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Exhibit 10.91
August 27, 1998
Mr. Kenneth W. Gann
Chief Executive Officer
CCAIR, Inc.
4700 Yorkmont Road, Second Floor
Charlotte, North Carolina 28208
RE: PROPOSED MERGER
Dear Ken:
As you are aware, representatives of our companies have recently discussed
a possible combination of our two organizations. We at Mesa Air Group, Inc.
("Mesa") believe such a combination provides exciting opportunities for both
companies and that now is the time to proceed to a more specific proposal. This
letter describes an attractive proposal to CCAIR, Inc., (the "Company") at a
greater than 20% premium to your recent trading price. The principal terms of
such proposal are set forth below. In this letter, (i) Mesa and the Company are
sometimes called the "Parties" and (ii) the possible business combination
described herein is sometimes called the "Possible Merger."
PART ONE
The Parties wish to commence due diligence leading to the negotiation of a
definitive written agreement providing for the Possible Merger (a "Definitive
Agreement"). The execution of any such Definitive Agreement would be subject to
the satisfactory completion of each party's due diligence investigation of the
other party, and would also be subject to approval by each party's board of
directors.
Based on the information currently known to the Parties, it proposed that
the Definitive Agreement include the following terms:
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1. Business Combination. Mesa would merge a wholly-owned subsidiary to be
formed (the "Acquisition Sub") with and into the Company. As a result of the
transaction, the Company would become a wholly-owned subsidiary of Mesa.
2. Consideration. Mesa would issue .72 shares of newly-issued Mesa common
stock for each share of outstanding Company common stock owned by Company common
shareholders. Based upon recent trading prices of approximately $7.50 per share
and $4.50 per share of the common stock of Mesa and the Company, respectively,
the exchange ratio stated above represents a value to the Company's shareholders
of approximately $5.40 per common share, a greater than 20% premium to the
Company's recent trading price. Accordingly, Mesa would issue a total of
approximately 6,068,000 common shares (on a primary-share basis) in connection
with the transaction representing a transaction value of approximately
$45,500,000. The final exchange ratio would be based upon the average closing
trading price for Mesa's common stock for the ten trading day period preceding
the second trading date prior to the consummation of the Possible Merger. In the
event such average is between $5.50 per share and $9.50 per share, the exchange
ratio would be adjusted so that the value per share of Company common stock
based on such adjusted ratio would equal $5.40. In the event such average is
$9.50 per share or greater, the adjusted exchange ratio would be fixed at .568.
In the event such average is $5.50 per share or less, the adjusted exchange
ratio would be fixed at .982.
3. Tax Treatment. The Parties intend to structure the Possible Merger as a
tax-free reorganization under the Internal Revenue Code.
4. Accounting Treatment. The Parties intend for the Possible Merger to be
structured to enable Mesa to account for the transaction as a
"pooling-of-interests" under generally accepted accounting principles and
applicable accounting rules of the Securities and Exchange Commission (the
"Commission").
5. Joint Proxy Statement/Registration Statement. The Parties intend to file
and effect a Joint Proxy Statement/Registration Statement on Form S-4 with the
Commission pertaining to Mesa's issuance of its common stock to the Company's
common shareholders and to the vote on the Proposed Merger by the common
shareholders of the Company and, as applicable, Mesa.
6. Executive Retention Agreements. Upon consummation of the Proposed
Merger, Mesa will cause the Company to enter into retention agreements with
certain key executives of the Company as determined by Mesa on terms to be
established.
7. Other Terms and Conditions. The Company and Mesa would make appropriate
representations and warranties, and would provide appropriate covenants,
indemnities, share escrows and other protections.
Consummation of the contemplated transactions by each Party would be
subject to the satisfaction of various conditions, including, but not limited
to, (i) completion of customary due diligence by each Party and its
representatives, (ii) completion and mutual approval of all documents related
to the Possible Merger, (iii) the approval by the shareholders of the Company
and, as applicable, Mesa, (iv) compliance with all applicable regulatory
consents, approvals and other requirements, including, without limitation,
termination or expiration of any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, (v) receipt of consents
from applicable airlines under existing code share agreements and other
applicable third party consents, (vi) receipt by each Party's board of directors
of a favorable fairness opinion concerning the transaction from an investment
banking firm selected by such board, (vii) dissenting votes to the Possible
Merger by the Company's shareholders only within a range deemed acceptable to
Mesa, (viii) the waiver of certain provisions pertaining to indebtedness owing
by the Company and agreements to which the Company is a party.
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and (ix) no material adverse change in either party's business or prospects
prior to consummation of the transactions contemplated by the Definitive
Agreement.
PART TWO
The following paragraphs of this letter (the "Binding Provisions") are the
legally binding and enforceable agreements of Mesa and the Company.
1. Access. During the period from the date this letter is signed by the
Company (the "Signing Date") until the date on which either Party provides the
other Party with written notice that negotiations toward a Definitive Agreement
are terminated (the "Termination Date"), each party will afford the other full
and free access to the Company, its personnel, properties, contracts, books and
records, and all other documents and data.
