ASSUMPTION AND CLAIM RESOLUTION
AGREEMENT
THIS ASSUMPTION
AND CLAIM RESOLUTION AGREEMENT (this “Agreement”) is
made as of this 20 th day of December, 2006 by and between
(i) Pinnacle Airlines, Inc., a Georgia corporation (together
with its successors and assigns, “Pinnacle”) and
Pinnacle Airlines Corp., a Delaware corporation (together with its
successors and assigns, “Pinnacle Corp.”), and (ii)
Northwest Airlines, Inc., a Minnesota corporation (together with
its successors and assigns, “Northwest”).
WHEREAS, on
September 14, 2005 (the “Petition Date”),
Northwest and its affiliated debtors (collectively, the
“Debtors”) filed voluntary petitions for relief under
Chapter 11 of Title 11 of the United States Code (the
“Bankruptcy Code”) in the United States Bankruptcy
Court for the Southern District of New York (the “Bankruptcy
Court”), under the jointly administered case number 05-17930
(the “Bankruptcy Case”);
WHEREAS,
Northwest, Pinnacle and Pinnacle Corp. are parties to a
pre-petition executory Airline Services Agreement dated as of
January 14, 2003 (the “Existing ASA”);
WHEREAS,
contemporaneously with the execution of this Agreement, the parties
will enter into an Amended and Restated Airline Services Agreement
(as amended, modified or altered from time to time, and including
all supplements, exhibits and attachments thereto, the
“ASA”), a Share Purchase Agreement (the “Share
Purchase Agreement”), and amendments to Aircraft Sublease
Agreements (the “Sublease Amendments”) (this Agreement,
together with the ASA, the Share Purchase Agreement and the
Sublease Amendments, are collectively hereinafter referred to as
the “Transaction Documents”);
WHEREAS, on or
before August 16, 2006, Pinnacle and Pinnacle Corp. filed the
proof(s) of claim listed on Annex A attached hereto in the
amount(s) specified in Annex A asserting claims under, in
connection with, or related to, without limitation, the ASA
(collectively, the “Filed Claims”);
WHEREAS, the
Debtors dispute the Filed Claims and intend to file or have filed
an objection with respect thereto;
WHEREAS, Northwest
is authorized under the Order Pursuant To Sections 502, 363
and 105 of the Bankruptcy Code and Rules 3007, 9019 and 2002
of the Bankruptcy Rules Establishing Procedures for
(i) Omnibus Objections to Proofs of Claim and
(ii) Compromising Disputed Proofs of Claim (the
“Claims Resolution Order”), Docket No. 3546, to
enter into agreements to resolve the Filed Claims and any and all
other claims (as defined in the Bankruptcy Code) that Pinnacle
and/or Pinnacle Corp. have or had against any Debtor including, but
not limited to, the Filed Claims (collectively, the
“Claims”);
WHEREAS, on
October 28, 2005, the Bankruptcy Court entered the Final
Order Pursuant to Sections 105, 362 and 541 of the Bankruptcy
Code and Bankruptcy Rule 3001 Establishing Notification and
Hearing Procedures for Trading in Claims and Equity Securities
(the “Claims Trading Order”), Docket No. 836;
and
WHEREAS, Northwest
and Pinnacle desire to enter into this Agreement to provide for the
assumption of the ASA in Northwest’s Bankruptcy Case and to
resolve all Claims held by Pinnacle against any of the Debtors on
the terms and conditions set forth herein.
NOW, THEREFORE, in
consideration of the foregoing recitals and the covenants and
conditions contained herein and in connection with the execution of
the ASA, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
1.
