Exhibit 10.84

 
 
EXECUTION COPY

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.  THE SYMBOL “[***]” HAS BEEN INSERTED IN PLACE OF THE PORTIONS SO
OMITTED.

 

STOCK PURCHASE AGREEMENT
 
dated as of July 1, 2010
 
by and among
 
Delta Air Lines, Inc.,
 
Pinnacle Airlines Corp.,
 
Mesaba Aviation, Inc.
 
and
 
Pinnacle Airlines, Inc.

 
 
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STOCK PURCHASE AGREEMENT
 
 
STOCK PURCHASE AGREEMENT (together with the Schedules, Annexes and Exhibits
attached hereto and as the same may be amended, supplemented or modified in
accordance with the terms hereof, this “Agreement”), dated as of July 1, 2010,
by and among DELTA AIR LINES, INC., a corporation organized and existing under
the laws of Delaware (“Seller”), PINNACLE AIRLINES CORP., a corporation
organized and existing under the laws of Delaware (“Buyer”), MESABA AVIATION,
INC., a corporation organized and existing under the laws of Minnesota (the
“Company”), and PINNACLE AIRLINES, INC., a corporation organized and existing
under the laws of Georgia (“Pinnacle”).
 
PREMISES
 
WHEREAS, Seller owns all of the issued and outstanding shares of capital stock
of the Company;
 
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, all of the issued and outstanding shares of capital stock of the
Company, subject to the terms and conditions hereinafter set forth; and
 
WHEREAS, the definitions of certain defined terms used herein are set forth in
Exhibit A hereto.
 
Accordingly, in consideration of the premises and of the respective covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, hereby agree as follows:

 
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ARTICLE 1
 

 
PURCHASE AND SALE OF SHARES
 
1.1           Purchase and Sale.  (a)  Upon the terms and subject to the
conditions set forth in this Agreement, (i) Seller does hereby sell to Buyer,
without recourse, representation or warranty, except as otherwise expressly
provided herein, and Buyer does hereby purchase from Seller, all of the
outstanding shares of common stock of the Company (the “Shares”), for aggregate
consideration equal to the Final Purchase Price.  The Base Purchase Price shall
be payable by means of a promissory note in the form attached hereto as Exhibit
B (the “Promissory Note” ).  As security for the payment of the Promissory Note,
Buyer and the Company shall execute and deliver at Closing a Security and Pledge
Agreement in the form attached hereto as Exhibit C (the “Security Agreement”)
with respect to the Shares held by Buyer after Closing and certain equipment
owned by the Company.  The Closing Working Capital Deficiency (if any) shall be
payable by Seller to Buyer in cash at Closing and the Closing Working Capital
Excess (if any) shall be payable by Buyer to Seller in cash at Closing.
 
(b)           No less than two (2) Business Days prior to the Closing Date,
Seller shall prepare and deliver to Buyer a schedule (the “Seller’s Closing
Schedule”) setting forth (i) the Estimated Closing Working Capital, (ii) the
Estimated Closing Cash, and (iii) the Estimated Closing Debt, and the
calculations thereof in reasonable detail, together with a copy of the Financial
Statements.
 
1.2           Closing.  The closing of the purchase and sale of the Shares (the
“Closing”) is taking place concurrently herewith at the offices of Seller, 1030
Delta Boulevard, Atlanta, Georgia  30354. The date of the Closing shall be
referred to herein as the “Closing Date.”

1.3           Deliveries at the Closing.  In addition to the other things
required to be done hereby, at the Closing:

(a) Seller shall deliver to the Buyer one or more certificates representing all
of the Shares, accompanied by stock powers duly executed in blank by Seller, or,
if any such certificates have been lost, stolen or destroyed, an affidavit of
such loss, theft or destruction in customary form and substance reasonably
satisfactory to Buyer;

(b) Seller, the Company, Pinnacle and Buyer shall execute and deliver the Second
Amended and Restated Airline Services Agreement in substantially the form
attached hereto as Exhibit D (the “CRJ-200 ASA”);

 
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(c) Seller, Pinnacle and Buyer shall execute and deliver Amendment to Delta
Connection Agreement in substantially the form attached hereto as Exhibit E (the
“CRJ-900-P DCA Amendment” and such agreement as amended by the CRJ-900-P DCA
Amendment, the “CRJ-900-P DCA”);

(d) Seller, the Company, Pinnacle and Buyer shall execute and deliver the 2010
Delta Connection Agreement in substantially the form attached hereto as Exhibit
F (the “CRJ-900-M DCA”);

(e) Seller, the Company and Buyer shall execute and deliver  the Saab 340B+
Delta Connection Agreement in substantially the form attached hereto as Exhibit
G (the “Saab 340 DCA”, and together with the CRJ-200 ASA, the CRJ-900-P DCA and
the CRJ-900-M DCA, the “DCA Agreements”);

(f) Seller and the Company shall execute and deliver the Transition Services
Agreement in substantially the form attached hereto as Exhibit H (the
“Transition Services Agreement”);

(g) Seller and the Company shall execute and deliver the Facilities Use
Agreement in substantially the form attached hereto as Exhibit I (the
“Facilities Use Agreement”);

(h) Seller and the Company shall execute and deliver the Mesaba/Delta Mutual
Release in substantially the form attached hereto as Exhibit J (the
“Mesaba/Delta Mutual Release”);

(i) The Company shall deliver a fully executed copy of that certain Letter of
Agreement between the Company and ALPA in the form attached hereto as Exhibit K
(the “ALPA Letter Agreement”);

(j) Seller and Pinnacle shall execute and deliver the Pinnacle/Delta Mutual
Release in substantially the form attached hereto as Exhibit M (the
“Pinnacle/Delta Mutual Release”);

(k) Buyer, Pinnacle and the Company shall execute and deliver, and Buyer shall
cause Pinnacle to execute and deliver, the Promissory Note;

(l) Buyer and the Company shall execute and deliver the Security Agreement;

(m) Seller shall deliver to Buyer a certificate signed under penalties of
perjury and in form and substance as required by Section 1445 of the Code
stating that (A) the Seller is not a “foreign person” as defined under Section
1445 of the Code, and (B) no withholding under Section 1445 of the Code is
required;

 
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(n) Seller shall deliver to Buyer resignations, effective as of the Closing, of
all directors and such officers, if any, of the Company as are specified by
Buyer;

(o) Buyer shall pay to Seller the amount of the Closing Working Capital Excess
(if any) by wire transfer of immediately available funds to one or more bank
accounts to be designated by Seller in a written notice delivered to Buyer at
least two (2) Business Days prior to the Closing Date; and

(p) Seller shall pay to Buyer the amount of the Closing Working Capital
Deficiency (if any) by wire transfer of immediately available funds to one or
more bank accounts to be designated by Buyer in a written notice delivered to
Seller at least two (2) Business Days prior to the Closing Date.
 
1.4           Closing Working Capital; Closing Cash and Closing Debt
Adjustment.  (a)  As promptly as practicable, but in no event later than
seventy-five (75) days after the Closing Date, Buyer shall prepare and deliver
to Seller a schedule (the “Buyer’s Closing Schedule”) setting forth in
reasonable detail Buyer’s calculation of the Closing Working Capital, Closing
Cash and Closing Debt (collectively, the “Closing Balances”).  Buyer and its
representatives will give Seller and its respective representatives access,
during the normal business hours of Buyer and the Company, to all personnel,
books and records of the Company as reasonably requested by Seller to assist it
in the preparation of Seller’s Dispute Notice (if any).  Seller will notify
Buyer in writing (the “Seller’s Dispute Notice”) within thirty (30) days after
receiving Buyer’s Closing Schedule if Seller disagrees with Buyer’s calculation
of the Closing Balances as set forth in Buyer’s Closing Schedule, which notice
shall set forth in reasonable detail the basis for such disagreement, the dollar
amounts involved and Seller’s calculation of the Closing Balances.  If a
Seller’s Dispute Notice is not received by Buyer within such thirty (30) day
period, Buyer’s calculation of each of the Closing Balances as set forth in
Buyer’s Closing Schedule shall be final and binding upon Seller and Buyer.
 
(b)           Upon receipt by Buyer of Seller’s Dispute Notice, Seller and Buyer
shall negotiate in good faith to promptly resolve any disagreement with respect
to the Closing Balances set forth in Seller’s Dispute Notice.  To the extent
Buyer and Seller are unable to agree with respect to the Closing Balances within
thirty (30) days after receipt by Buyer of the Seller’s Dispute Notice, Buyer
and Seller shall then each prepare a revised Buyer’s Closing Schedule and
Seller’s Dispute Notice, respectively, setting forth its determination of the
Closing Balances.  The Seller’s Dispute Notice shall include the Seller’s
proposal regarding the disputed items that remain unresolved in accordance with
the preceding sentence, and Buyer’s determination of the Closing Balances shall
include Buyer’s proposal regarding such unresolved disputed items.   The only
differences between the Seller’s and Buyer’s respective schedules shall relate
to the unresolved disputed items, it being understood that all other items shall
be deemed final and binding on Buyer and Seller and no additional issues may be
raised in connection with the preparation of such schedules other than such
unresolved disputed items.  Buyer and Seller shall

 
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then promptly engage Deloitte & Touche USA LLP (the “Accounting Firm”) and
submit such schedules to the Accounting Firm for a binding resolution by the
Accounting Firm as promptly as practicable.  Except as specified in the
following sentence, the cost of any dispute resolution procedure (including the
fees and expenses of the Accounting Firm) pursuant to this Section 1.4 shall be
borne, in its entirety, by the party whose calculation of the Final Purchase
Price based upon its calculation of the Closing Balances as initially submitted
to the Accounting Firm is furthest away from the Final Purchase Price based upon
the Closing Balances, as determined by the Accounting Firm. The fees and
expenses of Buyer’s independent auditors (if any) and attorneys (if any)
incurred in connection with the issuance of the Buyer’s Closing Schedule shall
be borne by the Buyer, and the fees and expenses of Seller’s independent
auditors (if any) and attorneys (if any) incurred in connection with its review
of the Buyer’s Closing Schedule and delivery of the Seller’s Dispute Notice
shall be borne by Seller.
 
(c)           Seller and Buyer shall instruct the Accounting Firm to render its
decision resolving the items in dispute within thirty (30) days after its
engagement.  The Accounting Firm shall determine, based solely on presentations
by Seller and Buyer and their respective representatives, and not by independent
review, only those issues in dispute specifically set forth in the Seller’s
Dispute Notice and shall prepare a written report as to the dispute and the
resulting calculation of any disputed item of the Closing Balances, which shall
be conclusive and binding upon Buyer and Seller (absent manifest error).  In
resolving any disputed item of the Closing Balances, the Accounting Firm
(i) shall be bound by the provisions of this Section 1.4 and the definitions of
Closing Working Capital, Closing Cash and Closing Debt, and the definitions
included therein, (ii) shall limit its review to matters still in dispute as
specifically set forth in the Seller’s Dispute Notice (and only to the extent
such matters are still in dispute at the commencement of such thirty (30) day
period) and (iii) shall further limit its review solely to whether the Buyer’s
Closing Schedule has been prepared in accordance with this Section 1.4.  The
determination of any item that is a component of the Closing Balances, and is
the subject of a dispute cannot, however, be in excess of, or less than, the
greatest or lowest value, respectively, claimed for any particular item in the
Buyer’s Closing Schedule or the Seller’s Dispute Notice (or, if closer to the
value claimed in the Seller’s Dispute Notice or Buyer’s Closing Schedule,
respectively, the value claimed by the relevant party at the commencement of
such thirty (30) day period (it being understood and agreed that any value for
any item proposed in an effort to reach an agreement with respect to the value
of such item shall not be deemed to be “claimed” for purposes of this sentence
if the proposing party clearly specifies so in writing at such time)).  Seller
and Buyer agree that judgment may be entered, at the Legal Expense of the
requesting party, upon the determination of the Accounting Firm in any court
having jurisdiction over the party against which such determination is to be
enforced.  Closing Working Capital, Closing Cash and Closing Debt, as agreed
upon by Seller and Buyer, as deemed agreed upon pursuant to the last sentence of
Section 1.4(a) or as determined by the Accounting Firm in accordance with this
Section 1.4, shall be termed the “Final Closing Working Capital”, “Final Closing
Cash” and the “Final Closing Debt”, respectively, and, collectively, the “Final
Closing Balances”.

 
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(d)           If the Final Purchase Price (based upon the Final Closing
Balances) is greater than the Closing Purchase Price, the Buyer shall, within
five (5) Business Days after the Final Purchase Price becomes final and binding
on Seller and Buyer in accordance with this Section 1.4, pay the amount of such
excess to Seller by wire transfer of immediately available funds to an account
designated in writing by Seller, provided, however, if the amount of such excess
(if any) exceeds ***, then the difference between the amount of such excess and
*** (the “Excess Working Capital Amount”) shall be payable by Buyer to Seller by
means of adding such amount to the principal amount of the Promissory Note, and
in such event the principal balance under the Promissory Note shall
automatically, without any further action by the parties, be increased by the
amount of the Excess Working Capital Amount, and Buyer agrees that, upon the
request of Seller, Buyer shall promptly execute and deliver, and shall cause the
Company and Pinnacle to promptly execute and deliver, to Seller, in replacement
of the Promissory Note, a substitute promissory note in the same form as the
Promissory Note except with a face amount equal to the principal amount then
outstanding under the Promissory Note plus the Excess Working Capital
Amount..  If the Closing Purchase Price is greater than the Final Purchase Price
(based upon the Final Closing Balances), the Seller shall, within five (5)
Business Days after the Final Purchase Price becomes final and binding on Seller
and Buyer in accordance with this Section 1.4, pay the amount of such excess to
Buyer by wire transfer of immediately available funds to an account designated
in writing by the Buyer.
 

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE SELLER
REGARDING SELLER AND THE PURCHASED SHARES
 
Subject to Sections 6.1, 6.2(a), 6.2(h), 6.2(i), and 8.1, Seller hereby
represents and warrants to Buyer as follows:
 
2.1           Authority.  Seller is a corporation duly incorporated and validly
existing as a corporation in good standing under the laws of the State of
Delaware.  Seller has the requisite corporate power and authority to execute and
deliver this Agreement and the Ancillary Instruments to which it is, or at the
Closing will be, a party, to perform its obligations hereunder and thereunder,
and to consummate the transactions contemplated hereby and thereby.  This
Agreement and the Ancillary Instruments to which Seller is a party have been
duly executed and delivered by Seller, and (assuming due authorization,
execution and delivery by the other parties hereto) constitute the legal, valid
and binding obligation of Seller, enforceable against Seller in accordance with
their respective terms, except that such enforcement may be limited by any
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar Laws (whether statutory, regulatory or decisional), now or hereafter in
effect, relating to or affecting the rights of creditors generally or by
equitable principles (regardless of whether considered in a proceeding at law or
in equity).

 
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2.2           Ownership of Shares; Title.  As of immediately preceding the
Closing, Seller is the sole direct record and beneficial owner of, and will have
good title to, all of the Shares, in each case, free and clear of all Liens
other than restrictions imposed by federal and state securities Laws.  Seller
has, and shall transfer to Buyer at the Closing, good title to the Shares, free
and clear of all Liens, except for (i) Liens created by this Agreement and
(ii) restrictions imposed by federal and state securities Laws.
 
2.3           No Conflict.  Except as set forth in Section 2.3 of the Disclosure
Letter and with such other exceptions as are not reasonably likely to have,
individually or in the aggregate, a material adverse effect on the ability of
Seller to perform its obligations under, and to consummate the transactions
contemplated by, this Agreement and the Ancillary Instruments to which Seller is
or at the Closing will be a party, the execution and delivery by Seller of this
Agreement and the Ancillary Instruments to which Seller is or at the Closing
will be, a party do not, and the performance by Seller of this Agreement and the
Ancillary Instruments to which Seller is or at the Closing will be a party and
the transactions contemplated hereby and thereby do not and will not, (i)
violate, conflict with or result in the breach of any provision of the
certificate of incorporation or by-laws of Seller, (ii) violate any Law or Order
applicable to Seller, or any of Seller’s assets, properties or businesses, (iii)
result in a breach of, constitute a default (or an event which, with or without
the giving of notice or lapse of time or both, would become a default) under,
require any consent under, or give to others any right of termination,
amendment, acceleration, suspension, revocation or cancellation of, any contract
to which Seller is a party or is bound, or (iv) result in the creation of any
Lien on any of the Shares.
 
