Document:

Exhibit
10.10

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PERSONNEL POLICY &

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PROCEDURE MANUAL

  	
   

  	
  Ref:

  	
   

  	
  III-8

  
	
  Subject:

  	
   

  	
  Annual Management Bonus Plan

  	
   

  	
  Date:

  	
   

  	
  11/06/03

  
	
  POLICY

  	
   

  	
  PINNACLE AIRLINES, INC.

  	
   

  	
  Page:

  	
   

  	
  1 of 4

  

 

	
  PURPOSE

  	
  It is the policy of Northwest Airlink (Pinnacle
  Airlines) to reward eligible members of the management team for meeting
  Personal, Corporate and Operational Unit performance objectives.  The plan sets forth uniform bonus
  calculation procedures along with specific objectives for the person, the
  operating unit and overall objectives for the company.

  
	
   

  	
   

  
	
   

  	
  The policy and procedure describes the eligibility
  requirements, personal, unit and company performance planning and evaluation
  process, and the payment and administration of the bonus award.

  
	
   

  	
   

  
	
  SCOPE

  	
  This policy applies to all full time officers and
  directors of Pinnacle Airlines that are active employees on the date of
  distribution.

  
	
   

  	
   

  
	
  GUIDELINES

  	
  GENERAL PROVISIONS

  
	
   

  	
   

  
	
   

  	
  Bonus Eligibility Maximum eligibility for bonus shall be
  determined by position as follows:

  

 

	
  Position

  	
  Level  IA

  	
  Level  I

  	
  Level  II

  	
  Level  III

  
	
  Maximum 

  bonus as a % 

  of base salary

  	
  40%

  	
  30%

  	
  20%

  	
  10%

  

 

	
   

  	
  The President and CEO will comprise Level IA.  The group of Level I officers will
  initially include the CFO, and the Chief Operating Officer.  The Level II officers will include the VP
  of Safety, the VP of Flight Operations, the VP of Customer Service, the VP of
  Maintenance, the VP of Marketing and the VP of Human Resources.  Level II Directors eligible for bonus include
  the Director of Maintenance and the Director of Technical Services.  Level III Directors include all other
  persons at the Director Level. 
  Persons participating in the Annual Management Bonus Plan may not participate
  in the City Team Bonus Program.

  
	
   

  	
   

  
	
   

  	
  Effective January 1, 2004, the maximum bonus as a
  percentage of base salary available at Level IA increases to 60% for the
  CEO.  A new level, IB, is created with
  a 50% maximum bonus level for the Chief Financial Officer and Chief Operating
  Officer. The Vice President of Flight Operations will move to Level I with a
  30% maximum bonus opportunity.

  

 

	
  Position

  	
  Level  IA

  	
  Level IB

  	
  Level  I

  	
  Level  II

  	
  Level III

  
	
  Maximum 

  bonus as a 

  % of base 

  salary

  	
  60%

  	
  50%

  	
  30%

  	
  20%

  	
  10%

  

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PERSONNEL POLICY &

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PROCEDURE MANUAL

  	
   

  	
  Ref:

  	
   

  	
  III-8

  
	
  Subject:

  	
   

  	
  Annual Management Bonus Plan

  	
   

  	
  Date:

  	
   

  	
  11/06/03

  
	
  POLICY

  	
   

  	
  PINNACLE AIRLINES, INC.

  	
   

  	
  Page:

  	
   

  	
  2 of 4

  

 

	
   

  	
  Bonus Payment
  Process

  
	
   

  	
   

  
	
   

  	
  Bonuses will be paid based on the achievement of
  specific personal, unit and company performance goals.  Operating Unit Bonus Objectives will be
  established at the beginning of each quarter.  Personal Performance Objectives will be established at the
  start of every calendar year, and approved by two levels of management.  These objectives should be recorded on
  your performance appraisal document following the employee’s annual goal
  setting meeting with their manager.

