EXHIBIT 10.23
BARLOW PARTNERS, LP
February 11, 1999
Mr. Jonathan Ornstein
Mesa Air Group, Inc.
410 N. 44th Street
Phoenix, Arizona 85008
Dear Jonathan:
As promised, we wanted to get back to you with our proposed advisory assignment,
as well as an engagement letter. This letter, therefore, will confirm our
understanding that Mesa Air Group, Inc. (which together with any of its
subsidiaries or affiliates is hereinafter referred to as the "Company") has
engaged Barlow Partners, LP ("Barlow Partners") to act as the Company's
financial advisor on a month to month basis commencing upon your acceptance of
this agreement with respect to (i) the renegotiation of the Company's existing
aircraft leases and (ii) the negotiation of the Company's fleet acquisition
program (each, a "Transaction") (iii) advise with respect to mergers and
acquisitions (iv) route profitability analysis and (v) capital structure and
liquidity enhancement.
As discussed, we propose to undertake certain services on your behalf including
to the extent requested by you: (i) assisting you in analyzing the Company's
fleet requirements, (ii) renegotiating any of the Company's existing aircraft
leases that the Company and Barlow Partners determine are in the Company's best
interests to be renegotiated, (iii) identifying and contacting selected aircraft
manufacturers or lessors acceptable to you and (iv) negotiating the financial
aspects of any proposed Transaction under your guidance.
The Company will pay a monthly retainer of $15,000 which will be credited
against transaction fees when earned.
In addition, the Company agrees to reimburse Barlow Partners promptly upon
request from time to time for all out-of-pocket expenses incurred by Barlow
Partners pursuant to its engagement hereunder, whether or not a Transaction is
consummated. The Company also agrees to indemnify and hold harmless Barlow
Partners, LP ("Barlow Partners") and its respective partners and agents of
Barlow Partners (Barlow Partners and each such person being referred to as an
"Indemnified Person") from and against any losses, claims, damages or
liabilities (or actions in respect thereof) relating to or arising out of
activities performed pursuant to the Agreement, the transactions contemplated
thereby or Barlow Partners' role in connection therewith. The Company will not,
however, be responsible for any such losses, claims, damages, liabilities or
expenses of any indemnified Person that are determined to have resulted
primarily from actions taken or omitted to be taken by such Indemnified Person
in bad faith or from such Indemnified Person's gross negligence. The Company
also agrees that no Indemnified Person shall have any liability to the Company
for or in connection with the Agreement, any transactions contemplated thereby
or Barlow Partners' role in connection therewith, except for any such liability
for losses, claims, damages, liabilities or expenses incurred by the Company
that are determined to have resulted primarily from actions taken or omitted to
be taken by such Indemnified Person in bad faith or from such Indemnified
Person's gross negligence.
This agreement may be terminated by either the Company or Barlow Partners upon
giving written notice thereof to the other party. No such termination will
affect (I) Barlow Partners' right to
c/o INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
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PHONE: 770-455-7575 - FAX: 770-455-7550
Mesa Air Group, Inc.
Page 2
receive compensation accrued prior to such termination or to receive
reimbursement of its out-of-pocket expenses as set forth above or (ii) the
rights of Barlow Partners or any other Indemnified Person to receive
indemnification.
It is understood that if the Company completes a transaction in lieu of any
Transaction for which Barlow Partners is entitled to compensation pursuant to
this agreement, Barlow Partners and the Company will negotiate in good faith
acceptable compensation for Barlow Partners taking into account, among other
things, the result obtained and the custom and practice among investment bankers
acting in similar transactions.
If the foregoing correctly sets forth the agreement between the Company and
Barlow Partners, please sign and return the enclosed copy of this letter,
whereupon it shall become our binding agreement to be governed by New York law.
Very truly yours,
Barlow Partners, LP
By: /s/ George Murnane III
----------------------------------------------
George Murnane III
General Partner
Accepted and agreed to:
Mesa Air Group, Inc.
By: /s/ Michael Lotz
----------------------------------------------
Name: Michael Lotz
Title: Chief Operating Officer
BARLOW CAPITAL PARTNERS, LLC
September 28, 1999
Mr. Michael Lotz
Mesa Air Group, Inc.
