Exhibit 10.74
 
 
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. THE SYMBOL “[***]” HAS BEEN INSERTED IN PLACE OF THE PORTIONS SO
OMITTED.
 
 
CREDIT AGREEMENT
 
dated as of January 30, 2009
 
between
 
COLGAN AIR, INC.,
Borrower
 
and
 
EXPORT DEVELOPMENT CANADA,
Lender
 
_______________________________________________________
 
Vedder Price P.C.
 

 
 

--------------------------------------------------------------------------------

 

 
TABLE OF CONTENTS
 
Page
 

Section 1.
Certain Definitions 
1

 
Section 2.
Commitments; Borrower’s Notice of Payment Dates; Closing Procedure; Termination
Date 
1

 
Section 3.
Fees 
2

 
Section 4.
Conditions 
3

 
Section 5.
The Certificate 
6

 
Section 6.
Extent of Interest of Lenders 
19

 
Section 7.
Borrower’s Representations and Warranties 
19

 
Section 8.
Indemnities 
23

 
Section 9.
Covenants of the Borrower 
30

 
Section 10.         Notices                                                                        32

 
Section 11.        Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial                                          33

 
Section 12.        Invoices and Payment of
Expenses                                                          34

 
Section 13.       
Confidentiality                                                                  
  34

 
Section 14.      
Miscellaneous                                                                      35

 

     
Schedule I
-
Notice and Account Information
Schedule II
-
Advances
Schedule III
 
[***]
     
Exhibit A
-
Form of Funding Notice
Exhibit B
-
Form of Officer’s Certificate
Exhibit C
-
Form of Assignment Agreement
Exhibit D
-
Form of Consent and Agreement
     
Annex A
-
Definitions

 
 

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CREDIT AGREEMENT
 
THIS CREDIT AGREEMENT dated as of January 30, 2009 (this “Agreement”) is between
(i) COLGAN AIR, INC., a Virginia corporation (the “Borrower”) and (ii) EXPORT
DEVELOPMENT CANADA, as lender (the “Lender”).
 
W I T N E S S E T H:
 
WHEREAS, concurrently with the execution and delivery of this Agreement, the
Borrower and the Lender are entering into the Mortgage and Security Agreement
dated as of the date hereof (the “Mortgage”) pursuant to which the Borrower
agrees, among other things, that the Loan Certificate issued hereunder and all
other obligations hereunder or under any other Operative Document will be
secured by the mortgage and security interest created by the Borrower in favor
of the Lender.
 
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
 
Section 1. Certain Definitions.  Except as otherwise defined in this Agreement,
including its annexes, schedules and exhibits, terms used herein in capitalized
form shall have the meanings attributed thereto in Annex A.
 
Unless the context otherwise requires, any reference herein to any of the
Operative Documents refers to such document as it may be modified, amended or
supplemented from time to time in accordance with its terms and the terms of
each other agreement restricting the modification, amendment or supplement
thereof.
 
Section 2. Commitments; Borrower’s Notice of Payment Dates; Closing Procedure;
Termination Date.
 
2.1 During the Credit Period, the Lender agrees, subject to the terms and
conditions of this Agreement, to make a secured loan to the Borrower in respect
of each Advance falling during the Credit Period, through a Drawing on Borrowing
Dates to be designated pursuant to Section 2.2.  No such Drawing shall exceed
the Maximum Commitment minus the aggregate amount of outstanding Drawings made
or to be made by the Lender on or prior to such Borrowing Date (the Lender’s
“Commitment”); provided that at no time shall the aggregate amount of Drawings
made by the Lender in respect of an Aircraft (i) exceed [***] of the Net
Purchase Price for such Aircraft in the case of the first ten Aircraft or (ii)
exceed [***] of the Net Purchase Price for such Aircraft in the case of the last
five Aircraft.
 
As more particularly set forth in Section 5, the Borrower shall execute and
deliver to the Lender with appropriate insertions the Loan Certificate to
evidence the Maximum Commitment.  Each Drawing shall be evidenced by this
Agreement, the Loan Certificate and notations made from time to time by the
Lender in its books and records, including computer records.  The Lender shall
record in its books and records, including computer records, the principal
amount of the Drawings owing to it from time to time.  Absent evidence to the
contrary, the Lender’s books and records shall constitute presumptive evidence
of the accuracy of the information contained therein.  Failure by the Lender to
make any such notation or record shall not affect the obligations of the
Borrower to the Lender with respect to the repayment of its Drawings.
 
2.2  (a) The Borrower agrees to give the Lender at least three (3) Business
Days’ prior written notice (the “Funding Notice”) of the Borrowing Date for each
Drawing to fund an Advance, which shall not be a date before the scheduled date
set forth in Schedule II for such Advance (or such later or earlier date as may
be agreed to in writing between the Borrower and the Lender), which notice shall
specify any funding instructions and shall be in substantially the form of
Exhibit A.  On the Business Day next following the execution and delivery of
this Agreement and the satisfaction of the conditions precedent in Section 4.1
(the “Effective Date”), the Lender shall allow Drawings (subject to the
limitations set forth in Section 2.1) in respect of certain Advances which were
paid by the Borrower prior to the Effective Date.
    
       (b) In the event that any Drawing to fund Advances shall not be
consummated in accordance with the terms hereof on the Effective Date or the
Borrowing Date specified in a Funding Notice, the Lender and the Borrower shall
cooperate with each other to arrange a mutually acceptable postponement of such
date provided that such date must fall within the Credit Period and may not be
more than sixty (60) days after the Borrowing Date anticipated in Schedule II
(the “Delayed Borrowing Date”).  In the event that the Drawing to fund Advances
shall not be consummated by 10:00 a.m. (New York time) on the Delayed Borrowing
Date or, if earlier, the date on which the Borrower notifies the Lender that the
Drawing will not occur, the Lender may cancel or terminate any funding
arrangements that it may have made to enable it to fund its Commitments and the
Borrower shall pay to the Lender on demand Break Amount, if any.  In
consideration of making its funds available on the Effective Date or the
specified Borrowing Date, the Borrower shall compensate the Lender for its net
loss of earnings on such funds, by paying the Lender interest on the aggregate
amount thereof (calculated on the basis of a 360-day year and actual days
elapsed) at a rate equal to LIBOR plus the Applicable Margin for the period from
and including the Effective Date or the specified Borrowing Date to but
excluding the earlier of (x) the Business Day on which the Borrowing shall
actually occur, (y) the Business Day on which the Borrower shall notify the
Lender that the Borrowing will not occur prior to the Delayed Borrowing Date (if
such notice is given prior to 10:00 a.m. (New York time) or if later, until the
Business Day subsequent to such notice date), or (z) the Delayed Borrowing Date.
 
2.3  On the Effective Date, the Lender agrees to fund the Drawing for the
initial Advance to Bombardier by wire transferring such amounts to the account
or accounts specified in the applicable Funding Notice, and to such other
account as the Borrower shall direct the Lender in writing, to reimburse the
Borrower for previously funded Advances.  On the Borrowing Date for each
subsequent Drawing specified in a Borrower’s notice referred to in Section 2.2,
subject to the terms and conditions of this Agreement, the Lender agrees to fund
the Drawing for each such Advance directly to Bombardier or, if such Advance
shall have already been paid by Borrower to Bombardier, to reimburse Borrower
for such Advance, by wiring such amounts to the account or accounts specified in
the applicable Funding Notice.  The Borrower agrees that the actual transfer of
the proceeds of Drawings to the bank designated by the Borrower for credit to
Bombardier’s or the Borrower’s account (as applicable) shall constitute
conclusive evidence that the Drawings were made.
 
Section 3. Fees.
 
3.1 The Loan Certificate shall bear interest and be repaid in accordance with
the applicable terms of this Agreement and the Mortgage.
 
3.2 In consideration of the Lender’s Commitments hereunder, the Borrower shall
pay to the Lender on the earlier of (i) the Effective Date and (ii) the
thirtieth (30th) day following the date hereof, an up-front fee equal to [***]
of the Maximum Commitment (the “Arrangement Fee”).  The Lender shall, at its
option, be entitled to offset any unpaid portion of the Arrangement Fee from the
Drawing to be made on the initial Borrowing Date hereunder.  In addition, the
Borrower shall pay to the Lender on each Interest Payment Date, in arrears on
the basis of a year of 360 days and the actual number of days elapsed, a
commitment fee of [***] of the average daily unused portion of the Maximum
Commitment during the preceding Interest Period (or in the case of the initial
Interest Period, from December 18, 2008) (the “Commitment Fee”).
 
Section 4. Conditions.
 
4.1 Conditions Precedent to the Effectiveness of the Commitments.  It is agreed
that the Commitment of the Lender and the effectiveness of this Agreement are
subject to the satisfaction prior to the Effective Date of the following
conditions precedent:
 
(a) The following documents shall have been duly authorized, executed and
delivered by the party or parties thereto, shall each be reasonably satisfactory
in form and substance to the Lender and shall be in full force and effect and
executed counterparts shall have been delivered to the Lender and its counsel:
 
(i) this Agreement;
 
(ii) the Mortgage;
 
(iii) the Guaranty;
 
(iv) the Bombardier Purchase Agreement and the Capacity Purchase Agreement,
including without limitation all amendments, supplements and modification to and
including the Effective Date, each certified by the Secretary or an Assistant
Secretary of the Borrower, as being a true, accurate and complete copy of the
same;
 
(v) the Notice of Assignment;
 
(vi) the Consent and Agreement; and
 
(vii) the Loan Certificate.
 
(b) The Lender shall have received the following, in each case in form and
substance reasonably satisfactory to it:
 
(i) a certificate of good standing and certified copy of the Certificate of
Incorporation and By-laws of each of the Borrower and the Guarantor and a copy
of resolutions of the board of directors of each of the Borrower and the
Guarantor or the executive committee thereof, certified by the Secretary or an
Assistant Secretary of the Borrower or the Guarantor, as applicable, duly
authorizing the execution, delivery and performance by the Borrower of this
Agreement, the Mortgage and each other document required to be executed and
delivered by the Borrower on the Effective Date, or in the case of the
Guarantor, the Guaranty; and
 
(ii) a certificate of the Borrower and the Guarantor as to the Person or Persons
authorized to execute and deliver the Operative Documents to which it is a
party, and any other documents to be executed on behalf of the Borrower or the
Guarantor, as applicable, in connection with the transactions contemplated
hereby and as to the signature of such person or persons.
 
(c) The Lender shall have received a certificate of the Borrower that the
aggregate amount of Advances in connection with each Aircraft shall be
sufficient when paid to Bombardier (together with any amounts previously paid to
Bombardier and which are to be reimbursed to Borrower hereunder) in accordance
with this Agreement to satisfy the obligation of the Borrower with respect to
all advance payments due and payable for each such Aircraft.
 
(d) In respect of Advances paid prior to the Effective Date, any liens over the
Collateral granted by the Borrower to finance such Advances shall be released
and terminated.
 
(e) A Uniform Commercial Code financing statement or statements covering all the
security interests created by or pursuant to the granting clause of the Mortgage
shall have been delivered by the Borrower, and such financing statement or
statements shall have been duly filed in all places deemed necessary or
advisable in the opinion of counsel for the Lender, and any additional Uniform
Commercial Code financing statements deemed advisable by the Lender or its
counsel shall have been delivered by the Borrower and duly filed and all other
action shall have been taken as is deemed necessary or advisable, in the opinion
of counsel for the Lender, to establish and perfect the Lender’s security
interest in the Bombardier Purchase Agreement.
 
(f) The Lender shall have received opinions, in form and substance reasonably
satisfactory to, and addressed to, the Lender from:
 
(i) Vinson & Elkins LLP, special counsel to the Borrower and Guarantor, as to
the due authorization and execution of the Operative Documents by the Guarantor
and as to the valid, binding and enforceable nature of the Operative Documents,
the creation and perfection of the Lien created by the Mortgage in place on the
Effective Date and as to such other matters as the Lender may reasonably
request;
 
(ii) Maskell & Gaba, special counsel to the Borrower, as to the due
authorization and execution of the Operative Documents by the Borrower and as to
such other matters as the Lender may reasonably request in as it relates to
Virginia law; and
 
(iii) Vedder Price P.C., as to such other matters required by the Lender.
 
(g) The Lender shall have received an opinion addressed to the Lender as to due
authorization, execution and delivery by Bombardier of the Bombardier Purchase
Agreement and the Consent and Agreement, in form and substance reasonably
satisfactory to the addressees thereof.
 
(h) Since December 31, 2007, there shall have been no material and adverse
change in the financial or operational condition of the Borrower or the
Guarantor and no event or circumstance shall have occurred which in the
reasonable judgment of the Lender had or would be reasonably likely to have a
Material Adverse Effect.
 
(i) The Lender shall have received evidence of the release by The Fauquier Bank
of its Lien on any and all of the Collateral and a disclaimer by The Fauquier
Bank of any interest therein.
 
4.2 Conditions Precedent to the Lender’s Participation in each Drawing.  It is
agreed that the obligations of the Lender to lend all or any portion of its
Commitment for an Advance to the Borrower is subject to the satisfaction prior
to the Borrowing Date of the following conditions precedent:
 
(a) The Lender shall have received due notice with respect to the Effective Date
or the Borrowing Date for such Advance pursuant to Section 2 (or shall have
waived such notice either in writing or as provided in Section 2).
 
(b) The Lender shall have received evidence in form and substance reasonably
satisfactory to them that the Borrower shall have paid to Bombardier all amounts
then due and owing (other than represented by an Advance being funded by a
Drawing on such date and to be paid to Bombardier in accordance with the terms
hereof) as of such date, including, without limitation, any amounts payable to
Bombardier in respect of Advances in which Borrower seeks reimbursement
hereunder.
 
(c) After the date of the execution and delivery of this Agreement, no change
shall have occurred in applicable law or regulations thereunder which would make
it a violation of law or regulations for the Lender to fund a Drawing, to
acquire the Loan Certificate or to realize the benefits of the security afforded
by the Mortgage.
 
(d) On such Borrowing Date, (A) the representations and warranties of the
Borrower contained in Section 7 and of the Guarantor contained in Section 10 of
the Guaranty shall be true and accurate as though made on and as of such date
except to the extent that such representations and warranties relate solely to
an earlier date (in which case such representations and warranties shall be true
and accurate on and as of such earlier date), (B) no event shall have occurred
and be continuing which constitutes (or would, with the passage of time or the
giving of notice or both, constitute) an Event of Default, and (C) since
December 31, 2007, there shall have been no material and adverse change in the
financial or operational condition of the Borrower or the Guarantor and no event
or circumstance shall have occurred which in the reasonable judgment of the
Lender had or would be reasonably likely to have a Material Adverse Effect, and
the Lender shall have received a certificate from the Borrower and the Guarantor
dated such Borrowing Date certifying each of the foregoing substantially in the
form attached as Exhibit B.
 
(e) The Lender shall have received all Fees that are due and payable on or prior
to such Borrowing Date.
 
(f) The Lender shall be satisfied that Continental Airlines, Inc.
(“Continental”) shall not have filed for bankruptcy protection under Chapter 11
of the U.S. Bankruptcy Code nor shall an involuntary case of bankruptcy under
the U.S. Bankruptcy Code have been commenced against Continental.
 
(g) Bombardier shall have provided a disclosure consent to Lender in a form
satisfactory to Lender.
 
Section 5. The Certificate.
 
5.1 Form of Loan Certificate.  The Loan Certificate in respect of the Drawings
to fund Advances shall be substantially in the form set forth below, as follows:
 
_____________
 

 
 

--------------------------------------------------------------------------------

 

COLGAN AIR, INC.
 
LOAN CERTIFICATE
 
DRAWINGS TO FUND ADVANCES
 
No.
New York, New York
$
[Effective Date]

Colgan Air, Inc. (the “Borrower”) hereby promises to pay to Export Development
Canada (the “Lender”), or registered transferees, (i) the principal sum of
_________________________ United States Dollars (US$__________), or, if less,
the aggregate unpaid principal amount of all Drawings to fund Advances made by
Lender to Borrower pursuant to that certain Credit Agreement dated as of
January 30, 2009 (the “Credit Agreement”) between the Borrower and Lender,
payable in full on the applicable Termination Date, together with interest on
the unpaid principal amount hereof from time to time outstanding from and
including the date hereof until such principal amount is paid in full.
 
The Interest Periods for the Drawings evidenced by this Loan Certificate (and
accordingly the Applicable Rates) can vary in accordance with the definitions of
Applicable Rate and Interest Period in the Credit Agreement.  Interest in
respect of the Drawings to fund Advances shall accrue with respect to each
Interest Period at the Applicable Rate in effect for such Interest Period and
shall be payable in arrears on each Interest Payment Date and on the date this
Loan Certificate is paid in full.  This Loan Certificate shall bear interest at
the Past Due Rate on any principal hereof, and, to the extent permitted by
applicable law, interest and other amounts due hereunder, not paid when due
(whether at stated maturity, by acceleration or otherwise), for any period
during which the same shall be overdue, payable on demand by the Lender.
 
Interest shall be payable with respect to the first but not the last day of each
Interest Period.  Interest shall be calculated on the basis of a year of 360
days and actual number of days elapsed.  If any sum payable hereunder falls due
on a day which is not a Business Day, then such sum shall be payable on the next
succeeding Business Day; provided that, in the case of principal of and interest
hereon payable on an Interest Payment Date, if by virtue of such extension such
payment would fall in the next succeeding month, such sum shall be payable on
the preceding Business Day.
 
