Document:

Exhibit
10.4

 

PROMISSORY NOTE

Due December 31, 2009

 

 

	
  $135,000,000

  	
   

  	
  Eagan, Minnesota

  	
   

  
	
   

  	
   

  	
                     ,
  2003

  	
   

  

 

 

FOR VALUE RECEIVED, PINNACLE AIRLINES, INC., a Georgia
corporation formerly known as Express Airlines I, Inc. (the “Borrower”), hereby
promises to pay to the order of NWA Inc., a Delaware corporation (“NWA”), or
its assignees on December 31, 2009 the principal sum of One Hundred Thirty-Five
Million Dollars ($135,000,000), together with interest on the outstanding
principal amount hereof at a rate of 3.4% per annum calculated on the basis of
a year comprised of twelve 30-day months and 360 days, payable on each March
31, June 30, September 30 and December 31 and at maturity (whether by required
prepayment, acceleration, declaration or otherwise) and thereafter on
demand.  Any portion of the principal
amount hereof which is not paid at maturity (as aforesaid) shall thereafter
bear interest at a rate of 5.4% per annum until paid.

 

The Borrower shall make prepayments of the outstanding
principal amount hereof in the amount of $3,000,000 each on the last business
day (i.e., a day on which banks are not required or authorized to close in
Minneapolis, Minnesota) of each March, June, September and December, commencing
December 2003 and continuing through September 2009.

 

In addition, the Borrower (a) shall make prepayments
of the outstanding principal amount hereof on the last business day of each
month, commencing with the first such day following the date hereof and
continuing through the last business day of November 2009, in an amount equal
in the case of each such prepayment to the excess of all cash and cash
equivalent investments of Pinnacle Airlines Corp., a Delaware corporation
(“Pinnacle”), and its subsidiaries (including the Borrower) on the date of such
prepayment (after giving effect to any prepayment required and made on such
date pursuant to the immediately preceding paragraph) over $50,000,000 and (b)
may make voluntary prepayments of the principal amount hereof on any business
day in an integral multiple of $100,000. 
All such prepayments shall be applied against the final principal
payment hereof due on December 31, 2009 and thereafter against all prepayments
required pursuant to the immediately preceding paragraph of this Note in the inverse
order of the maturity thereof.

 

Both principal and interest are payable in lawful
money of the United States of America in immediately available funds to such
account of NWA as NWA may notify to Borrower from time to time, free and clear
of, and without deduction for or on account of, any and all present and future
taxes, levies, imposts, deductions, charges, withholdings and all liabilities
with respect thereto.  Whenever any
payment to be made 

 

 

hereunder shall otherwise be due on a day which is not a business day,
such payment shall be made on the next succeeding business day and such
extension of time shall be included in computing interest in connection with
such payment.

 

Upon (i) non-payment by the Borrower of any amount due
hereunder as the same becomes due and payable or (ii) the occurrence and
continuance of any event entitling Northwest Airlines, Inc., a Minnesota
corporation (“Northwest”), to terminate that certain Airline Services
Agreement, dated as of January 14, 2003 (as amended from time to time, the
“Airline Services Agreement”), among the Borrower, Pinnacle and Northwest,
pursuant to Article X thereof, the principal of and accrued interest on this
Note may be declared by NWA to be immediately due and payable.

 

All parties hereto, whether as makers, endorsers, or
otherwise, severally waive presentment for payment, demand, protest and notice
of dishonor.

 

The Borrower hereby agrees to indemnify the holder
hereof against any loss, cost or expense incurred by such holder in connection
with the enforcement of any and all rights pertaining to this Note, including,
without limitation, all court costs, reasonable attorney’s fees and other costs
of collection.  No delay on the part of
the holder hereof in exercising any of its options, powers or rights, or any
partial or single exercise thereof, shall constitute a waiver thereof.  The options, powers and rights of the holder
hereof specified herein are in addition to those otherwise created.  Demand for payment of this Note shall be
sufficiently made upon the Borrower by notice given by or on behalf of the
holder to the Borrower in the manner set forth in Section 11.07 of the Airline
Services Agreement.

 

This Note is issued in substitution and replacement
for that certain promissory note of the Borrower, dated January 14, 2003 and
payable to the order of NWA in the original principal amount of $200,000,000.

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CHOICE OF LAW
OR CONFLICTS OF LAWS PRINCIPLES.

