Document:

EX-(10J)

 

Exhibit (10j)

FOURTH AMENDMENT

     THIS FOURTH AMENDMENT (this “Amendment”), dated as of September 30, 2004 is by and
among UNIFI, INC., a New York corporation (the “Parent”), certain Subsidiaries of the
Parent (each a “Borrower”, and collectively with the Parent, the “Borrowers”), THE
PERSONS IDENTIFIED AS THE LENDERS ON THE SIGNATURE PAGES HERETO (the “Lenders”), and BANK
OF AMERICA, N.A., as Agent for the Lenders (the “Agent”).

W I T N E S S E T H:

     WHEREAS, pursuant to the Credit Agreement dated as of December 7, 2001, as amended by that
certain Reallocation Amendment and Assignment dated as of January 1, 2003, that certain Second
Amendment dated as of August 6, 2003, that certain Third Amendment dated as of December 2003 and as
further amended from time to time (the “Existing Credit Agreement”) among the Borrowers,
the Lenders and the Agent, the Existing Lenders have extended commitments to make certain credit
facilities available to the Borrowers;

     WHEREAS, the parties hereto have agreed to amend the Existing Credit Agreement as set forth
herein.

     NOW, THEREFORE, in consideration of the agreements herein contained and other good and
valuable consideration, the parties hereby agree as follows:

PART I

DEFINITIONS

     SUBPART 1.1. Certain Definitions. Unless otherwise defined herein or the context
otherwise requires, the following terms used in this Amendment, including its preamble and
recitals, have the following meanings:

     “Amended Credit Agreement” means the Existing Credit Agreement as amended
hereby.

     “Fourth Amendment Effective Date” shall have the meaning set forth in
Subpart 3.1.

     SUBPART 1.2. Other Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Amendment, including its preamble and recitals, have the
meanings provided in the Amended Credit Agreement.

 

 

PART II

AMENDMENTS TO EXISTING CREDIT AGREEMENT

     SUBPART 2.1. Addition of Section 3.11. Effective on (and subject to the occurrence
of) the Fourth Amendment Effective Date, a new Section 3.11 is hereby added to the Existing Credit
Agreement, after Section 3.10 thereof, to read as follows:

     3.11 Proceeds of Unifi Kinston Security Agreement.

     In the event that, pursuant to the terms of the Intercreditor Agreement and the Unifi
Kinston Security Agreement, the Agent receives the proceeds of any of the Common Collateral
(as defined in the Intercreditor Agreement), the Agent may apply such proceeds to any
outstanding Obligations (whether or not such Obligations are then due) or, if no Obligations
are then outstanding, hold such proceeds in a cash collateral account as security in respect
of the Obligations.

     SUBPART 2.2. Amendment to Section 6.2. Effective on (and subject to the occurrence
of) the Fourth Amendment Effective Date, Section 6.2 of the Existing Credit Agreement is hereby
amended to read as follows:

     The provisions of this Agreement and the other Loan Documents create legal and valid
Liens on all the Collateral in favor of the Agent, for the ratable benefit of the Agent and
the Lenders, and such Liens constitute perfected and continuing Liens on all the Collateral,
having priority over all other Liens on the Collateral, except for those Liens identified in
clauses (c), (d), (e) and (n) of the definition of Permitted
Liens securing all the Obligations, and enforceable against the Borrowers and all third
parties.

     SUBPART 2.3. Amendment to Section 6.9. Effective on (and subject to the occurrence
of) the Fourth Amendment Effective Date, Section 6.9 of the Existing Credit Agreement is hereby
amended to read as follows:

     After giving effect to the making of the Revolving Loans to be made on the Closing
Date, the Borrowers have no Debt, except (a) the Obligations, (b) Debt described on
Schedule 6.9, (c) the Parent’s Guaranty of the Unifi Kinston Loan Agreement;
provided such Guaranty is expressly subordinated, on terms satisfactory to the Agent, in
right of payment to the prior payment of the Obligations under this Agreement and the other
Loan Documents, (d) Unifi Manufacturing’s limited Guaranty of the Unifi Kinston Loan
Agreement and (e) other Guaranties permitted pursuant to Section 7.12 hereof. None
of the holders of Debt owed by any Subsidiary which is not a Borrower has recourse against
any Borrower other than pursuant to the Parent’s Guaranty and Unifi Manufacturing’s limited
Guaranty of the Unifi Kinston Loan Agreement.

