EXHIBIT 10.3
REVOLVING CREDIT NOTE
$17,000,000.00 Memphis, Tennessee
June 16, 2005
On June 16, 2006, the undersigned, PINNACLE AIRLINES, INC., a Georgia
corporation (the "Maker"), promises to pay to the order of FIRST TENNESSEE BANK
NATIONAL ASSOCIATION, a national banking association having its principal place
of business in Memphis, Tennessee (the "Bank"), the principal sum of Seventeen
Million Dollars ($17,000,000.00), value received, together with interest from
date until paid, upon disbursed and unpaid principal balances, at the rate
hereinafter specified, said interest being payable monthly on the first (1st)
day of each month hereafter, with the final installment of interest being due
and payable concurrently on the same date that the principal balance is due
hereunder.
Subject to the limitations hereinafter set forth, the disbursed and
unpaid principal balances of the indebtedness hereby evidenced shall bear
interest prior to maturity (computed on the basis of a 365 or 366-day year, as
appropriate, for advances bearing interest at the Base Rate, or computed on the
basis of a 360-day year for actual days elapsed, for advances bearing interest
at the Adjusted LIBOR Rate) at a rate per annum which shall, from day to day, be
equal to the lesser of (a) the maximum effective variable contract rate of
interest ("Maximum Rate") which Bank may from time to time lawfully charge, or
(b) a rate equal to the Applicable Rate (hereinafter defined). The "Applicable
Rate" shall mean either the Adjusted LIBOR Rate or the Base Rate as elected by
Maker in accordance with the terms hereof.
"Adjusted LIBOR Rate" shall mean the Reserve Adjusted LIBOR Rate plus
two and one-half percent (2.50%).
"Base Rate" means the base commercial rate of interest
established from time to time by the Bank.
"Borrowing Amount" means all or any portion of the outstanding
principal balance owing hereunder (or an advance to be made hereunder)
designated as a Borrowing Amount in a Rate Notice.
"Business Day" means a banking business day of the Bank.
"Change in Law" means the adoption of any law, rule,
regulation, policy, guideline or directive (whether or not having the
force of law) or any change therein or in the interpretation or
application thereof, in all cases by any Governmental Authority (as
hereinafter defined) having jurisdiction over the Bank, in each case
after the date hereof.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
regulatory functions of or pertaining to government.
"Interest Period" means with respect to any Borrowing Amount
bearing interest at an Adjusted LIBOR Rate: (a) initially, a period
commencing on the date set forth in
Maker's first Rate Notice and ending one (1), two (2), three (3), four
(4), or six (6) months thereafter as selected by Borrower in such Rate
Notice, and (b) thereafter, each period commencing on the last day of
the immediately preceding Interest Period applicable to such Borrowing
Amount and ending one (1), two (2), three (3), four (4), or six (6)
months thereafter as selected by Borrower in its Rate Notice; provided
that (i) the first day of an Interest Period must be a Business Day,
(ii) any Interest Period that would otherwise end on a day that is not
a Business Day shall be extended to the next succeeding Business Day,
unless such Business Day falls in the next calendar month, in which
case, the Interest Period shall end on the next preceding Business Day,
and (iii) the Maker may not elect an Interest Period that extends
beyond the Maturity Date.
"LIBOR Loan" shall mean, in each instance, a particular
Borrowing Amount bearing interest at an Adjusted LIBOR Rate hereunder.
"LIBOR Rate" shall mean the London Interbank Offered Rate of
Interest for an Interest Period elected by the Maker, determined by the
Bank, appearing on the Bloomberg LLC Computer Service as of 11:00 a.m.
London time on the Business Day immediately following the date of
election by Maker; provided, however, that, if the LIBOR Rate is not
reported on the Business Day immediately following the date of election
by Maker, then the LIBOR Rate for such election shall be the LIBOR Rate
reported on the immediately preceding Business Day (unless failure of
the LIBOR Rate to be reported is due to a disruption in the London
interbank market, in which case the Bank shall use commercial best
efforts to establish an alternative LIBOR Rate). The applicable
Interest Period shall be as elected by Maker, which election must be
made at the time of election of the Adjusted LIBOR Rate.
"Loan Agreement" means that certain Loan Agreement, of even
date herewith, by and among Bank, Maker, and Pinnacle Airlines Corp., a
Delaware corporation, the Guarantor.
"Rate Notice" means a written notice by Maker to Bank,
actually received by Bank no later than 10:30 a.m., Memphis, Tennessee
time on the Rate Setting Date for the next Interest Period, specifying
the Rate Option and the applicable portion of the outstanding principal
balance hereof as a Borrowing Amount and, with respect to Advances
bearing interest at an Adjusted LIBOR Rate only, the commencement date
and duration of the next applicable Interest Period. A Rate Notice may
designate only one Interest Period.
