Document:

Exhibit 10.16

 

MANAGEMENT COMPENSATION AGREEMENT

between

PINNACLE AIRLINES, INC.

and

PHILIP H. TRENARY

dated as of

January 14, 2003

 

MANAGEMENT COMPENSATION AGREEMENT

MANAGEMENT COMPENSATION
AGREEMENT made as of the 14th day of January, 2003 between Pinnacle
Airlines, Inc., a Georgia corporation (the “Company”) and Philip H.
Trenary (the “Executive”).

PREAMBLE

The Company and Executive
hereby desire to enter into this Management Compensation Agreement (the
“Agreement”) on the date set forth above.

1.             Terms of
Employment.

1.1  Employment.  The Company agrees to continue to employ
Executive, and Executive agrees to continue to serve the Company, on the terms
and conditions set forth herein.

1.2  Position and Duties.  During the term of Executive’s employment
hereunder, Executive shall continue to have his title, powers and duties as on
the Effective Date or such other powers and duties as may from time to time be
prescribed by the Board.  Executive
shall devote substantially all his working time and effort to the business and
affairs of the Company and its affiliates.

2.             Compensation.

2.1  Base Salary.  Executive’s Base Salary shall be his base
salary in effect on the Effective Date, as increased thereafter by the Board.
Executive’s Base Salary shall be payable in accordance with the Company’s
payroll policies.

2.2  Bonus.  Executive shall be entitled to participate
in the Company’s Annual Management Bonus Plan (the “Bonus Plan”) or any
successor annual bonus plan, the terms and conditions of which shall be established
by the Board from time to time.  In
addition, the Company previously granted to Executive a special cash retention
award consisting of four annual cash payments of $62,500 each beginning in
2000, so long as Executive remains employed by the Company on the applicable
payment date. The Company will make the remaining payments under such award.

2.3  Expenses.  During the term of Executive’s employment
hereunder, Executive shall be entitled to receive prompt reimbursements for all
reasonable expenses incurred in performing services hereunder, provided
that Executive properly accounts therefor in accordance with Company policy.

2.4  Compensation and Benefit Programs of the
Company.  Except as set forth below,
Executive shall continue while employed hereunder to participate in the
Company’s employee compensation and benefit programs (or any successor
programs) at levels in effect on the Effective Date or such other levels
established from time to time by the Board except that Executive shall not
participate in any severance pay plan or annual bonus plan maintained by the
Company except to the extent necessary to receive any severance or bonus
payments specifically provided for hereunder.

 

3.             Termination of
Employment. 

3.1  Upon Death.  Executive’s employment hereunder shall
terminate upon his death.

3.2  By the Company.  The Company may terminate Executive’s
employment hereunder at any time with or without Cause.

3.3.  By the Executive.  Executive may terminate his employment
hereunder at any time for any reason.

3.4  Notice of Termination,
Payments.  Any termination of
Executive’s employment hereunder (other than by death) shall be communicated by
thirty (30) days’ advance written Notice of Termination by the terminating
party to the other party to this Agreement; provided that no advance
Notice of Termination of Executive for Cause by the Company is required.

4.             Payments in the
Event of Termination of Employment.

4.1  Payments in the Event of
Termination by the Company for Cause or Voluntary Termination by Executive.  If Executive’s employment hereunder is
terminated by the Company for Cause, as a result of death or Disability or by
Executive other than for Good Reason, the Company shall pay Executive
(a) his accrued and unpaid Base Salary through the Date of Termination and
(b) any vested or accrued and unpaid payments, rights or benefits
Executive may be otherwise entitled to receive pursuant to the terms of any
written retirement, pension or other employee benefit or compensation plan
maintained by the Company at the time or times provided therein.

4.2  Payments in the Event of
Any Other Termination of Employment. 
If Executive’s employment hereunder is terminated by the Company other
than for Cause, or by Executive for Good Reason:

(a)   The Company shall pay Executive (i) his
accrued and unpaid Base Salary through the Date of Termination, (ii) any
bonus under the Bonus Plan, or any successor annual bonus plan, (the “Incentive
Bonus”) for any calendar year ended before the Date of Termination,
(iii) a pro rata share (based on days employed during the applicable year)
of the Incentive Bonus Executive would otherwise have received with respect to
the year in which the Date of Termination occurs, payable at the time the
Incentive Bonus would otherwise be payable to Executive; provided, however,
that 100% of the Incentive Bonus shall be determined solely with reference to
the financial performance of the Company for the year (based on the goals
previously established with respect thereto) (rather than a portion of the
Incentive Bonus determined on the basis of individual performance); provided,
further, in the event that Company’s performance exceeds 100% of the
financial performance target for the year, that portion of the Incentive Bonus
that would have, but for this Section 4.2(a), related to the achievement
of the individual performance target shall be 100% and (iv) any vested or
accrued and unpaid payments, rights or benefits Executive may be otherwise
entitled to receive pursuant to the terms of any 

 

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written
retirement, pension or other employee benefit or compensation plan maintained
by the Company at the time or times provided therein.

