PURCHASE AND RELEASE AGREEMENT
Exhibit
10.78
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.
Execution
Copy
PINNACLE
AIRLINES CORP. (“Client”), and [***] hereby agree as
follows:
Client
currently holds the auction-rate security positions listed in Exhibit A hereto
in [***] Account No. [***] (“Client’s Account”)
(each such position, in the amount set forth in Exhibit A, a “Position” and
collectively the “Positions”).
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1.
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Sale of Positions and
Client Purchase Option
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(a)
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[***]
will purchase each Position from Client for a purchase price equal to the
Purchase Price Percentage for such Position (as set forth in Exhibit A)
multiplied by the outstanding principal amount of such Position, plus
accrued unpaid interest (as determined by [***] consistent with bond
market practice). Settlement of such purchase shall take place
within 3 business days of the date of execution of this Purchase and
Release Agreement (the “Agreement”) on
a delivery-versus-payment basis upon [***]’s crediting funds in the amount
of the purchase price to Client’s Account and simultaneously debiting the
Positions from Client’s Account; provided that the aggregate purchase
price in respect of all Positions shall be immediately
applied to the repayment of all amounts that are (or upon demand or
acceleration would be) payable in respect of Client’s Loan Obligations (as
defined in the Loan) under the Amended and Restated Loan Agreement, dated
as of November 5, 2008, as amended by Amendment No. 1 thereto dated as of
March 2, 2009, between [***] and Client (the “Loan”) as of
such settlement date and any balance of such aggregate purchase price
remaining after such application will be available as a credit
balance in Client’s Account (subject to any applicable margin, lending or
lending-related or other agreements governing Client's
Account). Upon settlement of such purchase, [***]’s obligation
to make advances under the Loan shall terminate and, if such aggregate
purchase price is sufficient to satisfy in full all Loan Obligations
outstanding as of such settlement date, [***]’s security interest and lien
in the Collateral (as defined in the Loan) shall be released and the
rights and obligations of the parties under the Loan shall terminate
(other than the rights and obligations of the parties under the
indemnification provisions of Section 12 of the Loan, the arbitration
provisions of Section 14 of the Loan and any other provisions of the Loan
that are expressly stated to survive termination of the
Loan). [***] shall have all of the incidents of ownership of
the Positions, including without limitation the right to transfer the
Positions to others (subject to any restrictions under applicable law or
the terms of the securities constituting the Positions) and the right to
receive cash distributions, if any, vote, provide consent or take any
similar action with respect to the
Positions.
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(b)
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At
any time following settlement of the purchase of any Position pursuant to
Section 1(a) and on or before August 21, 2012, upon written notice (“Exercise
Notice”) to [***], Client may purchase from [***] [***] Option
Securities corresponding to any such Position for an amount equal to the
product of (A) the Adjusted Exercise Percentage and (B) the sum of the
Exercise Price for such Position plus the amount of any accrued unpaid
interest (as determined by [***] consistent with bond market practice) on
the Option Securities corresponding to such Position. The
Exercise Notice shall specify (i) the Position or Positions with respect
to which Client is exercising the option pursuant to this paragraph 1(b)
and (ii) the Exercise Percentage for each Position specified in such
Exercise Notice.
