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EXHIBIT 10.38
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered
into effective as of the 16th day of August, 1996 (the "Effective Date") by and
between (1) Air South Airlines, Inc., a Delaware corporation (the "Company"),
and (2) The Pointe Group, L.L.C., a Maryland limited liability company ("TPG").
RECITALS:
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 Columbia, South Carolina
and 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 Company is authorized to issue (1) 18,000,000 shares of common
stock having a par value of $0.001 per share (the "Common Stock") and (2)
2,000,000 shares of preferred stock having a par value of $0.001 per share (the
"Preferred Stock"), of which, (1) 6,917,182 shares of Common Stock are issued
and outstanding, (2) 1,995,000 shares of Preferred Stock are issued and
outstanding, and (3) 56,236,500 shares of Common Stock are reserved for issuance
upon conversion of any outstanding shares of Preferred Stock and any issued and
outstanding convertible debentures, and upon the exercise of any outstanding
stock options and/or warrants; the amounts given in "(3)" above are subject to
increase as a result of anti-dilution provisions applicable to the various
issuance of convertible debt and preferred stock.
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, on
an interim and longer term basis, in connection with the conduct of all aspects
of the Company Business. TPG has commenced providing such consulting services
for the Company on an interim basis and TPG and the Company have entered into an
Indemnification Agreement with respect thereto, the terms and conditions of
which will remain in full force and effect. In order to induce TPG to provide
such consulting services for and on behalf of the Company on a longer term basis
beyond an interim basis, 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
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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,
Xxxx Xxxxxxxxxxxx, and Xxxxx Xxxxxxxx (the "TPG Team"). In connection with TPG's
supervising, operating, and managing the overall operations of the Company
Business, (a) 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, and (b) Xxxx Xxxxxxxxxxxx shall have such officer
titles as determined by the Board of Directors of the Company, after
consultation with Xxxx X. Xxxxx.
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 $425,000 per year (the "TPG Fee"); provided, however, that in the
event Xxxx X. Xxxxx renders less than his full time and attention to the
rendering of the Services by TPG pursuant to this Agreement, the TPG Fee shall
be reduced to the sum of $325,000 per year. The TPG Fee shall be paid in advance
in equal monthly installments of $35,416.67 in the event the TPG Fee is $425,000
per year or $27,083.33 in the event the TPG Fee is $325,000 per year.
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 complete their one existing and ongoing project of TPG dealing
primarily with the disposition of various aircraft for a specific client, (b)
the TPG Team to reassign its other projects with TPG to other contractors as
necessary, (c) 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 (d) 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 convertible debt has been converted
to preferred stock of the Company, all preferred stock of
the Company has been converted to Common Stock of the
Company, and all
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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 31, 1996 plus shares of Common Stock
issuable upon conversion of up to $12,500,000 of
convertible debentures to be sold and issued prior to June
30, 1997;
(b) the closing for the purchase by TPG from the Company of the
TPG Acquired Stock shall take place on such 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
$0.02 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) subject to the provisions of Section 7(g), 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(c), or 8(d);
(g) subject to the provisions of Section 7(g), the Company
shall have the Repurchase Option to repurchase one-sixth
(1/6th) of the "unvested" TPG Acquired Stock purchased by
TPG in the event that Xxxx Xxxxxxxxxxxx resigns as a member
of the TPG Team before the end of the Initial Term of this
Agreement; and
(h) 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
closing by the Company of an IPO (as hereinafter defined),
(iv) 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 (v)
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 any party upon the expiration of the Initial Term or any
subsequent term established in accordance with Section 3;
(c) 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
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Company;
(d) 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;
(e) by the Company upon 30 days prior written notice after the
closing of the sale of shares of Common Stock of the
Company offered under a registration statement filed by the
Company pursuant to the Securities Act of 1933, the gross
proceeds of which are not less than $10,000,000 (the
"IPO").
9. Termination Obligations of the Company.
(a) In the event of termination of this Agreement by the
Company under Section 8(b) because of the expiration of the Initial Term or any
subsequent term of this Agreement, or Section 8(e) because of the closing by the
Company of an IPO, 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 Chief Executive Officer of
the Company, and shall be a 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
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the Company;
(4) a term and severance arrangement as mutually
agreed upon and usual and customary in the
airline industry for companies of comparable
operations as the Company; and
(5) the Xxxxx Option Arrangement, as set forth in
more detail in Section 10 of this Agreement.
(b) In the event of termination of this Agreement by the
Company under Sections 8(a), 8(c), or 8(d), 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.
10. Xxxxx Stock Option.
In the event that the Company offers and enters into the Xxxxx
Employment Agreement with Xxxx X. Xxxxx, the Company shall grant to Xxxx X.
Xxxxx the option to acquire Common Stock of the Company (the "Xxxxx Option
Arrangement"). The Xxxxx Option Arrangement shall be consistent with the
Company's stock option plan and shall contain all usual and customary
provisions, including by way of illustration but not limitation, the following:
(a) Common Stock of the Company representing 5% of all shares
of the Company shall be reserved for issuance pursuant to
the Xxxxx Option Arrangement (the "Xxxxx Option Shares"),
with the determination of the number of Xxxxx Option Shares
pursuant to which the Xxxxx Option Arrangement shall apply
being done on a fully diluted basis, in accordance with the
"treasury stock" calculation method, such that it shall be
determined as if all convertible debt has been converted to
Common Stock of the Company, all Preferred Stock of the
Company has been converted to Common Stock of the Company,
and all authorized and outstanding stock options and/or
warrants of the Company have been fully exercised; and
(b) the Xxxxx Option Shares granted shall be exercisable at the
fair market value of the Common Stock on the date of each
respective grant.
