TABLE OF CONTENTS

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ARTICLE I		CANCELLATION AND PURCHASE AND SALE OF SHARES		2
1.1		Cancellation and Purchase and Sale		2
1.2		Closing		3
1.3		Deliveries at the Closing		4
1.4		Plan of Reorganization		5
1.5		Assets and Liabilities		5
1.6		Timing and Interpretation		5
1.7		Buyer Claim		5
ARTICLE II		REPRESENTATIONS AND WARRANTIES OF THE COMPANY		5
2.1		Organization and Good Standing		5
2.2		Capitalization		6
2.3		Authority, Approvals, Enforceability and Consents		6
2.4		Financial Statements		7
2.5		Absence of Undisclosed Liabilities		9
2.6		Absence of Certain Changes		9
2.7		Taxes		11
2.8		Legal Matters		12
2.9		Real Property		12
2.10		Aircraft		13
2.11		Intellectual Property		13
2.12		Insurance		14
2.13		Company Agreements		15
2.14		Labor Relations		16

 

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2.15		Employee Benefit Plans		17
2.16		Environmental Matters		19
2.17		Title; Condition of Assets		19
2.18		Suppliers		19
2.19		U.S. Citizen; Air Carrier		20
2.20		Brokers		20
ARTICLE III		REPRESENTATIONS AND WARRANTIES OF BUYER		20
3.1		Organization and Good Standing		20
3.2		Authority, Approvals, Enforceability and Consents		20
3.3		Financial Capability		21
3.4		Brokers		21
3.5		Buyer Committee		21
ARTICLE IV		COVENANTS		21
4.1		Access		21
4.2		Announcements		22
4.3		Conduct of Business of the Company Prior to the Closing		22
4.4		Further Assurances		24
4.5		Additional Agreements; Notification of Certain Matters		25
4.6		Bankruptcy Proceedings		26
4.7		Acquisition Proposals		28
4.8		Key Employees		30
4.9		State Property Taxes		30
4.10		Cure Amounts		31
ARTICLE V		CONDITIONS TO THE OBLIGATIONS OF BUYER TO EFFECT THE CLOSING		31
5.1		Representations and Warranties; Agreements; Covenants		31

 

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5.2		HSR		31
5.3		DOT and FAA; Authorizations; Permits; Consents		32
5.4		Injunction; Litigation; Legislation		32
5.5		Key Employees		32
5.6		Bankruptcy		32
5.7		Delivery of Transaction Documents		32
5.8		Parent		32
ARTICLE VI		CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO EFFECT THE CLOSING		33
6.1		Representations and Warranties; Agreements; Covenants		33
6.2		HSR Act; DOT and FAA		33
6.3		Injunction		33
6.4		Bankruptcy		33
6.5		Delivery of Transaction Documents		33
ARTICLE VII		TERMINATION		33
7.1		Termination.		33
7.2		Effect of Termination.		35
ARTICLE VIII		MISCELLANEOUS		35
8.1		Expenses		35
8.2		Survival		36
8.3		Certain Interpretative Matters		36
8.4		Notices		36
8.5		Assignment		38
8.6		Entire Agreement		38
8.7		Modifications, Amendments and Waivers		38
8.8		Counterparts		39

 

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8.9		Governing Law		39
8.10		Severability		39
8.11		Submission to Jurisdiction; Waivers		39
8.12		Specific Performance		40
8.13		No Presumption		40
8.14		No Third Party Beneficiary		40
8.15		Representations.		41

 

Exhibit A                Certain Defined Terms

Exhibit B                Form of Plan

Exhibit C                Form of Buyer Approval Order

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STOCK PURCHASE AND REORGANIZATION AGREEMENT

This Stock Purchase and Reorganization Agreement, dated as of January 22, 2007 (this “Agreement” ), is between Northwest Airlines, Inc., a Minnesota corporation ( “Buyer” ) and Mesaba Aviation, Inc., a Minnesota corporation (the “Company” ).  Capitalized terms used but not defined herein have the meanings assigned to them on Exhibit A .

WHEREAS, MAIR Holdings, Inc., a Minnesota corporation ( “Parent” ) is the sole owner of the Company’s issued and outstanding shares (the “Shares” ) of common stock, par value $0.01 per share (the “Common Stock” ).

WHEREAS, the Company filed on October 13, 2005 (the “ Company Petition Date ”), a voluntary petition (the “ Company Case ”) for relief under chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq. (the “ Bankruptcy Code ”) in the United States Bankruptcy Court for the District of Minnesota (the “ Company Bankruptcy Court ”);

WHEREAS, on September 14, 2005, Buyer and certain of its Affiliates filed a voluntary petition (the “ Buyer Case ”) for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “ Buyer Bankruptcy Court ”);

WHEREAS, the Company intends to seek the entry of an order of the Company Bankruptcy Court (the “ Company Confirmation Order ”) to approve the restructuring of the Company pursuant to a plan of reorganization, substantially in the form attached hereto as Exhibit B (the “ Plan ”, and such restructured Company, “Reorganized Company” ), including the approval of this Agreement and the authorization of the Company to consummate the transactions contemplated hereby and thereby, and Buyer intends to seek the entry of an order of the Buyer Bankruptcy Court to approve this Agreement, the Allowed Claim and the authorization of Buyer to consummate the transactions contemplated hereby (the “ Buyer Approval Order ”);

WHEREAS, the Official Committee of Unsecured Creditors of the Company (the “ Company Committee ”) has agreed to submit a letter of support with respect to the Plan to be mailed to all creditors of the Company along with the Disclosure Statement and ballots; and

WHEREAS, pursuant to the Plan, the Company desires to sell to Buyer new shares of common stock representing 100 percent of the ownership interests of the Reorganized Company and to cancel the Shares.

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows:

 

ARTICLE I

CANCELLATION AND PURCHASE AND SALE OF SHARES

1.1            Cancellation and Purchase and Sale .

(a)            Upon the terms and subject to the conditions set forth in this Agreement, at or prior to the Closing and pursuant to the Plan (i) all Company Equity shall, without any action on the part of the holder thereof, cease to be outstanding, shall be cancelled and retired and shall cease to exist and (ii) Reorganized Company shall issue and sell to Buyer and Buyer shall purchase from Reorganized Company 1,000 duly and validly authorized and issued, fully paid and nonassessable shares (the “ New Shares ”) of common stock, par value $.01 per share (the “New Common Stock” ) of Reorganized Company, free and clear of all Liens.  The transactions referred to in the foregoing clause (i) are herein referred to as the “ Equity Cancellation ” and the transactions referred to in the foregoing clause (ii) are herein referred to as the “ New Shares Issuance ”.  The Equity Cancellation and the New Shares Issuance are herein collectively referred to as the “ Cancellation and Issuance ”.