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As used
herein, the term “Option Securities”
means, as of any date of determination and with respect to any Position,
securities or other property (excluding any securities or other property
distributed in respect of interest and excluding all cash) of the same class and
in the same amount as a holder of such Position would own in respect of its
holding such Position, assuming such holder became a holder of such Position on
the settlement date of the purchase of such Position pursuant to Section 1(a)
and held such securities and property (excluding cash) from such execution date
to and including such date of determination (such holder, a “Reference Holder”);
provided that if the
composition of the Option Securities would depend on any election or other
action taken by such Reference Holder, then [***] shall be entitled to
determine, in its absolute discretion, what elections or actions such Reference
Holder shall be deemed to have made; and provided further that if the
composition of the Option Securities would depend on any election, action,
redemption (including without limitation any randomly-allocated partial
redemption made by an issuer of Option Securities), exchange, distribution or
other event that, in each case, was not available to all holders of the Option
Securities generally (a “Non-Pro Rata Event”),
then such Non-Pro Rata Event shall not be taken into account unless such Non-Pro
Rata Event (whether by itself or in conjunction with preceding Non-Pro Rata
Events) has resulted (as determined by [***] in its reasonable discretion) in
the redemption, liquidating distribution or similar event with respect to all or
substantially all of the securities of the same class as the Option
Securities. Upon any exercise of Client’s option pursuant to this
paragraph 1(b), the Option Securities shall thereafter no longer include the
Pro-Rata Portion of the Option Securities subject to such
exercise. For the avoidance of doubt, the Option Securities shall not
include any cash, whether received as interest, principal or otherwise, or any
proceeds or returns deemed to be received thereon or any investments
thereof.
[***]
As used
herein, the term “Exercise Percentage”
means, with respect to a Position, an amount expressed as a percentage not to
exceed 100%, as specified in the Exercise Notice; provided that [***] may
adjust such percentage in a commercially reasonable manner to take account of
the minimum transfer denominations and unit sizes of the securities and property
comprised in the Option Securities (as so adjusted, the “Adjusted Exercise
Percentage”).
Client acknowledges and agrees that
the consequences of Non-Pro Rata Events under this Agreement may differ from
(and Non-Pro Rata Events are likely to result in no or reduced allocations of
issuer partial redemptions in comparison with) what Client would have
experienced had it not sold the Positions to [***] and, accordingly, there can
be no assurance that any adjustments of the Option Securities or the Exercise
Price in respect of Non-Pro Rata Events will be made pursuant to this
Agreement.
Client is urged to consult with its
own legal, regulatory, tax, business, investment, financial and accounting
advisors in connection with any decision to exercise its rights pursuant to this
paragraph 1(b). Absent exercise, Client will not be entitled to vote
the Option Securities and Client may not be able to participate in any future
opportunity to sell or tender any Option Securities to the same extent as if
Client had exercised such rights. In particular, absent such
exercise, Cash Redemption Amounts, if any, will be reflected through an
adjustment to the Exercise Price and will not result in cash payments to Client
unless and until the cumulative Cash Redemption Amounts with respect to a
Position exceed the Exercise Price during the period when Client may exercise
its rights under paragraph 1(b).
As used
herein, the term “Exercise Price”
means, as of any date of determination and with respect to any Position, the
Initial Exercise Price for such Position (as set out in Exhibit A), as reduced
(but not below zero) by (i) the amount of any Cash Redemption Amounts received
on or prior to such date of determination in respect of the Option Securities
corresponding to such Position and (ii) an amount equal to the sum of the
products, with respect to each exercise, if any, of Client’s option pursuant
this paragraph 1(b) with respect to such Position that occurred prior to such
date of determination, of the Exercise Price multiplied by the Adjusted Exercise
Percentage, in each case, with respect to such exercise and such
Position.
As used
herein, the term “Cash
Redemption Amounts” means the amount of any cash received by a Reference
Holder of Option Securities in redemption of, or as a repayment of principal
(including any payment on liquidation that discharges principal) on, the Option
Securities; provided
that if such cash amount would depend on any election or other action taken by
such Reference Holder, then [***] shall be entitled to determine, in its
absolute discretion, what elections or actions such Reference Holder shall be
deemed to have made; and provided further that if such
cash amount would depend on any Non-Pro Rata Event, then such Non-Pro Rata Event
shall not be taken into account unless such Non-Pro Rata Event (whether by
itself or in conjunction with preceding Non-Pro Rata Events) has resulted (as
determined by [***] in its reasonable discretion) in the redemption, liquidating
distribution or similar event with respect to all or substantially all of the
securities of the same class as the Option Securities.