  
	
   

  	
   

  
	
   

  	
  All bonus payments will be made soon as practical
  after the financial statements for the relevant period are prepared, audited
  (annual only), and the Board of Directors has approved the bonus awards.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Bonus Payout
  Percentage

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  The percentage of the total bonus attributable to
  company performance, unit performance and personal performance shall be
  allocated according to the following schedule:

  
	
   

  	
   

  
	
   

  	
  Percentage
  of Total

  
	
   

  	
  Bonus

  

 

	
  Position

  	
  Level IA &

  Level l

  	
  Level II

  	
  Level III

  
	
  Criteria

  Company 

  Performance

  	
  70%

  	
  40%

  	
  30%

  
	
  Organizational 

  Unit

  	
  0%

  	
  30%

  	
  40%

  
	
  Personal 

  Performance

  	
  30%

  	
  30%

  	
  30%

  
	
  Total

  	
  100%

  	
  100%

  	
  100%

  

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PERSONNEL POLICY &

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PROCEDURE MANUAL

  	
   

  	
  Ref:

  	
   

  	
  III-8

  
	
  Subject:

  	
   

  	
  Annual Management Bonus Plan

  	
   

  	
  Date:

  	
   

  	
  11/06/03

  
	
  POLICY

  	
   

  	
  PINNACLE AIRLINES, INC.

  	
   

  	
  Page:

  	
   

  	
  3 of 4

  

 

	
   

  	
   

  
	
   

  	
  Company Bonus
  Performance Payout Schedule

  
	
   

  	
   

  
	
   

  	
  The component of the management bonus attributable
  to company performance shall be payable according to the following schedule.

  
	
   

  	
   

  
	
   

  	
  Company
  Performance to Plan

  

 

	
  % of Pretax Profit 

  Achieved

  
	
   

  	
  <80%

  	
  80%

  	
  85%

  	
  90%

  	
  95%

  	
  100%

  	
  >120%

  
	
  % of Profit 

  Bonus Awarded

  	
  0%

  	
  60%

  	
  70%

  	
  80%

  	
  90%

  	
  100%

  	
  110%

  

 

	
   

  	
  Proration of
  Management Bonus/Employee Transfers

  
	
   

  	
   

  
	
   

  	
  Eligible employees who are promoted within an
  operating unit during the year will receive a pro-rata bonus award based upon
  individual goal achievement and positions held.

  
	
   

  	
   

  
	
   

  	
  In the event of promotion and/or transfers between
  operating units, pro-rata bonus awards for eligible participants are
  calculated based on the individual goal achievement and the performance of
  each operating unit.

  
	
   

  	
   

  
	
   

  	
  Approval and
  Payment of Annual Bonus Plan Award

  
	
   

  	
   

  
	
   

  	
  The Compensation Committee shall have responsibility
  for administration of the Annual Management Bonus Plan.  It shall make recommendation to the Board
  of Directors for payment of annual bonuses. 
  The Compensation Committee shall be composed of the President and
  Chief Executive Officer, the Vice President and Chief Financial Officer and
  the Vice President of Human Resources.

  
	
   

  	
   

  
	
   

  	
  The Compensation Committee shall review all
  recommendations for award of quarterly and yearly bonus payments.  The Compensation Committee shall submit
  its recommendations to the Board of Directors for final approval of bonus
  payment.

  
	
   

  	
   

  
	
   

  	
  Discretionary
  Nature of Annual Bonus Plan

  
	
   

  	
   

  
	
   

  	
  The Annual Management Bonus Plan is completely
  discretionary.  No legal rights or
  obligations are created by the Plan. 
  Accordingly, the Company may terminate the Plan or amend its
  provisions at any time, and no interest is created that can be assigned,
  encumbered, or transferred by an employee. 
  No rights in any specific funds or assets will exist by reason of the
  plan.

  
	
   

  	
   

  

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PERSONNEL POLICY &

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PROCEDURE MANUAL

  	
   

  	
  Ref:

  	
   

  	
  III-8

  
	
  Subject:

  	
   

  	
  Annual Management Bonus Plan

  	
   

  	
  Date:

  	
   

  	
  11/06/03

  
	
  POLICY

  	
   

  	
  PINNACLE AIRLINES, INC.

  	
   

  	
  Page:

  	
   

  	
  4 of 4

  

 

	
   

  	
  The Compensation Committee administers the Plan and
  has full power to adopt and enforce administrative rules and procedures, and
  has the power to make administrative interpretations.  The Compensation Committee with approval
  of the Board of Directors has the full power to decide substantive issues, to
  make adjustments to the Plan and to terminate the Plan.  Neither the members of the Compensation
  Committee, the Board of Directors, or any other person involved in
  administering the Plan or making decisions concerning bonuses will have any
  personal liability to any employee for any decision made in carrying out duties
  as outlined in the Plan.

