AMENDED AND RESTATED INVESTORS AGREEMENT

 

TABLE OF CONTENTS

				Page
1.		Definitions		2
2.		Voting Agreement		5
3.		Transfers of Shares		9
4.		Exempt Transfers		12
5.		Preemptive Rights		13
6.		Registration Rights		15
7.		Market Agreements		26
8.		Clawback Provision		27
9.		Compliance with Securities Laws		27
10.		Execution by the Company		29
11.		Enforcement		30
12.		Miscellaneous		31

 

SCHEDULE A – LIST OF EXISTING HOLDERS

SCHEDULE B – INVESTORS

EXHIBIT A – INSTRUMENT OF ACCESSION

EXHIBIT B – TERMS OF PLAN OF DISTRIBUTION

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AMENDED AND RESTATED INVESTORS AGREEMENT

THIS AMENDED AND RESTATED INVESTORS AGREEMENT (the “ Agreement ”) is made as of December 13, 2006 by and among ALLEGIANT TRAVEL COMPANY, LLC, a Nevada limited liability company (the “ Company ”), the holders of Common Shares and Series B Shares of the Company listed on Schedule A hereto (together with any Permitted Transferee of the Existing Holder Shares (as herein defined) of any such person and together with any Person who becomes subject to the provisions hereof pursuant to the provisions of this Agreement, the “ Existing Holders ”), the investors listed on Schedule B hereto (together with any Permitted Transferee of any such person, each, an “ Investor ” and together with the Existing Holders, each a “ Member ,” and collectively, the “ Members ”) and PAR INVESTMENT PARTNERS, L.P., a Delaware limited partnership (“ PAR ”).

RECITALS:

A.            The Investors entered into a Securities Purchase Agreement with the Company’s subsidiary, Allegiant Air, LLC, (the “ Purchase Agreement ”) and a subsequent letter agreement with the Company providing, among other things, for the sale of shares of the Company’s Series A Shares (as herein defined) and, in connection with that agreement and as an inducement to the Investors to purchase the Series A Shares, the Company and the Members entered into an Investors Agreement dated as of May 4, 2005 (the “ Original Agreement ”).

B.            The Company operates a low-cost passenger airline marketed to leisure travelers in small cities (the “ Business ”).

C.            In connection with the initial public offering (the “ IPO ”) of the common stock, par value $.001 per share (the “ Common Stock ”), of Allegiant Travel Company, a Nevada corporation and a wholly-owned subsidiary of the Company (“ Allegiant ”) pursuant to a registration statement on Form S-1 (Reg. No. 333-134145) (the “ Initial Registration Statement ”), the Company will complete a reorganization transaction (the “ Reorganization ”) whereby Allegiant will succeed to the Business of the Company and the members of the Company will become stockholders of Allegiant.

D.            The Reorganization will be accomplished through a merger (the “ Merger ”) of the Company with and into Allegiant and the members of the Company will receive shares of Common Stock of Allegiant in exchange for their shares of preferred and common membership interests in the LLC.

E.             The members of the Company will become record owners of shares of Common Stock of Allegiant upon completion of the Reorganization.

F.             In connection with the closing of the IPO, PAR is purchasing certain of the shares of Common Stock of Allegiant that the members of the Company receive in the Reorganization.

G.            The parties to the Original Agreement desire to amend and restate the Original Agreement to add PAR as a party and to grant PAR certain registration rights.

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NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, and intending to be legally bound, the parties hereto amend and restate the Original Agreement and agree as follows:

This Amended and Restated Investor Agreement shall become effective only upon the closing of the IPO. The parties hereto acknowledge that the IPO qualifies as a Qualified Public Offering. The parties hereto further acknowledge that the clawback obligations set forth in Section 8 hereof will be satisfied through the consummation of the Merger. From and after consummation of the Merger, (i) the term “Company,” as used herein, shall mean Allegiant, as the surviving corporation in the Merger, and (ii) the term “Common Shares,” as used herein, shall mean the shares of Common Stock, par value $0.001 per share, of Allegiant issued pursuant to the Merger. For purposes of this Agreement, the term “ Member ” shall not include PAR.

1.             Definitions . As used in this Agreement, the following capitalized terms are defined as provided in this Section 1 :

“ Affiliate ” shall mean, with respect to any Person, any Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with such Person, including, but not limited to, any executive officer or director of such Person or any holder of ten percent (10%) or more of the outstanding equity or voting power of such Person.

“ Board ” means the managing board of the Company.

“ Certificate of Determination ” means the Certificate of Determination of Voting Powers, Designations, Preferences, Limitations, Restrictions and Relative Rights of Series A Convertible Preferred Shares and Series B Convertible Preferred Shares of the Company.

“ Common Shares ” means shares of common equity of the Company.

“ Company Securities ” means, collectively, Common Shares, Series A Shares and Series B Shares.

“ ComVest ” means ComVest Allegiant Holdings LLC or its Permitted Transferees.

“ Control ” shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of voting securities, by agreement or otherwise).