     SUBPART 2.4. Amendment to Section 7.12. Effective on (and subject to the occurrence
of) the Third Amendment Effective Date, Section 7.12 of the Existing Credit Agreement is hereby
amended to read as follows:

- 2 -

 

     Without the prior consent of the Majority Lenders, no Borrower shall make, issue, or
become liable on any Guaranty, except (i) Guaranties of the Obligations in favor of the
Agent, (ii) Guaranties of another Borrower in favor of suppliers and/or vendors of Unimatrix
Americas, LLC, in form and substance satisfactory to the Agent, incurred in the ordinary
course of business in an aggregate amount not to exceed $10,000,000 at any one time
outstanding, (iii) the Guaranty by the Parent of Unifi Kinston’s obligations under the Unifi
Kinston Loan Agreement; provided such Guaranty is expressly subordinated, on terms
satisfactory to the Agent, in right of payment to the prior payment of the Obligations under
this Agreement and the other Loan Documents, (iv) the limited Guaranty by Unifi
Manufacturing of Unifi Kinston’s obligations under the Unifi Kinston Loan Agreement, (iv)
the Guaranty by the Parent of Unifi Kinston’s obligations under that certain Terephthalic
Acid Supply Agreement dated July 12, 2001 between Unifi Kinston, as assignee of the Seller,
and DAK Monomers LLC and (v) the Guaranty by the Parent of certain of Unifi Kinston’s
indemnity obligations pursuant to that certain letter agreement dated September 30, 2004
between Parent and Seller.

     SUBPART 2.5. Amendment to Section 7.13. Effective on (and subject to the occurrence
of) the Fourth Amendment Effective Date, Section 7.13 of the Existing Credit Agreement is hereby
amended by adding the following clause (j) to the end of the first sentence of such Section, “...and
(j) Debt in the form of loans by Unifi Kinston in an amount not to exceed $12,000,000 in the
aggregate from the Fourth Amendment Effective Date.”

     SUBPART 2.6. Amendment to Section 7.20. Effective on (and subject to the occurrence
of) the Fourth Amendment Effective Date, Section 7.20 of the Existing Credit Agreement is hereby
amended by adding the following sentence to the end of such Section:

     Notwithstanding the foregoing, the Borrower shall not be required to cause Unifi
Kinston to (i) become a Borrower hereunder, (ii) to pledge its assets under the Security
Agreement or (iii) to execute a Joinder Agreement; provided that Unifi
Kinston shall have executed and delivered to the Agent the Unifi Kinston Security Agreement.

     SUBPART 2.7. Amendment to Section 7.30. Effective on (and subject to the occurrence
of) the Fourth Amendment Effective Date, Section 7.30 of the Existing Credit Agreement is hereby
amended to read as follows:

     The Parent will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance
or restriction on the ability of any such Subsidiary to (a) pay dividends or make any other
distributions on its capital stock or any other interest or participation in its profits
owned by the Parent or any Subsidiary, or pay any Debt owed to the Parent or any Subsidiary,
(b) make loans or advances to the Parent or any of its Subsidiaries, or (c) transfer any of
its properties or assets to a Borrower, except for such encumbrances or restrictions
existing under or by reason of applicable laws, the Agreement or, with respect to Unifi
Kinston only, the Unifi Kinston Loan Agreement and the Seller Security Agreement.

- 3 -

 

     SUBPART 2.8. Amendment to Section 8.2(a). Effective on (and subject to the
occurrence of) the Fourth Amendment Effective Date, Section 8.2(a) of the Existing Credit Agreement
is hereby amended by adding the following language to the end of such section:

     unless such Borrowing is for the sole purpose of the Parent satisfying its obligations to
Seller pursuant to its Guaranty of the obligations of Unifi Kinston under the Unifi Kinston Loan
Agreement, in which case if the event causing the default under the Unifi Kinston Loan Agreement
also constitutes a Default or Event of Default hereunder or results in a representation or warranty
ceasing to be correct in all material respects, the Parent may nonetheless request such Borrowing
so long as the terms of Paragraph 3 of the Subordination Agreement have been met.

     SUBPART 2.9. Amendments to Annex A.

     (a) Effective on (and subject to the occurrence of) the Fourth Amendment Effective Date, the
definition of “Bank Products” set forth in Annex A of the Credit Agreement is hereby
amended to read as follows:

     “Bank Products” means any one or more of the following types of services or
facilities extended to the Borrowers by any Lender or any affiliate of a Lender in reliance
on such Lender’s agreement to indemnify such affiliate: (i) ACH Transactions; (ii) cash
management, including controlled disbursement services; (iii) credit cards; and (iv) Hedge
Agreements.