Notwithstanding
the foregoing definitions of “Option Securities”, “Exercise Price” and “Cash
Redemption Amounts”, [***] may elect at any time to treat all or any portion of
the Option Securities corresponding to a Position (the “Removed Portion”) as
having been redeemed for cash at [***] percent of the outstanding principal
amount thereof, in which event (i) the term “Option Securities” shall thereafter
no longer include such Removed Portion and (ii) the amount of cash deemed to
have been received in redemption of such Removed Portion shall be treated as a
Cash Redemption Amount.
Unless
otherwise agreed by the parties, settlement of any purchase of Option Securities
under this Section 1(b) shall take place not later than the 10th
business day following [***]’s receipt of the Exercise Notice on a
delivery-versus-payment basis upon [***]’s crediting the Pro-Rata Portion of the
Option Securities to Client’s Account and simultaneously debiting from Client’s
Account an amount equal to the product of (A) the Adjusted Exercise Percentage
and (B) the sum of the Exercise Price for such Position plus the amount of any
accrued unpaid interest (as determined by [***] consistent with bond market
practice) on the Option Securities corresponding to such Position; provided that it shall be a
condition of [***]’s obligation to make such delivery that sufficient funds are
available in Client’s Account. [***] Upon settlement of such
exercise, Client shall have all of the incidents of ownership of the purchased
Pro-Rata Portion of the Option Securities, including without limitation the
right to transfer such purchased Pro-Rata Portion of the Option Securities to
others (subject to any applicable margin, lending or lending-related or other
agreements governing Client's Account and to any restrictions under applicable
law or the terms of the Option Securities) and the right to receive cash
distributions, if any, vote, provide consent or take any similar action with
respect to such purchased Pro-Rata Portion of the Option
Securities.
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(c)
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If
on any date on or before August 21, 2012 the Exercise Price with respect
to any Position becomes zero, then Client’s option pursuant to Section
1(b) to purchase the Option Securities corresponding to such Position
shall be deemed to have been automatically exercised on such date with an
Exercise Percentage of 100%. Unless otherwise agreed by the
parties, settlement of such automatic exercise shall take place within 15
business days of the date of such automatic exercise by [***]’s crediting
to Client’s Account the Option Securities and any Excess Cash Redemption
Amounts with respect to such Position. As used herein, the term
“Excess Cash
Redemption Amounts” means, with respect to any Position, the
amount, if any, by which (x) all Cash Redemption Amounts received with
respect to such Position after Client’s most recent exercise of its option
pursuant to paragraph 1(b) with respect to such Position exceed (y) the
Exercise Price with respect to such Position that was in effect
immediately following such most recent exercise or, if Client has not
previously delivered an Exercise Notice with respect to such Position, the
amount by which all Cash Redemption Amounts with respect to such Position
exceed the Initial Exercise Price with respect to such
Position. Upon settlement of such exercise, Client shall have
all of the incidents of ownership of the Option Securities, including
without limitation the right to transfer the Option Securities to others
(subject to any applicable margin, lending or lending-related or other
agreements governing Client’s Account and to any restrictions under
applicable law or the terms of the Option Securities) and the right to
receive cash distributions, if any, vote, provide consent or take any
similar action with respect to such Option
Securities.
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(d)
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Until
August 21, 2012 or such earlier time at which the Option Securities in
respect of all Positions have been purchased by Client, [***] will use all
reasonable efforts to forward to Client on a timely basis copies of the
issuer redemption and voluntary action notifications it receives from The
Depository Trust Company for any Option Securities still outstanding and
subject to the rights and obligations set forth in Section 1(b) or Section
1(c) above.
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2.
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Release
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Except
for the obligations created by, and the rights expressly reserved under, this
Agreement, Client hereby releases and forever discharges [***], its past and
present predecessors and affiliates, officers, directors, agents and employees,
and their respective heirs, executors, administrator, successors and assigns,
(including Xxxxxx Xxxxxxx Xxxxx Xxxxxx LLC) (hereinafter collectively referred
to as the “Releasee”) from all
actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents,
executions, claims, and demands whatsoever, in law, admiralty or equity, known
or unknown, fixed or contingent, based upon or relating to the Loan or to
Client’s investment in, holding of, delivery of, or any past, present or future
difficulties Client may have experienced or may experience in disposing
of, auction rate securities sold by [***] (collectively “Released
Matters”).
