Document:

Exhibit
10.4

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT
BE SOLD OR OFFERED FOR SALE UNLESS REGISTERED UNDER SAID ACT OR LAWS OR UNLESS
AN EXEMPTION IS AVAILABLE UNDER SAID ACT OR LAWS.

 

TRANSFER OF THIS NOTE IS RESTRICTED IN THE
MANNER SPECIFIED IN SECTION 2.07 OF THE MORTGAGE.

 

 

SKYWEST AIRLINES, INC.,

a Utah corporation

 

NOTE DUE MARCH 21, 2006, ISSUED IN CONNECTION
WITH A LOAN TO SKYWEST AIRLINES, INC. AND SECURED BY FOUR BOMBARDIER REGIONAL
JET MODEL CL-600-2B19 AIRCRAFT WITH MANUFACTURER’S SERIAL NUMBER 7799, 7801,
7850 AND 7852 AND INITIALLY BEARING CORRESPONDING UNITED STATES FEDERAL
AVIATION ADMINISTRATION REGISTRATION NO. N698BR, N699BR, N709BR AND N710BR AND
TWO GENERAL ELECTRIC CF34-3B1 ENGINES ATTACHED TO EACH AIRCRAFT.

 

No.
R-1

 

	
  US $60,000,000

  	
  September
  21, 2005

  

 

SKYWEST AIRLINES, INC., a
Utah corporation (“Borrower”), hereby promises to pay to C.I. T. Leasing
Corporation, a Delaware corporation, or its registered transferees, in
accordance with that certain Aircraft Mortgage and Security Agreement dated as
of September 21, 2005 (the “Mortgage”), the principal sum of SIXTY
MILLION AND 00/100 DOLLARS ($60,000,000), to be due and payable on the Final
Maturity Date.  Interest on the unpaid
principal amount hereof from time to time outstanding from and including the
date hereof until such principal amount is paid in full shall accrue at the
Floating Rate as provided for in Sections 2.02 and 2.03 of the Mortgage, and
shall be payable in arrears on each Payment Date and on the Final Maturity Date.  A schedule of the Payment Dates is set for on
Annex A hereto. Notwithstanding the foregoing, the final payment shall be an
amount sufficient to discharge in full the unpaid principal amount, accrued and
unpaid interest and all other amounts due and owing to the Note Holder under
the Operative Documents.

 

This Note shall bear
interest at the Past Due Rate on any principal hereof, interest and other
amounts due hereunder, not paid when due (whether at stated maturity, by
acceleration or otherwise), for any period during which the same shall be
overdue, payable on demand by the holder hereof given through Security
Trustee.  Interest on past-due amounts
shall be calculated on the basis of a year of 360 days and the actual days
elapsed.  In the event the principal of
or interest on this Note or other amount payable hereunder is not paid in full
when due (whether at stated maturity, by acceleration or otherwise), the period
applicable to the Past Due Rate if and so long as the Applicable Rate for this
Note is based on LIBOR shall be either (i) a period commencing on the due date
of such principal, interest or other amount and ending on the next succeeding
Business Day and thereafter each period commencing on the last day of the
preceding period and ending on the next succeeding Business Day, or (ii) such
other period or periods (not greater than six months) as the Security Trustee
may, at any time and from time to time during the period the same remains
past-due, select in its sole discretion for the purpose of determining the Past
Due Rate.

 

 

Interest shall be calculated
as provided for in Sections 2.02 and 2.03 of the Mortgage.  If any sum payable hereunder falls due on a
day that is not a Business Day, then such sum shall be payable on the next
succeeding Business Day together with interest thereon at the Applicable Rate
from and including the scheduled due date to but excluding such next succeeding
Business Day; provided, that if such succeeding Business Day falls in
the next calendar month, such payment shall be made on the preceding Business
Day.

 

Principal and interest and
other amounts due hereon shall be payable in Dollars in immediately available
funds prior to 11:15 a.m., New York City time, on the due date thereof, to
Security Trustee at it offices, and Security Trustee shall, subject to the
terms and conditions of the Mortgage, promptly remit all such amounts so
received by it to the Note Holder holding this Note in accordance with the
terms of the Mortgage at such account or accounts at such financial institution
or institutions as such Note Holder shall have designated to Security Trustee
in writing, in immediately available funds, such payment to be made, in the
case of any such designated account in New York City, New York prior to 2:00
p.m. New York City time, on the due date thereof.  If Security Trustee, through negligence or
willful misconduct, shall fail to make any such payment as provided in the
immediately foregoing sentence after its receipt of funds at the place and
prior to the time specified above, Security Trustee, in its individual capacity
and not as trustee, agrees to compensate the Note Holder holding this Note for
loss of use of funds in a commercially reasonable manner, and Borrower shall
have no liability for, and the Mortgage Estate shall not secure, any such loss
or any overdue interest on this Note in connection with any such failure of
Security Trustee to timely distribute funds. 
All such payments by Borrower and Security Trustee shall be made free
and clear of and without reduction for or on account of all wire or other like
charges.

 

 

The Note Holder holding this
Note, by its acceptance hereof, agrees that, except as otherwise expressly
provided in the Mortgage, each payment received by it in respect hereof shall
be applied, first, to the payment of any amount (other than the
principal of or the Breakage Amount (if any) or interest on this Note) due in
respect of this Note, second, to the payment of the Breakage Amount, if
any, and interest hereon (as well as any interest on overdue principal and, to
the extent permitted by law, interest and other amounts payable hereunder) due
and payable hereunder, third, to the payment of the principal of this
Note then due and fourth, the balance, if any, remaining thereafter, to
the payment of the principal of this Note remaining unpaid, in the manner set
forth in the “fourth” clause of Section 2.05 of the Mortgage.