(b)   In addition to the compensation and benefits
described in Section 4.2(a):

(i)            The Company shall pay Executive, no
later than thirty (30) days following Executive’s termination of employment, a
lump sum amount equal to 11⁄2 times the sum of (i) Executive’s annual Base
Salary and (ii) the target Incentive Bonus for Executive with respect to
the year in which the Date of Termination occurs (or if no target has been set
for that year, the target Incentive Bonus for the immediately preceding year).

(ii)           Until the earlier of the second
anniversary of Executive’s Date of Termination or the date Executive is
employed by a new employer, Executive, his dependents, beneficiaries and estate
shall be entitled to all benefits under the Company’s group medical and dental
insurance plans as if Executive were still employed by the Company hereunder
during such period.

(c)   Executive shall not be required to mitigate
the amount of any payment provided for in this Section 4.2 by seeking
other employment or otherwise, and no such payment shall be offset or reduced
as a result of Executive obtaining new employment.

(d)   Notwithstanding anything else to the contrary
in this Agreement, the Company’s obligation regarding the payments and benefit
continuation provided for in Section 4.2(b)(i) and (ii) is expressly
conditioned upon the execution, delivery and non-revocation of a general
release in the form attached hereto as Attachment A.

5.             Board/Committee Resignation.  Executive’s
termination of employment for any reason, shall constitute, as of the date of
such termination and to the extent applicable, a resignation as an officer of
the Company and a resignation from the Board (and any committees thereof) and
the Board of Directors (and any committees thereof) of any of the Company’s
affiliates and from the board of directors or similar governing body of any
corporation, limited liability company or other entity in which the Company or
any affiliate holds an equity interest and with respect to which board or
similar governing body Executive serves as the Company’s or such affiliate’s
designee or other representative. 

6.             Confidentiality;
Non-Compete; Non-Solicitation; Nondisparagement.

While employed by the
Company and thereafter, Executive shall not disclose any Confidential
Information either directly or indirectly, to anyone (other than appropriate
Company employees and advisors), or use such information for his own account,
or for the account of any other person or entity, without the prior written
consent of the Company or except as required by law.  This confidentiality covenant has no temporal or geographical
restriction.  For purposes of this
Agreement, “Confidential Information” shall mean all non-public information
respecting the Company’s business, including, but not limited to, its services,
pricing, scheduling, products, research and development, processes, customer
lists, marketing plans and strategies, financing plans and the terms and
provisions of this Agreement, but excluding information that is, or becomes,
available to the public (unless such availability occurs through an unauthorized
act on 

 

3

 

the part of the
Executive).  Upon termination of this
Agreement, Executive shall promptly supply to the Company all property and any
other tangible product or document that has been produced by, received by or
otherwise submitted to Executive during or prior to his term of employment, and
shall not retain any copies thereof.

Executive acknowledges that
his services are of special, unique and extraordinary value to the
Company.  Accordingly, Executive shall
not at any time prior to the first anniversary of the Date of Termination (i)
become an employee, consultant, officer, partner or director of any air carrier
which competes with the Company (or any of its affiliates) or (ii) whether on
Executive’s own behalf or on behalf of or in conjunction with any person,
company, business entity or other organization whatsoever, directly or
indirectly solicit or encourage any employee of the Company or its affiliates
to leave the employment of the Company or its affiliates. Notwithstanding the
foregoing, the Executive’s obligation set forth in subsection (i) above shall
be conditioned upon (A) receipt of the amounts set forth in Section 4.2(b)(i)
hereof in the case of a termination of Executive’s employment hereunder by the
Company other than for Cause, or by Executive for Good Reason, and (B) the
Company continuing to pay Executive his then current Base Salary payments
during such one-year period in the case of a termination of Executive’s
employment hereunder by Executive other than for Good Reason.

While employed by the
Company and thereafter, Executive agrees not to make any untruthful or
disparaging statements, written or oral, about the Company, its affiliates,
their predecessors or successors or any of their past and present officers,
directors, stockholders, partners, members, agents and employees or the
Company’s business practices, operations or personnel policies and practices to
any of the Company’s customers, clients, competitors, suppliers, investors,
directors, consultants, employees, former employees, or the press or other
media in any country.