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3.
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Representations and
Warranties
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Client
hereby represents and warrants that: (i) Client has all requisite power and
authority to execute and deliver this Agreement and perform its obligations
hereunder; and (ii) any and all consents and approvals required for Client to
enter into this Agreement have been obtained; and (iii) Client’s execution and
performance of its obligation under this Agreement do not violate any material
agreements or obligations of Client. Client further represents and
warrants that it is the sole and the lawful owner of the Positions and of all
rights, title and interest in and to all Released Matters set forth in Section
2, and that it has not heretofore assigned or transferred or purported to assign
or transfer to any other person or entity the Positions or any such Released
Matters or any part or portion of them. Client represents and
warrants that this Agreement is binding upon it as well as any of its successors
in interest.
Client
further represents and warrants that (i) it is an “accredited investor” as such
term is defined in Regulation D as promulgated under the Securities Act of 1933
(the “Securities
Act”); and (ii) at all times until August 21, 2012 or such earlier time
at which the Option Securities in respect of all Positions have been purchased
by Client, Client is not, and is not acting on behalf of, (A) an “employee
benefit plan” that is subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), (B) a “plan”
within the meaning of Section 4975 of the Internal Revenue Code of 1986, as
amended (the “Code”), (C) a person
or entity the underlying assets of which include plan assets by reason of
Department of Labor Regulation Section 2510.3-101, as amended by Section 3(42)
of ERISA, or otherwise, or (D) a federal, state or local governmental plan or
non-U.S. plan that is subject to any federal, state or local law that is
materially similar to the provisions of Section 406 of ERISA or Section 4975 of
the Code. Client acknowledges and agrees that any disposition of its rights or
interests in or under this Agreement is restricted under this Agreement, the
Securities Act and state securities laws.
[***]
[***] hereby represents and warrants that: (i) [***] has
all requisite power and authority to execute and deliver this Agreement and
perform its obligations hereunder; (ii) any and all consents and approvals
required for [***] to enter into this Agreement have been obtained; and (iii)
this Agreement is binding upon it as well as any of its successors in
interest.
Each
party hereby represents and warrants that in connection with the negotiation of,
entry into, and performance of its obligations and exercise of its rights under,
this Agreement: (i) the other party is not acting as a fiduciary or
financial or investment advisor for it; (ii) it is not relying upon any
representations (whether written or oral) of the other party other than the
representations expressly set forth in this Agreement; and (iii) it has
consulted with its own legal, regulatory, tax, business, investment, financial,
and accounting advisors to the extent it has deemed necessary, and it has made
and will make its own decisions based upon its own judgment and upon any advice
from such advisors as it has deemed necessary and not upon any view expressed by
the other party. Client acknowledges and agrees that
[***] has no obligation to provide indicative quotations or valuations with
respect to the Positions, the Option Securities or the option rights of Client
pursuant to Section 1(b)
or Section 1(c), that
traded instruments corresponding to such option rights may not exist and that,
consequently, it may be difficult for Client to establish an independent value
for such option rights. [***] The option rights of
Client pursuant to Section 1(b) and Section 1(c), and rights under Section 1(d)
may not be assigned, pledged, sold or otherwise transferred without the prior
written consent of [***].
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4.
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Acknowledgement
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The
parties acknowledge that they have entered into this Agreement in consideration
of and in reliance upon the fact that all rights and obligations hereunder
constitute a single business and contractual relationship between the parties
and have been made in consideration of each other. Furthermore, the parties
intend for this Agreement to be a “securities contract” as defined in Section
741(7) of the United States Bankruptcy Code (the “Bankruptcy Code”) and
all payments and transfers of securities, cash or other property hereunder to be
“margin payments”, “settlement payments” or “transfers” (as defined in the
Bankruptcy Code).
