Document:

EXHIBIT
10.22.2

DRAFT

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT.  THE SYMBOL
“[***]” HAS BEEN INSERTED IN PLACE OF THE PORTIONS SO OMITTED.

 

AMENDMENT NO. 2

to the

Airline Services Agreement

By and Among

Pinnacle Airlines Corp., Pinnacle Airlines, Inc. and

Northwest Airlines, Inc.

 

 

This Amendment No. 2 (the
“Amendment”) to the Airline Services Agreement by and among Pinnacle Airlines Corp.,
Pinnacle Airlines, Inc. and Northwest Airlines, Inc., dated January 14, 2003
and made effective as of January 1, 2003, as amended by Amendment No. 1, dated
September 11, 2003 (the “ASA”) is made and entered into as of November __,
2003.

 

WITNESSETH:

 

WHEREAS, Pinnacle Airlines Corp., Pinnacle Airlines,
Inc. and Northwest Airlines, Inc. desire to amend certain provisions of the ASA
in the manner set forth in this Amendment.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Pinnacle Airlines Corp., Pinnacle Airlines, Inc. and
Northwest Airlines, Inc. enter into this Amendment and agree as follows:

 

1.                                       Amendment of Section 1.01. 
Section 1.01 of the ASA is amended as of the Revision Date as follows:

 

(a) The definition of “Market Margin Rate” in Section
1.01 of the ASA is amended to read as follows:

 

“Market Margin Rate” or “MMR” means the weighted (by revenue) average
full year operating margin of the five largest (by revenue) publicly traded
U.S. domestic regional airlines operating primarily regional jet aircraft;
provided, however, that if the result of this calculation is greater than 12
percent, the MMR shall be 12 percent , and if the result is less than 

 

 

 

8 percent, the MMR shall be 8 percent.  The MMR shall be initially calculated with
respect to calendar year 2008 and it shall be re-calculated with respect to
each fifth year thereafter so long as this Agreement remains in effect.

 

(b) The following definition of “Revision Date” shall
be inserted in Section 1.01 of the ASA after the definition of “Revenue
Threshold”:

 

“Revision Date” shall have the meaning ascribed to such term in
Section 9 of Amendment No. 2 to the ASA.

 

2.                                       Amendment of Section 2.15. 
Section 2.15 of the ASA is amended in its entirety as of the date hereof
to read as follows:

 

2.15  Other Operations. 
Pinnacle Corp. and/or an Affiliate of Pinnacle Corp. (other than
Pinnacle which shall not acquire aircraft and/or operate air transportation
services in its own name or on behalf of or in cooperation with an airline
other than Northwest) may acquire aircraft and operate air transportation
services in its own name or on behalf of or in cooperation with an airline
other than Northwest, subject to Section 2.14, Section 6.01(b), Section
6.02(a) and the following conditions:

(a)                                  During the term of this Agreement, no
officers, employees, facilities, Equipment or other assets of Pinnacle shall be
used in connection with such activity without Northwest’s prior written
approval except as follows:  (i) officers
of Pinnacle may engage in planning and coordination with respect to such
activities to the extent that such planning and coordination does not have an
adverse impact on Pinnacle’s performance of Regional Airline Services
hereunder, and (ii) the following operational and corporate functions of
Pinnacle may also be used to support such activity to the extent such use does
not have an adverse impact on Pinnacle’s performance on Regional Airline
Services hereunder:  (x) information
services personnel, equipment and other infrastructure to the extent such use
does not violate the Information Technology Services Agreement between Pinnacle
and Northwest, dated January 14, 2003, as amended; (y) systems operation
control (“SOC”) management personnel (excluding dispatchers) and
infrastructure, including but not limited to, facilities and computer systems;
(z) corporate functions specifically defined as those traditionally performed
by the tax, treasury, internal audit, purchasing, and corporate education (excluding
pilot training performed via simulators) departments; provided, however, that
prior to the commencement of operations by Pinnacle Corp. and/or an Affiliate
of Pinnacle Corp. in cooperation with an airline other than Northwest, the
parties shall negotiate in good faith an adjustment to the Fixed Cost Payment 

 

resulting from the
operating cost efficiencies shared between Pinnacle and the newly commenced
operation by Pinnacle Corp. and/or an Affiliate of Pinnacle Corp.

(b)                                 The aircraft operated by Pinnacle Corp.
or an Affiliate of Pinnacle Corp. pursuant to this Section 2.15 (i)
shall be certificated with a maximum passenger capacity of less than 60 seats
and a maximum gross takeoff weight of less than 70,000 pounds (or such greater
seat and weight limits as may be established under Section C.7 of Northwest’s
collective bargaining agreement with its pilots or any comparable successor
provision), and (ii) shall not otherwise cause Northwest to be in violation of
its collective bargaining agreement with its pilots.

(c)                                  Pinnacle Corp. is not at the commencement
of such operations an “Affiliate” of Northwest as such term is defined in
Northwest’s collective bargaining agreement with its pilots.  Northwest and Pinnacle Corp. acknowledge
that as of November __, 2003 neither Pinnacle nor Pinnacle Corp. is an
“Affiliate” of Northwest as such term is defined in Northwest’s collective
bargaining agreement with its pilots.

 

3.                                       Amendment of Section 3.02(a)(iv). 
Section 3.02(a)(iv) of the ASA is amended in its entirety as of the date
hereof to read as follows:

 

(iv)  Reserved.

 

4.                                       Amendment of Section 3.08. 
Section 3.08 of the ASA is amended in its entirety as of the date hereof
to read as follows:

 

Section 3.08         Related
Transfer Arrangements

 

All leases and subleases
of ground support equipment, simulators, tooling and spare parts inventory
agreements and vendor and/or maintenance agreements with respect to the
Equipment (collectively “Support Agreements”) entered into by Pinnacle after
the Effective Date shall be assignable to Northwest without the consent of the
other party to such Support Agreement on termination of this Agreement.  Pinnacle shall, at Northwest’s option,
assign such Support Agreements as Northwest shall designate to Northwest on
termination of this Agreement.  Pinnacle
shall use its best efforts to obtain the consent of the other party to any such
Support Agreements in effect as of the Effective Date and, subject to obtaining
such consents, if necessary, shall, at Northwest’s option, assign such Support
Agreements as Northwest shall designate to Northwest on termination of this
Agreement.  On termination of this
Agreement and during the Option Term, Northwest shall have the option to
purchase from Pinnacle all ground support equipment, simulators, tooling and
spare parts 

 

inventory then owned by
Pinnacle which are used with or related to the Equipment for an amount equal to
such assets’ then fair market value or depreciated book value, whichever is
less.  In the event Northwest invokes
its Equipment removal rights under Section 3.02 above, on the Equipment removal
date and for a period of thirty (30) days thereafter, Northwest shall have the
option to purchase from Pinnacle all ground support equipment, simulators,
tooling and spare parts inventory then owned by Pinnacle which are used with or
related to the returning Equipment for an amount equal to such assets’ then
fair market value or depreciated book value, whichever is less.  Upon request from Northwest, Pinnacle shall
make available to Northwest at no cost (i) the Maintenance Program and
Maintenance Manual (as defined in the Lease) for the Equipment, and (ii) all
other documentation required in order to operate and maintain the Equipment,
and Pinnacle agrees that Northwest may provide such Maintenance Program,
Maintenance Manual and other documentation to one or more other carriers
operating (or anticipated to operate) Canadair Regional Jet aircraft on behalf
of Northwest.