     (b) Effective on (and subject to the occurrence of) the Fourth Amendment Effective Date, the
definition of “Fixed Charge Coverage Ratio” set forth in Annex A of the Credit Agreement is
hereby amended to read as follows:

     “Fixed Charge Coverage Ratio” means, with respect to any fiscal period of the
Parent and its Domestic Subsidiaries, the ratio of (a) EBITDA for such period minus
Capital Expenditures made by the Parent or any of its Domestic Subsidiaries during such
period plus cash payments (excluding cash distribution of earnings) made during such
period from Persons in which the Parent or any of its Domestic Subsidiaries has an ownership
interest minus cash payments made during such period by the Parent or any of its
Domestic Subsidiaries to Persons in which the Parent or any of its Domestic Subsidiaries has
an ownership interest plus cash proceeds from asset sales received by the Parent or
any of its Domestic Subsidiaries during such period minus Distributions paid by the
Parent during such period minus share repurchases made by the Parent of its Capital
Stock during such period minus cash invested (including by way of loans) in joint
ventures, in Unifi Kinston and in Permitted Acquisitions during such period minus
cash taxes paid for such period plus tax refunds received in cash for such period to
(b) Fixed Charges. Unless otherwise specified herein, the applicable period of computation
shall be for the four (4) consecutive fiscal quarters ending as of the date of
determination.

     (c) Effective on (and subject to the occurrence of) the Fourth Amendment Effective Date, the
definition of “Permitted Lien” set forth in Annex A of the Credit Agreement is hereby
amended by adding the following clause (n) after clause (m) of such Section, “...and (n) Liens of

- 4 -

 

Seller on the assets of Unifi Kinston, Unifi Manufacturing and the Parent granted under the
Seller Security Agreement.”

     (d) Effective on (and subject to the occurrence of) the Fourth Amendment Effective Date, the
definition of “Restricted Investment” set forth in Annex A of the Credit Agreement is
hereby amended by adding the following clause (j) to the end of the first sentence of such Section,
“...and (j) cash investments in Unifi Kinston in an amount not to exceed $12,000,000 in the
aggregate.”

     (e) Effective on (and subject to the occurrence of) the Fourth Amendment Effective Date, the
following new definitions are hereby added to Annex A of the Credit Agreement in the appropriate
alphabetical order:

     “Intercreditor Agreement” means that certain intercreditor agreement dated as of
September 30, 2004 between the Agent and the Seller, as the same may be amended,
supplemented, restated or otherwise modified from time to time.

     “Unifi Kinston” means Unifi Kinston, LLC, a North Carolina limited liability company
and a wholly owned subsidiary of Unifi Manufacturing.

     “Unifi Kinston Documents” means, collectively, the Intercreditor Agreement, the Unifi
Kinston Loan Agreement, the Seller Security Agreement and the Subordination Agreement.

     “Unifi Kinston Loan Agreement” means that certain loan agreement dated as of September
30, 2004 between Unifi Kinston and Seller.

     “Unifi Kinston Security Agreement” means that certain security agreement dated as of
September 30, 2004 between Unifi Kinston and the Agent for the benefit of the Agent and the
other Lenders as the same may be amended, supplemented, restated or otherwise modified from
time to time.

     “Unifi Manufacturing” means Unifi Manufacturing, Inc., a North Carolina corporation and
a wholly owned subsidiary of the Parent.

     “Seller” means Invista S.a.r.l., a limited liability company organized and existing
under the laws of Luxembourg.

     “Seller Security Agreement” means that certain security agreement dated as of September
30, 2004 between Unifi Kinston and Seller as the same may be amended, supplemented, restated
or otherwise modified from time to time.

     “Subordination Agreement” means that certain subordination agreement dated as of
September 30, 2004 between the Agent and the Seller as the same may be amended, supplemented,
restated or otherwise modified from time to time.

- 5 -

 

PART III

CONDITIONS TO EFFECTIVENESS

     SUBPART 3.1. Fourth Amendment Effective Date. This Amendment shall be and become
effective as of the date hereof when all of the conditions set forth in this Part III shall
have been satisfied (the “Fourth Amendment Effective Date”), and thereafter this Amendment
shall be known, and may be referred to, as “Fourth Amendment.”