Borrower hereby acknowledges and agrees that this note is the Loan Certificate
referred to in, evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement including, without limitation, the
repayment in full of the Drawings made in respect of an Aircraft upon the
applicable Termination Date.  The Credit Agreement, to which reference is hereby
explicitly made, sets forth said terms and provisions, including those under
which this Loan Certificate may or must be paid prior to its due date or may
have its due date accelerated.
 
All payments of principal, Break Amount, if any, and interest and other amounts
to be made to the Lender hereunder, under the Credit Agreement or under the
Mortgage and Security Agreement dated as of January 30, 2009 (as amended or
supplemented from time to time, the “Mortgage”) between the Borrower and the
Lender, (i) shall be made in accordance with the terms of the Credit Agreement
and the Mortgage, and (ii) are guaranteed by Pinnacle Airlines Corp. (the
“Guarantor”) pursuant to the terms of the Guaranty dated as of January 30, 2009
from Guarantor (as amended or supplemented from time to time, the “Guaranty”).
 
Principal and interest and other amounts due hereon shall be payable in Dollars
in immediately available funds prior to 10:00  a.m., New York time, on the due
date thereof, to the Lender in accordance with the terms of the Credit Agreement
at such account or accounts at such financial institution or institutions as
Lender hereof shall have designated, in immediately available funds.  All such
payments by the Borrower shall be made free and clear of and without reduction
for or on account of all wire or other like charges.
 
Lender, by its acceptance of this Loan Certificate, agrees that each payment
received by it in respect hereof shall be applied in the manner set forth in
Section 5.4 of the Credit Agreement.
 
The Collateral is held by the Lender as security, in part, for this Loan
Certificate.  Reference is hereby made to the Credit Agreement and the Mortgage
for a statement of the rights and obligations of the Lender, and the nature and
extent of the security for this Loan Certificate as well as for a statement of
the terms and conditions of the trusts created by the Mortgage, to all of which
terms and conditions in the Credit Agreement and the Mortgage the Lender agrees
by its acceptance of this Loan Certificate.
 
There shall be maintained a Certificate Register for the purpose of registering
transfers and exchanges of this Loan Certificate at the office of the Lender set
forth in the Credit Agreement or at the office of any successor thereto in the
manner provided in Section 5.7 of the Credit Agreement.  As provided in the
Credit Agreement and the Mortgage and subject to certain limitations set forth
therein, this Loan Certificate or any interest herein may, subject to the next
following paragraph, be assigned or transferred, and this Loan Certificate is
exchangeable for a like aggregate original principal amount of Loan Certificates
of any authorized denomination, as requested by the Lender surrendering the
same.
 
Prior to the due presentment for registration or transfer of this Loan
Certificate, the Borrower shall deem and treat the person in whose name this
Loan Certificate is registered on the Certificate Register as the absolute owner
of this Loan Certificate and the Lender for the purpose of receiving payment of
all amounts payable with respect to this Loan Certificate and for all other
purposes whether or not this Loan Certificate is overdue, and the Borrower shall
not be affected by notice to the contrary.
 
This Loan Certificate is subject to prepayment as permitted by Sections 5.10 and
5.11 of the Credit Agreement and to acceleration by the Lender as provided in
Section 4.1 of the Mortgage, and the Lender, by its acceptance of this Loan
Certificate, agrees to be bound by said provisions.
 
Terms defined in the Credit Agreement and in the Mortgage have the same meaning
when used in this Loan Certificate.
 
This Loan Certificate shall be governed by and construed in accordance with the
law of the State of New York.
 
*     *     *
 

 
 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Borrower has caused this Loan Certificate to be executed
in its corporate name by its officer thereunto duly authorized, as of the date
hereof.
 

 
COLGAN AIR, INC.
By:_____________________________
Name:  Peter Hunt
Title:  Vice President

 
 

--------------------------------------------------------------------------------

 

5.2 Terms of Loan Certificate; Drawings.  (a) Prior to the Effective Date, the
Borrower shall issue a Loan Certificate to the Lender in an aggregate original
principal amount equal to Thirty-Five Million Six Hundred Forty-One Thousand
Eight Hundred Forty-Four United States Dollars (US$35,641,844) in respect of
Drawings to fund Advances.  The Borrower shall be entitled to make Drawings
against the Loan Certificate in accordance with Sections 2.1 and 4.  The Loan
Certificate shall bear interest on the unpaid principal amount thereof from time
to time outstanding from and including the date thereof until such principal
amount is paid in full.  Such interest shall accrue in respect of Drawings to
fund Advances with respect to each Interest Period at the Applicable Rate in
effect for such Interest Period and shall be payable in arrears on each Interest
Payment Date and on the date the Loan Certificate is paid in full.  The Interest
Periods for the Drawings to fund Advances can vary in accordance with the
definitions of Applicable Rate and Interest Period.  Interest shall be payable
with respect to the first but not the last day of each Interest
Period.   Interest hereunder and under the Loan Certificate shall be calculated
on the basis of a year of 360 days and actual number of days elapsed.  The
principal of the Drawings to fund Advances shall be due and payable (for the
avoidance of doubt without Break Amount) on the applicable Termination Date.
 
(b) If any sum payable under the Loan Certificate or under the Mortgage falls
due on a day which is not a Business Day, then such sum shall be payable on the
next succeeding Business Day; provided that, in the case of principal of and
interest hereon payable on an Interest Payment Date, if by virtue of such
extension such payment would fall in the next succeeding month, such sum shall
be payable on the next preceding Business Day.
 
(c) The Loan Certificate shall bear interest at the Past Due Rate on any
principal thereof and, to the extent permitted by applicable law, interest
(other than interest accrued at the Past Due Rate) and other amounts due
thereunder and hereunder, not paid when due (whether at stated maturity, by
acceleration or otherwise), for any period during which the same shall be
overdue, payable on demand by the Lender.
 
(d) The Loan Certificate shall be executed on behalf of the Borrower by one of
its authorized officers.  A Loan Certificate bearing the signatures of
individuals who were at any time the proper officers of the Borrower shall bind
the Borrower, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the delivery of such Loan Certificate or did not
hold such offices at the respective dates of such Loan Certificate.  No Loan
Certificate shall be issued hereunder except that provided for in
Section 5.2(a), and any Loan Certificate issued in exchange or replacement
therefor pursuant to the terms of this Agreement.
 
5.3 [Intentionally Omitted].
 
5.4 Distribution of Funds Received.  (a)  Provided that no Event of Default has
occurred and is then continuing, each installment of interest payable on the
Loan Certificate shall be applied as soon as possible on or after the date that
such amount is received and becomes immediately available to the Lender:
 
First, to the Lender to the payment in full of the aggregate amount of interest
due under the Loan Certificate in an amount equal to (i) accrued interest at the
rate provided in the Loan Certificate, (ii) any overdue interest thereon, and
(iii) Break Amount, if any; and
 
Second, the balance, if any, thereof thereafter remaining to the Borrower or
such other Person(s) as may then lawfully be entitled thereto.
 
(b) Provided that no Event of Default has occurred and is then continuing, on
the Termination Date in respect of any or all of the Aircraft, each payment made
by the Borrower as repayment of Drawings in respect of such Termination Date
shall be distributed as promptly as possible on or after the date that such
amount is received and becomes immediately available to the Lender:
 
First, to the Lender to the payment in full of the aggregate amount of interest
due under the Loan Certificate in respect of such Aircraft or all Aircraft, as
applicable, being in an amount equal to (i) accrued interest at the rate
provided in the Loan Certificate, and (ii) any overdue interest thereon plus the
Break Amount, if any, due to the Lenders in respect of such payment;
 
Second, to the Lender to the payment in full of the outstanding principal amount
of the Drawings in respect of such Aircraft or all Aircraft, as applicable, made
by the Lender which is being repaid; and
 
Third, the balance, if any, thereof thereafter remaining to the Borrower or such
other Person(s) as may then lawfully be entitled thereto.
 
(c) Upon any partial repayment of the Loan Certificate pursuant to
Section 5.11(a) hereof, the amount paid by Borrower shall be applied against the
amounts which Borrower is obligated to pay in connection with such prepayment
pursuant to Section 5.11(a).
 
(d) After an Event of Default shall have occurred, and so long as such Event of
Default shall be continuing, all amounts received by the Lender hereunder and
all proceeds resulting from a sale of any of the Collateral shall be applied in
the following order of priority:
 
First, to the extent not theretofore paid by or on behalf of the Borrower, to
pay all costs and expenses of the Lender incurred in connection with the
performance of its duties hereunder or under any other Operative Document,
including reasonable attorneys’ fees and expenses, and all reasonable costs and
expenses incurred by the Lender in connection with its entering upon, taking
possession of, holding, operating, managing, selling or otherwise disposing of
the Collateral or any part thereof, any and all Taxes, assessments or other
charges of any kind prior to the Lien of any Operative Document that the Lender
determined in good faith to pay or be paid, and all reasonable amounts payable
to the Lender hereunder or under any of the Operative Documents in respect of
any indemnities or other obligations of the Borrower;
 
Second, to the Lender to the payment of any other amount, indebtedness or
obligations (other than principal and interest) due and payable to the Lender
under any Operative Documents, including, without limitation, the Fees and Break
Amount, if any;
 
Third, to the Lender to the payment of accrued and unpaid interest (including
interest on account of overdue payments of principal and interest) then due the
Lender under this Agreement or the Loan Certificate;
 
Fourth, to the Lender to the payment in full of the principal amount of the Loan
Certificate; and
 
Fifth, to the Lender to the payment of all amounts due and payable under any
Other Operative Document;
 
Sixth, the balance, if any, thereof thereafter remaining, to the Borrower or
such other Person(s) as may then lawfully be entitled thereto.
 
5.5 Method of Payment.  Principal, interest and other amounts due hereunder or
under the Loan Certificate or in respect hereof or thereof shall be payable in
Dollars in immediately available funds prior to 10:00 a.m., New York time, on
the due date thereof, to the Lender at such account specified in Schedule I
hereto (or such other account as shall be notified by Lender to Borrower).
 
        All such payments by the Borrower shall be made free and clear of and
without reduction on account of all wire and other like charges.  Prior to the
due presentment for registration of transfer of the Loan Certificate, the
Borrower may deem and treat the Person in whose name the Loan Certificate is
registered on the Certificate Register as the absolute owner of the Loan
Certificate for the purpose of receiving payment of all amounts payable with
respect to the Loan Certificate and for all other purposes whether or not the
Loan Certificate shall be overdue, and the Borrower shall not be affected by any
notice to the contrary.
 
5.6 Termination of Interest in Collateral.  The Lender shall have no further
interest in, or other right with respect to, the Collateral with respect to any
Aircraft, provided no Default or Event of Default has occurred and is
continuing, when and if the principal amount of, Break Amount on, if any,
interest on and other amounts due under all Drawings in relation to such
Aircraft held by the Lender and all other sums due to the Lender hereunder and
under the other Operative Documents in respect of such Aircraft shall have been
paid in full; provided, however, that the interests and rights of the Lender in
and with respect to the mortgage and security interests created by the Mortgage
shall continue (except with respect to an Aircraft as to which the related
Drawings have been repaid) after all such amounts have been paid in full so long
as the Commitments have not terminated.  Upon payment in full of any Drawings
relating to an Aircraft as contemplated hereby and provided no Event of Default
shall have occurred and be continuing, the Lender shall release that portion of
the Collateral which relates solely to the applicable Aircraft from the Lien of
the Mortgage.
 
5.7 Registration, Transfer and Exchange of Loan Certificate.  The Lender agrees
with the Borrower that the Lender shall keep a register (herein sometimes
referred to as the “Certificate Register”) in which provision shall be made for
the registration of Loan Certificate.
 
        Prior to the due presentment for registration of the transfer of the
Loan Certificate, the Borrower shall deem and treat the person in whose name the
Loan Certificate is registered on the Certificate Register as the absolute owner
of the Loan Certificate, and the Lender for the purpose of receiving payment of
all amounts payable with respect to the Loan Certificate, and for all other
purposes whether or not the Loan Certificate is overdue, and the Borrower shall
not be affected by notice to the contrary.
 
        The Certificate Register shall be kept at the office of the Lender set
forth in this Agreement or at the office of any successor Lender, and the Lender
is hereby appointed “Certificate Registrar” for the purpose of registering Loan
Certificates and transfers of Loan Certificates as herein provided.
 
        Upon surrender for registration of transfer of the Loan Certificate at
the office of the Lender set forth in this Agreement and upon delivery by the
Lender to the Borrower of such surrendered Loan Certificate, the Borrower shall
execute, in the name of the designated transferee or transferees, one or more
new Loan Certificates of a like aggregate principal amount.
 
        The Lender may assign to any assignee an interest in the Loan
Certificate held by it and the Lender shall register in the name of such
assignee such interest in the Loan Certificate and thereafter such assignee
shall be a Lender for all purposes of the Operative Documents (subject to any
limitations in the instrument of assignment).
 
      All Loan Certificates issued upon any registration of transfer or exchange
of Loan Certificates shall be the valid obligations of the Borrower evidencing
the same obligations, and entitled to the same security and benefits under the
Mortgage and this Agreement, as the Loan Certificate surrendered upon such
registration of transfer.
 
        The Lender may transfer the Loan Certificate to any Person.  The
Borrower shall treat the Person in whose name each Loan Certificate is
registered on the Certificate Register as the Lender with respect thereto for
all purposes hereof until due presentment for registration of transfer as
provided in this Section 5.7.
 
      The Lender shall give the Borrower notice of such transfer of a Loan
Certificate under this Section 5.7.
 
5.8 Mutilated, Destroyed, Lost or Stolen Loan Certificates.  If any Loan
Certificate shall become mutilated, destroyed, lost or stolen, the Borrower
shall, upon the written request of the Lender, execute and deliver in
replacement thereof, a new Loan Certificate, in the same principal amount, dated
the date of such Loan Certificate and designated as issued under the Mortgage.
 
If the Loan Certificate being replaced has become mutilated, such Loan
Certificate shall be furnished to the Borrower by the Lender.
 
If the Loan Certificate being replaced has been destroyed, lost or stolen, the
Lender shall furnish to the Borrower such security or indemnity as may be
reasonably required by Borrower to hold the Borrower harmless and evidence
satisfactory to the Borrower of the destruction, loss or theft of such Loan
Certificate and of the ownership thereof, provided, however, that if the Lender
is an original party to this Agreement or an Affiliate thereof, the written
notice of such destruction, loss or theft and such ownership and the written
undertaking of the Lender delivered to the Borrower to hold harmless the
Borrower in respect of the execution and delivery of such new Loan Certificate
shall be sufficient evidence, security and indemnity.
 
5.9 Payment of Expenses on Transfer.  Upon the issuance of a new Loan
Certificate or new Loan Certificates pursuant to Section 5.7 or 5.8, the
Borrower may require from the party requesting such new Loan Certificate or Loan
Certificates payment of a sum sufficient to reimburse the Borrower for, or to
provide funds for, the payment of any tax or other governmental charge in
connection therewith or any charges and expenses connected with such tax or
other governmental charge paid or payable by the Borrower, and any out of pocket
expenses, including legal fees (for external counsel) incurred, of the Borrower.
 
5.10 Prepayment.  (a)  Upon the occurrence of a cancellation of the Bombardier
Purchase Agreement with respect to any or all of the Aircraft for any reason
whatsoever, the aggregate outstanding principal amount of all Drawings relating
to the affected Aircraft shall become due and payable, and the Borrower shall
immediately prepay the Loan Certificate to the extent of such Drawings, together
with accrued interest thereon to the date of prepayment plus any Break Amount
and all other amounts due thereunder and hereunder and under the other Operative
Documents with respect to such Aircraft to the Lender.
 
(b) On the second Business Day prior to the occurrence or anticipated occurrence
of a Pinnacle Event, the Requisite Portion of the Facility Amount shall become
due and payable, and the Borrower shall immediately prepay the Loan Certificate
in an amount equal to the Requisite Portion of the Facility Amount (provided
that if, at the time of such prepayment, the Requisite Portion of the Facility
Amount exceeds the aggregate outstanding principal amount of all Drawings, then
the principal amount to be prepaid shall equal the aggregate outstanding
principal amount of all Drawings), together with accrued interest thereon to the
date of prepayment plus any Break Amount and all other amounts due thereunder
and hereunder and under the other Operative Documents with respect to such
Aircraft to the Lender.  Any prepayment under this Section 5.10(b) shall be
applied on a pro rata basis to the aggregate principal amount of all Drawings.
 
(c) In the event that the Lender is entitled to a payment under Section 5.12 or
Section 8.2, the Borrower and the Lender shall cooperate for a period of 60 days
to:
 
(i) first, restructure the Drawings for the Lender so as to eliminate the need
for any such payment (it being agreed that the Lender shall have no obligation
to proceed with such restructuring to the extent such restructuring would:
 
(1) result in an adverse regulatory consequence for the Lender; or
 
(2) involve any unreimbursed or unindemnified cost for the Lender; or
 
(3) be inconsistent with the Lender’s internal policies); or
 
(ii) if no restructuring can be arranged, attempt, with the Borrower acting as
marketing agent, to find an entity reasonably satisfactory to the Lender to
purchase the Loan Certificate and assume the Lender’s Commitment.
 