5.                                       Amendment of Section 4.03(g). 
Section 4.03(g) of the ASA is amended in its entirety as of the date
hereof to read as follows:

 

(g)  Reserved.

 

6.                                       Amendment of Article V; Transition Year
Settlement.

 

(a)                                  Article V of the ASA is amended in its
entirety as of the Revision Date to read as set forth in Article V attached
hereto in Exhibit I.

 

(b)                                 Article V of the ASA as it existed prior
to the Revision Date shall be applicable to the settlement of amounts due for
the time period from January 1, 2003 to the last day of the month prior to the
Revision Date.

 

(c)                                  Notwithstanding Sections 3(a) and 3(b)
above, with respect to the calendar year that encompasses the Revision Date,
(i) for purposes of calculating the Annual Margin Adjustment Payment, pursuant
to Section 5.09 of the ASA, the “Transition Floor and Ceiling” will be used in lieu
of the floors and ceilings in the table in Section 5.09(b), and (ii) for
purposes of calculating any payments owed by Pinnacle under Sections 5.05(e)
and 5.13 of the ASA, the “Transition Margin” will be used in lieu of the margin
multiplier in the formula set forth in Section 5.08, where

 

“Transition Floor and Ceiling” means the weighted average (based on
revenue received from Northwest) of the applicable floor and ceiling pursuant
to Section 5.09 in effect for each month of the calendar year that encompasses
the Revision Date.

 

 

 

“Transition Margin” means the weighted average (based on revenue received
from Northwest) of the applicable margin multiplier in the formula set forth in
Section 5.08, as in effect for each month of the calendar year that encompasses
the Revision Date.

 

7.                                       Amendment of Section 10.01. 
Section 10.01 of the ASA is amended in its entirety as of the date
hereof to read as follows:

 

Section 10.01       Term. 
This Agreement shall commence on and shall be effective as of January 1,
2003 (the “Effective Date”) and, unless earlier terminated as provided herein,
shall continue in effect until December 31, 2017 and shall thereafter
automatically be extended for successive five (5) year renewal periods (each a
“Renewal Term”) unless  Northwest gives
not less than two years’ advance notice of non-renewal prior to December 31,
2017 or the commencement of any Renewal Term, in which case the Agreement will
terminate on December 31, 2017 or the last day of the then applicable Renewal
Term, as the case may be.

 

8.                                       Amendment of Section 10.03(h). 
Section 10.03(h) of the ASA is amended in its entirety as of the date
hereof to read as follows:

 

(h)  Pinnacle
or a Pinnacle Affected Company shall commence operating an aircraft type which
causes Northwest to be in violation of its collective bargaining agreement with
its pilots or a Pinnacle Affected Company operates an aircraft that is
certificated with a maximum passenger capacity equal to or greater than 60
seats or a maximum gross takeoff weight equal to or greater than 70,000 pounds
(or such greater seat and weight limits as may be established under Section C.7
of Northwest’s collective bargaining agreement with its pilots or any
comparable successor provision).

9.                                       Revision Date. 
“Revision Date” shall mean the first day of the first month following
the month in which the sale of the stock of Pinnacle Airlines Corp. occurs
pursuant to the Registration Statement on Form S-1 (Registration No.
333-83354).

 

10.                                 Miscellaneous. 
This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument.  This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the internal
laws of the State of Minnesota, notwithstanding the choice of law provisions
thereof.  Except as specifically
amended, the ASA remains in full force and effect and is reaffirmed by each of
the parties hereto.  From and after the
date hereof all references in the ASA to the “Agreement” shall be deemed to be
references to the Agreement as amended by this Amendment.

 

 

IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as
of the date and year first set forth above.

 

	
  PINNACLE AIRLINES, INC.

  	
   

  	
  NORTHWEST AIRLINES, INC.

  
	
   

  	
   

  	
   

  
	
  By: 
  _________________________

  	
   

  	
  By:________________________

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  Title:

  

 

 

	
  PINNACLE AIRLINES CORP.

  	
   

  
	
   

  	
   

  
	
  By: 
  _________________________

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  

 

 

Exhibit I

 

ARTICLE V

REVENUES,
PAYMENTS AND SETOFF

Section
5.01         Revenues. 
Pinnacle acknowledges and agrees that all revenues resulting from the
sale and issuance of passenger tickets and cargo air waybills associated with
the operation of the Aircraft and all other sources of revenue associated with
the operation of the Aircraft are the sole property of Northwest, including
without limitation ticket change fees and other fees or charges which are
applicable pursuant to Northwest’s tariffs, unaccompanied minor fees, beverage
services, excess baggage fees and nonrevenue pass travel charges.

Section
5.02         Payments to Pinnacle.

(a)   Reports.  Pinnacle shall provide to Northwest periodic reports with respect
to the number of actual, completed Block Hours and Cycles of regional jet
service flown by Pinnacle (each in respect of Scheduled Flights, Charter
Flights and Non-Scheduled Flights) in accordance with the following schedule in
each calendar month during the term of this Agreement:

	
  Day of Month Report Due

  	
   

  	
  Period Covered by Report

  
	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  1st — 15th of Month

  
	
   

  	
   

  	
   

  
	
   7

  	
   

  	
  Complete Previous Month

  
	
   

  	
   

  	
   

  

 

Pinnacle shall also
provide Northwest periodic reports with respect to its Available CRJ Days, CRJ
deliveries, and its expenses with respect to Section 5.05 and Section 5.06 in
accordance with the following schedule in each calendar month during the term
of this Agreement:

 

	
  Day of Month Report Due

  	
   

  	
  Period Covered by Report

  
	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  Complete Previous Month

  
	
   

  	
   

  	
   

  

 

(b)   Payment Schedule.  Northwest shall remit to Pinnacle by wire
transfer of immediately available funds by the close of business on the 30th
day of each calendar month (or the next banking day if the 30th is a bank
holiday), as a provisional payment, Pinnacle’s Block Hour Payment, Cycle
Payment, IOP Payment and any payments due pursuant to Section 5.05 below
for the period covered by the Block Hour Report and Cycle Report furnished by
Pinnacle on the 22nd day of the month and the payment due in respect of
Equipment Rental Expense pursuant to Section 5.06 below.

 

 

Northwest shall remit to Pinnacle by wire transfer of
immediately available funds by the close of business on the 15th day of each
month (or the next banking day if the 15th is a bank holiday), as a final
payment, Pinnacle’s Block Hour  Payment,
Cycle Payment, IOP Payment, Fixed Cost Payment, Monthly Margin Payment, any
payments due pursuant to Section 5.05 or Section 5.06 below for
the preceding month and any payments due with respect to Charter Flights, less
the amount of the provisional payment made on the 30th day of the preceding
month.

