Exhibit 10.5(a)
December 31, 2001
Xx. Xxxxx X. Xxxxxxx
President and CEO
Chautauqua Airlines, Inc.
Indianapolis Int'l Airport
Suite #160
0000 Xxxxx Xxxx Xxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Sent via Fax to (000) 000-0000
Air Services Agreement, dated as of June 11, 2001 by and between Chautauqua
Airlines, Inc. ("Chautauqua") and AMR Corporation ("AMR")
Dear Xx. Xxxxxxx:
We refer to the agreement described above (the "Air Services
Agreement"). (Unless otherwise defined in this letter, capitalized terms that we
use below have the meaning set forth in the Air Services Agreement.)
Chautauqua has informed AMR that Chautauqua wishes to take delivery of three
Firm Approved Aircraft under a financing arrangement that is not a Lease
meeting the requirements of Section 7.03(c) of the Air Services Agreement
(such financing arrangement, and any refinancing of such arrangement that is
also not a Lease meeting the requirements of such Section 7.03(c), an
"Alternative Financing"). The three Firm Approved Aircraft referred to above
have serial numbers 145538, 145543 and 145544, respectively (each, a
"Specified Aircraft"). AMR consents, on the following terms, to such
deliveries under such Alternative Financing arrangements.
1) Until such time as Chautauqua is able to close an Alternative Financing
arrangement with Banco Nacional de Desenvolvimento Economico e Social or
its affiliate Agencia Especial de Financimento Industrial - FINAME
(either being referred to hereafter as "BNDES"), Chautauqua will only
enter into an Alternative Financing with Embraer (or an affiliate
thereof) (an "Embraer Alternative Financing"), and thereafter, Chautauqua
will only enter into an Alternative Financing (including, without
limitation, a refinancing of an Embraer Alternative Financing other than
pursuant to a Lease meeting the requirements of Section 7.03(c) of the Air
Services Agreement) with BNDES.
2) Chautauqua acknowledges that AMR and AA intend to negotiate with BNDES
forms of leveraged lease documentation (the "AA/BNDES Form Lease") based on
existing
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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.
aircraft loans by BNDES to AMR affiliates and acceptable to AMR for
submission to lessors (which may include Solitair Corp., an affiliate of
Chautauqua; Chautauqua or a subsidiary of Chautauqua (each a "CAI
Affiliate") as the equity participant) with respect to any Firm Approved
Aircraft financed by BNDES that are subsequently leased to AA or an AMR
affiliate (a "Permitted Assignee") pursuant to either the "put" or "call"
provisions of the Air Services Agreement. Any AA/BNDES Form Lease shall be
subject to the approval of the lessor under such leveraged lease.
Chautauqua and AMR intend to negotiate leveraged lease documentation based
on the AA/BNDES Form Lease and acceptable to AMR for lease to an AMR
affiliate with a CAI Affiliate as equity participant acting through a trust
or similar entity (such lease, a "Chautauqua Leasing Arrangement"). AMR and
Chautauqua and their respective affiliates shall not have any liability
under this letter for any failure to reach agreement as to an AA/BNDES Form
Lease, as to a Chautauqua Leasing Arrangement, or as to any Alternative
Financing or other arrangement.
3) Until the date that (i) AMR and BNDES agree to the terms of an AA/BNDES
Form Lease, (ii) AMR and Chautauqua agree on the terms of a Chautauqua
Leasing Arrangement and, (iii) financing for a Specified Aircraft has
been put in place with BNDES that permits such Specified Aircraft to be
leased to a Permitted Assignee pursuant to an AA/BNDES Form Lease (and,
if applicable, under a Chautauqua Leasing Arrangement) upon exercise of
any put or call option referred to below, Chautauqua will not enter into
any Alternative Financing for any Specified Aircraft other than the
Embraer Alternative Financing. If the conditions of the preceding
sentence are satisfied, Chautauqua may enter into an Alternative
Financing of a Specified Aircraft on such agreed terms without further
approval by AMR of such financing (a "Definitive Alternative
Arrangement") for purposes of the Air Services Agreement.
4) At the time of (a) a transfer to AMR or an affiliate of a leasehold
interest in a Specified Aircraft or (b) a lease to an AMR affiliate
under a Chautauqua Leasing Arrangement, in either case pursuant to a
One-Time Put Option, a Call Option or a One-Time Call Option, the
Specified Aircraft shall be subject only to the lien of the Alternative
Financing (but otherwise free and clear of all liens, including liens
permitted by the Alternative Financing).
5) At such time as Chautauqua enters into an [*], provided that (a) the
"Lender's Debt Rate" shall be the interest rate charged by [*], and (b)
the illustrative Average Monthly Accounting Rent shall be [*] rather
than the figure set forth on such [*] in each case subject to further
adjustment as provided in [*]. In the event Chautauqua subsequently
enters into a Definitive Alternative Financing with BNDES, Chautauqua's
reimbursable aircraft
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* Confidential
ownership costs with respect to the respective Specified Aircraft shall
be recalculated pursuant to [*], as if such aircraft was leased by
Chautauqua, provided that the illustrative Average Monthly Accounting
Rent shall be [*] rather than the figure set forth on such Exhibit P
subject to further adjustment as provided in Exhibit P. The foregoing is
not intended to amend or modify Schedule E-3, Section 1. J of the Air
Services Agreement or Schedule E-3, Section 1. K of the current proposed
draft of the Amended and Restated Air Services Agreement.