“ Conversion Shares ” shall mean the total number of Common Shares an owner of Preferred Shares would receive at a particular time upon conversion of all of his Preferred Shares into Common Shares.

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“ Darley ” means Darley Properties Limited or its Permitted Transferees.

“ Director ” shall mean any individual serving on the Board of the Company.

“ Existing Holder Shares ” means any Common Shares or Series B Shares now owned or subsequently acquired by any Existing Holder or his successors, transferees or assigns.

“ Investor Director ” means each Person elected to the Board pursuant to Section 2(a)(i) .

“ Member Notice ” means written notice from a Member notifying the Company and the selling Member that such Member intends to exercise its Right of First Refusal as to a specified number of shares of the Transfer Securities with respect to any Proposed Transfer.

“ New Securities ” means any equity securities of the Company, whether now authorized or not, or rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible into or exchangeable into or exercisable for such equity securities other than exempt issuances described in Section 5(b) .

“ Percentage Ownership ” of a Member shall be equal to the number of such Member’s Common Shares and Conversion Shares divided by the total number of Common Shares and Conversion Shares owned by all Members.

“ Permitted Transferee ” means any Person holding shares of capital of the Company which have been transferred to such Person in accordance with the terms and conditions of the Company’s Operating Agreement, this Agreement and applicable securities laws.

“ Person ” means any individual, corporation, limited liability company, partnership, trust, unincorporated association, business or other legal entity and any government or governmental agency or political subdivision thereof.

“ Preferred Shares ” means, collectively, Series A Shares and Series B Shares.

“ Proposed Transfer ” means any proposed assignment, sale, offer to sell, disposition or any other like transfer of any Common Shares or Preferred Shares of the Company (or any interest therein), in each case arising from a bona fide transaction with a third party, actual or proposed by any of the Members (or to which any of the Members is subject) that is not exempt from restrictions on transfer under Section 4 of this Agreement.

“ Proposed Transfer Notice ” means written notice from a Member, setting forth the terms and conditions of a Proposed Transfer.

“ Prospective Transferee ” means any Person to whom a Member proposes to make a Proposed Transfer.

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“ Public Offering ” shall mean a firm commitment underwritten public offering registered under the Securities Act covering the offer and sale by the Company of its Common Shares.

“ Qualified Public Offering ” shall mean a Public Offering: (a) in which (i) the aggregate proceeds to the Company equal or exceed $30,000,000 before deduction for underwriting discounts, commissions and fees, and (ii) the price per share of such Common Shares before deduction for underwriting discounts and commissions, equals or exceeds $5.00 per Share (such price subject to equitable adjustment in the event of any share split, share dividend, combination, recapitalization, reorganization, reclassification or other similar event), and (b) that results in the securities so offered being listed on a national securities exchange or quoted on the NASDAQ National Market.

“ Right of Co-Sale ” means the right, but not an obligation, of an Investor to participate in a Proposed Transfer on the terms and conditions specified in the applicable Proposed Transfer Notice.

“ Right of First Refusal ” means the right, but not an obligation, of each Member to purchase up to its pro rata portion (based upon the total number of Common Shares and Conversion Shares of such Member as compared to the total number of Common Shares and Conversion Shares of all Members) of any Transfer Securities with respect to a Proposed Transfer, on the terms and conditions specified in the Proposed Transfer Notice.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Series A Shares ” means shares of Series A Convertible Preferred Shares of the Company.

“ Series B Holders ” means the holders of the Series B Shares.

“ Series B Shares ” means shares of Series B Convertible Preferred Shares of the Company.

“ Shares ” means shares of capital of the Company at any time outstanding including Common Shares, Preferred Shares and Common Shares issued or issuable upon exercise or conversion, as applicable, of share options, warrants or other convertible securities of the Company, in each case now owned or subsequently acquired by any Member, or such Member’s successors, Permitted Transferees or assigns.

“ Transfer Securities ” means Common Shares or Preferred Shares subject to a Proposed Transfer.

“ Undersubscription Notice ” means written notice from an Investor notifying the Company and the selling Member that such Investor intends to exercise its option to purchase a portion of the Transfer Securities not purchased pursuant to the Right of First Refusal.

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2.             Voting Agreement .

(a)           Board Composition . Each Member shall vote all of his, her or its Shares, whether now owned or hereafter acquired or which such Member may be empowered to vote, from time to time and at all times, in whatever manner shall be necessary to ensure that at each annual or special meeting of Members of the Company at which an election of Directors is held or pursuant to any written consent of the Members of the Company, the following persons shall be elected to the Board:

(i)            At each election of Directors in which the holders of Series A Shares, voting as a separate class, are entitled to elect Directors of the Company, (A) two (2) individuals (the “ ComVest Directors ”) designated by ComVest, which individuals shall initially be Robert L. Priddy and Michael S. Falk and (B) one individual (the “ Darley Director ”), which individual shall initially be Declan Ryan (the ComVest Directors and Darley Director being sometimes referred to collectively as the “ Investor Directors ” or individually as an “ Investor Director ”);

(ii)           At each election of Directors in which the holders of Series B Shares and Common Shares, voting as a separate class, are entitled to elect Directors of the Company, three (3) individuals (the “ Common Directors ”) designated by the holders of the Series B Shares and Common Shares, voting as a separate class, one of which individuals shall initially be Maurice J. Gallagher, Jr. (“ Gallagher ”); and

(iii)          One (1) independent Director (the “ Independent Director ”) selected by mutual agreement of a majority in interest of the Series B Holders and a majority in interest of the Investors.