 

	
   

  	
  PINNACLE AIRLINES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

2Exhibit
10.5

 

GUARANTY

 

THIS GUARANTY (this “Guaranty”),
dated as of
                ,
2003, made by PINNACLE AIRLINES CORP., a Delaware corporation (the “Guarantor”),
in favor of NWA INC., a Delaware corporation (the “Lender”).

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS, Pinnace Airlines, Inc., a Georgia corporation
(the “Borrower”) is indebted to the Lender pursuant to a promissory note of the
Borrower, dated
                ,
2003, in the original principal amount of $135,000,000 (together with all
amendments and other modifications, if any, from time to time thereafter made
thereto, the “Note”); and

 

WHEREAS, the Guarantor owns all of the issued and
outstanding shares of capital stock of the Borrower; and

 

WHEREAS, it is in the best interests of the Guarantor
to execute this Guaranty inasmuch as the Guarantor will derive substantial
direct and indirect benefits from the loan evidenced by the Note;

 

NOW THEREFORE, for good and valuable consideration the
receipt of which is hereby acknowledged, the Guarantor agrees, for the benefit
of the Lender, as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.1.   Certain Terms.   The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):

 

“Borrower” is defined in the first recital.

 

“Guaranteed Obligations” is defined in Section
2.1

 

“Guarantor” is defined in the preamble.

 

“Guaranty” is defined in the preamble.

 

“Lender” is defined in the preamble.

 

“Note” is defined in the first recital.

 

 

ARTICLE II

 

GUARANTY
PROVISIONS

 

SECTION 2.1.   Guaranty.   The Guarantor hereby absolutely,
unconditionally and irrevocably (all of the following guaranteed and
indemnified obligations being collectively called the “Guaranteed
Obligations”)

 

(a)           guarantees
the full and punctual payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise, of all obligations
of the Borrower now or hereafter existing under the Note, whether for
principal, interest, fees, expenses or otherwise, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent or now or
hereafter existing or due or to become due (including in all cases all such
amounts which would become due but for the operation of the automatic stay
under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. §362(a),
and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy
Code, 11 U.S.C. §502(b) and §506(b)), and

 

(b)           indemnifies
and holds harmless the Lender and each holder of the Note for any and all costs
and expenses (including reasonable attorney’s fees and expenses) incurred by
the Lender or such holder, as the case may be, in enforcing any rights under
this Guaranty.

 

SECTION 2.2.   Acceleration of Guaranty.   The Guarantor agrees that, in the event of
the dissolution or insolvency of the Borrower or the Guarantor, or the
inability or failure of the Borrower or the Guarantor to pay debts as they
become due, or an assignment by the Borrower or the Guarantor for the benefit
of creditors, or the commencement of any case or proceeding in respect of the
Borrower or the Guarantor under any bankruptcy, insolvency or similar laws, and
if such event shall occur at a time when any of the Guaranteed Obligations may
not then be due and payable, the Guarantor will pay to the Lender forthwith the
full amount which would be payable hereunder by the Guarantor if all such
Guaranteed Obligations were then due and payable.

 

SECTION 2.3.   Guaranty
Absolute, etc.   This Guaranty shall
in all respects be a continuing, absolute, unconditional and irrevocable
guaranty of payment, and shall remain in full force and effect until all Guaranteed
Obligations have been paid in full.  The
Guarantor guarantees that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Note and each other document under which they
arise, regardless of any law, regulation or order now or hereafter in effect in
any jurisdiction affecting any of such terms or the rights of the Lender or any
holder of the Note with respect thereto. 
The liability of the Guarantor under this Guaranty shall be absolute,
unconditional and irrevocable irrespective of:

 

(a)           any
lack of validity, legality or enforceability of the Note;

 

(b)                                 the failure of the Lender or any holder
of the Note

 

2

 

(i)            to assert any claim or demand or to
enforce any right or remedy against the Borrower or any other person (including
any other guarantor) under the provisions of the Note or otherwise, or

 

(ii)           to
exercise any right or remedy against any other guarantor of, or collateral
securing, any Guaranteed Obligations;

 

(c)           any change in the time, manner or
place of payment of, or in any other term of, all or any of the Guaranteed
Obligations, or any other extension, compromise or renewal of any Guaranteed
Obligation;

 

(d)           any reduction, limitation, impairment
or termination of any Guaranteed Obligations for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to (and the Guarantor hereby waives any right to or claim of) any
defense or set off, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any Guaranteed
Obligations;

 

(e)           any
amendment to, rescission, waiver, or other modification of, or any consent to
departure from, any of the terms of the Note;

 

(f)            any
addition, exchange, release, surrender or nonperfection of any collateral, or
any amendment to or waiver or release or addition of, or consent to departure
from, any other guaranty, held by the Lender or any holder of the Note securing
any of the Guaranteed Obligations; or

 

(g)           any other circumstance which might
otherwise constitute a defense available to, or a legal or equitable discharge
of, the Borrower, any surety or any guarantor.

