EXHIBIT 10.1
Settlement and Assumption Term Sheet
WHEREAS US Airways Group, Inc. ("Group") and various affiliates including US
Airways, Inc. ("Inc.") (collectively referred to as "Airways") commenced
bankruptcy cases in the matter entitled In re US Airways, Inc., et al., Case No.
04-13819, currently pending in the United States Bankruptcy Court for the
Eastern District of Virginia, Alexandria Division (the "Bankruptcy Case");
WHEREAS on January 13, 2004, the Bankruptcy Court ("Court") in the Bankruptcy
Case issued an order ("Embraer Order") approving the Post Petition Purchase
Agreement Modification and Aircraft Financing Term Sheet ("Term Sheet") executed
between Inc. and Embraer - Empresa Brasileira de Aeronautica SA ("Embraer") and
which concerned, among other things, certain modifications to Purchase Agreement
DCT-021/03, Letter Agreement DCT-022/03, and Financing Letter of Agreement
DCT-023/03, as each has been amended from time to time (collectively referred to
as "Purchase Agreement");
WHEREAS on February 3, 2005, Embraer filed with the Court its partially secured
and unsecured Proof of Claim ("Proof of Claim") for any damages which Embraer
may have suffered in the event of rejection of the Purchase Agreement DCT-021/03
under Section 365 of the United States Bankruptcy Code ("Bankruptcy Code");
WHEREAS on November 16, 2004, Group and Embraer Aircraft Customer Services, Inc.
("EACS") executed Letter of Intent No. 2, as amended from time to time ("TSP
LOI"), in regard to maintenance services for EMBRAER 170 aircraft;
WHEREAS the TSP LOI is scheduled to expire on March 31, 2006 and Embraer and
Group have reserved all of their claims, rights and remedies with respect to
whether the TSP LOI is a post-petition contract or a pre-petition contract;
WHEREAS on March 31, 2005, the Court issued an order authorizing Airways, under
certain conditions, to sell ten (10) EMBRAER 170 aircraft ("Currently Owned
Aircraft") to Republic Airways Holdings Inc. ("Republic") and to assume and
assign to Republic leases relative to fifteen (15) additional EMBRAER 170
aircraft ("Leased Aircraft") leased to Airways by General Electric Capital
Corporation or its affiliates (collectively "GECC") and such March 31, 2005
order was amended on September 2, 2005 (the March 31, 2005 order and the
September 2, 2005 order are collectively referred to as the "Wexford Order");
WHEREAS on June 24, 2005, the Court issued an order ("GE Master Merger MOU
Order") which, among other things, approved a term sheet pursuant to which GECC
under certain conditions would consent to the assignment of the Leased Aircraft
to Republic;
WHEREAS on September 16, 2005, the Court issued an order confirming the Joint
Plan of Reorganization ("Plan") in the Bankruptcy Case and in connection with
the Plan, Airways designated the Purchase Agreement DCT-021/03 as amended,
including, without limitation, by Letter Agreement DCT-022/03, and the TSP LOI
as agreements with respect to which Airways had 180 days to assume under Section
365 of the Bankruptcy Code;
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WHEREAS on September 21 and 22, 2005, the Currently Owned Aircraft were sold to
Republic with the consent of Embraer ("Republic Sale Transaction") and in
connection with the Republic Sale Transaction the debt financing for the
Currently Owned Aircraft provided by affiliates of Embraer to Airways was fully
discharged **;
WHEREAS the assignment of the Leased Aircraft ("Republic Lease Transaction") is
subject to the consent of Embraer **;
WHEREAS Airways and Embraer desire to reach a settlement in regard to the final
disposition of the Purchase Agreement DCT-021/03 as amended, including, without
limitation, by Letter Agreement DCT-022/03, the Proof of Claim and the TSP LOI;
and
NOW THEREFORE for good and valuable consideration the receipt and sufficiency of
which is hereby acknowledged and agreed, the undersigned parties hereby agree in
this Settlement and Assumption Term Sheet ("Assumption Term Sheet") this __ day
of February 2006 as follows:
1. REPUBLIC LEASE TRANSACTION.
Embraer shall negotiate in good faith with GECC to conclude the Republic
Lease Transaction on terms acceptable to Embraer in its sole discretion.
2. PROGRESS AND DEPOSIT PAYMENTS.
A. Pursuant to the terms of the Embraer Order, Term Sheet and Purchase
Agreement Embraer shall retain eighteen million four hundred eighty-one thousand
nine hundred twenty-three dollars (US$18,481,923) in nonrefundable progress and
deposit payments ("Old PDPs") paid by Airways pursuant to the terms of the
Purchase Agreement DCT-021/03.