(b)            As consideration for the New Shares, Buyer agrees that, upon the consummation of the Closing, the Company Bankruptcy Estate shall have a final, non-appealable order, including the waiver of Bankruptcy Code Section 502(j) reconsideration rights, granting the Company an allowed general unsecured claim in the Buyer Case in an amount equal to $145 million plus interest on such amount from and after the petition date of Buyer’s Case (the “ Buyer Petition Date ”) to the extent that other general unsecured creditors of Buyer receive interest from and after the Buyer Petition Date pursuant to Buyer’s plan of reorganization (the “Allowed Claim” ).  The parties acknowledge and agree that the Allowed Claim will not be effective unless and until the Closing has been consummated.  The Allowed Claim will be classified as a general unsecured claim in the plan of reorganization submitted to the Buyer Bankruptcy Court and supported by Buyer in the Buyer Case and will receive the same treatment in such plan of reorganization as the other general unsecured claims against Buyer.  Notwithstanding anything in this Agreement to the contrary, the parties understand and agree that unless and until the Plan becomes effective, the Closing is consummated and the transactions contemplated hereby have been consummated, nothing in this Agreement or any other Transaction Document shall have, or shall be deemed to have, created an allowed claim in the Buyer Case or constitute an admission by Buyer, the Company or any of their Affiliates as to the amount, if any, of the Company’s claim against the Buyer Bankruptcy Estate, nor of Buyer’s claim against the Company Bankruptcy Estate.  The parties agree that from the date of this Agreement until the Closing, the Company shall have the right to enter into a forward Contract with a Third Party to sell the Allowed Claim (the “Forward Contract” , and the aggregate consideration in exchange for the Allowed Claim, valued as of the date of the Forward Contract, provided for in the Forward Contract is herein referred to as the “Forward Price” ), provided that the settlement of any such Forward Contract shall be contingent on the consummation of the Closing.

(c)            From the date of this Agreement until the entry of the Company Confirmation Order, Buyer and the Company agree that Buyer, in its sole discretion, shall have the right to revise Schedule A-1 and Schedule A-4 to (i) designate any Company Agreement that

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is not an Assumed Contact or a Rejected Contract as either an Assumed Contract or a Rejected Contract; it being agreed that any Company Agreement that is not so designated shall be deemed to be a Rejected Contract and (ii) designate any Company Agreement that was as of the date of this Agreement set forth on Schedule A-1 or Schedule A-4 , as applicable, as (A) an Assumed Contract as a Rejected Contract and (B) a Rejected Contract as an Assumed Contract, provided that if the aggregate unsecured claim amount attributable to rejection damages with respect to any additional Rejected Contracts under clause (ii)(A) minus the aggregate unsecured claim amount attributable to rejection damages with respect to any additional Assumed Contracts under clauses (i) and (ii)(B) exceeds $1 million (the “ Rejection Excess ”), then Buyer will pay, simultaneous with the consummation of the Closing, to the Company Bankruptcy Estate an amount in cash equal to such Rejection Excess.

(d)            Solely to the extent that the Company’s aggregate Cash (without giving effect to any proceeds received in connection with a Forward Contract) were not sufficient to satisfy the post Company Petition Date amounts set forth on Schedule 1.1(d) that are due and payable at the time of the effectiveness of the Plan (any such aggregate Cash deficiency amount, the “Deficiency” ), then, simultaneous with the consummation of the Closing, Buyer shall pay to the Company Bankruptcy Estate the lesser of the Deficiency or the Cap, provided that Buyer shall under no circumstance be obligated to pay an amount that is in excess of the Cap.

(e)            Each of the parties understands and agrees that unless the Closing is consummated, nothing contained in this Agreement shall constitute an admission by Buyer, the Company or any of their Affiliates as to the amount, if any, of the Company’s claim against the Buyer Bankruptcy Estate on account of rejection of that certain Airline Services Agreement between Buyer and the Company (the “ ASA ”) or otherwise, nor of Buyer’s claim against the Company Bankruptcy Estate.  In the event that this Agreement is terminated and the transactions contemplated hereby are not consummated, Buyer expressly reserves the right to assert that the rejection damages claim of the Company from rejection of the ASA or otherwise is an amount that is lower than the Allowed Claim plus the Cap, including zero, and the Company expressly reserves the right to assert that the rejection damages claim of the Company from rejection of the ASA or otherwise is an amount higher than the Allowed Claim plus the Cap.   Further, in the event that the transactions contemplated hereby are not consummated, the Company expressly reserves the right to assert that the claim of Buyer is an amount lower than the Buyer Claim, including zero, and Buyer expressly reserves the right to assert that the claim of Buyer is an amount higher than the Buyer Claim.  In addition, neither Buyer nor the Company makes any representation as to the value to be distributed with respect to allowed unsecured claims in the Buyer Case or the Company Case, respectively. Except with respect to the Buyer Claim and the Allowed Claim and with respect to any matter arising out of this Agreement or any Transaction Document, upon consummation of the Closing, each of Buyer, the Buyer Bankruptcy Estate and the Company Bankruptcy Estate agrees that it has no Claims arising from the beginning of the world until the Closing Date against the other Person or the other Person’s Affiliates and that such Person shall not assert any such Claim against the other Person or the other Person’s Affiliates.

1.2            Closing .  Subject to Section 1.4, on the terms and subject to the conditions set forth in this Agreement, the closing of the transactions contemplated by this Agreement (the “Closing” ) shall take place:  (a) at the offices of Hughes Hubbard & Reed LLP, One Battery

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Park Plaza, New York, New York, at 10:00 a.m., local time, on the third Business Day after the day on which the last to be satisfied or waived of the conditions to the Closing set forth in this Agreement (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) are satisfied or waived; or (b) at such other time, on such other date and at such other place as may be mutually agreed upon by the parties.  The date on which the Closing is to occur is herein referred to as the “Closing Date.”