  
	
   

  	
   

  
	
   

  	
  Miscellaneous
  Administrative Matters

  
	
   

  	
   

  
	
   

  	
  The Compensation Committee with the approval of the
  Board of Directors may approve a discretionary pro-rata bonus if active
  employment was terminated during the Plan year by death, disability, or
  retirement.

  
	
   

  	
   

  
	
   

  	
  Employees who have been on Leave of Absence are
  eligible to participate if their unit qualifies and they meet personal
  performance criteria.  Employees who
  are eligible to receive payment of a bonus award, but did not receive that
  award due to being out on Leave of Absence at the time of bonus payout, will
  receive payout of their bonus only after they worked for a period of time
  equal to the number of days of their leave of absence, but in no instance
  shall the delay in payout of their bonus award exceed sixty (60) days
  following their return to work.  The
  eligible earnings used in bonus calculations includes base salary only.  It specifically excludes commissions, and
  any other incentive pay.

  
	
   

  	
   

  
	
   

  	
  No provision in this plan may be construed to amend
  the at-will nature of employment with company, nor confer upon any employee a
  continued right of employment or employment for a specified term.Exhibit 10.11

 

Execution
Copy

 

AMENDED
AND RESTATED SUBLEASE AGREEMENT

 

This Amended and Restated Sublease Agreement (the “Agreement”),
dated as of January 14, 2003 (the “Effective Date”), is entered into by and
between Northwest Airlines, Inc., a Minnesota corporation (“Northwest”)
and Pinnacle Airlines, Inc., a Georgia corporation (formerly Express Airlines
I, Inc.), (“Sublessee”).

 

WITNESSETH:

 

WHEREAS, Northwest and Sublessee have entered into
that certain Sublease Agreement dated as of August 1, 2001 (the “Prior
Agreement”);

 

WHEREAS, Northwest subleases certain premises and
facilities located at St. Joseph County Airport (the “Airport”) for use as
aircraft maintenance facilities under that certain Sublease Agreement dated as
of August 1, 2001 by and between SBN, INC. (d/b/a Corporate Wings, an Indiana
corporation (the “Lessor”) and Northwest 
(as amended and supplemented from time to time, the “Northwest Lease”);
and

 

WHEREAS, Northwest and Sublessee have entered into an
Airline Services Agreement dated as of January 14, 2003 (the “Airline Services
Agreement”), pursuant to which Northwest agreed to sublease to Sublessee the
premises and facilities leased by Northwest from Lessor pursuant to the
Northwest Lease on the terms and subject to the conditions set forth in this
Agreement;

 

WHEREAS, Northwest and Sublessee desire to amend and
restate the Prior Agreement in order to conform certain provisions to the
provisions contained in the Airline Services Agreement.

 

NOW, THEREFORE, Northwest and Sublessee, each in
consideration of the agreements of the other and intending to be legally bound,
agree as follows:

 

Section 1.  Sublease
of Premises.  Northwest hereby
subleases to Sublessee and Sublessee hereby subleases from Northwest, on and
subject to the terms, conditions and covenants hereinafter set forth, those
premises and facilities at the Airport subleased to Northwest pursuant to the
Northwest Lease (together with all improvements located thereon, the
“Premises”).  NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS SUBLEASE, THE PREMISES ARE SUBLEASED “AS IS, WHERE IS” AND WITH ALL
DEFICIENCIES AND FAULTS BOTH KNOWN AND UNKNOWN.  SUBLESSEE ACKNOWLEDGES THAT IT HAS MADE A THOROUGH INSPECTION OF
THE PREMISES AND ACCEPTS SUCH PREMISES “AS IS, WHERE IS” AND THAT, EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED HEREIN, NORTHWEST MAKES NO REPRESENTATIONS OR
WARRANTIES, AND SUBLESSEE EXPRESSLY WAIVES ALL WARRANTIES, EXPRESSED OR
IMPLIED, RELATING TO THE SUITABILITY, FITNESS FOR USE OR FOR ANY PARTICULAR
PURPOSE, MERCHANTABILITY, DESIGN OR CONDITION OF THE PREMISES.