For purposes of this Section 5.02, the
above-referenced payments to Pinnacle shall be calculated as follows for any
applicable period:

(i)            the Block Hour Payment will be equal
to the then applicable Block Hour Rate multiplied by the number of actual,
completed Block Hours reported in Pinnacle’s Block Hour Report for such period
for Scheduled Flights, Non-Scheduled Flights and Charter Flights, plus

(ii)           the Cycle Payment will be equal to
the then applicable Cycle Rate multiplied by the number of actual, completed
Cycles reported in Pinnacle’s Cycle Report for such period for Scheduled
Flights and Non-Scheduled Flights, plus

(iii)          the IOP Payment, if any, will be
determined in accordance with Section 5.03(c) below, plus

(iv)          any payments due pursuant to Section
5.05 below, plus

(v)           with respect to the payment to be
made on the 15th day of each month, Pinnacle’s Fixed Cost Payment determined in
accordance with Section 5.04 below and any payments due pursuant to Section
5.06 below, plus

(vi)          with respect to the payment to be made
on the 15th day of each month, the Monthly Margin Payment determined in
accordance with Section 5.08 or Section 5.11 below, as
applicable.

Adjustments arising from Northwest’s audit of the
Block Hour Report, Cycle Report, Available CRJ Days Report,  CRJ Deliveries Report, Section 5.05 Report,
or Section 5.06 Report may be made within ninety (90) days following the end of
each month.  Any reference to the 30th
day of a month in this Section 5 will be deemed to mean the last day of
February with respect to that month.

Section
5.03         Block Hour and Cycle Rates;
IOP Program Adjustment

(a)  Block Hour Rate. 
The Block Hour Rate for the time period through December 31, 2005
shall be calculated by multiplying the Base Block Hour Rate as follows for the
applicable period by (1 + CPPIB):

 

	
   

  	
   

  	
  Base Block Hour Rate

  	
   

  
	
  Period

  	
   

  	
  CRJ-200/440

  	
   

  
	
  Effective Date —
  12/31/03

  	
   

  	
  [***]

  	
   

  
	
  01/01/04 —
  12/31/04

  	
   

  	
  [***]

  	
   

  
	
  01/01/05 —
  12/31/05

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

(b) Cycle Rate. 
For each year in the Annual Operating Plan prepared in accordance with
Section 2.12, the departures for the year will be categorized into the six
categories set forth in the table below. 
The Cycle Rate for the CRJ200/440 Aircraft for the time period through
December 31, 2005 shall be calculated by multiplying the Base Cycle Rates as
set forth below by (1+CPPIB), and then calculating the weighted average of the
resulting rates for the applicable period:

Base Cycle Rates - - CRJ
200/400

	
   

  	
   

  	
  Effective
  Date — 12/31/03

  	
   

  	
  01/01/04-12/31/04

  	
   

  	
  01/01/05-12/31/05

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DTW

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  MSP

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  MEM

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  NW Cities

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  CS Cities

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  PS Cities

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

NW Cities means Northwest Service Cities.

CS Cities means Contracted Service Cities

PS Cities means Pinnacle Service Cities

Example:  If
Pinnacle’s 2004 Annual Operating Plan includes 40,000 annual departures in DTW,
35,000 annual departures in MSP, 25,000 annual departures in MEM, 50,000 annual
departures in NW Cities, 30,000 annual departures in CS Cities and 20,000
annual departures in PS Cities, and if the PPI for December 2003 is 141.5 and
the PPI for December 2002 is 137.4 (CPPIB= (141.5/137.4) — 1 = 3.0%), the Cycle
Rate for 2004 shall be calculated as follows:

Cycle Rate = {1.03*[([***]*40,000)+( [***]*35,000)+(
[***]*25,000)+( [***]*50,000)+( [***]*30,000)+( [***]*20,000)] }/ 200,000 =
[***]

(c)   IOP Program Incident Adjustment.  If during any month during the term of this
Agreement Pinnacle cancels one or more Scheduled Flights in connection with one
or more IOP Program Incidents, Northwest shall pay to Pinnacle an amount determined
in accordance with the following formula:

P=((IBH)*(BHR)*(
[***])) + ((ICYC)*(CYCR)*( [***]))

 

where,

P is the IOP Payment to be made to Pinnacle,

IBH is the number of scheduled Block Hours cancelled
in connection with the IOP Program Incident(s), calculated by the following
formula:

IBH=Pinnacle scheduled Block Hours in Hub cancelled *
(((% points of Pinnacle’s Scheduled Flights in Hub cancelled)-(% points of
Northwest scheduled flights in Hub cancelled))/(% points of Pinnacle’s
Scheduled Flights in Hub cancelled)),

BHR is the then applicable Block Hour Rate in which
such IOP Program Incident(s) occurred,

ICYC is the number of scheduled Cycles cancelled in
connection with the IOP Program Incident(s), calculated by the following
formula:

ICYC=Pinnacle’s scheduled Cycles in Hub cancelled *
(((% points of Pinnacle’s Scheduled Flights in Hub cancelled)-(% points of
Northwest scheduled flights in Hub cancelled))/(% points of Pinnacle’s
Scheduled Flights in Hub cancelled))), and

CYCR is the then applicable Cycle Rate in which such
IOP Program Incident(s) occurred.

 

Section 5.04           Fixed Costs.  Pinnacle’s Fixed Cost Payment arising from
operation of the Aircraft shall be calculated on a monthly basis as follows:

Fixed Cost Payment = 
[***]

where,

[***]

[***]

[***]

[***]

[***]

Section
5.05         Fuel.

(a)           Fuel
Administration.  As soon as
practicable, Northwest will provide to Pinnacle the following fuel-related
administrative services:  (i)
negotiation of fuel supply, fuel storage and into-plane service contracts for
the Aircraft, (ii) payment of all into-plane and fuel invoices in respect of
the Aircraft, (iii) monthly reconciliations (by the 15th of the following
month) with respect to fuel boarded, inventory and purchases, and (iv) monthly
reports with respect to fuel boarded by station, flight and Aircraft.

 

(b)           In
the event Northwest is unable to execute the administrative functions as
outlined in Section 5.05  (a)  (ii) and (iii), above,
and until such time that it can, the following procedures will apply:

(i)            Current reporting mechanisms in
place as of the Effective Date of this Agreement will continue with Pinnacle
reporting to Northwest by the 15th day of the following month, the actual
gallons boarded and the fuel price paid (including into-plane fees and taxes).

(ii)           Current payment mechanisms in place
as of the Effective Date of this Agreement will continue with the exception
that the applicable monthly Margin Payment (per Section 5.08 or Section
5.11) will only be paid on the actual fuel boarded multiplied by the lesser of
the actual fuel price, including into-plane fees and taxes, and $.78/gallon
(the “Fuel Price”).  In addition, no
adjustment will be made to bring Pinnacle’s fuel expense up to $.78/gallon.  The reimbursement will be through the Section
5.02 wire transfer occurring on the 15th day of the following month.