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5.
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Notices
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Any notices given hereunder shall be
sent by facsimile, or email, with a courtesy confirmation copy via overnight
courier to the following addresses (or such other address as a party may
designated as a notice address in a prior written notice to the other party) and
shall be deemed delivered when received (or if received on a weekend or holiday
or after the close of business, on the next business day);
providedthat failure to deliver a confirmation copy via
overnight courier shall not invalidate any such notice and [***] shall not be
required to deliver confirmation copies of any notices given pursuant to Section
1(d) above:
If to Client:
0000
Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Attention: Chief Financial Officer (with copy to General
Counsel)
Fax: [***]
Email: [***]
If to
[***]:
[***]
With a
copy to:
[***]
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6.
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Amendment;
Counterparts
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This
Agreement may only be amended by written agreement
of Client and [***]. This Agreement may be executed in
counterparts and each counterpart, when duly executed, shall be effective as an
original and all counterparts taken together shall constitute one and the same
agreement.
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7.
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Governing
Law
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This
Agreement and all matters arising herein or in connection herewith will be
governed by, and construed and enforced in accordance with, the law of the State
of New York, including Section 5-1401 and Section 5-1402 of the General
Obligations Law, but otherwise without reference to choice of law
doctrine.
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8.
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Arbitration
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This
Agreement contains a pre-dispute arbitration clause. By signing this Agreement,
the parties agree as follows:
(a)
All parties to this Agreement are giving up the right to xxx each other in
court, including the right to a trial by jury, except as provided by the rules
of the arbitration forum in which a claim is filed.
(b)
Arbitration awards are generally final and binding; a party’s ability to have a
court reverse or modify an arbitration award is very limited.
(c)
The ability of the parties to obtain documents, witness statements and other
discovery is generally more limited in arbitration than in court
proceedings.
(d)
The arbitrators do not have to explain the reason(s) for their
award.
(e)
The panel of arbitrators will typically include a minority of arbitrators who
were or are affiliated with the securities industry, unless Client is a member
of the organization sponsoring the arbitration facility, in which case all
arbitrators may be affiliated with the securities industry.
(f)
The rules of some arbitration forums may impose time limits for bringing a claim
in arbitration. In some cases, a claim that is ineligible for
arbitration may be brought in court.
(g)
The rules of the arbitration forum in which the claim is filed, and any
amendments thereto, shall be incorporated into this agreement. Client
agrees that any and all controversies that may arise between Client and [***],
including, but not limited to, those arising out of or relating to the
transactions contemplated hereby and any activity or claim related to the
construction, performance, or breach of this Agreement shall be determined by
arbitration conducted before FINRA Dispute Resolution (“FINRA-DR”) or, if
FINRA-DR declines to hear the matter, before the American Arbitration
Association, in accordance with their arbitration rules then in force. The award
of the arbitrator shall be final, and judgment upon the award rendered may be
entered in any court, state or federal, having jurisdiction. No
person shall bring a putative or certified class action to arbitration, nor seek
to enforce any pre-dispute arbitration agreement against any person who has
initiated in court a putative class action or who is a member of a putative
class who has not opted out of the class with respect to any claims encompassed
by the putative class action until: (i) the class certification is denied; (ii)
the class is decertified; or (iii) the Client is excluded from the class by the
court. Such forbearance to enforce an agreement to arbitrate shall
not constitute a waiver of any rights under this Agreement except to the extent
stated herein.
In
Witness Whereof, Client and
[***] have executed this Agreement effective as of the 21st day of
August 2009.
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By:
____________________________
Name: Xxxxx
X. Xxxx
Title: Vice
President and Chief Financial Officer
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CITIGROUP
GLOBAL MARKETS INC.
By:
_____________________________
Name: [***]
Title:
[***]
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EXHIBIT
A
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Position
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Purchase
Price Percentage
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Initial
Exercise Price
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