EXHIBIT 10-107
 
CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED.  THE SYMBOL “[***]” HAS
BEEN INSERTED IN PLACE OF THE PORTIONS SO OMITTED.
 

 

SECOND AMENDMENT TO
 DELTA CONNECTION AGREEMENT

This SECOND AMENDMENT TO DELTA CONNECTION AGREEMENT (this “Amendment”), is
entered into as of the 1st day of April, 2012 (the “Effective Date”), by and
among Pinnacle Airlines, Inc. (“Operator”), Pinnacle Airlines Corp. (“Parent”)
and Delta Air Lines, Inc. (“Delta” and, together with Operator and Parent, the
“Parties” and each individually, a “Party”).
 

 
WITNESSETH:
 
WHEREAS, Operator operates certain of its flights as “Delta Connection” flights
using the “DL” designator code pursuant to the Delta Connection Agreement, dated
effective April 27, 2007, which agreement was amended by that certain Amendment
to Delta Connection Agreement dated as of July 1, 2010 (the “First Amendment”)
(as amended, modified and supplemented from time to time, and together with all
exhibits, schedules and attachments thereto, the “Agreement”);

WHEREAS, Delta, Parent, Operator and certain other subsidiaries of Parent
(collectively, the “Pinnacle Debtors”) have entered into a commitment letter of
even date herewith, pursuant to which Delta has agreed to provide the Pinnacle
Debtors a $74,285,000 senior secured super-priority debtor-in-possession credit
facility (the “DIP Credit Facility”), which may, subject to certain conditions,
convert into an exit credit facility (the “Exit Loan”), all on the terms and
conditions set forth in the Summary of Terms and Conditions attached to such
commitment letter as Annex A (the commitment letter together with such term
sheet, the “Commitment Letter”) in the event the Pinnacle Debtors elect to file
a chapter 11 bankruptcy proceeding under title 11 of the United States Code
(together, the “Bankruptcy Cases”) in the bankruptcy court (the “Bankruptcy
Court”) on the petition date (the “Petition Date”); and

WHEREAS, Delta, Parent and Operator have entered into an Amended and Restated
2010 Delta Connection Agreement of even date herewith (as amended, modified and
supplemented from time to time, and together with all exhibits, schedules and
attachments thereto, the “2010 CRJ-900 Delta Connection Agreement”);

WHEREAS, Delta, Parent and Operator have entered into a Third Amended and
Restated Airline Services Agreement of even date herewith (as amended,

 
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modified and supplemented from time to time, and together with all exhibits,
schedules and attachments thereto, the “Airline Services Agreement”);

WHEREAS, Delta, Parent, Operator, and Mesaba Aviation, Inc., a Minnesota
corporation and wholly-owned subsidiary of Pinnacle Corp., have entered into a
Setoff and Mutual Release of even date herewith (the “Setoff and Release”), the
terms of which are incorporated herein by reference as though fully restated in
this Agreement, pursuant to which the parties thereto agreed to an offset of
certain amounts in dispute between the parties thereto and to a mutual release
of claims related to such disputed amounts; and
 

WHEREAS, the Parties desire to amend certain provisions of the Agreement and are
entering into this Amendment contemporaneously with the execution and delivery
of the Commitment Letter, the 2010 CRJ-900 Delta Connection Agreement, the
Airline Services Agreement and the Mutual Release.

NOW THEREFORE, for and in consideration of the foregoing premises and the mutual
undertakings set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties, intending
to be legally bound, hereby agree as follows:

AGREEMENT

1.           Capitalized Terms.  All capitalized terms used, but not defined,
herein shall have the respective meanings set forth in the Agreement.

2.           Amendments to the Agreement.  Effective as of the Effective Date,
the Agreement shall be amended as follows:

A.           Amendment of Article 3 of the Agreement.  Article 3.H. of the
Agreement shall be amended by inserting the following text at the end of the
first paragraph of such article:

“All EAS subsidies received by Operator shall be paid to Delta promptly upon
receipt and in any event within five (5) business days after such receipt.”

B.           Amendment of Article 4 of the Agreement.  Article 4 of the
Agreement shall be amended by inserting the following text at the end of such
article:

“E.           Essential Air Service.  With respect to Essential Air Service
(“EAS”) cities designated by Delta to be operated by Operator from time to time
hereunder:

1.           Operator agrees to (A) bid on and enter into EAS agreements with
the DOT, at the direction of Delta, (B) maintain and comply with its

 
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obligations under such agreements during the Term, (C) provide air
transportation services pursuant to any such agreement solely in connection with
providing Delta Connection Flights hereunder, and (D) refrain from modifying or
amending the terms of such agreements without the prior written consent of
Delta;

2.           In the event this Agreement terminates (other than as a result of a
breach by Operator or Parent hereunder) prior to the expiration or permitted
termination of any EAS agreement entered into by Operator in accordance with the
provisions hereof, then Delta will or will cause another carrier, to the extent
permitted under the terms of such EAS agreement, to perform Operator’s
obligations under such EAS agreement.”