Executive agrees that any
breach of the terms of this Section 6 would result in irreparable injury
and damage for which there would be no adequate remedy at law, and that, in the
event of said breach or any threat of breach, the Company shall be entitled to
an immediate injunction and restraining order to prevent such breach or
threatened breach, without having to prove damages, in addition to any other remedies
to which the Company may be entitled at law or in equity. Executive further
agrees that the provisions of the covenant not to compete are reasonable.  Should a court determine, however, that any
provision of the covenant not to compete is unreasonable, either in period of
time, geographical area, or otherwise, the parties hereto agree that the
covenant should be interpreted and enforced to the maximum extent which such
court deems reasonable.  The provisions
of this Section 6 shall survive any termination of this Agreement and
Executive’s term of employment.  The
existence of any claim or cause of action or otherwise, shall not constitute a
defense to the enforcement of the covenants and agreements of this Section 6.

7.             Successors and
Assigns.

(a)   This Agreement shall bind any successor to
the Company, whether by purchase, merger, consolidation or otherwise, in the
same manner and to the same extent that the Company would be obligated under
this Agreement if no such succession had taken place.

 

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(b)   This Agreement shall not be assignable by
Executive.  This Agreement and all
rights of Executive hereunder shall inure to the benefit of and be enforceable
by, Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributes, devises and legatees.

8.             Term.

The term of this Agreement
shall commence on the Effective Date and end upon the Executive’s termination
of employment.  The rights and
obligations of the Company and Executive shall survive the termination of this
Agreement to the fullest extent necessary to give effect to the terms hereof.

9.             Notices.

Notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered to and mailed by United States
mail, addressed:

(a)   if to Executive, to the address set forth on
the signature page hereto, and

(b)   if to the Company, c/o Pinnacle Airlines,
Inc., 1689 Nonconnah Blvd., Suite 111, Memphis, TN  38132 Attention:  Chairman
of the Board of Directors,

or, in each case, to such
other address as may have been furnished in writing.

10.           Withholding.

All payments required to be
made by the Company hereunder shall be subject to the withholding and/or
deduction of such amounts as are required to be withheld or deducted pursuant
to any applicable law or regulation. 
The Company shall have the right and is hereby authorized to withhold or
deduct from any compensation or other amount owing to Executive, applicable
withholding taxes and deductions and to take such action as may be necessary in
the opinion of the Company to satisfy all obligations for the payment of such
taxes or deductions.

11.           Certain Defined
Terms.

As used herein, the
following terms have the following meanings:

“Agreement” shall
mean this Management Compensation Agreement, as the same may be amended,
supplemented or otherwise modified from time to time in accordance herewith.

“Base Salary” shall
mean the salary of the Executive in effect from time to time under
Section 2.1.

“Board” shall mean
the Board of Directors of the Company.

“Cause” shall mean
with respect to termination by the Company of Executive’s employment hereunder
(i) an act or acts of dishonesty by Executive resulting in, or intended to

 

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result in, directly or
indirectly, any personal enrichment of Executive, (ii) an act or acts of
dishonesty by Executive intended to cause substantial injury to the Company,
(iii) material breach (other than as a result of a Disability) by
Executive of Executive’s obligations under this Agreement which action was
(a) undertaken without a reasonable belief that the action was in the best
interests of the Company and (b) not remedied within a reasonable period
of time after receipt of written notice from the Company specifying the alleged
breach, (iv) Executive’s conviction of, or plea of nolo contendere to, a
crime constituting (a) a felony under the laws of any country, the United
States or any state thereof or (b) a misdemeanor involving moral turpitude
or (v) a material breach of (a) the Company’s policies and procedures
in effect from time to time or (b) the provisions of this Agreement.

“Change in Control”
shall have the meaning given such term in the Stock Incentive Plan, provided
that, for purposes of such definition, the term “Permitted Holders” shall
include Northwest Airlines Corporation or any affiliate of Northwest Airlines
Corporation.

“Date of Termination”
shall mean, with respect to Executive, the date of termination of Executive’s
employment hereunder after the notice period provided by Section 3.4.

“Disability” shall
mean Executive’s physical or mental condition which prevents continued
performance of his duties hereunder, if Executive establishes by medical
evidence that such condition will be permanent and continuous during the
remainder of Executive’s life or is likely to be of at least three (3)
years duration.

“Effective Date”
shall mean January 14, 2003.