2.4           Governmental Consents and Approvals.  The execution and delivery
by Seller of this Agreement and the Ancillary Instruments to which Seller is or
at the Closing will be a party do not, and the performance by Seller of this
Agreement and the Ancillary Instruments to which Seller is or at the Closing
will be a party and the consummation by Seller of the transactions contemplated
hereby and thereby do not and will not, require any Governmental Authorization
or filing with, or notification of, any Governmental Authority, except (i) for
the Governmental Authorizations set forth in Section 2.4 of the Disclosure
Letter, (ii) notice to the Federal Aviation Administration (the “FAA”) pursuant
to Title 14, Part 119, section 36 of the Code of Federal Regulations (the “FAA
Notice”), (iii) notice to the DOT pursuant to Title 14, Part 204 of the Code of
Federal Regulations (the “DOT Notice”), and (iv) as would not be reasonably
likely to have, individually or in the aggregate, a material adverse effect on
the ability of Seller to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Ancillary Instruments to
which Seller is or at the Closing will be a party.

 
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2.5           Affiliated Transactions.
 
(a)           Except as disclosed in Section 2.5(a) of the Disclosure Letter, as
of the date of this Agreement, neither Seller nor any of its Affiliates (other
than the Company) is a party to any Contract with the Company involving payments
during any twelve (12) month period to or from the Company in excess of $600,000
(all such Contracts, the “Intercompany Agreements”).
 
(b)           As of the date of this Agreement, none of the officers or
directors of Seller or Seller’s Affiliates (other than the Company) is a party
to any Contract with the Company involving payments during any twelve (12) month
period to or from the Company in excess of $100,000 (all such Contracts, the
“Related-Party Agreements”).
 
(c)           Except as disclosed in Section 2.5(c) of the Disclosure Letter and
except for rights and obligations arising out of or in connection with this
Agreement or any Ancillary Instrument, as of the date of this Agreement, neither
Seller nor any of its Affiliates (other than the Company) is a party to any
contract, agreement or arrangement with a third-party vendor for the benefit of
the Company involving payments during any twelve (12) month period to or from
the Company in excess of $400,000 (all such contracts, agreements or
arrangements, the “Seller-Vendor Agreements”).
 
(d)           Except as disclosed in Section 2.5(d) of the Disclosure Letter and
except for rights and obligations arising out of or in connection with this
Agreement or any Ancillary Instrument, as of the date of this Agreement, the
Company is not a party to any Contract with a third-party vendor for the benefit
of Seller or an Affiliate of Seller (other than the Company) involving payments
during any twelve (12) month period to or from the Seller or an Affiliate of
Seller in excess of $400,000 (all such Contracts, the “Company-Vendor
Agreements”).
 
2.6           Brokers.  Neither Seller nor any of its directors, officers,
employees or Affiliates has employed any broker, finder, investment banker or
Person fulfilling a similar role or has incurred or will incur any broker’s,
finder’s or other similar fees, commissions or expenses, in each case in
connection with the transactions contemplated by this Agreement and the
Ancillary Instruments.

 
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ARTICLE 3
 

 
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
 
Subject to Sections 6.1, 6.2(a), 6.2(h), 6.2(i), and 8.1, Seller hereby
represents and warrants to Buyer as follows:
 
3.1           Organization and Good Standing of the Company.  The Company is a
corporation duly incorporated and validly existing as a corporation in good
standing under the laws of the State of Minnesota.  The Company has the
requisite corporate power and authority to own, operate and lease the properties
and assets now owned, operated or leased by it and to carry on its business as
now being conducted.  The Company has the requisite corporate power and
authority to execute and deliver this Agreement and the Ancillary Instruments to
which it is, or at the Closing will be, a party, to perform its obligations
hereunder and thereunder, and to consummate the transactions contemplated hereby
and thereby.  This Agreement and the Ancillary Instruments to which the Company
is a party have been duly executed and delivered by the Company, and (assuming
due authorization, execution and delivery by the other parties hereto)
constitute the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with their respective terms, except that such
enforcement may be limited by any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar Laws (whether statutory,
regulatory or decisional), now or hereafter in effect, relating to or affecting
the rights of creditors generally or by equitable principles (regardless of
whether considered in a proceeding at law or in equity).  The Company is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where qualification as a foreign corporation is required,
except for such failures to be qualified and in good standing, if any, that when
taken together with all other such failures would not be reasonably likely to
have, in the aggregate, a Material Adverse Effect.  Seller has previously
delivered to Buyer complete and correct copies of the Company’s certificate of
incorporation and by-laws (including all amendments thereto), as in effect on
the date of this Agreement.
 
3.2           No Subsidiaries.  As of immediately preceding the Closing, the
Company has no Subsidiaries.
 
3.3           Capitalization of the Company.  As of immediately preceding the
Closing, the authorized capital stock of the Company consists of 2,000 shares of
common stock, $0.01 par value, of which 1,000 shares are issued (all to Seller)
and outstanding.  The Shares have been duly and validly authorized and issued,
are fully paid and nonassessable and have not been issued in violation of any
preemptive rights or any federal or state securities Law.  As of immediately
preceding the Closing, there is no outstanding security, option, warrant, right,
call, subscription, put, agreement, commitment or understanding of any nature
whatsoever, fixed or contingent, that directly or indirectly (i) calls

 
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for the acquisition, issuance, sale, pledge or other disposition by the Company
of any shares of capital stock or other equity interest of the Company or any
securities convertible into, or other rights to acquire, any shares of capital
stock or other equity interest of the Company, (ii) relates to the voting or
control of such capital stock, equity interest, securities or rights or
(iii) obligates the Company to grant, offer or enter into any of the
foregoing.  As of immediately preceding the Closing, there are no outstanding or
authorized stock appreciation, phantom stock or similar rights with respect to
the Company or any voting trusts, stockholder agreements, proxies or other
agreements or understandings with third parties in effect with respect to the
voting or transfer of any of the Shares or any other capital stock of the
Company.
 
3.4           No Conflict.  Except as set forth in Section 3.4 of the Disclosure
Letter and with such other exceptions as would not be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect, the execution and
delivery by Seller of this Agreement and the Ancillary Instruments to which
Seller is or at the Closing will be a party, do not, and the performance by
Seller of this Agreement and the Ancillary Instruments to which Seller is or at
the Closing will be a party and the consummation by Seller of the transactions
contemplated hereby and thereby do not and will not, (i) violate, conflict with
or result in the breach of any provision of the certificate of incorporation or
the by-laws of the Company, (ii) violate any Law or Order applicable to the
Company, or any of the Company’s assets, properties or businesses, (iii) result
in a breach of, constitute a default (or an event which, with or without the
giving of notice or lapse of time or both, would become a default) under,
require any consent under, result in the imposition of any fine, penalty or
other termination fee under, or give to others any right of termination,
amendment, acceleration, suspension, revocation or cancellation of, any Contract
involving payments during any twelve (12) month period to or from the Company in
excess of $300,000 (such amount to include the amount, if any, of any fine,
penalty, fee, amount accelerated, or termination or cancellation payment) or
Permit to which the Company is a party or is bound, or (iv) result in the
creation of any Lien on any of the assets or properties of the Company.
 
3.5           Financial Statements; Undisclosed Liabilities.  (a) Seller has
delivered to Buyer (i) the unaudited balance sheet of the Company as of December
31, 2009 (the “Balance Sheet”), and the income statement of the Company for the
year then ended, together with the schedules thereto and (ii) the unaudited
balance sheet of the Company as of the Interim Balance Sheet Date (the “Interim
Balance Sheet”) and the income statement for the period commencing on January 1,
2010 and ending on the Interim Balance Sheet Date, together with the schedules
thereto (clauses (i) and (ii), collectively and as delivered to Buyer pursuant
to Section 1.1(b), the “Financial Statements”).  The Financial Statements have
been prepared substantially in accordance with the applicable books and records
of the Company and present fairly, in all material respects, the financial
position of the Company as of the applicable dates, and the results of
operations of the Company for the applicable periods in conformity with United
States generally accepted accounting principles (“GAAP”), except as otherwise
indicated in the Financial Statements and except for normal recurring year end
adjustments and the lack of footnotes thereto.

 
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(b)           Except as set forth in any Section of the Disclosure Letter in
connection with any other representation or warranty contained in this Agreement
or as reflected, reserved against or otherwise disclosed in the Balance Sheet or
the exhibits to the applicable Financial Statement, as of the Balance Sheet
Date, the Company did not have any liabilities or obligations that were not
reflected, reserved against or otherwise disclosed in the Financial Statements
and were required to be reflected on the Balance Sheet or otherwise disclosed in
notes to the Financial Statements (if notes had been prepared) in accordance
with GAAP and that, individually or in the aggregate, would be reasonably likely
to be material to the Company; provided, however, that the representations and
warranties contained in this Section 3.5(b) shall not be deemed breached if such
breach relates to a matter that is covered by a representation or warranty
contained in Article 2 or 3 that is qualified by Knowledge of Seller or Seller’s
Knowledge and such matter was not within the Knowledge of Seller.
 
3.6           Business Since the Balance Sheet Date.  Except as contemplated by
this Agreement or as disclosed in Section 3.6 of the Disclosure Letter, since
the Balance Sheet Date, the Company has operated its business, assets and
properties in the ordinary course of business consistent with past practice and
there has not occurred:
 
(a)           any Material Adverse Effect;
 
(b)           any acquisition of all or substantially all of the assets or
properties or the securities or business of any other Person by the Company or
any merger, consolidation or amalgamation involving the Company;
 
 (c)           any sale, assignment, lease or transfer of any of the assets of
the Company with an aggregate fair market value of more than $250,000 other than
in the ordinary course of business;
 
 (d)           through the date of this Agreement, any incurrence by the Company
of any indebtedness for borrowed money or incurrence, assumption or guarantee
of, or any other act to become responsible for, any obligations of any other
Person, or making of loans or advances by the Company to any Person, other than
in the ordinary course of business consistent with past practice and other than
with respect to any Intercompany Agreements;
 
(e)           any change in the financial or accounting practices or policies of
the Company, except as required by Law or GAAP;
 
(f)           (i) any increase in the base salary or target incentive
compensation of any Employees or directors or officers of the Company, except in
the ordinary course of business consistent with past practice, or (ii) any
establishment, adoption, entrance into, amendment increasing benefits in excess
of 5% year over year in the aggregate under or termination of any Collective
Bargaining Agreement or any employee benefit plan;

 
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 (g)           (i) any declaration, setting aside or payment of any
distributions, dividends or similar payments (other than cash dividends) in
respect of any shares of capital stock of the Company (including the Shares); or
(ii) any redemption, purchase or other acquisition of any outstanding shares of
capital stock or other securities of the Company (including the Shares);
 
(h)           any amendment or any authorization to amend any (i) certificate of
incorporation or bylaws (ii) outstanding security of the Company or (iii)
Collective Bargaining Agreement; or
 
(i)           any entry by the Company into a new line of business (other than
the commencement of operations in a new city in the U.S.) or commencement by the
Company of business operations in any country in which Company was not operating
as of December 31, 2009;
 
(j)           any damage, destruction, loss or casualty to the property or
assets of the Company in excess of $100,000, whether or not covered by
insurance; and
 
(k)           any binding agreement (whether written or oral) by the Company to
do any of the foregoing.
 
3.7           Compliance with Law; Litigation; Injunctions.  The Company is in
compliance with all applicable Laws and Orders and the terms of all Permits,
except (i) as set forth in Section 3.7 of the Disclosure Letter and (ii) for
failures to be in compliance the existence of which and cost of remedying would
not be reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect.  Except for the matters set forth in Section 3.7 of the
Disclosure Letter, as of the date of this Agreement, (i) there is no action,
suit, arbitration or other judicial or administrative proceeding pending or, to
Seller’s Knowledge, threatened against the Company, at law or in equity, before
any Governmental Authority which is reasonably likely to result in a liability
of the Company of $100,000 or more and has not been reflected, reserved against
or otherwise disclosed in the Balance Sheet in accordance with GAAP or which
would affect the legality, validity or enforceability of this Agreement or the
Ancillary Instruments or the consummation of the transactions contemplated
hereby or thereby and (ii) the Company is not a party to, and none of the
Company and the Company’s assets or properties are subject to or bound by, any
Order which is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect or which would affect the legality, validity or
enforceability of this Agreement or the Ancillary Instruments or the
consummation of the transactions contemplated hereby or thereby.  The Company’s
DOT certificate of public convenience and necessity and FAA operating
certificate (the “Operating Certificates”) are each in full force and effect
subject to their respective terms.  The Company has not received from the FAA,
the DOT or any other Governmental Authority any outstanding notice of
cancellation, modification, suspension, revocation or termination with respect
to the Operating Certificates, nor to Seller’s Knowledge, has the FAA, the DOT
or any other Governmental Authority threatened any such revocation,
cancellation, modification, suspension or termination.

 
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3.8           Contracts and Agreements; Defaults.  (a) Section 3.8(a) of the
Disclosure Letter sets forth a true and complete list, as of the date of this
Agreement, of all Contracts of the types described below to which the Company is
a party (each such Contract of the character described below being referred to
herein as a “Material Contract”):
 
(i)           any such Contract involving payments during any twelve (12) month
period to or from the Company of $600,000 or more;
 
(ii)           any such Contract relating to Debt, except for the Intercompany
Agreements;
 
(iii)           any such Contract relating to capitalized lease obligations or
the deferred purchase price of property, or operating leases, except in each
case any such Contract with an aggregate outstanding principal amount (or, in
the case of any operating lease, lease payments during any twelve (12) month
period) not exceeding $300,000;
 
(iv)           any such Contract containing any provision or covenant
prohibiting or limiting the ability of the Company to engage in any business
activity (in any market, geographic region or otherwise) or to compete with any
Person;
 
(v)           any such Contract that creates or obligates the Company to
participate in any joint venture, limited liability company, partnership
agreements, shareholders arrangement or other similar arrangement;
 
(vi)           any such Contract that provides for any party to have first
refusal, first offer, “tag-along” or “drag-along” rights or obligations with
respect to any partnership interest, capital stock or other security of the
Company;  and
 
(vii)           any such Contract relating to the lease of real property or
aircraft which requires payments during any twelve (12) month period of more
than $100,000.

(b)           On or prior to the date of this Agreement, the Company has made
available to Buyer copies of all Material Contracts.

(c)           Each Material Contract, as of the date of this Agreement, is valid
and binding and enforceable on the Company and, to the Knowledge of Seller, the
counterparties thereto, and is in full force and effect, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar Laws relating to or affecting creditors’ rights generally and
subject to general equitable principles (whether considered in a proceeding in
equity or at Law).  Except as set forth in Section 3.8(c) of the Disclosure
Letter or for such breaches, defaults or events as have not had and are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect, (1) there is no pending default under, or breach of, any Material
Contract by the Company or, to the Knowledge of Seller, any other counterparty

 
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thereto, and no event has occurred that, with the lapse of time or the giving of
notice or both, would constitute a default thereunder by the Company or, to the
Knowledge of Seller, any other counterparty thereto and (2) as of the date of
this Agreement, the Company has not received any written notice from, or made a
written claim against, any party to any such Material Contract with respect to
any breach or default thereunder.

(d)           The Company is not a party to any interest rate swaps, cap or
collar agreements, commodity or financial future or option contracts or similar
derivative or hedging contracts.

3.9           Employee Benefit Plans.  (a) Section 3.9(a) of the Disclosure
Letter contains a true and complete list as of the date of this Agreement of
each material “employee benefit plan” (within the meaning of Section 3(3) of
ERISA) and each other material severance, retention, employment,
change-in-control, bonus, incentive, deferred compensation, supplemental
retirement or other employee benefit plan, agreement, program, policy or
arrangement that is maintained, sponsored or entered into or contributed or
required to be contributed to by the Company.  All such plans, agreements,
programs, policies and arrangements shall be collectively referred to as the
“Company Plans”.