(c)           Fuel
Payment.  On and after the date on
which Northwest executes the administrative functions outlined in Section
5.05(a) (ii) and (iii) above, Northwest will charge Pinnacle on a pre-pay basis
the last week of each month for fuel to be boarded for the 1st -15th of the
succeeding month.  Pinnacle will pay for
that fuel through a set-off of the amount due from the Section 5.02 wire
transfer on the 15th of the month for which the prepay is occurring.  Northwest will reimburse Pinnacle for this
pre-pay amount through the Section 5.02 wire transfer on the 30th of the
month.  Likewise, Northwest will charge
Pinnacle on a pre-pay basis the second week of the month for fuel to be boarded
for the 16th-end of month.  Pinnacle
will pay for that fuel through a set-off of the Section 5.02 wire
transfer on the 30th of the month for which the prepay is occurring.  By the 15th of the following month,
Northwest will reconcile the pre-paid fuel expense for the preceding month with
the actual expense (at a price not to exceed the Fuel Price), and charge or
credit Pinnacle with the difference, including reimbursement for the second
half pre-pay.  This reimbursement and
month end adjustment for the preceding month will be handled via the Section
5.02 wire transfer occurring the 15th day of the following month through
additional payment or set-off.

The pre-pay will be based on using half of Pinnacle’s
prior month actual boarded volume at the Fuel Price.

Pinnacle shall have the right to audit on a
semi-annual basis the determination of the number of gallons of aircraft fuel
boarded and shall report any disputes to Northwest.  Any dispute not reported to Northwest within thirty (30) days of
the conclusion of such audit shall be deemed waived.

Northwest’s fuel department shall have the right to
audit on a monthly basis the determination of the number of gallons of aircraft
fuel boarded and fuel price paid and shall report any disputes to
Pinnacle.  Any dispute not reported to
Pinnacle within thirty (30) days of the conclusion of such audit shall be
deemed waived.

 

(d)           Pinnacle
Reporting Procedures.  Pinnacle will
provide to Northwest the following fuel administrative service assistance:  (i) timely Fuel Management System
(“FMS”) data entry by Pinnacle at Pinnacle Service Cities including month-end
reconciling to the fixed base operator (“FBO”) by the end of the second
business day, (ii) FMS coverage by Pinnacle when regular FMS person is on
vacation, leave, etc., (iii) Pinnacle will train new Pinnacle employees on
FMS due to turnover, vacation, etc., (iv) problems at FBO regarding supply
of fuel slips and bill of lading receipts will be addressed by Pinnacle
personnel first before involving the Northwest Fuel Department.

(e)           Fuel
Burn Review Procedures - CRJ. 
Northwest and Pinnacle agree to review the fuel burn performance of the
CRJ Aircraft for compliance with the performance measure (burn rate ceiling)
set below.  Either party may initiate
the audit of the actual fuel burn against the set measure.  The performance measure includes both
scheduled and non-scheduled fuel usage/expense.  The ceiling is the Northwest budgeted scheduled fuel burn per
scheduled Block Hour [***] for non-scheduled usage.  For example, the 2002 performance measure (ceiling) was equal to
the Northwest scheduled fuel burn rate of [***] gallons per scheduled Block
Hour [***] which sets the ceiling at [***].

In the event that the CRJ Aircraft’s actual fuel burn
for the period of review is above the ceiling the parties will work together in
good faith to explain the variance relative to the ceiling and to resolve the
cause of the variance.  If it is
determined that actual fuel burn was above the ceiling for reasons within the
control of Pinnacle, Pinnacle will pay a Fuel Burn Penalty Payment to Northwest
and such payment shall be made in accordance with Section 5.07.  The Fuel Burn Penalty Payment shall be
calculated as follows:

Fuel Burn Penalty Payment = [(total fuel
expense/actual fuel price) / scheduled Block Hours - performance ceiling] *
completed scheduled Block Hours * actual fuel price (not to exceed $.78 per
gallon) + Margin applicable to the fuel expense reimbursement pursuant to Section
5.08 or 5.11.

Section
5.06         Direct Expenses. 
Northwest will reimburse Pinnacle for the following expenses at the
Direct Cost to Pinnacle.  Reimbursement
for these expenses paid or accrued by Pinnacle in the prior month, (other than
the Equipment Rental Expense) will be included in the wire transfer to Pinnacle
on the 15th of each subsequent month pursuant to Section 5.02(b)
above.  The reimbursement of Equipment
Rental Expense pursuant to Section 5.06(a) attributable to a month will occur
as part of the provisional payment on the 30th of such month pursuant
to Section 5.02(b).  Pinnacle will be
responsible for providing Northwest with a copy of all third party invoices and
evidence of payment needed to determine the expense amount and the timeliness
of payment.

(a)  Equipment
Rental Expense — less any performance guarantee payments or credits that
Pinnacle receives from the manufacturers.

 

(b)  Aviation
Insurance - Aircraft hull insurance and aviation liability insurance, including
war risk liability and hull war risk insurance, subject to the following:

Pinnacle’s aviation liability insurance (including war
risk liability) expense shall be the lesser of the expense based on the actual
rates or $[***] per Pinnacle Revenue Passenger.  Pinnacle’s hull insurance (including hull war risk insurance)
expense shall be the lesser of the expense based on the actual rates or $[***]
per dollar ($) of Pinnacle Fleet Value. 
The margin payment pursuant to Section 5.08 or 5.11 shall be based on
the foregoing amounts.  If Pinnacle’s
actual aviation insurance expense exceeds the amounts above, the incremental
insurance expense above the foregoing limits will be reimbursed by
Northwest.  In the event that Pinnacle
obtains aviation insurance coverage as part of Northwest’s aviation insurance
placement, the rates used to determine Pinnacle’s share of the aviation
insurance expenses shall be the same as the rates used to determine Northwest’s
expense for such insurance.

(c)  Engine
maintenance — The CRJ 200/440 engine maintenance performed pursuant to the GE
Agreements less any warranty payments or credits that Pinnacle receives,
including but not limited to those from GE, plus the cost of materials and
components used in connection with unscheduled off-wing maintenance performed
by Pinnacle (not including maintenance or replacement of line replaceable units
or QEC items).  Pinnacle shall provide
to Northwest, upon reasonable request, documentation detailing the unscheduled
event and cost of each of the components. 
If Northwest and Pinnacle agree at any time to have such engine work
performed elsewhere, the reimbursement amount will be adjusted to take into
account the new arrangement. 
Notwithstanding the foregoing, Northwest will not reimburse Pinnacle for
engine maintenance performed pursuant to the GE Agreements which is accomplished
unreasonably in advance of the time such maintenance is required in accordance
with the Maintenance Program or which is accomplished for the sole purpose of
satisfying return conditions under the Lease.