1.3            Deliveries at the Closing .  In addition to the other requirements set forth herein, at the Closing:

(a)            Reorganized Company shall deliver to Buyer:

(i)             one or more certificates representing the New Shares, and any other documents that are necessary to issue and transfer to Buyer good, valid and marketable title to all the New Shares free and clear of all Liens;

(ii)            if requested by Buyer, instruments evidencing the resignation, effective as of the Closing, of the directors of Reorganized Company;

(iii)           the certificate called for by Section 5.1;

(iv)           certificates from appropriate government officials certifying as to the good standing of Reorganized Company in its jurisdiction of organization and in each jurisdiction in which Reorganized Company is qualified to conduct business as a foreign corporation; and

(v)            all other instruments and documents reasonably requested by Buyer;

(b)            Buyer shall deliver to

(i)             the Company, the certificate called for by Section 6.1;

(ii)            the Company Bankruptcy Estate, the amount, if any, payable by Buyer pursuant to Section 1.1(c), in immediately available funds, to an account designated by the Company in writing to Buyer at least three Business Days prior to the Closing;

(iii)           the Company Bankruptcy Estate, the amount, if any, payable by Buyer pursuant to Section 1.1(d), in immediately available funds, to an account designated by the Company in writing to Buyer at least three Business Days prior to the Closing;

(iv)           the Company Bankruptcy Estate, a certificate of Buyer executed by an officer of Buyer stating that (a) the Buyer Approval Order has been entered by the Buyer Bankruptcy Court, is a Final Order and is in full force and effect and (b) all conditions set forth in the Buyer Approval Order have been satisfied; and

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(v)            all other instruments and documents reasonably requested by the Company.

1.4            Plan of Reorganization .  The Cancellation and Issuance shall be effected pursuant to a Plan confirmed by the Company Bankruptcy Court. The Closing Date shall occur as provided in Section 1.2.

1.5            Assets and Liabilities .  Pursuant to the Plan, on the effective date of the Plan and at the consummation of the Closing:

(a)            (i) Reorganized Company shall own the Company Assets, free and clear of all Liens and (ii) the Company Bankruptcy Estate shall own the Excluded Assets; and

(b)            the only Liabilities of Reorganized Company shall be the Assumed Liabilities, and all other Liabilities of the Company, including the Excluded Liabilities, shall be solely the obligation and Liability of the Company Bankruptcy Estate.

1.6            Timing and Interpretation .  The parties understand and agree that any reference to the Company shall, with respect to any matter determined as of the Closing, be deemed to be a reference to Reorganized Company as if it were the successor to the Company.

1.7            Buyer Claim .  As part of the consideration for the transactions contemplated by this Agreement, the Company agrees that the Buyer Bankruptcy Estate shall have a final, non-appealable order, including the waiver of Bankruptcy Code Section 502(j) reconsideration rights, granting Buyer an allowed general unsecured claim in the Company Case in an amount equal to $7,300,000 plus interest on such amount from and after the Company Petition Date to the extent that other general unsecured creditors of the Company receive interest from and after the Company Petition Date pursuant to the Plan (the “ Buyer Claim ”).  The parties acknowledge and agree that the Buyer Claim will not be effective unless and until the Closing has been consummated.

ARTICLE II

REPRESENTATIONS AND WARRANTIES
OF THE COMPANY

The Company hereby represents and warrants to Buyer as follows:

2.1            Organization and Good Standing .  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota and has the requisite corporate power and authority to own, lease and operate the properties used in its business and to carry on its business as currently conducted and currently contemplated to be conducted.  The Company is duly qualified to do business and is in good standing as a foreign corporation in the states and jurisdictions set forth on Schedule 2.1 and in each other jurisdiction where qualification as a foreign corporation is required.  Prior to the date of this Agreement, the Company has delivered to Buyer complete and correct copies of the articles of incorporation, bylaws and other organizational documents of the Company, each as presently in effect.

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2.2            Capitalization .

(a)            The authorized capital stock of the Company consists of 10,000 shares of Common Stock.  As of the date of this Agreement and immediately prior to the Equity Cancellation, there are 500 shares of Common Stock issued and outstanding, all of which are owned by Parent.  As of the Cancellation and Issuance, the New Shares shall constitute all the issued and outstanding shares of New Common Stock of Reorganized Company.  As of the Cancellation and Issuance, the New Shares shall have been duly and validly authorized and issued, shall be fully paid and nonassessable with no personal liability attaching to the ownership thereof and shall not have been issued in violation of any preemptive right or of any federal or state securities law.  Except for the New Shares Issuance, there is no security, option, warrant, right, call, subscription, agreement, commitment or understanding of any nature whatsoever, fixed or contingent, that directly or indirectly (i) calls for the issuance, redemption, sale, pledge or other disposition of any shares of capital stock of the Company or any securities convertible into, or other rights to acquire, any shares of capital stock of the Company, (ii) obligates the Company to grant, offer or enter into any of the foregoing or (iii) relates to the voting or control of such capital stock, securities or rights.  There is no “phantom stock,” stock appreciation rights or other similar rights the value of which is related to or based upon the price or value of any class or series of capital stock of the Company.  No Person is entitled to any preemptive or similar rights to subscribe for shares of capital stock of the Company.  The Company has not granted to any Person the right to demand or request that the Company effect a registration under the Securities Act of any securities held by such Person or to include any securities of such Person in any such registration by the Company.

(b)            The Company (i) does not own and is not bound by any Contract or other obligation to acquire or sell, any equity securities of or ownership interest in any Person or any direct or indirect equity or ownership interest in any other business and (ii) is not bound by any joint venture Contract or any Contract or other obligation to provide funds to, or make any investment in, any Person.

2.3            Authority, Approvals, Enforceability and Consents .

(a)            The Company has the corporate power and authority to enter into this Agreement and the other Transaction Documents to be executed and delivered by it and, subject to entry of the Company Confirmation Order, to perform its obligations hereunder and thereunder.

(b)            The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to be executed and delivered by it and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized and approved by the Board of Directors of the Company and, subject to entry of the Company Confirmation Order, no other corporate proceedings or other approvals on the part of the Company are necessary to authorize, approve and perform its obligations under this Agreement and the other Transaction Documents to be executed and delivered by it and the transactions contemplated hereby and thereby.

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(c)            This Agreement has been, and the other Transaction Documents to be executed and delivered by the Company at the Closing will, at the Closing, have been, duly executed and delivered by the Company and, subject to entry of the Company Confirmation Order, constitutes (or will constitute at the Closing, as applicable) the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, subject to the discretion of the Company Bankruptcy Court for so long as the Company Bankruptcy Court retains jurisdiction over the Company Case.

(d)            The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to be executed and delivered by the Company and the consummation of the transactions contemplated hereby and thereby do not and will not:

(i)             contravene any provision of the articles of incorporation or bylaws (or comparable organizational documents) of the Company;

(ii)            subject to entry of the Company Confirmation Order, after notice or lapse of time or both, result in a material violation, material conflict with, or material breach of any provision of, constitute a material default under, result in or permit the material modification, revocation, cancellation, termination or acceleration of, any Contract to which the Company is a party or by which any of its properties or assets are bound or otherwise subject or, require any consent or waiver of any party to any such Contract;

(iii)           result in the creation or imposition of any Lien upon, or any Person obtaining any right to acquire or other interest in, any properties, assets or rights of the Company;

(iv)           to the Company’s Knowledge, violate or conflict with any Law applicable to the Company or its business or properties; or

(v)            except for the Company Confirmation Order and any authorization, consent, order, permit, approval, notice, filing, registration or qualification (i) required under the HSR Act, (ii) with, from or to the Federal Aviation Administration (the “ FAA” ) and (iii) with, from or to the United States Department of Transportation (the “ DOT ”), require any authorization, consent, order, permit or approval of, or notice to, or filing, registration or qualification with, any Government Authority.