(b)           With respect to each Company Plan in force on the date of this
Agreement, the Company has made available or delivered to Buyer (i) a true and
complete copy thereof and, to the extent applicable, any related trust
agreement, annuity contract or other funding instrument; (ii) the most recent
IRS determination letter, if applicable; (iii) any summary plan description;
(iv) the most recent Form 5500; and (v) the most recent audited financial
reports, if applicable.

(c)           Except as listed in Section 3.9(c) of the Disclosure Letter,
(i) each Company Plan has been established and administered in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
applicable Laws; (ii) each Company Plan which is intended to be qualified within
the meaning of Code Section 401(a) has received a favorable determination letter
from the IRS as to its qualification or is a prototype plan with respect to
which an IRS opinion letter has been issued; (iii) no actions, suits, or claims
(other than routine claims for benefits in the ordinary course) are pending or,
to the Knowledge of Seller, threatened with respect to any Company Plan; and
(iv) no audit or investigation by the IRS, the U.S. Department of Labor or other
Governmental Authority is pending, or to Seller’s Knowledge, threatened, with
respect to any Company Plan.

(d)           No Company Plan currently (or ever in the past three (3) years)
maintained, sponsored, contributed to or required to be contributed to by the
Company) is or was (i) a multiemployer plan, within the meaning of Section 3(37)
of ERISA, or (ii) a plan subject to Title IV of ERISA.

 
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(e)           With respect to any employee benefit plan, within the meaning of
Section 3(3) of ERISA, that is subject to Title IV of ERISA and is sponsored,
maintained or contributed to, or has been sponsored, maintained or contributed
to within three (3) years prior to the Closing Date, by any ERISA Affiliate of
the Company (i) no withdrawal liability, within the meaning of Section 4201 of
ERISA, has been incurred, which withdrawal liability has not been satisfied,
(ii) no event has occurred that presents a material risk of a complete or
partial withdrawal from any multiemployer plan, within the meaning of Section
3(37) of ERISA, (iii) no liability to the Pension Benefit Guaranty Corporation
(“PBGC”) has been incurred by any such ERISA Affiliate, which liability has not
been satisfied, (iv) all contributions (including installments) to such plan
required by Section 302 of ERISA and/or Section 412 of the Code have been timely
made, (v) no reportable event within the meaning of Section 4043 of ERISA (for
which the disclosure requirements of regulation § 4043.1 et seq., promulgated by
the PBGC, have not been waived) has occurred; and (vi) no ERISA Affiliate of the
Company has filed a notice of intent to terminate any such plan or has adopted
any amendment to treat a plan as terminated nor has any proceeding been
instituted under Section 4042 of ERISA to terminate such plan.

(f)           Except as set forth in Section 3.9(f) of the Disclosure Letter,
the transactions contemplated hereby will not cause the acceleration of vesting
in, or payment of, any benefits or compensation under any Company Plan and will
not otherwise accelerate or increase any liability of the Company under any
Company Plan.

(g)           No Company Plan provides retiree medical or retiree life insurance
benefits to any Person and the Company is not contractually or otherwise
obligated (whether or not in writing) to provide any Person with life insurance
or medical benefits upon retirement or termination of employment, other than as
required by the provisions of Sections 601 through 608 of ERISA and Section
4980B of the Code.

3.10           Employment-Related Matters.  (a) Section 3.10 of the Disclosure
Letter sets forth a list of all collective bargaining agreements (including any
side letters, supplemental agreement or memorandum of understanding relating
thereto) covering employees of the Company (collectively, the “Collective
Bargaining Agreements”).  The Company has made available to Buyer copies of all
such Collective Bargaining Agreements.

(b) Except as set forth in Section 3.10 of the Disclosure Letter, at the date of
this Agreement:

(i)           the Company has not breached in any material respect or otherwise
failed to comply in any material respect with any provision of any Collective
Bargaining Agreement applicable to employees of the Company, nor, to Seller’s
Knowledge, has any such breach or failure been alleged by the applicable union,
and there are no material grievances outstanding against the Company thereunder,
in each case which would have a Material Adverse Effect;
 

 
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(ii)           to Seller’s Knowledge, there is no petition pending before the
National Mediation Board seeking certification or any change in certification of
a labor representative with respect to any craft or class of employees of the
Company;
 
(iii)           there is no strike, slowdown, work stoppage, labor action or
lockout or, to Seller’s Knowledge, threat thereof, by or with respect to any
employees of the Company;
 
(iv)            there is no complaint for violation of the Railway Labor Act, 45
U.S.C. § 151 et seq. 8, as amended, against the Company pending before any
Governmental Authority; and
 
(v)           to the Knowledge of Seller, no charges with respect to or relating
to the Company or any Employee are pending before the Equal Employment
Opportunity Commission or any other Governmental Authority responsible for the
prevention of unlawful employment practices.
 
3.11           Taxes.  Except as set forth in Section 3.11 of the Disclosure
Letter:
 
(a)           All material Tax Returns required to be filed by the Company on or
prior to the Closing Date have been duly and timely filed.   Each such Tax
Return is true, correct and complete in all material respects.  All Taxes owed
by the Company which are or have become due and payable have been paid in
full.  All Tax withholding and deposit requirements imposed on or with respect
to the Company have been satisfied in full.  There are no Liens (other than
Permitted Liens) on any of the assets of the Company that arose in connection
with any failure (or alleged failure) to pay any Tax.
 
(b)           There is no claim against the Company for any Taxes, and no
assessment, deficiency, or adjustment has been asserted, proposed, or, to the
Knowledge of the Seller, threatened with respect to any Taxes or Tax Returns of
or with respect to the Company.  No Tax Audits or administrative or judicial
proceedings are being conducted, pending or to the knowledge of the Company or
Seller, threatened with respect to the Company.  To the Knowledge of the Seller,
no claim has ever been made by an authority in a jurisdiction where the Company
does not file Tax Returns that it is or may be subject to taxation in that
jurisdiction.
 
(c)           The Company has not participated (within the meaning of Treasury
Regulations § 1.6011-4(c)(3)) in any “listed transaction” within the meaning of
Treasury Regulations § 1.6011-4(b)(2) (and all predecessor regulations).

 
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3.12           Permits.  Except as set forth in Section 3.12 of the Disclosure
Letter, the Company owns or possesses all of the Permits that are necessary to
enable it to own, lease and operate its assets and properties and to carry on
its operations as currently conducted.  Except as set forth in Section 3.12 of
the Disclosure Letter and with such other exceptions as would not be reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect, all
Permits are valid, binding, and in full force and effect.  The Company has taken
all necessary action to maintain each Permit, except where the failure to so act
is not likely to have a Material Adverse Effect. No loss or expiration of any
Permit is pending, or, to the Knowledge of the Company or Seller, threatened
(other than expiration upon the end of any term).
 
3.13           Real Property.  (a)  The Company does not own any real property.

 
(b)           Section 3.13(b)(i) of the Disclosure Letter sets forth a true and
complete list of the addresses of all leasehold or subleasehold estates and
other rights to use or occupy any land or buildings held by the Company other
than land or buildings leased, used or occupied at any airport (the “Leased Real
Property”).
 
3.14           Title; Condition of Assets.  (a)  As of immediately preceding the
Closing, the Company has good title to, or valid leasehold or license interests
in, all of the assets that it purports to own or lease, free and clear of any
Liens, other than the Liens described in Section 3.14(a) of the Disclosure
Letter and any other Permitted Liens.
 
(b)  As of the Closing Date, all of the flight simulators (including fixed
training devices) that the Company purports to own or lease or use in the
conduct of the Company’s business are in normal working condition and in a state
of normal maintenance and repair, in all material respects, in each case,
ordinary wear and tear excepted and subject to scheduled maintenance.
 
3.15           Intellectual Property.  (a)  To Seller’s Knowledge, the Company
owns or has the right to use all Intellectual Property and all Technology used
or held for use in the conduct of its business without any conflict with the
rights of any third party, in each case with such exceptions as are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect and subject to limitations contained in any applicable license agreement;
provided, however, that no representation or warranty is made as to the extent
to which ownership of or right to use any particular Intellectual Property or
Technology includes the exclusive right to use such Intellectual Property or
Technology.

 
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 (b)           Section 3.15(b) of the Disclosure Letter sets forth a true and
complete list as of the date of this Agreement of (i) all trademarks, trade
names, service marks and patents owned by the Company which have been duly
registered in the United States Patent and Trademark Office (“PTO”), the states
of the United States or the corresponding offices of other jurisdictions, (ii)
all copyrights owned by the Company which have been duly registered in the
United States Copyright Office (“Copyright Office”) or the corresponding offices
of other jurisdictions, (iii) all trademark, trade name, service mark and patent
applications that have been filed by the Company and are pending in the PTO, the
states of the United States or the corresponding offices of other jurisdictions,
and (iv) all copyright applications that have been filed by the Company and are
pending in the Copyright Office or the corresponding offices of other
jurisdictions.
 
3.16           Insurance.  (a)   Section 3.16(a) of the Disclosure Letter sets
forth a complete and correct list of all insurance for the last policy year
carried by or for the benefit of the Company specifying the insurer, type of
policy, the amount of and nature of coverage and policy limits, the deductible
or retention amount (if any) and the date through which coverage will continue
and whether each such policy is a “claims made” or an “occurrences” policy.  All
such policies are in full force and effect and the Company is in compliance in
all material respects with the material terms and provisions of such policies.
Except as set forth in Section 3.16(a) of the Disclosure Letter, the Company has
not received any notice of cancellation of any such insurance policy or refusal
of coverage thereunder.  Except as set forth in Section 3.16(a) of the
Disclosure Letter, there is no claim pending under any of such policies relating
to the Company for which coverage has been denied or disputed by an insurance
carrier. The Company has not reached or exceeded its policy limits for any
insurance policies in effect at any time during the past three years.
 
(b)           Section 3.16(b) of the Disclosure Letter sets forth a true and
correct list as of the date of this Agreement of all surety bonds and all
letters of credit issued on behalf of the Company in an amount over $50,000.
 
3.17           Environmental Laws. Except as set forth in Section 3.17 of the
Disclosure Letter:
 
(a)           The Company and its Leased Real Property and operations are in
compliance in all material respects with all Environmental Laws.
 
(b)           The Company has not allowed any machinery, equipment, facility or
property owned, operated, leased, occupied or used by it, or permitted any such
machinery, equipment, facility or property to be used by any other Person, to
generate, manufacture, refine, treat, transport, store, handle, dispose of,
transfer, produce or process any Hazardous Substance except in compliance in all
material respects with all applicable Environmental Laws.

 
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(d)           The Company has received no written notice alleging any Losses
under Environmental Law and, to Seller’s Knowledge, no facts, circumstances or
conditions relating to or arising from the operations of, or any real property
currently or formerly owned, operated, leased occupied or used by the Company
has resulted in or would reasonably be expected to result in the receipt of such
notice.
 
(e)           There are no suits, actions, investigations or proceedings pending
or, to Seller’s Knowledge, threatened, in which it is alleged that the Company
is potentially responsible for a domestic or foreign federal, provincial, state,
municipal or local clean-up or remediation of the environment (including,
without limitation, surface or subsurface soils, groundwater, surface water, and
the ambient air) contaminated with Hazardous Substances, including, without
limitation, any Hazardous Substances transported or Released or arranged to be
transported or Released by or on behalf of the Company, or for any other
remedial or corrective action under an Environmental Law.
 
(f)           Seller has made available to Buyer complete and correct copies of
all material environmental site assessment reports (collectively, the
“Reports”), regarding alleged non-compliance with any Environmental Law or
Permit required under Environmental Law, any alleged Loss under Environmental
Law, and any Release of Hazardous Substances or remedial or corrective actions
with respect thereto) that are in Company’s possession or control and relating
to the ownership, operation, lease, occupation or use of the Company’s
machinery, equipment, facilities and properties.
 
3.18           Brokers.  Neither the Company nor any of its directors, officers,
employees or Affiliates has employed any broker, finder, investment banker or
Person fulfilling a similar role or has incurred or will incur any broker’s,
finder’s or other similar fees, commissions or expenses, in each case in
connection with the transactions contemplated by this Agreement and the
Ancillary Instruments.
 
3.19           Aircraft and Engines.
 
(a) Section 3.19(a) of the Disclosure Letter sets forth a true and complete
list, as of the date of this Agreement, of all in-service aircraft owned or
leased by the Company (an “Aircraft”), including the manufacturer model, FAA
registration number and vintage thereof, including the name of the lessee or
sublessee thereof.
 
(b) All Aircraft owned or leased by the Company are registered on the FAA
aircraft registry, and are in such condition as may be necessary to enable the
airworthiness certification of the Aircraft with the FAA to be maintained in
good standing at all times other than during temporary periods of storage,
maintenance, testing or modification, or during periods of grounding by
applicable governmental authorities.
 
(c) All Aircraft and in-service engines owned or leased by the Company as of the
date of this Agreement (the “Engines”) are being maintained according to the
Company’s FAA-approved maintenance program.

 
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(d) As of the date of this Agreement, there are no Contracts (other than, with
respect to an obligation to lease, existing leases covering the Aircraft
identified in Section 3.19(a) of the Disclosure Letter and the Engines) pursuant
to which the Company is obligated to purchase, finance or lease aircraft,
engines or simulators.
 
(e)  As of the date of this Agreement, there is no pending default under, or
breach of, any lease of Aircraft or Engines to which the Company is a party.
 
3.20           No Slots.  As of the date of this Agreement, the Company does not
own or lease any right or operational authority to conduct one Instrument Flight
Rule (as defined under the FAA regulations) or one scheduled landing or takeoff
operation at a specific time or during a specified time period at any airports.
 
3.21           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 such Act operating under certificates issued pursuant to
such Act (49 U.S.C. Sections 41101-41112).
 
3.22           Unclaimed Property.  Except as set forth in Section 3.22 of the
Disclosure Letter, there is no material property or obligation of the Company,
including uncashed checks to vendors, customers, or employees, non refunded
overpayments, or unclaimed subscription balances, that is escheatable or
reportable as unclaimed property to any state or municipality under any
applicable escheatment or unclaimed property laws.
 
ARTICLE 4
 

 
REPRESENTATIONS AND WARRANTIES OF BUYER
 
Subject to Sections 6.1, 6.2(b), 6.2(h), 6.2(i), and 8.1, Buyer hereby
represents and warrants to Seller as follows:
 
4.1           Incorporation of Buyer.  Buyer is a corporation duly incorporated
and validly existing as a corporation in good standing under the laws of
Delaware.

 
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4.2           Authority.  Buyer has the requisite corporate power and authority
to execute and deliver this Agreement and the Ancillary Instruments to which it
is or at the Closing will be, a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and
thereby.  This Agreement and the Ancillary Instruments to which Buyer is a party
have been duly executed and delivered by Buyer, and (assuming due authorization,
execution and delivery by Seller) constitute the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with their
respective terms, except that such enforcement may be limited by any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
Laws (whether statutory, regulatory or decisional), now or hereafter in effect,
relating to or affecting the rights of creditors generally or by equitable
principles (regardless of whether considered in a proceeding at law or in
equity).
 
4.3           No Conflict.  Except as would not have or be reasonably likely to
have, individually or in the aggregate, a material adverse effect on the ability
of Buyer to perform its obligations under, and to consummate the transactions
contemplated by, this Agreement and the Ancillary Instruments to which it is or
at the Closing will be, a party, the execution and delivery by Buyer of this
Agreement and the Ancillary Instruments to which it is or at the Closing will
be, a party do not, and the performance by Buyer of this Agreement and the
Ancillary Instruments to which it is or at the Closing will be a party and the
transactions contemplated hereby and thereby by Buyer do not and will not, (i)
violate, conflict with or result in the breach of any provision of the
certificate of incorporation or by-laws of Buyer, (ii) violate any Law or Order
applicable to Buyer, or any of Buyer’s assets, properties or businesses, or
(iii) result in a breach of, constitute a default (or an event which, with or
without the giving of notice or lapse of time or both, would become a default)
under, require any consent under, or give to others any right of termination,
amendment, acceleration, suspension, revocation or cancellation of, any contract
to which Buyer is a party or is bound.
 