410 N. 44th Street
Phoenix, Arizona 85008
Dear Michael:
This letter will amend and supplement that certain letter agreement dated
February 11, 1999 between Mesa Air Group, Inc. (which together with any of its
subsidiaries or affiliates is hereinafter referred to as the "Company") and
Barlow Capital Partners, LLC ("Barlow") pursuant to which the Company engaged
Barlow as the Company's financial advisor with respect to certain matters set
forth therein (such letter agreement is hereinafter referred to as the
"Engagement Letter").
Notwithstanding any provisions of the Engagement Letter to the contrary, this
amendment will confirm our understanding that the Company has engaged Barlow to
act as the Company's financial advisor with respect to the acquisition of, and
structuring, arranging and financing of the 100 Embraer ERJ-135/145 regional jet
aircraft subject to the Purchase Agreement No. DCT-031/99 dated June 1999
between the Company and Empresa Brasileira de Aeoronautica, S.A. (the "Purchase
Agreement") (each, a "Transaction") by performing the aircraft financing
services set forth below (the "Services").
As discussed, we propose to undertake the following Services on your behalf,
including to the extent requested by you:
(i) assist you in negotiations with: (1) any governmental financing
entity regarding direct long-term debt financing and with the
government's export financing agencies regarding any subsidies that
may be available; (2) the aircraft and engine manufacturers
regarding credit and/or asset support for the Transaction; and (3)
the aircraft and engine manufacturers regarding the Purchase
Agreement for the Aircraft;
(ii) assisting you in preparing an offering memorandum describing the
Company, its operations, its historical performance and its future
prospects, as well as the Transaction;
(iii) identifying and contacting selected qualified lessors acceptable to
you;
(iv) assist you in arranging for lenders and lessors to conduct business
investigations;
(v) negotiating and evaluating the Transaction proposals received,
ensuring competitive pricing, terms and conditions and making a
final recommendation to Mesa on which proposals meet its objectives;
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PHONE: 770-455-7575 - FAX: 770-455-7550
Mesa Air Group, Inc.
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(vi) completing negotiations with any financing sources identified,
arranging for final aircraft appraisals, managing the closing
activities and providing other necessary services as requested by
Mesa; and
(vii) assisting in negotiating and finalizing legal documentation
associated with the Transaction.
As compensation for the services to be provided by Barlow hereunder, the Company
agrees to pay Barlow a Transaction Fee in an amount equal to 0.35% of the
Aircraft Purchase Price where Barlow acts as co-agent in the placement of
financing for the aircraft and 0.50% of the Aircraft Purchase Price where Barlow
acts as sole agent. The Aircraft Purchase Price shall be defined as the
escalated gross purchase price of the aircraft before the effect of discounting
any export subsidies, other manufacturer's discounts or other manufacturer's
credits and as specified in the manufacturer's purchase agreement or the
aircraft sales financing proposal, which ever is applicable, accepted by Mesa
(the "Aircraft Purchase Price"). Such fee shall be payable with respect to each
Transaction in cash upon successful closing of such Transaction.
Should Mesa require financing for spare parts and/or spare engines acquired in
conjunction with the Aircraft, then Barlow shall arrange such financing and
shall receive a Success Fee equal to 0.35% of the equipment cost for lease
financing or 0.35% of the debt raised for the equipment for debt financing where
Barlow acts as co-agent and 0.50% where Barlow acts as sole agent, payable upon
the closing of the financing for the equipment.
There will be a credit against the Transaction Fee(s) for any amounts advanced
to Barlow as part of its retainer for consulting services under the February 11,
1999 Engagement Letter.
In addition, the Company agrees to reimburse Barlow promptly upon request from
time to time for all out-of-pocket expenses incurred by Barlow pursuant to its
engagement hereunder, whether or not a Transaction is consummated. The Company
also agrees to indemnify and hold harmless Barlow and its respective partners
and agents (Barlow and each such person being referred to as an "Indemnified
Person") from and against any losses, claims, damages or liabilities (or actions
in respect thereof) relating to or arising out of activities performed pursuant
to this agreement, the transactions contemplated thereby or Barlow's role in
connection therewith. The Company will not, however, be responsible for any such
losses, claims, damages, liabilities or expenses of any Indemnified Person that
are determined to have resulted primarily from actions taken or omitted to be
taken by such Indemnified Person in bad faith or from such Indemnified Person's
gross negligence. The Company also agrees that no Indemnified Person shall have
any liability to the Company for or in connection with this agreement, any
transactions contemplated thereby or Barlow's role in connection therewith,
except for any such liability for losses, claims, damages, liabilities or
expenses incurred by the Company that are determined to have resulted primarily
from actions taken or omitted to be taken by such Indemnified Person in bad
faith or from such Indemnified Person's gross negligence.