(d)   Airframe maintenance — The CRJ 200/440 airframe
maintenance performed pursuant to Bombardier Agreement less any warranty
payments or credits that Pinnacle receives, including but not limited to those
from Bombardier.  If Northwest and
Pinnacle agree at any time to have the maintenance work performed elsewhere,
the reimbursement amount will be adjusted to take into account the new
arrangement.  Notwithstanding the
foregoing, Northwest will not reimburse Pinnacle for airframe maintenance
performed pursuant to the Bombardier Agreement which is accomplished
unreasonably in advance of the time such maintenance is required in accordance
with the Maintenance Program or which is accomplished for the sole purpose of
satisfying return conditions under the Lease.

(e)   Deicing services and glycol - subject to the
provisions of Section 4.02 and reimbursed accordingly:

 

(i)                            Deicing services and
glycol at Pinnacle Service Cities, Contracted Service Cities and Hub Cities
where a contracted agent is performing the service.

(ii)                           Glycol at Pinnacle
Service Cities, Contracted Service Cities and Hub Cities where Pinnacle
performs the deicing function.

(f)    Maintenance Facilities, subject to the
provisions of Section 4.03 (c).

(g)   CRJ 200/440 auxiliary power unit (APU)
maintenance expense, CRJ 200/440 avionics maintenance expense and CRJ 200/440
landing gear overhaul expense less any warranty payments or credits that
Pinnacle receives with respect to any of the foregoing expenses.

(h)   Hub City facility charges pursuant to Exhibit
B.

(i)  Airport
security-related equipment maintenance expenses and personnel expenses incurred
by Pinnacle pursuant to Section 4.05 less any government reimbursement
for such expenses.

 

(j)             Landing fees incurred for Pinnacle operations in DTW.

(k)   Ground handling charges at Northwest Service
Cities pursuant to Section 4.02.

 

(l)    Property taxes, subject to the provisions of
Section 8.03 less the amounts of any refunds, subject to the provisions of
Section 8.04.

Notwithstanding the foregoing, Northwest will not
reimburse Pinnacle for any late payment charges, penalties and/or fees which
Pinnacle incurs in connection with payment of the expenses listed above.

 

Section
5.07         Billing. 
Northwest and Pinnacle shall bill each other on a monthly basis in
respect of amounts owed to each other under this Agreement not contemplated
under Section 5.02.  If such
billed items are not paid by the party within sixty (60) days of the statement
date, the aggregate amount of undisputed items may be offset against or
included in the next scheduled wire transfer pursuant to Section 5.02(b).  Disputed amounts must be paid when the
dispute is resolved, provided that such amount may be set off against or
included in the next scheduled wire transfer pursuant to Section 5.02(b)
if the formerly disputed amount is not paid within seven (7) days of
resolution.  Northwest may also offset
against the next scheduled wire transfer pursuant to Section 5.02(b) the
amount of any payment (including those under any Lease or the Note) with
respect to which Pinnacle shall have defaulted and shall have failed to cure
before the expiration of any applicable grace period.

Section
5.08         Monthly Margin Calculation
and Payment.  The monthly Margin Payment for the time
period through December 31, 2007 shall be calculated as follows:

 

Monthly Margin Payment = (payments due to Pinnacle
pursuant to Sections 5.03, 5.04, 5.05 and  5.06) *
(.10 / .90)

Section
5.09         Annual Margin Adjustment
Payment.  For the time period through December 31,
2007, the parties will calculate Pinnacle’s Margin in accordance with Section
5.09(a) and, if required pursuant to Section 5.09(b) below, one
party will make a Margin Adjustment Payment to the other party.

(a)  Calculation
of the Total Operating Cost and the Margin.  Not later than ninety (90) days following the end of 2003, 2004,
2005, 2006 and 2007, Pinnacle shall deliver to Northwest its audited financial
statements including the calculation of its operating margin for Regional
Airline Services provided under this Agreement for the prior year (the
“Margin”) by dividing (x) Pinnacle’s Total Operating Income for Regional
Airline Services for such year by (y) Pinnacle’s Total Operating Revenue for
Regional Airline Services for such year, subject to the following:

In calculating the Margin, the amount of any penalties
(accounted for as a reduction to revenue) pursuant to Section 5.05,  Section  5.13 and/or Section 5.14 below
and any Saab 340 Aircraft rental revenue will not be included in Pinnacle’s
Total Operating Revenue, and the following expenses will not be included in Pinnacle’s
Total Operating Cost:

(1)   Increment above predicted employee bonuses
and incentives as set forth in Exhibit C hereto.  Predicted bonus and incentive levels are the amounts used in
calculating the Block Hour, Cycle and Fixed Cost Rates for 2003, 2004, 2005,
2006 and 2007, respectively.

(2)   Increment above market pay rates for
Pinnacle’s employees per the Parity Pay Agreement in Exhibit D.

(3)   The amount of any penalties pursuant to Section  5.14 (if not accounted for as a
reduction to revenue).

(4)   The amount of any depreciation expense
associated with capital expenditures in excess of $250,000 which are designated
by Northwest as Section 5.09(a)(4) items because Northwest has determined that
such capital expenditures are not necessary after taking into consideration the
Annual Operating Plan and Pinnacle’s obligations under this Agreement, within
seventy-five (75) days after receiving written notice from Pinnacle of such
capital expenditure pursuant to Section 6.01(a)(iv) below.

(5)   The amount of any Fuel Burn Penalty Payment
pursuant to Section 5.05(d) (if not accounted for as a reduction to
revenue).

(6)   The amount of any asset write-downs
(excluding normal depreciation) or extraordinary charges as defined by GAAP.

 

(7)   Rental expense associated with the Saab 340
Aircraft not flown by Pinnacle.

(8)   The amount of any fines or penalties paid by
Pinnacle to any governmental entity.

(9)   The CRJ 200/440 Aircraft and Spare Engine
return costs including termination costs incurred by Pinnacle pursuant to Section
3.02(b) above.

(10) The amount of any late payment charges,
penalties and/or fees incurred by Pinnacle.

(11)         The amount of any payment from Pinnacle
to Northwest pursuant to Section 5.13 (if not accounted for as a reduction to
revenue).

 

The Margin shall be expressed as a decimal rounded to
the fourth place.  The calculation of
the Margin shall be derived from Pinnacle’s reported financial statements for
such year and shall be determined in accordance with GAAP.

(b)  Annual
Margin Adjustment Payment.  With
respect to each calendar year through and including 2007, the Margin will be
subject to the floors and ceilings in the following table:

	
  Period:

  	
   

  	
  Revision
  Date — 2005

  	
   

  	
  2006 &
  2007

  
	
  Ceiling:

  	
   

  	
  11%

  	
   

  	
  12%

  
	
  Floor:

  	
   

  	
  9%

  	
   

  	
  8%

  

 

With respect to each
calendar year through and including 2007, if the Margin is less than the
applicable Floor, Pinnacle shall receive from Northwest an amount determined as
follows:

Ppin = [Total Operating Cost/(1 - Floor)] — Rev

where

Ppin is the amount payable to Pinnacle,

Rev is Total Operating Revenue for Regional Airline Services for the applicable
calendar year excluding the items listed in Section 5.09 (a),

Floor is the applicable floor from the above table,
and

Total Operating Cost excludes Items 1-11 in Section
5.09(a) above.