The Lender shall be paid (by the purchasing entity or the Borrower) the
outstanding principal balance of the Loan Certificate, all accrued and unpaid
interest thereon, any Break Amount incurred (calculated as if such purchase were
a prepayment of the Loan Certificate) and all other amounts owed to the Lender
under any Operative Document as a condition precedent to such purchase.
 
In the event the Borrower is unable to find a purchaser of the Loan Certificate,
then, so long as no Default or Event of Default shall have occurred and be
continuing on at least 5 Business Days’ prior written notice, the Borrower may
prepay on the date specified in its notice of prepayment, in whole the Loan
Certificate at the principal amount thereof together with accrued and unpaid
interest thereon to the date of prepayment plus the Break Amount, if any and all
other amounts due to the Lender hereunder, thereunder and under the other
Operative Documents.
 
(d) In the event that the Lender receives a refund directly from Bombardier or
that Borrower or any other person receives from Bombardier any amounts in either
case under the Bombardier Purchase Agreement relating to the Aircraft, a
principal amount of the Drawings (and any Break Amount related thereto) relating
to such Aircraft equal to such refund shall become immediately due and payable.
 
(e) Any notice of prepayment delivered pursuant to Section 5.10(c) shall be
irrevocable and shall identify the amount to be prepaid and the Drawings
relating to an Aircraft subject to prepayment (if applicable).
 
(f) Voluntary Prepayment.  So long as no Event of Default has occurred and is
continuing, the Borrower may, at any time after the first Interest Payment Date
and upon thirty (30) days’ irrevocable written notice to the Lender, prepay on
the date specified in such notice in whole, or in part, the Advances then
outstanding, provided that any partial prepayment shall be in an amount at least
equal to an Advance.  Each prepayment will be applied to repayment of
installments in inverse order of maturity.  Amounts prepaid under this Section
5.10(f) shall not be available for re-borrowing.
 
5.11 Provisions Relating to Prepayment.  (a)  In connection with any prepayment
to be made pursuant to Section 5.10 above, the principal amount of the Loan
Certificate so to be prepaid, plus accrued interest thereon to the date of
prepayment, together with the Break Amount, if any, shall become due and payable
on the applicable prepayment date.
 
(b) On the date fixed for prepayment under Section 5.10, immediately available
funds in Dollars shall be deposited by the Borrower in the account of the Lender
at the place and by the time and otherwise in the manner provided in
Section 5.5, in an amount equal to the principal amount of Loan Certificate to
be prepaid together with accrued and unpaid interest thereon to the date fixed
for such prepayment, all Break Amounts, if any and all other amounts due to the
Lender under the Operative Documents.
 
(c) The Lender shall furnish to the Borrower a certificate setting forth the
Break Amount due to the Lender, which certificate shall be presumptively
correct.
 
5.12 Increased Costs.  (a)  The Borrower shall pay directly to the Lender from
time to time such amounts as the Lender may determine to be necessary to
compensate the Lender for any increase in actual costs that the Lender
reasonably determines are attributable to its making or maintaining of its
Commitment or the loans evidenced by the Loan Certificate or funding
arrangements utilized in connection with such loans, or any reduction in any
amount receivable by the Lender hereunder in respect of any of its Commitments,
such loans or such arrangements (such increases in costs and reductions in
amounts receivable being herein called “Additional Costs”), resulting from any
Regulatory Change that:
 
(i) imposes any Tax that is the functional equivalent of any reserve, special
deposit or similar requirement of the sort covered by Section 5.12(a)(ii); or
 
(ii) imposes or modifies any reserve, special deposit or similar requirements
(including any Reserve Requirement) relating to any extensions of credit or
other assets of, or any deposits with or other liabilities of, the Lender
(including, without limitation, any of such loans or any deposits referred to in
the definition of “LIBOR” in Annex A), or any such obligations; or
 
(iii) imposes any other condition affecting this Agreement or the Loan
Certificate (or any of such extensions of credit or liabilities) or any such
obligation.
 
(b) Without limiting the effect of the foregoing provisions of this Section 5.12
(but without duplication), the Borrower shall pay directly to the Lender from
time to time on request such amounts as the Lender may reasonably determine to
be necessary to compensate the Lender (or, without duplication, the holding
company of which the Lender is a subsidiary) for any increase in actual costs
that it determines are attributable to the maintenance by the Lender (or any
lending office or such holding company), pursuant to any law or regulation or
any interpretation, directive or request (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful so long as
compliance therewith is standard banking practice in the relevant jurisdiction)
of any court or governmental or monetary authority following:
 
(i) any Regulatory Change; or
 
(ii) implementing any risk-based capital guideline or other similar requirement
hereafter issued by any government or governmental or supervisory authority, of
capital in respect of its Commitments or the Loan Certificate or funding
arrangements utilized in connection with the Loan Certificate; such compensation
to include, without limitation, an amount equal to any reduction of the rate of
return on assets or equity of the Lender (or any lending office or such bank
holding company) could have achieved but for such law, regulation,
interpretation, directive or request.
 
(c) The Lender shall notify the Borrower of any event occurring after the date
of this Agreement entitling the Lender to compensation under Sections 5.12(a) or
(b) as promptly as practicable, but in any event within 60 days after the Lender
obtains actual knowledge thereof, provided that, the Lender will use
commercially reasonable efforts (at the Borrower’s expense) to mitigate the
amount of the Additional Costs associated with such event, including designating
a different lending office for the Loan Certificate if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the sole opinion of the Lender, result in any economic, legal or regulatory
disadvantage to the Lender (other than economic disadvantages for which the
Borrower agrees to indemnify the Lender and which indemnity is acceptable to the
Lender in its discretion acting reasonably based on its credit assessment of the
Borrower).
 
(d) The Lender will furnish to the Borrower an officer’s certificate setting
forth in reasonable detail:
 
(i) the events giving rise to such Additional Costs;
 
(ii) the basis for determining and allocating such Additional Costs; and
 
(iii) the amount of each request by the Lender for compensation under
Sections 5.12(a) or (b) (subject, however, to any limitations the Lender may
require in respect of disclosure of confidential information relating to its
capital structure), together with a statement that the determinations and
allocations made in respect of the Additional Costs comply with the provisions
of this Section 5.12.
 
Determinations and allocations by the Lender for purposes of this Section 5.12
of the effect of any Regulatory Change pursuant to Section 5.12(a), or of the
effect of capital maintained pursuant to Section 5.12(b), on its costs or rate
of return of maintaining its Commitment or the Loan Certificate or its funding,
or on amounts receivable by it in respect of the Loan Certificate, and of the
amounts required to compensate the Lender under this Section 5.12, shall be
conclusive absent manifest error, provided that such determinations and
allocations are made on a reasonable basis and, in the case of allocations, are
made fairly.
 
(e) The Borrower shall not be required to make payments under this Section to
the Lender if (i) a claim hereunder arises through circumstances peculiar to the
Lender and which do not affect commercial lenders in the same jurisdiction
generally; (ii) the Lender is required by Section 5.12(f) to sell the Loan
Certificate to a designated purchaser (which may be the Borrower) but fails to
do so (other than as a result of such designated purchaser failing to purchase
the Loan Certificate); (iii) the Lender is not also seeking indemnification
against similar increased costs, to the extent it is entitled to do so, in
transactions with substantial borrowers (it being agreed that an officer’s
certificate to the contrary from any the Lender shall constitute conclusive
evidence of such fact); or (iv) the claim arises out of a voluntary relocation
by the Lender of its lending office (it being understood that any such
relocation effected pursuant to this Section 5.12 is not “voluntary”).
 
(f) If the Lender gives notice of a claim against the Borrower under
Section 5.12(c), the Borrower shall have the right by notice to the Lender to
request the Lender to sell, without representation or warranty (except for its
own acts), the Loan Certificate on a Business Day not fewer than ten days after
the giving of such notice (the “Purchase Date”) to a Person (which may be the
Borrower) designated by the Borrower (the “Purchaser”) at a purchase price equal
to either (A) the sum of (i) the aggregate outstanding principal amount of the
Loan Certificate, plus (ii) accrued interest to the Purchase Date, plus
(iii) any Break Amount as if the Loan Certificate was being prepaid pursuant to
Section 5.10, plus (iv) all other amounts owing to the Lender under the
Operative Documents, or (B) a lesser amount than the preceding clause (A), so
long as the Borrower pays an additional amount sufficient to cover the amount of
such shortfall (as compared to such clause (A)).
 
5.13 Illegality.  Notwithstanding any other provision of this Agreement or the
Mortgage, if the Lender (the “Illegal Lender”) shall notify any of the parties
hereto that the introduction after the date of this Agreement of or any change
after the date of this Agreement or any other Operative Document in or in the
interpretation of any law or regulation makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful, for the Lender to
make, fund or allow to remain outstanding the Loan Certificate, then the Lender
shall, promptly after becoming aware of the same, deliver to the Borrower a
certificate to that effect, and the Borrower shall attempt to cure such
illegality and in the event such illegality shall not have been cured, on or
before the earlier of (a) the next Interest Payment Date or (b) thirty (30) days
following such notification, the Borrower shall immediately prepay the aggregate
outstanding principal amount of the Loan Certificate in full, together with
accrued interest thereon to the date of prepayment plus all the Break Amount, if
any and all other amounts due thereunder and hereunder and under the other
Operative Documents to such Illegal Lender.
 
Section 6. Extent of Interest of Lenders.  The Lender shall not have any further
interest in, or other right with respect to, the Collateral when and if the
principal and interest on the Loan Certificate, any Break Amount and all other
sums payable to the Lender hereunder, under the Mortgage and under the Loan
Certificate shall have been paid in full, provided, however, that the interests
and rights of the Lender in and with respect to the Collateral shall continue
after all such amounts have been paid in full so long as the Commitments have
not terminated.  Upon such termination, the Lender will take such steps as
reasonably requested by the Borrower and at the Borrower’s expense related to
the release of such liens.
 
Section 7. Borrower’s Representations and Warranties.  The Borrower represents
and warrants that on the date hereof and on each Borrowing Date:
 
(a) the Borrower is a corporation duly organized and validly existing in good
standing pursuant to the laws of the State of Virginia; is duly qualified to do
business as a foreign corporation in each jurisdiction in which its operations
or the nature of its business requires, except where the failure, in each case,
to be so qualified would not have a Material Adverse Effect; is a U.S. Air
Carrier; has its “location” (as such term is defined in Article 9 of the Uniform
Commercial Code) in the State of Virginia; and has the corporate power and
authority to purchase the Aircraft under the Bombardier Purchase Agreement and
to enter into and perform its obligations under the Operative Documents to which
it is a party;
 
(b) the execution, delivery and performance by the Borrower of the Operative
Documents to which it is a party have been duly authorized by all necessary
corporate action on the part of the Borrower, do not require any stockholder
approval, or approval or consent of any trustee or holders of any indebtedness
or obligations of the Borrower except such as have been duly obtained and are in
full force and effect, and none of the execution, delivery or performance by the
Borrower of such Operative Documents contravenes any law, judgment, government
rule, regulation or order binding on the Borrower or the Certificate of
Incorporation or By-laws of the Borrower or contravenes the provisions of, or
constitutes a default under, or results in the creation of any Lien upon the
property of the Borrower under, any indenture, mortgage, contract or other
agreement to which the Borrower is a party or by which it or its properties may
be bound or affected;
 
(c) neither the execution and delivery by the Borrower of the Operative
Documents to which it is a party nor the performance by the Borrower of its
obligations thereunder requires the consent or approval of, the giving of notice
to, or the registration with, or the taking of any other action in respect of
any Federal, state or foreign government authority or agency, except for (A) the
orders, permits, waivers, exemptions, authorizations and approvals of the
regulatory authorities having jurisdiction over the operation of the Aircraft by
the Borrower, which orders, permits, waivers, exemptions, authorizations and
approvals, if any, concurrently required to be obtained and in full force and
effect have been duly obtained and are in full force and effect except for those
orders, permits, waivers, exemptions, authorizations and approvals the failure
to obtain which would not have a Material Adverse Effect, and (B) any filings,
registrations or applications specifically described in this Agreement (the
items referred to in (A) and (B) collectively referred to as “Permits”);
 
(d) the Operative Documents to which the Borrower is a party each constitute
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with the terms thereof except as such enforceability may
be limited by equitable principles or applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally;
 
(e) there is no pending or (to the Borrower’s knowledge) threatened action or
proceeding before any court, arbitrator or administrative agency that
individually (or in the aggregate in the case of any group of related lawsuits)
is expected by the Borrower to have a Material Adverse Effect;
 
(f) except for the filing of financing statements (and continuation statements
at periodic intervals) with respect to the interests created by such documents
under the Uniform Commercial Code of Virginia, no further action, including any
filing or recording of any document (including any financing statement in
respect thereof under Article 9 of the Uniform Commercial Code of any applicable
jurisdiction), is necessary or advisable in order to establish and perfect the
first mortgage Lien on the Collateral in favor of the Lender pursuant to the
Mortgage;
 
(g) there has not occurred any event which constitutes a Default or an Event of
Default which is presently continuing;
 
(h) the statements of financial position of each of the Borrower and Guarantor
as of December 31, 2007, and the related statements of earnings and cash flow of
each of the Borrower and Guarantor in all material respects for the year then
ended, copies of which have been furnished to the Lender, fairly present the
financial condition of each of the Borrower and Guarantor and subsidiaries of
each, respectively, at such date and the results of operations and cash flow of
the Borrower and Guarantor for the period ended on such date, in accordance with
generally accepted accounting principles consistently applied, and since
December 31, 2007, there has been no material and adverse change in the
financial or operational condition of the Borrower or the Guarantor and no event
or circumstance has occurred which would have a Material Adverse Effect;
 
(i) the Borrower has provided to the Lender a true, accurate and complete copy
of the Bombardier Purchase Agreement and the Bombardier Purchase Agreement is in
full force and effect and neither the Borrower nor, to the knowledge of the
Borrower, Bombardier is in default of any of its material obligations
thereunder.  Except as contemplated by the Mortgage, the Borrower has neither
assigned nor granted any Lien in its rights under the Bombardier Purchase
Agreement in respect of any of the Aircraft or the Engines;
 
(j) the issuance of the Loan Certificate to the Lender will not require
registration of the Loan Certificate pursuant to the Securities Act;
 
(k) the Borrower has filed or caused to be filed all Federal, state, local and
foreign tax returns which are required to be filed and has paid or caused to be
paid or provided adequate reserves for the payment of all taxes shown to be due
and payable on such returns or (except to the extent being contested in good
faith and by appropriate proceedings and for the payment of which adequate
reserves have been provided in accordance with generally accepted accounting
principles) on any assessment received by the Borrower, to the extent that such
taxes have become due and payable, except such returns or taxes as to which the
failure to file or pay, as the case may be, could not be reasonably expected to
result in a Material Adverse Effect of the Borrower;
 
(l) the Borrower and its subsidiaries are not:
 
(i) in default under any indenture, mortgage, lease or credit agreement or under
any other agreement or instrument of a material nature to which the Borrower or
its subsidiaries is now a party or by which it is bound, and no event has
occurred and is continuing which, under the provisions of any such indenture,
mortgage, credit agreement or other material agreement or instrument, with the
lapse of time or the giving of notice, or both, would constitute a default
thereunder; or
 
(ii) in violation of any law, order, injunction, decree, rule or regulation
applicable to the Borrower of any court or administrative body, which default or
violation would reasonably be expected to materially and adversely affect the
operations or financial condition of the Borrower or the Borrower’s ability to
execute, deliver and perform its obligations under the Operative Documents;
 
(m) the Borrower is not an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940;
 
(n) none of the information furnished in writing by or on behalf of the Borrower
to the Lender in connection with the negotiation of this Agreement or delivered
hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading;
 
(o) no part of the proceeds of any Drawing hereunder will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board of Governors of the Federal Reserve, including
Regulations U and X;
 
(p) the Lender has, or will have upon the filing of necessary UCC-1 financing
statements in Virginia, a duly perfected first priority security interest in the
Collateral;
 
(q) the Collateral is free and clear of all Liens (except Liens contemplated in
and otherwise permitted by the Mortgage);
 
(r)      (i)            there are no pre-delivery deposit payments or other
advances with respect to any Aircraft other than the Advances listed on
Schedule II;
 
(ii) the Borrower has paid in full all Advances which have become due and owing
with respect to the Aircraft (including, without limitation, the Advances due
and payable upon the execution of the Bombardier Purchase Agreement) and has not
received, directly or indirectly, any refund or credit from Bombardier with
respect to any portion thereof; and
 
(iii) Schedule II sets forth in full and accurate detail, with respect to each
Aircraft:
 
(1) the aggregate amount of Advances made by the Borrower prior to the date
hereof (net of any and all refunds and credits received from Boeing prior to the
date hereof) with respect to such Aircraft;
 
(2) the scheduled dates and amounts of each Advance due with respect to such
Aircraft after the date hereof; and
 
(3) the scheduled delivery month for such Aircraft;
 
(s) [***];
 
(t) The Borrower is in compliance with all applicable laws, regulations and
requirements of governmental authorities (including environmental laws)
applicable to it or its properties and all material agreements, charges and
other instruments binding upon it or its property, other than (except in the
case of laws relating to corruption and bribery) such noncompliance as would not
reasonably be expected to have a Material Adverse Effect; and
 
(u) There has been no material adverse change to the Capacity Purchase
Agreement, the Capacity Purchase Agreement remains in full force and effect and
the Capacity Purchase Agreement has been expanded to include the Aircraft for
which an Advance is being funded as of the applicable Borrowing Date.
 