“Good Reason” shall
mean with respect to an Executive, any one or more of the following:

(a)           a material reduction in Executive’s
Base Salary or level of target bonus under the Bonus Plan or any successor
bonus plan without Executive’s consent;

(b)           any substantial and sustained
diminution in Executive’s authority or responsibilities hereunder; or

(c)           a failure by the Company to comply
with any provision of this Agreement;

provided, however,
that the foregoing events shall constitute Good Reason only if the Company
fails to cure such event within thirty (30) days after receipt from Executive
of written notice of the event which constitutes Good Reason; provided, further,
that “Good Reason” shall cease to exist for an event on the 60th day
following the later of its occurrence or Executive’s knowledge thereof, unless
Executive has given the Company written notice thereof prior to such date.

In order for Executive’s
termination of his employment to be considered for Good Reason, such
termination must occur within one (1) year after the event giving rise to
such Good Reason.  Executive’s continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.

 

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“Notice of Termination”
shall mean a notice specifying the Date of Termination.

12.           Executive
Representation.

Executive hereby represents
to the Company that the execution and delivery of this Agreement by Executive
and the Company and the performance by Executive of Executive’s duties
hereunder shall not constitute a breach of, or otherwise contravene, the terms
of any employment agreement or other agreement or policy to which Executive is
a party or otherwise bound.

13.           Amendment.

No provision of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by Executive and an
authorized officer of the Company.

14.           Governing Law.

The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Tennessee, without regard to principles of
conflicts of laws.

15.           Validity.

The invalidity or
unenforceability of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement
which shall remain in full force and effect.

16.           Arbitration.

Except as otherwise provided
in Section 17 of this Agreement, all disputes and controversies arising
from or in conjunction with Executive’s employment with, or any termination
from, the Company and all disputes and controversies arising under or in
connection with this Agreement (except claims for vested benefits brought under
ERISA) shall be settled by mandatory arbitration conducted before one arbitrator
having knowledge of employment law in accordance with the rules for expedited
resolution of employment disputes of the American Arbitration Association then
in effect.  The arbitration shall be
held in the Memphis, Tennessee metropolitan area at a location selected by the
Company.  The determination of the
arbitrator shall be made within thirty (30) days following the close of
the hearing on any dispute or controversy and shall be final and binding on the
parties.  The parties hereby waive their
right to a trial of any and all claims arising out of this Agreement or breach
of this Agreement.  All costs and
expenses incurred in connection with any arbitration including, without
limitation, arbitrator and attorney’s fees, shall be paid by the nonprevailing
party in the arbitration unless the arbitrator determines that such expenses
must be otherwise allocated under applicable law to maintain the validity of
this Section 16.

 

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17.           Specific
Performance.

Notwithstanding
Section 16 of this Agreement, if Executive breaches or threatens to commit
a breach of Section 6 of this Agreement, the Company shall have the right
to specific performance (i.e., the right and remedy to have the terms and
conditions of Section 6 specifically enforced by any court of competent
jurisdiction), it being agreed that any breach or threatened breach of
Section 6 would cause irreparable injury and that money damages may not
provide an adequate remedy.

18.           Cooperation.  

Executive shall provide his
reasonable cooperation in connection with any investigation, action or
proceeding (or any appeal from any action or proceeding) which relates to
events occurring during Executive’s employment hereunder.  This provision shall survive any termination
of this Agreement.

19.           Compensation Limitation.  

Notwithstanding the
foregoing, Executive and the Company agree that (i) to the extent permitted by
the Air Transportation Safety and System Stabilization Act (the “Act”) any
payments or benefits payable to Executive under this Agreement (including,
without limitation, payments under Sections 2 and 4 hereof) or pursuant to
any other compensation or benefit plan of the Company or other arrangement
between the Company and Executive that do not comply with the Act shall be
deferred until such payments or benefits may be paid under the Act, and (ii) to
the extent the Act does not permit the deferral of any such payments or
benefits, the maximum compensation and/or severance Executive may receive from
the Company under this Agreement or any other compensation or benefit plan of
the Company or other arrangement between the Company and Executive will not
exceed the amount allowed under the Act.

20.           Entire
Agreement.

This Agreement, together
with the Release, any award agreement between the Company and Executive entered
into pursuant to the Company’s stock incentive plans, and the Company’s
employee benefit plans in which Executive will continue to participate as
provided in this Agreement, contain the entire understanding between the
Company and Executive with respect to Executive’s employment with the Company
and supersedes in all respects any prior or other agreement or understanding
between the Company or any affiliate of the Company and Executive with respect
to Executive’s employment.

