Document:

Exhibit
10.5

 

 

GUARANTY

 

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

  
					

 

8Exhibit
10.6.2

SECOND AMENDMENT TO
REVOLVING CREDIT FACILITY

 

 

                                THIS
SECOND AMENDMENT, dated as of ________, 2003 (this “Amendment”), to the
REVOLVING CREDIT FACILITY, dated as of January 14, 2003 and amended as of
February 5, 2003 (the “Agreement”), between NORTHWEST AIRLINES, INC., a
Minnesota corporation (“Northwest”), and Pinnacle Airlines, Inc., a
Georgia corporation (“Pinnacle”);

 

 

W I T N E S S E T H:

 

                                WHEREAS,
Northwest and Pinnacle are parties to the Agreement; and

 

                                WHEREAS,
Pinnacle has requested that the Agreement be amended as set forth herein;

 

                                NOW
THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:

 

                                SECTION
1.  Defined Terms.  Terms defined in the Agreement and used
herein shall have the meanings given to them in the Agreement.

 

                                SECTION
2.  Amendment to Section 1.  Section 1(a) of the Agreement is hereby
amended and restated to read in its entirety as follows:

 

                “(a)    December 31, 2004, provided that,
in the event you are unable to arrange the Replacement Credit Facility on or
prior to such date, such date may be extended by you on at least ten Business
Days’ prior written notice from you to us furnished no earlier than December
10, 2004 to a date set forth in such notice and in no event later than December
31, 2005;”

 

                                SECTION
3.  Amendment to Section 13.  Clause (a) of Section 13 of
the Agreement is hereby amended to read in its entirety as follows:

 

                (a)  Debt.  Create or suffer to exist any Debt, except (i) that certain
promissory note, dated ________, 2003 and payable to our order in the original
principal amount of $135,000,000, and (ii) a cash collateralized line of credit
with Union Planters Bank in an amount not in excess of $1,000,000 at any time
and used solely for the purpose of obtaining letters of credit from Union
Planters Bank.

 

                                SECTION
4.  Amendment to Section 14.  Section 14(j) of the Agreement is hereby
deleted.

 

 

                                SECTION
5.  Amendment to Section 18.  The definition of “Airline Services
Agreement” in Section 18 of the Agreement is hereby amended to read in its
entirety as set forth below:

 

                “Airline
Services Agreement” means that certain Airline Services Agreement, dated as
of January 14, 2003, between you and us, as amended from time to time.

 

                                SECTION
6.  Amendment to Guaranty.  Article IV of the Guaranty is hereby amended
to read in its entirety as set forth below:

 

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 under the Letter Agreement, the Guarantor will not
engage in any business activity except as permitted by Section 2.15 of the
Airline Services Agreement.

 

                                SECTION
7.  Effectiveness of this Amendment.

 

                                This
Amendment shall become effective on the date on which Northwest shall have
received counterparts of this Amendment duly executed and delivered by Pinnacle
and Guarantor.

 

                                SECTION
8.  Miscellaneous.

 

                                (a)           Effect.  Except as expressly amended hereby, all of
the representations, warranties, terms, covenants and conditions of the
Agreement shall remain unamended and not waived and shall continue to be in
full force and effect.

 

                                (b)           Counterparts.  This Amendment may be executed by one or
more of the parties to this Amendment on any number of separate counterparts
(including by telecopy transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.

 

                                (c)           Severability.  Any provision of this Amendment 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.

 

                                (d)           Integration.  This Amendment represents the agreement of
the parties with respect to the subject matter hereof, and there are no
promises, undertakings, 

 

2

 

representations or warranties relative to the subject matter hereof not
expressly set forth or referred to herein.

 

                                (e)           GOVERNING LAW.  THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
MINNESOTA.

 

3

 

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

 

	
   

  	
   

  	
   

  	
  NORTHWEST AIRLINES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  PINNACLE AIRLINES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

 

 

 

GUARANTOR CONSENT

 

                                The
undersigned Guarantor hereby acknowledges receipt of a counterpart of the
foregoing Second Amendment to Revolving Credit Facility, consents to all of the
terms and provisions thereof and acknowledges and agrees that its Guaranty,
dated as of January 14, 2003, in favor of Northwest shall remain in full force
and effect after giving effect to the foregoing Second Amendment to Revolving
Credit Facility.

 

 

	
   

  	
   

  	
  PINNACLE AIRLINES CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

4

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