Resolution of Claims. In accordance with the Claims
Resolution Order, the parties hereby agree as follows:
(a)
(i) Subject to Sections 1(a)(ii) and 1(a)(iii) hereof,
upon the “Effective Date” (as such term is defined in
the ASA), and in full and final satisfaction of any and all Claims
(including without limitation any Claim arising under the Tax
Indemnity Agreement, but specifically excluding any Claim that may
arise under this Agreement or any other Transaction Document and
any claim for amounts payable by Northwest to Pinnacle pursuant to
the Existing ASA for products or services actually provided to
Northwest after the Petition Date), claim number 10898, which was
filed by Pinnacle, shall be liquidated and fixed in the amount of
Three Hundred Seventy Seven Million Five Hundred Thousand and
00/100 Dollars ($377,500,000) (the “Allowed Amount”)
and shall be allowed and treated as a general unsecured claim
against the estate of Northwest (the “Allowed Claim”),
and any amount in excess of the Allowed Amount shall be disallowed
in its entirety. All Filed Claims other than the Allowed Claim are
deemed withdrawn (with prejudice), and shall be deemed disallowed
and expunged upon the Effective Date without the requirement for
any further action by any party.
(ii) In the event
Northwest designates pursuant to Section 3.02(a)(ii)(B) of the
ASA a three (3) or ten (10) year term for the aircraft
placed with Pinnacle pursuant to the first sentence of
Section 3.02(a)(i) of the ASA, then the Allowed Amount of the
Allowed Claim shall be reduced by the following: (A) if such
term is ten (10) years, the Allowed Amount shall be reduced by
the product of $2.5 million multiplied by the number of such
aircraft, and (B) if such term is three (3) years, the
Allowed Amount shall be reduced by the product of $0.8 million
multiplied by the number of such aircraft (any such reduction in
the Allowed Amount is hereinafter referred to as the
“Reduction”); provided, however, if the Allowed Claim,
or any portion thereof, has been assigned, transferred, or conveyed
by Pinnacle prior to the occurrence of any Reduction (the aggregate
amount of the Allowed Claim, or portion thereof, so transferred,
the “Transferred Amount”) and the Reduction exceeds the
Allowed Amount less the Transferred Amount (the difference between
the Allowed Amount and the Transferred Amount, the “Retained
Amount,” and the difference between the
Reduction and the
Retained Amount, the “Excess Reduction”), then,
(i) the Retained Amount of the Allowed Claim shall be reduced
to zero, and (ii) Pinnacle shall pay to Northwest, at the time
of the designation by Northwest referenced in this paragraph, an
amount equal to (x) the Excess Reduction multiplied by
(y) a fraction, the numerator of which is the total amount of
proceeds or other consideration received by Pinnacle in connection
with such assignment, transfer or conveyance of the Transferred
Amount and the denominator of which is the amount of the
Transferred Amount.
(iii) In the event
Northwest exercises its right pursuant to Section 3.02(a)(ii)(E) of
the ASA to remove aircraft from Pinnacle’s fleet, then the
Allowed Amount of the Allowed Claim shall be:
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(A)
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increased by the amount of the
operating profit that would have been earned by Pinnacle under the
ASA with respect to the operation of any removed aircraft that
constitute all or part of the Twenty-Four Aircraft (as defined in
the ASA) during the remaining term of the ASA if Northwest had not
exercised such right and, if Northwest has, as of such date,
designated pursuant to Section 3.01(a)(ii)(B) of the ASA a term for
the Seventeen Aircraft (as defined in the ASA) that has resulted in
a reduction in the Allowed Amount of the Allowed Claim pursuant to
Section 1(a)(ii) hereof, then the Allowed Amount of the
Allowed Claim shall also be increased by the amount of the
operating profit that would have been earned by Pinnacle under the
ASA with respect to the operation of the removed Seventeen Aircraft
during the remaining portion of the designated term for such
aircraft if Northwest had not exercised such right; and
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(B)
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decreased by the amount of any
reduction in the Purchase Price (as defined in the Share Purchase
Agreement) pursuant to Section 2.1 of the Share Purchase
agreement resulting from the exercise of such right by Northwest,
but in no event shall the amount of any decrease pursuant to this
clause (B) exceed the amount of any increase with respect to
the Twenty-Four Aircraft pursuant to clause (A) above, even if
the reduction in the Purchase Price is greater than the aggregate
amount of operation profit referenced above.
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(iv) To the extent
at any time the Allowed Amount of the Allowed Claim is reduced
pursuant to this Section 1(a), Pinnacle agrees to withdraw
with prejudice the portion of the Allowed Claim equ
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