 

1

 

Section 2.  Incorporation
of the Northwest Lease.  Sublessee
expressly acknowledges and agrees that this Agreement is subject to and
conditioned upon all of the terms, covenants and conditions of the Northwest
Lease, which terms, covenants and conditions, except as modified or deleted
herein, are expressly incorporated into this Agreement by reference as if set
forth in full herein to the extent the same apply to the Premises. Sublessee
agrees to assume, faithfully perform, carry out and be bound by all of the
terms, covenants and conditions of the Northwest Lease with respect to the
Premises at the time and in the manner provided therein as if Sublessee was expressly
named as the Lessee under the Northwest Lease. 
Unless otherwise provided herein, all references to the “Lessor” in the
Northwest Lease shall be deemed to include both the Lessor and Northwest, and
Northwest shall have against Sublessee all rights and remedies conferred upon
the Lessor therein, provided, however, that Sublessee agrees to look
solely to the Lessor for performance of the Lessor’s obligations under the
Northwest Lease. Sublessor shall not be liable to Sublessee for the failure of
the Lessor to perform its obligations under the Northwest Lease, provided that
within a reasonable period of time after receipt of notice from Sublessee that
Lessor has failed to so perform, Sublessor shall use its reasonable efforts to
cause the Lessor to perform such obligations to the extent that the failure of
Lessor to do so could adversely affect Sublessee’s use of the Premises.  Sublessee agrees that it will not do or fail
to do anything with respect to the Premises which would cause a default to
occur under the terms of the Northwest Lease. 
If approval of this Agreement by the Lessor is required pursuant to the
provisions of the Northwest Lease, this Agreement is conditioned upon receipt
of such approval. In the event the Lessor does not approve this Agreement, this
Agreement shall be canceled immediately and all rights and obligations of the
parties hereunder shall terminate immediately.

 

Section 3.  Term.  This Agreement shall commence on and shall
become effective as of the Effective Date and shall continue in effect until
July 31, 2003 or such later date if Northwest elects to exercise its option to
renew the Northwest Lease in which case this Agreement shall continue in effect
during any and all renewal periods under the Northwest Lease, subject to earlier
termination upon the occurrence of any of the following:  (i) if the Northwest Lease expires or is
terminated for any reason whatsoever, in which event this Agreement shall
terminate immediately upon the expiration or termination of the Northwest Lease;
(ii) if Northwest terminates this Agreement pursuant to Section 12 hereof;
(iii) if the Airline Services Agreement is terminated for any reason; (iv) upon
mutual agreement of the parties hereto; or (v) a Sublessee Change of Control
(as defined herein).  For purposes of
this Agreement, a “Sublessee Change of Control” shall have the same meaning as
the term “Pinnacle Change of Control” is given in the Airline Services
Agreement.  In the event Northwest
decides not to exercise its option to renew the Northwest Lease for any of the
above-referenced renewal periods, Northwest shall notify Sublessee in writing
not less than nine (9) months prior to the expiration of the initial term of
the Northwest Lease or any subsequent renewal term thereunder.

 

Section 4.  Rent
and Other Charges.  For and during
the term of this Agreement, Sublessee shall pay to Northwest as rent for the
Premises the amounts set forth in Exhibit A attached hereto and
incorporated herein by reference.  Rent
shall be paid by Sublessee monthly in advance on the first day of each month
during the term hereof, without setoff or deduction, at Northwest’s address as
herein set forth.  The rent for any
fractional month following the commencement or preceding the end of this
Agreement shall be prorated by days.  In
addition, unless Northwest otherwise agrees, Sublessee shall be responsible for
the payment of any other fees, costs and charges payable from time to time by
Northwest to the Lessor pursuant to the

 

2

 

Northwest Lease to the
extent attributable to the Premises or to Sublessee’s activities at the
Airport. Sublessee shall pay to Northwest any and all invoices for such fees,
costs and charges within thirty (30) days following the date of such invoice.  If any payment due hereunder is not received
by Northwest on or before the date on which said payment is due, Sublessee
agrees to pay interest on any overdue amounts at the rate of one and one-half
percent (11⁄2%) per month, but not to exceed the maximum interest rate legally
permissible in the State of Indiana, in addition to the amounts due.

 

Section 5.  Taxes,
Fees and Other Charges; Liens.  In
addition to rent payable pursuant to Section 4 hereof, Sublessee shall be
responsible for the payment of all taxes (other than taxes based on or measured
by Northwest’s net income), fees and other charges, including without
limitation port or percentage fees assessed against this Agreement, which are
imposed by the Airport or any governmental authority against the Lessor,
Northwest or Sublessee with respect to this Agreement, the Premises or
improvements, fixtures, furnishings, equipment or other personal property
located thereon, plus all interest and penalties attributable to such taxes,
fees or other charges. At all times during the term of this Agreement,
Sublessee shall keep the Premises free and clear of all liens, levies and
encumbrances arising from or related to any act or omission of Sublessee or any
party acting by or through Sublessee.