 

SECTION 2.4.   Reinstatement, etc.   The Guarantor agrees that this Guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Guaranteed Obligations is
rescinded or must otherwise be restored by the Lender or any holder or the Note
upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise,
as though such payment had not been made.

 

SECTION 2.5   Waiver,
etc.   The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and any requirement that the Lender or
any holder of the Note protect, secure, perfect or insure any security interest
or lien, or any property subject thereto, or exhaust any right or take any
action against the Borrower or any other person (including any other guarantor)
or entity or any collateral securing any Guaranteed Obligations.

 

SECTION 2.6.  Waiver
of Subrogation.  The Guarantor
hereby irrevocably waives any claim or other rights which it may now or
hereafter acquire against the Borrower that arise from the existence, payment,
performance or enforcement of the Guarantor’s obligations under this

 

3

 

Guaranty or any other document, including any right of subrogation,
reimbursement, exoneration, or indemnification, any right to participate in any
claim or remedy of the Lender against the Borrower or any collateral which the Lender
now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including the right
to take or receive from the Borrower, directly or indirectly, in cash or other
property or by set-off or in any manner, payment or security on account of such
claim or other rights.  If any amount
shall be paid to the Guarantor in violation of the preceding sentence and the
Guaranteed Obligations shall not have been paid in cash in full or any other
commitments by the Lender to the Borrower have not been terminated, such amount
shall be deemed to have been paid to the Guarantor for the benefit of, and held
in trust for, the Lender, and shall forthwith be paid to the Lender to be
credited and applied upon the Guaranteed Obligations, whether matured or
unmatured.  The Guarantor acknowledges
that it will receive direct and indirect benefits from the financing
arrangements contemplated by the Note and that the waiver set forth in this
Section is knowingly made in contemplation of such benefits.

 

SECTION 2.7.  Successors,
Transferees and Assigns; Transfers of Note, etc.  This Guaranty shall:

 

(a)           be binding upon the Guarantor, and
its successors, transferees and assigns; and

 

(b)           inure to the benefit of and be
enforceable by the Lender, each holder of the Note and each of their respective
successors, transferees and assigns.

 

Without limiting the
generality of the foregoing clause (b), the Lender may assign or
otherwise transfer (in whole or in part) the Note to any other person or
entity, and such other person or entity shall thereupon become vested with all
rights and benefits in respect thereof granted to the Lender under the Note,
this Guaranty or otherwise, subject, however, to any contrary provisions in
such assignment or transfer.

 

 

ARTICLE III

 

REPRESENTATIONS
AND WARRANTIES

 

The Guarantor hereby represents and warrants unto the
Lender as follows:

 

(a)           The Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the nature of its business
requires such qualification.

 

(b)           The execution, delivery and
performance of this Guaranty by the Guarantor is within its corporate powers,
have been duly authorized by all necessary corporate action, and do not
contravene the Guarantor’s charter or bylaws, any law, rule

 

4

 

or regulation applicable to the Guarantor or any
contractual restriction binding on or affecting the Guarantor.

 

(c)           No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance of
this Guaranty by the Guarantor.

 

(d)           This Guaranty is the legal, valid and
binding obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms.

 

(e)           The Guarantor is not an “investment
company”, or a company “controlled” by an “investment company”, within the
meaning of the Investment Company Act of 1940, as amended; nor is the Guarantor
a “holding company”, a “subsidiary company” of a “holding company”, or an
“affiliate” of a “holding company” or of a “subsidiary company” of a “holding
company”, within the meaning of the Public Utility Holding Company Act of 1935,
as amended.

 

 

ARTICLE IV

 

COVENANT

 

The Guarantor covenants and agrees that, so long as any portion of the
Guaranteed Obligations shall remain unpaid or the Lender shall have any
outstanding commitment to the Borrower, the Guarantor will not engage in any
business activity other than owning and holding, directly and free and clear of
all liens and security interests, all of the outstanding shares of capital
stock of the Borrower.