     SUBPART 3.2. Execution of Counterparts of Documents. The Agent shall have received
fully executed counterparts of this Amendment, the Intercreditor Agreement, the Subordination
Agreement and the Unifi Kinston Security Agreement.

     SUBPART 3.3. Fees and Expenses. The Borrowers shall have paid (i) all fees and
expenses of the Agent and the Lenders in connection with this Amendment and the extensions of
credit hereunder and (ii) to each Lender, an amendment fee equal to 0.125% of such Lender’s
Commitment.

     SUBPART 3.4. Legal Opinion. The Agent and the Lenders shall have received an opinion
of counsel for Unifi Kinston with respect to the Unifi Kinston Security Agreement, such opinion to
be in a form, scope, and substance satisfactory to the Agent.

     SUBPART 3.5. UCC. The Agent shall have received (i) searches of UCC filings in the
jurisdiction of formation of Unifi Kinston, the jurisdiction of the chief executive office of Unifi
Kinston and each jurisdiction where any property of Unifi Kinston is located or where a filing
would need to be made in order to perfect the Agent’s security interest in such property, copies of
the financing statements on file in such jurisdictions and evidence that no Liens exist other than
Permitted Liens and (ii) UCC financing statements for each jurisdiction that the Agent may deem
necessary or desirable in order to perfect the Agent’s Liens under the Unifi Kinston Security
Agreement.

     SUBPART 3.6. Organizational Documents, Resolutions, Etc. The Agent shall have
received:

     (i) copies of the articles of organization of Unifi Kinston certified to be true and
complete as of a recent date by the appropriate Governmental Authority of the state of its
organization and a copy of the operating agreement, in each case, certified by a Responsible
Officer of Unifi Kinston to be true and correct as of the Fourth Amendment Effective Date;

     (ii) such certificates of resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of Unifi Kinston as the Agent may require
evidencing the identity, authority and capacity of each Responsible Officer thereof
authorized to act as a Responsible Officer in connection with this Amendment, the Unifi
Kinston Security Agreement, the Intercreditor Agreement, the Subordination Agreement and the
other Loan Documents to which Unifi Kinston is a party; and

- 6 -

 

     (iii) such documents and certifications as the Agent may reasonably require to evidence
that Unifi Kinston is duly organized or formed, and is validly existing, in good standing
and qualified to engage in business in its state of incorporation.

PART IV

MISCELLANEOUS

     SUBPART 4.1. Cross-References. References in this Amendment to any Part or Subpart
are, unless otherwise specified, to such Part or Subpart of this Amendment.

     SUBPART 4.2. References in Other Credit Documents. At such time as this Amendment
shall become effective pursuant to the terms of Subpart 3.1, all references in the Existing
Credit Agreement to the “Credit Agreement” and all references in the other Loan Documents to the
“Credit Agreement” shall be deemed to refer to the Amended Credit Agreement.

     SUBPART 4.3. Representations and Warranties of the Borrower. Each Borrower hereby
represents and warrants that (a) the conditions precedent to the initial Loans were satisfied as of
the Closing Date, (b) the representations and warranties contained in Section 6 of the Existing
Credit Agreement (as amended by this Amendment) are correct in all material respects on and as of
the date hereof as though made on and as of such date and after giving effect to the amendments
contained herein and (c) no Default or Event of Default exists under the Existing Credit Agreement
on and as of the date hereof and after giving effect to the amendments contained herein.

     SUBPART 4.4. Counterparts. This Amendment may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of which shall
constitute together but one and the same agreement.

     SUBPART 4.5. Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NORTH CAROLINA WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.

     SUBPART 4.6. Successors and Assigns. This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns.

     SUBPART 4.7. Intercreditor Documents. Each Lender hereby consents to and approves
the terms of the Intercreditor Agreement and the Subordination Agreement, a copies of which are
attached hereto as Exhibit A. By execution hereof, the Lenders acknowledge the terms of
the Intercreditor Agreement and the Subordination Agreement and agree to be bound by the terms
thereof and further authorize and direct the Agent to enter into the Intercreditor Agreement and
the Subordination Agreement on behalf of all the Lenders.

[The remainder of this page is intentionally left blank.]

- 7 -

 

     Each of the parties hereto has caused a counterpart of this Amendment to be duly executed and
delivered as of the date first above written.