4.4           Governmental Consents and Approvals.  The execution and delivery
by Buyer of this Agreement and the Ancillary Instruments to which it is or at
the Closing will be a party do not, and the performance by Buyer of this
Agreement and the Ancillary Instruments to which it is or at the Closing will be
a party and the consummation by Buyer of the transactions contemplated hereby
and thereby do not and will not, require any Governmental Authorization or
filing with or notification of, any Governmental Authority, except for the
filing of the FAA Notice and the DOT Notice, and (iii) as would not be
reasonably likely to have, individually or in the aggregate, a material adverse
effect on the ability of Buyer to carry out its obligations under, and to
consummate the transactions contemplated by, this Agreement and the Ancillary
Instruments to which Buyer is or at the Closing will be a party.

 
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4.5           Experience; Acquisition of Shares for Investment.  (a) Buyer is an
“accredited investor” within the meaning of Regulation D promulgated under the
Securities Act and has been afforded the opportunity to ask questions and
receive answers regarding the Company and has reviewed the data and information
it requested from Seller and the Company in connection with this Agreement.
 
(b)           Buyer is acquiring the Shares for its own account and not with a
view toward, or for sale in connection with, any distribution within the meaning
of applicable federal securities Laws.  Buyer agrees that the Shares may not be
sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed
of (i) without registration under the Securities Act except pursuant to an
exemption from such registration available under the Securities Act and
(ii) except in accordance with any applicable provisions of state securities
laws.
 
4.6           Brokers.  Neither Buyer nor any of its directors, officers,
employees or Affiliates has employed any broker, finder, investment banker or
Person fulfilling a similar role or has incurred or will incur any broker’s,
finder’s or other similar fees, commissions or expenses, in each case in
connection with the transactions contemplated by this Agreement and the
Ancillary Instruments.
 
ARTICLE 5
 

 
COVENANTS
 
5.1           Public Announcements.  Promptly following Closing, Seller and
Buyer shall cooperate to issue press releases to be approved by Seller and
Buyer. Prior to the communication of such press releases, neither Seller nor
Buyer shall issue any press release or make any other public statement with
respect to the transactions contemplated by this Agreement and the Ancillary
Instruments without prior consultation with the other party; provided, however,
that either such party may issue a press release or make such other public
statement to the extent required by Applicable Law or by the rules and
regulations of any applicable stock exchanges without such prior consultation to
the extent such consultation is impracticable under the circumstances.

 
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5.2           Termination of Intercompany Agreements.
 
 (a)           The parties hereby agree that all Intercompany Agreements, other
than those set forth in Section 5.2(a) of the Disclosure Letter, shall be
terminated in their entirety immediately prior to the Closing and shall be
without further force and effect, all amounts owed pursuant to such Intercompany
Agreements shall be canceled (except as provided in Section 5.2(d)), and no
party thereto (nor any of their respective successors in interest) shall have
any further rights, duties, liabilities or obligations of any nature whatsoever
with respect to, in connection with or otherwise arising under the Intercompany
Agreements (except as provided in Section 5.2(d)).  Each of the parties hereby
agrees to, and shall cause its Affiliates, officers and directors to, execute
and deliver from time to time such documents or other assurances reasonably
necessary to carry out the termination provided in this Section 5.2(a).
 
(b)           The parties hereby acknowledge and agree that one or more of the
Seller-Vendor Agreements and the Company-Vendor Agreements may be terminated
with respect to the Company in accordance with their respective terms at any
time at or after Closing; provided, however, each of Seller and the Company
agree not to take any action to terminate any such agreement without first
providing the other party with at least twenty (20) days prior written notice of
such termination.
 
(c)           Notwithstanding the foregoing, Seller agrees not to terminate at
Closing and shall continue in full force and effect (i) for a period of thirty
(30) days after Closing those surety bonds listed in Section 5.2(c) of the
Disclosure Letter and (ii) for a period of ten (10) Business Days after Closing
the letter of credit listed in Section 5.2(c) of the Disclosure Letter.  The
Company shall replace such surety bonds and letter of credit within the
applicable period set forth in this Section 5.2(c) in accordance with the
underlying agreement requiring the posting of such bonds or letter of
credit.  In the event any third party draws down on such letters of credit or
surety bonds before the same are replaced by the Company, the Company shall
promptly reimburse Seller for any amounts drawn and, if the Company fails to do
so, Seller shall be entitled to set-off any such amounts against amounts owed by
Seller to the Company or any of its affiliates under any Ancillary Document.
 
(d)           Notwithstanding anything contained herein or in the Mesaba/Delta
Mutual Release, in consideration and full satisfaction of all amounts owed by
Seller to the Company with respect to regional airline services provided by the
Company to Seller prior to the Closing Date in accordance with and subject to
the terms, conditions and provisions of that certain Second Amended and Restated
Airline Services Agreement dated as of January 12, 2009 between Seller (as
successor by merger to Northwest Airlines, Inc. (“Northwest”)) and the Company,
(i) Seller hereby agrees to pay to the Company an amount equal to ***, which
amount shall be made on or before July 7, 2010, and (ii) the Company agrees to
pay to Seller (if and when received) any amounts received by the Company with
respect to revenues derived from flights operated by the Company prior to
Closing, provided that Seller would have been entitled to receipt of such
amounts had the CRJ-200 ASA, the CRJ-900-M DCA or the Saab 340 DCA (as
applicable) been in effect prior to the Closing Date.

 
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5.3           Non-Solicitation.  (a)                                           Seller
agrees that, during the Restricted Period, without the prior written approval of
Buyer, Seller shall not, and shall cause its Affiliates not to, directly or
indirectly or by assisting others, recruit, solicit, induce (or initiate
discussions relating to future employment with) or hire away, or attempt to
recruit, solicit, induce or hire away, on their behalf or on behalf of any other
Person, any employee of the Company or any Person who was an employee of the
Company on the Closing Date and is an employee of the Company on the date of
such recruitment, solicitation, inducement or hiring or the initiation of such
discussions to accept employment with Seller or its Affiliates, except for
persons whose employment (A) is solicited or procured through newspaper ads or
(B) is first terminated by Buyer or the Company after the Closing.  The
“Restricted Period” means the *** period after the Closing Date.
 
(b)           Buyer agrees that, during the Restricted Period, without the prior
written approval of Seller, Buyer shall not, and shall cause its Affiliates not
to, directly or indirectly or by assisting others, recruit, solicit, induce (or
initiate discussions relating to future employment with) or hire away, or
attempt to recruit, solicit, induce or hire away, on their behalf or on behalf
of any other Person, any employee of the Seller or any Person who was an
employee of the Seller on the Closing Date and is an employee of the Seller on
the date of such recruitment, solicitation, inducement or hiring or the
initiation of such discussions to accept employment with Buyer or its
Affiliates, except for persons whose employment (A) is solicited or procured
through newspaper ads or (B) is first terminated by Seller after the Closing.
 
(c)           If a judicial or arbitral determination is made that any of the
provisions of this Section 5.3 constitutes an unreasonable or otherwise
unenforceable restriction against Seller, the provisions of this Section 5.3
shall be rendered void only to the extent that such judicial or arbitral
determination finds such provisions to be unreasonable or otherwise
unenforceable with respect to it.  In this regard, the parties hereto hereby
agree that any judicial authority construing this Agreement shall be empowered
to sever any time period from the coverage of this Section 5.3 and to apply the
provisions of this Section 5.3 to the remaining time period not so severed by
such judicial or arbitral authority.  The time period during which the
prohibitions set forth in this Section 5.3 shall apply shall be tolled and
suspended for a period equal to the aggregate time during which Seller violates
such prohibitions in any respect.
 
(d)           It is agreed by the parties hereto that the foregoing covenants in
this Section 5.3 are necessary in terms of time to protect the interests of
Seller and Buyer pursuant to the terms of this Agreement and impose a reasonable
restraint on Buyer and Seller, respectively.

 
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(e)           Each of Seller and Buyer recognizes and agrees that compliance
with the covenants contained in this Section 5.3 are necessary to protect such
party, and that an actual or threatened breach by Seller or Buyer of any of the
covenants set forth in this Section 5.3 could cause irreparable harm to the
other party, that the remedies of such party at law in the event of such breach
would be inadequate, and that, accordingly, in the event of such breach, a
restraining order or injunction or both may be issued against the breaching
without the requirement that the non-breaching party make proof of actual
damages or post a bond, in addition to any other rights and remedies which are
available to such party.  In the event of any legal proceeding (whether at law
or in equity) relating to this Section 5.3, if a court of competent jurisdiction
determines that either party has breached this Section 5.3, then such party
shall be liable and pay to the non-breaching party any costs in connection with
such proceeding and any appeal therefrom, including reasonable legal fees, and
such non-breaching party shall be entitled to pursue the recovery of all
damages, losses and liabilities related to such breach.
 
5.4           Company Headquarters.  For a period of ***following the Closing
Date, Buyer shall cause the Company to retain its headquarters in the
Minneapolis-St. Paul metropolitan area.
 
5.5           Labor Matters.  The Company hereby covenants and agrees to (i)
meet and confer promptly following the Closing with the Seller and the Air Line
Pilots Association, International (“ALPA”) regarding the possible continuation
of the pilot flow through agreement contained in Letter of Agreement No. 36 to
the Company’s collective bargaining agreement with ALPA, and (ii) in the course
of the aforementioned meet and confer process, be willing to execute and deliver
an interim agreement with Seller and ALPA consistent in all material respects
with the draft Letter of Agreement attached hereto as Exhibit K (the “ALPA
Letter Agreement”).  The Company further agrees to provide advance written
notice to Seller of its intent to discontinue any discussions with Seller or
ALPA or terminate its application of the pilot flow through agreement.
 
5.6           Section 338(h)(10).
 
(a)           Seller and Buyer shall make a joint election for the Company under
Section 338(h)(10) of the Code and under any comparable provisions of foreign,
state or local law with respect to the purchase of the Shares (collectively, the
“Section 338(h)(10) Elections”) and shall timely sign or cause to be timely
signed such Tax forms as are necessary to make such Section 338(h)(10)
Elections.  The parties acknowledge that the Section 338(h)(10) Elections shall
result in the purchase of the Shares being treated as if the Company sold its
assets to Buyer followed by the Company’s deemed complete liquidation while
still owned by Seller.  Buyer shall, within thirty (30) calendar days after the
completion of the Allocation Schedule (as defined below), but in no event later
than ninety (90) calendar days prior to the due date for filing IRS Form 8023
and the appropriate foreign, state and local forms, prepare at its expense and
provide Seller with such IRS, foreign, state and local forms and schedules
thereto that are required with respect to the Section 338(h)(10)
Elections.  Seller shall have thirty (30) calendar days to review and comment
upon

 
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such forms and schedules.  Seller shall promptly forward any comments they may
have to Buyer upon completion of the review, and the parties agree to each use
commercially reasonable efforts to agree upon, finalize, execute and timely file
such forms and schedules.
 
(b)           Within one hundred twenty (120) calendar days after the Closing
Date but in any event (and notwithstanding any failure to have finally
determined Closing Working Capital by such date) no later than ninety (90)
calendar days prior to the due date for filing IRS Form 8023, Buyer shall
prepare at its own expense and deliver to Seller a Schedule (as ultimately
agreed or finalized as provided herein, the “Allocation Schedule”) allocating
the “ADSP” (as such term is defined in Treasury Regulations Section 1.338-4) of
the assets of the Company in accordance with the Treasury regulations
promulgated under Section 338(h)(10).  Seller agrees that it shall review and
comment upon the Allocation Schedule within thirty (30) calendar days of its
delivery by Buyer.  The parties each agree to use commercially reasonable
efforts to agree upon and finalize the Allocation Schedule within fifteen (15)
calendar days of the delivery of Seller’s comments.  Buyer and Seller each agree
to file all federal, state, local and foreign Tax Returns (where such 338(h)(10)
Elections have been made) in accordance with the Allocation Schedule (as agreed
upon and finalized) and not to take, or cause to be taken, any action that would
be inconsistent with or prejudice such Allocation Schedule or any Section
338(h)(10) Elections in any Tax Return, audit, litigation or otherwise.
 
(c)           No part of the Purchase Price for the Shares shall be allocated
for any purpose to any non-solicitation covenants or similar covenants made by
Seller, either in the Allocation Schedule or otherwise, unless required by
applicable Law.

5.7           Minimum Cash.  Seller shall cause the Company at Closing (i) to
maintain cash and cash equivalents of not less than ***, and (ii) to reflect all
uncashed checks in the Company’s accounts payable account.

5.8           Filing of Amendments to Aircraft Subleases.

***

 
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***

5.9           Insurance for Pre-Closing Occurrences.  Seller agrees to maintain
after Closing coverage under the existing insurance policies of Seller for the
types of insurance coverage listed in Section 5.9 of the Disclosure Letter for
claims against the Company involving pre-Closing occurrences ; provided,
however, (i) with respect to any such claim covered by Seller’s insurance
policies listed in Section 5.9 of the Disclosure Letter (other than the Aviation
Hull and Liability policy), Seller shall control and conduct  the defense of any
such claim and the Company shall reimburse Seller for all out of pocket costs
not covered by insurance reasonably incurred by Seller in connection with the
defense, settlement or resolution of any such claim, except that, in lieu of
Seller’s deductible for Employment Practices Liability claims, the Company shall
only be responsible for a deductible amount equal to ***; and (ii) with respect
to any such claim covered by Seller’s Aviation Hull and Liability policy, the
Company shall control and conduct the defense of any such claim at the Company’s
sole cost and expense.  With respect to any claim against the Company for which
Seller controls the defense pursuant to this Section 5.9, Seller shall obtain
the prior written approval of the Company, which approval shall not be
unreasonably withheld, conditioned or delayed, before entering into any
settlement or compromise of such claim, consenting to the entry of any judgment
with respect to such claims or ceasing to defend against such claims unless
(x) there is no finding or admission of any violation of applicable Law or the
rights of any Person and (y) the sole relief provided is monetary damages that
are paid in full by Seller’s insurance (other than the applicable deductible) or
by Seller pursuant to the terms of this Agreement.

5.10           Termination of  CRJ-200 Letter Agreement.  With respect to the
CRJ-200 Letter Agreement, Seller, Pinnacle and Buyer hereby agree as follows:

(a)           On or before the third (3rd) Business Day after the Closing Date,
Seller shall pay to Pinnacle an amount equal to ***, such amount being the
aggregate of all amounts paid by Pinnacle to Seller pursuant to paragraph (iii)
of the CRJ-200 Letter Agreement prior to the Closing Date.
 
(b)           Immediately after payment of the amount set forth in Section
5.10(a) hereof, (i) the CRJ-200 Letter Agreement shall terminate and shall have
no further force or effect; and (ii) Pinnacle shall, without any further action,
be deemed to have assigned to Seller all of Pinnacle’s rights and obligations to
and under any Vendor Contracts (as such term is defined in the CRJ-200 Letter
Agreement).
 
***
 

 
***
 

 
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5.11           Settlement of CRJ-200 ASA Disputes.  As of the Closing, each of
Seller and Pinnacle shall execute and deliver the Pinnacle/Delta Mutual Release
in the form attached hereto as Exhibit M, pursuant to which each of Seller and
Pinnacle release the other from all claims, losses and liabilities related to
certain disputes arising under the CRJ-200 ASA.

5.12           Transfer of Ground Equipment.  After the Closing Date, the
Company shall, upon Seller’s reasonable request from time to time, execute and
deliver any and all documents to effectuate the transfer of certain ground
equipment and motor vehicles from the Company to Seller or one or more
Affiliates of Seller, which equipment shall include without limitation those
items listed on Exhibit N attached hereto, provided that such equipment is
neither in use by the Company on the Closing Date nor reflected on the Interim
Balance Sheet.

5.13           Release of Liens.  Promptly following Closing, Seller shall
obtain (i) full and final releases of the Company under, and of any of the Liens
on the Shares or any assets or properties of the Company granted pursuant to,
any of the agreements listed in Section 2.3 of the Disclosure Letter, if the
Company or any such Liens have not been released as of the Closing Date, and
(ii) the termination of that certain Blocked Account Agreement between Bank of
America, N.A. and Seller relating to the Company’s deposit account number *** at
Bank of America, N.A.

5.14           Consent of Third Parties
 
1.2 .
 