 

This Note is one of the
Notes referred to in the Mortgage that have been or are to be issued by
Borrower pursuant to the terms of the Mortgage. 
Reference is hereby made to the Mortgage and the Operative Documents
referred to therein for a statement of the rights and obligations of the Note
Holder holding this Note, and the nature and extent of the security for this
Note and of the rights and obligations of the other Note Holders, and the
nature and extent of the security for the other Notes, to all of which terms
and conditions in the Mortgage and such Operative Documents the Note Holder
holding this Note agrees by its acceptance hereof.

 

There shall be maintained a
Note Register for the purpose of registering transfers and exchanges of this
and other Notes at the offices of the Security Trustee in the manner provided
in Section 2.07 of the Mortgage.  Subject
to the Operative Documents and the next following paragraphs, this Note or any
interest herein may be assigned or transferred, and the Notes are exchangeable
for a like aggregate original principal amount of Notes of any authorized
denomination, as requested by the Note Holder surrendering the same; provided
that no such transfer shall be effective until recorded in the Note Register.

 

Prior to the due presentment
for registration of transfer of this Note, Borrower and Security Trustee may
deem and treat the person in whose name this Note is registered on the Note
Register as the

 

 

absolute owner of this Note and the Note Holder for
the purpose of receiving payment of all amounts payable with respect to this
Note and for all other purposes whether or not this Note is overdue, and
neither Borrower nor Security Trustee shall be affected by notices to the
contrary.

 

This Note is subject to
prepayment only as permitted by Sections 2.10 and 2.11 of the Mortgage and such
Note Holder, by its acceptance of this Note, agrees to be bound by said
provisions.

 

This Note shall not be
secured by or be entitled to any benefit under the Mortgage or be valid or
obligatory for any purpose, unless authenticated by the Security Trustee as
evidenced by the manual signature of one of its authorized signatories on the
certificate below.

 

Capitalized terms used
herein and not otherwise defined shall have the meaning assigned such terms in
Appendix A to the Mortgage.

 

THIS NOTE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

 

 

[Remainder of Page Intentionally
Blank – Signature Page Follows]

 

 

IN WITNESS WHEREOF, Borrower
has caused this Note to be executed in its corporate name by its officer thereunto
duly authorized, as of the day and year first above written.

 

	
   

  	
  SKYWEST
  AIRLINES, INC.,

  
	
   

  	
  Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael J. Kraupp

  	
   

  
	
   

  	
  Name:
  

  	
  Michael
  J. Kraupp

  
	
   

  	
  Title:

  	
  Vice
  President Finance and Assistant Treasurer

  
					

 

[Signature
page to Note]

 

 

ANNEX
A

TO

NOTE

 

SCHEDULED
PAYMENT DATES 

 

	
  Payment Date

  	
   

  	
  Principal

  	
   

  	
  Outstanding Principal

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21-Oct-2005

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  60,000,000.00

  	
   

  
	
  21-Nov-2005

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  60,000,000.00

  	
   

  
	
  21-Dec-2005

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  60,000,000.00

  	
   

  
	
  21-Jan-2006

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  60,000,000.00

  	
   

  
	
  21-Feb-2006

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  60,000,000.00

  	
   

  
	
  21-Mar-2006

  	
   

  	
   

  	
  $

  	
  60,000,000.00

  	
   

  	
  $

  	
  —

  	
   

  

 

 

RECEIPT

 

I,                                 ,
as special counsel to CIT Leasing Corporation, a Delaware corporation (“Lender”),
hereby acknowledge receipt of the original Note No. R-1 dated September      ,
2005, executed by Borrower in favor of Lender.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  September        ,
  2005Exhibit 10.5

 

GUARANTY

(CIT Loan)

 

 

Dated as of September 21, 2005

 

 

among

 

 

SKYWEST, INC.,

as Guarantor,

 

 

C.I.T. LEASING CORPORATION,

as Lender,

 

 

and

 

 

C.I.T. LEASING CORPORATION,

as Security Trustee

 

 

Four Bombardier Regional Jet Model CL-600-2B19 Aircraft

U.S. Registration Numbers: N698BR, N699BR, N709BR and N710BR

Corresponding Manufacturer’s Serial Numbers:  7799, 7801, 7850, 7852

 

 

TABLE OF CONTENTS

 

	
  SECTION 1.

  	
  Guaranty of Obligations

  	
   

  
	
  SECTION 2.

  	
  Rights Limited to Guaranteed
  Party

  	
   

  
	
  SECTION 3.

  	
  Bankruptcy, Etc.

  	
   

  
	
  SECTION 4.

  	
  Subrogation

  	
   

  
	
  SECTION 5.

  	
  Amendments and Other Actions

  	
   

  
	
  SECTION 6.

  	
  Remedies

  	
   

  
	
  SECTION 7.

  	
  No Waiver

  	
   

  
	
  SECTION 8.

  	
  Instrument for the Payment
  of Money

  	
   

  
	
  SECTION 9.

  	
  Continuing Guaranty

  	
   

  
	
  SECTION 10.

  	
  Mortgage

  	
   

  
	
  SECTION 11.

  	
  Effectiveness
  of Amendments

  	
   

  
	
  SECTION 12.

  	
  Payments

  	
   

  
	
  SECTION 13.

  	
  Consent
  to Jurisdiction; Service of Process

  	
   

  
	
  SECTION 14.

