Exhibit 10.41
SETTLEMENT AND
RELEASE AGREEMENT
THIS SETTLEMENT AND RELEASE AGREEMENT (the "Agreement") is made
and entered into by and between YUCAIPA CORPORATE INITIATIVES FUND
I, L.P. and YUCAIPA CORPORATE INITIATIVES FUND I, LLC (collectively
"Yucaipa"), on the one hand, and MESA AIR GROUP, INC. ("Mesa"). The
Agreement concerns the settlement and compromise of certain claims
and disputes that relate to the action entitled Aloha Airlines,
Inc., et al. v. Mesa Air Group, Inc., which is pending in the
United States District Court for the District of Hawaii (the
"Court") as Case No. CV 07-00007 DAE/BMK (the "Action").
In consideration of the mutual promises contained herein, the
sufficiency of which is hereby acknowledged, each of the Parties
1 to this Agreement agrees, promises, covenants,
represents, warrants and stipulates as follows:
1.
Effective Date. This Agreement, including any and all
Exhibits hereto, is made and effective as of November 28, 2008 (the
"Effective Date").
2.
Parties and Disputes Resolved
(a)
The "Aloha Parties" refers to Aloha Airlines, Inc., Aloha Air Group
Inc. (collectively "Aloha"), their parent, subsidiary and
affiliated entities, and all of their respective past, present and
future divisions, departments, units, affiliates, members,
investors, partners, joint ventures, joint venturers, affiliated
partnerships, stockholders, shareholders, predecessors,
_________________
1 In this Agreement, Yucaipa and Mesa are
referred to individually as a "Party" and referred to collectively
as the "Parties."
1
successors, assigns, officers, directors, employees, agents,
representatives, attorneys and independent contractors.
(b)
The "Yucaipa Parties" refers to Yucaipa, its parent, subsidiary and
affiliated entities, and all of their respective past, present and
future divisions, departments, units, affiliates, members,
investors, partners, joint ventures, joint venturers, affiliated
partnerships, stockholders, shareholders, predecessors, successors,
assigns, officers, directors, employees, agents, representatives,
attorneys and independent contractors.
(c)
The "Mesa Parties" refers to Mesa, its parent, subsidiary and
affiliated entities, and all of their respective past, present and
future divisions, departments, units, affiliates, members,
investors, partners, joint ventures, joint venturers, affiliated
partnerships, stockholders, shareholders, predecessors, successors,
assigns, officers, directors, employees, agents, representatives,
attorneys and independent contractors.
(d)
This Agreement fully and finally settles all issues and disputes
that were raised or could have been raised by Aloha, Yucaipa, or
Mesa in the Action and releases the Mesa Parties and the Yucaipa
Parties from any and all disputes, claims, counterclaims and causes
of action that arise out of or are in any way connected with or
related to the matters set forth or alleged in the pleadings or
other papers on file in the Action, whether or not alleged in the
Action, including but not limited to all claims arising from the
Non-Disclosure Agreements dated January 6, 2005 and January 25,
2006 and Mesa's introduction of flight service into the Hawaiian
inter-island market and fare pricing and other business activities
therein.
2
3.
Obligations of Yucaipa
(a)
Licensing Agreement. Upon the consummation of Yucaipa's
acquisition of Aloha's Assets (as defined in the Asset Purchase
Agreement, by and among Yucaipa and Dane S. Field, as Chapter 7
Trustee (the "Trustee") for Aloha and AirGroup Acquisition, Inc.,
filed with the Bankruptcy Court on October 7, 2008 (the "Asset
Purchase Agreement")), which is subject to certain conditions,
including but not limited to, the Bankruptcy Court's approval of
the purchase of the Assets by Yucaipa, Yucaipa will acquire from
Aloha all rights, title and interest it has in the "Aloha" name
and/or the "Aloha Airlines" name. As soon as practicable after
Yucaipa acquires the "Aloha" name and the "Aloha Airlines" name,
Yucaipa will enter in an agreement with Mesa (the "Licensing
Agreement") whereby Yucaipa will, on a non-exclusive basis subject
to Section 8(f) of this Agreement, license the "Aloha" name and the
"Aloha Airlines" name (collectively, the "Licenses") to Mesa for 10
years, including all rights, title and interest acquired by Yucaipa
in those names pursuant to Article 3 of the Asset Purchase
Agreement. Neither the Licensing Agreement nor any of the Licenses
may be assigned by Mesa (including by merger, change of control or
otherwise) to any party, other than, any direct or indirect
wholly-owned subsidiary of Mesa (and only for so long as it remains
a direct or indirect wholly-owned subsidiary of Mesa), provided
that Mesa remains liable for all payments under the License
Agreement. Should Mesa cease inter-island flight operations, it
shall have the right, upon written notice to Yucaipa, to terminate
the Licensing Agreement and the Annual, Revenue and Profit Sharing
Payments provided for in Paragraphs 5(a)(i) and 5(a)(ii) below.