At any time the Board seat for the second or third Common Director remains vacant, any such Common Director may be selected by a majority in interest of the Series B Holders. The selection shall be evidenced by a written notice delivered by a majority in interest of the Series B Holders to the Company, ComVest and Darley.

At any time the Board seat for the Independent Director remains vacant, a majority interest of the Investors or a majority interest of the Series B Holders may propose a name to serve in such position. Upon approval by both a majority interest of the Investors and a majority interest of the Series B Holders, such individual shall be added to Board immediately to fill such vacancy.

(b)           Removal of Board Members .

(i)            The Board shall have the right to remove any Director for Cause upon a vote of at least 70% of all of the members of the Board, excluding the Board member whose removal is being voted upon. For these purposes, “ Cause ” shall be defined as (i) commission of a felony or other act involving moral turpitude, which other act is materially detrimental to the Company; (ii) commission of any act, specifically including but not limited to, drug or alcohol abuse, which act is materially harmful to the Company, or which in the reasonable opinion of the Board brings the Company into disrepute; (iii) commission of any act of fraud, dishonesty, theft or misappropriation, whether or not related to his activities on behalf of the Company; (iv) breach of any duty of confidentiality to the Company; or (v) material breach of the fiduciary duty owed to all Members of the Company.

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(ii)           Each Member shall vote all of his, her or its Shares from time to time and at all times in whatever manner as shall be necessary to ensure (A) that no Director elected pursuant to Section 2(a) of this Agreement may be removed from office other than for Cause or as provided in (B) or (C) below, (B) the removal of a Director elected pursuant to Section 2(a)(i) , which removal is directed or approved by the affirmative vote of the Members entitled under Section 2(a)(i) to designate that Director, (C) removal of a Director elected pursuant to Section 2(a)(ii) , which removal is directed or approved by the affirmative vote of the Members entitled under Section 2(a)(ii) to designate such Director, and (D) that any vacancies created by the resignation, removal or death of a Director elected pursuant to Section 2(a) shall be filled pursuant to the provisions of Section 2(a) . Each Member shall execute any written consents required to effectuate the obligations of this Agreement, and the Company shall, at the request of any Member entitled to designate a Director, call a special meeting of Members for the purpose of electing Directors.

(c)           Notice of Elections . The Company shall provide the holders of Series A Shares with 30 days’ prior written notice of any intended mailing of a notice to holders of Series A Shares for any meeting of the Company’s Members at which Directors are to be elected. The Members entitled to designate a Director pursuant to Section 2(a) shall give written notice to the Company, no later than 20 days prior to such mailing, of the individual(s) designated by such Members as nominees for election as Directors. The Company shall nominate and recommend for election as Directors only the individuals designated, or to be designated, pursuant to Section 2(a) . If the Members entitled to designate a Director pursuant to Section 2(a) shall fail to give notice to the Company as provided above in this Section 2(c) , it shall be deemed that the designees of such Members then serving as Directors shall be their designees for reelection. Notwithstanding the foregoing, the notice provisions hereof shall not apply to the election of Directors by written consent of the Company’s Members.

(d)           Termination of Board Rights . The obligations to vote and the rights granted pursuant to Sections 2(a) through 2(c) shall terminate upon consummation of a Qualified Public Offering.

(e)           Directors’ Liability and Indemnification . The Operating Agreement of the Company (“ Operating Agreement ”) shall provide (a) for elimination of the liability of Directors to the maximum extent permitted by law, and (b) that the Company shall be authorized to indemnify Directors for acts on behalf of the Company to the maximum extent permitted by law. The Members acknowledge and agree that the Company does not intend to maintain directors and officers liability insurance prior to a Public Offering. At the request of any Director designated to serve on the Board in accordance with this Agreement, the Company shall enter into an indemnification agreement with such Director in form reasonably satisfactory to such director and the Company confirming that such Director is entitled to indemnification to the maximum extent permitted by law.

(f)            Confidentiality; Conflict of Interest . Each Director shall be required to execute and deliver to the Company a confidentiality agreement protecting confidential information of the Company and the Company’s conflict of interest policy assuring that the Director does not have any conflict of interest that may impair the Director’s exercise of his fiduciary duty to the Members, such documents to be in such form as may be approved by the Board of the Company.