  	
  Governing
  Law

  	
   

  
	
  SECTION 15.

  	
  Integration;
  Counterparts; Successors and Assigns

  	
   

  
	
  SECTION 16.

  	
  Notices

  	
   

  
	
  SECTION 17.

  	
  Costs
  and Expenses

  	
   

  
	
  SECTION 18.

  	
  Performance

  	
   

  
	
  SECTION 19.

  	
  Waiver
  of a Jury Trial

  	
   

  
	
  SECTION 20.

  	
  Further
  Assurances

  	
   

  
	
  SECTION 21.

  	
  Captions

  	
   

  
	
  SECTION 22.

  	
  Agents
  and Attorneys-in-Fact

  	
   

  
	
  SECTION 23.

  	
  Severability

  	
   

  
	
  SECTION 24.

  	
  Payment
  in Dollars

  	
   

  

 

 

GUARANTY

(CIT Loan)

 

THIS
GUARANTY (CIT Loan), dated as of September [  ], 2005, is executed by
SkyWest, Inc., a Utah corporation (“Guarantor”), for the benefit of (a) C.I.T.
Leasing Corporation, as lender (“Lender”), and (b) C.I.T. Leasing Corporation,
not in its individual capacity, except as expressly provided herein, but solely
as Security Trustee (“Security Trustee” and, together with Lender, and their
respective successors and permitted assigns, each a “Guaranteed Party”, and
collectively, the “Guaranteed Parties”).

 

W I  T
N  E  S  S  E  T  H :

 

WHEREAS,
pursuant to the terms of that certain Loan Agreement (CIT Loan) dated as of
even date herewith (the “Loan Agreement”) by and among SkyWest Airlines, Inc.,
a Utah corporation (“Borrower”), Guarantor, Lender and Security Trustee, Lender
has agreed to provide the Loan to Borrower;

 

WHEREAS,
Borrower and Security Trustee are entering into that certain Aircraft Mortgage
and Security Agreement (CIT Loan) (the “Mortgage”) dated as of even date
herewith pursuant to which Borrower issues to Lender one or more Notes as
evidence of Borrower’s indebtedness to Lender, and Borrower shall execute and
deliver an initial Mortgage Supplement dated the Closing Date covering the
Aircraft, supplementing the Mortgage;

 

WHEREAS,
capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in Appendix A to the Mortgage; and

 

WHEREAS,
Borrower is a wholly-owned subsidiary of Guarantor and the making of the Loan
is a direct benefit to Borrower in connection with the profitable conduct of
its business and, therefore, also benefits Guarantor; and

 

WHEREAS,
Guarantor is fully informed, understands and acknowledges that it is a
condition precedent and a requisite inducement to the commitment of Lender to
make the Loan, and to the execution and delivery of the Operative Documents by
the Guaranteed Parties party thereto, that Guarantor execute and deliver this
Guaranty (as the same may be amended or supplemented from time to time, herein
referred to as this “Guaranty”);

 

NOW,
THEREFORE, in consideration of the benefits, rights and interests to Borrower
derived from the making of the Loan and the delivery of the Operative
Documents, for a necessary inducement to the Guaranteed Parties to enter into
the Operative Documents, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Guarantor, fully aware
that the Guaranteed Parties are relying hereupon as an inducement to the
provisions of the Operative Documents, hereby agrees as follows:

 

SECTION
1.           Guaranty of Obligations.

 

(a)                                  Guaranty.

 

(i)                                     Guarantor hereby (A) acknowledges that it is
fully aware of the terms and conditions contained in, and has received a copy
of the Mortgage, Loan Agreement, Mortgage Supplement No. 1 and the other
Operative Documents (as the same may be amended, modified or supplemented from
time to time, collectively, the “Guaranteed Documents”) and is fully aware of
the transactions contemplated by the terms thereof and (B) irrevocably,
absolutely and unconditionally

 

 

guarantees, as primary obligor and not as
surety or guarantor of collection, without set-off, abatement, deferment, or
deduction, (1) the full and prompt payment by Borrower of all payment
obligations of Borrower under the Guaranteed Documents to which Borrower is a
party when due, whether by acceleration or otherwise, (including, without
limitation, when due by reason of an Event of Default) strictly in accordance
with the terms thereof (such obligations of Borrower guaranteed hereby are
hereinafter referred to as the “Financial Obligations”), and (2) the
performance of each and every other covenant, agreement and obligation to be
performed or observed by Borrower under the Guaranteed Documents to which
Borrower is a party (the “Nonfinancial Obligations” and, collectively with the
Financial Obligations, the “Obligations”).

 

(ii)                                  Guarantor hereby agrees that, if Borrower
fails to pay any Financial Obligation for any reason on the date that such
Financial Obligation is required to be paid, Guarantor will pay or cause to be
paid such Financial Obligation at the time specified in such Guaranteed
Documents, whether by acceleration or otherwise, and that in the case of any
extension of time of payment or renewal of any of the Financial Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
by acceleration or otherwise) in accordance with the terms of such extension or
renewal (it being the intention hereof that Guarantor shall promptly pay, as a
payment obligation directly due from Guarantor, amounts equal to all amounts
due that Borrower shall fail to faithfully and properly pay when due under the Guaranteed
Documents, whether by acceleration or otherwise).