B. Upon assumption of the Purchase Agreement DCT-021/03 as amended,
including, without limitation, by Letter Agreement DCT-022/03, and as further
modified by this Assumption Term Sheet as provided in Article 3 below (as so
modified and assumed, the "Modified and Assumed Purchase Agreement"), the Old
PDPs shall be applied to future firm aircraft orders placed by Airways and
otherwise controlled by the terms of the Modified and Assumed Purchase
Agreement.
3. ASSUMPTION OF THE PURCHASE AGREEMENT.
A. Airways shall assume Purchase Agreement DCT-021/03 as amended,
including, without limitation, by Letter Agreement DCT-022/03, and as further
modified pursuant to this Assumption Term Sheet pursuant to Section 365 of the
Bankruptcy Code and such assumption shall be deemed effective as of the
effective date of the Plan. In connection with such assumption, Airways shall
place an initial firm order under the Modified and Assumed Purchase Agreement
for twenty five (25) EMBRAER 190 aircraft ("Initial Aircraft") with deliveries
scheduled to occur pursuant to Annex A attached hereto. ** Furthermore, Airways
shall place
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another firm order under the Modified and Assumed Purchase Agreement for thirty
two (32) additional firm EMBRAER 190 aircraft ("Additional Aircraft") with
deliveries scheduled pursuant to Annex A hereto. **.
B. Financing incident to certain Aircraft to be purchased under the
Modified and Assumed Purchase Agreement shall be provided pursuant to the terms
of the Second Amended and Restated Financing Letter of Agreement DCT-023/03
attached hereto as Annex C ("Finance LOA") which shall be executed by the
parties and effective as of the date the Assumption Term Sheet is approved by
the Bankruptcy Court.
C. **
D. Section 21 of Purchase Agreement DCT-021/03 is hereby deleted. Option
Aircraft shall be provided as stated herein. Upon assumption of Purchase
Agreement DCT-021/03 as amended, including, without limitation, by Letter
Agreement DCT-022/03, and as further modified by this Assumption Term Sheet,
Embraer shall grant Airways the rights to purchase up to 50 additional EMBRAER
190 aircraft ("Option Aircraft") in accordance with the terms of this Assumption
Term Sheet. Upon assumption of the Purchase Agreement DCT-021/03 as amended,
including, without limitation, by Letter Agreement DCT-022/03 and as further
modified by this Assumption Term Sheet, Airways shall have the right to purchase
20 Option Aircraft with deliveries scheduled pursuant to Annex A hereto. **.
E. **
F. **
G. Section 2.1 and 2.2 of Letter Agreement DCT-022/03 shall be deleted.
Airways shall be allowed to convert the Initial Aircraft, Additional Aircraft or
Option Aircraft to a model EMBRAER 170, EMBRAER 175, or EMBRAER 195, subject to
availability, provided that Airways sends a written notice to Embraer that it
intends to purchase an aircraft other than the model EMBRAER 190, **.
H. **
I. Except as otherwise agreed to between Embraer and Group, no changes
shall be made to the terms of the Purchase Agreement DCT-021/03, Letter
Agreement DCT-022/03 and the Finance LOA except as provided for herein and in
Annexes attached hereto. Purchase Agreement DCT-021/03, as amended, including by
Letter Agreement DCT-022/03 shall be amended and restated to reflect the terms
of this Assumption Term Sheet.
4. EXTENSION OF TSP LOI AND AIRCRAFT WARRANTIES.
A. Airways shall assume the TSP LOI, as modified by this Assumption Term
Sheet, pursuant to Section 365 of the Bankruptcy Code and such assumptions shall
be deemed effective
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as of the effective date of the Plan. The TSP LOI will be extended from March
31, 2006 until the earlier of October 31, 2006 **.
B. **
5. MUTUAL RELEASE.
Upon the approval by the Bankruptcy Court of this Assumption Term Sheet and the
assumption of the TSP LOI as amended by this Assumption Term Sheet and the
Purchase Agreement DCT-021/03 as amended, including without limitation, by
Letter Agreement DCT-022/03 and as further modified by the terms of this
Assumption Term Sheet, and the execution and delivery of the Finance LOA, each
party hereto, individually and on behalf of its affiliates, and their respective
officers, directors, employees, agents, shareholders, attorneys, successors and
assigns, shall hereby be deemed to remise, release and discharge the other party
hereto and its affiliates, including without limitation, their respective
officers, directors, employees, agents, shareholders, attorneys, successors and
assigns, of and from any and all manner of actions, causes of action, suits,
judgments, costs, claims and demands whatsoever, in law or in equity, foreseen
or unforeseen, matured or unmatured, known or unknown, accrued or not accrued,
including, without limitation, claims for attorneys' fees, indemnity,
extra-contractual damages, punitive damages, or any other claim whatsoever,
including without limitation, claims contained in the Proof of Claim and arising
from the Purchase Agreement DCT-021/03 as amended, including without limitation,
by Letter Agreement DCT-022/03 prior to its assumption pursuant to Section 365
of the Bankruptcy Code, or the termination of the TSP LOI pursuant to Article 4
above, under that certain TSP Letter of Intent No. 1 entered into between Group
and EACS, as amended, or under the original Finance LOA or its First Amendment
each as defined in the Finance LOA. For the avoidance of doubt, each party shall
retain all of its rights at law or equity with respect to this Assumption Term
Sheet, the Modified and Amended Purchase Agreement and the TSP LOI, each as it
is assumed pursuant to this Assumption Term Sheet.