"Rate Setting Date" means, with respect to an Advance bearing
interest at the Adjusted Base Rate, the date of such Advance, and with
respect to an Interest Period for an Advance bearing interest at an
Adjusted LIBOR Rate, two (2) Business Days prior to the commencement
date of such Interest Period.
"Reserve Adjusted LIBOR Rate" means the LIBOR Rate adjusted
each day to include the cost, in basis points, of any applicable
reserve requirements of the Board of Governors of the Federal Reserve
System (or any successor), applicable to "Eurocurrency
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Liabilities" pursuant to Regulation D or other then-applicable
regulations of the Board of Governors, if any.
Maker shall have the right, if exercised strictly in accordance with
the provisions hereof and subject to the limitations set forth herein, to
designate the entire principal balance outstanding hereunder, or advances of
such principal about to be made hereunder, to bear interest at the Applicable
Rate for designated Interest Periods. Any such designation must be made in a
Rate Notice strictly complying with the requirements hereof relating to same. No
more than four (4) separate Borrowing Amounts bearing interest at four (4)
separate Adjusted LIBOR Rates and Interest Periods may be in effect at any one
time in connection with this Note, and one (1) Borrowing Amount bearing interest
at the Base Rate may be in effect at any one time. Each Borrowing Amount bearing
interest at an Adjusted LIBOR Rate as designated in a Rate Notice shall equal
Five Hundred Thousand Dollars ($500,000.00) or more.
An election by Maker shall be in effect until (a) if the effective
Applicable Rate is the Adjusted Base Rate, a change in the election of the
Applicable Rate by Maker in accordance with the terms hereof or (b) if the
effective Applicable Rate is the Adjusted LIBOR Rate, the expiration of the
Interest Period elected by Maker. Upon the expiration of each Interest Period,
the Maker shall have the right to specify a new Interest Period for the portion
of the indebtedness that will bear interest at the Adjusted LIBOR Rate by giving
written notice of such requested Interest Period to the Bank no later than 10:30
A.M., Memphis time, on the second Business Day preceding the last day of such
expiring Interest Period. If no election is made by Maker, on or prior to 10:30
A.M., Memphis time on the second Business Day prior to the expiration of an
Interest Period, to change the Applicable Rate or to continue to have the
indebtedness hereunder bear interest at the Adjusted LIBOR Rate for a designated
Interest Period, to change the Applicable Rate or to continue to have the
Indebtedness bear interest at the Adjusted LIBOR Rate for a designated Interest
Period, the Applicable Rate shall be the Base Rate upon the expiration of such
Interest Period. If Maker does not elect an Applicable Rate at any time, then
the Applicable Rate shall automatically be the Base Rate. When the Applicable
Rate is the Adjusted Base Rate, each change in the Adjusted Base Rate shall be
effective without notice to the undersigned on the effective date of each change
in the Maximum Rate or the Base Rate, as the case may be.
Notwithstanding any other provisions herein, if any Change in Law shall
make it unlawful for the Bank to make or maintain a LIBOR Rate loan as
contemplated by this Note, if the principal outstanding hereunder then bears
interest at a LIBOR Rate, such principal balance shall, if required by law and
if the Bank so requests, be converted on the date required to make the
indebtedness evidenced by this Note legal to a loan accruing interest at the
lesser of the Maximum Rate or the Base Rate. Each change in the Base Rate shall
become effective, without notice to the undersigned, on the same date that the
Base Rate changes. The undersigned hereby agrees promptly to pay the Bank, upon
demand, any costs incurred by the Bank in making any conversion in accordance
with this paragraph, including any interest or fees payable by the Bank to
lenders of funds obtained by it in order to maintain its LIBOR Rate loans.
The undersigned hereby indemnifies the Bank and holds the Bank harmless
from any loss or expense which the Bank may sustain or incur as a consequence of
(i) a default by the undersigned in payment of the principal amount of or
interest on the loan evidenced hereby,
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which results in interest or fees payable by the Bank to lenders of funds
obtained by it in order to make or maintain its LIBOR Rate loans, or (ii) a
Change in Law that results in the imposition on the Bank of reserve requirements
in connection with LIBOR Rate loans made by the Bank. The undersigned will make
any payments under this indemnity to Bank, upon demand. The undersigned further
agrees to enter into a modification of this Note, at the request of the Bank, to
bring this Note into compliance with any Change in Law.
In the event that the foregoing provisions should be construed by a
court of competent jurisdiction not to constitute a valid, enforceable
designation of a rate of interest or method of determining same, the
indebtedness hereby evidenced shall bear interest at the lesser of: (a) the Base
Rate plus four percent (4%) per annum; or (b) the maximum effective variable
contract rate which may be charged by the Bank under applicable law from time to
time in effect (the applicable provision referred to as the "Maximum Rate").