6) AMR agrees that it may not exercise either of its One-Time Call Option
or its Call Option under 7.03 of the Air Services Agreement and
Chautauqua agrees that it may not exercise its One-Time Put Option under
Section 7.03 of the Air Services Agreement with respect to any Specified
Aircraft that is subject to an Alternative Financing until such time, if
any, that a Definitive Alternative Financing or a Lease is entered into
with respect to such aircraft.
7) Except as otherwise expressly provided herein, this letter does not limit
(a) any of AMR's One-Time Call Option or AMR's Call Option or
Chautauqua's One-Time Put Option pursuant to Section 7.03 of the Air
Services Agreement, which options will remain in effect with respect to
each Specified Aircraft, or (b) any of the other rights or obligations
of Chautauqua or AMR under the Air Services Agreement.
8) This letter agreement does not apply to any Firm Approved Aircraft other
than the Specified Aircraft.
9) AMR agrees that each Specified Aircraft shall be placed into service under
the Air Services Agreement and waives any claim for any delay in placing
such Aircraft into service, including any claim for liquidated damages
under Section 1.02(a) of the Air Services Agreement. AMR further
acknowledges and agrees that Chautauqua has the right under certain
circumstances to return the Specified Aircraft to Embraer and agrees that
in the event Chautauqua exercises such right, (a) such Aircraft shall
be removed from service under the Air Services Agreement, (b) such
Aircraft shall no longer be subject to the terms and conditions of the
Air Services Agreement, (c) the Air Services Agreement shall be amended
mutatis mutandi to reflect the removal from service of such Aircraft,
and (d) AMR consents to the removal from service of such Aircraft.
Except as modified hereby, the Air Services Agreement remains in
effect. This letter agreement shall be governed by the internal laws of Texas
without reference to conflict of laws rules.
This letter agreement may be executed in separate counterparts, each of
which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
Execution may be effected by delivery of facsimiles of signature pages (and the
parties shall follow such delivery by prompt delivery of originals of such
pages). This letter agreement may be executed in any
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* Confidential
number of counterparts (and each of the parties hereto shall not be required to
execute the same counterpart). Any counterpart may be executed by facsimile
signature and such
[Intentionally Blank. Continued on next page.]
facsimile signature shall be deemed an original. Each counterpart of this letter
agreement including a signature page executed by each of the parties hereto
shall be an original counterpart of this letter agreement, but all of such
counterparts together shall constitute one instrument.
If you are in agreement with the foregoing, please countersign a copy
of this letter agreement and return a copy to the parties set forth in the
notice provisions of the Air Services Agreement.
Very Truly Yours,
AMR CORPORATION
By:
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Its:
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AGREED AND ACCEPTED:
CHAUTAUQUA AIRLINES, INC.
By:
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Its:
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cc: Wexford Capital, LLC, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000;
Attention: Xxxxxx Xxxxxx, President; Attention: Xxxxxx Xxxxx,
General Counsel;
Fax # 000-000-0000
Xxx Xxxxx - American Eagle
Xxxx Xxxx - American Eagle
Xxxxx Xxxxxx - American Airlines
Xxxx Xxx - Xxxxxx & Xxxxx, Fax # 000-000-0000
Xxxx Xxxxx - Xxxxxx Xxxxxxx & Xxxx, Fax # 000-000-0000
Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000;
Attn: Xxxxxx Xxxxxxx; Fax # 000-000-0000
ATTACHMENT TEXT OF EXHIBIT P
Note: input items marked with an asterisk (*) will be adjusted in the manner
specified. The figures included below are based on GECC indicative financing as
of November 7, 2001.
Purchase Price*: [*]
Closing Date*: November 23, 2001 (to be adjusted to reflect the actual
delivery date of the respective Firm Approved Aircraft).
5-yr Generic
US Swap Rate*: [*] (determined using Bloomberg page "IRSB18." To be
adjusted to reflect the rate in effect on the Closing Date).
Equity After-Tax
Yield*: [*]
Composite
Tax Rate: 35%
Lender's
Debt Rate*: CIRR Rate (as adjusted for the rate in effect on date of
closing, which is [*] as of November __, 2001).
CIRR Rate: For any day, the Commercial Interest Reference Rate
for the U.S. dollar with respect to loans with a tenor
exceeding 17 semi-annual repayment periods applicable for
such day, as published for monthly periods by the United
States Export-Import Bank, at its official website address
under the heading "Commercial Interest Reference Rate
(CIRRS)."
Rent Structure: [*]
Average Monthly
Accounting Rent: [*] (to be determined using the Xxxxxx & Xxxxxxx ABC
Program using the input items set forth herein; provided,
however, that in no event shall the rent be less than the
Lender's debt service).
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* Confidential
Residual: [*] of Purchase Price
Early Buyout Date: [*] Anniversary of the Closing Date.
Early Buyout Price: The greater of (a) the termination value, as determined
according to the Xxxxxx & Xxxxxxx ABC Program, and (b) the
estimated fair market value as of the Early Buyout Date of
the respective Firm Approved Aircraft determined by an
outside appraiser on the Closing Date.
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* Confidential
Note to Exhibit 10.5(a)
The two additional Letter Agreements are substantially identical in all
material respects to the filed Letter Agreement except as follows:
Date of Letter Agreement Serial Numbers Covered
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February 20, 2002 145569
March 27, 2002