Section 8. Indemnities.
 
8.1 General Indemnity.  Subject to the next following paragraph, the Borrower
hereby agrees to indemnify each Indemnitee against, and agrees to protect, save
and keep harmless each of them from any and all Expenses imposed on, incurred by
or asserted against any Indemnitee arising out of or directly resulting from:
 
(a) the operation, possession, use, maintenance, overhaul, testing,
registration, reregistration, delivery, non-delivery, lease, nonuse,
modification, alteration, or sale of an Aircraft, Airframe or Engine, or any
engine used in connection with any Airframe or any part of any of the foregoing,
any lessee or any other Person whatsoever, including, without limitation, claims
for death, personal injury or property damage or other loss or harm to any
person whatsoever and claims relating to any laws, rules or regulations
pertaining to such operation, possession, use, maintenance, overhaul, testing,
registration, reregistration, delivery, non-delivery, lease, non-use,
modification, alteration, sale or return including environmental control, noise
and pollution laws, rules or regulations;
 
(b) the manufacture, design, purchase, acceptance, rejection, delivery, or
condition of an Aircraft, Airframe or Engine, any engine used in connection with
any Airframe, or any part of any of the foregoing including, without limitation,
latent and other defects, whether or not discoverable, or trademark or copyright
infringement;
 
(c) any breach of or failure to perform or observe, or any other noncompliance
with, any covenant or agreement to be performed, or other obligation of the
Borrower under any of the Operative Documents, or the falsity of any
representation or warranty of the Borrower in any of the Operative Documents;
 
(d) the offer, sale and delivery by the Borrower or anyone acting on behalf of
the Borrower of the Loan Certificate or successor debt obligations issued in
connection with the refunding or refinancing thereof (including, without
limitation, any claim arising out of the Securities Act, the Securities Exchange
Act of 1934, as amended, or any other federal or state statute, law or
regulation, or at common law or otherwise relating to securities (collectively
“Securities Liabilities”)) (the indemnity provided in this Section 8.1(d) to
extend also to any Person who controls an Indemnitee, its successors, assigns,
employees, directors, officers, servants and agents within the meaning of
Section 15 of the Securities Act); and
 
(e) purchasing any Aircraft following an Event of Default, including any costs
incurred after purchasing such Aircraft and prior to resale of such Aircraft and
the recovery of all other amounts owing hereunder following an Event of Default
under the Mortgage or the enforcement against the Borrower of any of the terms
thereof (including, without limitation, Section 3 of the Mortgage).
 
The foregoing indemnity shall not extend to any Expense of any Indemnitee to the
extent attributable to one or more of the following:
 
(a) acts or omissions involving the willful misconduct or gross negligence of
such Indemnitee or any Person acting on behalf of such Indemnitee;
 
(b) any Tax, or increase in Tax liability under any Tax law (such matter being
subject to the indemnity in Sections 8.2 and 8.3); provided, however, that this
clause (b) shall not apply to Taxes taken into consideration in making any
payments on an after-Tax basis;
 
(c) except to the extent attributable to acts or events occurring prior thereto,
acts or events (other than acts or events related to the performance by the
Borrower of its obligations pursuant to the terms of the Operative Documents)
that occur after the Mortgage is required to be terminated in accordance with
Section 8.1 of the Mortgage; provided, that nothing in this clause (c) shall be
deemed to exclude or limit any claim that any Indemnitee may have under
applicable law by reason of an Event of Default or for damages from the Borrower
for breach of the Borrower’s covenants contained in the Operative Documents or
to release the Borrower from any of its obligations under the Operative
Documents that expressly provide for performance after termination of the
Mortgage;
 
(d) to the extent attributable to any transfer (voluntary or involuntary) by or
on behalf of such Indemnitee of the Loan Certificate or interest therein, except
pursuant to the exercise of remedies under any Operative Document, as otherwise
contemplated in the Operative Documents;
 
(e) to the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Document;
 
(f) to the extent attributable to the failure by such Indemnitee or any related
Indemnitee to perform or observe any agreement, covenant or condition on its
part to be performed or observed in any Operative Document;
 
(g) to the extent attributable to the offer or sale by such Indemnitee or any
related Indemnitee of any interest in the Collateral, the Loan Certificate, or
any similar interest in violation of the Securities Act or other applicable
federal, state or foreign securities laws (other than any thereof caused by acts
or omissions of the Borrower);
 
(h) other than during the continuation of an Event of Default, to the extent
attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any Operative
Document other than such as have been requested by the Borrower or as are
required by or made pursuant to the terms of the Operative Documents (unless
such requirement results from the actions of an Indemnitee not required by or
made pursuant to the Operative Documents);
 
(i) to the extent attributable to any amount which any Indemnitee expressly
agrees to pay or such Indemnitee expressly agrees shall not be paid by or be
reimbursed by the Borrower; or
 
(j) for any lien attributable to such Indemnitee or any related Indemnitee.
 
For purposes of this Section 8.1, a Person shall be considered a “related”
Indemnitee with respect to an Indemnitee if such Person is an Affiliate or
employer of such Indemnitee, a director, officer, employee, agent, or servant of
such Indemnitee or any such Affiliate or a successor or permitted assignee of
any of the foregoing.
 
The Borrower further agrees that any payment or indemnity pursuant to this
Section 8.1 in respect of any “Expense” shall be in an amount which, after
deduction of all Taxes required to be paid by such recipient with respect to
such payment or indemnity under the laws of any federal, state, or local
government or taxing authority in the United States, or under the laws of any
other country or any taxing authority or governmental subdivision of such
country, or any territory or possession of the United States, or any
international authority, shall be equal to the amount of such Expense the
recipient would have received in the absence of the imposition of such Taxes.
 
If a claim is made against an Indemnitee involving one or more Expenses and such
Indemnitee has notice thereof, such Indemnitee shall after receiving such notice
give notice of such claim to the Borrower; provided that the failure to provide
such notice shall not release the Borrower from any of its obligations to
indemnify hereunder except to the extent that the Borrower is prejudiced as a
result of the failure to give such notice, and no payment by the Borrower to an
Indemnitee pursuant to this Section 8.1 shall be deemed to constitute a waiver
or release of any right or remedy which the Borrower may have against such
Indemnitee for any actual damages as a result of the failure by such Indemnitee
to give the Borrower such notice.
 
The Borrower shall be entitled, at its sole cost and expense, so long as the
Borrower has acknowledged in writing its responsibility for such Expense
hereunder:
 
(a)           in any judicial or administrative proceeding that involves solely
a claim for one or more Expenses, to assume responsibility for and control
thereof,
 
(b)           in any judicial or administrative proceeding involving a claim for
one or more Expenses and other claims related or unrelated to the transactions
contemplated by the Operative Documents, to assume responsibility for and
control of such claim for Expenses to the extent that the same may be and is
severed from such other claims (and such Indemnitee shall use its reasonable
efforts to obtain such severance), and
 
(c)           in any other case, to be consulted by such Indemnitee with respect
to judicial proceedings subject to the control of such Indemnitee and to be
allowed, at the Borrower’s sole expense, to participate therein.
 
The Indemnitee may participate at its own expense and with its own counsel in
any judicial proceeding controlled by the Borrower pursuant to the preceding
provisions.  Notwithstanding any of the foregoing, the Borrower shall not be
entitled to assume responsibility for and control of any such judicial or
administrative proceedings if any Event of Default shall have occurred and be
continuing, if such proceedings will involve a material risk of the sale,
forfeiture or loss of any portion of the Collateral unless the Borrower shall
have posted a bond or other security reasonably satisfactory to the relevant
Indemnitee with respect to such risk or if such proceedings could entail any
risk of criminal liability being imposed on such Indemnitee.
 
The Indemnitee shall supply the Borrower with such information reasonably
requested by the Borrower as is necessary or advisable for the Borrower to
control or participate in any proceeding to the extent permitted by this
Section 8.1.  Such Indemnitee shall not enter into a settlement or other
compromise with respect to any Expense without the prior written consent of the
Borrower, which consent shall not be unreasonably withheld or delayed, unless
such Indemnitee waives its right to be indemnified with respect to such Expense
under this Section 8.1.
 
The Borrower shall supply the Indemnitee with such information reasonably
requested by the Indemnitee as is necessary or advisable for the Indemnitee to
control or participate in any proceeding to the extent permitted by this
Section 8.1.
 
Notwithstanding any other provision of this Section 8.1 to the contrary, in the
case of any Expense indemnified by the Borrower hereunder which is covered by a
policy of insurance maintained by the Borrower, it shall be a condition of such
indemnity with respect to any particular Indemnitee that such Indemnitee shall
cooperate with the insurers in the exercise of their rights to investigate,
defend or compromise such claim as may be required to retain the benefits of
such insurance with respect to such claim.
 
To the extent of any payment of any Expense pursuant to this Section 8.1, the
Borrower, without any further action, shall be subrogated to any claims the
Indemnitee may have relating thereto.  The Indemnitee agrees to give such
further assurances or agreements and to cooperate with the Borrower to permit
the Borrower to pursue such claims, if any, to the extent reasonably requested
by the Borrower.
 
In the event that the Borrower shall have paid an amount to an Indemnitee
pursuant to this Section 8.1, and such Indemnitee subsequently shall be
reimbursed in respect of such indemnified amount from any other Person, such
Indemnitee shall promptly pay the Borrower the amount of such reimbursement,
including interest received attributable thereto (but net of costs, if any, of
recovery of such amounts), provided that no Default or Event of Default has
occurred and is continuing.
 
8.2 General Tax Indemnity.  Whether or not any of the transactions contemplated
hereby shall be consummated, the Borrower agrees to pay, indemnify and hold each
Indemnitee harmless from, all Taxes imposed against any Indemnitee, by any
taxing authority upon or with respect to any of the foregoing, or upon or
relating to or measured by (i) the operation, possession, use, maintenance,
overhaul, testing, registration, reregistration, delivery, non-delivery, lease,
nonuse, modification, alteration, or sale of any Aircraft, Airframe or Engine,
or any engine used in connection with any Airframe or any part of any of the
foregoing by the Borrower, any lessee of the Borrower or any other Person acting
by or on behalf of the Borrower whatsoever, including, without limitation,
claims for death, personal injury or property damage or other loss or harm to
any person whatsoever and claims relating to any laws, rules or regulations
pertaining to such operation, possessions, use, maintenance, overhaul, testing,
registration, reregistration, delivery, non-delivery, lease, nonuse,
modification, alteration, sale or return including environmental control, noise
and pollution laws, rules or regulations; (ii) the manufacture, design,
purchase, acceptance, rejection, delivery, or condition of any Aircraft,
Airframe or Engine, any engine used in connection with any Airframe, or any part
of any of the foregoing including, without limitation, latent and other defects,
whether or not discoverable, or trademark or copyright infringement; or
(iii) upon the rentals, receipts or earnings arising therefrom, or upon or with
respect to the Borrower, or upon the Loan Certificate or other sums payable
thereunder or under or on or with respect to the Operative Documents or any sums
payable thereunder, the execution and delivery of this Agreement or any other
Operative Document, or otherwise with respect to the transactions contemplated
by the Operative Documents, provided that the foregoing indemnity shall not
apply:
 
(i) In the case of any Indemnitee, to any Taxes imposed by any taxing authority
on, based on, or measured by, the income (whether denominated an income or a
franchise Tax), receipts, capital, net worth, excess profits, or items of tax
preference, including minimum Taxes and withholding Taxes measured by income of
such Indemnitee from, upon or with respect to the Aircraft or the transactions
contemplated hereby, provided, however, that this clause (i) shall not exclude
(A) any Taxes imposed by any taxing authority which are sales, use, value-added,
rental, excise, license, ad valorem or property taxes or (B) any Taxes (other
than U.S. federal, state or local income taxes) imposed by any taxing authority
due to (y) the place of incorporation, commercial domicile, or other presence in
such jurisdiction of the Borrower or any user of or person in possession of any
Aircraft or any part thereof (or any affiliate of such person), or (z) any
payments made under any of the Operative Documents being made from the
jurisdiction imposing such Taxes or (C) any Taxes to the extent covered by
Section 8.3 below;
 
(ii) Any Taxes imposed on an Indemnitee (A) to the extent resulting from the
gross negligence or willful misconduct of such Indemnitee or any Person acting
on behalf of such Indemnitee or (B) to the extent resulting from the material
falsity or material inaccuracy of any representation or warranty of any
Indemnitee or any material misrepresentation or material breach of contract of
any Indemnitee made in connection with or arising under any of the Operative
Documents;
 
(iii) Any Taxes imposed on an Indemnitee for the sale of any Aircraft, Airframe
or Engine after an Indemnitee has purchased such Aircraft, Airframe or Engine
pursuant to Section 4 of the Mortgage and the Consent and Agreement;
 
(iv) Any Taxes imposed on an Indemnitee arising from the acts or omissions of
any Person in respect of any Aircraft, Airframe, Engine, engine or part thereof
incurred in connection with or following the exercise of any remedies under the
Mortgage;
 
(v) Any Tax imposed as a result of a transfer or disposition by an Indemnitee of
all or any portion of its interest in the Loan Certificate, or any Operative
Document or any interest in an Indemnitee, unless in each case pursuant to an
exercise of remedies in the case of an Event of Default or pursuant to
Sections 5.12(f) or 8.3(d) hereof;
 
(vi) Any Tax imposed on the Lender based on or measured by any fees received by
the Lender in connection with any transaction contemplated by the Operative
Documents;
 
(vii) Any Tax imposed on or with respect to a transferee (or subsequent
transferee) of an original Indemnitee to the extent such Tax, under applicable
law in effect on the date of such transfer, would not have been imposed on or
with respect to such original Indemnitee, unless in each case pursuant to an
exercise of remedies in the case of an Event of Default or pursuant to
Section 8.3(d) hereof;
 
(viii) Any Tax imposed on an Indemnitee to the extent such Tax would not have
been imposed but for a present or future connection between such Indemnitee or
any Affiliate thereof and the jurisdiction imposing such Taxes (including,
without limitation, the Indemnitee or an Affiliate thereof being or having been
a citizen or resident thereof, or having been organized, present or engaged in a
trade or business therein, or having, having had, a permanent establishment or
fixed place of business therein), other than a connection arising by reason of
the transactions contemplated by the Operative Documents or the operation,
presence, storage or use of the Aircraft, Airframe, Engine or any part thereof
or the presence, activity or other matter of or in respect of the Borrower;
 
(ix) Any Tax imposed on any Indemnitee under Section 4975 of the Code or under
subtitle B of ERISA or equivalent state law as a result of the use by such
Indemnitee or any of its Affiliates of the assets of an “employee benefit plan”
(as defined in Section 3(3) of ERISA) to fund the Loan Certificate or otherwise
to acquire any interest in the Loan Certificates; or
 
(x) Any Tax imposed on an Indemnitee that is incurred as a result of a change by
such Indemnitee of its lending office, unless such change is effected pursuant
to Section 8.3(d) hereof.
 
8.3 Withholding Taxes.
 
(a) Except as provided in this Section 8.3, the Borrower shall have no liability
to the Lender in the event any withholding Tax is imposed on payments made to
the Lender pursuant to this Agreement, the other Operative Documents, or in
respect of the Loan Certificate.
 
(b) Notwithstanding anything to the contrary contained herein or any other
Operative Document, the Borrower agrees that any payment made to or for the
benefit of the Lender with respect to interest, principal, Break Amount or other
amounts payable pursuant to this Agreement and the other Operative Documents on
or with respect to the Loan Certificate (it being understood, including amounts
payable pursuant to Section 5.12 hereof) shall be free of all withholdings or
deductions with respect to United States federal income withholding Taxes (“U.S.
Withholding Taxes”), and in the event that the Borrower shall be required by
applicable law to make any such withholding or deduction for any such U.S.
Withholding Taxes (a) the Borrower shall pay to the Lender an additional amount
so that after making all required withholdings or deductions for U.S.
Withholding Taxes from such payment the Lender receives the same amount it would
have received had no such withholdings or deductions been required, (b) the
Borrower shall make all such withholdings or deductions, (c) the Borrower shall
pay such amount withheld or deducted to the Internal Revenue Service in
accordance with applicable law, and (d) shall indemnify the Lender in respect of
such U.S. Withholding Taxes; provided, however, that the Borrower shall only
have an obligation under this Section 8.3 for U.S. Withholding Taxes to the
extent (i) that the Lender is the initial Lender hereunder, (ii) that the Lender
is a Treaty Lender and such U.S. Withholding Taxes result from a change in law,
the Tax treaty between the United States and Austria, Canada, France, Germany,
Ireland, the Netherlands or the United Kingdom (each, a “Specified
Jurisdiction”), or interpretation of either thereof that occurs on or after the
date the Lender acquires its interest in the Loan Certificate, or (iii) that the
Lender is a lender whose interest income from the transactions contemplated by
the Operative Documents is income effectively connected with the conduct of a
United States trade or business and such U.S. Withholding Taxes result from a
change in law, the relevant Tax treaty, or interpretation of either thereof that
occurs on or after the date the Lender acquires its interest in the Loan
Certificate.
 
