
By By
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Name: Name:
Title: Title:
By Date:
---------------------------
Name: Place:
Title:
Date:
Place:
Witness: Witness:
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Name: Name:
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SCHEDULE "7"
FINANCING TERM SHEET
Pursuant to negotiations between Embraer - Empresa Brasileira de Aeronautica
S.A. ("Embraer"), Republic Airways Holdings, Inc. ("Buyer") and Delta Air Lines,
Inc. ("Delta"), Embraer is pleased to present this Financing Term Sheet which
describes the general terms and conditions of the financing assistance to be
offered [*] . (References to Buyer in this Financing Term Sheet shall be deemed
to include Chautauqua).
Embraer will use commercially reasonable efforts to obtain [*] financing for the
Delta Aircraft based on the following basic terms and conditions:
AIRCRAFT: The Delta Aircraft (i.e. 22 Firm Aircraft and 30
Option Aircraft).
AIRCRAFT PRICE: The Purchase Prices for the Delta Aircraft.
[*]
FINANCING TRANSACTION: The Delta Aircraft Interim or permanent financing
assistance will be provided in the form of [*]
financing (the "[*] Financing") and will be
provided by Embraer [*] to the benefit of Buyer,
which may require the utilization of special purpose
corporation(s) and/or trust arrangements, and shall
consist of following financial main terms and
conditions:
DEBT PROVIDER: [*] ;
FINANCED AMOUNT: Up to [*] of the Delta Aircraft Purchase Price, with
Buyer to pay no less than [*] itself;
DEBT TENOR: [*] years, payable in [*] and a maximum average [*]
DEBT RATE: [*] as such rate is adjusted on the [*] For reference
purposes only, [*] rate as at June 5, 2002 [*]
In the event that [*] obtain financing from [*] but
in an amount less than [*] of the aircraft purchase
price, Embraer agrees that it will provide or cause
to be provided from a third party [*] The interest
rate for such [*] shall be [*]
In the event that Embraer cannot obtain [*] Embraer
agrees to [*] Further, such [*] is expressly
conditioned upon Buyer's [*] provided that Buyer
shall not be [*]
[*] are generally offering in the US market for
similar regional airlines at the time.
Embraer and Buyer agree to jointly work together [*]
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Additionally, in the event Buyer arranges sub-debt or
market equity (including without limitation a single
investor lease) [*] Embraer may provide, [*] on terms
and conditions to be further discussed and agreed
between Buyer and Embraer. [*]
CONDITIONS PRECEDENT: (1) Absence of any material adverse change in the
business, operations or financial condition of Buyer
as proposed by the Buyer business plan as reflected
in its S1 filing. The parties specifically agree that
the following events in and of themselves shall not
constitute material adverse changes in the business,
operations or financial condition of Buyer (provided
that, for the avoidance of doubt, such events may
contribute to a material adverse change) : [*].
(2) Absence of litigation by or against Buyer, Delta
or any Buyer affiliate, which could be reasonably be
expected to have a material adverse effect upon the
operations of Buyer; provided that if Buyer continues
to make reasonable efforts to resolve the litigation
without a material adverse effect and such litigation
is resolved within ninety days (in any case, no later
than thirty days before the relevant closing), this
condition shall only [*].
(3) For the Option Aircraft, absence of any material
adverse change in the financial/lease markets
negatively impacting availability of, access to, or
costs of aircraft financing; and for all Aircraft,
absence of a disruption in the finance markets that
results In banks being permitted or required to close
(provided that such condition shall only [*] ).
(4) Buyer entering into a code-share agreement with
Delta for 22 firm Aircraft and such agreement
remaining in full force and effect. With respect to
the financing of any Option Aircraft, Buyer shall
have entered into an agreement with Delta pursuant to
which such Option Aircraft will be operated under
such code share agreement or an amendment or
modification thereof.
(5) No changes or amendments to Section 1110 of the
United States Bankruptcy Code as currently legislated
and interpreted 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; provided that if such effect [*], this
condition shall [*] ends.
(6) Buyer shall cooperate with any financing party,
or any other participant in the financing structure,
and shall provide financial and other information
reasonably requested by such participants.
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(7) There shall not be a monetary default by Buyer
with respect to the pertinent financing parties at
the time of financing.
(8) Buyer shall waive trial by jury in respect of any
claim based upon or arising out of financings and
resulting transactions.
(9) All payments to be made by the Buyer in favor of
the financing parties shall be free and clear of any
taxes, levies, duties or other deductions of whatever
nature including standard gross up provisions.
(10) All legal fees and disbursements, and
out-of-pocket expenses of Embraer, the financing
parties, or any other financing party associated with
this transaction, including but not limited to
registration fees/expenses that are customary in
aircraft transactions, shall be for the account of
Buyer and shall be paid by it on closing, provided
that with respect to any Aircraft for which Embraer
arranges or provides Interim Financing and permanent
financing is subsequently arranged, in the event the
total amount of such fees, disbursements and expenses
incurred in connection with such Interim Financing
and such permanent financing [*], Embraer shall [*].
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