 

With respect to each
calendar year through and including 2007, if the Margin is greater than the
applicable Ceiling, Northwest shall receive from Pinnacle an amount determined
as follows:

Pnw = Rev - [Total Operating Cost/(1 - Ceiling)]

where,

Pnw is the amount payable to Northwest,

Rev is Total Operating Revenue for Regional Airline Services for the applicable
calendar year excluding the items listed in Section 5.09 (a),

Ceiling is the applicable ceiling from the above
table, and

Total Operating Cost excludes items 1-11 in Section
5.09(a) above.

An amount payable pursuant to this Section 5.09 (b)
is a “Margin Adjustment Payment.” 
Northwest shall add in or setoff, as appropriate, any Margin Adjustment
Payment in the next wire transfer due to Pinnacle.

(c)  Audit
of Total Operating Cost and the Margin. 
Northwest shall have the right to audit the calculation of the Total
Operating Cost, the Margin and the Margin Adjustment Payment, and shall report
any disputes to Pinnacle.  Any dispute
not reported to Pinnacle in writing within ninety (90) days of the receipt of
the audited financial statements and Margin calculation by Northwest shall be
deemed waived.  The payment in respect
of any dispute shall be handled as a disputed amount in accordance with Section
5.07.

Section
5.10         Rate Adjustments. 
For the calendar year 2006, the Block Hour, Cycle, and Fixed Cost Rates
will be adjusted as described below.

(a)  One
Time Adjustment Factor.  Effective
for the twelve-month period beginning on January 1, 2006 (i) the Block Hour
Rate used for the 2005 calendar year will be multiplied by a One Time
Adjustment Factor (OTAF) and multiplied by (1 + CPPI), and (ii) the Cycle Rate
shall be calculated by multiplying the Base Cycle Rates for 2005 by (1 +
CPPIB)* (OTAF), and then calculating the weighted average of the resulting
rates.  These adjusted rates will be
used for the twelve-month period beginning January 1, 2006.  The OTAF will be calculated as follows:

(1)           Determine Pinnacle’s actual operating
expenses for the twelve-month period ending December 31, 2005, excluding [***].

(2)           Determine the actual payment made to
Pinnacle for the twelve month period ending December 31, 2005, excluding [***].

(3)           Divide the result of step (1) by the
result of step (2).

 

(b)  Inflation
Adjustment.  Effective for 2007, (i)
the Block Hour Rate used for 2006 will be multiplied by (1+CPPI), and (ii) the
Cycle Rate shall be calculated by multiplying the Base Cycle Rates for 2005 by
(1 + CPPIB)* (OTAF), and then calculating the weighted average of the resulting
rates, to establish the 2007 rates.

(c)  Fixed
Cost Payment Adjustment.  Effective
for 2006 and 2007, the Fixed Cost Payment formula will be multiplied by the
OTAF.

(d)  Effective
for 2008 the payment rates and mechanisms set forth in Sections 5.02
through 5.06 will be re-set through good faith negotiations utilizing a
payment methodology consistent with the methodology utilized through 2007;
provided, however, that any increment above market pay rates for Pinnacle’s
employees, per the Parity Pay Agreement in Exhibit D, will not be considered in
re-setting such rates.  The rates for
2009, 2010, 2011 and 2012 will be determined by multiplying the prior year’s
rates by (1+CPPI).

(e)  So long as
this Agreement remains in effect, the payment rates and mechanisms set forth in
Sections 5.02 through 5.06 will be re-set every fifth year
through good faith negotiations, commencing with the rates effective for 2013,
utilizing a payment methodology consistent with the methodology utilized during
the prior five (5) year period; provided, however, that any increment above
market pay rates for Pinnacle’s employees, per the Parity Pay Agreement in
Exhibit D, will not be considered in re-setting such rates.  The rates for the years between each
adjustment year will be determined by multiplying the prior year’s rates by (1
+ CPPI).

(f)  In the
event the parties are unable to reach agreement on new payment rates and
mechanisms through good faith negotiations, the rates will be set utilizing the
following procedure:  (i) the parties
shall attempt to agree upon an impartial industry expert to act as sole
arbitrator, provided that if the parties are unable to agree upon an expert to
so act, each party shall appoint an expert, and the two experts so appointed
shall appoint a third expert; (ii) each party shall submit a set of proposed
rates to the arbitrator(s); and (iii) the arbitrator(s) shall choose a set of
rates from those submitted without modifying either.

Section
5.11         Revised Monthly Margin
Calculation and Payment.  Effective
January 1, 2008, the monthly Margin Payment shall be calculated as follows:

Monthly Margin Payment = (payments due to Pinnacle
pursuant to Sections 5.03, 5.04, 5.05 and 5.06 (all
adjusted pursuant to Section 5.10)) * MMR / (1-MMR)

Where, MMR is the Market Margin Rate.

Section
5.12         Revised Annual Margin
Adjustment Payment.  Effective for 2008 and each
calendar year thereafter, the parties will calculate Pinnacle’s Margin in
accordance with Section 5.12(a) and, if required pursuant to Section
5.12(b) below, one party will make a Margin Adjustment Payment to the other
party.

 

(a)  Calculation
of the Total Operating Cost and the Margin.  Not later than ninety (90) days following the end of 2008 and
each subsequent calendar year during the term of this Agreement, Pinnacle shall
deliver to Northwest its audited financial statements including the calculation
of its operating margin for Regional Airline Services provided under this
Agreement for the prior year (the “Margin”) by dividing (x) Pinnacle’s Total
Operating Income for Regional Airline Services for such year by (y) Pinnacle’s
Total Operating Revenue for Regional Airline Services for such year, subject to
the following:

In calculating the Margin, the amount of any penalties
(accounted for as a reduction to revenue) pursuant to Section 5.05, Section
5.13 and/or Section 5.14 below and any Saab 340 Aircraft rental
revenue will not be included in Pinnacle’s Total Operating Revenue, and the
following expenses will not be included in Pinnacle’s Total Operating Cost:

(1)  Increment above predicted employee bonuses
and incentives as set forth in Exhibit C hereto.  Predicted bonus and incentive levels are the amounts used in
calculating the Block Hour, Cycle and Fixed cost rates for 2007, grown each
year by multiplying by (1 + CPPI).

(2)  The amount of any penalties pursuant to Section
5.14 (if not accounted for as a reduction to revenue).

(3)  The amount of any depreciation expense
associated with capital expenditures in excess of $250,000 which are designated
by Northwest as Section 5.13(a)(3) items because Northwest has determined that
such capital expenditures are not necessary after taking into consideration the
Annual Operating Plan and Pinnacle’s obligations under this Agreement, within
seventy-five (75) days after receiving written notice from Pinnacle of such
capital expenditure pursuant to Section 6.01(a)(iv) below.

(4)  The amount of any Fuel Burn Penalty Payment
pursuant to Section 5.05(d) (if not accounted for as a reduction to
revenue).