 
(a) Seller shall cooperate with the Company to obtain any third party consents
or waivers required under any Contracts listed in Section 3.4 of the Disclosure
Letter on account of a change of control of the Company occasioned by the
transactions contemplated hereby or otherwise required to eliminate all
conflicts, violations and breaches in respect of which such Contract was so
listed.  In obtaining a consent, (x) neither Seller nor the Company shall be
required to modify or alter the terms of the Contract to which such consent
relates and (y) neither Seller nor the Company shall be required to make any
payments of money or provide any other inducement to the other party or parties
to such Contract.
 
(b) If any such consent is not obtained as of the Closing, and the Buyer elects
to proceed with the Closing in the absence of such consent, then (a) the Seller
and the Company shall cooperate and use their respective commercially reasonable
efforts to obtain such consent as soon as practicable following the Closing and
(b) until such consent is obtained, the Seller shall use its commercially
reasonable efforts, and the Company shall cooperate in all commercially
reasonable respects, to provide to the Company the benefits under any such
Contract, including enforcement of any and all rights of the Company against the
other party thereto arising out of breach or cancellation thereof by such other
party or otherwise, or to obtain a replacement arrangement for the Company that
replicates the economics of the Contract as if such consent had been obtained.
 

 
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5.15           Rubb Hangar
 
1.3 .
 
  Promptly following Closing, Seller shall use its commercially reasonable
efforts to enter into a sublease with the Company of that certain aircraft
hangar facility located at the Minneapolis/St. Paul International Airport and
subject to that certain Aircraft Hangar Facility Lease Agreement, dated as of
September 1, 2009 between Metropolitan Airports Commission and Seller (the “Rubb
Lease”) for the term that is coterminus with the Rubb Lease, and otherwise on
the existing terms and conditions as those contained in the oral sublease for
such facility in effect between Seller and the Company as of the Closing Date.
 
 
ARTICLE 6
 

 
SURVIVAL; INDEMNIFICATION
 
6.1           Survival.  Subject to this Section 6.1 and Section 6.2, the
representations and warranties of Seller and Buyer contained in this Agreement
and the related indemnity obligations set forth in the applicable subsection of
Section 6.2 shall survive the Closing for a period of two (2) years after the
Closing Date, except that (x) the representations and warranties contained in
Sections 2.1, 2.2, 3.1, 3.2, 3.3, and 3.18, and the related indemnity
obligations contained in the applicable subsection of Section 6.2 shall survive
indefinitely, and (y) the representations and warranties contained in Sections
3.11 and their respective related indemnity obligations contained in the
applicable subsection of Section 6.2 shall survive until 90 days following the
expiration of the applicable statute of limitations (giving effect to any waiver
or extension thereof).  All covenants and other agreements of the parties hereto
set forth in this Agreement shall survive the Closing in accordance with their
respective terms, except to the extent otherwise provided herein.  The
representations, warranties, covenants and other agreements of the parties
hereto which terminate pursuant to this Section 6.1, and the liability of any
party hereto with respect thereto pursuant to this Article 6, shall not
terminate with respect to any claim, whether or not fixed as to liability or
liquidated as to amount, with respect to which the Indemnifying Party has been
given written notice from the Indemnified Party setting forth the alleged facts
upon which the claim for indemnification is based and, if possible, a reasonable
estimate of the amount of the claims, prior to the expiration of the applicable
survival period and any such claim shall not thereafter be barred by the
expiration of the applicable survival period and shall survive until such claim
is finally and fully resolved.
 
6.2           Indemnification.  Seller and Buyer shall indemnify each other as
set forth below:

 
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(a)           Subject to Section 6.1 and the other provisions of this
Section 6.2, Seller hereby agrees to indemnify and hold harmless, from and after
the Closing, Buyer and its Affiliates (including, following the Closing, the
Company) and their respective officers, directors, employees, agents, successors
and permitted assigns (each a “Buyer Indemnified Party”), from, and to reimburse
Buyer for any Losses (the “Buyer Losses”) that result from:
 
(i)           the failure of any representation or warranty of Seller contained
in Article 2 or 3 of this Agreement (the “Seller Representations”)(it being
understood and agreed that for purposes of determining whether there has been
any breach of any representation or warranty and for purposes of calculating the
amount of any Buyer Losses arising therefrom under this Section 6.2(a)(i), the
Seller Representations shall not be deemed to be qualified by any concept of
“material”, “materiality”, “Material Adverse Effect” or similar qualification,
except for such qualifications contained in Section 3.5(a), 3.5(b), 3.6(a), 3.9,
3.11(a), 3.17(f) and the definition of Permitted Liens, which shall not be
deemed deleted); or
 
(ii)           any breach or nonperformance by Seller of its covenants,
agreements or undertakings contained in this Agreement;
 
provided, however, that
 
(A)           Seller shall not be responsible for any particular Loss with
respect to a Seller Representation unless such Loss equals or exceeds *** (the
“Mini-Basket Amount”), in which case the amount of such Loss in excess of the
Mini-Basket Amount shall then count towards, or be included in, the Basket
Amount; provided, that recovery of Buyer Losses shall be subject to the
Mini-Basket Amount until the Buyer Losses for which a Buyer Indemnified Party
would recover under Section 6.2(a) which do not equal or exceed the Mini-Basket
Amount (the “Initial Losses”) equals ***.  Once the Initial Losses reach a total
of ***, the Mini-Basket Amount shall not apply and a Buyer Indemnified Party
shall be entitled to recover the amount of any subsequent Buyer Losses without
being subject to the Mini-Basket Amount, but subject to the other limitations
and caps set forth herein.
 
(B)           subject to clause (A) above (it being understood and agreed that
any Buyer Losses that do not meet the Mini-Basket Amount as specified in clause
(A)(i) above shall not be considered a Buyer Loss for purposes of determining
the Basket Amount), Seller shall not be responsible for any Buyer Losses
pursuant to Section 6.2(a)(i) with respect to the Basket Representations until
the cumulative aggregate amount of such Buyer Losses exceeds ***  (the “Basket
Amount”), in which case Seller shall then be liable only for such Buyer Losses
in excess of the Basket Amount;

 
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(C)           the cumulative aggregate indemnity obligation of Seller under this
Section 6.2(a) shall in no event exceed *** (the “Seller Cap”);
 
(D)           a Buyer Indemnified Party shall not be entitled to indemnification
under this Section 6.2(a) for any Buyer Losses to the extent such Loss is
included in the calculation of Final Closing Working Capital; and
 
(E)           a Buyer Indemnified Party shall not be entitled to indemnification
under this Section 6.2(a) for any Losses to the extent such Losses are
reimbursed by Seller any of the DCA Agreements within six (6) months after the
final resolution of such claim in accordance with this Section 6.2 under; and
 
(F)           if Buyer shall give written notice of an Indemnification Claim
pursuant to Section 6.2(c) below, then Buyer’s Indemnification Claim shall be
accompanied by an analysis of the extent, if any, to which the Financial
Statements, as adjusted for the Final Closing Working Capital, overstated or
understated the amount of any asset or liability of the Company as of the
Closing Date but taking into account any events, changes or conditions
subsequent to the Closing Date that may have impacted any such amount included
in the Financial Statements, including without limitation the amount of any
asset, reserve, accrual or liability included in the Financial Statements.  Any
such overstatement or understatement that is less than the Mini-Basket Amount,
up to an aggregate of ***, shall be disregarded.  To the extent that all such
overstatements and understatements in excess of the foregoing limitations, if
any, in the aggregate represent an increase in net assets (total assets net of
total liabilities), then such increase shall be offset against Buyer’s
Indemnification Claim, notwithstanding that such overstatements or
understatements may be unrelated to the Indemnification Claim for which Buyer
has provided notice pursuant to this Section 6.2(a)(ii)(E) or may be due to
facts or circumstances occurring after the Closing Date.  Seller shall have the
right to audit Buyer’s books and records to verify the accuracy of any such
analysis performed by the Company and the payment of any amount owed by Seller
with respect to any such Indemnification Claim in accordance with this Section
6.2 shall be delayed until the final resolution of any dispute between the
Seller and the Buyer regarding the amount of any such overstatement or
understatement to be set-off against the Indemnification Claim.
 
(b)           Subject to Section 6.1 and the other provisions of this
Section 6.2, Buyer hereby agrees to indemnify and hold harmless, from and after
the Closing, Seller and its Affiliates and their respective officers, directors,
employees, agents, successors and permitted assigns (each a “Seller Indemnified
Party”), from, and to reimburse Seller for any Losses (the “Seller Losses”)
arising out of or resulting from:

 
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(i)           the failure of any representation or warranty of Buyer contained
in Article 4 of this Agreement o be true and correct as of the date of this
Agreement; or
 
(ii)           any breach or nonperformance by Buyer of its covenants,
agreements or undertakings contained in this Agreement;
 
provided, however, that
 
(A)           Buyer shall not be responsible for any Seller Losses pursuant to
Section 6.2(b)(i) until the cumulative aggregate amount of such Seller Losses
exceeds the Basket Amount, in which case Buyer shall then be liable only for
such Seller Losses in excess of the Basket Amount; and
 
(B)           the cumulative aggregate indemnity obligation of Buyer under
Section 6.2(b)(i) shall in no event exceed *** (the “Buyer Cap”);
 
(c)           As promptly as practicable, and in any event within thirty (30)
days, after a Buyer or Seller shall receive any notice of, or otherwise become
aware of, the commencement of any action, suit or proceeding, the assertion of
any claim, the occurrence of any event, the existence of any fact or
circumstance, or the incurrence of any Loss, for which indemnification is
provided for (assuming, only for the purposes of this Section 6.2(c) and of the
terms defined in this Section 6.2(c), that the Basket Amount was zero) by
Section 6.2(a) or (b) hereof (an “Indemnification Event”), the party entitled to
such indemnification (an “Indemnified Party”) shall give written notice (an
“Indemnification Claim”) to the party from which such indemnification is (or,
under such assumption, could be) sought (an “Indemnifying Party”) describing in
reasonable detail the Indemnification Event and the basis on which
indemnification is (or, under such assumption, could be) sought.  If the
Indemnifying Party  is not so notified by the Indemnified Party within thirty
(30) days after the date of the receipt by the Indemnified Party or any of its
Affiliates of notice of, or of the Indemnified Party or any of its Affiliates
otherwise becoming aware of, any particular Indemnification Event, then the
Indemnifying Party shall be relieved of all liability hereunder in respect of
such Indemnification Event (or the facts or circumstances giving rise thereto)
only if, and only to the extent that, such failure to notify the Indemnifying
Party results in (i) the forfeiture by the Indemnifying Party of rights and
defenses otherwise available to the Indemnifying Party with respect to such
claim or (ii) prejudice in any material respect to the Indemnifying Party with
respect to such claim (and, to such extent, all Losses resulting from such
Indemnification Event shall be disregarded for purposes of determining whether
the Basket Amount has been exceeded), and in such event the Indemnifying Party
shall not be liable for any expenses incurred during the period in which the
Indemnified Party was overdue in giving, and had not given, such notice.

 
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 (d)           If any Indemnification Event involves the claim, complaint,
audit, investigation, action or proceeding by any third party (a “Third-Party
Claim”), the Indemnifying Party shall (whether or not the Indemnified Party is
entitled to claim indemnification under Section 6.2(a) or (b), as the case may
be) be entitled, and the Indemnified Party shall provide the Indemnifying Party
with the right (unless the Indemnifying Party is also a Person against whom the
Third-Party Claim is made and the Indemnified Party determines in good faith
that joint representation would be inappropriate due to a conflict of interest),
upon written notice delivered to the Indemnified Party within 30 days thereafter
(or, if earlier, by the tenth day preceding the day on which an answer or other
pleading must be served in order to prevent judgment by default in favor of the
third party asserting the Third-Party Claim) to participate in, and assume sole
control over, the defense and settlement of such Third-Party Claim (with counsel
reasonably satisfactory to the Indemnified Party and the Indemnifying Party
shall pay the Legal Expenses of such counsel) in each case subject to the terms
and conditions of this Agreement; provided, however, that (i) the Indemnified
Party shall have the right to take control of the defense of such Third-Party
Claim away from the Indemnifying Party if the Indemnifying Party is not
conducting the defense in a reasonably prudent and diligent manner and the
Indemnifying Party does not cure such failure within twenty (20) days after
written notice thereof is received by the Indemnifying Party, (ii) the
Indemnified Party shall otherwise be entitled to participate in the defense of
such Third-Party Claim and to employ counsel at its own expense to assist in the
handling of such Third-Party Claim, and (iii) the Indemnifying Party shall
obtain the prior written approval of the Indemnified Party, which approval shall
not be unreasonably withheld, conditioned or delayed, before entering into any
settlement or compromise of such Third-Party Claim, consenting to the entry of
any judgment with respect to such Third-Party Claim or ceasing to defend against
such Third-Party Claim unless (x) there is no finding or admission of any
violation of applicable Law or the rights of any Person and (y) the sole relief
provided is monetary damages that are paid in full by the Indemnifying Party
pursuant to the terms of this Agreement (subject only to the Basket Amount, if
applicable).  After written notice by the Indemnifying Party to the Indemnified
Party of its election to assume control of the defense of any such Third-Party
Claim, the Indemnifying Party shall not be liable hereunder to indemnify any
Person for any Legal Expenses subsequently incurred in connection therewith.  If
the Indemnifying Party declines to, or does not, assume sole control over the
defense or settlement of such Third-Party Claim as provided in this
Section 6.2(d) within the time period proscribed above, or, after assuming such
control, fails to defend against such Third-Party Claim (it being agreed that a
permitted settlement of such Third-Party Claim does not constitute such a
failure to defend), then the Indemnified Party shall have the right (as to
itself) to defend or employ counsel to represent or defend it against such
Third-Party Claim and, upon obtaining the written consent of the Indemnifying
Party, settle the claim in such manner as it may deem appropriate, and the
Indemnifying Party shall promptly reimburse the Indemnified Party therefor in
accordance with (and to the extent provided for (subject to, and not
disregarding, the provisos to Section 6.2(a) in) Section 6.2(a) or (b), as
appropriate; provided, however, that the Indemnifying Party will not be required
to pay the Legal Expenses of more than one counsel for all Indemnified Parties
in any jurisdiction in any single complaint, audit, investigation, action or
proceeding.  Notwithstanding anything in this Section 6.2 to the contrary, in
any Indemnification Event, the Indemnified Party or the Indemnifying Party,
whichever is not

 
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assuming the defense of such action, shall have the right to participate in such
matter and to retain its own counsel at such Party’s own expense and if the
Indemnified Party fails to tender the defense or settlement of any Third-Party
Claim under circumstances not expressly permitted under this Section 6.2(d) and
such failure continues for a period of ten (10) days after receipt of notice
therefore, then the Indemnifying Party shall cease to have any obligation under
Section 6.2(a) or (b), as the case may be, in respect of such Third Party Claim
and all Losses resulting from such Third-Party Claim will not be considered for
purposes of determining whether the Basket Amount, as applicable, has been
exceeded. The Indemnifying Party shall not be liable under this Section 6.2 for
any settlement or compromise effected without its consent, which consent, if
such Indemnifying Party shall not have agreed to indemnify the Indemnification
Claim at issue, shall not be unreasonably withheld, conditioned or delayed.
 
(e)           The Indemnified Party and the Indemnifying Party shall each
cooperate fully (and shall each cause its Affiliates to cooperate fully) with
the other in the defense of any Third-Party Claim pursuant to
Section 6.2(d).  Without limiting the generality of the foregoing, each such
Person shall furnish the other such Person (at the expense of the Indemnifying
Party) with such documentary or other evidence as is then in its or any of its
Affiliates’ possession as may reasonably be requested by the other Person for
the purpose of defending against any such Third-Party Claim.
 
(f) In the event an Indemnified Party shall claim a right to payment pursuant to
this Agreement not involving a Third-Party Claim, such Indemnified Party shall
send written notice of such claim to the Indemnifying Party.  Such notice shall
specify the basis for such claim, a reasonable estimate of the amount of Loss
and the method of computation of such amount.
 
(g)           Upon payment of any amount pursuant to any Indemnification Claim,
the Indemnifying Party shall be subrogated, to the extent of such payment, to
all of the Indemnified Party’s rights of recovery (and, if Seller is the
Indemnifying Party, the Indemnified Party shall cause Seller to be subrogated to
all of Buyer’s and the Company’ rights of recovery) against any third party with
respect to the matters to which such Indemnification Claim relates.
 