The Company agrees to provide Barlow all financial and other information
requested by it for the purpose of its assignment hereunder. In performing its
services hereunder Barlow shall be entitled to rely upon and assume, without
independent verification, the accuracy and completeness of all information that
is available from public sources and of all information that has been furnished
to it by the Company or otherwise reviewed by it and shall have no
Mesa Air Group, Inc.
Page 3
obligation to verify the accuracy or completeness of any such information or to
conduct an appraisal of any assets.
This engagement shall commence on the date hereof and shall continue until the
Company has completed the Transactions. Prior to the Company's completion of the
Transactions, this engagement may be terminated only for "cause" or with the
express written consent of Barlow. For purposes of this agreement, "cause" shall
mean a material breach by Barlow of its obligations pursuant to this agreement.
This agreement shall bind and shall inure to the benefit of the successors and
assigns of the Company and Barlow. The Company will not assign its interest in
the Purchase Agreement to any third party unless the third party agrees to be
bound by the terms of this letter agreement.
In order to coordinate our efforts with respect to possible Transactions, during
the period of our engagement hereunder neither the Company nor any
representative thereof (other than Barlow) will initiate discussions regarding a
Transaction except through Barlow. If the Company or its management receives an
inquiry regarding a Transaction, they will promptly advise Barlow of such
inquiry in order that we can evaluate such prospective investor and its interest
and assist the Company in any resulting negotiations.
If the foregoing correctly sets forth the agreement between the Company and
Barlow, please sign and return the enclosed copy of this letter, whereupon it
shall become our binding agreement to be governed by New York law.
Very truly yours,
Barlow Capital Partners, LLC
By: /s/ George Murnane III
------------------------------------
George Murnane III
Partner
Accepted and agreed to:
Mesa Air Group, Inc.
By: /s/ Michael Lotz
------------------------------------
Name: Michael Lotz
Title: President & COO
BARLOW CAPITAL PARTNERS, LLC
July 17, 2000
Mr. Michael Lotz
Mesa Air Group, Inc.
410 N. 44th Street
Phoenix, Arizona 85008
Dear Michael:
This letter will amend and supplement that certain letter agreement dated
February 11, 1999 between Mesa Air Group, Inc. (which together with any of its
subsidiaries or affiliates is hereinafter referred to as the "Company") and
Barlow Capital Partners, LLC ("Barlow"), pursuant to which the Company engaged
Barlow as the Company's financial advisor with respect to certain matters set
forth therein (such letter agreement, as previously supplemented and amended, is
hereinafter referred to as the "Engagement Letter"). All capitalized terms used
herein without definition shall have the meanings assigned to them in the
Engagement Letter.
Notwithstanding any provisions of the Engagement Letter to the contrary, if the
Company does not acquire all of the 36 Embraer ERJ-135/145 regional jet aircraft
for which it has placed orders pursuant to the Purchase Agreement (each aircraft
that the Company elects not to purchase, a "Deferred Aircraft"), the Company
shall pay to Barlow, in lieu of a Transaction Fee, an amount (the "Alternate
Fee") equal to $59,500 multiplied by the number of Deferred Aircraft. Subject to
the following paragraph, the Alternate Fee shall be payable on the date that the
Company either (i) defers for more than six months or (ii) irrevocable cancels
its order to purchase the Deferred Aircraft (the "Termination Date").