For any payment which is not made within twenty (20) days of the due
date for such payment, the Maker shall pay a late fee, including without
limitation loans which are renewed more than twenty (20) days after the due date
even though the renewal may be dated as of the past due payment date. The late
fee shall equal the lesser of five percent (5%) of the unpaid portion of the
past due payment or Five Hundred Dollars ($500.00).
This Note is secured by a Security Agreement of even date herewith upon
the Maker's inventory, equipment, and certain other personalty (the "Security
Agreement"), by a Negative Pledge Agreement of even date herewith related to the
Maker's accounts, accounts receivable, and chattel paper, as more particularly
described therein (the "Negative Pledge Agreement"), and by an Assignment and
Security Agreement (the "Assignment and Security Agreement") of even date
herewith upon certain contracts of the Maker.
All installments of interest, and the principal hereof, are payable at
the office of First Tennessee Bank National Association, 165 Madison Avenue,
Memphis, Tennessee 38103, or at such other place as the holder may designate in
writing, in lawful money of the United States of America, which shall be legal
tender in payment of all debts and dues, public and private, at the time of
payment.
Notwithstanding the foregoing, upon the occurrence of an Event of
Default (as defined in the Loan Agreement), the Bank, at its option, may charge,
and the Maker agrees to pay, interest on disbursed and unpaid principal balances
at the default rate (the "Default Rate") equal to a rate per annum equal to the
lesser of (a) the Maximum Rate or (b) (i) the Base Rate plus (ii) four percent
(4%).
The Base Rate is one of several interest rate indices employed by the
Bank. The Maker acknowledges that the Bank has made, and may hereafter make,
loans bearing interest at rates which are higher or lower than the Base Rate.
If the Maker shall fail to make payment of any installment of interest,
as above provided, and such failure to pay continues for more than five (5) days
after written notice of default, or upon any default in the terms and provisions
of the Security Agreement, or the Loan Agreement of even date herewith between
the Maker and the Bank, or upon any default in any other
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mortgage, trust deed, security agreement, or other instrument of pledge or
hypothecation which now or hereafter secures the payment of the indebtedness
evidenced hereby, and the failure to cure such default within thirty (30) days
of written notice or default (or any other specific cure or grace period
provided in any such loan documents), or upon the dissolution of the Maker or
any endorser or guarantor, or upon any default in full payment, promptly as and
when due (whether by reason of demand, acceleration or otherwise) of any other
indebtednesses, liabilities or obligations of the Maker to the Bank, whether now
existing or hereafter created or arising, absolute or contingent, due or to
become due, and the failure to cure such default within any applicable grace or
cure period provided therein, then, in any of such events, the entire unpaid
principal balance of the indebtedness evidenced hereby together with all
interest then accrued, shall, at the absolute option of the Bank, at once become
due and payable, without demand or notice, the same being expressly waived.
If this Note is placed in the hands of an attorney for collection, by
suit or otherwise, or to protect the security for its payment, or to enforce its
collection, or to represent the rights of the Bank in connection with any loan
documentation executed in connection herewith, or to defend successfully against
any claim, cause of action or suit brought by the Maker against the Bank, the
Maker shall pay on demand all costs of collection and litigation (including
court costs), together with a reasonable attorney's fee. These include, but are
not limited to, the Bank's reasonable attorney's fees and legal expenses,
whether or not there is a lawsuit, including attorney's fees for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction) and appeals.
THE BANK AND THE MAKER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER BANK OR MAKER AGAINST THE
OTHER.
To help the government fight the funding of terrorism and money
laundering activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each business entity that
opens an account. What this means to Maker: When Maker opens an account, the
Bank will ask for Federal Tax Identification Number, physical street address,
full legal name of the Maker and other information that will allow the Bank to
identify Maker. The Bank may also ask Maker to provide copies of certain
documents that will aid in confirming this information.
The Maker and any endorsers or guarantors hereof waive protest, demand,
presentment, and notice of dishonor, and agree that this Note may be extended,
in whole or in part, without limit as to the number of such extensions or the
period or periods thereof, without notice to them and without affecting their
liability hereon.
With respect to any portion of the outstanding principal balance of the
indebtedness hereby evidenced which bears interest at the Base Rate, the
privilege is reserved to prepay said portion, in whole or in part, prior to the
Maturity Date, without premium or penalty.
In the event of (a) the payment of any principal of any LIBOR Loan
other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (b) the conversion of any LIBOR Loan other
than on the last day of the Interest Period applicable thereto, (c) the failure
to borrow, convert, continue or prepay any LIBOR Loan on the date
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specified in any notice delivered pursuant hereto or (d) the assignment of any
LIBOR Loan other than on the last day of the Interest Period applicable thereto
as a result of a request by the Borrower, then, in any such event, the Borrower
shall compensate Bank for the loss, cost and expense attributable to such event.