11. Registration Rights.
TPG shall, with respect to the TPG Acquired Stock, and Xxxx X.
Xxxxx shall, with respect to the Xxxxx Option Shares, 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, Xxxx X. Xxxxx
and the Company.
12. 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 $__,000 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 leasing a home in Columbia, South Carolina for
and selected by Xxxx X. Xxxxx for one (1) year in an amount
not to exceed $3,000 per
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month;
(d) the cost of leasing a home in Columbia, South Carolina for
and selected by Xxxx Xxxxxxxxxxxx for one (1) year in an
amount not to exceed $1,250 per month;
(e) the cost of food and lodging at a hotel in Columbia, South
Carolina for and selected by Xxxx X. Xxxxx and Xxxx
Xxxxxxxxxxxx until the homes referred to in sections 12(c)
and 12(d) can be leased; and
(f) the cost of moving household and personal effects for Xxxx
X. Xxxxx and Xxxx Xxxxxxxxxxxx from Indianapolis, Indiana
to Columbia, South Carolina to the rental homes referred to
in Sections 12(c) and 12(d), and the cost of moving
household and personal effects for Xxxx X. Xxxxx and Xxxx
Xxxxxxxxxxxx from the rental homes referred to in Sections
12(c) and 12(d) located in Columbia, South Carolina to such
permanent residences as Xxxx X. Xxxxx and Xxxx Xxxxxxxxxxxx
shall each select upon moving out of the rental homes
referred to in Sections 12(c) and 12(d), in an amount not
to exceed $10,000 for Xxxx X. Xxxxx and $10,000 for Xxxx
Xxxxxxxxxxxx.
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
or 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
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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) 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. Xxxxxxxx, III, Esquire
Secretary and General Counsel
Air South Airlines, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone Number 000-000-0000
Telecopy Number 000-000-0000
To TPG:
in care of:
Xx. Xxxx X. Xxxxx
President and Chief Executive Officer
Air South Airlines, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone Number 000-000-0000
Telecopy 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
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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:
Air South Airlines, Inc.
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
TPG:
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The Pointe Group, L.L.C.
By: /s/ Xxxx X. Xxxxx
--------------------------
Name: Xxxx X. Xxxxx
Title: Co-Chairman and CEO
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INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made and
entered into effective as of the 17th day of July, 1996 (the "Effective Date")
by and between (1) Air South Airlines, Inc., a Delaware corporation (the
"Company"), and (2) The Pointe Group, L.L.C., a Maryland limited liability
company ("TPG").
RECITALS:
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 Columbia, South Carolina
and 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 Company is authorized to issue (1) 18,000,000 shares of common
stock having a par value of $0.001 per share (the "Common Stock") and (2)
2,000,000 shares of preferred stock having a par value of $0.001 per share (the
"Preferred Stock"), of which, (1) 6,917,182 shares of Common Stock are issued
and outstanding, (2) 1,995,000 shares of Preferred Stock are issued and
outstanding, and (3) 56,236,500 shares of Common Stock are reserved for issuance
upon conversion of any outstanding shares of Preferred Stock and any issued and
outstanding convertible debentures, and upon the exercise of any outstanding
stock options and/or warrants; the amounts given in "(3)" above are subject to
increase as a result of anti-dilution provisions applicable to the various
issuance of convertible debt and preferred stock.
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, on
an interim and longer term basis, in connection with the conduct of all aspects
of the Company Business. TPG has commenced providing such consulting services
for the Company on an interim basis, but in order to induce TPG to continue
providing such consulting services for the Company on an interim basis, TPG has
requested and the Company hereby agrees to indemnify TPG with respect to its
actions for and on behalf of the Company.
E. The Company and TPG intend to enter into a separate agreement (the
"Consulting Agreement") with respect to the consulting services to be provided
by TPG for and on behalf of the Company on a longer term basis.
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. Services.
The Company hereby engages TPG, on an interim basis until a formal
Consulting Agreement is entered into between the Company and TPG, for 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,
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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, Xxxx Xxxxxxxxxxxx,
and Xxxxx Xxxxxxxx (the "TPG Team"). In connection with TPG's supervising,
operating, and managing the overall operations of the Company Business, (a) 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, and (b) Xxxx Xxxxxxxxxxxx shall have such officer titles as determined
by the Board of Directors of the Company, after consultation with Xxxx X. Xxxxx.
3. 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
or 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
commence as of the beginning of time and shall remain operative and shall
survive the commencement and termination of this Agreement.
4. Indemnification.
(a) Neither the Company nor TPG as an 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
12
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.
5. 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. Xxxxxxxx, III, Esquire
Secretary and General Counsel
Air South Airlines, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone Number 000-000-0000
Telecopy Number 000-000-0000
To TPG:
in care of:
Xx. Xxxx X. Xxxxx
President and Chief Executive Officer
Air South Airlines, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone Number 000-000-0000
Telecopy 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
6. 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.
13
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.
7. Integration.
This Agreement sets forth (and is 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 matters set forth herein and there are no promises, agreements,
conditions, understandings, warranties or representations, oral or written,
express or implied, among them with respect to the matters set forth herein
other than as set forth herein.
8. 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.
9. 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.
10. 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.
11. 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 as of the date and year first above written.
WITNESS/ATTEST:
The Company:
Air South Airlines, Inc.
By:
--------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
TPG:
The Pointe Group, L.L.C.
By:
--------------------------
Name: Xxxx X. Xxxxx
Title: Co-Chairman and CEO