2.4            Financial Statements .

(a)            Schedule 2.4 sets forth a true, correct and complete copy of:

(i)             the audited balance sheet of the Company as of March 31, 2005 and March 31, 2006, and the related audited statements of operations, stockholders equity and cash flows for the fiscal years ended on such dates, together with the notes thereto, in each case examined by and accompanied by the report of Deloitte & Touche LLP, independent certified public accountants, and

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(ii)            the unaudited balance sheet of the Company as of September 30, 2006, and the unaudited statements of operations, stockholders equity and cash flows for the 6-month period ended on such date, together with the notes thereto;

(all the foregoing financial statements, including the notes thereto being referred to herein collectively as the “Company Financial Statements” ).  The Company Financial Statements are in accordance with the books and records of the Company and fairly present the financial position, results of operations, stockholders equity and cash flows of the Company as of the dates and for the periods indicated, in each case in conformity with GAAP consistently applied during such periods, and the unaudited financial statements included in the Company Financial Statements include all adjustments, except for normal recurring year end accruals, which are not, individually or in the aggregate, material, and the unaudited financial statements included in the Company Financial Statements do not include footnotes.  The books and accounts of the Company are complete and correct and fully and accurately reflect the transactions of the Company in all material respects.

(b)            The management of the Company has:  (i) designed disclosure controls and procedures to ensure that material information relating to the Company is made known to the management of the Company by others within the Company; and (ii) disclosed, based on its most recent evaluation, to the Parent’s outside auditors and the Board of Directors of the Company (or its audit committee, if any) (A) any significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data and have identified for the Parent’s outside auditors any material weaknesses in internal controls and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls.  A summary of any of those disclosures made by management to the Parent’s auditors and the Board of Directors of the Company (or its audit committee, if any) has been furnished to Buyer prior to the date of this Agreement.  The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  To the Company’s Knowledge, Parent’s auditors and the Company’s chief executive officer and chief financial officer would be able to give the certifications and attestations contemplated by the rules and regulations adopted pursuant to Section 404 of the Sarbanes Oxley Act of 2002, insofar as they relate to the Company only, without qualification, when next due.

(c)            Since December 31, 2003, none of the Company or any director, officer, employee, auditor, accountant or representative of the Company has received, and the Company has no Knowledge of, any complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company with respect to the Company Financial Statements or the internal accounting controls of the Company.  No attorney representing the Company has reported evidence of a violation of securities laws, breach of fiduciary duty or similar violation by the Company or any of its

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respective officers, directors, employees or agents to the Board of Directors of the Company or any committee thereof or to any director or officer of the Company.

(d)            To the Knowledge of the Company, no employee of the Company has provided or is providing information to any law enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any Law.

(e)            The Company has not engaged in any “off-balance sheet arrangement” (as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended).

2.5            Absence of Undisclosed Liabilities .  As of the date of this Agreement and immediately prior to the Cancellation and Issuance, the Company has no Liability and there is no existing condition, situation or set of circumstances which is reasonably expected to result in such a Liability, except for (a) Liabilities expressly set forth on Schedule 2.5 , (b) Liabilities reflected or reserved against in the balance sheet as of March 31, 2006 (the “Balance Sheet Date” ) included in the Company Financial Statements (the “Company Balance Sheet” ), and (c) current Liabilities incurred in the Ordinary Course after the Balance Sheet Date which have not had, or would not reasonably be expected to have, a Material Adverse Effect.  As of the Closing, Reorganized Company shall have no Liability and there shall not be any existing condition, situation or set of circumstances which is reasonably expected to result in such a Liability, except for the Assumed Liabilities.

2.6            Absence of Certain Changes .  Since the Balance Sheet Date, the Company has conducted its business only in the Ordinary Course and:

(a)            except as set forth on Schedule 2.6 and the effects in existence as of the date hereof resulting from the Company Bankruptcy Case, there has been no:

(i)             development, change, event or occurrence that has had, or would reasonably be expected to have, a Material Adverse Effect;

(ii)            physical damage, destruction or loss in an amount exceeding $250,000  in the aggregate affecting the assets of the Company that is not covered by insurance or has not been remedied within 30 days;

(b)            except as set forth on Schedule 2.6 , the Company has not, directly or indirectly:

(i)             amended or otherwise changed its articles of incorporation, bylaws or comparable organizational documents;

(ii)            (A) issued, granted or sold any shares of its capital stock, (B) issued, granted or sold any security, option, warrant, call, subscription or other right of any kind, fixed or contingent, that directly or indirectly calls for the issuance, sale, pledge or other disposition of any of its shares of capital stock, or (C) entered into any agreement, commitment or understanding calling for any transaction referred to in clause (A) or (B) of this paragraph (ii);

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(iii)           declared, set aside or paid any dividend or other distribution (whether in Cash, stock, property or any combination thereof) in respect of any shares of its capital stock, or purchased, redeemed or otherwise acquired, any shares of its capital stock;

(iv)           made any capital expenditures or appropriations or commitments with respect thereto, except to the extent of the total dollar amounts and, to the extent indicated therein, at the times set forth in the Company’s 2006 or 2007 capital expenditure budget that have been furnished to Buyer prior to the date of this Agreement;

(v)            created, incurred or assumed any indebtedness for money borrowed or obligations in respect of capital leases;

(vi)           paid, discharged or satisfied Liabilities which involve payments or commitments to make payments, other than Liabilities incurred in the Ordinary Course;

(vii)          assumed, endorsed, guaranteed or otherwise become liable or responsible for (whether directly, contingently or otherwise) any indebtedness for money borrowed or any other obligation of any other Person;

(viii)         entered into any transaction involving total payments to or by the Company of, or involving the acquisition or disposition by the Company of property, assets or rights having a value of, more than $250,000 in the aggregate;

(ix)            approved or put into effect any increase in compensation or benefits payable to any of the employees of the Company, made any bonus payment to any of the employees of the Company, entered into or adopted a new Benefit Plan, or amended any Benefit Plan to increase the amount of compensation or benefits payable thereunder;

(x)             changed the accounting methods, principles or practices employed by the Company, except as required by GAAP;

(xi)            subjected to any Lien (other than Permitted Liens) any assets of the Company;

(xii)           changed or modified any of the following:  (A) billing and collection policies, procedures and practices with respect to accounts receivable or unbilled charges; (B) policies, procedures and practices with respect to the provision of discounts, rebates or allowances; or (C) payment policies, procedures and practices with respect to accounts payable;

(xiii)          settled any Tax audit or other proceeding, made or changed any Tax election, Tax accounting method or practice or filed any amended Tax Return; or

(xiv)         authorized any of, or committed or agreed to take, whether in writing or otherwise, any of the foregoing actions.

