CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is
made and entered into effective as of the 1st day of November,
1996 (the "Effective Date") by and between (1) Vanguard Airlines,
Inc., a Delaware corporation (the "Company"), and (2) The Pointe
Group, L.L.C., a Maryland limited liability company ("TPG").
R E C I T A L S:
A. The Company is engaged in the business of owning and
operating an air carrier certificated by the U.S. government to
engage in the provision of air transportation services in the
common carriage of persons, property, and mail (the "Company
Business"). The Company is based in Kansas City, Missouri and
provides jet service primarily in the Midwestern, Rocky Mountain
and Western regions of the United States.
B. The Company is authorized to issue (1) 15,000,000
shares of common stock having a par value of $0.001 per share
(the "Common Stock") and (2) 1,000,000 shares of preferred stock
having a par value of $0.001 per share (the "Preferred Stock"),
of which, (1) 9,955,773 shares of Common Stock are issued and
outstanding, (2) no shares of Preferred Stock are issued and
outstanding, and (3) 3,225,000 shares of Common Stock are
reserved for issuance upon the exercise of any outstanding stock
options and/or warrants.
C. TPG has various members and employees that have
experience in operating companies engaged in the Company
Business.
D. The Company is in need of certain consulting services
from TPG in connection with the conduct of all aspects of the
Company Business. In order to induce TPG to provide such
consulting services for and on behalf of the Company for the
Initial Term of this Agreement (as hereinafter defined), the
parties desire to enter into this Agreement.
E. The Company hereby agrees to engage TPG and TPG hereby
agrees to accept such consulting engagement with the Company in
accordance with the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants as contained herein, the parties hereto, intending to
be legally bound, agree as follows:
1. Incorporation of Recitals.
The Recitals set forth above shall be incorporated
herein and made a part hereof by this reference.
2. Engagement.
The Company hereby engages TPG to perform independent
contractor, consulting, and management services, including by way
of illustration but not limitation, to (a) supervise, operate,
and manage the overall operations of the Company Business,
including by way of illustration but not limitation, decisions
regarding (i) airline schedules and routes, (ii) regulation of
the Company Business by governmental authorities, (iii) aircraft
and other equipment and real estate acquisitions and/or leases,
(iv) formulation, implementation, and administration of
strategies, policies, and practices, (v) formulation,
implementation, and administration of budgets, business and
financial plans, (vi) hiring, firing, and supervising employees
and consultants, (vii) setting compensation and benefit programs
for employees and consultants, and (viii) such other duties,
responsibilities, and authority usually and customarily granted
to the chief executive officer of a company, and/or (b) provide
such additional services as reasonably requested by the Company
(collectively the "Services"). TPG agrees that it will at all
times faithfully, industriously, and to the best of its ability,
experience, and talents perform the Services. TPG shall, with
the concurrence and approval of the Board of Directors of the
Company and/or the Executive Committee of the Board of Directors
of the Company, have the power to determine (a) the specific
duties that shall be performed by it in rendering the Services
and (b) the means and manner by which those duties shall be
performed. The specific employees of TPG that shall render the
Services shall be Xxxx X. Xxxxx and Xxxxx Xxxxxxxx (the "TPG
Team"). In connection with TPG's supervising, operating, and
managing the overall operations of the Company Business, Xxxx X.
Xxxxx shall have the officer title of President and Chief
Executive Officer of the Company, and shall become a member of
the Board of Directors of the Company.
3. Term.
The term of this Agreement shall commence on the
Effective Date set forth above and shall continue for a period of
two (2) years (the "Initial Term"), unless (a) terminated prior
thereto pursuant to Section 8 hereof or (b) otherwise extended by
the written agreement of the parties hereto.
4. Consideration.
In addition to the TPG Acquired Stock (as hereinafter
defined) and the expense reimbursement and other consideration
hereinafter provided, for all Services rendered by TPG pursuant
to this Agreement, the Company shall pay TPG the sum of $225,000
per year (the "TPG Fee"). The TPG Fee shall be paid in advance
in equal monthly installments of $18,750.
5. Non-Exclusive Service.
In connection with the Services to be rendered by TPG
hereunder, it is expected that the TPG Team will be required to
devote such time, attention, and energies as shall be mutually
deemed necessary to the rendering of such Services.