 

Section 6.  Use
of Premises; Compliance with Laws and Regulations.  Sublessee shall use the Premises solely for
its Northwest Airlink operations in accordance with the Airline Services
Agreement and for no other purpose without Northwest’s prior written consent.
Sublessee shall conduct its operations on the Premises in a reasonable manner
and shall not commit or suffer to be committed any nuisance or act or thing
which may disturb the quiet enjoyment of Northwest or any other tenant at the
Airport.  Sublessee acknowledges that
Northwest reserves the right to establish from time to time reasonable rules,
regulations and procedures for the use of the Premises and Sublessee agrees to
and shall cause its employees, agents and all persons using the Premises under
it to comply with all such rules, regulations and procedures. At all times
during the term of this Agreement, Sublessee’s operations and activities on the
Premises shall be in strict compliance with all laws, rules and regulations of
any federal, state, county, city or other governmental authority having
jurisdiction over the operation of the Airport.  Sublessee shall pay when due all costs, fines, fees and
assessments that may be levied against it with respect to its operations and
activities on the Premises.

 

Section 7.  Improvements.  Sublessee shall not erect any structures,
make any improvements to or do any other construction work on the Premises or
alter, modify, make additions or improvements to or install any fixtures in any
building or structure now existing on the Premises at any time during the term
hereof, without the prior written consent of both Northwest and the
Lessor.  The costs of any such
construction, improvements, alterations, additions or modifications shall be
borne solely by Sublessee.  In the event
any construction, improvement, alteration, modification or addition is made
without such approvals, Northwest may require Sublessee to remove the same and
restore the Premises to their condition prior to such construction,
improvement, alteration, modification or addition, and if Sublessee fails to do
the same, Northwest may effect the removal and restoration and Sublessee shall
pay the cost thereof to Northwest plus an administrative charge of fifteen
percent (15%) of such costs.  Sublessee
shall not remove any improvements made or fixtures installed on the Premises
during the term of this Agreement (unless Northwest requires their removal
pursuant to this Section 7)

 

3

 

and title to such
improvements and fixtures shall automatically vest in Northwest at the
expiration or earlier termination of this Agreement.

 

Section 8.  Maintenance
and Repair.  To the extent not
provided by Lessor pursuant to the Northwest Lease, Sublessee shall be
responsible for the maintenance and repair of the Premises and shall arrange
and pay for all services necessary for such maintenance and repair.  Sublessee shall promptly repair any and all
damage to the Premises caused by its employees, agents, guests and invitees, or
resulting from Sublessee’s failure to observe or perform any of its obligations
hereunder. In the event Sublessee fails to perform such maintenance and repair
of the Premises and such failure continues for at least ten (10) days following
Sublessee’s receipt of written notice of such failure from Northwest, Northwest
may elect, but shall have no obligation, to perform any work on the Premises
that may be necessary by reason of Sublessee’s failure to perform and in such
event Sublessee shall pay to Northwest immediately upon demand therefor the
full cost associated with such work plus an administrative fee of fifteen
percent (15%).  Nothing herein shall
imply any duty upon the part of Northwest to do any such work and performance
thereof by Northwest shall not constitute a waiver of Sublessee’s default in
failing to perform the same.  Northwest
shall not be liable for inconvenience, annoyance, disturbance, loss of business
or other damage to Sublessee by reason of making such repairs or the
performance of any work, or on account of bringing materials, tools, supplies
or equipment into or through the Premises during the course thereof and the
obligations of Sublessee under this Agreement shall not be affected thereby.

 

Section 9.  Security
Procedures.  Sublessee agrees to
fully implement all procedures and comply with all regulations of the Airport’s
security program.  Sublessee will
instruct its employees and any other representatives of Sublessee including
those under contract, as to the security procedures to be followed and
responsibilities required to be performed by Sublessee with respect to the
Premises.  Northwest may, from time to
time, evaluate Sublessee’s compliance with the Airport’s security program.  In the event Sublessee shall fail to
implement, perform or observe any of the security procedures on its part to be
performed, observed and kept with respect to the Premises, Northwest shall have
the right to immediately take any corrective measures deemed necessary by
Northwest.  Sublessee shall indemnify
and hold harmless Northwest, its directors, officers, agents and employees,
from and against any and all costs, claims, judgments and expenses (including
attorneys’ fees) incurred by Northwest due to any investigation commenced, or
penalties or fines imposed, by the Federal Aviation Administration,
Transportation Security Administration, the Airport or any other governmental
agency having jurisdiction with respect to the Airport’s security program
arising out of or in connection with Sublessee’s use or occupancy of the
Premises.