6. BANKRUPTCY COURT APPROVAL.
This Assumption Term Sheet is subject to approval of the Bankruptcy Court by
separate order of the Bankruptcy Court. In the event this Assumption Term Sheet
is not approved by the Bankruptcy Court on or before February 23, 2006, it shall
be void and of no further force or effect.
[signature page follows]
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US AIRWAYS GROUP, INC.
By /s/ Thomas T. Weir
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Name: Thomas T. Weir
Title: Vice President and Treasurer
EMBRAER - EMPRESA BRASILEIRA
DE AERONAUTICA S.A.
By /s/ Antonio Luiz Pizarro Manso
------------------------------------------
Name: Antonio Luiz Pizarro Manso
Title: Executive Vice-President
Corporate & CFO
By /s/ Paulo Cesar de Souza e Silva
------------------------------------------
Name: Paulo Cesar de Souza e Silva
Title: Senior Vice President
Sales Financing
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ANNEX "A"
DELIVERY SCHEDULE
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ANNEX "B"
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ANNEX "C"
SECOND AMENDED AND RESTATED FINANCING LETTER OF AGREEMENT DCT-023-03
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SECOND AMENDED AND RESTATED
FINANCING LETTER OF AGREEMENT DCT-023/03
This Second Amended and Restated Financing Letter of Agreement DCT-023/03 dated
as of February __, 2006 ("Financing LOA"), is an agreement between US Airways
Group, Inc. ("US Airways Group" or "Buyer"), a Delaware corporation with its
principal place of business at 4000 East Skyharbor Blvd., Phoenix, Arizona
85034, United States, and Embraer - Empresa Brasileira de Aeronautica S.A.
("Embraer"), a Brazilian corporation with its principal place of business at Sao
Jose dos Campos, Sao Paulo, Brazil, to amend and restate the Amended and
Restated Financing Letter of Agreement DCT-023/03 executed between US Airways
Group and Embraer dated as of January 24, 2005 ("First Amendment"), which
amended and restated Financing Letter of Agreement DCT-023/03 executed between
US Airways Group and Embraer dated as of May 9, 2003 (the "Original Financing
LOA") and relates to the Purchase Agreement DCT-021/03 executed between US
Airways Group and Embraer dated as of May 9, 2003, as amended including, without
limitation, by the Letter Agreement (defined below) (collectively the "Purchase
Agreement").
WHEREAS, Buyer and Embraer entered into the Purchase Agreement, pursuant to
which Embraer agreed to manufacture and sell to Buyer, and Buyer agreed to
purchase and take delivery from Embraer of, eighty-five (85) firm aircraft;
WHEREAS, Buyer and Embraer entered into that certain Letter Agreement
DCT-022/03, dated as of May 9th, 2003, as amended, (the "Letter Agreement"),
pursuant to which, among other things, the Parties agreed to additional terms
and conditions relating to the sale and purchase of the firm Embraer aircraft;
WHEREAS, on September 12, 2004 (the "Petition Date"), Buyer filed a voluntary
petition for reorganization relief under chapter 11 of the United States
Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the Eastern District of Virginia, Alexandria Division (the "Court") in the
matter entitled, In re US Airways, Inc., et al., Case No. 04-13819 (the
"Bankruptcy Case");
WHEREAS, immediately following the Petition Date, the delivery of additional
Aircraft pursuant to the Purchase Agreement and the Original Financing LOA was
suspended;
WHEREAS, Buyer and Embraer entered into that certain Post-Petition Purchase
Agreement - Modification and Aircraft Financing Term Sheet dated as of December
16, 2004 (the "Term Sheet"), which contemplated among other things, certain
modifications to the Purchase Agreement, the Letter Agreement and the Original
Financing LOA (collectively, the "Embraer Agreements");
WHEREAS, on January 13, 2005, the Court entered an order (the "Embraer Order")
approving the transactions contemplated in the Term Sheet;
WHEREAS, in accordance with, and as contemplated by, the Term Sheet and the
Embraer Order, the parties entered into the First Amendment in anticipation of
future deliveries of Aircraft pursuant to an amended and assumed Purchase
Agreement.