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2.7            Taxes .  Except as set forth on Schedule 2.7,

(a)            The Company and any consolidated, combined or unitary group of which the Company is or was a member, have timely filed all Tax Returns which are required to be filed by them and all Taxes that are due with respect to the periods covered by such Tax Returns (whether or not shown as due on any Tax Return) have been timely paid.  All such Tax Returns are true, correct and complete in all material respects.  The Company has provided Buyer with access to complete and accurate copies of all such Tax Returns for which the statute of limitations remains open.  All Taxes of the Company attributable to periods or portions thereof ending on or before the Balance Sheet Date were paid prior to the date of the Company Balance Sheet or have been included in a liability accrual for Taxes on the Company Balance Sheet.  Since the Balance Sheet Date, the Company has not incurred any Taxes other than Taxes incurred in the Ordinary Course consistent in type and amount (relative to the results of operations of the Company and taking into account changes in Tax rates and other changes in applicable Tax law) with past practice.

(b)            The Company has been included in the consolidated federal income Tax Return filed by Parent and, where permitted, in combined, consolidated, or unitary Tax Returns with Parent for state Tax purposes.  Following the Closing Date, the Company shall not have any Liability with respect to any such Tax Returns.

(c)            The Company has duly withheld, collected and timely paid all Taxes that it was required to withhold, collect and pay relating to amounts paid or owing to any employee, independent contractor, creditor, stockholder or other Person and has complied with all information reporting requirements with respect to such amounts.

(d)            No audit or other proceeding by any taxing authority is pending or threatened in writing with respect to any Taxes due from the Company, or with respect to any Tax Return filed or required to be filed by or relating to the Company.  No assessment or deficiency for any Tax is proposed nor, to the Knowledge of the Company, is threatened against the Company.

(e)            To the Company’s Knowledge, no claim has been made by any taxing authority in a jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to Tax or required to file a Tax Return in such jurisdiction.  There are no outstanding waivers or consents that have been given by the Company regarding the application of the statute of limitations with respect to any Taxes or Tax Returns.  There are no Liens on any of the assets of the Company that arose in connection with any failure to pay Taxes, other than for Taxes that are not yet due and payable.

(f)             The Company has not requested or received a Tax ruling, private letter ruling, technical advice memorandum, competent authority relief or similar agreement or entered into a closing agreement or contract with any taxing authority that, in each case, remains outstanding or effective.  The Company is not subject to a Tax sharing, allocation, indemnification or similar agreement.

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(g)            The Company is not participating and has not participated in a reportable or listed transaction within the meaning of Treas. Reg. Section 1.6011-4 or Section 6707A(c) of the Code.

(h)            The Company has not been the “distributing corporation” or a “controlled corporation” (within the meaning of Section 355 of the Code) with respect to a transaction described in Section 355 of the Code within the two-year period ending on the date of this Agreement.

2.8            Legal Matters .

(a)            Except as set forth on Schedule 2.8(a) hereto, (i) there is no claim, action, suit, litigation, investigation, inquiry, review, demand, request for information or proceeding (collectively, “Claims” ) pending against, or, to the Knowledge of the Company, threatened against or affecting, the Company or any of its properties or rights, at law or in equity, before or by any court, arbitrator, panel, commission or other Government Authority and (ii) the Company is not operating under, or subject to, any judgment, decree, writ, injunction, ruling, award, stipulation, determination or order (collectively, “Judgments” ) of any Government Authority.

(b)            The business of the Company has been and is being conducted in all material respects in compliance with all applicable Laws, operating certificates, common carrier obligations, airworthiness directives, federal aviation regulations, and all applicable rules, regulations, directives and policies of any Government Authority.

(c)            The Company has, and is in all material respects in compliance with, all Permits required, issued or granted by all applicable Laws and all applicable rules, regulations, directions or policies of any Government Authorities.  Schedule 2.8(c) lists all material Permits owned or held by the Company.  The Company owns or hold all Permits material to the conduct of its business.  No event has occurred and is continuing which permits, or after notice or lapse of time or both would permit, any modification, revocation, non-renewal or termination of any Permit held by the Company.  The Company has not received any written notice asserting any noncompliance with any Permit.

2.9            Real Property .

(a)            The Company does not own any Real Property.

(b)            Schedule 2.9(b)-1 lists all Real Property Leases.  The Real Property described on Schedule 2.9(b)-1 is referred to as the “Leased Real Property.”   Copies of all written (and summaries of all oral) Real Property Leases have been provided to Buyer prior to the date of this Agreement.  Subject to assumption under bankruptcy law, (i) each of the Real Property Leases is in full force and effect, and (ii) the Company has the right to conduct business in each Leased Real Property for the remaining term of the applicable Real Property Lease.  The Leased Real Properties and their condition are adequate for the uses for which they are used by the Company.  All options to renew, rights of first offer and rights of first refusal with regard to the Real Property Leases, exercisable prior to the Closing have been properly exercised.  Prior to the date of this Agreement, the Company has delivered to Buyer copies of all subleases with respect to any Real Property Lease (collectively, the “Subleases” ) entered into by the Company

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(all of which are listed on Schedule 2.9(b)-2 ).  All Subleases are in full force and effect, and all necessary consents with respect thereto have been obtained.

2.10          Aircraft .

(a)            Schedule 2.10(a) sets forth a true and complete list of all aircraft owned or leased by the Company (such aircraft, together with their engines, and any parts, components, instruments, appurtenances, accessories, furnishings and other equipment attached or relating to such aircraft or engines are collectively referred to herein as the “ Aircraft ”), including the type and aircraft number of each such Aircraft and the date the Company placed such Aircraft in service or proposes to place such Aircraft in service.  The Company has a valid ownership or leasehold interest in each of the Aircraft, and the owned Aircraft are owned by the Company free and clear of all Liens, except as set forth on Schedule 2.10(a) .  All Aircraft owned or leased by the Company are in airworthy condition and are being maintained according to applicable FAA regulatory standards and the FAA-approved maintenance program of the Company.  The Company has implemented maintenance schedules with respect to their respective Aircraft that, if complied with, would result in the satisfaction of all material requirements under all applicable airworthiness directives and federal aviation regulations required to be complied with in accordance with the FAA-approved maintenance program of the Company, and the Company is in compliance with such maintenance schedules in all material respects and has no reason to believe that it will not satisfy any component of such maintenance schedules on or prior to the dates specified in such maintenance schedules.  All deferred maintenance items and temporary repairs with respect to each Aircraft have been or will be made in accordance with FAA, manufacturer’s and the Company’s maintenance programs.