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(g)           Drag-Along Right . In the event that Members holding at least 66 2/3% of the Shares (the “ Requisite Members ”) approve either:

(A)          a transaction or series of related transactions in which a Person, or two or more Persons who agree to act together to acquire, hold, vote or dispose of any securities of the Company, would acquire from the Company or from Members of the Company shares representing fifty percent (50%) or more of the outstanding voting power of the Company, or

(B)           a transaction that would qualify as a “ Liquidation ” as defined in the Company’s Certificate of Determination

(such events described in subsections (A) and (B) are referred to in this Agreement as a “ Sale of the Company ”), then each Member shall, with respect to all Shares that he, she or it holds and any other Company Securities over which he, she or it otherwise exercises dispositive power:

(i)            in the event that a Sale of the Company is submitted for the approval of Members after receiving proper notice in accordance with Section 2(c), vote (in person, by proxy or by action by written consent, as applicable) all Shares in favor of such Sale of the Company and in opposition to any and all other proposals that could reasonably be expected to delay or impair the ability of the Company to consummate such Sale of the Company;

(ii)           in the event that a Sale of the Company is to be effected by the sale of the Shares, sell all Shares beneficially held by such Member (or in the event that the Requisite Members are selling fewer than all of their Shares, Shares in the same proportion as the Requisite Members are selling) to the Person(s) to whom the Requisite Members propose to sell their Shares, for the same per-share consideration (on an as-converted basis) and on the same relative terms and conditions as the Requisite Members, except that the aggregate consideration to be received by the Members in connection with any such Sale of the Company shall be allocated and distributed in the same manner as provided upon a Liquidation as set forth in the Company’s Certificate of Determination;

(iii)          refrain from exercising any dissenters’ rights or rights of appraisal under applicable law at any time with respect to such Sale of the Company;

(iv)          execute and deliver all related documentation and take such other action in support of such Sale of the Company as shall reasonably be requested by the Company, including the execution of such agreements and such instruments and other actions reasonably necessary to effectuate the allocation and distribution of the aggregate consideration upon such Sale of the Company, provided that no Member shall be required to incur any obligation in connection with such Sale of the Company other than such obligations as may be incurred by all Members in proportion to their interests in the Company; and

(v)           not deposit, and cause their Affiliates not to deposit, except as provided in this Agreement, any voting securities owned by such Member or Affiliate in a voting trust or, except as provided in this Agreement, subject any such voting securities to any arrangement or agreement with respect to the voting of such shares, unless specifically requested to do so by the acquirer in connection with such Sale of the Company.

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The provisions of this Section 2(g) shall terminate upon consummation of a Qualified Public Offering.

(h)           Increase in Authorized Capital; Further Issuances . Each Member shall vote all of his, her or its Shares from time to time and at all times, in whatever manner necessary to authorize an increase in the authorized capital of the Company so that there will be sufficient Common Shares available for conversion of all of the then outstanding Preferred Shares, at any time that an adjustment to the Conversion Price (as defined in the Company’s Certificate of Determination) is made pursuant to the Company’s Certificate of Determination. In the event the Board approves an equity financing plan or arrangement involving an (i) increase in the number of authorized shares of any class or series of capital of the Company, (ii) the creation of any new class or series of equity of the Company, and/or (iii) the issuance of additional shares of capital of the Company (whether or not such issuance requires any action set forth in either of the preceding items (i) or (ii)) and such action is also approved as required (if required) under the terms of the Certificate of Determination, each Member shall, with respect to all Shares that he, she or it holds and any other Company securities over which he, she or it otherwise exercises voting power: (A) be present, in person or by proxy, as a holder of Shares, at any and all meetings of Members duly called and noticed for the approval of such plan or arrangement and be counted for the purposes of determining the presence of a quorum at such meetings so long as the Member votes in favor of such plan or arrangement (otherwise, the Member agrees not to be present, in person or by proxy at such meetings), (B) vote (in person, by proxy or by action by written consent, as applicable) all Shares in favor of or not in opposition to such plan or arrangement, (C) vote (in person, by proxy or by action by written consent) in opposition to any and all other proposals that could reasonably be expected to delay or impair the ability of the Company to consummate such plan or arrangement, and (D) execute and deliver all related documentation and take such other action in support of such financing as may be requested by the Board, including the execution of such agreements and other instruments, including but not limited to, amendments and modifications to this Agreement as may be necessary to effectuate such financing.

(i)            Covenants of the Company . The Company shall use its best efforts to ensure that the rights granted under this Agreement are effective and that the Members enjoy the benefits of this Agreement. Such actions include, without limitation, the use of the Company’s best efforts to cause the nomination and election of the Directors as provided above. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all of the provisions of this Agreement.

(j)            Manner of Voting . The voting of Shares pursuant to this Agreement may be effected in person, by proxy, by written consent or in any other manner permitted by applicable law.

(k)           Stock Option Plans and Employment Agreements . In no event shall the Company implement any new stock option or bonus plan or enter into any new employment arrangements unless and until approved by a majority of the members of the Board.

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3.             Transfers of Shares .

(a)           Right of First Refusal .

(1)           Grant . No Existing Holder shall pledge or otherwise encumber any Company Securities held by such Existing Holder except that this restriction shall not apply to Shares that have heretofore been pledged by Mitch Allee (“ Allee ”) to Gallagher. Each Existing Holder hereby unconditionally and irrevocably grants to all Members a Right of First Refusal to purchase all or any portion of the Transfer Securities that such Existing Holder may propose to transfer in a Proposed Transfer, at the same price and on the same terms and conditions as those offered to the Prospective Transferee.