Such loss, cost or expense to Bank shall be deemed to include an amount
determined by Bank (the "Prepayment Penalty") to be the excess, if any, of (i)
the amount of interest which would have accrued on the principal amount of such
LIBOR Loan had such event not occurred, at the Adjusted LIBOR Rate that would
have been applicable to such LIBOR Loan, for the period from the date of such
event to the last day of the then current Interest Period therefore (or, in the
case of a failure to borrow, convert or continue, for the period that would have
been the Interest Period for such LIBOR Loan), over (ii) the amount of interest
which would accrue on such principal amount for such period at the interest rate
which Bank would bid were it to bid, at the commencement of such period, for
dollar deposits of a comparable amount and period from other banks in the LIBOR
market. For example, assume a $1,000,000.00 30 day LIBOR tranche priced at 2.75%
is prepaid 15 days into the Interest Period. On the prepayment date, due to a
decline in the LIBOR rate market, the bid rate is now 2.40%. The calculations
are:
Original interest: $1,000,000.00 x .0275 x 15/360 = $1,145.83
Bid interest: $1,000,000.00 x .0240 x 15/360 = $1,000.00
Thus, Borrower's Prepayment Penalty would be $145.83. A certificate of
Bank setting forth any amount or amounts that Bank is entitled to receive
pursuant to this paragraph shall be delivered to the Borrower and shall be
conclusive absent demonstrable error. The Borrower shall pay Bank the amount
shown as due on any such certificate within 10 days after receipt thereof.
Except for the foregoing, Borrower may pay all or a portion of the amount owed
earlier than it is due.
It is the intention of the Bank and the Maker to comply strictly with
applicable usury laws; and, accordingly, in no event and upon no contingency
shall the Bank ever be entitled to receive, collect, or apply as interest any
interest, fees, charges or other payments equivalent to interest, in excess of
the maximum rate which the Bank may lawfully charge under applicable statutes
and laws from time to time in effect; and in the event that the holder hereof
ever receives, collects, or applies as interest any such excess, such amount
which, but for this provision, would be excessive interest, shall be applied to
the reduction of the principal amount of the indebtedness hereby evidenced; and
if the principal amount of the indebtedness evidenced hereby, and all lawful
interest thereon, is paid in full, any remaining excess shall forthwith be paid
to the Maker, or other party lawfully entitled thereto. In determining whether
or not the interest paid or payable, under any specific contingency, exceeds the
highest rate which the Bank may lawfully charge under applicable law from time
to time in effect, the Maker and the Bank shall, to the maximum extent permitted
under applicable law, characterize any non-principal payment as a reasonable
loan charge, rather than as interest. Any provision hereof, or of any other
agreement between the Bank and the Maker, that operates to bind, obligate, or
compel the Maker to pay interest in excess of such maximum rate shall be
construed to require the payment of the maximum rate only. The provisions of
this paragraph shall be given precedence over any other provision contained
herein or in any other agreement between the Bank and the Maker that is in
conflict with the provisions of this paragraph.
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This Note shall be governed and construed according to the statutes and
laws of the State of Tennessee from time to time in effect, except to the extent
that Section 85 of Title 12 of the United States Code (or other applicable
federal statue) may permit the charging of a higher rate of interest than
applicable state law, in which event such applicable federal statute, as amended
and supplemented from time to time shall govern and control the maximum rate of
interest permitted to be charged hereunder; it being intended that, as to the
maximum rate of interest which may be charged, received, and collected
hereunder, those applicable statutes and laws, whether state or federal, from
time to time in effect, which permit the charging of a higher rate of interest,
shall govern and control; provided, always, however, that in no event and under
no circumstances shall the Maker be liable for the payment of interest in excess
of the maximum rate permitted by such applicable law, from time to time in
effect.
This Note evidences a revolving line of credit. Advances under this
Note may be requested either orally or in writing by the Maker or by an
authorized person. The Bank may, but need not, require that all oral requests be
confirmed in writing. All communications, instructions, or directions by
telephone or otherwise to the Bank are to be directed to the Bank at the Bank's
address. The Maker agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person, or (b) credited to any
of the Maker's accounts with the Bank. The unpaid principal balance owing on
this Note at any time may be evidenced by endorsements on this Note or by the
Bank's internal records, including daily computer print-outs. The Bank will have
no obligation to advance funds under this Note if: (a) The Maker or any
guarantor is in default under the terms of this Note or any agreement that the
Maker or any guarantor has with the Bank, including any agreement made in
connection with the signing of this Note; (b) the Maker or any guarantor ceases
doing business or is insolvent; (c) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of this Note or
any other loan with the Bank; or (d) the Maker has applied funds provided
pursuant to this Note for purposes other than those authorized by the Bank.
PINNACLE AIRLINES, INC.,
a Georgia corporation
By:
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Name:
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Title:
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