Notwithstanding the foregoing, the TPG Team shall be entitled to
devote such time, attention, and energies as shall be required
for (a) the TPG Team to supervise, operate and manage the overall
operations of Air South Airlines, Inc., a Delaware corporation
based in Columbia, South Carolina that operates flights from and
between various cities in the southern region of the United
States to various major cities in the northeastern and midwestern
region of the United States, (b) the TPG Team to complete their
one existing and ongoing project of TPG dealing primarily with
the disposition of various aircraft for a specific client, (c)
the TPG Team to reassign its other projects with TPG to other
contractors as necessary, (d) Xxxx X. Xxxxx to act as a director
and/or officer (but not involved in day to day management) of
Semicon, Inc., a family owned business, and (e) the TPG Team, or
any member thereof, to render such other services to such other
company or client as shall be requested by TPG and reasonably
approved by the Company.
6. Working Facilities.
The Company shall be obligated to provide to and
maintain for the TPG Team appropriate offices, supplies,
equipment, and such other facilities and services, including but
not limited to such technical, secretarial, and other support
personnel, necessary to perform the Services.
7. TPG Acquired Stock.
The Company hereby agrees to sell to TPG 6% of the
outstanding Common Stock of the Company (the "TPG Acquired
Stock"). The terms of the sale of the TPG Acquired Stock by the
Company to TPG shall be as follows:
(a) the determination of the number of shares of
Common Stock of the Company which constitute the TPG Acquired
Stock shall be done on a fully diluted basis, in accordance with
the "treasury stock" calculation method, such that it shall be
determined as if all authorized and outstanding stock options
and/or warrants of the Company have been fully exercised,
including but not limited to all shares of the Company issued
and outstanding as of December 30, 1996;
(b) the closing for the purchase by TPG from the
Company of the TPG Acquired Stock shall take place on December
30, 1996, or such other date as shall be mutually agreed to by
the parties hereto (the "TPG Acquired Stock Closing Date");
(c) the closing for the purchase by TPG from the
Company of the TPG Acquired Stock shall take place at the offices
of the Company or such other location as shall be mutually agreed
to by the parties hereto;
(d) the purchase price for the TPG Acquired Stock
shall be $.02 per share (the "TPG Acquired Stock Purchase
Price");
(e) the TPG Acquired Stock Purchase Price shall be
payable by TPG to the Company on the TPG Acquired Stock Closing
Date in the form of cash or check in an amount equal to the par
value of the TPG Acquired Stock together with TPG's noninterest
bearing, promissory note, which shall be due and payable six (6)
months from the TPG Acquired Stock Closing Date;
(f) the Company shall have the option to repurchase
all of the "unvested" TPG Acquired Stock (the "Repurchase
Option") in the event this Agreement is terminated before the
end of the Initial Term for any of the reasons set forth in
Sections 8(a), 8(d), or 8(e); and
(g) the Repurchase Option may be exercised only with
respect to "unvested" TPG Acquired Stock and the TPG Acquired
Stock shall vest as follows:
(i) in equal quarterly increments during the
Initial Term commencing with the Effective Date of this
Agreement, with such vesting to be effective upon the last day of
each calendar quarter, (ii) one-half of any "unvested" TPG
Acquired Stock shall vest upon the death or permanent disability
of Xxxx X. Xxxxx, (iii) upon the merger of the Company into or
with another person, unless (A) the Company is the surviving
entity and (B) this Agreement remains in full force and effect,
or (iv) the sale of all or substantially all of the assets or
stock of the Company to another person.
The foregoing terms regarding the TPG Acquired Stock shall, if
the parties hereto mutually so agree, be set forth in a separate
agreement (the "Stock Purchase Agreement"), to be entered into
within 30 days of the Effective Date of this Agreement. The
Stock Purchase Agreement shall contain all usual and customary
provisions, including the foregoing terms.