Agreement, Yucaipa shall provide Mesa an executed Stipulation of
Dismissal of Entire Action seeking the dismissal of the entire
Action with prejudice (the "Stipulation"). The Stipulation
3
shall be effective at 5:00 p.m. Hawaii time 91 days after the
Effective Date (the "Dismissal Effective Date"); provided, however,
that if a petition for relief under 11 U.S.C. has been filed by or
against Mesa on or prior to 5:00 p.m. Hawaii time 91 days after the
Effective Date, the Dismissal Effective Date shall not occur until
the expiration of any statute of limitations for the avoidance
and/or recovery of the transfers and payments by Mesa pursuant to
the terms of Sections 4(a) and (b) of this Agreement (collectively,
the "Transfers"). In the event Mesa or any entity acting through,
on behalf of or in the name of Mesa or its estate seeks during any
applicable statute of limitations to avoid and/or recover, and
avoids and/or recovers, any of the Transfers, the Dismissal
Effective Date shall be deemed to have never occurred. The
Stipulation shall be substantially in the form of Exhibit A to this
Agreement. Within 1 business day following Mesa's receipt of the
Stipulation executed by Yucaipa, Mesa shall execute the Stipulation
and lodge it with the Court. Without limiting the terms of Section
8(e), during the period expiring on the earlier of (a) the
Dismissal Effective Date and (b) the avoidance and/or recovery of
any of the Transfers by Mesa or any entity acting through, on
behalf of or in the name of Mesa or its estate, neither Party shall
pursue the Action or commence or pursue any proceeding asserting
claims provided to be released under this Agreement, in any
capacity, against the other Party whether as a named plaintiff or
otherwise.
4.
Obligations of Mesa for Dismissal of Action. Mesa agrees to
do the following:
(a)
Mesa Air Group Ownership. Upon Yucaipa's delivery of the
executed Stipulation as provided in Paragraph 3(b), Mesa will issue
to Yucaipa 2,692,800 unregistered shares of Mesa Air Group common
stock (the "Stock Consideration") in a private placement
transaction within three business days. By January 15, 2008, Mesa
agrees to file a shelf registration statement on Form S-1 in order
to register the resale of such shares by Yucaipa in
4
public transactions. Mesa agrees to keep such registration
continuously effective for a period of one year. Yucaipa will
provide Mesa with such customary investment representations as Mesa
may reasonably request in connection with the issuance of such
shares.
(b)
Cash Payment. Mesa shall make a cash payment of $2,000,000
to Yucaipa on the Effective Date.
5. Obligations of Mesa for Licensing
Agreement. After the execution of the Licensing Agreement by
all the Parties as provided in Paragraph 3(a) and upon the dates
specified below, Mesa agrees to do the following:
(a)
Annual, Revenue and Profit Sharing Payments. For a period of
ten years commencing on the date Mesa's obligations are triggered
under this Section 5 (the "Term"), subject to Mesa's right to
terminate under Paragraph 3(a) above:
(i)
For each year of the Term, Mesa will pay Yucaipa 1% of the
passenger ticket revenue generated from all Hawaiian inter-island
flight operations conducted by Mesa or any of its affiliates(the
"Revenue Payments"), subject to a minimum annual Revenue Payment of
$600,000 (the "Annual Minimum Payment"). The Annual Minimum Payment
for the first year of the Term shall be due no later than 5
business days after execution of the Licensing Agreement by all the
parties thereto (the "Payment Date"). The Annual Minimum Payment
for each subsequent year shall be due on the anniversary of the
Payment Date. Any Revenue Payment in excess of the Annual Minimum
Payment shall be due and payable on the 60 th day
following the end of each such annual period.
5
(ii)
For each year of the Term, Mesa will pay Yucaipa an amount (the
"Profit Sharing Payments") equal to 30% of the pre-tax operating
profits from Mesa's operations in the Hawaiian inter-island market
(which amount shall be computed by including only costs directly
associated with the go! operations in Hawaii and shall include an
overhead allocation based on $27,000 per month for 50-seat aircraft
that are in service (including no more than one operational spare
aircraft for up to ten aircraft in service and excluding any
aircraft in long-term storage), less the Revenue Payments described
in Paragraph 5(a)(i) above. Payments made under this paragraph will
be calculated and paid quarterly and trued up annually. Mesa shall
provide certified monthly revenue and quarterly financial
statements to Yucaipa to verify the calculation of Profit Sharing
Payments.
(b)
Promissory Note. Mesa will deliver to Yucaipa within five
business days after the Effective Date a $5 million promissory
note, payable quarterly over five years, at LIBOR + 350 basis
points interest, reset quarterly (the "Note"). The Note will be
effective and enforceable as of the Effective Date, but will
provide that all payments thereunder will be deferr