(2)           Notice . Each Existing Holder proposing to make a Proposed Transfer shall deliver a Proposed Transfer Notice to the Company and to each other Member not later than 30 days prior to the consummation of such Proposed Transfer. Such Proposed Transfer Notice shall contain the material terms and conditions of the Proposed Transfer and the identity of the Prospective Transferee. To exercise its Right of First Refusal, a Member shall deliver a Member Notice to the selling Existing Holder and the Company within 15 days after delivery of the Proposed Transfer Notice (such 15-day period, the “ Notice Period ”).

(3)           Undersubscription of Transfer Securities . If by the end of the Notice Period, the Members, or any of them, have exercised their respective rights to purchase Transfer Securities with respect, in the aggregate, to some but not all of the Transfer Securities, then the Company shall, immediately after the expiration of the Notice Period, send written notice to those Members who fully exercised their options within the Notice Period (the “ Exercising Members ”). Each Exercising Member shall have an additional option to purchase all or any part of the balance of any such remaining unsubscribed shares of Transfer Securities on the terms and conditions set forth in the Proposed Transfer Notice. To exercise such option, an Exercising Member shall deliver an Undersubscription Notice to the selling Existing Holder and the Company within 15 days after the expiration of the Notice Period. In the event there are two or more such Exercising Members that choose to exercise the last-mentioned option for a total number of remaining shares of Transfer Securities in excess of the number available, the remaining shares of Transfer Securities available for purchase under this Section 3(b)(3) shall be allocated to such Exercising Members pro rata based on the number of shares of Transfer Securities such Exercising Members have elected to purchase. If the options to purchase the remaining shares of Transfer Securities are exercised in full by the Exercising Members, the Company shall immediately notify all of the Exercising Members of that fact. If the options to purchase the remaining shares of Transfer Securities are not exercised in full by the Exercising Members, then the Company shall have the right to purchase all or any part of the balance of any such remaining unsubscribed shares of Transfer Securities on the terms and conditions set forth in the Proposed Transfer Notice.

(4)           Oversubscription of Transfer Securities . In the event more than one Member elects to purchase any or all of the shares of Transfer Securities specified in the Proposed Transfer Notice and such elections to purchase aggregate more than the number of shares of Transfer Securities, each such Member shall be entitled to purchase from the selling Existing Holder a pro rata portion (based upon the number of Common Shares and Conversion Shares of such Member as compared to the number of Common Shares and Conversion Shares of all Exercising Members) of such Transfer Securities, up to the number of shares specified in

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such Exercising Member’s election. Any shares of Transfer Securities not so allocated shall be allocated as aforesaid in one or more successive allocations to each Exercising Member whose election specified a number of shares greater than the number which had then been allocated to such Exercising Member, until all of the shares of Transfer Securities have been allocated.

(5)           Consideration; Closing . If the consideration proposed to be paid for the Transfer Securities is in property, services or other non-cash consideration, and any Exercising Member (or the Company) cannot for any reason pay for the Transfer Securities in the same form of non-cash consideration, such Exercising Member (or the Company) may pay the cash value equivalent thereof, as determined by the Board. The closing of the purchase of Transfer Securities by the Exercising Members (or the Company) shall take place, and all payments from the Exercising Members (or the Company) shall be delivered to the selling Existing Holder by the later of (i) the date specified in the Proposed Transfer Notice as the intended date of the Proposed Transfer, and (ii) forty-five (45) days after delivery of the Proposed Transfer Notice.

(b)           Right of Co-Sale .

(1)           If any Transfer Securities subject to a Proposed Transfer by any Existing Holder are not purchased in whole by one or more Members (or the Company) pursuant to Section 3(a) above and thereafter are to be sold to a Prospective Transferee, each Investor who has chosen not to exercise a right to purchase such Transfer Securities may elect to exercise its Right of Co-Sale and participate on a pro-rata basis in the Proposed Transfer on the same terms and conditions specified in the Proposed Transfer Notice. Each Investor who desires to exercise its Right of Co-Sale shall give the selling Existing Holder written notice to that effect on or before the deadline for delivery of the Undersubscription Notice, and upon giving such notice such Investor will be deemed to have effectively exercised the Right of Co-Sale.

(2)           Each Investor who timely exercises its Right of Co-Sale by delivering the written notice provided for in Section 3(b)(1) (each, a “ Co-Selling Investor ”) may include in the Proposed Transfer, all or any part of its Shares equal to the product obtained by multiplying (i) the aggregate number of Common Shares or Preferred Shares proposed to be transferred (excluding shares purchased by the Company or the Members pursuant to the Right of First Refusal) by (ii) a fraction, the numerator of which is the number of Common Shares and Conversion Shares of such Co-Selling Investor immediately before consummation of the Proposed Transfer and the denominator of which is the total number of Common Shares and Conversion Shares, in the aggregate, of all Co-Selling Investors immediately prior to the consummation of the Proposed Transfer, plus the number of Common Shares and Conversion Shares owned by the selling Existing Holder. To the extent one or more of the Investors exercise such right of participation in accordance with the terms and conditions set forth herein, the number of Shares that the selling Existing Holder may sell in the Proposed Transfer shall be correspondingly reduced.