(b)            Schedule 2.10(b) sets forth a true and complete list containing all Contracts pursuant to which the Company may purchase or lease aircraft, including the manufacturer and model of all aircraft subject to each Contract. The Company has provided to Buyer true and complete copies of all Contracts listed on Schedule 2.10(b) prior to the date of this Agreement.  No Aircraft is subleased to or otherwise in the possession of another Person other than the Company.

(c)            Each Aircraft has a validly issued, current individual aircraft FAA certificate of airworthiness with respect to such Aircraft which satisfies all requirements for the effectiveness of such FAA certificate of airworthiness.  Each Aircraft is properly registered on the FAA aircraft registry.  Each Aircraft’s structure, systems and components are functioning in accordance with its intended use as set forth in FAA-approved documentation, including any applicable manuals, technical standard orders or parts manufacturing approval certificates.

2.11          Intellectual Property .

(a)            Schedules 2.11(a)-1 to 4 set forth an accurate and complete list of (1) all Domain Names of which the Company is the registrant or of which a third party is the registrant for the benefit of the Company (collectively, the “Company Registered Domain Names” ); (2) all registered Marks and pending applications for registration of Marks owned by the Company (collectively, the “Company Registered Marks” ); (3) all Patents owned by the Company (collectively, the “Company Patents” ); and (4) all registered Copyrights and all

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pending applications for registration of Copyrights by the Company (collectively, the “Company Registered Copyrights” and, together with the Company Registered Domain Names, the Company Registered Marks and the Company Patents, the “Company Registered IP” ).  To the Company’s Knowledge, the conduct of the business of the Company as currently conducted, does not infringe upon or misappropriate or violate the Intellectual Property rights or the confidential and proprietary information, including Trade Secrets, of any third party.  The Company Registered IP has not been the subject of a judicial finding or opinion, nor has any written notice or claim challenging the ownership, validity, registrability, enforceability, use or licensed right to use any Intellectual Property been received by the Company.  No claim or notice has been asserted against the Company in writing or, to the Knowledge of the Company, orally, that the conduct of the business of the Company as currently conducted infringes in any material respect upon or misappropriates the Intellectual Property rights or the confidential and proprietary information, including Trade Secrets, of any third party, in each case, except with respect to claims or notices that have been fully resolved.  The Company has timely paid all filing, examination, issuance, post registration and maintenance fees, annuities and the like associated with or required with respect to any of the Company Registered IP, and all documents, recordations and certificates necessary to be filed by the Company to maintain the effectiveness of the Company Registered IP have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, so that no item required to be listed in Schedule 2.11(a)-1 to 4 , has lapsed, expired or been abandoned or canceled other than in the Ordinary Course.  The Company has used reasonable best efforts to protect its rights and the secrecy of its confidential information and Trade Secrets, including by requiring that all employees, consultants and independent contractors who are involved in the creation of Intellectual Property for the Company enter into non-disclosure and invention assignment agreements.  The Company owns all right, title and interest in and to the Company Registered IP, or have a valid license to use (if required), each other item of Intellectual Property currently used by the Company in its business and is entitled to use any such Company Registered IP or other Intellectual Property used in the operation of its business as currently conducted to the extent such use is material to such business, free and clear of all Liens other than Permitted Liens.  There are no claims asserted or threatened by the Company that a third Person infringes, misappropriates or otherwise violates any of the Company Registered IP.

(b)            The Company Registered IP and the other Intellectual Property owned by the Company, together with the rights granted to the Company under the Inbound IP Agreements and under any “shrink-wrap” or “click-wrap” license agreements relating to software desktop applications, are sufficient for the continued conduct of the business of the Company after the Closing Date in the same manner as such business were conducted prior to the Closing Date in all material respects, and neither the execution of this Agreement nor the consummation of any transaction contemplated hereby will adversely affect any of the rights of the Company with respect to the Intellectual Property owned by the Company or Intellectual Property licensed by the Company pursuant to the Inbound IP Agreements.

2.12          Insurance .  Schedule 2.12 lists each insurance policy maintained by, at the expense of or for the benefit of, the Company with respect to its properties and assets.  Prior to the date of this Agreement, the Company has furnished to Buyer true and complete copies of all such policies.  All such insurance policies are in full force and effect and the Company is not in

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default with respect to its obligations under any such insurance policy.  The Company has not received any written notice regarding any actual or possible (a) cancellation or invalidation of any insurance policy, (b) refusal of any coverage or rejection of any material claim under any insurance policy or (c) material adjustment in the amount of premiums payable with respect to any insurance policy.

2.13          Company Agreements .

(a)            Schedule 2.13(a) lists as of the date of this Agreement (i) each Company Agreement that is material to the business, assets, Liabilities, results of operation, operations, financial condition or EBITDA of the Company, and (ii) without regard to materiality, each of the following:

(i)             any mortgage, indenture, note, installment obligation or other instrument, agreement or arrangement for or relating to any borrowing of money by the Company;

(ii)            any guaranty, direct or indirect, primary or secondary, by the Company of any obligation for borrowings or otherwise, excluding endorsements made for collection in the Ordinary Course;

(iii)           any Company Agreement made other than in the Ordinary Course;

(iv)           any Company Agreement providing for the grant of any preferential rights to purchase or lease any material assets of the Company or any assets related to any RJ-85 aircraft;

(v)            any Company Agreement providing for any obligation to register any shares of the capital stock or other securities of the Company with the Securities and Exchange Commission or otherwise relating to such stock or other securities;

(vi)           any Company Agreement providing for any obligation to make payments, contingent or otherwise, arising out of the prior acquisition of the business, assets or stock of other Persons;

(vii)          any Company Agreement that is a collective bargaining agreement with any labor union;

(viii)         any Company Agreement providing for any lease or similar arrangement for the use by the Company of personal property involving payments of in excess of $20,000 per annum;

(ix)            any Company Agreement to which any Insider is a party;

(x)             any Company Agreement with a term in excess of one year or providing for aggregate payments in excess of $15,000 or $100,000 for all such Company Agreements that are not otherwise listed on Schedule 2.13(a) ;

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(xi)            any Company Agreement that contains a non-competition provision relating to the business of the Company or any of its Affiliates or any other Contract restricting the right of the Company or any of its Affiliates to conduct business at any time, in any manner or at any place in the world, or the expansion thereof to other geographical areas or lines of business, or that grants the other party or any third Person “most favored nation” status;

(xii)           any Company Agreement that is a partnership, joint venture or similar agreement;

(xiii)          any Company Agreement that is generating or is expected to generate revenue to the Company; and

(xiv)         any Company Agreement relating to the acquisition or disposition of any material portion of its business.