 

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

 

	
   

  	
  PINNACLE
  AIRLINES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Curtis E. Sawyer

  
	
   

  	
   

  	
  Curtis
  E. Sawyer

  
	
   

  	
   

  	
  Vice
  President & Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Philip H. Trenary

  
	
   

  	
   

  	
  Philip
  H. Trenary

  
	
   

  	
   

  	
   

  

 

 

9Exhibit 10.17

MANAGEMENT
COMPENSATION AGREEMENT

between

PINNACLE AIRLINES, INC.

and

CURTIS E. SAWYER

dated as of

January
14, 2003

 

MANAGEMENT COMPENSATION AGREEMENT

MANAGEMENT COMPENSATION
AGREEMENT made as of the 14th day of January, 2003 between
Pinnacle Airlines, Inc., a Georgia corporation (the “Company”) and
Curtis E. Sawyer (the “Executive”).

PREAMBLE

The Company and Executive
hereby desire to enter into this Management Compensation Agreement (the
“Agreement”) on the date set forth above.

1.             Terms of Employment.

1.1           Employment.  The Company agrees to continue to employ
Executive, and Executive agrees to continue to serve the Company, on the terms
and conditions set forth herein.

1.2           Position and
Duties.  During the term of
Executive’s employment hereunder, Executive shall continue to have his title,
powers and duties as on the Effective Date or such other powers and duties as
may from time to time be prescribed by the Board.  Executive shall devote substantially all his working time and
effort to the business and affairs of the Company and its affiliates.

2.             Compensation.

2.1           Base Salary.  Executive’s Base Salary shall be his base
salary in effect on the Effective Date, as increased thereafter by the Board.
Executive’s Base Salary shall be payable in accordance with the Company’s
payroll policies.

2.2           Bonus.  Executive shall be entitled to participate
in the Company’s Annual Management Bonus Plan (the “Bonus Plan”) or any
successor annual bonus plan, the terms and conditions of which shall be
established by the Board from time to time. 
In addition, the Company previously granted to Executive a special cash
retention award consisting of four annual cash payments of $50,000 each
beginning in 2000, so long as Executive remains employed by the Company on the
applicable payment date. The Company will make the remaining payments under
such award.

2.3           Expenses.  During the term of Executive’s employment
hereunder, Executive shall be entitled to receive prompt reimbursements for all
reasonable expenses incurred in performing services hereunder, provided
that Executive properly accounts therefor in accordance with Company policy.

2.4           Compensation and Benefit Programs
of the Company.  Except as set forth
below, Executive shall continue while employed hereunder to participate in the
Company’s employee compensation and benefit programs (or any successor
programs) at levels in effect on the Effective Date or such other levels
established from time to time by the Board except that Executive shall not
participate in any severance pay plan or annual bonus plan maintained by the
Company except to the extent necessary to receive any severance or bonus
payments specifically provided for hereunder.

 

3.             Termination of Employment. 

3.1           Upon Death.  Executive’s employment hereunder shall
terminate upon his death.

3.2           By the Company.  The Company may terminate Executive’s
employment hereunder at any time with or without Cause.

3.3           By the Executive.  Executive may terminate his employment
hereunder at any time for any reason.

3.4           Notice of
Termination, Payments.  Any
termination of Executive’s employment hereunder (other than by death) shall be
communicated by thirty (30) days’ advance written Notice of Termination by
the terminating party to the other party to this Agreement; provided
that no advance Notice of Termination of Executive for Cause by the Company is
required.

4.             Payments in the Event of
Termination of Employment.

4.1           Payments in the
Event of Termination by the Company for Cause or Voluntary Termination by
Executive.  If Executive’s
employment hereunder is terminated by the Company for Cause, as a result of
death or Disability or by Executive other than for Good Reason, the Company
shall pay Executive (a) his accrued and unpaid Base Salary through the
Date of Termination and (b) any vested or accrued and unpaid payments,
rights or benefits Executive may be otherwise entitled to receive pursuant to
the terms of any written retirement, pension or other employee benefit or
compensation plan maintained by the Company at the time or times provided
therein.

                4.2           Payments in the Event of Any Other Termination of
Employment.  If Executive’s
employment hereunder is terminated by the Company other than for Cause, or by
Executive for Good Reason:

(a)   The Company shall pay Executive (i) his
accrued and unpaid Base Salary through the Date of Termination, (ii) any
bonus under the Bonus Plan, or any successor annual bonus plan, (the “Incentive
Bonus”) for any calendar year ended before the Date of Termination,
(iii) a pro rata share (based on days employed during the applicable year)
of the Incentive Bonus Executive would otherwise have received with respect to
the year in which the Date of Termination occurs, payable at the time the
Incentive Bonus would otherwise be payable to Executive; provided, however,
that 100% of the Incentive Bonus shall be determined solely with reference to
the financial performance of the Company for the year (based on the goals
previously established with respect thereto) (rather than a portion of the
Incentive Bonus determined on the basis of individual performance); provided,
further, in the event that Company’s performance exceeds 100% of the
financial performance target for the year, that portion of the Incentive Bonus
that would have, but for this Section 4.2(a), related to the achievement
of the individual performance target shall be 100% and (iv) any vested or
accrued and unpaid payments, rights or benefits Executive may be otherwise
entitled to receive pursuant to the terms of any 

 

2

 

written
retirement, pension or other employee benefit or compensation plan maintained
by the Company at the time or times provided therein.