(3)           Each Co-Selling Investor shall effect its participation in the Proposed Transfer by making reasonable arrangements, no later than 15 days after such Co-Selling Investor’s exercise of the Right of Co-Sale, to deliver to the transferring Member one or more share certificates, properly endorsed for transfer to the Prospective Transferee representing

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the number of Common Shares or Series A Shares, as applicable, that such Co-Selling Investor elects to include in the Proposed Transfer. The Company shall make any conversion required by an Investor to exercise its Right of Co-Sale concurrent with and contingent upon the actual transfer of such shares to the Prospective Transferee.

(4)           The terms and conditions of any sale pursuant to this Section 3(b) will be on the terms and conditions specified in the Proposed Transfer Notice.

(5)           Each share certificate a Co-Selling Investor delivers pursuant to subparagraph (3) above will be transferred to the Prospective Transferee against payment therefor in consummation of the sale of the Transfer Securities pursuant to the terms and conditions specified in the Proposed Transfer Notice and the purchase and sale agreement, and the selling Existing Holder shall concurrently therewith remit to each Co-Selling Investor the portion of the sale proceeds to which such Co-Selling Investor is entitled by reason of its participation in such sale. If any Prospective Transferee or Transferees refuse(s) to purchase Shares subject to the Right of Co-Sale from any Co-Selling Investor exercising its Right of Co-Sale hereunder, no Existing Holder may sell any Company Securities to such Person unless and until, simultaneously with such sale, such Existing Holder purchases all Shares subject to the Right of Co-Sale from such Co-Selling Investor.

(6)           If any aspect of any Proposed Transfer is not consummated with the original Prospective Transferee, or with or by any Investor exercising any rights under this Section 3 , within 90 days after the expiration of the Right of First Refusal, the Existing Holder proposing the Proposed Transfer may not sell any Company Securities unless it first complies in full with each provision of this Section 3 . The exercise or election not to exercise any right by any Member hereunder shall not adversely affect its right to participate in any other sales of Transfer Securities subject to Section 3 .

(c)           Transfers by Investors . Any Investor may transfer any portion or all of its Series A Shares to an Affiliate or to another transferee subject to the following: (i) the transfer complies with all applicable state and federal securities laws and the Investor furnishes to the Company a legal opinion to that effect in a form reasonably satisfactory to the Company; (ii) the transfer does not jeopardize the Company’s characterization as a U.S. Air Carrier as a result of foreign ownership of Shares in the Company; (iii) the Board determines in good faith that ownership of Shares in the Company by the Prospective Transferee could have a detrimental effect on the business of the Company; and (iv) the transferee agrees to be bound by the terms of this Agreement and the Operating Agreement. Any Investor seeking to transfer Shares in the Company agrees to provide the Company with any information reasonably requested by the Company concerning the Prospective Transferee or the Proposed Transfer.

(d)           Effect of Failure to Comply .

(1)           Any Proposed Transfer not made in compliance with the requirements of this Agreement shall be null and void ab initio, shall not be recorded on the books of the Company or its transfer agent and shall not be recognized by the Company. Each party hereto acknowledges and agrees that any breach of this Agreement would result in substantial harm to the other parties hereto for which monetary damages alone could not

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adequately compensate. Therefore, the parties hereto unconditionally and irrevocably agree that any non-breaching party hereto shall be entitled to seek protective orders, injunctive relief and other remedies available at law or in equity (including, without limitation, seeking specific performance or the rescission of purchases, sales and other transfers not made in strict compliance with this Agreement).

(2)           If any Member purports to sell any Shares in contravention of the Right of Co-Sale (a “ Prohibited Transfer ”), each Investor, in addition to such remedies as may be available by law, in equity or hereunder, is entitled to require such Member to purchase Shares from such Investor as provided below, and such Member will be bound by the terms of such option. If a Member makes a Prohibited Transfer, each Investor who timely exercises its Right of Co-Sale under Section 3(b) may require such Member to purchase from such Investor the type and number of Shares that such Investor would have been entitled to sell under Section 3(b) had the Prohibited Transfer been effected pursuant to and in compliance with the terms of Section 3(b) .

(3)           Within 90 days after the date on which an Investor received notice of the Prohibited Transfer or otherwise became aware of the Prohibited Transfer, such Investor shall, if exercising the option created hereby, make reasonable arrangements to deliver to the selling Member, the certificate or certificates representing the Shares to be transferred, each certificate to be properly endorsed for transfer.

(4)           Such selling Member shall, upon receipt of the certificate or certificates for the Shares to be transferred by an Investor pursuant to this Section 3(c) , pay the aggregate purchase price therefor in cash or by other means acceptable to such Investor.