Notwithstanding the foregoing paragraph, the Company shall not be required to
pay the Alternate Fee to Barlow, if the Company has, on or prior to the
Termination Date, engaged Barlow to provide aircraft financing services
substantially similar to the Services with respect to a number of aircraft other
than Embraer ERJ-135/145 regional jet aircraft equal to or greater than the
number of Deferred Aircraft. Pursuant to such engagement, the Company shall have
agreed to pay to Barlow, as compensation for the services to be provided by
Barlow, a fee (the "Substitute Fee"), in an amount equal to not less than 0.35%
of the applicable aircraft purchase price where Barlow acts as co-agent in the
placement of financing for the aircraft, and not less than 0.50% of the
applicable aircraft purchase price, where Barlow acts as sole agent. The
applicable aircraft purchase price with respect to any such engagement shall be
defined by mutual agreement of the parties at the commencement of such
engagement. The Substitute Fee shall be payable with respect to each transaction
in cash upon successful closing of such transaction. Such engagement shall be on
substantially the same terms as set forth in the Engagement Letter and shall be
evidenced by a supplement to the Engagement Letter executed by the Company and
Barlow.
Any payments previously made to Barlow, either as a part of Barlow's monthly
retainer or as a Transaction Fee pertaining to previously financed Aircraft,
will not be credited against any
1954 AIRPORT ROAD, SUITE 200 - ATLANTA, GEORGIA - 30341
PHONE: 770-455-7575 - FAX: 770-455-7550
Mesa Air Group, Inc.
Page 2
amounts owed hereunder. The Engagement Letter, amended as set forth herein, is
hereby confirmed and ratified in all respects.
If the foregoing correctly sets forth the agreement between the Company and
Barlow, please sign and return the enclosed copy of this letter, whereupon it
shall become our binding agreement to be governed by New York law.
Very truly yours,
Barlow Capital Partners, LLC
By: /s/ George Murnane III
------------------------------------------
George Murnane III
Partner
Accepted and agreed to:
Mesa Air Group, Inc.
By: /s/ Michael Lotz
------------------------------------------
Name: Michael Lotz
Title: COO
BARLOW CAPITAL PARTNERS, LLC
February 28, 2001
Mr. Michael Lotz
Mesa Air Group, Inc.
410 N. 44th Street
Phoenix, Arizona 85008
Dear Mike:
This letter will amend and supplement that certain letter agreement dated
February 11, 1999 between Mesa Air Group, Inc. (which together with any of its
subsidiaries or affiliates is hereinafter referred to as the "Company") and
Barlow Capital Partners, LLC ("Barlow"), pursuant to which the Company engaged
Barlow as the Company's financial advisor with respect to certain matters set
forth therein (such letter agreement, as previously supplemented and amended, is
hereinafter referred to as the "Engagement Letter"). All capitalized terms used
herein without definition shall have the meanings assigned to them in the
Engagement Letter.
Notwithstanding any provisions of the Engagement Letter to the contrary, this
amendment will confirm our understanding that the Company has engaged Barlow to
act as the Company's financial advisor with respect to the acquisition of, and
structuring, arranging and financing of additional Embraer and Bombardier
regional jet aircraft currently being contemplated for purchase by the Company
(each, a "Transaction") by performing the aircraft financing services set forth
below (the "Services"). For purposes of this Engagement Letter, these
Transactions will be deemed in addition to, and not in lieu of, Barlow's
engagement with respect to the Embraer regional jet aircraft subject to the
Purchase Agreement (as previously defined in the amendment to the Letter
Agreement dated September 28, 1999). Currently it is contemplated that the
Company will enter into definitive purchase agreements with Embraer and
Bombardier whereby the Company will acquire up to 60 CRJ-200 aircraft, 75
CRJ-700 aircraft and 45 CRJ-900 aircraft (pursuant to Bombardier Proposal
Agreement # P-686-R6 dated Feb 5th, 2001 (the "Bombardier Proposal")), as well
as 80 ERJ-145 aircraft and 105 ERJ-170 aircraft (40 ERJ-145 aircraft pursuant to
the Purchase Agreement and the remaining 145 ERJ aircraft pursuant to Embraer
proposal PRO24/2000 (the "Embraer Proposal" and collectively with the Bombardier
Proposal, the "RJ Proposals")). To the extent that the Company enters into
definitive purchase agreements with Bombardier and/or Embraer, the provisions
contained in our amendment to the Engagement Letter dated July 17,
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Mesa Air Group, Inc.
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2000 relating to the payment of an Alternate Fee will also apply to the
Transactions described herein.