(b)   In addition to the compensation and benefits
described in Section 4.2(a):

(i)            The Company shall pay Executive, no
later than thirty (30) days following Executive’s termination of employment, a
lump sum amount equal to the sum of (i) Executive’s annual Base Salary and
(ii) the target Incentive Bonus for Executive with respect to the year in
which the Date of Termination occurs (or if no target has been set for that
year, the target Incentive Bonus for the immediately preceding year).

(ii)           Until the earlier of the second
anniversary of Executive’s Date of Termination or the date Executive is
employed by a new employer, Executive, his dependents, beneficiaries and estate
shall be entitled to all benefits under the Company’s group medical and dental
insurance plans as if Executive were still employed by the Company hereunder
during such period.

(c)   Executive shall not be required to mitigate
the amount of any payment provided for in this Section 4.2 by seeking
other employment or otherwise, and no such payment shall be offset or reduced
as a result of Executive obtaining new employment.

(d)   Notwithstanding anything else to the contrary
in this Agreement, the Company’s obligation regarding the payments and benefit
continuation provided for in Section 4.2(b)(i) and (ii) is expressly
conditioned upon the execution, delivery and non-revocation of a general
release in the form attached hereto as Attachment A.

5.
            Board/Committee Resignation.  Executive’s termination of employment for
any reason, shall constitute, as of the date of such termination and to the
extent applicable, a resignation as an officer of the Company and a resignation
from the Board (and any committees thereof) and the Board of Directors (and any
committees thereof) of any of the Company’s affiliates and from the board of
directors or similar governing body of any corporation, limited liability
company or other entity in which the Company or any affiliate holds an equity
interest and with respect to which board or similar governing body Executive
serves as the Company’s or such affiliate’s designee or other representative.

 

6.             Confidentiality; Non-Compete;
Non-Solicitation; Nondisparagement.

While employed by the
Company and thereafter, Executive shall not disclose any Confidential
Information either directly or indirectly, to anyone (other than appropriate
Company employees and advisors), or use such information for his own account,
or for the account of any other person or entity, without the prior written
consent of the Company or except as required by law.  This confidentiality covenant has no temporal or geographical
restriction.  For purposes of this
Agreement, “Confidential Information” shall mean all non-public information
respecting the Company’s business, including, but not limited to, its services,
pricing, scheduling, products, research and development, processes, customer
lists, marketing plans and strategies, financing plans and the terms and
provisions of this Agreement, but excluding information that is, or 

 

3

 

becomes, available to the
public (unless such availability occurs through an unauthorized act on the part
of the Executive).  Upon termination of
this Agreement, Executive shall promptly supply to the Company all property and
any other tangible product or document that has been produced by, received by
or otherwise submitted to Executive during or prior to his term of employment,
and shall not retain any copies thereof.

Executive acknowledges that
his services are of special, unique and extraordinary value to the
Company.  Accordingly, Executive shall
not at any time prior to the first anniversary of the Date of Termination (i)
become an employee, consultant, officer, partner or director of any air carrier
which competes with the Company (or any of its affiliates) or (ii) whether on
Executive’s own behalf or on behalf of or in conjunction with any person,
company, business entity or other organization whatsoever, directly or
indirectly solicit or encourage any employee of the Company or its affiliates
to leave the employment of the Company or its affiliates.  Notwithstanding the foregoing, the
Executive’s obligation set forth in subsection (i) above shall be conditioned
upon (A) receipt of the amounts set forth in Section 4.2(b)(i) hereof in the
case of a termination of Executive’s employment hereunder by the Company other
than for Cause, or by Executive for Good Reason, and (B) the Company continuing
to pay Executive his then current Base Salary payments during such one-year
period in the case of a termination of Executive’s employment hereunder by
Executive other than for Good Reason.

While employed by the
Company and thereafter, Executive agrees not to make any untruthful or
disparaging statements, written or oral, about the Company, its affiliates,
their predecessors or successors or any of their past and present officers,
directors, stockholders, partners, members, agents and employees or the
Company’s business practices, operations or personnel policies and practices to
any of the Company’s customers, clients, competitors, suppliers, investors,
directors, consultants, employees, former employees, or the press or other
media in any country.