(c) For purposes of this Section 8.3, the term “Treaty Lender” shall mean a
person who is a resident of a Specified Jurisdiction and entitled to claim the
benefits of the income Tax treaty between the United States and such Specified
Jurisdiction at the time it acquires its interest in the Loan Certificate.
 
(d) The Lender agrees to investigate alternatives for reducing or avoiding any
Taxes indemnifiable pursuant to this Section 8.3 and to use commercially
reasonable efforts (at the Borrower’s expense) to avoid or minimize any
liability with respect to such Taxes, including, without limitation, by
transferring the Loan Certificate to an Affiliate or to a third party or by
designating a different lending office of the Lender, if such designation or
other action would avoid the need for, or reduce the amount of, any such Taxes;
provided, however, that this sentence shall not obligate the Lender to take any
action that would, in its reasonable judgment, cause the Lender to incur any
economic, legal, or regulatory disadvantage, unless the Borrower agrees to
indemnify the Lender therefor in a manner reasonably satisfactory to the Lender.
 
(e) In addition, the Borrower agrees to pay and indemnify the Lender in respect
of any present or future stamp or documentary Taxes or any other license,
excise, registration, filing or property Taxes imposed by any governmental
authority which arise from (i) the execution, delivery, registration, filing,
recording or perfection of any security interest of or in connection with this
Agreement or other Operative Documents (other than any such Taxes attributable
to a voluntary transfer of the Loan Certificate by the Lender) or (ii) in
connection with an Event of Default.
 
(f) The Borrower further agrees that any payment or indemnity pursuant to this
Section 8.3 shall be in an amount which, after deduction of all Taxes required
to be paid by such recipient with respect to such payment or indemnity under the
laws of any federal, state, or local government or taxing authority in the
United States, or under the laws of any other country or any taxing authority or
governmental subdivision of such country, or any territory or possession of the
United States, or any international authority, shall be equal to the amount the
recipient would have received in the absence of the imposition of such Taxes.
 
(g) If by reason of (x) any U.S. Withholding Taxes with respect to which a
payment or indemnity was made or paid by the Borrower to or on behalf of the
Lender under clause (a) of Section 8.3(b), or (y) any additional payments to the
Lender pursuant to Section 8.1, 8.2 or Section 8.3(f) with respect to Taxes
resulting from payment or indemnification of an Expense or from payment or
indemnification pursuant to this Section 8.3 on an after-tax basis, the Lender
realizes a net tax savings (by means of a credit, deduction or otherwise), the
Lender shall pay to the Borrower, as promptly as practicably after the
realization of such net tax saving, the amount of such net tax saving together
with any additional tax saving realized as a result of such payment (it being
understood that the amount and timing of the realization of such tax saving
shall be reasonably determined by the Lender in good faith).
 
8.4 Interest.  The Borrower will pay to each Indemnitee on demand, to the extent
permitted by applicable law, interest on any amount of indemnity not paid when
due pursuant to this Section 8 until the same shall be paid, at the Past Due
Rate.
 
Section 9. Covenants of the Borrower.  The Borrower hereby covenants for the
benefit of the Lender, as follows:
 
(a) Borrower Merger.  The Borrower shall not, without the prior written consent
of the Lender (such consent not to be unreasonably withheld or delayed), enter
into a merger, consolidation, sale or other transaction or series of
transactions (whether related or not) to sell, transfer or otherwise dispose of
all or any substantial part of its business.
 
(b) U.S. Air Carrier.  The Borrower covenants and agrees that at all times it
will be a U.S. Air Carrier.
 
(c) Bombardier Purchase Agreement.  The Borrower shall:
 
(i) duly perform all of its obligations under the Bombardier Purchase Agreement
and take all actions necessary to keep them in full force and effect;
 
(ii) promptly upon acquiring actual knowledge of the same, notify the Lender of
any material default (whether by the Borrower, Bombardier or Engine
Manufacturer) under or cancellation, termination or rescission or purported
cancellation, termination or rescission of the Bombardier Purchase Agreement
specifying in reasonable detail the nature of such default, cancellation,
rescission or termination;
 
(iii) not, without the Lender’s prior written consent (such consent not to be
unreasonably withheld or delayed), in any way modify, cancel, terminate or amend
or consent to the modification, cancellation, termination or amendment of any
material terms of the Bombardier Purchase Agreement in respect of the Aircraft
against which Drawings are made; and
 
(iv) not accept delivery of an Aircraft from Bombardier before or concurrently
repaying to the Lender all amounts owing in respect of the Drawings relating to
that Aircraft.
 
(d) Further Assurances.  The Borrower covenants and agrees with the Lender as
follows:
 
(i) The Borrower will cause to be done, executed, acknowledged and delivered all
and every such further documents and agreements and assurances as reasonably
necessary and as the Lender shall reasonably require for accomplishing the
purposes of this Agreement and the other Operative Documents; provided that any
instrument or other document so executed by the Borrower will not expand any
obligations or liabilities, or limit any rights of the Borrower in respect of
the transactions contemplated by any Operative Documents;
 
(ii) The Borrower, at its expense, will take all actions (including the filing
of financing statements under the Uniform Commercial Code in all applicable
jurisdictions and perfection in any other jurisdiction in relation to any
Operative Document) to (A) cause the lien of the Mortgage to at all times be and
remain a perfected Lien, (B) establish the priority of the Mortgage with respect
to the Collateral, and (C) establish the priority of the Lender’s security
interest in the Aircraft to the extent possible or feasible prior to delivery
(or when manufacturer’s serial numbers are available in respect of the Airframe
and the Engines and the Aircraft are anticipated as being delivered and there is
a possibility that such equipment may be delivered by Bombardier before the
Lender is repaid the Drawings in respect of an Aircraft).
 
(iii) The Borrower shall pay all reasonable costs and expenses (including
reasonable costs and disbursements of counsel) incurred by the Lender after the
date hereof in connection with (A) any supplements or amendments of the
Operative Documents (including, without limitation, any related recording costs)
(other than any supplement or amendment associated with the syndication or
transfer of the Loan Certificate or the sale of participation interests
therein), (B) any Default and any enforcement or collection proceedings
resulting therefrom or in connection with the negotiation of any restructuring
or “work-out” (whether or not consummated), or (C) the enforcement of this
Section 9.
 
(iv) The Borrower will at all times comply with all applicable laws and
regulations relating to the Borrower, and its business and the Operative
Documents other than (except in the case of laws relating to corruption and
bribery) such noncompliance as would not reasonably be expected to have a
Material Adverse Effect.
 
(e) Conduct of Business, Maintenance of Existence.  The Borrower shall and shall
cause its subsidiaries, if any, to (i) continue to engage in business of the
same general type as conducted by the Borrower and its subsidiaries on the date
hereof and (ii) except as expressly permitted by Section 9(a), preserve, renew
and keep in full force and effect its respective corporate existence and take
all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of business of the Borrower and any
of its subsidiaries; provided that the Borrower shall not be required to
maintain, and shall not be required to cause any of its subsidiaries to
maintain, any such rights, privileges or franchises, if the failure to do so
could not reasonably be expected to result in a Material Adverse Effect; comply
with all contractual obligations and requirements of law, except to the extent
that failure to comply therewith could not reasonably be expected to result in a
Material Adverse Effect; and comply with the provisions of their respective
certificates of incorporation, by-laws and other organizational documents.
 
(f) Maintenance of Property; Insurance.  The Borrower shall keep all property
(other than Aircraft in the possession of third party air carriers) useful and
necessary in the respective businesses of the Borrower in good working order
consistent with industry standards and condition, normal wear and tear excepted;
maintain or cause any lessee to maintain with financially sound and reputable
insurance companies insurance on all property material to the business of the
Borrower in at least such amounts and against at least such risks (but including
in any event public liability and product liability) as are usually insured
against in the same general area by companies engaged in the same or a similar
business; and furnish to the Lender, upon written request, information in
reasonable detail as to the insurance carried, together with copies of
certificates of insurance and other evidence of such insurance, if any.
 
(g) Inspection of Property; Books and Records; Discussions.  The Borrower shall
keep proper books of records and account in which full, complete and correct
entries in conformity with GAAP and shall be made of all dealings and
transactions in relation to the Borrower’s and its subsidiaries’ respective
business and activities; and permit representatives of the Lender to visit and
inspect any of the Borrower’s properties and examine and, to the extent
reasonable, make abstracts from any of the Borrower’s non-confidential books and
records and to discuss the business, operations, properties and financial and
other condition of the Borrower and its subsidiaries with officers and employees
of the Borrower, in each case at any reasonable time during normal business
hours, upon reasonable notice to a responsible officer of the Borrower, and as
often as may reasonably be desired at reasonable intervals, provided that
non-disclosure agreements are executed or no non-public information is divulged
other than to employees or advisers of the Lender who agree to hold the
information confidential or regulatory agencies which oversee the Lender, it
being understood that the Borrower is the principal subsidiary of a publicly
traded company.
 
Section 10. Notices.  All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, or by facsimile, or by prepaid
courier service, and shall be effective upon receipt.
 
Unless otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 10, notices, demands, instructions and
other communications in writing shall be given to or made upon the parties
hereto at their addresses (or to their facsimile numbers) as follows:  (a) if to
the Borrower, to the addresses set forth in Section 6.6 of the Mortgage, (b) if
to the Lender, to the address set forth on Schedule I, or (c) if to any
subsequent Lender, addressed to such Lender at its address set forth in the
Certificate Register maintained pursuant to Section 5.7.
 
Section 11. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
 
11.1 This Agreement shall in all respects be governed by, and construed in
accordance with, the law of the State of New York.
 
11.2 Each party hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the Supreme Court of the State
of New York sitting in New York County and of the United States District Court
of the Southern District of New York, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.  Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement against another party or its properties in the courts
of any jurisdiction.
 
11.3 Each party hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any court referred to in Section
11.2.  Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
 
11.4 Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 10.  Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
 
11.5 EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
 
Section 12. Invoices and Payment of Expenses.  The Borrower agrees to pay
Transaction Expenses (as defined below) promptly, but in no event later than 30
days after, Lender’s billing in respect of such Transaction Expenses.  For the
purposes hereof, “Transaction Expenses” means:
 
(a) with respect to the preparation, negotiation, execution and delivery of this
Agreement and the other Operative Documents and the payment or anticipated
payment of each Drawing on each Borrowing Date, the reasonable fees, expenses
and disbursements of the Lender, including, without limitation, the reasonable
fees, expenses and disbursements of Vedder Price P.C., special counsel to the
Lender (the fees of Vedder Price P.C. being capped at [***] in connection with
the preparation, negotiation, execution and delivery of this Agreement and the
other Operative Documents); and
 
(b) all fees, taxes (including license, documentary, stamp, excise and property
taxes) and other charges payable in connection with the recording or filing of
instruments and financing statements.
 
Section 13. Confidentiality.  The Lender covenants and agrees to keep
confidential, and not to disclose to any third parties, the Operative Documents
and all non-public information received by it from the Borrower, Bombardier or
Engine Manufacturer pursuant to the Operative Documents or the Bombardier
Purchase Agreement, if any is so delivered, provided that such information may
be made available:
 
(a) to prospective and permitted transferees of the Loan Certificate or the
Lender’s interest in the Collateral, who agree to hold such information
confidential on the terms provided herein and in the Bombardier Purchase
Agreement;
 
(b) to the Lender’s counsel or independent certified public accountants,
independent insurance advisors or other agents who agree to hold such
information confidential who agree to hold such information confidential on the
terms provided;
 
(c) as may be required by applicable law or by any statute, court or
administrative order or decree or governmental ruling or regulation (or, in the
case of the Lender, to any bank examiner or other regulatory personnel);
 
(d) as may be necessary for purposes of enforcement of any Operative Document;
 
(e) as may be required pursuant to any requirement that such information be
disclosed by virtue of the Lender’s status as an agent of Her Majesty in Right
of Canada or by virtue of any law, regulation, order-in-council, court or
administrative order, or Canadian government policy or by virtue of any
international agreement to which the government of Canada or the Lender is a
party, including without limitation, the WTO Subsidies and Countervailing
Measures Agreement; or
 
(f) to the government of Canada.
 
In addition to the foregoing, the initial Lender may make publicly available
(i) the name of the Borrower and the Guarantor, (ii) the financial service
provided, (iii) a general description of the commercial transaction, (iv) the
amount of the Drawings in approximate Canadian dollar range, (v) the name of the
manufacturer of the Aircraft and (vi) the country involved in the transaction.
 
Section 14. Miscellaneous.
 
14.1 The representations, warranties, indemnities and agreements of the Borrower
provided for in this Agreement and each party’s obligations under any and all
thereof, shall survive the expiration or other termination of this Agreement or
any other Operative Document, except as expressly provided herein or therein.
 
14.2 This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.  Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party or parties thereto.
 
14.3 (a)            This Agreement shall be binding upon and shall inure to the
benefit of, and shall be enforceable by, the parties hereto and their respective
successors and permitted assigns including each successive holder of the Loan
Certificate issued and delivered pursuant to this Agreement or the Mortgage.
 
(b) The Borrower may not assign any of its rights or obligations under this
Agreement or the other Operative Documents except to the extent expressly
provided thereby.
 
(c) In addition to the foregoing:
 
(i) The Lender may, upon prior notice to Borrower (unless a Default or an Event
of Default shall have occurred and is continuing (in which case no prior notice
shall be required)) assign the Loan Certificate, in whole or in part to any
Person, as provided in Section 5.7, which assignment shall be effected pursuant
to an agreement substantially in the form of Exhibit C.
 
(ii) In addition, the Lender may, upon prior notice to Borrower (unless a
Default or an Event of Default shall have occurred and is continuing (in which
case no prior notice shall be required)) assign, in whole or in part its
Commitment to any financial institution, which assignment shall be effected
pursuant to an agreement substantially in the form of Exhibit C, appropriately
modified to relate to the assignment of a Commitment.
 
(iii) Effective upon the assignment of any Commitment, the Lender shall be
relieved of its obligations in respect of such Commitment to the extent the
assignee thereof shall have become obligated in respect thereof.
 
(iv) Notwithstanding the above, the Lender may not transfer the Loan Certificate
or interest therein in violation of the Securities Act or applicable foreign or
state securities laws.
 
(v) In addition to the foregoing, if the Lender desires to assign or transfer
any part of the Loan Certificate to a special purpose vehicle (“SPV”), as part
of an overall transaction pursuant to which the SPV issues notes, other
evidences of indebtedness, trust certificates or other beneficial interests in
the SPV to investors to fund its purchase of such Loan Certificate (a
“Securitization”), the Borrower agrees to cooperate reasonably with any such
Securitization.
 
(vi) The Lender shall not have any obligation or duty to the Borrower, or to
other Persons with respect to the transactions contemplated hereby except those
obligations or duties of the Lender expressly set forth in this Agreement and
the other Operative Documents and the Lender shall not be liable for performance
by any other party hereto of such other party’s obligations or duties hereunder.
 
*     *     *
 

 
 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
 

 
COLGAN AIR, INC., as Borrower
By:
Name:  Peter Hunt
Title:  Vice President
 
EXPORT DEVELOPMENT CANADA, as Lender
By:
Name:
Title:
 
By:
Name:
Title:

 
 

--------------------------------------------------------------------------------

 

SCHEDULE I
 
NOTICE & ACCOUNT INFORMATION
 
Lender
 
Notice to:
 
Export Development Canada
 
[***]
 
Wiring Instructions:
 
[***]

 
 

--------------------------------------------------------------------------------

 

SCHEDULE II
 
ADVANCES
 

   
Scheduled
Final
 
Bombardier
 
Aircraft
Aircraft
Delivery
Payment
Payment
Purchase Agreement
Advances
No.
Type
Month
Date
Number
Payment Dates
 to be Made
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
TOTAL
         
[***]

 
 

--------------------------------------------------------------------------------

 

SCHEDULE III
 
[***]

 
 

--------------------------------------------------------------------------------

 

EXHIBIT A
 
FUNDING NOTICE
 
____________, 20__
 
Export Development Canada
151 O’Connor Street
 
Ottawa, Ontario, Canada
 
KIA IK3
 
 
Re:
Predelivery Deposit Payment Financing for Colgan Air, Inc. -

 
EDC Reference Number [***]
 

 
Ladies and Gentlemen:
 
Reference is hereby made to that certain Credit Agreement dated as of
January __, 2009 (the “Credit Agreement”; capitalized terms used herein without
definition shall have the definitions set forth in the Credit Agreement) entered
into between Colgan Air, Inc., as borrower (the “Borrower”), and Export
Development Canada, as lender (the “Lender”).
 
1. Pursuant to Section 2.2(a) of the Credit Agreement, Borrower hereby requests
a Drawing in accordance with the following parameters:
 
(1) Aircraft Number[s]*:  _________________
 
(2) Borrowing/Effective Date:  ______________
 
(3) Drawing to fund Advance:  US$__________
 
(4) Purchase Installment:  Corresponding to “Payment Number” _____ pursuant to
Schedule II of the Credit Agreement.
 
2. Please distribute the proceeds of the Drawing as follows: [Insert payment
instructions]
 
3. Borrower hereby confirms that the representations and warranties of the
Borrower in Section 7 of the Credit Agreement are true and accurate on the date
hereof as though made on the date hereof except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties were true and accurate on and as of such
earlier date).
 