C.           Amendment of Article 11.A of the Agreement.  Article 11.A of the
Agreement is hereby amended by deleting such section in its entirety and
replacing such section with the following:

“This Agreement shall commence as of the Agreement Date and shall terminate upon
the last of the dates described in the following sentence, unless the Agreement
is terminated earlier in accordance with its terms (such period, the
“Term”).  With respect to each Aircraft, unless this Agreement is terminated
earlier in accordance with its terms, this Agreement shall terminate in
accordance with the following schedule:  (i) two (2) Aircraft (which specific
Aircraft to be mutually agreed by Delta and Operator) shall be removed from
service and the scope of this Agreement during January 2013 (on such dates in
January 2013 as mutually agreed upon by Delta and Operator); (ii) three (3)
Aircraft (which specific Aircraft to be mutually agreed by Delta and Operator)
shall be removed from service and the scope of this Agreement during each of
February, March and April, 2013 (on such dates in such months as mutually agreed
upon by Delta and Operator); and (iii) the remaining four (4) Aircraft shall be
removed from service and the scope of this Agreement during May 2013 (on such
dates in May 2013 as mutually agreed upon by Delta and Operator), provided that,
notwithstanding the above, (y) if Operator reasonably determines that Operator’s
pilot training capacity would permit additional Aircraft to be removed during
January and February 2013, then Delta shall have the right to accelerate the
scheduled removal dates of Aircraft to be removed in March, April and May 2013
as set forth above to the months of January and February 2013 upon thirty (30)
days’ prior written notice to Operator, and (z) if Operator fails to achieve any
of the Operational Performance Standards set forth on Schedule 10 to the
Agreement, Delta, in its sole discretion, shall have the right to accelerate
removal of any or all of the Aircraft to such dates as Delta shall determine.”

D.           Amendment of Exhibit B to the Agreement.   The amounts set forth in
the table of “Base Rate Costs” set forth in Exhibit B to the Agreement shall be
amended by deleting the amounts set forth opposite the categories “Maintenance
Overhead” and

 
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“Headquarter/Other Facilities” for calendar years 2012 and 2013 and replacing
such amounts with [***] per Aircraft Month and [***] per Aircraft Month,
respectively.

E.           [***]

3.           [***]

4.           General Unsecured Claim.  Delta and Operator agree that Delta shall
be entitled to an allowed general unsecured claim in the Bankruptcy Cases based
on Delta’s damages as a result of the modifications of the Agreement pursuant to
this Amendment, including without limitation the early termination of the
Agreement; provided, however, that (1) Delta and Operator reserve their rights
as to the calculation of the amount of such claim and the allowed amount of the
claim will be subject to the determination and approval of the Bankruptcy Court;
and (2) Delta waives its right to have such general unsecured claim paid as a
cure in connection with assumption of any executory contract between Operator
and Delta.

5.           Status of Agreement.  Except as expressly provided in this
Amendment, all of the terms and conditions of the Agreement remain in full force
and effect and fully binding upon and enforceable against the Parties.

6.           Governing Law.  This Amendment shall be governed in accordance with
the laws of the State of New York, notwithstanding the choice of law provisions
thereof.

7.           Amendment.  This Amendment may not be amended or modified except by
a written agreement executed on behalf of the Parties.

8.           Counterparts .  This Amendment may be executed in any number of
counterparts and by the Parties on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.

9.           No Third Party Beneficiary .  This Amendment is for the sole
benefit of the Parties and their respective successors and permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Amendment.

[Signature page follows]

 
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IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by
their duly authorized representatives as of the day and year first above
written.

 
DELTA AIR LINES, INC.
 
By:   /s/ Donald T. Bornhurst                                                  
Name:    Donald T. Bornhurst
Title:  Vice President, Delta Connection
 
PINNACLE AIRLINES, INC.
 
By:   /s/ Brian T. Hunt
Name:  Brian T. Hunt 
Title:  Vice President/General Counsel
 
 
 
PINNACLE AIRLINES CORP.
 
By:  /s/ Brian T. Hunt
Name:  Brian T. Hunt
Title:  Vice President/General Counsel
 

 
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