 

Section 10.  Limitation
of Liability and Indemnity. 
Notwithstanding any provision of the Northwest Lease to the contrary,
Northwest shall not be liable to Sublessee, or any of Sublessee’s agents,
employees, servants or invitees, for any damage to persons or property due to
the condition or design or any defect in the Premises which may exist or
subsequently occur, and Sublessee, with respect to Sublessee and Sublessee’s
agents, employees, servants and invitees, hereby expressly assumes all risks
and damage to persons and property, either proximate or remote, by reason of
the present or future condition or use of the Premises.  Sublessee agrees to release, indemnify, hold
harmless and defend Northwest, the Lessor, and their respective officers,
directors, employees, agents, successors and assigns, from and against any and
all suits,

 

4

 

claims, actions, damages,
liabilities and expenses (including, without limitation, attorneys’ fees, costs
and related expenses) for bodily or personal injury or death to any persons and
for any loss of, damage to, or destruction of any property, including loss of
use, incidental and consequential damage thereof, arising out of or in any
manner connected with the breach, violation, performance or nonperformance of
any provision of this Agreement or of the Northwest Lease or the use of the
Premises by Sublessee or any of Sublessee’s agents, employees, contractors or
invitees, whether or not occurring or arising out of the negligence, whether
sole, joint, concurrent, comparative, active, passive, imputed or any other
type, of Northwest, the Lessor or their respective officers, directors,
employees or agents.

 

Section 11.  Insurance.

 

(a)           Sublessee shall at all
times during the term of this Agreement maintain in full force and effect the
following insurance coverages:

 

(i)            Workers’ compensation
and occupational disease coverage in the form of and in the minimum amounts
required by the laws of the states in which Sublessee operates.  Such coverage shall include employer’s
liability coverage with limits of not less than $1,000,000 per incident.

 

(ii)           Commercial general
liability coverage with limits no less than $25,000,000 combined single limit
per occurrence.  Such coverage shall
include endorsements for personal injury and contractual liability.

 

(iii)          Comprehensive aviation
bodily injury and property damage liability coverage with limits of not less
than $300,000,000 combined single limit per occurrence, including but not
limited to aircraft liability, passenger legal liability, premises and property
damage liability, hangar keepers liability and baggage and cargo
liability.  Such coverage shall include
personal injury and contractual liability, and shall also include war risk and
allied perils, hijack and confiscation coverage with a limit of not less than
$1 billion per incident.

 

(b)           Commercial general
liability and comprehensive airline liability insurance coverages shall provide
coverage for events which occur during the policy period, are continuing in
nature and not on a claims made basis, and shall include endorsements that:

 

(i)            Underwriters
acknowledge that the indemnification and hold harmless provisions of this
Agreement are insured under Sublessee’s blanket contractual liability coverage;

 

(ii)           Northwest and the
Lessor are named as additional insureds on such insurance to the extent of the
contractual liability assumed by Sublessee hereunder;

 

(iii)          Said insurance is
primary with respect to the matters within such coverage, irrespective of any
insurance carried by Northwest;

 

5

 

(iv)          Provide that, as
respects the interests of Northwest and the Lessor, this insurance shall not be
invalidated by any breach of warranty by Sublessee;

 

(v)                                 Provide
a severability of interests/cross liability endorsement; and

 

(vi)          Provide that the insurer
shall waive its subrogation rights against Northwest and the Lessor.

 

(c)           Prior
to the commencement of this Agreement, Sublessee shall cause to be delivered to
Northwest certificates of insurance evidencing compliance with the provisions
of this Section 11.  All of the
insurance coverages referenced in this Section 11 shall be written through a company
or companies satisfactory to Northwest, and the certificates of insurance shall
unconditionally obligate the insurer to notify Northwest in writing at least
thirty (30) days in advance of the effective date of any material change in or
cancellation of such insurance.