(h)           The rights and remedies of Buyer and Seller under this Section 6.2
are exclusive and in lieu of any and all other rights and remedies which Buyer
or Seller, as the case may be, may have against the other, under this Agreement
or otherwise (except as may exist under any Delta Connection Agreement and
Section 5.3(d) of this Agreement, (i) with respect to (x) the breach of any
representation, warranty, certification or other statement made (or deemed made)
by Seller or Buyer in or pursuant to this Agreement, the Disclosure Letter or
any Ancillary Instrument or (y) any breach of, or failure to perform or comply
with, any covenant or agreement set forth in this Agreement or in any Ancillary
Instrument or (ii) otherwise with respect to the transactions contemplated by
this Agreement).  All claims for indemnification must be asserted, if at all, in
good faith and in accordance with the provisions of Section 6.2(c) hereof and,
to the extent applicable to such claims, within the relevant time period set
forth in the last sentence of Section 6.1 hereof.

 
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(i)           The amount of any Losses shall be determined on a Net After Tax
Basis and will be reduced by the amount recoverable by Buyer or any of its
Affiliates, including the Company, from any third party under any contract with
such party or under any applicable insurance policy.  If at any time subsequent
to the receipt by an Indemnified Party of an indemnity payment hereunder, such
Indemnified Party (or any Affiliate thereof) receives any recovery, settlement
or other similar payment with respect to the Loss for which it received such
indemnity payment (a “Recovery”), such Indemnified Party shall promptly pay to
the Indemnifying Party an amount equal to the amount of such Recovery, less any
expense incurred by such Indemnified Party (or its Affiliates) in connection
with such Recovery, but in no event shall any such payment exceed the amount of
such indemnity payment.
 
(j)           Notwithstanding anything herein to the contrary, this Section 6.2
shall have no application to claims for indemnification for Income Taxes, which
are subject to Section 7.1.
 
ARTICLE 7
 

 
CERTAIN TAX MATTERS
 
7.1           Liability for Taxes.  (a) Seller shall be liable for and pay, and
shall indemnify, defend and hold harmless Buyer from and against, any Taxes
imposed on the Company, or for which the Company may otherwise be liable (i) for
any Pre-Closing Taxable Periods and, with respect to any Straddle Period, the
portion of such Straddle Period ending on and including the Closing Date; (ii)
resulting from a breach of the representations and warranties set forth in
Section 3.11 (determined without regard to any materiality or Knowledge
qualifiers or any scheduled items) or covenants set forth in Section 5.7 or this
Article 7; (iii) of any member of any Affiliated Group of which the Company (or
any predecessor of the Company) is or was a member on or prior to the Closing
Date by reason of Treasury Regulation § 1.1502-6(a) or any analogous or similar
foreign, state or local law; or (iv) of any other Person for which the Company
is or has been liable as a transferee or successor, by contract or otherwise;
provided, however, that Seller shall not be liable for or pay any Taxes (x)
included in the calculation of Final Closing Working Capital or (y) imposed on
the Company or for which the Company may otherwise be liable as a result of any
transaction other than in the ordinary course of business occurring on the
Closing Date and after the Closing that is properly allocable for any Income Tax
purposes to the portion of the Closing Date after the Closing.  Buyer shall not,
and shall not permit the Company to, make any tax election after the Closing
that would increase the Income Tax liability of the Company for any Pre-Closing
Taxable Period (or portion thereof), and Buyer shall indemnify and hold harmless
Seller from and against any liability for Income Taxes resulting from any such
action or election.  Seller will be entitled to

 
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retain, or to receive prompt payment from Buyer or the Company of any refund or
credit (when actually realized) for the overpayment of Taxes (including for this
purpose any over-accrual in Final Closing Working Capital) for which Seller is
responsible pursuant to this Section 7.1(a), plus any interest received or
credited with respect thereto from the relevant taxing authorities.  Buyer and
Seller shall reasonably cooperate with respect to claiming any refund or credit
with respect to Taxes referred to in this Section 7.1(a).
 
(b)           Except as otherwise provided in Section 7.1(a) or otherwise
herein, the Buyer shall be liable for and pay, and shall indemnify, defend and
hold harmless the Seller from and against, all Taxes imposed on the Company, or
for which the Company may otherwise be liable, for any Post-Closing Taxable
Periods and, with respect to any Straddle Period, the portion of such Straddle
Period beginning after the Closing Date.
 

(c)           For purposes of Section 7.1(a) and Section 7.1(b), whenever it is
necessary to determine the liability for Taxes of the Company for a Straddle
Period, the determination of the Taxes of the Company for the portion of the
Straddle Period ending on and including, and the portion of the Straddle Period
beginning after, the Closing Date shall be determined as follows:

(i) in the case of Taxes that are either (A) based upon or related to income or
receipts, or (B) imposed in connection with any sale or other transfer or
assignment of property (real or personal, tangible or intangible), by assuming
that the Straddle Period consisted of two taxable years or periods, one of which
ended at the close of the Closing Date and the other of which began at the
beginning of the day following the Closing Date, and items of income, gain,
deduction, loss or credit of the Company for the Straddle Period shall be
allocated between such two taxable years or periods on a “closing of the books
basis” by assuming that the books of the Company were closed at the close of the
Closing Date; provided, however, that transactions other than in the ordinary
course of business occurring on the Closing Date that are properly allocable to
the portion of the Closing Date after the Closing shall be allocated to the
taxable year or period that is deemed to begin at the beginning of the day
following the Closing Date; and
(ii) in the case of Taxes that are imposed on a periodic basis with respect to
the assets or capital of the Company, deemed to be the amount of such Taxes for
the entire Straddle Period (or, in the case of such Taxes determined on an
arrears basis, the amount of such Taxes for the immediately preceding period),
multiplied by a fraction the numerator of which is the number of calendar days
in the portion of the period ending on and including the Closing Date and the
denominator of which is the number of calendar days in the entire period.

(d)           Notwithstanding anything to the contrary contained herein, Buyer
and Seller will share equally any sales, use, transfer, stamp, documentary or
similar Taxes (including any penalties and interest, but excluding any Income
Taxes) incurred in connection with the sale of the Shares pursuant to this
Agreement.  Buyer will be responsible for preparing and timely filing (and
Seller will cooperate with Buyer in preparing and filing) any forms required
with

 
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respect to any such Taxes.  Buyer will provide to Seller a true copy of each
such return as filed and evidence of the timely filing thereof and payment by
Buyer of the Tax shown to be due on any such return and be reimbursed by Seller
for fifty percent (50%) of any such Tax paid by Buyer.  Buyer and Seller shall
cooperate in good faith to minimize, to the extent permissible under Law, the
amount of any such Taxes.
 
7.2           Tax Returns.  (a)  Seller shall timely file or cause to be timely
filed when due (taking into account all extensions properly obtained) all
Combined Tax Returns that are required to be filed by it, which returns shall
properly include and reflect the taxable income of the Company for the
Pre-Closing Taxable Period that includes the Closing Date, and, subject to the
provisions of Section 7.1, Seller shall remit or cause to be remitted any Taxes
due in respect of such Tax Returns.  Buyer shall furnish or cause to be
furnished information to Seller as reasonably requested by Seller to allow
Seller to satisfy its obligations under this Section 7.2 in accordance with past
custom and practice.
 
(b)           Buyer shall timely file or cause to be timely filed when due
(taking into account all extensions properly obtained) all other Tax Returns
(i.e., Tax Returns other than Combined Tax Returns described in Section 7.2)
that are first due and required to be filed after the Closing Date with respect
to the operations of the Company for Pre-Closing Taxable Periods and, subject to
the provisions of Section 7.1, the Buyer shall remit or cause to be remitted any
Taxes due in respect of such Tax Returns.  Any such Tax Returns (x) shall be
prepared and filed in a manner consistent with Seller’s past practice with
respect to such Tax Returns, and no position shall be taken, election made or
method adopted that is inconsistent with positions taken, elections made or
methods used in prior periods in filing Tax Returns, in each case unless
required by Law and (y) shall be submitted to Seller not later than twenty (20)
days prior to the due date for filing such Tax Returns (or, if such due date is
within twenty (20) days following the Closing Date, as promptly as practicable
following the Closing Date) for review and approval by Seller, which approval
may not be unreasonably withheld, delayed or conditioned and which approval
shall relate solely to matters for which Seller is liable pursuant to this
Agreement or that otherwise would affect the Tax position of the Seller, but may
in all cases be withheld if such Tax Returns were not prepared in accordance
with clause (x) of this sentence.  Seller shall furnish information to Buyer as
reasonably requested by Buyer to allow Buyer to satisfy its obligations under
this Section 7.2 in accordance with past custom and practice.
 
(c)           Seller or Buyer (as the case may be) shall pay the other for the
Taxes for which Seller or Buyer, respectively, is liable pursuant to Section 7.1
but which are payable with any Tax Return to be filed by Seller, on the one
hand, or Buyer, on the other hand, pursuant to this Section 7.2, within ten (10)
days of receiving the written request of the party entitled to payment, setting
forth in reasonable detail the computation of the amount owed by Seller, on the
one hand, or Buyer, on the other hand (as the case may be), but in no event more
than ten (10) days prior to the due date for paying such Taxes.

 
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(d)           Buyer shall not, and shall not permit the Company to, amend,
re-file or otherwise modify (or grant an extension of any statute of limitation
with respect to) any Income Tax Return of the Company with respect to any
Pre-Closing Taxable Period without the prior written consent of Seller, which
consent may be withheld in the sole discretion of Seller.  If Buyer or Seller
desires to amend, re-file or otherwise modify (or grant an extension of any
statute of limitations with respect to) any Income Tax Return of the Company for
a Straddle Period, the other party shall cooperate in good faith in connection
therewith unless (i) the other party would be adversely affected thereby and
(ii) the adverse effect to such other party would outweigh the potential benefit
to the party desiring to take such action.
 
7.3           Contest Provisions.                                           If
Buyer or, following the Closing Date, the Company, receives notice of any Tax
Audit or any other claim or demand with respect to Taxes for which Buyer may be
indemnified hereunder, Buyer shall promptly notify Seller thereof in
writing.  Seller may discharge, at any time, its indemnification obligation
under Section 7.1 with respect to such Tax Audit, claim or demand by paying to
Buyer the amount payable pursuant to Section 7.1, calculated on the date of such
payment.  Alternatively, Seller may, at its own expense, participate in and,
upon notice to Buyer, assume defense of any such Tax Audit, claim or demand.  If
Seller assumes such defense, it shall have the sole discretion as to the conduct
of such defense but, other than in the case of any matter involving a Seller
Combined Tax Return, shall consult with Buyer and keep Buyer reasonably informed
as to the status of the Tax contest. Whether or not Seller chooses to defend or
prosecute any Tax Audit, claim or demand, all of the parties hereto shall
cooperate in the defense or prosecution thereof.
 
7.4           Assistance and Cooperation.  After the Closing Date, each of Buyer
and Seller shall furnish or cause to be furnished to each other (subject to
reimbursement by the requesting party for any out-of-pocket expenses), upon
request, as promptly as practicable, such information (including access to
books, records and personnel) and assistance as is reasonably requested for the
preparation and filing of any Tax Return or related document, for the
preparation for any Tax Audit or for the prosecution or defense of any claim,
suit or proceeding relating to liability for Taxes of Seller and the
Company.  Buyer further agrees to retain, and provide Seller with access to, all
files, books, records and documents relevant to the liability of Seller and the
Company for Taxes for any periods prior to Closing for at least five (5) years
after the Closing and, after such fifth (5th) year anniversary, to give Seller
at least ninety (90) days’ prior written notice and a reasonable opportunity to
receive such files, books, records or documents prior to destroying or
discarding any such files, books, records or documents.

 
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ARTICLE 8
 

 
MISCELLANEOUS
 
8.1           Exclusivity of Representations.  THE REPRESENTATIONS AND
WARRANTIES MADE BY SELLER AND BUYER, RESPECTIVELY, IN THIS AGREEMENT OR IN THE
ANCILLARY INSTRUMENTS ARE IN LIEU OF AND ARE EXCLUSIVE OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE AND ANY OTHER
IMPLIED WARRANTIES, OF SELLER AND BUYER, RESPECTIVELY.  SELLER AND BUYER EACH
HEREBY DISCLAIMS ANY SUCH OTHER OR IMPLIED REPRESENTATIONS OR WARRANTIES,
NOTWITHSTANDING THE DELIVERY OR DISCLOSURE BY SELLER OR ANY OTHER PERSON TO
BUYER OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES,
OR BY BUYER OR ANY OTHER PERSON TO SELLER OR ANY OF ITS EMPLOYEES, AGENTS OR
REPRESENTATIVES, OF ANY DOCUMENTATION OR OTHER INFORMATION IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
8.2           Expenses.  Except as expressly set forth in this Agreement,
regardless of whether the Closing occurs, each party hereto shall bear all of
its expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement, including accounting, financial advisory and
legal fees incurred in connection herewith.
 
8.3           Further Assurances.  From time to time after the Closing Date,
without the payment of any additional consideration, except as otherwise set
forth in this Agreement, each party hereto will execute all such instruments and
take all such actions as the other party, being advised by counsel, shall
reasonably request in connection with carrying out and effectuating the intent
and purpose hereof and all transactions and things contemplated by this
Agreement.
 
8.4           Notices.  All notices, requests, claims, demands and other
communications required or permitted hereunder shall be given in writing and
given by certified or registered mail, return receipt requested, nationally
recognized overnight delivery service, such as Federal Express, or facsimile (or
like transmission) with confirmation of transmission by the transmitting
equipment or personal delivery against receipt to the party to whom it is given,
in each case, at such party’s address or facsimile number set forth below or
such other address or facsimile number as such party may hereafter specify by
notice to the other party hereto given in accordance herewith.  Any such notice
or other communication shall be deemed to have been given as of the date so
personally delivered or

 
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transmitted by facsimile or like transmission, on the next Business Day when
sent by overnight delivery service or five (5) Business Days after the date so
mailed if by certified or registered mail:
 

If to Seller:

Delta Air Lines, Inc.
1030 Delta Blvd.
Atlanta, GA  30354
Attn:  VP – Corporate Strategy & Business Development
Telephone:  404-715-2207
Facsimile:  404-773-1702
E-mail:  ***

with a copy to:

Delta Air Lines, Inc.
1030 Delta Blvd.
Atlanta, GA  30354
Attn:  Senior VP & General Counsel
Telephone:  404-715-2191
Facsimile:  404-715-2233
E-mail:  ***
 
If to Buyer:

Pinnacle Airlines Corp.
1689 Nonconnah Blvd., Suite 111
Memphis, TN 38132
Fax No:  901-348-4103
Attention:  Chief Financial Officer

 
with a copy to:

Pinnacle Airlines Corp.
1689 Nonconnah Blvd., Suite 111
Memphis, TN 38132
Fax No:  901-348-4103
Attention:  General Counsel

 
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and:

Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002
Attn: Kevin P. Lewis
Facsimile: (713) 615-5967
 
8.5           Assignment.  This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, and any reference to a party hereto
shall also be a reference to the successors and permitted assigns thereof;
provided, however, that neither this Agreement nor any of the rights, interests,
or obligations hereunder may be assigned, by operation of Law or otherwise, by
any party hereto without the prior written consent of each other party.  Any
assignment in violation of this Agreement shall be null and void ab initio.
 
8.6           Construction.  (a)  Unless otherwise expressly specified herein,
(i) defined terms in the singular shall also include the plural and vice versa,
(ii) the words “hereof”, “herein”, “hereunder” and other similar words refer to
this Agreement as a whole, (iii) Article, Section, Schedule and Exhibit
references in this Agreement are to Articles of, Sections of, Schedules to and
Exhibits to this Agreement, and (iv) words of any gender (masculine, feminine,
neuter) mean and include correlative words of the other genders.
 
(b)           The captions in this Agreement are for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
 
(c)           All references to “days” shall be to calendar days unless Business
Days are specified.
 
(d)           Unless the context otherwise requires, (i) “or” is not exclusive
and (ii) ”including” means “including but not limited to” and “including without
limitation”.
 