Annex "C" to Settlement and Assumption Term Sheet Page 2 of 6
WHEREAS, on September 16, 2005, the Court issued an order confirming the Joint
Plan of Reorganization ("Plan") in the Bankruptcy Case and in connection with
the Plan, US Airways Group designated the Purchase Agreement as an agreement
with respect to which US Airways Group had 180 days to assume under Section 365
of the Bankruptcy Code;
WHEREAS in order to resolve, among other things, the issues outstanding under
the Purchase Agreement, Embraer and Airways on the date hereof have entered into
the Settlement and Assumption Term Sheet dated February __, 2006 ("Assumption
Term Sheet"), to which this Financing LOA is attached as Annex C;
WHEREAS, this Financing LOA constitutes a replacement, amendment and
modification of the First Amendment and sets forth additional agreements of the
parties with respect to the matters set forth in the Purchase Agreement, as same
shall be amended and modified by the Assumption Term Sheet and assumed by US
Airways Group under Section 365 of the Bankruptcy Code (as so amended and
modified, the "Modified and Assumed Purchase Agreement").
NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency
of which is hereby acknowledged by the parties, Embraer and US Airways Group
agree as follows:
DEFINITIONS: All terms defined in the Purchase Agreement and Assumption
Term Sheet shall have the same meaning when used herein,
and in case of any conflict between this Financing LOA
and the Modified and Assumed Purchase Agreement and the
Assumption Term Sheet, this Financing LOA shall govern.
FIRST AMENDMENT: The First Amendment is hereby amended and restated by
this Financing LOA effective as of the date the
Assumption Term Sheet is approved by the Court.
AIRCRAFT: Up to ** firm Embraer aircraft scheduled for delivery
under the Modified and Assumed Purchase Agreement which
are defined as the ** "Initial Aircraft" pursuant to the
Assumption Term Sheet, together with the ** "Additional
Aircraft" provided for pursuant to the Assumption Term
Sheet. Embraer shall provide financing as provided for
herein for the first ** aircraft scheduled for delivery
under the Modified and Assumed Purchase Agreement
("Financed Aircraft"). **.
BUYER: US Airways Group; provided that the financing and support
in this Financing LOA may be used by a US airline
subsidiary of US Airways Group that is guaranteed by US
Airways Group and eligible for the protections of
Section 1110 of the Bankruptcy Code.
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NET AIRCRAFT
PURCHASE PRICE: The escalated Aircraft Purchase Price (as defined in
Article 3 of the Purchase Agreement) as shown on the
relevant invoice, and excluding any applicable product
support and similar commercial concessions as well as any
and all taxes, VAT, imposts, levies, and duties accrued
either in Brazil or the U.S.
COMMITTED FINANCING: Embraer or an affiliate of Embraer (collectively
"Debt Provider") will provide debt financing for the
Financed Aircraft.
EMBRAER COMMITMENT: **
FINANCED AMOUNT: **
DEBT TENOR: **
DEBT RATE: **
SPREAD OF THE
FINANCED AIRCRAFT: **
TERMS: **
EQUITY INVESTOR: **
NON-INTERFERENCE: **
ADDITIONAL SUPPORT: **
CONDITIONS PRECEDENT: Embraer's obligations pursuant to this Financing LOA
with respect to the Financed Aircraft are subject to the
following conditions precedent:
**
DISPUTE RESOLUTION: Buyer shall waive trial by jury in respect of any
claim based upon or arising out of financings and
resulting transactions.
AFTER-TAX PAYMENT: All payments made by Buyer in favor of the financing
parties shall be free and clear of any taxes, levies or
duties.
FEES AND EXPENSES: **
All terms and conditions of the Modified and Assumed Purchase Agreement, which
have not been specifically altered or modified hereunder, shall remain in full
force and effect without any
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change. The confidentiality provisions of the Modified and Assumed Purchase
Agreement, as modified to apply to this Financing LOA, are hereby incorporated
by reference.
[Signature page follows]
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IN WITNESS WHEREOF, Embraer and Buyer, by their duly authorized officers, have
entered into and executed this Second Amended and Restated Financing Letter of
Agreement DCT-023/03 to be effective as of the date first written above.
ACCEPTED AND AGREED: ACCEPTED AND AGREED:
US AIRWAYS GROUP, INC. EMBRAER - EMPRESA BRASILEIRA DE
AERONAUTICA S.A.
By: /s/ Thomas T. Weir By: /s/ Antonio Luiz Pizarro Manso
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Print: Thomas T. Weir Print: Antonio Luiz Pizarro Manso
Name: Vice President and Treasurer Name: Executive Vice-President
Corporate & CFO
By: /s/ Paulo Cesar de Souza e Silva
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Print: Paulo Cesar de Souza e Silva
Name: Senior Vice President
Sales Financing
Date: February 9, 2006 Date: ________________________________
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ANNEX "D"
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ANNEX "E"
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ANNEX "F"
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