8. Termination of Engagement.
This Agreement shall be terminated and the independent
contractor consulting relationship between the Company and TPG
shall cease upon the occurrence of any of the following events:
(a) by TPG for any reason, upon 30 days prior written
notice;
(b) by the Company for any reason, upon 30 days prior
written notice;
(c) by any party upon the expiration of the Initial
Term or any subsequent term established in accordance with
Section 3;
(d) by the Company upon the death or permanent
disability of Xxxx X. Xxxxx or his resignation as the President
and Chief Executive Officer of the Company;
(e) by the Company for "Cause," which for purposes of
this Section 8 shall mean any of the following: (i) TPG's breach
of or failure to comply with or observe any of the material
terms, conditions or agreements contained in this Agreement,
which breach or failure to comply has not been cured within 30
days following written notice by the Company to TPG setting forth
in detail the specific nature of such breach or failure to
comply, or if such breach or failure to comply cannot be cured
within such 30 day period, TPG has not, (A) within such 30 day
period, commenced actions to cure such breach or failure to
comply and diligently pursued such actions and (B) actually cured
such breach or failure to comply within 90 days following such
initial written notice by the Company to TPG, (ii) TPG or any
member of the TPG Team shall be adjudged by a court of competent
jurisdiction as guilty of (A) any willful or grossly negligent
act which causes material harm to the Company, (B) any criminal
act which causes material harm to the Company, (C) any act
involving moral turpitude which causes material harm to the
Company, or (D) any fraud upon the Company, or (iii) any member
of the TPG Team shall be guilty of habitual absenteeism, chronic
alcoholism or other form of chronic addiction;
9. Termination Obligations of the Company.
(a) In the event of termination of this Agreement by
the Company under Section 8(c) because of the expiration of the
Initial Term or any subsequent term of this Agreement, the
Company shall have the following obligations to TPG:
(i) any unpaid portion of the TPG Fee earned
through the date of termination shall be paid by the Company to
TPG;
(ii) any unreimbursed expenses owed by the Company
to TPG for expenses incurred through the date of termination
shall be paid by the Company to TPG;
(iii) the Repurchase Option with respect to the
TPG Acquired Stock shall lapse, such that all of the shares of
the TPG Acquired Stock shall be fully vested;
(iv) the TPG Team shall each be offered full-time
employment with the Company upon mutually satisfactory terms
usual and customary in the airline industry for companies of
comparable operations as the Company; provided, however, that the
Company and Xxxx X. Xxxxx shall enter into a written employment
agreement (the "Xxxxx Employment Agreement") which shall, for
purposes of illustration but not limitation, contain the
following provisions:
(1) he shall have the officer title of Chairman,
President, and member of the Board of Directors of the Company;
(2) he shall have duties at least as expansive as
the Services set forth in Section 2 of this Agreement;
(3) he shall have an annual base salary and
annual bonus as mutually agreed upon and usual and customary in
the airline industry for companies of comparable operations
as the Company;
(4) a term and severance arrangement as mutually
agreed upon and usual and customary in the airline industry
companies of comparable operations as the Company; and
(b) In the event of termination of this Agreement by
the Company under Sections 8(a), 8(d), or 8(e), the Company shall
have the following obligations to TPG:
(i) any unpaid portion of the TPG Fee earned
through the date of termination shall be paid by the Company to
TPG;
(ii) any unreimbursed expenses owed by the Company
to TPG for expenses incurred through the date of termination
shall be paid by the Company to TPG; and
(iii) the Company shall be entitled to exercise
the Repurchase Option with respect to those shares of the TPG
Acquired Stock that have not vested as of the date of
termination.
(c) In the event of termination of this Agreement by
the Company under Section 8(b), the Company shall have the
following obligations to TPG:
(i) any unpaid portion of the TPG Fee earned
through the date of termination shall be paid by the Company to
TPG;
(ii) any unreimbursed expenses owed by the Company
to TPG for expenses incurred through the date of termination
shall be paid by the Company to TPG; and
(iii) the Company shall be entitled to exercise
the Repurchase Option with respect to one-half of those shares of
the TPG Acquired Stock that have not vested as of the date of
termination and the remaining one-half of those
shares shall fully vest and the Company's purchase option shall
lapse.
10. Registration Rights.
TPG shall, with respect to the TPG Acquired Stock be
granted unlimited piggy-back registrations, with any cut-backs of
shares to be registered pursuant to the applicable registration
statement to be done on a pro-rata basis among all of the Sellers
of Company Common Stock pursuant to the applicable registration
statement. A specific Registration Rights Agreement containing
all usual and customary provisions shall be entered into among
TPG and the Company.