 

Section 12.  Default
and Remedies.  Northwest may
terminate this Agreement or pursue any other remedy provided to the Lessor
under the Northwest Lease if Sublessee fails to cure any default of this
Agreement within ten (10) days following receipt of written notice of default
from Northwest, or under any circumstances in which the Northwest Lease permits
the Lessor to pursue any such remedies. 
Termination of this Agreement by Northwest pursuant to this Section 12
shall not be construed as a waiver by Northwest of any other rights or remedies
it may have at law or in equity. 
Notwithstanding any other provision of this Agreement, Northwest, in
addition to the remedies provided herein and in the Northwest Lease, Northwest
shall have all other rights and remedies available at law or in equity.

 

Section 13.  Surrender
of Subleased Premises; Removal of Personal Property.  Upon expiration or other termination of this
Agreement, Sublessee shall remove from the Premises all of its signs, trade
fixtures and other personal property, repair all damage caused by such removal,
and surrender the Premises to Northwest in good order and condition, reasonable
wear and tear excepted.  In the event
Sublessee fails to remove the same on or before said date, Northwest may remove
or cause to be removed such personal property from the Premises and Sublessee
shall reimburse Northwest for the costs associated with such removal plus an
administrative charge of fifteen percent (15%).

 

Section 14.  Notices.
All notices and other communications under this Agreement shall be effective
two (2) business days after deposit with the United States Postal Service,
first class, postage prepaid, or when hand delivered or transmitted by
facsimile, and shall be in writing and addressed to the parties at the
following addresses:

 

To Northwest:                                                                   Northwest
Airlines, Inc.

2700 Lone Oak Parkway (Dept. A1135)

Eagan, MN 55121-1534

Fax No. (612) 727-6041

Attention: 
Vice President - Facilities & Airport Affairs

 

6

 

To Sublessee:                                                                     Pinnacle
Airlines, Inc.

1689 Nonconnah Blvd., Suite 111

Memphis, TN 38132

Fax No. 901-348-4130

Attention: Chief Financial Officer

 

Either party may change the address at which notice is to be made by
providing notice of the change to the other party, in writing, in the manner
provided for in this Section 14.

 

Section 15.  Force
Majeure.  Neither party shall be
liable for any failure to perform its obligations under this Agreement, except
for Sublessee’s payment obligations set forth herein, if such failure is due to
causes beyond its control and not the result of its fault or neglect, including
without limitation, acts of God, war, the public enemy, epidemics, quarantine
restrictions, fire, fog, flood or other abnormally severe weather condition,
epidemics, riots or civil commotion, strikes, lockouts or labor disputes,
actions of governments or agencies thereof.

 

Section 16.  Nondiscrimination.  Sublessee agrees that it shall not
discriminate against any worker, employee or applicant or any member of the
public because of race, color, creed, religion, national origin, ancestry, age
or sex.  Sublessee agrees to undertake
an affirmative action program as required by 14 CFR Part 152, Subpart E, to
ensure that no persons shall on the grounds of race, color, creed, national
origin or sex be excluded from participating in any employment activities
covered in 14 CFR Part 152, Subpart E.

 

Section 17.  Right of Entry.  Northwest reserves the right to enter upon
the Premises at any time during an emergency to take such action therein as may
be required for the protection of persons or property and at other reasonable
times, upon reasonable prior notice, for the purpose of inspection,
maintenance, repairs, replacements, alterations or improvements (to the
Premises or to other areas), showing of the Premises to prospective tenants and
for other purposes permitted elsewhere in this Agreement or in the Northwest
Lease.

 

Section 18.  Miscellaneous.

 

(a)           Litigation Expenses.  In the event of any legal action between
Northwest and Sublessee to enforce any of the provisions and/or rights
hereunder, the unsuccessful party in such action agrees to pay to the other
party all costs and expenses incurred by the successful party in connection
therewith, including, without limitation, court costs and reasonable attorneys’
fees.

 

(b)           Integration;
Amendment and Modification.  This
Agreement embodies the entire agreement between the parties hereto relative to
the subject matter hereof and shall not be modified, changed or altered in any
respect except in writing.

 

(c)           Assignment and
Subleasing.  Sublessee shall not
assign its rights or obligations pursuant to this Agreement or sublease or
permit any third party to use any portion of the Premises without the prior
written consent of Northwest and the Lessor (if required under the Northwest
Lease).  In the event any third party is
permitted to use any

 

7

 

portion of the Premises during the term of this
Agreement, Sublessee shall be fully responsible to Northwest and the Lessor for
and shall indemnify and hold Northwest and the Lessor harmless with respect to
compliance by such third party with all of the provisions of this Agreement and
the Northwest Lease.

 

(d)           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.