 

(iii)                               Guarantor hereby agrees that, if Borrower
fails to perform any Nonfinancial Obligation for any reason on the date that
such Nonfinancial Obligation is required to be performed by Borrower under the
Guaranteed Documents, Guarantor will perform or cause such Nonfinancial
Obligation to be performed when due, and that in the case of any extension of
time of performance or renewal of any of the Nonfinancial Obligations, the same
will be promptly performed on the date performance is due (whether by extension
or otherwise) in accordance with the terms of such extension or renewal.

 

(b)                                 Absolute Guarantee.  To
the fullest extent permitted under applicable law, the obligations of Guarantor
hereunder shall be absolute and unconditional, shall be continuing and remain
in full force and effect until final and irrevocable payment, performance or
observance in full of all of the Obligations has occurred and shall not, in any
manner, be affected by (i) any action taken or not taken by any Guaranteed
Party or any other Person or by (ii) any lack of prior enforcement or retention
of any rights against Borrower or Guarantor or by (iii) any illegality,
unenforceability or invalidity of (A) the Obligations or the Guaranteed
Documents, (B) any other guarantee or other obligations, or (C) any other
agreement or instrument referred to herein or therein, or by (iv) any
substitution, release or exchange of any other guarantee of, or security for,
any of the Obligations, or by (v) any other circumstance or condition (whether
or not Guarantor or Borrower shall have any knowledge or notice thereof),
including without limitation: (1) to the extent not covered in Section 5
below, any termination, amendment or modification of, or deletion from, or
addition or supplement to, or other change in any of the Guaranteed Documents,
the Obligations or any other instrument or agreement applicable to any of the
parties to such agreements, any assignment, mortgage or transfer of any thereof
or of any interest therein, or to any leasing or subleasing or any registration
or re-registration of the Aircraft or any substitution of any Airframe or any
Engine; (2) any failure, omission or delay on the part of Borrower or any other
Person to conform or comply with any term of any Guaranteed Document; (3) any
exercise, delay in the exercise, or nonexercise of any right, remedy, power or
privilege under or in respect of any Guaranteed Document or any obligation or
liability contained therein; (4) any waiver by any Guaranteed Party, or their
successors or assigns, of the performance or observance by Borrower of any
Obligation, or of any payment, Default or Event of Default, or breach or
failure to perform under any Guaranteed Document; (5) any extension or renewal
of time or forbearance for payment of any Financial Obligation or for
performance of any other

 

2

 

Obligation, or of the time for performance of
any other obligations, covenants or agreements under or arising out of any
Guaranteed Document; (6) the exchange, surrender, substitution or modification
of any collateral security for any of the Obligations, or any furnishing or
acceptance of additional security, or any release of any security, for the
obligations of Borrower under the Guaranteed Documents, or the failure of any
security or the failure of any Person to perfect any interest in any collateral
security; (7) any failure, omission or delay on the part of any Guaranteed
Party, or their successors or assigns (x) to give Guarantor notice of any
Default, Event of Default, breach or other failure of performance under any
Guaranteed Document or (y) to enforce, assert or exercise any right, power or
remedy conferred on it in this Guaranty; (8) any other failure, omission or
delay on the part of any Guaranteed Party in connection with any Guaranteed
Document, or any other action on the part of the Guaranteed Party; (9) any
voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment,
general assignment for the benefit of creditors, composition, receivership,
conservatorship, custodianship, liquidation, marshalling of assets and
liabilities or similar proceedings with respect to Borrower, Guarantor, any
other Person or any of their respective properties or creditors, or the
disaffirmance with respect to Borrower of any of the Guaranteed Documents in
any such proceeding or any action taken by any trustee or receiver or by any
court in any such proceeding; (10) any limitation on Borrower’s liability or
the Obligations (or the liabilities and obligations of any other Person) by
cancellation, discharge, termination, frustration, irregularity, invalidity or
unenforceability, in whole or in part, of any of the Guaranteed Documents; (11)
any defect in the title, compliance with specifications, condition, design,
operation or fitness for use of, or any damage to or loss or destruction of,
the Aircraft, or any interruption or cessation in the use of the Aircraft or
any portion thereof by Borrower or any other Person for any reason whatsoever
(including without limitation any governmental or military authority, or any
act of God or of the public enemy) regardless of the duration thereof, whether
or not resulting from accident and whether or not without fault on the part of
Borrower or any other Person; (12) any merger or consolidation of Borrower or
Guarantor into or with any other Person, or any sale, lease or transfer of any
of the assets of Borrower or Guarantor to any other Person; (13) any
compromise, settlement, release, renewal, extension, indulgence, change in
amendment to or waiver or modification of any Obligation, or any failure to
mitigate damages, or any release or discharge, by operation of law or
otherwise, of Guarantor, Borrower or any other Person from the performance or
observance of any obligation, covenant or agreement contained in this Guaranty
or any other Guaranteed Document; (14) any transfer or permitted assignment by
Borrower or any Guaranteed Party, or their successors or assigns of its
interest, or any part thereof, in and to any Guaranteed Document or the
Aircraft or the assignment or transfer of any rights relating to any Obligation
contained in any Guaranteed Document, including, without limitation, the full or
partial assignment of any of the Guaranteed Documents or the Aircraft; (15) any
defense, set-off, cross-claim or counterclaim which may at any time be
available to or asserted against Borrower or Guarantor; (16) any
misrepresentation or breach of warranty made by Borrower in any Guaranteed
Document or in any certificate or document delivered in connection therewith;
(17) the genuineness, legality, validity or enforceability of any Guaranteed
Document, or of any assignment or termination of any Guaranteed Document; and
(18) any other condition or circumstance that might otherwise constitute a
legal or equitable discharge, release, counterclaim, offset or defense of a
surety or guarantor, or that might otherwise limit recourse against Guarantor,
including, without limitation, any discharge, release, defense or limitation
arising out of any laws of the United States of America or any State thereof or
any Governmental Authority having jurisdiction thereover that would either
exempt, modify or delay the due or punctual payment and performance of the
obligations of Guarantor hereunder, it being agreed that the obligations of
Guarantor hereunder shall not be discharged except by payment or performance as
herein provided.  To the fullest extent
permitted by applicable law, Guarantor hereby waives and agrees not to assert
any of the foregoing occurrences as a defense to its obligations
hereunder.  Without limiting the
foregoing, it is understood that repeated and successive demands and recoveries
may be made hereunder as and when, from time to time, there shall be a Default
or Event of Default by Borrower under the terms of any Guaranteed Document, and
that this Guaranty shall remain in force and effect and shall apply to each and
every subsequent Default or Event of Default. 
No failure or delay in exercising any right under