11. Expense Reimbursement.
The Company shall reimburse TPG and/or the TPG Team or
directly pay all of the reasonable expenses incurred by TPG
and/or the TPG Team in connection with the performance of TPG's
Services in accordance with this Agreement, including by way of
illustration but not limitation, as follows:
(a) an amount equal to $_____ for legal and related
fees in connection with the preparation and review of this
Agreement;
(b) all ordinary and necessary travel, lodging,
entertainment, and related expenses;
(c) the cost of renting an apartment in Kansas City,
Missouri and leasing or renting a car in Kansas City, Missouri
for Xxxxx Xxxxxxxx; and
(d) the cost of renting an apartment in Kansas City,
Missouri and rental car in Kansas City, Missouri for Xxxx X.
Xxxxx.
13. Representations and Warranties.
(a) The Company covenants, represents and warrants as
of the Effective Date to TPG as follows:
(i) The Company has the sole and entire right,
power and authority (a) to enter into this Agreement, (b) to
fulfill the obligations imposed herein upon the Company, and (c)
to consummate the transactions contemplated herein;
(ii) This Agreement constitutes the legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms; and
(iii) There are no agreements, contracts,
understandings commitments which would prevent the Company from
entering into this Agreement, making any representations or
warranties herein and/or consummating any of the transactions
contemplated herein.
(b) TPG covenants, represents and warrants as of the
Effective Date to the Company as follows:
(i) TPG has the full and entire right, power and
authority (a) to enter into this Agreement, (b) to fulfill the
obligations imposed herein upon TPG, and (c) to consummate the
transactions contemplated herein;
(ii) This Agreement constitutes the legal, valid
and binding obligation of TPG, enforceable against TPG in
accordance with its terms; and
(iii) There are no agreements, contracts,
understandings or commitments which would prevent TPG from
entering into this Agreement, making any representations or
warranties herein and/or consummating any of the transactions
contemplated herein.
(c) The representations, warranties, covenants,
indemnities, obligations and agreements set forth in or made
pursuant to this Agreement shall remain operative and shall
survive the commencement and termination of this Agreement.
14. Indemnification.
(a) Neither the Company nor TPG as independent
contractor shall be liable for any of the debts, liabilities or
obligations of the other. Accordingly, the Company will
indemnify TPG and TPG will indemnify the Company, and each will
hold the other harmless from and against any and all loss, cost,
damage, injury or expense (including court costs and reasonable
attorneys' fees) whatsoever and howsoever arising which TPG or
the Company (as the case may be) or any of their respective
agents, successors or assigns incurs as a proximate result of (i)
TPG or the Company (as the case may be) being held liable for any
debt, liability or obligation of the Company or TPG (as the case
may be) or (ii) any breach of this Agreement by the Company or
TPG (as the case may be).
(b) In the TPG Team's rendering of the Services
hereunder and in their capacity as officers, directors,
employees, independent contractors, and/or agents of the Company,
the Company shall, as and to the extent permitted by the General
Corporation Law of Delaware, indemnify the TPG Team, TPG, and the
members, officers, employees, representatives, agents,
successors, and assigns of TPG (collectively the "TPG Group") and
hold the TPG Group harmless from and against any and all loss,
cost, damage, injury or expense (including court costs and
reasonable attorneys' fees) whatsoever and howsoever arising
which the TPG Group or any person within the TPG Group incurs
relating to their actions under this Agreement and the status of
the TPG Team as officers, directors, employees, independent
contractors, and/or agents of the Company. In addition, The
Company shall include the TPG Group and the persons within the
TPG Group as beneficiaries and covered persons in the Company's
insurance policy to protect the TPG Group and the persons within
the TPG Group relating to their status as officers, directors,
employees, independent contractors, and/or agents of the Company.
(c) TPG will assume full responsibility for and will
indemnify the Company and hold the Company harmless from and
against any and all loss, cost, damage, injury or expense
(including court costs and reasonable attorneys' fees) whatsoever
and howsoever arising which the Company incurs relating to TPG's
status as an independent contractor in connection with the
non-withholding by the Company of federal, state, and local
income taxes.