(5)  The amount of any asset write-downs
(excluding normal depreciation) or extraordinary charges as defined by GAAP.

(6)  Rental expense associated with the Saab 340
Aircraft not flown by Pinnacle.

(7)  The amount of any fines or penalties paid by
Pinnacle to any governmental entity.

(8)  The CRJ 200/440 Aircraft and Spare Engine
return costs including termination costs incurred by Pinnacle pursuant to
Section 3.02 (b) above.

(9)  The amount of any late payment charges,
penalties and/or fees incurred by Pinnacle.

 

(10)  The amount of any payment from Pinnacle to
Northwest pursuant to Section 5.13 (if not accounted for as a reduction
to revenue).

 

The Margin shall be expressed as a decimal rounded to
the fourth place.  The calculation of
the Margin shall be derived from Pinnacle’s reported financial statements for
such year and shall be determined in accordance with GAAP.

(b)           Annual
Adjustment to Margin Payment.

With respect to each calendar year effective 2008, if
the Margin is greater than MMR but less than or equal to (MMR + 0.05),
Northwest shall receive from Pinnacle an amount determined as follows:

Pnw = (Rev - [Total Operating Cost/(1 - MMR)]) / 2

where,

Pnw is the amount payable to Northwest,

Rev is Total Operating Revenue for Regional Airline
Services for the applicable calendar year excluding the items listed in Section
5.12 (a), and

Total Operating Cost excludes items 1-10 in Section
5.12(a) above.

With respect to each calendar year effective 2008, if
the Margin is greater than (MMR + 0.05), Northwest shall receive from Pinnacle
an amount determined as follows:

Pnw = (Rev - [Total Operating Cost/(0.975 - MMR)])

where,

Pnw is the amount payable to Northwest,

Rev is Total Operating Revenue for Regional Airline
Services for the applicable calendar year excluding the items listed in Section
5.12 (a), and

Total Operating Cost excludes items 1-10 in Section
5.12(a) above.

An amount payable pursuant to this Section 5.12(b)
is a “Margin Adjustment Payment.” 
Northwest shall add in or setoff, as appropriate, any Margin Adjustment
Payment in the next wire transfer due to Pinnacle.

 

(c)  Audit
of Total Operating Cost and the Margin. 
Northwest shall have the right to audit the calculation of the Total
Operating Cost, the Margin and the Margin Adjustment Payment, and shall report
any disputes to Pinnacle.  Any dispute
not reported to Pinnacle in writing within ninety (90) days of the receipt of
the audited financial statements and Margin calculation by Northwest shall be
deemed waived.  The payment in respect of
any dispute shall be handled as a disputed amount in accordance with Section
5.07.

Section 5.13         Non-Scheduled
Flight Refund.

With respect to
each calendar year during the term of this Agreement, Northwest shall within
thirty (30) days from the receipt of the final Block Hour and Cycle Report
received pursuant to Section 5.02 for the immediately preceding year, calculate
and notify Pinnacle of the ratio of actual Block Hours for Non-Scheduled
Flights to actual Block Hours for Scheduled Flights and the ratio of actual
Cycles for Non-Scheduled Flights to actual Cycles for Scheduled Flights.  In the event that either ratio exceeds
[***], Pinnacle shall remit to Northwest (through a set-off of the next amount
due from the Section 5.02 wire transfer) an amount equal to the
following:

Refund
Calculation:

Actual Block Hours and/or Cycles for Non-Scheduled
Flights in excess of [***] of the actual Block Hours and Cycles for Scheduled
Flights, respectively, multiplied by the Block Hour Rate and Cycle Rate,
respectively, in effect for the immediately preceding year pursuant to Section
5.03 and as adjusted pursuant to Section 5.10, plus the amount of any Margin
Payments previously paid by Northwest to Pinnacle in connection with such
excess Block Hours and/or Cycles; provided, however, that no refund will be
paid to Northwest with respect to Non-Scheduled Flights which are Aircraft
delivery flights.

Section 5.14         Performance
Levels and Penalties.

(a)  Pinnacle shall be subject to certain
performance levels and penalties as described in this Section 5.14(a)
(“Performance Criteria”) which shall be deducted from the Block Hour
Payment.  If Pinnacle does not achieve
the performance criterion, then a penalty shall be charged against amounts
owing to Pinnacle. Any penalty charge incurred by failing to meet Performance
Criteria shall be made in the wire transfer due on the 30th day of the second
month following the end of the Performance Period in question pursuant to Section
5.02(b).  The applicable performance
levels and penalties are as follows:

(i)            Completion
Factor (calculated in accordance with Section 2.10 (a)):

	
   

  	
   

  	
  Additional
  Penalty

  	
   

  	
  Penalty

  	
   

  	
  Neutral

  	
   

  
	
  Performance
  Level

  	
   

  	
  [***]

  	
   

  	
  [***]

  [***]

  	
   

  	
  [***]

  	
   

  
	
  Penalty per
  enplaned revenue passenger

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

 

(ii)           On-Time Factors (calculated in
accordance with Section 2.10(b)):

Departure [***]

	
   

  	
   

  	
  Additional
  Penalty

  	
   

  	
  Penalty

  	
   

  	
  Neutral

  	
   

  
	
  Performance
  Level

  	
   

  	
  [***]

  	
   

  	
  [***]

  [***]

  	
   

  	
  [***]

  	
   

  
	
  Penalty per
  enplaned revenue passenger

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

Arrival [***]

	
   

  	
   

  	
  Additional
  Penalty

  	
   

  	
  Penalty

  	
   

  	
  Neutral

  	
   

  
	
  Performance
  Level

  	
   

  	
  [***]

  	
   

  	
  [***]

  [***]

  	
   

  	
  [***]

  	
   

  
	
  Penalty per
  enplaned revenue passenger

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

In conjunction with Pinnacle’s on-time arrival
performance, Pinnacle’s target block time performance [***]shall not exceed
[***].  If Pinnacle’s actual block time
performance [***] exceeds [***], Pinnacle’s actual arrival performance [***]
will be adjusted downward by [***] percentage point per [***] percentage point
in excess of [***]

 

(iii)          Luggage Mishandled (calculated in
accordance with Section 2.10 (c)):

 

	
   

  	
   

  	
  Additional
  Penalty

  	
   

  	
  Penalty

  	
   

  	
  Neutral

  	
   

  
	
  Performance
  Level (incidents per 1,000 enplaned revenue passengers)

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Penalty per
  enplaned revenue passenger

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(iv)          Customer complaints (calculated in
accordance with Section 2.10 (d)):

 

	
   

  	
   

  	
  Additional
  Penalty

  	
   

  	
  Penalty

  	
   

  	
  Neutral

  	
   

  
	
  Performance
  Level (incidents per 1,000 enplaned revenue passengers)

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Penalty per
  enplaned revenue passenger

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

 

The parties will review
the penalty levels for customer complaints after the first year this Agreement
is in effect and make such adjustments as are mutually agreed.