(e)           Expiration of Rights . The respective rights of the Members under this Section 3 shall not apply to the sale of up to 1,750,000 shares to PAR simultaneously with the initial Public Offering of the Company and shall expire upon the consummation of a Qualified Public Offering.

4.             Exempt Transfers .

Notwithstanding the foregoing or anything to the contrary herein, the provisions of Sections 3(a) and 3(b) shall not apply: (i) to sales of up to $2,500,000 of Shares by Gallagher to one or more accredited investors (as defined in Regulation D under the Securities Act) which is completed on or before June 30, 2005; (ii) to any transfer of Allee’s Shares to Gallagher as a result of the pledge agreement currently in effect; (iii) in the case of any Member that is an entity, upon a transfer by such Member to its stockholders, members, partners or other equity holders as a distribution in respect of such persons’ ownership interests in such Member, (iv) pursuant to a Qualified Public Offering or a Sale of the Company, (v) in the case of any Member that is a natural person, upon a transfer of Shares by such Member, either during his or her lifetime or on death by will or intestacy to his or her siblings, lineal antecedents or descendents, spouse or any custodian or trustee for the account of such Member or such Member’s siblings, lineal antecedents or descendents, or spouse, or (vi) to a sale of Shares on a public trading market if there is an established trading market for the Shares; provided, however, notwithstanding any such permitted transfer, such transferred Shares (except in the case of a transfer under clause (v)

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above) shall remain Company Securities for all purposes hereunder, and such transferee shall be treated as a Member (but only with respect to the securities so transferred to the transferee) for all purposes of this Agreement (including the obligations of a Member with respect to Proposed Transfers of such Shares pursuant to Section 3 ); and provided, further, in the case of any transfer pursuant to clause (iii) or (v) hereof, that such transfer is made pursuant to a transaction in which there is no consideration actually paid for such transfer.

5.             Preemptive Rights .

(a)           Grant of Rights . Subject to the terms and conditions specified in this Section 5 , in the event the Company proposes to offer or sell any New Securities, the Company shall first make an offering of such New Securities to each Investor and each Series B Holder (for purposes of this Section 5 , the Investors and the Series B Holders are referred to collectively as the “ Offerees ”) in accordance with the following provisions:

(i)            The Company shall deliver written notice (each, an “ Offer Notice ”) to each Offeree stating (i) its intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

(ii)           By written notification delivered to the Company, within twenty (20) calendar days after the Offer Notice is given, each Offeree may elect to purchase, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities equal to the product obtained by multiplying (i) the number of shares of New Securities specified in the applicable Offer Notice, multiplied by (ii) a fraction, the numerator of which is the number of Common Shares and Conversion Shares of such Offeree immediately prior to the consummation of the proposed issuance of New Securities and the denominator of which is the total number of Common Shares and Conversion Shares of all Members immediately prior to the consummation of the proposed issuance of New Securities. The Company shall promptly, in writing, inform each Offeree that elects to purchase all the shares of New Securities available to it, each, a “ Fully-Exercising Offeree ”) of any other Offeree’s failure to do likewise. During the ten (10) day period commencing after receipt of such information, each Fully-Exercising Offeree shall be entitled to purchase that portion of New Securities for which the Offerees were entitled to subscribe but which were not subscribed for by the Offerees which is equal to the proportion that the number of Common Shares and Conversion Shares of such Fully-Exercising Offeree bears to the total number of Common Shares and Conversion Shares of all Fully-Exercising Offerees who wish to purchase such unsubscribed shares.

(iii)          If all New Securities referred to in the Offer Notice are not elected to be purchased as provided in Section 5(a)(ii) hereof, the Company may, during the ninety (90) day period following the expiration of the period provided in Section 5(a)(ii) hereof, offer the remaining unsubscribed portion of such New Securities (collectively, the “ Refused Securities ”) along with the balance of the New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the purchasers thereof than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New

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Securities shall not be offered unless first reoffered to the Investors in accordance with this Section 5(a) .

(b)           Exempt Issuances . The right of first offer in this Section 5 shall not be applicable to the following “ Exempt Issuances ”: (i) the issuance of Common Shares (or options, warrants or rights exercisable for, or convertible securities convertible into, such Common Shares) representing, in the aggregate, not more than 500,000 Common Shares, to employees, officers or directors of, or consultants or advisors to, the Company or any subsidiary pursuant to share purchase or share option plans or other arrangements that are approved by the Board, (ii) the issuance of securities pursuant to the conversion or exercise of convertible or exercisable securities that are outstanding on the date hereof, or that are hereafter issued in accordance with the provisions of this Section 5 , in each case, that are not otherwise included in the preceding clause (i), (iii) the issuance of securities in connection with any share split, share dividend or recapitalization by the Company, (iv) the issuance of securities for consideration other than cash pursuant to a merger, consolidation, strategic alliance, acquisition or similar business combination with any Person provided such Person is not an Affiliate of the Company or any Existing Holder, (v) the issuance of securities pursuant to any equipment loan or leasing arrangement, real property leasing arrangement, or debt financing from a bank or similar financial or lending institution, and (vi) the issuance of securities by the Company pursuant to an effective registration statement filed under the Securities Act.