(e)           As used herein, the phrases “date of this Agreement” and “date
hereof” and any other phrases of similar import mean July 1, 2010 (it being
understood that, with respect to representations and warranties made as of the
“date of this Agreement” or as of the “date hereof”, the date or time which such
representations and warranties are made or deemed to have been made or as of
which the accuracy or inaccuracy thereof is measured or determined shall not
alter the July 1, 2010 date as of which any such representations or warranties
speak).
 
8.7           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK (WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW AS
TO ALL MATTERS, INCLUDING BUT NOT LIMITED TO MATTERS OF VALIDITY, CONSTRUCTION,
EFFECT AND PERFORMANCE).

 
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8.8           Waiver of Provisions.  The provisions, terms, covenants,
representations, warranties and conditions of this Agreement may be waived only
by a written instrument executed by the party hereto waiving compliance.  The
failure of any party hereto at any time or times to require performance of any
provision of this Agreement shall in no manner affect the right of such party at
a later date to enforce the same.  No waiver by any party hereto of any term or
condition or the breach of any provision, term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances shall be deemed to be or construed as a further,
subsequent or continuing waiver of any such term or condition or of any
subsequent breach of any other provision, term, covenant, representation or
warranty of this Agreement.
 
8.9           Counterparts.  This Agreement may be executed in several
counterparts, and all counterparts so executed shall constitute one agreement,
binding on the parties hereto, notwithstanding that such parties are not
signatory to the same counterpart.
 
8.10           Entire Agreement.  This Agreement and the Ancillary Instruments
constitute the entire agreement among the parties, and supersede and cancel any
and all prior agreements among them, relating to the subject matter hereof and
thereof, and may not be amended or modified except by a written agreement signed
by Buyer and Seller.
 
8.11           Disclosure Letter.  All sections of the Disclosure Letter
referred to herein shall be construed with and as an integral part of this
Agreement to the same extent as if they were set forth verbatim herein.  Any
information disclosed in any section of the Disclosure Letter shall be deemed
fully disclosed for the purposes of all applicable sections of the Disclosure
Letter if such disclosure is referred to in another section or the relevance of
such disclosure to another section is reasonably apparent.  Neither the
specification (directly or indirectly by reference to a defined term hereof) of
any dollar amount in the representations and warranties set forth in Article 2,
3 or 4 or the indemnification provisions of Article 6 nor the inclusion of any
items in the Disclosure Letter shall be deemed to constitute an admission by
Seller or Buyer, or otherwise imply, that any such amount or such items so
included are material for the purposes of this Agreement.  The inclusion of, or
reference to, any item within any particular section of the Disclosure Letter
does not constitute an admission by either Seller or Buyer that such item meets
any or all of the criteria set forth in this Agreement for inclusion in such
section of the Disclosure Letter.
 
8.12           Submission to Jurisdiction; Waivers.  (a) Each party hereto to
this Agreement hereby irrevocably and unconditionally:

 
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(1)           (i) agrees that any suit, action or proceeding instituted against
it or by it against any other party with respect to this Agreement or any
Ancillary Instrument
 
may be instituted only in the Supreme Court of the State of New York, County of
New York, or the U.S. District Court for the Southern District of New York (and
appellate courts from any of the foregoing), as the party instituting such suit,
action or proceeding may in its or its sole discretion elect, (ii) consents and
submits, for itself or itself and its or its property, to the exclusive
jurisdiction of such courts for the purpose of any such suit, action or
proceeding instituted against it by any other party and (iii) agrees that a
final judgment in any such suit, action or proceeding after the expiration of
any period permitted for appeal and subject to any stay during appeal shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law;
 
(2)           agrees that service of all writs, process and summonses in any
suit, action or proceeding pursuant to Section 8.12(a)(1) may be effected by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
Buyer or Seller, as the case may be, at the addresses for notices pursuant to
Section 8 hereof (with copies to such other Persons as specified therein), such
service to become effective fifteen (15) days after such mailing; provided,
however, that nothing contained in this Section 8.12(a)(2) shall affect the
right of Buyer or Seller, as the case may be, to serve process in any other
manner permitted by law;
 
(3)           (i) waives any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any Ancillary Instrument brought in any court specified in
Section 8.12(a)(1), (ii) waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum
and (iii) agrees not to plead or claim either of the foregoing; and
 
(4)           WAIVES ANY RIGHT HE OR IT MAY HAVE TO A TRIAL BY JURY OF ANY
DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY ANCILLARY INSTRUMENT,
THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY OR ANY DOCUMENT CONTEMPLATED
HEREIN OR THEREIN AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE
SITTING WITHOUT A JURY.
 
8.13           No Third-Party Beneficiary.  This Agreement is for the sole
benefit of the parties hereto and their respective successors and permitted
assigns, and nothing herein, express or implied, is intended to or shall confer
upon any other Person, other than (i) the parties hereto or their respective
successors and permitted assigns and (ii) the Seller Indemnified Parties and the
Buyer Indemnified Parties with respect to their rights to indemnification in
accordance with Article 6, any legal or equitable

 
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right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, and no Person is intended to be a third-party beneficiary of any of
the provisions of this Agreement, other than the Seller Indemnified Parties and
the Buyer Indemnified Parties with respect to their rights to indemnification in
accordance with Article 6. .
 
8.14           No Presumption.  With regard to each and every term and condition
of this Agreement and any and all agreements and instruments subject to the
terms hereof or referred to herein, the parties hereto understand and agree that
the same have or has been mutually negotiated, prepared and drafted, and if at
any time the parties hereto desire or are required to interpret or construe any
such term or condition or any agreement or instrument subject hereto, no
consideration shall be given to the issue of which party hereto actually
prepared, drafted or requested any term or condition of this Agreement or any
agreement or instrument subject hereto.
 
8.15           Severability.  The parties agree that any provision of this
Agreement which is rendered or held invalid, illegal or unenforceable in any
respect in any jurisdiction shall be ineffective, but such ineffectiveness shall
be limited as follows:  (i) if such provision is rendered or held invalid,
illegal or unenforceable in such jurisdiction only as to a particular Person or
Persons or under any particular circumstance or circumstances, such provision
shall be ineffective, but only in such jurisdiction and only with respect to
such particular Person or Persons or under such particular circumstance or
circumstances, as the case may be; (ii) without limitation of clause (i), such
provision shall in any event be ineffective only as to such jurisdiction and
only to the extent of such invalidity, illegality or unenforceability, and such
invalidity, illegality or unenforceability in such jurisdiction shall not render
invalid, illegal or unenforceable such provision in any other jurisdiction; and
(iii) without limitation of clause (i) or (ii), such ineffectiveness shall not
render invalid, illegal or unenforceable this Agreement or any of the remaining
provisions hereof.  Without limitation of the preceding sentence, (A) it is the
intent of the parties hereto that, in the event that in any court proceeding,
such court determines that any provision of this Agreement is illegal, invalid
or unenforceable in any jurisdiction to any extent, such court shall have the
power to, and shall, (1) modify such provision (including by limiting the
Persons against whom, or the circumstances under which, such provision shall be
effective in such jurisdiction) for purposes of such proceeding to the minimum
extent necessary so that such provision, as so modified, may then be enforced in
such proceeding and (2) enforce such provision, as so modified pursuant to
clause (1), in such proceeding and (B) upon any determination that any provision
of this Agreement is invalid, illegal or unenforceable, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of such parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.  Nothing in this Section 8.15 is
intended to, or shall, (x) limit the ability of any party hereto to appeal any
court ruling or the effect of any favorable ruling on appeal or (y) limit the
intended effect of Section 8.7 or 8.12.

 
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8.16           Access to Books and Records.  (a)  After the Closing Date, Buyer
shall, upon Seller’s reasonable request from time to time, and upon reasonable
notice, (i) (A) provide to Seller and its representatives access, during normal
business hours, to any and all premises, properties, files, books, records,
documents and other information of the Company relating to periods prior to the
Closing, (B) cause its officers and the officers of the Company to furnish to
Seller and its representatives any and all existing financial data and other
information pertaining to the Company relating to periods prior to the Closing
(it being understood that neither Buyer nor the Company shall be required to
create or compile data or other information hereunder) and (C) make available to
Seller and its representatives, during normal business hours, personnel of Buyer
and the Company to consult with such personnel, and (ii) make available for
inspection and copying by Seller at Seller’s expense true and complete copies of
any documents relating to the foregoing.  In exercising their rights under the
foregoing provisions of this Section 8.16, Seller and its representatives shall
not interfere with the normal operations of Buyer or the Company.  Buyer shall
cause the Company to retain the files, books, records and documents of the
Company relating to the period prior to the Closing Date for at least five (5)
years after the Closing Date.
 
(b)           In the event any claims are made against or incurred by Buyer with
respect to the Company, the preparation or filing of any Tax Returns and other
governmental reports or of financial statements in connection with any audit
related to the Company, and for purposes of compliance with any audit,
investigation or other examination by any Governmental Authority with
securities, environmental, employment and other Laws, until the fifth (5th)
anniversary of the Closing, Seller shall, upon the request of Buyer, provide
Buyer with access to, or copies of, any books and records relating to the
Company for periods prior to the Closing which shall not otherwise have been
delivered hereunder to Buyer or the Company; and, upon reasonable notice, afford
the officers, employees, agents and representatives of Buyer reasonable access
(including the right to make, at Buyer’s expense, copies), during normal
business hours, to such books and records; provided, however, that any such
access or furnishing of information shall be conducted in such a manner as not
to unreasonably interfere with the normal operations of Seller.  Seller shall,
at Buyer’s expense, provide such information as Buyer may reasonably request in
connection with (x) any action by or against Buyer; or (y) compliance with
securities, environmental, employment and other Laws.  Seller shall retain the
files, books, records and documents of the Company relating to the period prior
to the Closing Date which shall not otherwise have been delivered hereunder to
Buyer for five (5) years after the Closing.
 
(c)           (i)           All files, books, records and documents of the
Company provided after the Closing by Buyer to Seller and its representatives
will be kept confidential by Seller, provided that Seller shall have the right
to disclose such information to those representatives of Seller who have a need
to know such information.  Seller shall be liable for any breach of this
confidentiality provision by its representatives as if Seller had breached this
confidentiality provision itself.

 
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(ii)           Seller shall exercise the same degree of care to preserve the
confidential information in the files, books, records and documents of the
Company which are provided to Seller pursuant to this Section 8.16 as Seller
exercises in preserving its own confidential information, which shall be no less
than a reasonable standard of care.  Seller shall not be required to keep
information confidential pursuant to this Section 8.16, and shall have the right
to disclose such information, if:  (A) Seller, or its representatives become
legally compelled to disclose such information, , (B) the information, at the
time of the disclosure is, or becomes, available publicly and was not disclosed
in breach of this Agreement by Seller or its representatives; or (C) the
information is used in connection with the enforcement of any rights of Seller
under this Agreement or any other agreement with Buyer or any of its Affiliates.
 
(iii)           Notwithstanding any other provision of this Agreement, Seller
agrees that any breach of the confidentiality obligations of this Section 8.16
may cause irreparable injury to the Company or Buyer and therefore, Buyer shall
be entitled to enforce the confidentiality obligations of this Section 8.16 by
seeking injunctive relief, in addition to all other rights and remedies at law
or in equity.
 
8.17           Specific Performance.  The parties hereto acknowledge and agree
that the parties hereto would be irreparably damaged if any of the provisions of
this Agreement are not performed in accordance with their specific terms or are
otherwise breached and that any non-performance or breach of this Agreement by
any party hereto could not be adequately compensated by monetary damages alone
and that the parties hereto would not have any adequate remedy at
law.  Accordingly, in addition to any other right or remedy to which any party
hereto may be entitled, at law or in equity (including monetary damages), such
party shall be entitled to enforce any provision of this Agreement by a decree
of specific performance and to temporary, preliminary and permanent injunctive
relief to prevent breaches of any of the provisions of this Agreement without
posting any bond or other undertaking.  The parties agree that they will not
contest the appropriateness of specific performance as a remedy.

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
 
DELTA AIR LINES, INC.

By:                                                                
Name:  ***
Title: Senior Vice President
– Delta Connection
 
PINNACLE AIRLINES CORP.
 

 
By:                                                                
 
Name:  ***
 
Title:  Vice President and General Counsel
 
MESABA AVIATION, INC.
 

 
By:                                                                
 
Name: ***
 
Title:  Vice President
 
PINNACLE AIRLINES, INC.
 

 

 
By:                                                                
 
Name:  ***
 
Title:  Vice President and General Counsel
 

 
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EXHIBIT A

CERTAIN DEFINED TERMS
 
1.           For purposes of the Agreement to which this Exhibit A is attached,
the following terms shall have the respective meanings specified below.
 
“Affiliate” means, as to any specified Person, any other Person which, directly
or indirectly through one or more intermediaries, controls, is controlled by or
is under common control with, such specified Person.  For the purposes of this
definition, “control” means the possession of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
 
“Affiliated Group” means, with respect to any federal income Tax matters, any
affiliated group of corporations within the meaning of Code Section 1504(a), of
which the Company is a member, and, with respect to any state, local or foreign
income, franchise or similar income-based Tax, the consolidated, combined or
unitary group of which the Company is a member.
 
“Ancillary Instruments” means all schedules, exhibits, certificates, agreements,
documents or statements delivered pursuant to this Agreement.
 
“Balance Sheet Date” means December 31, 2009.
 
“Base Purchase Price” means $62,000,000.
 
“Base Working Capital” means ***.
 
“Basket Representation” means any Seller Representation other than any Seller
Representations contained in Sections 2.1, 2.2, 3.1, 3.2, 3.3, 3.11, 3.18 and
3.23.
 
“Business Day” means any day except Saturday, Sunday or any other day on which
commercial banks in New York, New York are authorized or required by Law to
remain closed.
 
“Closing Cash” means, as of the opening of business on the Closing Date, the
cash and cash equivalents of the Company, including deposits in banks or other
financial institution accounts of any kind and restricted cash collateralizing
letters of credit extended on behalf of the Company in respect of workers’
compensation insurance.
 
“Closing Debt” means the Debt of the Company determined as of immediately prior
to the consummation of the Closing, but excluding any amounts of inter-company
Debt.
 
“Closing Purchase Price” means the Base Purchase Price, (i) plus the Closing
Working Capital Excess (if any), (ii) minus the Closing Working Capital
Deficiency (if any), and (iii) minus an amount, if any, equal to the Estimated
Closing Debt.

 
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“Closing Working Capital” means the Working Capital of the Company as of the
opening of business on the Closing Date.
 
“Closing Working Capital Deficiency” means an amount, if any, equal to the
amount by which the Base Working Capital exceeds the Estimated Closing Working
Capital.
 
“Closing Working Capital Excess” means an amount, if any, equal to the amount by
which the Estimated Closing Working Capital exceeds the Base Working Capital.
 
“Combined Tax” means federal income Tax and income, franchise or similar
income-based Tax payable to any state, local or foreign taxing jurisdiction with
respect to which the Company has filed or will file a Tax Return with a member
of any Affiliated Group on an affiliated, consolidated, combined or unitary
basis.
 
“Combined Tax Return” means any Tax Return reporting Combined Taxes of an
Affiliated Group.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Contracts” means all contracts and all other legally binding agreements,
arrangements, commitments and undertakings to which the Company is a party.

“CRJ-200 Letter Agreement” means that certain letter agreement dated as of April
20, 2009 between Seller and Pinnacle providing for the re-painting of aircraft
operated by Pinnacle pursuant to the CRJ-200 ASA and the payment of certain
expenses associated with such re-painting in connection with a change of livery
due to the Merger between Seller and Northwest.
 
“Debt” means, with respect to the Company, (i) all indebtedness for borrowed
money (including any loans, overdrafts and advances), (ii) all accrued but
unpaid interest (or interest equivalent) to the date of determination related to
any items of indebtedness of the type described in clause (i) above, and (iii)
any guarantee of any of the items described in clauses (i) or (ii) above.  For
purposes of this Agreement, “Debt” shall not include any trade accounts payable.
 
“Disclosure Letter” means the Disclosure Letter, dated the date of this
Agreement, as delivered to Buyer.
 
“Dollar” or “$” means a dollar or other equivalent unit in such coin or currency
of the United States of America as at the time shall be legal tender for the
payment of public and private debts.
 