 

 

ARTICLE V

 

MISCELLANEOUS
PROVISIONS

 

SECTION 5.1.  Binding
on Successors, Transferees and Assigns; Assignment of Guaranty.  In addition to, and not in limitation of, Section
2.7, this Guaranty shall be binding upon the Guarantor and its successors,
transferees and assigns and shall inure to the benefit of and be enforceable by
the Lender and each holder of the Note and their respective successors,
transferees and assigns (to the full extent provided pursuant to Section 2.7);
provided, however, that the Guarantor may not assign any of its
obligations hereunder without the prior written consent of the Lender and the
holder of the Note.

 

SECTION 5.2.  Amendments,
etc.  No amendment to or waiver of
any provision of this Guaranty, nor consent to any departure by the Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

 

5

 

SECTION 5.3.  Addresses
for Notices to the Guarantor.  All
notices and other communications hereunder to the Guarantor shall be in writing
(including facsimile communication) and mailed or facsimiled or delivered to
it, addressed to it at the address set forth below its signature hereto or at
such other address as shall be designated by the Guarantor in a written notice
to the Lender (at 2700 Lone Oak Parkway, Eagan, Minnesota 55121,
Attention:  Treasurer, Facsimile No.
(612) 726-6221) complying as to delivery with the terms of this Section.  All such notices and other communications
shall, when mailed or telegraphed, respectively, be effective when deposited in
the mails or facsimiled (receipt confirmed) respectively, addressed as
aforesaid.

 

SECTION 5.4  No
Waiver; Remedies.  In addition to,
and not in limitation of, Section 2.3 and Section 2.5, no failure
on the part of the Lender or any holder of the Note to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.

 

SECTION 5.5.  Section
Captions.  Section captions used in
this Guaranty are for convenience of reference only, and shall not affect the
construction of this Guaranty.

 

SECTION 5.6.  Setoff.  In addition to, and not in limitation of,
any rights of the Lender or any holder of the Note under applicable law, the
Lender and each such holder shall, upon the occurrence of any event entitling
the Lender or the holder of the Note to accelerate the maturity thereof, have
the right to appropriate and apply to the payment of the obligations of the
Guarantor owing to it hereunder, whether or not then due, and the Guarantor
hereby grants to the Lender and each such holder a continuing security interest
in, any and all balances, credits, deposits, accounts or moneys of the
Guarantor then or thereafter maintained with the Lender or such holder and any
and all property of every kind or description of or in the name of the
guarantor now or hereafter, for any reason or purpose whatsoever, in the
possession or control of, or in transit to, the Lender, such holder or any
agent or bailee for the Lender or such holder.

 

SECTION 5.7.  Severability.  Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.

 

SECTION 5.8.  Governing
Law, Entire Agreement, etc.  THIS
GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH INTERNAL LAWS OF
THE STATE OF MINNESOTA.  THIS GUARANTY
AND THE NOTE CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS,
WRITTEN OR ORAL, WITH RESPECT THERETO.

 

6

 

SECTION 5.9.  Forum
Selection and Consent to Jurisdiction. 
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER OR THE GUARANTOR SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF MINNESOTA OR
IN THE UNTED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY PROPERTY MAY BE
BROUGHT, AT THE LENDER’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
PROPERTY MAY BE FOUND.  THE GUARANTOR
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF MINNESOTA AND OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT
OF MINNESOTA FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH SUCH LITIGATION.  THE GUARANTOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
MINNESOTA.  THE GUARANTOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

SECTION 5.10.  Waiver
of Jury Trial.  THE GUARANTOR HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS GUARANTY, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER OR
THE GUARANTOR.  THE GUARANTOR
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION.

 

7

 

IN WITNESS THEREOF, the Guarantor has caused this Guaranty
to be duly executed and delivered by its officer thereunto duly authorized as
of the date first above written.

 

	
   

  	
  PINNACLE AIRLINES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  1689 Nonconnah Blvd.

  
	
   

  	
   

  	
  Suite 111

  
	
   

  	
   

  	
  Memphis, Tennessee
  38132

  
	
   

  	
  Attention:

  	
  Chief Financial Officer

  
	
   

  	
  Facsimile:

  	
  (901) 348-4103

  
						

 

8

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