2. Exclusive Dealing. Until the earlier of (i) ninety (90) days after
the Signing Date or (ii) the Termination Date:
(a) Each party will immediately notify the other party regarding any
contact between it or its officers, directors, shareholders,
representatives or agents, and any other person regarding any such offer or
proposal or any related inquiry.
3. Termination. This agreement shall be terminable at will by either
party by written notice provided the other party at any time. This agreement
shall automatically terminate if no definitive agreement for a transaction
between the two parties has been executed on or before the 90th day after the
date of this letter.
4. Conduct of Business. During the period from the Signing Date until
the Termination Date, each party shall operate its business in the ordinary
course and notify the other party of any extraordinary transactions, including,
but not limited to, transactions involving the Company's common stock or other
securities.
5. Confidentiality. Except as and to the extent contemplated by
Paragraph 6 of this Part II or as otherwise required by law, neither party will
disclose or use, and will direct its representatives not to disclose or use to
the detriment of the other party, any Confidential Information (as defined
below) furnished, or to be furnished, by the other party or its representatives
at any time or in any manner other than in connection with its evaluation of
the transaction proposed in this letter. For purposes of this Paragraph 5,
"Confidential Information" means any information stamped "confidential" or
identified in writing as confidential by the furnishing party before or
promptly following its furnishing, unless (a) such information is already known
to the other party or its representatives or to others not bound by a duty of
confidentiality or such information becomes publicly available through no fault
of the other party or its representatives, (b) the use of such information is
necessary or appropriate in making any filing or obtaining any consent or
approval required for the consummation of the Possible Merger, or (c) the
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furnishing or use of such information is required by or necessary or
appropriate in connection with legal proceedings. Upon the written request each
party will promptly return to the other party or destroy any Confidential
Information in its possession and certify in writing to the other party that it
has done so.
6. Disclosure. Upon the Parties' execution of this letter, each
anticipates issuing a press release in a form previously provided to and
approved by the other announcing the Possible Merger at a premium to the
Company's current market price. Except for the preceding sentence and except as
and to the extent required by law, without the prior written consent of the
other Party, neither Mesa nor the Company will, and each will direct its
representatives not to make, directly or indirectly, any public comment,
statement, or communication with respect to, or otherwise to disclose or to
permit the disclosure of the existence of discussions regarding, a possible
transaction between the Parties or any of the terms, conditions, or other
aspects of the transaction proposed in this letter. If a Party is required by
law to make any such disclosure, it must first provide to the other Party the
content of the proposed disclosure, the reasons that such disclosure is
required by law, and the time and place that the disclosure will be made.
7. Costs. Each of Mesa and the Company will be responsible for and bear
all of its own costs and expenses (including any broker's or finder's fees and
the expenses of its representatives) incurred at any time in connection with
pursuing or consummating the Possible Merger. Each party represents that as of
the date hereof, there is no broker or finder known to either party to be
entitled to a commission, finders fee, or investment banking fees in connection
with the consummation of a merger between the companies.
8. Entire Agreement. This letter constitutes the entire agreement
between the Parties, and supersedes all prior oral or written agreements,
understandings, representations and warranties, and courses of conduct and
dealing between the parties on the subject matter hereof. The Binding
Provisions may be amended or modified only by a writing executed by all of the
Parties.
9. Governing Law. The Binding Provisions will be governed by and
construed under the laws of the State of New York without regard to conflicts
of laws principles.
10. Survival. Paragraphs 1 and 4 of this Part Two shall expire on the
Termination Date. Paragraphs 2, 5, 6, 7, 8, 9, 10, 11 and 12 of this Part Two
shall survive the Termination Date.
11. Counterparts. This letter may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
letter and all of which, when taken together, will be deemed to constitute one
and the same agreement.
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12. No Liability. The paragraphs and provisions of Part One of this letter
do not constitute and will not give rise to any legally binding obligation on
the part of any of the Parties. Moreover, except as expressly provided in the
Binding Provisions (or as expressly provided in any binding written agreement
that the Parties may enter into in the future), no past or future action, course
of conduct, or failure to act relating to the Possible Merger, or relating to
the negotiation of the terms of the Possible Merger or any Definitive Agreement,
will give rise to or serve as a basis for any obligation or other liability on
the part of the Parties.
If you are in agreement with the foregoing, please sign and return one
copy of this letter agreement, which thereupon will constitute our agreement
with respect to its subject matter.
Very truly yours,
MESA AIR GROUP, INC.
By: /s/ Blaine M. Jones
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Name: Blaine M. Jones
Title: CFO
Duly executed and agreed as to the Binding Provisions on August 27, 1998.
CCAIR, INC.
By: /s/ Kenneth W. Gann
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Kenneth W. Gann
Chief Executive Officer
cc: Members of the Board of Directors, Mesa Air Group, Inc.