4. In consideration of the Lender making its funds available on the Borrowing
Date specified in this Funding Notice, in the event that the Drawing does not
take place on the Borrowing Date specified in this Funding Notice, the Borrower
shall compensate the Lender for its net loss on such funds, including any Break
Amounts.  In addition the Borrower agrees to pay the Lender interest on the
aggregate amount thereof (calculated on the basis of a 360-day year and actual
days elapsed) at a rate equal to LIBOR plus the Applicable Margin for the period
from and including the Borrowing Date specified in this Funding Notice to but
excluding the earlier of (x) the Business Day on which the Borrowing Date shall
actually occur, (y) the Business Day on which the Borrower shall notify the
Lender that the Borrowing will not occur prior to the Delayed Borrowing Date (if
such notice is given prior to 10:00 a.m. (New York time) or if later, until the
Business Day subsequent to such notice date), or (z) the Delayed Borrowing Date.
 
The terms and provisions of this Funding Notice shall be binding upon and inure
to the benefit of the Lender and the Borrower and their successors and assigns.
 
This Funding Notice shall be governed by the internal laws of the State of New
York.
 

 
Very truly yours,
COLGAN AIR, INC.
By:
Name:  Peter Hunt
Title:  Vice President

--------------------------------------------------------------------------------

 
* In the event of Drawings in respect of multiple Aircraft, the form of this
Funding Notice shall be modified accordingly to the Lender’s reasonable
satisfaction.
 

 
 

--------------------------------------------------------------------------------

 

EXHIBIT B
 
FORM OF OFFICER’S CERTIFICATE
 
This Certificate, effective as of _________ __, 2009, is given pursuant to
Section 4.2(d) of that certain Credit Agreement dated as of January 30, 2009
(the “Credit Agreement”) between Colgan Air, Inc., as Borrower, and Export
Development Canada, as Lender.  Capitalized terms used but not defined herein
shall have the meanings set forth in the Credit Agreement.
 
The undersigned officer of the [Colgan Air, Inc.][Pinnacle Airlines Corp.] (the
“Company”) hereby confirms and certifies that on effective date hereof, (A) the
representations and warranties of the Company contained in [Section 7 to the
Credit Agreement] [Section 10 of the Guaranty] are true and accurate as of such
date except to the extent that such representations and warranties relate solely
to an earlier date (in which case such representations and warranties shall be
true and accurate on and as of such earlier date), (B) no event has occurred or
is continuing which constitutes (or would, with the passage of time or the
giving of notice or both, constitute) an Event of Default, and (C) since
December 31, 2007, there has been no material and adverse change in the
financial or operational condition of the Company and no event or circumstance
has occurred or is occurring which had or would be reasonably likely to have a
Material Adverse Effect.
 
*      *      *
 

 
 

--------------------------------------------------------------------------------

 

In witness whereof, the undersigned officer of the Company has executed this
Certificate this __ day of __________, ____.
 

 
By:________________________________
Name:
Title:

 
 

--------------------------------------------------------------------------------

 

EXHIBIT C
 
ASSIGNMENT AGREEMENT
 
ASSIGNMENT AGREEMENT dated as of __________, ____ between
________________________________ (the “Assignee”) and
_____________________________ (the “Assignor”).
 
RECITALS
 
WHEREAS, the Assignor is the holder of the Loan Certificate No. ____ dated as of
____________, ____ (the “Assignor’s Loan Certificate”) issued under the Credit
Agreement, dated as of January 30, 2009 (the “Credit Agreement”) between Colgan
Air, Inc. (“Borrower”) and Export Development Canada, as lender (the “Lender”);
 
WHEREAS, the Assignor proposes to assign to the Assignee $____________ of the
$_____________ Assignor’s Loan Certificate and a pro rata portion of all of the
rights and obligations of the Assignor under the Credit Agreement and the other
Operative Documents (as defined below) in respect thereof, on the terms and
subject to the conditions set forth herein, and the Assignee proposes to accept
the assignment of such rights and obligations from the Assignor on such terms
and subject to such conditions;
 
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
 
Section 1. Definitions.  Unless otherwise defined herein, terms defined in the
Credit Agreement are used herein as therein defined.
 
Section 2. Assignment.
 
(a) On ____________, ____ (the “Effective Date”), and on the terms and subject
to the conditions set forth herein, the Assignor will sell, assign and transfer
to the Assignee, without recourse to or representation, express or implied, by
the Assignor (except as expressly set forth in Section 5 hereof), a $___________
portion of the Assignor’s Loan Certificate and a pro rata portion of the rights
and obligations of the Assignor under the Credit Agreement and the other
Operative Documents in respect thereof (but not with respect to any indemnity or
other claim, interest thereon at the Past Due Rate and Break Amount, if any,
accrued and unpaid as of the Effective Date or thereafter payable to the
Assignor in respect of the period prior to the Effective Date), and the Assignee
shall accept such assignment from the Assignor and assume all of the obligations
of the Assignor accruing from and after the Effective Date under the Credit
Agreement and the other Operative Documents relating to the Assignor’s Loan
Certificate on such terms and subject to such conditions.
 
(b) Upon the satisfaction of the conditions set forth in Section 4, (A) the
Assignee shall, on the Effective Date, succeed to the rights and be obligated to
perform the obligations of the Lender under the Credit Agreement and the other
Operative Documents, and (B) the Assignor shall be released from its obligations
under the Credit Agreement and the other Operative Documents accrued from and
after the Effective Date, in each case to the extent such obligations have been
assumed by the Assignee.
 
Section 3. Payments.  As consideration for the sale, assignment and transfer
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor, on the
Effective Date, in lawful currency of the United States and in immediately
available funds, to the account specified below its signature on the signature
pages hereof, an amount equal to $_______________.
 
Section 4. Conditions.  This Assignment Agreement shall be effective upon the
due execution and delivery of this Assignment Agreement by the Assignor and the
Assignee and the effectiveness of the assignment contemplated by Section 2
hereof is subject to:
 
(a) the receipt by the Assignor of the payment provided for in Section 3; and
 
(b) the delivery to the Lender of the Assignor’s Loan Certificate, duly endorsed
for [partial] transfer to the Assignee, together with a request in the form
attached hereto as Exhibit A that a new Loan Certificate be issued to the
Assignee and Assignor.
 
Section 5. Representations and Warranties of the Assignor.  The Assignor
represents and warrants as follows:
 
(a) the Assignor has full power and authority, and has taken all action
necessary to execute and deliver this Assignment Agreement and any other
documents required or permitted to be executed or delivered by it in connection
with this Assignment Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Assignment Agreement, and no
governmental authorizations or other authorizations are required in connection
therewith;
 
(b) the Assignor’s interest in the Assignor’s Loan Certificate is free and clear
of any and all Liens created by or through the Assignor;
 
(c) this Assignment Agreement constitutes the legal, valid and binding
obligation of the Assignor, enforceable against the Assignor in accordance with
its terms; and
 
(d) the Assignor has received no written notice of any Default having occurred
and continuing on the date of execution hereof.
 
Section 6. Representations and Warranties of the Assignee.  The Assignee hereby
represents and warrants to the Assignor and Borrower that:
 
(a) the Assignee has full power and authority, and has taken all action
necessary to execute and deliver this Assignment Agreement and any and all other
documents required or permitted to be executed or delivered by it in connection
with this Assignment Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Assignment Agreement, and no
governmental authorizations or other authorizations are required in connection
therewith;
 
(b) this Assignment Agreement constitutes the legal, valid and binding
obligation of the Assignee, enforceable against the Assignee in accordance with
its terms; and
 
(c) the Assignee has fully reviewed the terms of the Operative Documents and has
independently and without reliance upon the Assignor and based on such
information as the Assignee has deemed appropriate, made its own credit analysis
and decision to enter into this Assignment Agreement.
 
Section 7. Further Assurances.  The Assignor and the Assignee hereby agree to
execute and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the transactions
contemplated by this Assignment Agreement.
 
Section 8. Governing Law.  This Assignment Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
 
Section 9. Notices.  All communications between the parties or notices in
connection herewith shall be in writing, hand-delivered or sent by ordinary mail
or facsimile, addressed as set forth on the signature pages hereof.  All such
communications and notices shall be effective upon receipt.
 
Section 10. Binding Effect.  This Assignment Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
 
Section 11. Integration of Terms.  This Assignment Agreement contains the entire
agreement between the parties relating to the subject matter hereof and
supersedes all oral statements and other writings with respect to the subject
matter hereof.
 
Section 12. Counterparts.  This Assignment Agreement may be executed in one or
more counterparts, each of which shall be an original but all of which, taken
together, shall constitute one and the same instrument.
 
*  *  *
 

 
 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have caused this Assignment Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
 

 
[ASSIGNEE]
By:
Name:
Title:
 
Address for Notices:
 
 
Wire Instructions:
 
 
[ASSIGNOR]
By:
Name:
Title:
 
Address for Notices:
 
 
Wire Instructions:
 

 
 

--------------------------------------------------------------------------------

 

EXHIBIT D
 
CONSENT AND AGREEMENT
 

 

 
 

--------------------------------------------------------------------------------

 

 

 
ANNEX A
DEFINITIONS
 
For all purposes of the Credit Agreement and the Mortgage the following terms
shall have the following meanings (such definitions to be equally applicable to
both the singular and plural forms of the terms defined).  Any agreement
referred to below shall mean such agreement as amended, supplemented and
modified from time to time in accordance with the applicable provisions thereof
and of the other Operative Documents.  Unless otherwise specified,
Section references are to Sections of the Credit Agreement or the Mortgage.
 
“Advance” means each purchase price installment paid or payable by Borrower in
respect of each Aircraft in accordance with the terms of the Bombardier Purchase
Agreement which, as of the Effective Date, is in the amount and paid or payable
on or before the date set forth in Schedule II to the Credit Agreement.
 
“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly controls, is controlled by, or under common control with, such
Person.  The term “control” means the possession, directly or indirectly of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
 
“Aircraft” means each Airframe together with the related Engines in the
configuration (including all optional features and Buyer Furnished Equipment)
specified in the Bombardier Purchase Agreement, together with, as the context
permits, the aircraft and engine manuals, records and other technical documents
delivered therewith.
 
“Airframe” means each Bombardier model DHC-8-402 (Q400) aircraft (excluding
Engines or engines from time-to-time installed thereon) listed by Aircraft No.
on Schedule II to the Credit Agreement.
 
“Applicable Margin” means [***] per annum.
 
“Applicable Rate” means, for any Interest Period, a rate per annum equal to
LIBOR for such Interest Period plus the Applicable Margin.
 
“Arrangement Fee” has the meaning given in Section 3.2 of the Credit Agreement.
 
“BBA Libor Page” means the display of British Bankers Association Interest
Settlement Rates for United States Dollar deposits in the London Interbank
Market (“BBA Libor”) designated as Reuters Screen LIBOR01 Page on the service
provided by Reuters or its successor (or such other display as may replace it on
any such service or as may be nominated by Reuters or its successor (or other
commercially available source providing quotations of BBA Libor as designated by
the Lender from time to time) for the purpose of displaying BBA Libor).
 
“Bombardier” means Bombardier, Inc., in its capacity as manufacturer of the
Aircraft, and its successors and assigns.
 
“Bombardier Purchase Agreement” means Purchase Agreement Number 0604 dated as of
February 17, 2007 together with Aircraft General Terms Agreement dated as of
February 17, 2007, each between Bombardier and the Guarantor, including the
exhibits, amendments or supplements from time to time related thereto but only
insofar as they relate to the Aircraft, and the related letter agreements;
together with the Assignment and Assumption Agreement dated as of April 11, 2007
between Guarantor and Borrower pursuant to which Guarantor assigned all of its
right, title and interest in and to such Purchase Agreement (insofar as it
relates to the Aircraft) to Borrower.
 
“Borrower” means Colgan Air, Inc., a Virginia corporation, and its successors
and permitted assigns.
 
“Borrowing Date” means the Effective Date and each date on which an Advance is
payable in respect of an Aircraft under the Bombardier Purchase Agreement as set
forth in Schedule II to the Credit Agreement.
 
“Break Amount” means, as at any date of determination, that amount reasonably
determined by the Lender to be sufficient to compensate it for any loss, cost or
expense directly attributable to any payment or prepayment of principal on (or
the purchase of) the Loan Certificate if such date is not an Interest Payment
Date.  Such amount shall be set forth in a certificate provided by the Lender
which includes in reasonable detail the basis for the calculations of the amount
being claimed which certificates shall be conclusive absent manifest error.
 
“Business Day” means any day other than a Saturday or Sunday or a day on which
commercial banks are required or authorized to close in Ottawa, Canada, New
York, New York and Memphis, Tennessee.
 
“Buyer Furnished Equipment” means the equipment purchased by the Borrower and
supplied to Bombardier to be incorporated into an Aircraft as contemplated by
the Bombardier Purchase Agreement.
 
“Capacity Purchase Agreement” shall mean the capacity purchase agreement dated
as of February 2, 2007 between Borrower, Guarantor and Continental Airlines,
Inc. (or such other code share arrangement having terms and with another major
airline acceptable to the Lender).
 
“Certificate Register” has the meaning specified in Section 5.7 of the Credit
Agreement.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Collateral” has the meaning given in the Granting Clause of the Mortgage.
 
“Commitment”, in respect of any Advance, has the meaning specified in
Section 2.1 of the Credit Agreement.
 
“Commitment Fee” has the meaning given in Section 3.2 of the Credit Agreement.
 
“Consent and Agreement” means the Consent and Agreement dated as of the January
30, 2009 among Bombardier, the Borrower and the Lender in the form specified in
Exhibit D to the Credit Agreement.
 
“Credit Agreement” means that certain Credit Agreement, dated as of January 30,
2009, between the Borrower and the Lender as such Credit Agreement may be
amended or supplemented from time to time.
 
“Credit Period” means the period from and including the Effective Date to and
excluding [***].
 
“Default” means any event which with the giving of notice or the lapse of time
or both if not timely cured or remedied would become an Event of Default
pursuant to Section 3 of the Mortgage.
 
“Delivery Date” means, for any Aircraft, the date on which such Aircraft is
delivered by Bombardier and accepted by Borrower or its permitted assignee under
the Bombardier Purchase Agreement.
 
“Dollars”, “Dollar” and “$” means the lawful currency of the United States of
America.
 
“Drawing” means any borrowing made by the Borrower on the Borrowing Date from
the Lender pursuant to Section 2.1 of the Credit Agreement.
 
“EDGAR” means the Electronic Date Gathering, Analysis & Retrieval Computer
System for the receipt, acceptance, review and dissemination of documents
submitted to the United States Securities and Exchange Commission in electronic
format.
 
“Effective Date” has the meaning specified in Section 2.2(a) of the Credit
Agreement.
 
“Engine” means in respect of each Airframe, each of the Pratt & Whitney Canada
model PW150A engines delivered with such Airframe under the Bombardier Purchase
Agreement.
 
“Engine Manufacturer” means Pratt & Whitney Canada, together with its successors
and permitted assigns.
 
“Event of Default” has the meaning specified in Section 3 of the Mortgage.
 
“Expense” or “Expenses” means any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, reasonable out of pocket costs,
expenses and disbursements (including reasonable legal fees and expenses) of
whatever kind and nature but excluding Taxes, internal costs and expenses such
as salaries, any amounts that would be included in Break Amounts, and overhead
of whatsoever kind and nature.
 
“Facility Amount” means, in respect of the Drawings to finance Advances,
US$35,641,844 (the “Initial Commitment”), provided that upon the occurrence of a
Pinnacle Event, such amount shall be reduced by the Requisite Portion of the
Initial Commitment.
 
“Fees” means, collectively, the Arrangement Fee and the Commitment Fee.
 
“Final Payment Date” means, for any Aircraft, the date set forth in Schedule II
to the Credit Agreement for such Aircraft under the column “Final Payment Date”.
 
“Funding Notice” has the meaning given in Section 2.2(a) of the Credit
Agreement.
 
“GAAP” means the United States’ generally accepted accounting principles,
consistently applied.
 
“Guarantor” means Pinnacle Airlines Corp., a Delaware corporation.
 
“Guaranty” means the Guaranty dated as of the January 30, 2009 from the
Guarantor in favor of the Lender.
 
“Indemnitee” or “Indemnitees” means the Lender and each of its Affiliates,
successors, permitted assigns, directors, officers, and employees.
 
“Interest Payment Date” means the last day of each of July and January occurring
after the Effective Date, provided that, if any such date shall not be a
Business Day, then the relevant Interest Payment Date shall be the next
succeeding Business Day, provided further that if by virtue of such extension
such payment would fall in the next succeeding calendar month, such sum shall be
payable on the next preceding Business Day and also provided that no Interest
Payment Date may extend past the Termination Date and the last Interest Payment
Date shall be the Termination Date.
 
“Interest Period” means, with respect to each Drawing (i) initially, the period
commencing on the Borrowing Date in respect of such Drawing and ending on the
first Interest Payment Date thereafter, and (ii) thereafter, the period
commencing on the last day of the previous Interest Period and ending on the
next Interest Payment Date or, if earlier, the Termination Date.
 
“Lender” means Export Development Canada and its successor and assigns.
 
“Letter of Offer” means the Letter of Offer dated December 18, 2008
(Ref:44610-000) from Lender to Guarantor, as such Letter of Offer may be
amended, modified or supplemented from time to time.
 