15. Notices.
All notices under this Agreement shall be in writing
and shall be delivered by personal service, or by certified or
registered mail, postage prepaid, return receipt requested, to
the parties at the addresses herein set forth:
To the Company:
in care of:
Xxxxx X. Xxxxxxx
Vice President and General Counsel
Vanguard Airlines, Inc.
00 XX Xxxx Xxxxxx, Xxxxxxxxx Xxxxx
Xxxxxx City International Airport
Xxxxxx Xxxx, XX 00000
Telephone Number 000-000-0000
Facsimile Number 000-000-0000
To TPG:
in care of:
Xx. Xxxx X. Xxxxx
President and Chief Executive Officer
Vanguard Airlines, Inc.
00 XX Xxxx Xxxxxx, Xxxxxxxxx Xxxxx
Xxxxxx City International Airport
Xxxxxx Xxxx, XX 00000
Telephone Number 000-000-0000
Facsimile Number 000-000-0000
with a copy to :
Xxxxx X. Xxxxxxxxx, Esquire
Xxxxxxxx, Xxxxxxx and Xxxxx Chartered
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telephone Number 000-000-0000
Telecopy Number 000-000-0000
16. Independent Contractor Status.
Unless otherwise agreed by the parties, TPG is retained
and engaged by the Company only for the purposes and to the
extent set forth in this Agreement, and its relationship to the
Company shall, during the period or periods of its engagement
hereunder, be that of an independent contractor. Accordingly,
the Company shall have no obligation to withhold any federal,
state or local income or other taxes or other similar charges
from the TPG Fee or other consideration payable by the Company to
TPG. TPG shall be fully responsible for all such taxes or
charges with respect to the members of the TPG Team.
Furthermore, TPG shall be free to exercise its judgment as to the
manner in which it and its employees will perform the Services
expected of it with the concurrence and approval of the Board of
Directors of the Company and/or the Executive Committee of the
Board of Directors of the Company.
17. Alteration, Amendment, or Waiver.
No change or modification of this Agreement shall be
valid unless the same is in writing and signed by the parties
hereto. No waiver of any provision of this Agreement shall be
valid unless in writing and signed by the person against whom it
is sought to be enforced. The failure of any party at any time
to insist upon strict performance of any condition, promise,
agreement or understanding set forth herein shall not be
construed as a waiver or relinquishment of the right to insist
upon strict performance of the same condition, promise,
agreement, or understanding at a future time. The invalidity or
unenforceability of any particular provision of this Agreement
shall not affect the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or
unenforceable provisions were omitted.
18. Integration.
This Agreement together with the Indemnification
Agreement and other separate agreements referred to herein set
forth (and are intended to be an integration of) all of the
promises, agreements, conditions, understandings, warranties, and
representations, oral or written, express or implied, among them
with respect to the terms of the consulting engagement and there
are no promises, agreements, conditions, understandings,
warranties or representations, oral or written, express or
implied, among them with respect to the terms of the consulting
engagement other than as set forth in this Agreement together
with the Indemnification Agreement and other separate agreements
referred to herein.
19. Conflicts of Law.
This Agreement shall be subject to and governed by the
laws of the State of Delaware irrespective of the fact that one
or more of the parties now is or may become a resident of a
different state.
20. Counterparts.
This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but all of which together
shall constitute one and the same instrument.
21. Further Assurances.
The parties hereto agree to execute and deliver to the
other such other documents or instruments as may be reasonable
and necessary in furtherance of the performance of the terms,
covenants, and conditions of this Agreement.
22. Benefits and Burden.
This Agreement shall inure to the benefit of, and shall
be binding upon, the parties hereto and their respective
successors, heirs, and personal representatives. This Agreement
shall not be assignable.
IN WITNESS WHEREOF, the Company and TPG have each caused
this Agreement to be signed by its respective duly authorized
officers and each of the parties hereto has executed this
Agreement on the date and year first above written.
WITNESS/ATTEST:
The Company:
Vanguard Airlines, Inc.
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Vice President
TPG:
The Pointe Group, L.L.C.
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