Executive agrees that any
breach of the terms of this Section 6 would result in irreparable injury
and damage for which there would be no adequate remedy at law, and that, in the
event of said breach or any threat of breach, the Company shall be entitled to
an immediate injunction and restraining order to prevent such breach or
threatened breach, without having to prove damages, in addition to any other
remedies to which the Company may be entitled at law or in equity. Executive
further agrees that the provisions of the covenant not to compete are
reasonable.  Should a court determine,
however, that any provision of the covenant not to compete is unreasonable,
either in period of time, geographical area, or otherwise, the parties hereto
agree that the covenant should be interpreted and enforced to the maximum
extent which such court deems reasonable. 
The provisions of this Section 6 shall survive any termination of
this Agreement and Executive’s term of employment.  The existence of any claim or cause of action or otherwise, shall
not constitute a defense to the enforcement of the covenants and agreements of
this Section 6.

7.             Successors and Assigns.

(a)   This Agreement shall bind any successor to
the Company, whether by purchase, merger, consolidation or otherwise, in the
same manner and to the same extent that the Company would be obligated under
this Agreement if no such succession had taken place.

 

4

 

(b)   This Agreement shall not be assignable by
Executive.  This Agreement and all
rights of Executive hereunder shall inure to the benefit of and be enforceable
by, Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributes, devises and legatees.

8.             Term.

The term of this Agreement
shall commence on the Effective Date and end upon the Executive’s termination
of employment.  The rights and
obligations of the Company and Executive shall survive the termination of this
Agreement to the fullest extent necessary to give effect to the terms hereof.

9.             Notices.

Notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered to and mailed by United States
mail, addressed:

(a)   if to Executive, to the address set forth on
the signature page hereto, and

(b)   if to the Company, c/o Pinnacle Airlines,
Inc., 1689 Nonconnah Blvd., Suite 111, Memphis, TN  38132 Attention:  Chairman
of the Board of Directors,

or, in each case, to such
other address as may have been furnished in writing.

10.           Withholding.

All payments required to be
made by the Company hereunder shall be subject to the withholding and/or
deduction of such amounts as are required to be withheld or deducted pursuant
to any applicable law or regulation. 
The Company shall have the right and is hereby authorized to withhold or
deduct from any compensation or other amount owing to Executive, applicable
withholding taxes and deductions and to take such action as may be necessary in
the opinion of the Company to satisfy all obligations for the payment of such
taxes or deductions.

11.           Certain Defined Terms.

As used herein, the
following terms have the following meanings:

“Agreement” shall
mean this Management Compensation Agreement, as the same may be amended,
supplemented or otherwise modified from time to time in accordance herewith.

“Base Salary” shall
mean the salary of the Executive in effect from time to time under Section 2.1.

“Board” shall mean
the Board of Directors of the Company.

“Cause” shall mean
with respect to termination by the Company of Executive’s employment hereunder
(i) an act or acts of dishonesty by Executive resulting in, or intended to

 

5

 

result in, directly or
indirectly, any personal enrichment of Executive, (ii) an act or acts of
dishonesty by Executive intended to cause substantial injury to the Company,
(iii) material breach (other than as a result of a Disability) by
Executive of Executive’s obligations under this Agreement which action was
(a) undertaken without a reasonable belief that the action was in the best
interests of the Company and (b) not remedied within a reasonable period of
time after receipt of written notice from the Company specifying the alleged
breach, (iv) Executive’s conviction of, or plea of nolo contendere to, a
crime constituting (a) a felony under the laws of any country, the United
States or any state thereof or (b) a misdemeanor involving moral turpitude
or (v) a material breach of (a) the Company’s policies and procedures
in effect from time to time or (b) the provisions of this Agreement.

“Change in Control”
shall have the meaning given such term in the Stock Incentive Plan, provided
that, for purposes of such definition, the term “Permitted Holders” shall
include Northwest Airlines Corporation or any affiliate of Northwest Airlines
Corporation.

“Date of Termination”
shall mean, with respect to Executive, the date of termination of Executive’s
employment hereunder after the notice period provided by Section 3.4.

“Disability” shall
mean Executive’s physical or mental condition which prevents continued
performance of his duties hereunder, if Executive establishes by medical evidence
that such condition will be permanent and continuous during the remainder of
Executive’s life or is likely to be of at least three (3) years duration.

“Effective Date”
shall mean January 14, 2003.