(c)           Darley Right to Purchase Shares Upon Exempt Issuances . Darley shall have the right to purchase Common Shares from the Company if all of the following conditions are met: (i) there is an Exempt Issuance which causes Darley’s Percentage Ownership to be reduced below ten percent (10%), (ii) Darley’s Percentage Ownership prior to the Exempt Issuance was ten percent (10%) or more, and (iii) the Exempt Issuance is not part of the Sale of the Company (as defined in Section 2(g)). In such event, Darley shall have the right, exercisable within ten (10) days after receipt of notice from the Company of such Exempt Issuance, to purchase additional Common Shares to increase Darley’s Percentage Ownership to ten percent (10%); provided, however, that in no event shall Darley have the right to purchase more than an aggregate of 500,000 Common Shares under this Section 5(c) as a result of all Exempt Issuances. The purchase price for the shares being purchased shall be the value of the Common Shares as agreed upon by the Company and Darley; provided that if the parties cannot agree on such value within twenty (20) days after initially attempting to do so, the value shall be determined by an investment bank mutually agreed between the Company and Darley. Each such party will submit a proposed per share value, and the investment bank will be required to select without modification the one of two proposed alternatives that it believes is closest to fair market value, and that shall be the purchase price. Darley’s designee to the Managing Board shall not participate in the determinations by the Company under this paragraph. The closing shall be held, and the purchase price for the additional Common Shares shall be payable by Darley in cash, within fifteen (15) days after the price has been determined and the Common Shares purchased shall be delivered to Darley upon the Company’s receipt of the purchase price.

(d)           Expiration of Rights . The rights of the Investors and Series B Holders under this Section 5 shall expire upon the consummation of a Qualified Public Offering.

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6.             Registration Rights . The Company covenants and agrees as follows:

(a)           Definitions . For purposes of this Section 6:

(i)            The term “ Act ” shall mean the Securities Act of 1933, as amended.

(ii)           The term “ Form S-3 ” shall mean such form under the Act as in effect on the date hereof or any registration form under the Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

(iii)          The term “ Full Cooperation ” shall mean, in connection with any underwritten offering, where, in addition to the cooperation otherwise required by this Agreement, (a) members of senior management of the Company (including the chief executive officer and chief financial officer) fully cooperate with the underwriter(s) in connection therewith and make themselves available to participate in “road-shows” and other customary marketing activities in such locations (domestic and foreign) as reasonably recommended by the underwriter(s) (including one-on-one meetings with prospective purchasers of the Registrable Securities) and (b) the Company prepares preliminary and final prospectuses (preliminary and final prospectus supplements in the case of an offering pursuant to a Shelf Registration Statement) for use in connection therewith containing such additional information as reasonably requested by the underwriter(s) (in addition to the minimum amount of information required by law, rule or regulation)., In the event fewer than 2,000,000 Common Shares are subject to the registration statement, then “Full Cooperation” shall not require more than two days of marketing activities by Allegiant’s management. Notwithstanding the foregoing, the Company’s management shall not be required to participate in the road show for more than one registration statement filed as a result of the demand of any Holders and the cost of any road shows shall be borne by the selling Holders.

(iv)          The term “ Fully Marketed Underwritten Offering ” means an underwritten offering in which there is Full Cooperation but shall not include a “registered direct” or other agented transaction that does not involve the preparation of a preliminary prospectus or preliminary prospectus supplement in the case of the offering pursuant to a Shelf Registration Statement.

(v)           The term “ Holder ” shall mean (i) each of the Investors and Series B Holders with respect to the Registrable Securities held by such Member (ii) any person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 6(m) hereof and (iii) any PAR Holder.

(vi)          The term “ 1934 Act ” shall mean the Securities Exchange Act of 1934, as amended.

(vii)         The term “ PAR ” shall mean PAR Investment Partners, L.P.

(viii)        The term “ PAR Holder ” shall mean PAR Investment Partners, L.P., or any assignee thereof in accordance with Section 6(m) hereof.

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(ix)           The term “ PAR Registrable Securities ” shall mean any Registrable Securities held by a PAR Holder.

(x)            The terms “ register ,”“ registered ,” and “ registration ” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement or document.

(xi)           The term “ Registrable Securities ” shall mean (A) Common Shares issued to the Investors upon conversion of their Series A Shares, (B) Common Shares issued to Series B Holders upon conversion of their Series B Shares, (C) Common Shares purchased by PAR pursuant to that certain Stock Purchase Agreement dated November 20, 2006 by and among, inter alia, PAR, the Company and the Sellers named therein (the “ Stock Purchase Agreement ”) and (D) any Common Shares issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of the securities referenced in (A), (B) or (C) above, that cannot be publicly resold by the holder thereof without registration under the Act or the availability of an exemption thereunder, it being understood, for the purposes of this Agreement, that Registrable Securities shall cease to be Registrable Securities when (1) a registration statement covering such Registrable Securities has been declared effective and they have been disposed of pursuant to such effective registration statemen