 

(e)           Successors and
Assigns.  The covenants, agreements
and obligations herein contained shall extend to, bind and inure to the benefit
not only of the parties hereto but their successors and permitted assigns.

 

(f)            Survival.  The obligations of Sublessee contained in
Sections 5, 7, 9, 10, 11 and 13 hereof shall remain in effect and survive the
expiration or termination of this Agreement.

 

(g)           Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one agreement.

 

(h)           Severability.  If any term of this Agreement shall be
judicially determined to be illegal, invalid or unenforceable at law or in
equity, it shall be deemed to be void and of no force and effect to the extent
necessary to bring such term within the provisions of any such applicable law
or laws, and such terms as so modified and the balance of the terms of this
Agreement shall remain enforceable.

 

8

 

IN WITNESS WHEREOF, Northwest and Sublessee have
executed this Agreement as of the day and year first above written.

 

 

	
  NORTHWEST AIRLINES, INC.

  	
  PINNACLE AIRLINES, INC.

  
	
   

  
	
   

  
	
  By:

  	
       /s/ James M. Greenwald

  	
   

  	
  By:

  	
        /s/ Curtis E.
  Sawyer

  	
   

  
	
   

  	
        James M.
  Greenwald

  	
   

  
	
   

  	
       Vice President -
  Facilities &

  	
  Name:

  	
     Curtis E. Sawyer

  	
   

  
	
   

  	
       Airport Affairs

  	
   

  
	
   

  	
  Title:

  	
       Vice President &
  CFO

  	
   

  
									

 

 

ACKNOWLEDGMENT AND CONSENT

 

SBN, INC., which is the Lessor under the Northwest Lease, hereby
acknowledges receipt of an executed copy of the foregoing Sublease Agreement
and consents to the terms thereof.

 

	
  SBN, INC.:

  
	
   

  
	
   

  
	
   

  
	
  By: 

  	
   

  	
   

  
	
  Name: 

  	
   

  	
   

  
	
  Title: 

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
  Date: 

  	
   

  	
   

  
					

 

9

 

EXHIBIT A

TO

SUBLEASE AGREEMENT

 

Northwest
Airlines/Pinnacle Airlines

South Bend, Indiana

 

 

1.             RENTAL:  Rental for the use of the Premises shall be
as follows:

 

	
  Hangar:

  	
   

  	
   

  
	
  Aug. 1, 2001 – July 31, 2003

  	
   

  	
  $5,692.50/month

  
	
  Aug. 1, 2003 – July 31, 2005

  	
   

  	
  $7,590.00/month (Renewal Term One)

  
	
  Aug. 1, 2005 – July 31, 2007

  	
   

  	
  $7,590.00/month (Renewal Term Two)

  
	
  Aug. 1, 2007 – July 31, 2009

  	
   

  	
  $8,855.00/month (Renewal Term Three)

  
	
  Aug. 1, 2009 – July 31, 2011

  	
   

  	
  $8,855.00/month (Renewal Term Four)

  
	
   

  	
   

  	
   

  
	
  Offices:

  	
   

  	
   

  
	
  Aug. 1, 2001 – July 31, 2003

  	
   

  	
  $260.00/month

  
	
  Aug. 1, 2003 – July 31, 2005

  	
   

  	
  $390.00/month (Renewal Term One)

  
	
  Aug. 1, 2005 – July 31, 2007

  	
   

  	
  $390.00/month (Renewal Term Two)

  
	
  Aug. 1, 2007 – July 31, 2009

  	
   

  	
  $455.00/month (Renewal Term Three)

  
	
  Aug. 1, 2009 – July 31, 2011

  	
   

  	
  $455.00/month (Renewal Term Four)

  

 

Sublessee will be required to establish an account
with the applicable utility companies for water, sewer, gas and electrical
utility services to the Premises, which will be paid directly by Sublessee
throughout the term of the Agreement. 
Sublessee will also be fully responsible for the installation,
connection, use, maintenance and disconnection of all telephone services and
for all associated charges.

 

2.                                       SETTLEMENT:  To the extent that Sublessee is not directly
invoiced by third parties, including but not limited to Lessor, utility
companies and building/grounds maintenance companies, and Northwest receives
invoices from said parties, then Northwest shall invoice Sublessee for costs
incurred for or related to the Premises, including but not limited to monthly
site rentals, property and real estate taxes, etc.  Sublessee shall pay Northwest such amounts no later than thirty
(30) days after receipt of Northwest’s invoice.

 

10

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