“LIBOR” means, with respect to the Loan Certificates, for any applicable
Interest Period, the interest rate per annum (calculated on the basis of a
360-day year and the actual number of days elapsed) at which deposits in Dollars
are offered in the London interbank market, at 11:00 a.m. (London time) two
London Business Days prior to the commencement of such Interest Period for
deposits of a duration equal to six (6) months, as appears on the BBA Libor Page
(rounding to the nearest 1/16th of one percent) or, if not possible to determine
LIBOR in this way, then LIBOR will mean the rates for such deposits as
determined by the Lender by averaging (rounding to the nearest 1/16th of one
percent) quotes furnished by the London Reference Banks.
 
“Lien” means any mortgage, pledge, lien, claim, encumbrance, lease, security
interest, international interest or other lien of any kind on property.
 
“Loan Certificate” means the loan certificate issued pursuant to Section 5.2 of
the Credit Agreement and any such certificates issued in exchange or replacement
therefor pursuant to Section 5.7 or 5.8 of the Credit Agreement.
 
“London Business Day” shall mean any day other than a Saturday or Sunday on
which commercial banks are not authorized or required to close in London,
England and which is also a day on which dealings in Dollar deposits are carried
out in the London interbank market.
 
“London Reference Banks” means the London branch of Bank of America, Citibank,
N.A., Deutsche Bank AG and JP Morgan Chase Bank.
 
“Material Adverse Effect” means a material adverse effect on (i) the business,
operations, properties, prospects or financial condition of the Borrower or
Guarantor and their respective subsidiaries on a consolidated basis, or (ii) the
ability of the Borrower or Guarantor to observe or perform its obligations,
liabilities and agreements under the Credit Agreement or any other Operative
Document to which it is a party.
 
“Maximum Commitment” means the Facility Amount.
 
“Mortgage” means the Mortgage and Security Agreement, dated as of January 30,
2009 between Borrower and Lender.
 
“Net Purchase Price” means, with respect to any Aircraft, the net purchase price
of such Aircraft as contained in the Bombardier Purchase Agreement, less the
amount of any credit memos, discounts, rebates or similar financial incentives
that have the effect of reducing the purchase price of such Aircraft, as
reasonably determined by the Lender.
 
“Notice of Assignment” means the Notice of Assignment dated as of January 30,
2009 from Borrower and Lender to Bombardier.
 
“Operative Documents” means the Credit Agreement, the Mortgage, the Guaranty,
the Loan Certificate, the Bombardier Purchase Agreement, the Notice of
Assignment and the Consent and Agreement and any amendments or supplements of
any of the foregoing.
 
“Other Operative Document” means any document or instrument (including, without
limitation, any credit agreement or loan agreement or other document or
instrument relating to any indebtedness) entered into by Borrower and/or
Guarantor with Export Development Canada, including without limitation, any
document or instrument entered into in connection with or relating to the
financing contemplated by and/or described in (i) the Revised Letter of Offer
dated September 11, 2007 (REF-880-USA-38767-000) from Export Development Canada
to Guarantor (as such Revised Letter of Offer may be amended, modified or
supplemented from time to time) or (ii) the Letter of Offer.
 
“Other Secured Obligations” means any and all moneys, liabilities and
obligations which are now or at any time hereafter may be expressed to be due,
owing or payable by the Borrower or the Guarantor to the Lender, actually or
contingently, with another or others, as principal or surety, on any account
whatsoever under any Other Operative Document or as a consequence of any breach,
non-performance, disclaimer or repudiation by Borrower or Guarantor (or by a
liquidator, receiver, administrative receiver, administrator, or any similar
officer in respect of the Borrower or Guarantor) of any of the Borrower’s or
Guarantor’s obligations to the Lender under any Other Operative Document.
 
“Past Due Rate” means a per annum rate equal to the Applicable Rate plus [***]
per annum calculated on the basis of a year of 360 days and actual number of
days elapsed and compounded on a semi-annual basis.
 
“Person” means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, estate or trust,
unincorporated organization or government or any agency or political subdivision
thereof.
 
“Pinnacle Event” shall mean either (i) the sale, transfer or other disposition
of all or a majority of Pinnacle Airlines, Inc.’s assets and/or capital stock or
(ii) the termination or cancellation of the airline service agreement between
Pinnacle Airlines, Inc. and Northwest Airlines, Inc.
 
“Regulatory Change” means, with respect to the Lender, any change that occurs
after the date of the Mortgage in Federal, state or foreign law or regulations
(including Regulation D) or the adoption or making after such date of any
interpretation, directive or request applying to a class of banks or financial
institutions including the Lender of or under any Federal, state or foreign law
or regulations (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful so long as compliance therewith is
standard banking practice in the relevant jurisdiction) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.  For the avoidance of doubt, the coming into effect of
any applicable law or regulations, policies, orders, directives or guidelines
issued by any governmental body, monetary authority or other regulatory
organization (whether or not having the force of law) with respect to, arising
out of, or in connection with the matters discussed and/or set forth in the
proposals set forth in the June 1999 Consultative Paper issued by the Basle
Committee or Banking Supervision (as modified, supplemented, revised and/or
superseded by any subsequent proposal, consultative paper or other document)
shall be deemed a Regulatory Change.
 
“Requisite Portion” means, with respect to any prepayment of the Loan
Certificate (or Drawings), [***] in the case of a Pinnacle Event.
 
“Reserve Requirement” means the average maximum rate at which reserves
(including, without limitation, any marginal, supplemental or emergency
reserves) are required to be maintained during the Interest Period in respect of
the Loan Certificate under Regulation D by member banks of the Federal Reserve
System in New York City with deposits exceeding one billion Dollars against
“Eurocurrency liabilities” (as such term is used in Regulation D).  Without
limiting the effect of the foregoing, the Reserve Requirement includes any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change with respect to (i) any category of liabilities that includes
deposits by reference to which LIBOR is to be determined or (ii) any category of
extensions of credit or other assets that includes the Loan Certificate.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Tax” or “Taxes” means any and all fees (including, without limitation, license,
documentation and registration fees), taxes (including, without limitation,
income, gross receipts, sales, rental, use, turnover, value added, property
(tangible and intangible), excise and stamp taxes), licenses, levies, imposts,
duties, recording charges or fees, charges, assessments, or withholdings of any
nature whatsoever, together with any assessments, penalties, fines, additions to
tax and interest thereon.
 
“Termination Date” means in respect of any Drawing relating to an Aircraft, the
earlier of (i) the Delivery Date of such Aircraft and (ii) the Final Payment
Date.
 
“U.S. Air Carrier” means any United States air carrier as to which there is in
force a certificate issued pursuant to Section 40102(a) of the Federal Aviation
Act, and which is a citizen of the United States (as defined in 49 U.S.C.
§ 40102(a)(15)) holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of title 49 (or the
equivalent authority issued by the Civil Aeronautics Board under the predecessor
regulatory laws, rules and regulations) for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo or which may operate as an air
carrier by certification or otherwise under any successor or substitute
provisions therefor or in the absence thereof.
 
 
 

--------------------------------------------------------------------------------

 

 
 
MORTGAGE AND SECURITY AGREEMENT
 
Dated as of
 
January 30, 2009
 
between
 
COLGAN AIR, INC.,
Borrower
 
and
 
EXPORT DEVELOPMENT CANADA,
Lender
 

 
______________________________________________________
 
Vedder Price P.C.
 

 
 

--------------------------------------------------------------------------------

 

 
TABLE OF CONTENTS
 
Page
 

Section 1.
Definitions 
4

 
Section 2.
Covenants of Borrower 
4

 
Section 3.
Events of Default 
6

 
Section 4.
Remedies 
8

 
Section 5.
Investment of Funds 
9

 
Section 6.
Miscellaneous 
9

 

     
Schedule I
-
[***]

 
 

--------------------------------------------------------------------------------

 

MORTGAGE AND SECURITY AGREEMENT
 
MORTGAGE AND SECURITY AGREEMENT, dated as of January 30, 2009 (this “Mortgage”),
between COLGAN AIR, INC., a Virginia corporation (the “Borrower”), and EXPORT
DEVELOPMENT CANADA as Lender (together with its successors hereunder, the
“Lender”).
 
WHEREAS, the Borrower desires by this Mortgage, among other things to provide
for the assignment, mortgage and pledge by the Borrower to the Lender, of the
Collateral including the Borrower’s right, title and interest in and to the
Bombardier Purchase Agreement and the payments and other amounts received in
respect thereof in accordance with the terms hereof, as security for the
Borrower’s obligations to the Lender;
 
WHEREAS, all things have been done to make the Loan Certificate, when executed
by the Borrower and issued and delivered under the Credit Agreement, the valid
obligation of the Borrower; and
 
WHEREAS, all things necessary to make this Mortgage the valid, binding and legal
obligation of the Borrower, for the uses and purposes herein set forth and in
accordance with its terms, have been done and performed and have happened.
 
-- GRANTING CLAUSE --
 
NOW, THEREFORE, THIS MORTGAGE WITNESSETH, that, to secure (i) the prompt payment
of the principal of, Break Amount (if any) on, interest on and all other amounts
due with respect to, the Loan Certificates from time to time outstanding
hereunder and the performance and observance by the Borrower of all the
agreements, covenants and provisions for the benefit of the Lender herein and in
the Credit Agreement and the Loan Certificates, and the prompt payment of any
and all amounts from time to time owing hereunder and under the Credit Agreement
and the other Operative Documents by the Borrower to the Lender, and (ii) the
prompt payment and performance of the Other Secured Obligations (the obligations
referred to in clauses (i) and (ii) above being collectively referred to as the
“Obligations”), and for the uses and purposes and subject to the terms and
provisions hereof, and in consideration of the premises and of the covenants
herein contained, and of the acceptance of the Loan Certificate by the Lender,
and of the sum of $1 paid to the Borrower by the Lender at or before the
delivery hereof, the receipt and sufficiency of which is hereby acknowledged,
the Borrower has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign,
transfer, convey, mortgage, pledge and confirm, unto the Lender, a security
interest in and mortgage lien upon, all right, title and interest of the
Borrower in, to and under the following described property, rights and
privileges, other than Excluded Rights (as defined below) (which, collectively,
including all property hereafter specifically subjected to the Lien of this
Mortgage, shall constitute the “Collateral”), to wit:
 
5. The Bombardier Purchase Agreement, including, without limitation, (i) the
right to purchase each of the Aircraft pursuant to and in accordance with the
Bombardier Purchase Agreement; (ii) all claims for damages in respect of each
Aircraft arising as a result of any default by Bombardier under the Bombardier
Purchase Agreement or by any vendor or other supplier of components or other
parts or equipment installed on or in any of the Aircraft referred to therein,
including, without limitation, all warranty, service life policy and indemnity
provisions contained in the Bombardier Purchase Agreement and all claims
thereunder; (iii) any and all rights of the Borrower to compel performance of
the terms of the Bombardier Purchase Agreement in respect of the Aircraft; and
(iv) any and all rights to receive any credits, refunds, rebates or other
discounts due to the Borrower with respect to the purchase price of the Aircraft
(and the Engines) pursuant to the Bombardier Purchase Agreement (except to the
extent specifically excluded by the terms of the Operative Documents) and all
right, title and interest in and to any payment or performance bonds delivered
thereunder, together with all rights, powers, privileges, options and other
benefits of the Borrower in respect thereof, including, without limitation, the
rights to make all waivers and agreements, to give and receive all notices and
other instruments or communications, and to take such action upon the occurrence
of a default in respect of such provisions, including the commencement, conduct
and consummation of legal, administrative or other proceedings, as shall be
permitted thereby or by law, and to do any and all other things which the
Borrower is or may be entitled to do in respect of such provisions;
 
6. all payments or proceeds payable to the Borrower with respect to the
Bombardier Purchase Agreement (as assigned) in respect of the Aircraft or any
part thereof as the result of the sale or other disposition thereof, and all
estate, right, title and interest of every nature whatsoever of the Borrower in
and to the same and every part thereof;
 
7. all Buyer Furnished Equipment (whether now owned or hereafter acquired)
furnished to Bombardier to be attached to any of the Aircraft and in relation to
which the Borrower has rights, together with all warranties, indemnities and
claims against any vendor or manufacturer of any such buyer furnished equipment
and all credit memoranda, credits, refunds or other amounts owing from any such
vendor or manufacturer with respect to such equipment;
 
8. all monies and securities deposited or required to be deposited with the
Lender pursuant to any term of this Mortgage or required to be held by the
Lender hereunder; and
 
9. all proceeds of the foregoing.
 
Any and all properties referred to in this Granting Clause which are hereafter
acquired by the Borrower, shall, without further conveyance, assignment or act
by the Borrower become and be subject to the security interest hereby granted as
fully and completely as though specifically described herein.  Anything in this
Mortgage to the contrary notwithstanding, the following rights with respect to
the Bombardier Purchase Agreement are reserved to and retained by the Borrower
and not assigned hereby or subject to any Lien or security interest hereunder
(which, collectively, shall constitute “Excluded Rights”):
 
(i)           all rights and interests in and to the Bombardier Purchase
Agreement as and to the extent that the same relate to aircraft and engines
other than the Aircraft and the Engines, or to any other matters not pertaining
to the Aircraft and the Engines;
 
(ii)           the right to demand, accept and retain all rights in and to
property, data, services, product support and other agreements of Bombardier
related to the Aircraft and the Engines under the Bombardier Purchase Agreement
which are available for the benefit of the Borrower only during such times as
the Borrower is the owner or operator of the Aircraft or the Engines; and
 
(iii)           the right to obtain services and training pursuant to the
Bombardier Purchase Agreement.
 
The Borrower shall at all times remain liable to Bombardier under the Bombardier
Purchase Agreement to perform all of the duties and obligations of the “Buyer”
thereunder to the same extent as if this Mortgage had not been executed.
 
The exercise by the Lender of any of the rights assigned hereunder shall not
release Borrower from any of its duties or obligations to Bombardier under the
Bombardier Purchase Agreement except to the extent that such exercise by the
Lender shall constitute performance of such duties and obligations.
 
Notwithstanding any of the foregoing provisions of this Granting Clause, but
subject to the express provisions of the other articles of this Mortgage, so
long as the Lender has not commenced the exercise of remedies under Section 4.1
and/or the Consent and Agreement, the Borrower shall have the right, to the
exclusion of the Lender and any others claiming by, through or under the Lender,
to exercise in Borrower’s name all rights and powers of the “Buyer” with respect
to the Aircraft under the Bombardier Purchase Agreement, provided, that, the
Borrower may not enter into or consent to any change order or other amendment,
modification or supplement to the Bombardier Purchase Agreement in relation to
the Aircraft, without the written consent and countersignature of the Lender, if
such change order, amendment, modification or supplement would:
 
A. change the time of or the amount of any Advance or the manner in which any
Advance can be returned or credited to the Borrower under the Bombardier
Purchase Agreement;
 
B. postpone the applicable Delivery Date of any Aircraft beyond the Final
Payment Date;
 
C. result in the rescission, cancellation or termination of the Bombardier
Purchase Agreement;
 
D. have the effect of changing the model of the Aircraft;
 
E. have the effect of changing the configuration of any Aircraft if such change
would materially affect the remarketability or the purchase price of any
Aircraft; or
 
F. materially adversely affect the position of the Lender including the value of
the rights granted to the Lender in relation to any and all of the properties
referred to in this Granting Clause.
 
The Borrower shall provide to the Lender promptly after the execution of the
same copies, certified by the Borrower, of all material change orders (other
than non charge change orders), amendments, modifications or supplements to the
Bombardier Purchase Agreement (which may omit confidential information) that
affect the Lender’s interest.
 
-- HABENDUM CLAUSE --
 
TO HAVE AND TO HOLD all and singular the aforesaid property unto the Lender, its
successors and assigns, and for the uses and purposes and subject to the terms
and provisions set forth in this Mortgage.
 
The Borrower does hereby constitute the Lender the true and lawful attorney of
the Borrower (which appointment is coupled with an interest), irrevocably, with
full power (in the name of the Borrower or otherwise) to ask, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due and to become due under or arising out of the Operative Documents and
all other property which now or hereafter constitutes part of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or to take any action or to institute any proceedings which the
Lender may deem to be necessary or advisable in the premises; provided that the
Lender agrees not to exercise such power of attorney unless an Event of Default
shall be continuing.
 
The Borrower does hereby warrant and represent that (except as permitted herein)
it has not assigned or pledged any of its right, title, and interest hereby
assigned to anyone other than the Lender.
 
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows:
 
Section 1. Definitions
 
1.1 Definitions.  Except as otherwise defined in this Mortgage, terms used
herein in capitalized form shall have them meanings attributed thereto in Annex
A.
 
Section 2. Covenants of Borrower.
 
2.1 Liens.  The Borrower will not directly or indirectly create, incur, assume
or suffer to exist any Lien on or with respect to the Collateral, title thereto
or any interest therein except:
 
(a) the rights of the Borrower as herein provided, the Lien hereof and any other
rights existing pursuant to the Operative Documents;
 
(b) Liens for Taxes of the Borrower either not yet due or being contested in
good faith by appropriate proceedings (and for which adequate reserves have been
provided in accordance with GAAP), so long as the continuing existence of such
Liens during such proceedings does not involve any material risk of the sale,
forfeiture or loss of, the Bombardier Purchase Agreement;
 
(c) Liens arising out of any judgment or award against the Borrower with respect
to which an appeal or proceeding for review is being prosecuted diligently and
in good faith, so long as such Liens do not result in a material risk of the
sale, forfeiture or loss of, the Bombardier Purchase Agreement; and
 
(d) any other Lien with respect to which the Borrower shall have provided a bond
or other security in an amount and under terms reasonably satisfactory to the
Lender.  The Borrower will promptly, at its own expense, take (or cause to be
taken) such actions as may be necessary duly to discharge any Lien not excepted
above if the same shall arise at any time.
 