(b)  Reconciliation
of Performance Standards.  For each
Performance Period, (i) Northwest shall determine the total number of enplaned
revenue passengers on Scheduled Flights operated by Pinnacle, (ii) Pinnacle
shall prepare a reconciliation of its actual performance to the targeted
performance with respect to its completion factor and its on-time factor and
(iii) Northwest shall prepare a reconciliation of Pinnacle’s actual performance
to targeted performance with respect to Pinnacle’s incidences of mishandled
luggage and its number of customer complaints. Such reconciliations will be completed
and delivered to the other within thirty (30) days after the end of each
Performance Period.  Northwest and
Pinnacle will have the right to audit the reconciliation prepared by the other
and shall report any discrepancies to the other.  Any discrepancy not reported in writing within sixty (60) days of
the end of any Performance Period shall be deemed waived.  The payment of in respect of any discrepancy
shall be handled as a disputed amount in accordance with Section 5.07.

(c)  Additional
Performance Criteria.  During the
term of this Agreement, Northwest may propose other performance criteria for
Pinnacle’s operations pursuant to this Agreement.  The parties agree that they will meet upon the introduction of
additional performance levels for Northwest’s operations, to develop similar
performance targets for Pinnacle, taking into account the differences in
operations between the two companies, and shall use their best commercially
reasonable efforts to develop a system of performance levels and penalties for
Pinnacle’s performance with respect thereto in a manner consistent with the
performance standards agreed to herein.

Section
5.15         Pinnacle Change of Control. 
In the event a Pinnacle Change of Control shall have occurred, Sections
5.08, 5.09, 5.11 and 5.12 shall be terminated
effective immediately.

Section
5.16         Credit Card Chargebacks.

(a)  Pinnacle
shall be billed for credit card chargebacks resulting from Pinnacle’s
noncompliance with Northwest’s credit card acceptance procedures.  Northwest shall apply the same card
acceptance procedures and standards to Pinnacle as applied to Northwest by
Northwest’s credit card contractors. 
Northwest will inform Pinnacle in writing regarding any material changes
in Northwest’s agreements with its credit card contractors to the extent such
changes will impact the procedures and standards to be applied by Pinnacle.

(b)  With respect to all credit card charge forms
returned to Pinnacle by Northwest, Northwest will furnish Pinnacle with a
complete written explanation of the reason therefore accompanied by relevant
documentation received from the credit card issuer or credit card holder.

(c)  Upon
receipt of a chargeback, Pinnacle shall have a reasonable period of time, but
not to exceed 30 days, to review the validity of the chargeback notice.  If the 

 

chargeback
is valid (within the scope of the circumstances for the chargeback), Pinnacle
shall remit to Northwest within 30 days a gross amount equal to such credit
card charge form.  If, in Pinnacle’s
good faith opinion, the chargeback is not valid, Pinnacle will so notify
Northwest and provide Northwest with a complete written explanation of the
transaction together with any necessary supporting documentation within the
30-day period.

(d)  All
revisions to Northwest’s credit card acceptance procedures must be in writing
and must be submitted to Pinnacle at least 30 days in advance of the effective
date of such procedures or such shorter notification period as Northwest may
utilize in notifying its own personnel.

Section
5.17         Returned Checks.

(a)  Pinnacle
shall be billed pursuant to Section 5.07 above for all returned checks
resulting from Pinnacle’s non-compliance with Northwest’s check acceptance
procedures.

(b)  Northwest
will furnish Pinnacle with a complete written explanation of the reason
therefore, accompanied with the relevant documentation.

(c)  Pinnacle
shall refund Northwest the full amount of the dishonored check within 30
days.  If, in Pinnacle’s reasonable
opinion, the charge is not valid, Pinnacle will so notify Northwest and provide
Northwest with a complete written explanation of the transaction together with
any necessary supporting documentation within the 30-day period.

(d)  All
revisions to Northwest’s check acceptance procedures will be in writing and
will be submitted to Pinnacle at least 30 days in advance of the effective date
of such procedures or such shorter notification period as Northwest may utilize
in notifying its own personnel.QuickLinks
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Exhibit 4.0    
    

 
 

GEMINI PARTNERS, INC.
  INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE  
  

	Common Stock	 	See Reverse for Certain Definitions

This

Certifies

that 

is
the owner of 

        Fully Paid and Non-Assessable Shares of the $.001 Par Value Common Stock  

transferable only on the books of the Corporation by the holder hereof in person or by a duly authorized attorney upon surrender of this certificate properly endorsed. This
certificate is not valid until countersigned by the Transfer Agent. This certificate and the shares represented hereby are issued
and shall be held subject to all of the provisions of the Certificate of Incorporation and By-Laws of the Corporation and all amendments thereto, copies of which are on file with the Transfer Agent,
to all of which the holder of this certificate, by acceptance hereof, assents. 

        IN
WITNESS WHEREOF, the Corporation has caused this certificate to be signed by the facsimile signatures of its duly authorized officers and to be sealed with the facsimile seal of the
Corporation. 

	 	 	CORPORATE

SEAL	 	 
	

 	
 	

2003

Delaware	
 	

 
	Secretary	 	 	 	Chairman

©Security-Columbian        United States Banknote Corporation 

 
 

GEMINI PARTNERS, INC.    
    

        The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to
applicable laws or regulations: 

	TEN COM	—	as tenants in common	 	UNIF GIFT MIN ACT	—	 	Custodian	 
	TEN ENT	—	as tenants by the entireties	 	 	 	
 (Cust)	 	
 (Minor)
	JT TEN	—	as joint tenants with right of survivorship and not as tenants in common	 	 	 	under Uniform Gifts to Minors
	 	 	 	 	 	 	Act	 	 
	 	 	 	 	 	 	 	
 (State)

        Additional
abbreviations may also be used though not in the above list. 

FOR
VALUE RECEIVED,            hereby sells, assigns and transfers unto 

	Please Insert Social Security or Other

Identifying Number of Assignee	 	 
	

	
 	

 
	

	
 	

 
	

(Please print or typewrite name and address, including postal zip code, of assignee)
	

	 	 	 
	

	
 	
 	

Shares
	
	 	 
	of the common stock represented by the within Certificate and does hereby irrevocably constitute and appoint
	

 	
 	

Attorney
	
	 	 
	to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises.

	

Dated	

 	
 	

 
	 	
	 	

	 	 	 	NOTICE: The signature to this assignment must correspond with the name as written upon the face of the Certificate in every particular, without alteration or enlargement or any change
whatever.

THESE SECURITIES SHALL BE PROMPTLY DEPOSITED INTO AN ESCROW ACCOUNT UNTIL THE CLOSING OF THE COMPANY'S INITIAL PUBLIC OFFERING OF SECURITIES AND THE CLOSING OF A BUSINESS
COMBINATION, SUCH AS A MERGER OR ACQUISITION.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY ONLY BE SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN EXEMPTION THEREFROM, AND PURSUANT TO APPLICABLE STATE SECURITIES LAW.  

QuickLinks

Exhibit 4.0

GEMINI PARTNERS, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

GEMINI PARTNERS, INC.

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