(b)            Copies of all written Company Agreements referred to on Schedule 2.13(a) have been delivered to Buyer prior to the date of this Agreement, and the Company has provided Buyer with accurate and complete written summaries of all such Company Agreements that are unwritten.

(c)            Except for matters that would be resolved by the Company Confirmation Order, (i) all of the Company Agreements (except for any Rejected Contracts) are in full force and effect and are valid and binding on and enforceable against the Company in accordance with their terms and, to the Knowledge of the Company, on and against the other parties thereto (with respect to such other parties and as to enforceability only, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity)), (ii) neither the Company nor, to the Knowledge of the Company, any other party to any Company Agreement (except for any Rejected Contracts), is in material breach of, or material default under, any such Company Agreement (except for any Rejected Contracts) and no event has occurred that, with the giving of notice or the lapse of time or both, would constitute a material breach of, or material default under, any such Company Agreement (except for any Rejected Contracts) and (iii) there are no unresolved disputes under any Company Agreement (except for any Rejected Contracts).  The Company has not waived any material right under any Company Agreement (except for any Rejected Contracts).  Except with respect to the Company Case, the Company has not given to or received from any other Person, at any time since December 31, 2004, any notice or other written communication regarding any actual, alleged, possible or potential violation or breach of, or default under, any Company Agreement (except for any Rejected Contracts).

2.14          Labor Relations .

(a)            Schedule 2.14(a) lists as of the date of this Agreement all employees of the Company, including for each such employee (i) his or her name; (ii) his or her job title; (iii) his or her status as a full-time or part-time employee; (iv) his or her base salary or wage rate; (v) his

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or her bonus entitlement; and (vi) whether or not each such employee is actively at work and, if not, the reason that such employee is not actively at work.

(b)            Schedule 2.14(b) lists as of the date of this Agreement all individuals who perform services for the Company as an independent contractor or a leased employee, the services they perform, their rate of compensation and any bonus entitlement.

(c)            Except as set forth in Schedule 2.14(c) , (i) no employees of the Company are covered by a collective bargaining agreement; (ii) no employees of the Company are, or within the last three years have been, represented by a union or other labor organization, association or bargaining agent; and (iii) to the Knowledge of the Company, no employee organizing efforts are now being conducted or pending with respect to employees of the Company.  Except as set forth in Section 2.14(c) , within the last three years, there has been no strike, work stoppage, work slowdown or other material labor dispute with respect to employees of the Company, nor, to the Knowledge of the Company, is any such action threatened.  The Company is not involved in nor, to the Knowledge of the Company, threatened with, any labor dispute, arbitration, lawsuit or administrative proceeding relating to labor matters involving the employees of the Company.

(d)            The Company has paid or made provision for the payment of all salaries and accrued wages and has complied in all material respects with all applicable Laws relating to the employment of labor, including those relating to wages, hours, collective bargaining and the payment and withholding of Taxes, and have withheld and paid to the appropriate Government Authority, or are holding for payment not yet due to such Government Authority, all amounts required by Law or agreement to be withheld from the wages or salaries of the employees of the Company.

(e)            Except as set forth in Schedule 2.14(e) , there are no claims or disputes pending or, to the Knowledge of the Company, threatened by any current or former employee of the Company in relation to his or her employment with, or termination of employment from, the Company.

2.15          Employee Benefit Plans .

(a)            Schedule 2.15(a) lists (i) all “employee benefit plans” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ( “ERISA” ), (ii) all other employee benefit plans, arrangements and policies, including all stock option, stock purchase, stock award, stock appreciation, phantom stock, deferred compensation, pension, retirement, savings, profit sharing, incentive, bonus, health, life insurance, cafeteria, flexible spending, dependent care, fringe benefit, vacation pay, holiday pay, disability, sick pay, unemployment, severance, employee loan, educational assistance or other similar plans, arrangements and policies, and (iii) all employment, consulting, retention, severance or change-in-control agreements, in each case, that is sponsored or maintained by the Company or to which the Company is a party, contributes or is required to contribute, on behalf of current or former employees, consultants or directors of the Company or their respective beneficiaries or dependents, whether or not written ( “Benefit Plans” ).  The Company has not communicated to present or former employees of the Company or formally adopted or authorized any additional

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Benefit Plan or any change in or termination of any existing Benefit Plan.  Except for rights under COBRA, no Benefit Plan covers employees other than employees of the Company.  The Company has delivered to Buyer complete and correct copies of each Benefit Plan, or written summaries of any unwritten Benefit Plan, any employee handbook applicable to employees of the Company, and, with respect to each Benefit Plan, the current summary plan description, all related trust agreements and insurance contracts, the latest IRS determination letter, the last three annual financial statements, and the last three annual reports on IRS Form 5500 (including all required schedules and accountant’s opinions).

(b)            Except as set forth in Schedule 2.15(b) , each Benefit Plan is and has been operated and administered in all material respects in accordance with (i) its terms and (ii) all applicable Laws.  Each Benefit Plan intended to be tax-qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code” ), has received a favorable determination letter from the IRS as to its tax-qualified status under the Code and nothing has occurred since the date of such favorable determination letter which would adversely affect the qualified status of such plan.  All material contributions and premium payments required to have been paid under or with respect to any Benefit Plan have been timely paid.  No Benefit Plan provides health, life insurance or other welfare benefits to retirees or other terminated employees of the Company, other than continuation coverage required by Section 4980B of the Code or Sections 601-608 of ERISA.  No Benefit Plan is a multiemployer plan within the meaning of 4001(a)(3) of ERISA, and the Company does not have any Liability with respect to any such plan.  No Benefit Plan is a “defined benefit plan”, within the meaning of Section 3(35) of ERISA or a plan subject to Section 412 of the Code, and the Company does not have any Liability with respect to any such plan.  To the Company’s Knowledge, no event has occurred and no condition exists with respect to any Benefit Plan which could subject any Benefit Plan or the Company, directly or indirectly (through an indemnification agreement or otherwise), to a liability for a breach of fiduciary duty, a “prohibited transaction,” within the meaning of Section 406 of ERISA or Section 4975 of the Code, or a tax, penalty or fine under ERISA or the Code.  No actions, suits or claims (other than routine claims for benefits in the Ordinary Course) are pending with respect to any Benefit Plan or, to the Knowledge of the Company, threatened, and the Company has no Knowledge of any facts which could give rise to any such actions, suits or claims (other than routine claims for benefits in the Ordinary Course).  No Benefit Plan is currently under governmental investigation or audit and, to the Knowledge of the Company, no such investigation or audit is contemplated or under consideration.  To the Company’s Knowledge, no event has occurred and no condition exists with respect to any employee benefit plan or arrangement currently or previously maintained or contributed to by any entity required to be aggregated with the Company under Section 414(b), (c), (m), or (o) of the Code which could subject the Company to liability, including liability under Section 412, 4971 or 4980B of the Code or Title IV of ERISA.