 

3

 

this Guaranty shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right preclude
any other or further exercise thereof or the exercise of any other right of the
Guaranteed Party under this Guaranty or the Guaranteed Documents.

 

(c)                                  Guarantee of Payment and Performance.  This
Guaranty is a guarantee of payment and performance and not of collection and,
to the fullest extent permitted by applicable law, Guarantor waives any right
to require that any action or recourse against Borrower or any other Person or
against any right or interest in any property or collateral security for the
obligations be taken or exhausted prior to action being taken against
Guarantor.  Guarantor specifically agrees
that it shall not be necessary or required, and that Guarantor shall not be
entitled to require, that any Guaranteed Party (i) file suit or proceed to
obtain or assert a claim against Borrower or any other Person for the
Obligations, (ii) give notice of or make demand for or make any effort at
collection or obtaining performance of the Obligations from Borrower or any
other Person, (iii) foreclose against or seek to realize upon any security now
or hereafter existing for the Obligations, (iv) file suit or proceed to obtain
or assert a claim for personal judgment or make any effort at collection of the
Obligations from or against Borrower or any other Person liable for the Obligations,
or exercise or assert any other right or remedy to which any Guaranteed Party
is or may be entitled in connection with the Obligations or any security or
other guaranty therefor, or (v) assert or file any claim against the assets of
Borrower or any other guarantor or any other Person liable for the Obligations,
or any part thereof, either before or as a condition to enforcing the liability
of Guarantor under this Guaranty or requiring payment of said Obligations by
Guarantor hereunder at any time thereafter.

 

(d)                                 Waiver.  Guarantor hereby specifically
agrees that it shall not be necessary or required as a condition to enforcement
of the obligations hereunder against it, that there be (and Guarantor, to the
fullest extent permitted by applicable law, specifically waives) diligence,
presentment, demand, protest or notice of any kind whatsoever with respect to
this Guaranty or the Obligations; such waiver includes, without limitation: (i)
notice of acceptance of this Guaranty or notice of nonpayment or nonperformance
of any of the Obligations; (ii) demand for payment or performance from Borrower
or Guarantor; (iii) presentment for payment upon Borrower or Guarantor or the
making of any protest; (iv) notice of the amount of the Obligations outstanding
at any time; (v) notice of failure to perform on the part of Borrower or notice
of dishonor or acceleration; (vi) any requirement to exhaust any remedies
exercisable upon a Default or Event of Default under any Guaranteed Document;
(vii) any notice of any sale, transfer or other disposition of any right, title
to or interest in the Aircraft, or any part thereof; or (viii) any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety or which might otherwise
limit recourse against Guarantor. 
Guarantor agrees that any repayment or performance of the Obligations
guaranteed hereunder or other act which tolls any statute of limitations
applicable to enforcement of the Obligations shall similarly operate to toll
any statute of limitations applicable to any liability of Guarantor
hereunder.  To the fullest extent
permitted by applicable law, Guarantor waives (x) all rights and benefits under
any statute or rule of law requiring the holder or holders of any promissory
note to pursue the maker thereof, any security that said holder or holders may
hold, or any other remedy before proceeding against Guarantor, (y) all rights
and benefits under any applicable law (to the extent applicable to Guarantor
hereunder) purporting to reduce a guarantor’s obligation in proportion to the
principal obligation guaranteed and (z) relinquishes the benefit and advantage
of any and all valuation, stay, appraisement, extension or redemption laws
which, but for this provision, agreement and waiver, might be applicable to any
sale made under any judgment, order or decree of any court or otherwise based
on this Guaranty, or any other Guaranteed Document or on the security interest
in favor of the Security Trustee under the Mortgage.  All waivers made by Guarantor in this
subparagraph (d) and elsewhere throughout this Guaranty are intentional and
made by Guarantor after due consideration of all the consequences thereof.

 

4

 

(e)                                  Borrower’s Financial Position. 
Guarantor assumes full responsibility for keeping fully informed of the
financial and business conditions of Borrower and all other circumstances
materially affecting Borrower’s ability to perform the Obligations, and agrees
that no Guaranteed Party will have any duty to report to Guarantor any
information that it receives about Borrower’s financial condition, business or
operations, or any circumstances bearing on its ability to perform its duties
under the Operative Documents.  To the
fullest extent permitted by applicable law, Guarantor waives any and all notice
of the creation, renewal, extension or accrual of any of the Obligations and
notice of or proof of reliance by any Guaranteed Party upon this Guaranty or
acceptance of this Guaranty.  The
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred in reliance upon this Guaranty, and all
dealings between Borrower or Guarantor and any Guaranteed Party relating
thereto shall likewise be conclusively presumed to have been had or consummated
in reliance upon this Guaranty.