“Good Reason” shall
mean with respect to an Executive, any one or more of the following:

(a)           a material reduction in Executive’s
Base Salary or level of target bonus under the Bonus Plan or any successor
bonus plan without Executive’s consent;

(b)           any substantial and sustained
diminution in Executive’s authority or responsibilities hereunder; or

(c)           a failure by the Company to comply
with any provision of this Agreement;

provided, however,
that the foregoing events shall constitute Good Reason only if the Company
fails to cure such event within thirty (30) days after receipt from Executive
of written notice of the event which constitutes Good Reason; provided, further,
that “Good Reason” shall cease to exist for an event on the 60th day
following the later of its occurrence or Executive’s knowledge thereof, unless
Executive has given the Company written notice thereof prior to such date.

In order for Executive’s
termination of his employment to be considered for Good Reason, such
termination must occur within one (1) year after the event giving rise to
such Good Reason.  Executive’s continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.

 

6

 

“Notice of Termination”
shall mean a notice specifying the Date of Termination.

12.           Executive Representation.

Executive hereby represents
to the Company that the execution and delivery of this Agreement by Executive
and the Company and the performance by Executive of Executive’s duties hereunder
shall not constitute a breach of, or otherwise contravene, the terms of any
employment agreement or other agreement or policy to which Executive is a party
or otherwise bound.

13.           Amendment.

No provision of this
Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by Executive and an
authorized officer of the Company.

14.           Governing Law.

The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Tennessee, without regard to principles of
conflicts of laws.

15.           Validity.

The invalidity or
unenforceability of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement
which shall remain in full force and effect.

16.           Arbitration.

Except as otherwise provided
in Section 17 of this Agreement, all disputes and controversies arising
from or in conjunction with Executive’s employment with, or any termination
from, the Company and all disputes and controversies arising under or in
connection with this Agreement (except claims for vested benefits brought under
ERISA) shall be settled by mandatory arbitration conducted before one
arbitrator having knowledge of employment law in accordance with the rules for
expedited resolution of employment disputes of the American Arbitration
Association then in effect.  The
arbitration shall be held in the Memphis, Tennessee metropolitan area at a
location selected by the Company.  The
determination of the arbitrator shall be made within thirty (30) days
following the close of the hearing on any dispute or controversy and shall be
final and binding on the parties.  The
parties hereby waive their right to a trial of any and all claims arising out
of this Agreement or breach of this Agreement. 
All costs and expenses incurred in connection with any arbitration
including, without limitation, arbitrator and attorney’s fees, shall be paid by
the nonprevailing party in the arbitration unless the arbitrator determines
that such expenses must be otherwise allocated under applicable law to maintain
the validity of this Section 16.

 

7

 

17.           Specific Performance.

Notwithstanding
Section 16 of this Agreement, if Executive breaches or threatens to commit
a breach of Section 6 of this Agreement, the Company shall have the right
to specific performance (i.e., the right and remedy to have the terms and
conditions of Section 6 specifically enforced by any court of competent
jurisdiction), it being agreed that any breach or threatened breach of
Section 6 would cause irreparable injury and that money damages may not
provide an adequate remedy.

18.           Cooperation.  

Executive shall provide his
reasonable cooperation in connection with any investigation, action or
proceeding (or any appeal from any action or proceeding) which relates to
events occurring during Executive’s employment hereunder.  This provision shall survive any termination
of this Agreement.

19.
          Compensation Limitation.  

Notwithstanding the
foregoing, Executive and the Company agree that (i) to the extent permitted by
the Air Transportation Safety and System Stabilization Act (the “Act”) any
payments or benefits payable to Executive under this Agreement (including,
without limitation, payments under Sections 2 and 4 hereof) or pursuant to
any other compensation or benefit plan of the Company or other arrangement
between the Company and Executive that do not comply with the Act shall be
deferred until such payments or benefits may be paid under the Act, and (ii) to
the extent the Act does not permit the deferral of any such payments or
benefits, the maximum compensation and/or severance Executive may receive from
the Company under this Agreement or any other compensation or benefit plan of
the Company or other arrangement between the Company and Executive will not
exceed the amount allowed under the Act.

20.           Entire Agreement.

This Agreement, together
with the Release, any award agreement between the Company and Executive entered
into pursuant to the Company’s stock incentive plans, and the Company’s
employee benefit plans in which Executive will continue to participate as
provided in this Agreement, contain the entire understanding between the
Company and Executive with respect to Executive’s employment with the Company
and supersedes in all respects any prior or other agreement or understanding
between the Company or any affiliate of the Company and Executive with respect
to Executive’s employment.

 

8

 

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

 

	
   

  	
  PINNACLE
  AIRLINES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Philip H. Trenary

  
	
   

  	
  Philip H. Trenary

  
	
   

  	
  President & Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Curtis E. Sawyer

  
	
   

  	
  Curtis E. Sawyer

  

 

9

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