2.2 Amendments, Supplements, Etc.  Forthwith upon the execution and delivery of
any amendment to this Mortgage, if an applicable legal system is in existence
that provides for filing and/or recording of the Mortgage and amendments or
supplements thereto, the Borrower will cause such amendment to be duly filed and
recorded, and maintained of record, in accordance with all applicable laws.  In
addition, the Borrower will promptly and duly execute and deliver to the Lender
such further documents and take such further action as the Lender may from time
to time reasonably request in order to more effectively carry out the intent and
purpose of this Mortgage and to establish and protect the rights and remedies
created or intended to be created in favor of the Lender hereunder, including,
without limitation, if requested by the Lender, at the expense of Borrower, the
execution and delivery of supplements or amendments hereto, each in recordable
form, in accordance with the laws of such jurisdiction as the Lender may
reasonably request.
 
2.3 Access to or Furnishing of Information.  The Borrower agrees to furnish to
the Lender:
 
(a) as soon as available, but not later than 90 days after the close of each
fiscal year occurring after the date hereof, (i) an unaudited balance sheet and
related statements of each of the Borrower and Pinnacle Airlines, Inc. at and as
of the end of such fiscal year, together with an unaudited statement of income
and cash flows of each of the Borrower and Pinnacle Airlines, Inc. for such
fiscal year, each of which shall be prepared in accordance with GAAP and (ii) an
audited balance sheet and related statements of the Guarantor at and as of the
end of such fiscal year, together with an audited statement of income and cash
flows of the Guarantor for such fiscal year, each of which shall be prepared in
accordance with GAAP;
 
(b) as soon as available, but not later than 45 days after the close of each of
the first three quarters of each fiscal year an unaudited balance sheet of each
of the Borrower, Guarantor and Pinnacle Airlines, Inc. at and as of the end of
such quarter, together with an unaudited statement of income and cash flows of
each of the Borrower, Guarantor and Pinnacle Airlines, Inc. for such quarter,
each of which shall be prepared in accordance with GAAP;
 
(c) as soon as available, but not later than 120 days after the close of each
fiscal year of the Borrower occurring while amounts are outstanding under the
Credit Agreement or any Loan Certificate, a certificate of the chief financial
officer, Treasurer, any Vice President, or other officer of the Borrower elected
by the Borrower’s Board of Directors stating that such authorized officer has
reviewed the activities of the Borrower and that, to the knowledge of such
authorized officer, there exists no Default or Event of Default hereunder;
 
(d) from time to time, such other non-confidential (except to the extent the
recipients are bound by confidentiality agreements reasonably acceptable to the
Borrower) or non-proprietary information as the Lender may reasonably request;
 
(e) promptly after the occurrence thereof and actual knowledge thereof by a
responsible officer of the Borrower, notice of any Event of Default; and
 
(f) quarterly updates detailing any required modifications that the Borrower is
aware of, and any optional changes effected in the prior calendar quarter, that
would lead to an increase in the final purchase price of any Aircraft under the
Bombardier Purchase Agreement.
 
Borrower shall be deemed compliant with any requirement pursuant to clauses (a)
or (b) above to provide any financial information to the extent such information
is available on EDGAR.
 
Section 3. Events of Default.
 
Each of the following events shall constitute an Event of Default (whether any
such event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body) and each such Event of Default shall continue so long as, but
only as long as, it shall not have been remedied:
 
3.1 Payment of Principal or Interest.  The Borrower shall have failed to make a
payment of any principal or interest on any Loan Certificate after the same
shall have become due;
 
3.2 Other Payments.  The Borrower shall have failed to make any payment of any
amount other than principal and interest on any Loan Certificate after the same
shall have become due and such failure shall continue for 5 Business Days after
the Borrower has received notice that such payment is due;
 
3.3 Other Covenants.  The Borrower or the Guarantor shall have failed to perform
or observe, or caused to be performed and observed, in any material respect, any
other covenant or agreement to be performed or observed by it under any
Operative Document, and such failure shall continue unremedied for a period of
10 Business Days after Borrower’s or Guarantor’s receipt of written notice from
the Lender; provided however that such grace period shall not apply if such
breach gives rise to any reasonable likelihood of the sale, forfeiture or other
loss of any of the Collateral or the Aircraft or any interest therein;
 
3.4 Representations and Warranties.  Any representation or warranty made by the
Borrower or the Guarantor in any Operative Document or any document or
certificate furnished by the Borrower or the Guarantor in connection therewith
or pursuant thereto shall prove to have been materially incorrect or misleading
at the time made;
 
3.5 Voluntary Bankruptcy.  The commencement by the Borrower or the Guarantor of
a voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar law in the United States, or the consent by the
Borrower or the Guarantor to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Borrower or the Guarantor or for all or substantially
all of its property, or the making by the Borrower or the Guarantor of any
assignment for the benefit of creditors or the Borrower or the Guarantor shall
take any corporate action to authorize any of the foregoing or to authorize a
general payment moratorium;
 
3.6 Involuntary Bankruptcy.  The commencement of an involuntary case or other
proceeding in respect of the Borrower or the Guarantor in an involuntary case
under the federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law in the
United States or seeking the appointment of a receiver liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Borrower or the
Guarantor or for all or substantially all of its property, or seeking the
winding-up or liquidation of its affairs and the continuation of any such case
or other proceeding remains undismissed and unstayed for a period of 90
consecutive days, or an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of the Borrower or the Guarantor, a receiver, trustee or liquidator of
the Borrower or the Guarantor, or for all or substantially all of its property,
or sequestering of all or substantially all of the property of the Borrower or
the Guarantor and any such order, judgment or decree or appointment or
sequestration shall be final or shall remain in force undismissed, unstayed or
unvacated for a period of 90 consecutive days after the date of entry thereof;
 
3.7 Perfected Security Interest.  The Lender shall cease to hold a valid and
perfected security interest in any of the Collateral;
 
3.8 Breach of Bombardier Purchase Agreement.  The Borrower breaches or
repudiates the terms of the Bombardier Purchase Agreement and, in the case of a
breach, such breach is not cured within 10 days after the earlier of (i) actual
knowledge by Borrower of such breach and (ii) receipt of notice from Lender of
such breach;
 
3.9 Cross Default.  Any event of default, termination event or similar event,
howsoever described, occurs under (i) any aircraft financing in which Lender and
Borrower or Guarantor are parties; (ii) any Other Operative Document; (iii) the
Indenture dated as of February 8, 2005 between Guarantor and Deutsche Bank
National Trust Company in respect of Guarantor’s 3¼% Senior Convertible Notes
due February 15, 2025; or (iv) any other document or agreement whereby any
indebtedness (as principal or surety) of the Borrower or Guarantor is owed to
Lender;
 
3.10 U.S. Air Carrier.  Borrower ceases to be a U.S. Air Carrier; or
 
3.11 Guaranty.  The Guaranty ceases to be in full force and effect.
 
3.12 [Intentionally Omitted].
 
3.13 Capacity Purchase Agreement.  The Capacity Purchase Agreement ceases to be
in full force and effect.
 
Section 4. Remedies.
 
4.1 General; Acceleration.  (a) If an Event of Default shall have occurred and
be continuing and so long as the same shall be continuing unremedied, then and
in every such case, the Lender may exercise any or all of the rights and powers
and pursue any and all of the remedies pursuant to this Section 4, and shall
have and may exercise all of the rights and remedies of a secured party under
the Uniform Commercial Code, including, without limitation, the right to assign
its right to purchase the Aircraft from Bombardier (subject to the Consent and
Agreement).
 
(b) If an Event of Default referred to in Section 3.5 or 3.6 shall have
occurred, then and in every such case all unfunded Commitments shall be
terminated and the unpaid principal of all Loan Certificates then outstanding,
together with interest accrued but unpaid thereon, and all other amounts due to
the Lender under the Operative Documents, shall immediately and without further
act become due and payable, without presentment, demand, protest or notice, all
of which are hereby waived.
 
(c) If any other Event of Default shall have occurred and be continuing, then
and in every such case, the Lender may at any time, by written notice or notices
to the Borrower, (i) terminate all unfunded Commitments and/or (ii) declare the
Loan Certificate to be due and payable, whereupon the unpaid principal of the
Loan Certificate then outstanding, together with accrued but unpaid interest
thereon, and all other amounts due to the Lender under the Operative Documents,
shall immediately and without further act become due and payable without
presentment, demand, protest or other notice, all of which are hereby waived.
 
(d) If the principal of the Loan Certificate shall have become due and payable
pursuant to this Section 4.1, there shall also become due and payable to the
Lender upon demand, without presentment, protest or notice, all of which are
hereby waived, any Break Amount therefor.
 
(e) The Lender shall be entitled, at any sale pursuant to this Section 4, to
credit against any purchase price bid at such sale by the Lender all or any part
of the unpaid obligations owing to the Lender and secured by the Lien of this
Mortgage.  The Lender shall, upon any such purchase, acquire good title to the
property so purchased, to the extent permitted by applicable law, free of all
rights of redemption.
 
(f) The Lender agrees to give to the Borrower at least 10 days’ prior written
revocable notice of any foreclosure of the Lien of this Mortgage, or of any
other action to cause the Borrower to lose any rights under the Bombardier
Purchase Agreement (which period of notice the parties hereto confirm is
commercially reasonable).
 
4.2 Discontinuance of Proceedings.  In case the Lender shall have instituted any
proceeding to enforce any right, power or remedy under this Mortgage by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Lender, then and in every such case, the Lender and the Borrower shall,
subject to any determination in such proceedings, be restored to their former
positions and rights hereunder with respect to the Collateral, and all rights,
remedies and powers of the Lender shall continue as if no such proceedings had
been instituted.
 
4.3 Waiver of Past Defaults.  At its sole discretion, the Lender may waive any
past Default or Event of Default hereunder and its consequences and upon any
such waiver such Default or Event of Default shall cease to exist and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Mortgage, but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
 
4.4 Remedies Cumulative.  Each and every right, power and remedy given to the
Lender specifically or otherwise in this Mortgage shall be cumulative and shall
be in addition to every other right, power and remedy herein specifically given
or now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by the Lender, and the exercise or the beginning of the
exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy.
 
No delay or omission by the Lender in the exercise of any right, remedy or power
or in the pursuit of any remedy shall impair any such right, power or remedy or
be construed to be a waiver of any default on the part of the Borrower or to be
an acquiescence therein.
 
Section 5. Investment of Funds.  Any monies held by the Lender as security
hereunder for Borrower’s obligations shall, until paid to Borrower or otherwise
applied in accordance with the terms of the Operative Documents, be invested by
the Lender in an interest bearing account held by the Lender.
 
Section 6. Miscellaneous.
 
6.1 Termination of Mortgage.  Upon (or at any time after) payment in full of the
principal of and interest on and Break Amount, if any, and all other amounts due
under, or otherwise due to the Lender of, the Loan Certificate and provided that
(i) the Commitments shall have terminated, (ii) there shall then be no other
amounts due to the Lender under the Operative Documents, and (iii) no Default or
Event of Default shall have occurred and is continuing, the Lender shall execute
and deliver to or as directed in writing by the Borrower an appropriate
instrument releasing the Collateral from the Lien of this Mortgage, and the
Lender shall execute and deliver such instrument as aforesaid and, at the
Borrower’s expense, will execute and deliver such other instruments or documents
as may be reasonably requested by the Borrower to give effect to such release;
provided, however, that this Mortgage and the trusts created hereby shall
earlier terminate and this Mortgage shall be of no further force or effect and
the rights of the Lender shall terminate (and the Lender shall release, by an
appropriate instrument, the Collateral from the Lien of this Mortgage) upon any
sale or other final disposition by the Lender of all property constituting part
of the Collateral and the final distribution by the Lender of all monies or
other property or proceeds constituting part of the Collateral in accordance
with the terms hereof.
 
Except as aforesaid otherwise provided, this Mortgage and the trusts created
hereby shall continue in full force and effect in accordance with the terms
hereof.
 
6.2 No Legal Title to Collateral in Lenders.  The Lender shall not have legal
title to any part of the Collateral.  No transfer, by operation of law or
otherwise, of any Loan Certificate or other right, title and interest of the
Lender in and to the Collateral or hereunder shall operate to terminate this
Mortgage or entitle the Lender or any successor or transferee of the Lender to
an accounting or to the transfer to it of legal title to any part of the
Collateral.
 
6.3 Sale of Collateral by Lender is Binding.  Any sale or other conveyance of
any part of the Collateral by the Lender made pursuant to the terms of this
Mortgage shall bind the Lender and shall be effective to transfer or convey all
right, title and interest of the Borrower and the Lender in and to such part of
the Collateral.  No purchaser or other grantee shall be required to inquire as
to the authorization, necessity, expediency or regularity of such sale or
conveyance or as to the application of any sale or other proceeds with respect
thereto by the Lender.
 
6.4 Mortgage for Benefit of Lender.  Nothing in this Mortgage, whether express
or implied, shall be construed to give to any person, other than the Borrower
and the Lender, any legal or equitable right, remedy or claim under or in
respect of this Mortgage.
 
6.5 No Action Contrary to Borrower’s Rights.  Notwithstanding any of the
provisions of this Mortgage to the contrary, so long as no Event of Default
shall have occurred and be continuing, the Lender agrees that neither it nor any
Person claiming by, through or under the Lender, will take any action in
violation of the Borrower’s rights, including the right to purchase the Aircraft
under the Bombardier Purchase Agreement in accordance with the terms of this
Mortgage by Borrower.
 
6.6 Notices.  Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Mortgage to be made, given,
furnished or filed shall be in writing, mailed by certified mail, postage
prepaid, fax or electronic mail and:
 
(a)  
if the Borrower:

 
 
Colgan Air, Inc.

 
 
Address:
1689 Nonconnah Blvd., Suite 111

 
 
Memphis, TN  38132

 
 
Attention:
[***]

 
 
Telephone:
[***]

 
 
Fax:
[***]

 
 
E-mail:
[***]

 

 
(b)  
if to the Lender:

 
 
Export Development Canada

 
 
Address:
151 O’Connor Street

 
 
Ottawa, Ontario

 
 
Canada K1A 1K3

 
                      Attention:
[***]

 
 
Telephone:
[***]

 
 
Fax:
[***]

 
Whenever any notice in writing is required to be given by the Borrower or the
Lender to the other, such notice shall be deemed given and such requirement
satisfied when such notice is received, if such notice is received, if such
notice is mailed by certified mail, postage prepaid, or is sent by facsimile,
addressed as provided above.
 
Any party hereto may change the address to which notices to such party will be
sent by giving notice of such change to the other parties to this Mortgage.
 
6.7 Lender’s Right to Perform for Borrower.  If the Borrower fails to make any
payment or to perform or comply with any of its agreements contained herein,
then (but in each case no earlier than 3 Business Days after notice to Borrower
as to the occurrence of such failure, whether or not it shall yet constitute an
Event of Default hereunder) the Lender may itself make such payment or perform
or comply with such agreement but shall not be obligated hereunder to do so, and
the amount of such payment and the amount of the reasonable expenses of the
Lender incurred in connection with such payment or the performance of or
compliance with such agreement, as the case may be, together with interest
thereon at the Past Due Rate, shall be payable by Borrower upon demand.
 
6.8 Severability.  Any provision of this Mortgage which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
 
6.9 No Oral Modifications or Continuing Waivers.  No terms or provisions of this
Mortgage or the Loan Certificates may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party or
other Person against whom enforcement of the change, waiver, discharge or
termination is sought and any other party or other Person whose consent is
required pursuant to this Mortgage; and any waiver of the terms hereof or of the
Loan Certificate shall be effective only in the specific instance and for the
specific purpose given.
 
6.10 Successors and Assigns.  All covenants and agreements contained herein
shall be binding upon, and inure to the benefit of, each of the parties hereto
and the successors and permitted assigns of each, all as herein provided.  Any
request, notice, direction, consent, waiver or other instrument or action by the
Lender shall bind the successors and assigns of the Lender.
 
6.11 Headings.  The headings of the various Sections herein and in the table of
contents hereto are for the convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
 
6.12 Governing Law; Counterparts.  THIS MORTGAGE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.  This Mortgage
may be executed by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
 
6.13 Waiver of Jury Trial.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
MORTGAGE OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS MORTGAGE BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
6.14 Jurisdiction.
 
(a) Each party hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the Supreme Court of the State
of New York sitting in New York County and of the United States District Court
of the Southern District of New York, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.  Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement against another party or its properties in the courts
of any jurisdiction.
 
(b) Each party hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any court referred to in paragraph
(a) of this Section.  Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
 
(c) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 10 of the Credit Agreement.  Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
 
*  *  *

 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly
executed by their respective officers thereunto duly authorized, as of the day
and year first written above.
 

 
COLGAN AIR, INC., as Borrower
 
 
By:
Peter Hunt
Its:         Vice President
 
EXPORT DEVELOPMENT CANADA,
as Lender
 
 
By:
Its:
By:
Its:

 
 

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SCHEDULE I
 
[***]
 

 
 

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