 

(f)                                    Termination.  Subject to the provisions of Section
3 hereof and except as otherwise provided in the Operative Documents,
Guarantor’s obligations under this Section 1 shall terminate one year
and 30 days from such time as the Obligations shall have been irrevocably paid,
performed and observed in full.

 

SECTION
2.                                Rights Limited to Guaranteed Party.  This
Guaranty shall not and shall not be deemed to create any right in any Person
except the Guaranteed Parties (and the successors and the permitted assigns of
any Guaranteed Party) and shall not be construed in any respect to be a
contract in whole or in part for the benefit of any other Person.

 

SECTION
3.                                Bankruptcy, Etc.

 

(a)                                  Guarantor agrees that if, at any time, all or
any part of any payment or performance theretofore applied by any Guaranteed
Party to any of the Obligations is or must be rescinded or returned by such
Guaranteed Party for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of Borrower, Guarantor or any other
Person), such Obligations shall, for the purposes of this Guaranty, to the
extent that such payment or performance is or must be rescinded or returned, be
deemed to have continued in existence, notwithstanding such application by such
Guaranteed Party, and this Guaranty shall continue to be effective or be
reinstated as to such Obligations, all as though such application by such
Guaranteed Party had not been made.  If
an event permitting the declaration of a Default or an Event of Default under a
Guaranteed Document shall at any time have occurred and be continuing, and such
declaration of Default or Event of Default shall at such time be prevented by
reason of the pendency against Borrower, Guarantor or any other Person of a
case or proceeding under a bankruptcy or insolvency law, Guarantor agrees that,
for purposes of this Guaranty and its obligations hereunder, a Default or Event
of Default shall be deemed to have been declared with respect to such
Guaranteed Document with the same effect as if such Guaranteed Document had
been enforceable in accordance with the terms thereof, and Guarantor shall
forthwith pay the amounts specified by any Guaranteed Party to be paid
thereunder, any interest thereon and any other amounts guaranteed hereunder
without any other notice or demand.

 

(b)                                 Guarantor hereby agrees that it will fully
reimburse and does hereby fully indemnify each Guaranteed Party, on demand, for
all reasonable costs and expenses (including without limitation reasonable fees
of counsel) incurred by such Guaranteed Party in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy,
insolvency or similar law; provided, however, that each
Guaranteed Party shall take such reasonable actions (or cease taking actions)
as Guarantor may reasonably request to minimize or terminate further costs and
expenses in connection with such rescission or restoration upon tender by
Guarantor of the amount so rescinded or restored plus all other amounts due and
owing hereunder

 

5

 

(including indemnified amounts reasonably
incurred to the date of such tender).  In
case any Guaranteed Document shall be terminated as a result of the rejection
or disaffirmance thereof by any trustee, receiver, liquidator, agent or other
representative of Borrower or any of its property in any assignment for the
benefit of creditors or in any bankruptcy, insolvency, reorganization,
arrangement, readjustment, liquidation, dissolution of Borrower, or similar proceeding,
Guarantor’s obligations hereunder shall continue to the same extent as if such
Guaranteed Document had not been so rejected or disaffirmed.  Guarantor shall and does hereby waive all
rights and benefits that might accrue to it by reason of any such assignment or
proceeding and Guarantor agrees that it shall be liable for the full amount of
the Obligations irrespective of and without regard to any modification,
limitation or discharge of liability of Borrower that may result from or in
connection with any such assignment or proceeding.

 

SECTION
4.                                Subrogation.  Guarantor hereby irrevocably
and unconditionally waives so long as any Obligation remains outstanding any
and all rights it may have or obtain, by reason of the performance of the terms
and provisions of this Guaranty, to succeed to or be subrogated to the rights
and privileges of any Guaranteed Party against Borrower or against any
collateral security or guarantee or right of offset held by any Guaranteed
Party for the payment of the Obligations pursuant to the Operative Documents or
otherwise.  As between Guarantor and the
Guaranteed Parties only, Guarantor hereby further (a) irrevocably waives, to
the fullest extent permitted by applicable law, all contractual, common law,
statutory or other rights of reimbursement, contribution, exoneration or
indemnity (or any similar right) from or against Borrower which may have arisen
in connection with this Guaranty and (b) agrees with Borrower for the benefit
of each of Borrower’s creditors (including, without limitation, each of the
Guaranteed Parties), but not to the benefit of any other Person who may have
obligations to Borrower, that any such payment or performance by Guarantor
shall constitute a contribution of capital by Guarantor to Borrower (or an
investment in the equity capital of Borrower by Guarantor).  So long as any Obligation remains
outstanding, if any amount shall be paid by or on behalf of Borrower to
Guarantor on account of any of the rights waived in this paragraph, such amount
shall be held by Guarantor in trust, segregated from other funds of Guarantor,
be turned over to the Guaranteed Party entitled thereto in the exact form
received by Guarantor (duly endorsed without recourse by Guarantor to such
Guaranteed Party, if required), to be applied against the Obligations, whether
matured or unmatured, in such order as such Guaranteed Party may
determine.  The provisions of this
paragraph shall survive the term of this Guaranty and the payment in full of
the Obligations and the termination of the Guaranteed Documents.