	 	 	 	 	 	 	 	 	 
	BORROWERS:	 	 	 	UNIFI, INC., a New York corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ CHARLES F. MCCOY	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Charles F. McCoy	 	 
	 

	 	 	 	Title:
	 	      V.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	UNIFI MANUFACTURING, INC.,

a North Carolina corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ CHARLES F. MCCOY	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Charles F. McCoy	 	 
	 

	 	 	 	Title:
	 	      V.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	GLENTOUCH YARN COMPANY, LLC,

a North Carolina limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ CHARLES F. MCCOY	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Charles F. McCoy	 	 
	 

	 	 	 	Title:
	 	      V.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	UNIFI TEXTURED POLYESTER, LLC,

a North Carolina limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ CHARLES F. MCCOY	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Charles F. McCoy	 	 
	 

	 	 	 	Title:
	 	      V.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	UNIMATRIX AMERICAS, LLC,

a North Carolina limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ CHARLES F. MCCOY	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Charles F. McCoy	 	 
	 

	 	 	 	Title:
	 	      V.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	UNIFI SALES & DISTRIBUTION, INC.,

a North Carolina corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ CHARLES F. MCCOY	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Charles F. McCoy	 	 
	 

	 	 	 	Title:
	 	      V.P.	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	UNIFI MANUFACTURING VIRGINIA, LLC,

a North Carolina limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ CHARLES F. MCCOY	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Charles F. McCoy	 	 
	 

	 	 	 	Title:
	 	      V.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	UNIFI EXPORT SALES, LLC,

a North Carolina limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ CHARLES F. MCCOY	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Charles F. McCoy	 	 
	 

	 	 	 	Title:
	 	       V.P.	 	 

 

 

	 	 	 	 	 	 	 	 	 
	LENDERS:	 	 	 	BANK OF AMERICA, N.A.,

in its capacity as Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ ANDREW A. DOHERTY	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Andrew A. Doherty	 	 
	 

	 	 	 	Title:
	 	       Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	BANK OF AMERICA, N.A.,

in its capacity as a Lender,	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ ANDREW A. DOHERTY	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Andrew A. Doherty	 	 
	 

	 	 	 	Title:
	 	       Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	THE CIT GROUP/COMMERCIAL

SERVICES, INC.,	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ J. W. SMITH, II	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	J. W. Smith, II	 	 
	 

	 	 	 	Title:
	 	 Vice Pres.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	CONGRESS FINANCIAL

CORPORATION (SOUTHWEST),	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ JOE T. CURDY	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Joe T. Curdy	 	 
	 

	 	 	 	Title:
	 	       Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	FLEET CAPITAL CORPORATION,	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ ANDREW A. DOHERTY	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Andrew A. Doherty	 	 
	 

	 	 	 	Title:
	 	       Vice President	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	WELLS FARGO FOOTHILL, Inc.

fka FOOTHILL CAPITAL CORPORATION,	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ BRAD ENGEL	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Brad Engel	 	 
	 

	 	 	 	Title:
	 	      Assistant Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	PNC BUSINESS CREDIT,	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ PETER REDINGTON	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Peter Redington	 	 
	 

	 	 	 	Title:
	 	      A.V.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	CITIZENS BUSINESS CREDIT, A DIVISION

OF CITIZENS LEASING CORPORATION,	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ STEPHEN D. METTS	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	      Stephen D. Metts	 	 
	 

	 	 	 	Title:
	 	      Vice President<PAGE>
                                                                    EXHIBIT 10.5

                            NEGATIVE PLEDGE AGREEMENT

         THIS NEGATIVE PLEDGE AGREEMENT, dated this the 16th day of June, 2005,
made by PINNACLE AIRLINES, INC., a Georgia corporation, party of the first part
("Borrower"), in favor of FIRST TENNESSEE BANK NATIONAL ASSOCIATION, a national
banking association having its principal place of business at 165 Madison
Avenue, Memphis, Tennessee 38103, party of the second part ("Bank").