As discussed, we propose to undertake the following Services on your behalf,
including to the extent requested by you:
(viii) assist you in negotiations with: (1) any governmental financing
entity regarding direct long-term debt financing and with the
government's export financing agencies regarding any subsidies that
may be available; (2) the aircraft and engine manufacturers
regarding credit and/or asset support for the Transaction; and (3)
the aircraft and engine manufacturers regarding the purchase
agreements for the Aircraft;
(ix) assisting you in preparing an offering memorandum describing the
Company, its operations, its historical performance and its future
prospects, as well as the Transaction;
(x) identifying and contacting selected qualified lessors acceptable to
you;
(xi) assist you in arranging for lenders and lessors to conduct business
investigations;
(xii) negotiating and evaluating the Transaction proposals received,
ensuring competitive pricing, terms and conditions and making a
final recommendation to Mesa on which proposals meet its objectives;
(xiii) completing negotiations with any financing sources identified,
arranging for final aircraft appraisals, managing the closing
activities and providing other necessary services as requested by
Mesa; and
(xiv) assisting in negotiating and finalizing legal documentation
associated with the Transaction.
As compensation for the services to be provided by Barlow hereunder, the Company
agrees to pay Barlow a Transaction Fee in an amount equal to 0.35% of the
Aircraft Purchase Price where Barlow acts as co-agent in the placement of
financing for the aircraft and 0.50% of the Aircraft Purchase Price where Barlow
acts as sole agent. The Aircraft Purchase Price shall be defined as the
escalated gross purchase price of the aircraft before the effect of discounting
any export subsidies, other manufacturer's discounts or other manufacturer's
credits and as specified in the manufacturer's purchase agreement or the
aircraft sales financing proposal, which ever is applicable, accepted by Mesa
(the "Aircraft Purchase Price"). Such fee shall be payable with respect to each
Transaction in cash upon successful closing of such Transaction.
Should Mesa require financing for spare parts and/or spare engines acquired in
conjunction with the Aircraft, then Barlow shall arrange such financing and
shall receive a Transaction Fee equal to 0.40% of the equipment cost for lease
financing or 0.40% of the debt raised for the equipment for debt financing where
Barlow acts
Mesa Air Group, Inc.
Page 3
as co-agent and 0.50% where Barlow acts as sole agent, payable upon the closing
of the financing for the equipment. In addition, the Company agrees to reimburse
Barlow promptly upon request from time to time for all out-of-pocket expenses
incurred by Barlow pursuant to its engagement hereunder, whether or not a
Transaction is consummated.
This engagement shall commence on the date hereof and shall continue until the
Company has completed the Transactions. Prior to the Company's completion of the
Transactions, this engagement may be terminated only for "cause" or with the
express written consent of Barlow. For purposes of this agreement, "cause" shall
mean a material breach by Barlow of its obligations pursuant to this agreement.
This agreement shall bind and shall inure to the benefit of the successors and
assigns of the Company and Barlow. The Company will not assign its interest in
the Purchase Agreement or RJ Proposals, or any definitive purchase agreements
that arise as a result of the RJ Proposals, to any third party (including a
subsidiary of the Company) unless the third party agrees to be bound by the
terms of this letter agreement.
Any payments previously made to Barlow, either as a part of Barlow's monthly
retainer or as a Transaction Fee pertaining to previously financed Aircraft,
will not be credited against any amounts owed hereunder. Furthermore, it is
expressly agreed that following the expiration or termination of the Engagement
Letter, Barlow will continue to be entitled to receive fees that have accrued
prior to such expiration or termination but are unpaid, as well as reimbursement
for expenses as contemplated by the Engagement Letter. The Engagement Letter,
amended as set forth herein, is hereby confirmed and ratified in all respects.
Mesa Air Group, Inc.
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If the foregoing correctly sets forth the agreement between the Company and
Barlow, please sign and return the enclosed copy of this letter, whereupon it
shall become our binding agreement to be governed by New York law.
Very truly yours,
Barlow Capital Partners, LLC
By: /s/ George Murnane III
-----------------------------------------
George Murnane III
Partner
Accepted and agreed to:
Mesa Air Group, Inc.
By: /s/ Michael Lotz 3/1/01
-----------------------------------------
Name: Michael Lotz
Title: President & COO