 

SECTION
5.                                Amendments and Other Actions.  Each
Guaranteed Party may, in its discretion, at any time and from time to time,
without notice to Guarantor and without Guarantor’s consent (unless otherwise
expressly required under the terms of such Guaranteed Documents), and without
affecting the liability of Guarantor under this Guaranty, (a) agree to
amendments, modifications or supplements to the Guaranteed Documents, give or
withhold consents, waivers or approvals, and exercise, or refrain from
exercising, rights under the Guaranteed Documents, (b) renew, extend (including
extensions beyond the original term), modify, release or discharge any
Obligation of Borrower, of co-guarantors (whether hereunder or under a separate
instrument) or of any other party at any time directly or contingently liable
for the payment of any of said Obligations, (c) accept partial payments of said
Obligations, (d) settle, release (by operation of law or otherwise), compound,
compromise, collect or liquidate any of said obligations and the security
therefor in any manner, (e) consent to the transfer of security, or (f) bid and
purchase at any sale of paper or security or any other collateral securing the
Guaranteed Obligations.

 

SECTION
6.                                Remedies.  Guarantor agrees that, as
between Guarantor and the Guaranteed Parties, the Obligations of Borrower may
be declared to be forthwith due and payable or to be performed, as the case may
be, as provided in the Guaranteed Documents (and shall be deemed to have become
automatically due and payable or to be performed, as the case may be, in the
circumstances provided for in such Guaranteed Documents) for purposes of this
Guaranty, notwithstanding any stay, injunction or other prohibition preventing
such declaration (or such Obligations from becoming automatically due and

 

6

 

payable or to be performed, as the case may
be), and such Obligations (whether or not due and payable or to be performed,
as the case may be, by Borrower) shall forthwith become due and payable by
Guarantor for purposes of this Guaranty.

 

SECTION
7.                                No Waiver.  No failure on the part of any
Guaranteed Party to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by any Guaranteed
Party of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.  The remedies herein are cumulative and are
not exclusive of any remedies provided by law.

 

SECTION
8.                                Instrument for the Payment of Money. 
Guarantor hereby acknowledges that this Guaranty constitutes an
instrument for the payment of money, and consents and agrees that any
Guaranteed Party, at its sole option, in the event of a dispute by Guarantor in
the payment of any moneys due hereunder, shall have the right, in addition to
any other remedies which are available at law, to bring an action for civil
remedies under the laws of the State of New York.

 

SECTION
9.                                Continuing Guaranty.  This
Guaranty is a continuing guarantee, and shall apply to all Obligations whenever
arising.

 

SECTION
10.                          Mortgage.  Guarantor hereby acknowledges
receipt of a copy of the Mortgage and consents to the terms thereof.

 

SECTION
11.                          Effectiveness of Amendments.  No
amendment of or supplement to this Guaranty, or waiver or modification of or
consent under the terms hereof, shall be effective unless evidenced by an instrument
in writing signed by Guarantor and each of the Guaranteed Parties.

 

SECTION
12.                          Payments.  All payments by Guarantor
hereunder in respect of any Obligation shall be made in immediately available
funds and otherwise as provided in the Guaranteed Documents pursuant to which
such Obligations are created.  All
payments by Guarantor hereunder shall be made free and clear of, and without
deduction of or withholding for or on account of or liability for any present or
future Taxes collected by way of withholding or deduction.  If any such Taxes are so levied or imposed,
Guarantor agrees to pay such Taxes and an additional amount such that the net
amount actually received by the person entitled to receive such payment will,
after such withholding, equal the full amount of the payment then due and shall
be free of expense to such person for collection or other charges.  Guarantor will promptly, and in any event
within 30 days after the date on which the payment of any such Taxes is due
pursuant to applicable law, furnish certified copies to such Guaranteed Party
of tax receipts if available or, if not available, other evidence of payment by
Guarantor.  Notwithstanding anything to
the contrary contained herein, the provisions of clauses 6(b)(ii) through
(xiii) of the Loan Agreement shall apply, mutatis mutandis, to any claim
for an amount to be paid by Guarantor with respect to Taxes pursuant to the
three preceding sentences as though the three preceding sentences were set
forth in clause 6(b)(i) of the Loan Agreement and Guarantor were Borrower in
all such clauses.

 

SECTION
13.                          Consent to Jurisdiction; Service of Process. 
Guarantor irrevocably agrees for the benefit of the Guaranteed Parties,
by execution and delivery of this Guaranty, that any legal action or proceeding
brought against Guarantor with respect to this Guaranty, the Guaranteed
Documents or the transactions contemplated hereby and thereby may be brought
and determined in the Supreme Court of the State of New York, or in the United
States District Court for the Southern District of New York, and Guarantor
hereby irrevocably accepts with regard to any such action or proceeding, for
itself and in respect of its properties, generally and unconditionally, the
non-exclusive jurisdiction of, acknowledges competence of and irrevocably
agrees (without waiving any rights to appeal) to be bound by a final

 

7

 

judgment of the aforesaid courts.  Guarantor irrevocably waives, to the fullest
extent permitted by applicable law, any objection that Guarantor may now or
hereafter have to venue in such a court and any claim that such court is an
inconvenient forum. Guarantor further irrevocably consents to the service of
process in any proceeding initiated in either of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered
airmail, postage prepaid, to Guarantor. 
Nothing herein shall affect the right of any Guaranteed Party to serve
process in any manner permitted by law or to commence legal proceedings or
otherwise proceed against Guarantor in any other jurisdiction in which
Guarantor may be subject to suit.

 

SECTION
14.                          Governing Law.  This
Guaranty is delivered in, and shall in all respects be governed by and
construed in accordance with the laws of the State of New York.