(c)            Neither the execution of this Agreement nor the consummation of the transactions contemplated by this Agreement, will (i) increase the amount of benefits otherwise payable under any Benefit Plan, (ii) result in the acceleration of the time of payment, exercisability, funding or vesting of any such benefits, or (iii) result in any payment (whether severance pay or otherwise) becoming due to, or with respect to, any current or former employee or director of the Company.  No payment or series of payments that would constitute an “excess parachute payment” (within the meaning of Section 280G of the Code) has been made or will be

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made by the Company, directly or indirectly, to any employee in connection with the execution of this Agreement or as a result of the consummation of the transactions contemplated hereby.  Each “nonqualified deferred compensation plan” (as defined in Section 409A of the Code) that is subject to Section 409A of the Code has at all times been operated in compliance with the requirements of Section 409A of the Code and applicable regulations and other guidance promulgated thereunder.  Substantially adequate and complete records have been and are maintained with respect to each Benefit Plan and are in the custody of the Company or a third party service provider retained by the Company.

2.16          Environmental Matters .  The Company has complied with, and the Company and the real property owned, used or leased by it, are in compliance with, the provisions of all applicable Environmental Laws in all material respects.  The Company has not received any written notice and is not otherwise aware of any existing claim or the basis for any claim by any Government Authority or any Third Party that the Company or the condition of the real property owned, used or leased by it has violated or is subject to liability pursuant to any Environmental Law which has or would reasonably be expected to have a Material Adverse Effect.  There are no facts, events or conditions with respect to the past or present operation of the business of the Company or any Environmental Conditions at any of the real properties owned, used or leased by the Company which could reasonably be expected to interfere with or prevent continued compliance with, or could reasonably be expected to give rise to any Claim under, Environmental Laws, which has or would reasonably be expected to have a Material Adverse Effect.  The Company is not subject to any material Liability under any Environmental Law.  There are no underground storage tanks on or under any of the real property owned or leased by the Company.  The Company has delivered to Buyer, prior to the date of this Agreement, true and complete copies of any environmental reports, studies or surveys prepared by or for the Company or any of its Representatives.

2.17          Title; Condition of Assets .

(a)            The Company has good and marketable title to or valid leasehold or license interests in all of the assets and properties that it purports to own, lease or license (including those assets reflected on the Company Financial Statements and all of their Intellectual Property), free and clear of any Liens other than any Permitted Lien.  Such assets and properties (i) constitute all of the assets and properties which are owned, used or held for use in the conduct by the Company of its business as it is currently conducted and (ii) are suitable for the purposes for which they are currently used and currently proposed to be used.  Except as provided in Schedule 2.17(a) with respect to shared insurance, no Insider has any right in or to any of the assets and properties which are owned, used or held for use in the conduct by the Company of its business as they are currently conducted.

(b)            The tangible personal property of the Company is in good working condition and repair, reasonable wear and tear and loss due to normal operations excepted.

2.18          Suppliers .  Schedule 2.18 lists the Company’s top 20 suppliers (by volume of purchases from such suppliers), for the fiscal year ended March 31, 2006 and the 6-month period ended September 30, 2006.  Except as set forth in Schedule 2.18 , the Company has not received any notice from any of the suppliers on Schedule 2.18 to the effect that, and the Company has no

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reason to believe that, any such supplier will stop, materially decrease the rate of, or materially change the terms with respect to, supplying materials, products or services to the Company.

2.19          U.S. Citizen; Air Carrier .  The Company is a “citizen of the United States” as defined in the Federal Aviation Act and is an “air carrier” within the meaning of the Federal Aviation Act operating under certificates issued pursuant to the Federal Aviation Act (49 U.S.C. §§ 41101-41112).

2.20          Brokers .  Neither the Company nor its directors, officers or employees, has employed any broker or finder or has incurred or will incur any broker’s, finder’s or similar fees, commissions or expenses, in each case, in connection with the transactions contemplated by this Agreement or any other Transaction Document.

ARTICLE III

REPRESENTATIONS AND WARRANTIES
OF BUYER

Buyer hereby represents and warrants as follows:

3.1            Organization and Good Standing .  Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota.

3.2            Authority, Approvals, Enforceability and Consents .

(a)            Buyer has the corporate power and authority to enter into this Agreement and the other Transaction Documents to be executed and delivered by Buyer and, subject to entry of the Buyer Approval Order, to perform its obligations hereunder and thereunder.

(b)            The execution, delivery and performance by Buyer of this Agreement and the other Transaction Documents to be executed and delivered by Buyer and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized and approved by the Board of Directors of Buyer and, subject to entry of the Buyer Approval Order, no other corporate proceedings on the part of Buyer are necessary to authorize, approve and perform its obligations under this Agreement and the other Transaction Documents to be executed and delivered by Buyer and the transactions contemplated hereby and thereby.

(c)            This Agreement has been and the other Transaction Documents to be executed and delivered by Buyer at the Closing will, at the Closing, have been duly executed and delivered by Buyer, and, subject to entry of the Buyer Approval Order, constitutes (or will constitute at the Closing, as applicable) the legal, valid and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms, subject to the discretion of the Buyer Bankruptcy Court for so long as the Buyer Bankruptcy Court retains jurisdiction over the Buyer Case.

(d)            The execution, delivery and performance by Buyer of this Agreement and the other Transaction Documents to be executed and delivered by it and the consummation by Buyer of the transactions contemplated hereby and thereby do not and will not:

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(i)             contravene any provisions of the certificate of incorporation or bylaws of Buyer;

(ii)            after notice or lapse of time or both, result in a material violation, material conflict with, or material breach of any provision of, constitute a material default under, result in or permit the material modification, revocation, cancellation, termination or acceleration of, any Contract to which Buyer is a party or by which any of its properties or assets are bound or otherwise subject or require any consent or waiver of any party to any such Contract;

(iii)           subject to entry of the Buyer Approval Order, to the actual knowledge of the Senior Vice President of Finance of Buyer and th