                             W I T N E S S E T H :

         WHEREAS, the Borrower has made application to the Bank for certain
loans and financial accommodations in the maximum principal amount of Seventeen
Million Dollars ($17,000,000.00), to be currently evidenced by a Seventeen
Million Dollar ($17,000,000.00) revolving credit note of even date herewith and
possibly to be evidenced in the future by certain other promissory notes and
standby letters of credit (collectively, the "Note") as described in that
certain Loan Agreement of even date herewith by and among the Borrower, the
Bank, and Pinnacle Airlines Corp., a Delaware corporation (the "Guarantor" and
the "Loan Agreement"); and

         WHEREAS, the Bank is unwilling to make such loans unless Borrower
further enters into this Agreement with the Banks;

         NOW, THEREFORE, for and in consideration of the premises, and other
good and valuable considerations, the receipt and sufficiency of which are
hereby acknowledged, Borrower does hereby agree with the Bank as follows:

         1. So long as Borrower is indebted to Bank pursuant to the Note,
Borrower will not, either directly or indirectly, incur, create, assume, or
permit to exist any mortgage, pledge, security interest, encumbrance, lien, or
charge of any kind upon any of the property (the "Property") owned by Borrower
and described in EXHIBIT "A," attached hereto and made a part hereof as fully as
if set out verbatim herein.

         2. Borrower hereby acknowledges to the Bank that the identity of
Borrower was and continues to be material circumstances upon which the Bank has
relied in connection with, and which constitutes valuable consideration to the
Bank for, the extending to Borrower of the loan evidenced by the Note. Borrower
therefore covenants and agrees with the Bank that the entire indebtedness
evidenced by the Note shall, at the absolute option of the Bank, be and become
immediately due and payable should the Borrower, without the prior written
consent of the Bank (which consent may be given or withheld in the sole and
absolute discretion of the Banks), sell, assign, transfer (other than for
purposes of collection of checks and instruments in the ordinary course of
business), convey, lease with option to purchase, enter into a contract for
sale, grant an option to purchase, or further encumber any or all of Borrower's
interest in the Property, or any portion thereof, or permit the same to be sold,
assigned, transferred, conveyed, contracted for or encumbered.

<PAGE>

         3. Any mortgage, pledge, security interest, or other lien or
encumbrance on the Property granted or created by Borrower, or any conveyance or
sale of the Property, without the prior written consent of the Bank, shall be
void and of no force and effect.

         4. In the event of a default hereunder, the Bank shall be entitled to
exercise all of their rights and remedies set forth in (a) the Note and (b) the
Loan Agreement.

         5. This Agreement shall be binding upon Borrower, its successors and
assigns, shall inure to the benefit of the Bank, its successors and assigns, and
shall remain in full force and effect until all indebtednesses, liabilities, and
obligations of Borrower to the Bank evidenced by the Note and any renewals,
modifications or extensions thereof, due or to become due, absolute or
contingent, shall have been fully paid and satisfied.

         6. This Agreement shall be governed by and construed under the laws of
the State of Tennessee.

         7. It is understood and agreed that the Bank may at its option record
this Negative Pledge Agreement, and/or cause evidence thereof to be filed in
such governmental offices as the Bank deems advisable.

                        [SEPARATE SIGNATURE PAGE FOLLOWS]

                                      -2-

<PAGE>

                                 SIGNATURE PAGE
                                       TO
                            NEGATIVE PLEDGE AGREEMENT

================================================================================

         IN TESTIMONY WHEREOF, the undersigned has caused this Negative Pledge
Agreement to be executed by its duly authorized officers on the day and year
first above written.

                                       "Borrower"

                                       PINNACLE AIRLINES, INC.

                                       By:
                                          --------------------------------------
                                       Name:
                                            ------------------------------------
                                       Title:
                                             -----------------------------------

STATE OF TENNESSEE
COUNTY OF SHELBY

         Before me, ______________________________, a Notary Public in and for
the State and County aforesaid, personally appeared ___________________________,
with whom I am personally acquainted (or proved to me on the basis of
satisfactory evidence), and who, upon oath, acknowledged himself (or herself)
to be the ______________________ of PINNACLE AIRLINES, INC., the within-named
bargainor, a corporation, and that _he as such ________________________, being
duly authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of the corporation by ___self as
such ____________________.

         WITNESS my hand and seal at office, on this the ____ day of June, 2005.

                                            ------------------------------------
                                            Notary Public

My Commission Expires:

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

                                      S-1
<PAGE>

                                   EXHIBIT "A"
                                       TO
                            NEGATIVE PLEDGE AGREEMENT

         All of the Borrower's accounts, accounts receivable, cash, chattel
paper, instruments, marketable securities, and other obligations of any kind,
whether or not evidenced by an instrument or chattel paper, and whether or not
it has been earned by performance whether now or hereafter existing, arising out
of or in connection with the sale or lease of goods or the rendering of services
or otherwise, and all rights now or hereafter existing in and to all security
agreements, leases and other contracts securing or otherwise relating to any
such accounts receivable.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}]]