 

SECTION
15.                          Integration; Counterparts; Successors and
Assigns.  This Guaranty (i) constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, among Guarantor and the Guaranteed Parties, with respect to
Guarantor’s obligation to guarantee the payment and performance of the
Obligations, (ii) may be executed in several counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument, and (iii) shall be binding upon the successors and assigns of
Guarantor and shall inure to the benefit of, and shall be enforceable by, the
Guaranteed Parties and their respective successors and assigns.

 

SECTION
16.                          Notices.  All requests, demands,
notices, copies of service of process or other communications hereunder shall
be addressed and given in the manner, and shall be effective as the times and
under the terms, set forth in Section 9(a) of the Loan Agreement.

 

SECTION
17.                          Costs and Expenses. 
Guarantor agrees to pay to the Guaranteed Parties any and all reasonable
expenses (including reasonable legal fees and expenses) incurred by the
Guaranteed Parties in construing and/or enforcing this Guaranty, including such
costs and expenses incurred at trial or on appeal or in connection with any
settlement, arbitration or mediation proceedings, together with any reasonable
cost, including attorney’s fees, incurred on account of the bankruptcy or
insolvency of Guarantor.

 

SECTION
18.                          Performance.  Performance by Guarantor of
any or all of the obligations of Borrower under and pursuant to the Guaranteed
Documents shall, for all purposes thereof, constitute performance by Borrower
of such obligations to the extent so performed by Guarantor hereunder.

 

SECTION
19.                          Waiver of a Jury Trial. 
GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO
WHICH IT IS A PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
ARISING IN TORT, CONTRACT, OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATING
TO, OR CONNECTED WITH THIS GUARANTY OR ANY OTHER OPERATIVE DOCUMENT OR THE
RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER AND WHETHER ARISING OR
ASSERTED BEFORE OR AFTER THE DATE HEREOF OR BEFORE OR AFTER THE PAYMENT, OBSERVANCE
OR PERFORMANCE OF GUARANTOR’S OBLIGATIONS UNDER THIS GUARANTY OR ANY OTHER
OPERATIVE DOCUMENT.

 

SECTION
20.                          Further Assurances. 
Guarantor agrees that at its expense, from time to time upon the written
request of any of the of the Guaranteed Parties, Guarantor will execute and
deliver such further documents and do such other acts and things as the
Guaranteed Parties reasonably request in order fully to effect the purposes of
this Guaranty, including without limitation, executing and delivering such further
documents as may be reasonably necessary or desirable to confirm or evidence
the rights hereunder of any successor or permitted assign of any Guaranteed
Party.

 

8

 

SECTION
21.                          Captions.  The captions appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Guaranty.

 

SECTION
22.                          Agents and Attorneys-in-Fact.  Each
Guaranteed Party may employ agents and attorneys-in-fact in connection herewith
and shall not be responsible for the negligence or misconduct of any such
agents or attorneys-in-fact selected by it in good faith.

 

SECTION
23.                          Severability.  If
any provision hereof is invalid and unenforceable in any jurisdiction, then, to
the fullest extent permitted by law, (i) the other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in favor of the Guaranteed Parties to carry out the intentions of the
parties hereto as nearly as may be possible and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.

 

SECTION
24.                          Payment in Dollars.

 

(a)                                  If, for the purposes of obtaining judgment
in, or enforcing the judgment of, any court, it is necessary for any Person to
convert a sum due hereunder in Dollars into another currency (the “Judgment
Currency”), the rate of exchange used shall be that at which in accordance
with normal banking procedures such Person could purchase Dollars with the
Judgment Currency on the Business Day on which final judgment is given or the
order of enforcement made.

 

(b)                                 The obligation of Guarantor in respect of any
sum due from it to any Person hereunder shall, notwithstanding any judgment or
order of enforcement in such Judgment Currency, be discharged only to the
extent that on the Business Day following that on which final judgment is given
or the order of enforcement made, such Person may in accordance with normal
banking procedures purchase Dollars with the Judgment Currency; if the Dollars
so purchased are less than the sum originally due to such Persons in Dollars,
Guarantor agrees, as a separate obligation and notwithstanding any such
judgment or order of enforcement, to indemnify any Person against such loss
attributable to any of its obligations hereunder, and if the Dollars so
purchased exceed the sum originally due from Guarantor, in Dollars, such Person
shall remit to Guarantor such excess. 
Any additional amount due from Guarantor under this Section 24 will be
due as a separate debt and shall not be affected by judgment or order of
enforcement being obtained for any other sums due under or in respect of this
Guaranty or any other Operative Document.

 

[Remainder of Page Intentionally
Blank — Signature Page Follows]

 

9

 

IN WITNESS WHEREOF, each of
Guarantor and the Guaranteed Parties have executed this Guaranty on the date
set forth above.

 

	
   

  	
  SKYWEST,
  INC.,

  
	
   

  	
  Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael J. Kraupp

  	
   

  
	
   

  	
  Name:
  

  	
  Michael
  J. Kraupp

  
	
   

  	
  Title:

  	
  Vice
  President Finance and Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  C.I.T.
  LEASING CORPORATION

  
	
   

  	
  not in its individual capacity, except as expressly

  provided herein, but solely as Security Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Glen T. Dimpfel

  	
   

  
	
   

  	
  Name:
  

  	
  Glen
  T. Dimpfel

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  C.I.T.
  LEASING CORPORATION

  
	
   

  	
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Glen T. Dimpfel

  	
   

  
	
   

  	
  Name:
  

  	
  Glen
  T. Dimpfel

  
	
   

  	
  Title:

  	
  Vice
  President

  
					

 

Signature Page for Guaranty

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