“DOT” means the United States Department of Transportation.
 
“Employee” means any employee of the Company.

 
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“Environmental Law” means any and all applicable foreign and U.S. federal, state
or local statute, law, rule, regulation, ordinance or rule of common law in
effect and any applicable judicial or administrative decisions, including, but
not limited to, any judicial or administrative order, consent decree or
judgment, relating to the regulation or control of any pollutant contaminant,
solid or hazardous waste, toxic or hazardous substance, chemical or hazardous
material, the protection of natural resources and the environment or the effect
of the environment on human health, including, but not limited to, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Sections 9601 et seq.; the Resource Conservation and
Recovery Act, as amended, U.S.C. Sections 6901 et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Sections 1252 et seq.; the Toxic
Substances Control Act, as amended, 15 U.S.C. Sections 2601 et seq.; the Clean
Air Act, as amended, 42 U.S.C. 7401 et seq.; the Safe Drinking Water Act, as
amended, 42 U.S.C. Sections 300f et seq.; the Hazardous Materials Transportation
Act, as amended 49 U.S.C. Sections 1801 et seq.; the Atomic Energy Act, as
amended, 42 U.S.C. Sections 2011 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, as amended, 7 U.S.C. Sections 136 et seq.; the Occupational
Safety and Health Act, as amended, 20 U.S.C. Section 651 et seq.; and the
Emergency Planning and Community Right to Know Act, as amended, 42 U.S.C.
Sections 11001 et seq.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
“ERISA Affiliate” means each trade or business that together with the Company
would at any relevant time be deemed a “single employer” within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
 
“Estimated Closing Cash” shall be Seller’s good faith estimate (on a preliminary
basis) of Closing Cash based on the Interim Balance Sheet of the Company with
such adjustments as the Seller reasonably believes are necessary to reflect its
good faith estimate of changes from the date of such balance sheet to the
Closing.
 
“Estimated Closing Debt” shall be Seller’s good faith estimate (on a preliminary
basis) of Closing Debt based on the Interim Balance Sheet of the Company with
such adjustments as the Seller reasonably believes are necessary to reflect its
good faith estimate of changes from the date of such balance sheet to the
Closing
 
“Estimated Closing Working Capital” shall be Seller’s good faith estimate (on a
preliminary basis) of Closing Working Capital based on the Interim Balance Sheet
of the Company with such adjustments as the Seller reasonably believes are
necessary to reflect its good faith estimate of changes from the date of such
balance sheet to the Closing.

 
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“Final Purchase Price” means the Base Purchase Price (i) plus an amount, if any,
equal to the amount by which the Final Closing Working Capital exceeds the Base
Working Capital, (ii) minus an amount, if any, equal to the amount by which the
Base Working Capital exceeds the Final Closing Working Capital, and (iii) minus
an amount, if any, equal to the Final Closing Debt.
 
“Governmental Authority” means any government, any governmental, administrative
or regulatory entity, authority, commission, board, agency, instrumentality,
bureau or political subdivision and any court, tribunal or judicial or arbitral
body (whether foreign or U.S. or any other national, federal, state or local
entity or, in the case of an arbitral body, whether governmental, public or
private).
 
“Governmental Authorization” means any approval, consent, license, permit,
Order, waiver, or other authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Authority or pursuant to
any applicable Law, including the lapse of any waiting period thereunder.
 
“Hazardous Substance” means any chemical, pollutant, contaminant material,
substance (including, without limitation, petroleum substances, petroleum
products, natural gas, crude oil and any components, fractions or derivatives
thereof) or waste that is listed or regulated (or for which liability or
standards of conduct may be imposed) under Environmental Laws.
 
“Income Taxes” means any Taxes in the nature of income or franchise taxes.
 
“Income Tax Return” means any Tax Return relating to Income Taxes.
 
“Intellectual Property” means any (a) trademarks, trade names and product names,
service marks, trade dress, registrations and applications therefor, and all
goodwill associated with any of the foregoing; (b) patents and applications
therefor and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations in part thereof; (c) copyrights and other works
of authorship, and all registrations and applications therefor; (d) all know-how
and other intangible or proprietary rights including inventions, technologies,
designs, technical data, production and other methods, processes and techniques,
trade and business secrets, engineering data, models, prototypes, drawings,
diagrams, bills of material, manuals and other similar information; (e) all
computer hardware and software whether internally developed, purchased or
licensed; and (f) all tangible embodiments of the foregoing.
 
“Interim Balance Sheet Date” means the balance sheet of the Company as of May
31, 2010.
 
 “IRS” means the United States Internal Revenue Service.
 
“Knowledge of Seller” or “Seller’s Knowledge” (or words of similar import) means
the actual knowledge after due inquiry of Don Bornhorst and each officer and
director-level employee of the Company.

 
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“Laws” means all laws, constitutions, statutes, directives, codes, ordinances,
decrees, rules, regulations, municipal by-laws, judicial or arbitral or
administrative or ministerial or departmental or regulatory judgments, Orders,
decisions, ruling or awards, consent orders, consent decrees and policies of any
Governmental Authority, including general principles of common and civil law and
equity, binding on or affecting the Person referred to in the context in which
such word is used.
 
“Leases” means all leases, subleases, licenses, concessions and other agreements
(written or oral) pursuant to which the Company holds any Leased Real Property,
including the right to all security deposits and other amounts and instruments
deposited by or on behalf of the Company thereunder.
 
“Legal Expenses” means the reasonable fees, costs and expenses of any kind
incurred by any Person indemnified under Article 8 and its counsel in
investigating, preparing for, defending against or providing evidence, producing
documents or taking other action with respect to any threatened or asserted
claim.
 
“Lien” means any lien (including any Tax lien), pledge, hypothecation, mortgage,
security interest, defect in title, or encumbrance of any kind whatsoever.
 
“Losses” means all losses, damages, liabilities, obligations, claims, fees,
costs, interest, awards, judgments, penalties and expenses of any kind related
thereto (including any Legal Expenses) actually suffered or incurred or
imposed.  Notwithstanding anything to the contrary contained in this Agreement,
Losses shall not include lost profits or consequential, special or punitive
damages (other than those damages required to be paid to a third party pursuant
to a Third-Party Claim).
 
“Material Adverse Effect” means (x) a material adverse effect on the financial
condition, results of operations or business of the Company taken as a whole
other than a material adverse effect (i) resulting, directly or indirectly, from
(a) conditions affecting the U.S. economy or financial or securities markets in
general; (b) conditions affecting the U.S. air transportation industry in
particular, (c) changes in any Law, GAAP or interpretations thereof applicable
to the Company, (d) any attack on, outbreak or escalation of hostilities or act
of terrorism involving, the United States, or (e) any natural disaster affecting
the United States, (ii) that arises out of the announcement or prior disclosure
of, or the response or reaction of vendors, suppliers or employees of the
Company to, this Agreement or any Ancillary Instrument or any of the
transactions contemplated hereby or thereby or the plans or intentions of Buyer
with respect to the conduct of the business of the Company after the Closing, or
(iii) that arises directly from an act or omission of Buyer (or an Affiliate of
Buyer) or from an act or omission of Seller or the Company to which Buyer has
consented; except with respect to clauses (a), (b), (d) and (e), in the event,
and only to the extent, that such event, circumstance, change or effect has had
a materially and disproportionately effect on the Company as compared to other
Persons

 
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engaged in the same industry; it being agreed that such a material adverse event
described in clause (x) from which the Company suffers Losses at least equal to
the Basket Amount shall be deemed to be a Material Adverse Event; or (y) any
event or condition existing as of the Closing with respect to the Company that
is the basis for the termination by Seller of any DCA Agreement effective within
nine (9) months after the Closing Date, provided that the foregoing clause (y)
shall not be deemed to be, or construed as, an admission by Buyer that any such
event or condition does not constitute a Material Adverse Effect if the
resulting termination by Seller of any DCA Agreement occurs after such nine (9)
month period.
 
“Net After-Tax Basis” means, with respect to the calculation of any
indemnification payment owed to any Indemnified Party pursuant to this
Agreement, calculation thereof in a manner taking into account any Taxes owing
by the Indemnified Party or its Affiliates as a result of receipt or accrual of
the indemnity payment and any savings in Taxes realized or reasonably realizable
by the Indemnified Party or its Affiliates as a result of the indemnified
liability.
 
 “Order” means any order, writ, judgment, stipulation, settlement, preliminary
or permanent injunction or other order, award or decree entered by any
Governmental Authority of competent jurisdiction.
 
“Permitted Liens” means (i) Liens for Taxes not yet due or delinquent and
payable, that are payable without interest or penalty or that are being
contested in good faith, (ii)  Liens created by, arising out of or specifically
contemplated or permitted by this Agreement, (iii) with respect to real property
or interests therein, any minor defects or irregularities in title that do not,
individually or in the aggregate, materially and adversely affect the Company,
(iv) Liens identified in any Section of the Disclosure Letter, (v)
materialmen’s, mechanics’, workmen’s, repairmen’s, employees’ or other like
Liens arising in the course of construction or in the ordinary course of
operations or maintenance, in each such case securing obligations which are not
delinquent or are being contested in good faith by appropriate proceedings and
for which adequate reserves have been taken or securing obligations which are
bonded in a reasonable manner, (vi) zoning restrictions, easements, licenses or
other restrictions on the use of real property or other minor irregularities in
title thereto or encumbrances thereon that do not, individually or in the
aggregate, materially and adversely interfere with or impair the use of such
real property in the ordinary course of business, (vii) Liens disclosed in any
title reports made available to Buyer or otherwise disclosed to Buyer in
writing, in each case prior to the date of this Agreement, and (viii) Liens
arising out of judgments or awards with respect to which at the time an appeal
or proceeding for review is being prosecuted in good faith if adequate reserves
with respect thereto have been established and are being maintained and with
respect to which there shall have been secured a stay of execution pending such
appeal or proceeding for review.
 
“Permits” means all licenses, franchises, exemptions, certificates, permits,
orders, consents, approvals, registrations, authorizations, qualifications and
filings which are required to be made with ,or required under all, applicable
Laws of the U.S. (federal, state or local) or any other jurisdiction of
applicable Governmental Authorities (including all authorizations from the FAA
and DOT).

 
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“Person” means any individual, corporation, partnership, limited liability
company, investment company, joint venture, association, joint stock company,
mutual fund, trust (including any beneficiary thereof), unincorporated
organization, Governmental Authority or government or any agency or political
subdivision thereof.
 
 “Post-Closing Taxable Period” means a Taxable period, excluding a Straddle
Period, that, to the extent it relates to the Company, begins after the Closing
Date.
 
“Pre-Closing Taxable Period” means a Taxable period, excluding a Straddle
Period, that, to the extent it relates to the Company, ends on or before the
Closing Date.
 
“Release” means any depositing, spilling, releasing, leaking, pumping, pouring,
placing, emitting, discarding, abandoning, emptying, discharging, migrating,
ingesting, escaping, leaching, dumping or disposing.
 
“Securities Act” means the U.S. Securities Act of 1933, as amended.
 
“Straddle Period” means a Taxable period that, to the extent it relates to the
Company, includes, but does not end on, the Closing Date.
 
“Subsidiary” means, with respect to any specified Person, any other corporation,
partnership, joint venture, association or other entity, whether incorporated or
unincorporated, in respect of which such specified Person directly, or
indirectly through one or more other Subsidiaries, either (i) owns not less than
a majority of the overall economic equity or (ii) has the power to elect a
majority of the board of directors (or individuals serving a function similar to
that of a board of directors of a corporation).
 
“Tax Audit” means any notice of deficiency, proposed adjustment, adjustment,
assessment, audit, examination or other administrative or court proceeding,
suit, dispute or other claim regarding Taxes
 
“Tax” or “Taxes” means all taxes, assessments, duties, levies, fees and other
governmental charges of any kind whatsoever (including taxes on or with respect
to net or gross income, employment, value added, rent, excise, occupancy,
licensing, sales, use, transfer, ad valorem, intangibles, gross receipts,
personal property, real property, franchise, doing business, withholding,
duties, customs duties, payroll, stamp and capital) of the United States
(federal, state or local) or other applicable jurisdiction, together with any
interest thereon, penalties, additions to tax or additional amounts with respect
thereto, and any interest in respect of any such penalties, additions or
additional amounts.
 
 “Tax Return” means any return, declaration, property Tax rendition, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.

 
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“Technology” means trade secrets, proprietary information, software and computer
programs and source code data relating thereto (including all current and
historical data bases), research records, test information, market surveys,
marketing know-how, inventions, know-how, processes and procedures.
 
“Total Current Assets” means the sum of (i) the amount of Closing Cash in excess
of $2,500,000, (ii) accounts receivable, (iii) inventory, and (iv) prepaid
expenses and other current assets, in each case calculated in the same manner
and using the same methodologies, practices, accounting applications and
assumptions utilized for the respective line items on the Balance Sheet;
provided, however, that Total Current Assets shall exclude inter-company
receivables and any items pertaining to rights to refunds of Taxes to which
Seller is entitled pursuant to Article 7.
 
“Total Current Liabilities” means the sum of (i) accounts payable, (ii) accrued
payroll, (iii) accrued maintenance, and (iv) other accrued expenses, in each
case calculated in the same manner and using the same methodologies, practices,
accounting applications and assumptions utilized for the respective line items
on the Balance Sheet; provided, however, that Total Current Liabilities shall
exclude inter-company payables, liabilities for Taxes (for the avoidance of
doubt, other than payroll taxes included in clauses (i) through (iv) above) for
which Seller is liable pursuant to Article 7, and any amounts included in
Closing Debt (or, if applicable, Estimated Closing Debt).
 
“Working Capital” means, with respect to the Company, the aggregate amount of
Total Current Assets of the Company minus the aggregate amount of the Total
Current Liabilities of the Company, in each case, without duplication.
 
2.           The following terms are defined in the sections of the Agreement
indicated:

 
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Defined Term
Section

Accounting Firm
1.4(b)

Agreement
Preamble

Aircraft
3.19(a)

Aircraft Sublease Agreement
5.8(a)

Aircraft Sublease Amendment
5.8(b)

Allocation Schedule
5.6(b)

ALPA
5.5

ALPA Letter Agreement
5.5

Balance Sheet
3.5(a)

Basket Amount
6.2(a)(ii)(B)

Buyer
Preamble

Buyer Cap
6.2(b)(ii)(B)

Buyer Indemnified Party
6.2(a)

Buyer Losses
6.2(a)

Buyer’s Closing Schedule
1.4(a)

Closing
1.2

Closing Balances
1.4(a)

Closing Date
1.2

Collective Bargaining Agreements
3.10(a)

Company
Preamble

Company Plans
3.9(a)

Company-Vendor Agreements
2.5(d)

Copyright Office
3.15(b)

CRJ-200 ASA
1.3(b)

CRJ-900-M DCA
1.3(d)

CRJ-900-P DCA Amendment
1.3(c)

CRJ-900-P DCA
1.3(c)

DCA Agreements
1.3(e)

DOT Notice
2.4

Engines
3.9(c)

Excess Working Capital Amount
1.4(d)

FAA
2.4

FAA Notice
2.4

Facilities Use Agreement
1.3(g)

Final Closing Balances
1.4(c)

Final Closing Cash
1.4(c)

Final Closing Debt
1.4(c)

Final Closing Working Capital
1.4(c)

Financial Statements
3.5(a)

GAAP
3.5(a)

Indemnification Claim
6.2(c)

Indemnification Event
6.2(c)

Indemnified Party
6.2(c)

Indemnifying Party
6.2(c)

Initial Losses
6.2(a)(ii)(A)

Intercompany Agreements
2.5(a)

Interim Balance Sheet
3.5(a)

Inventory Basket Amount
6.2(a)(ii)(C)

Inventory Representation
6.2(a)(ii)(C)

Leased Real Property
3.13(b)

Material Contract
3.8(a)

Mini-Basket Amount
6.2(a)(ii)(A)

Mesaba/Delta Mutual Release
1.3(h)

Northwest
5.2(d)

Operating Certificates
3.7

PBGC
3.9(e)

Pinnacle
Preamble

Pinnacle/Delta Mutual Release
1.3(j)

Promissory Note
1.1(a)

PTO
3.15(b)

Recovery
6.2(i)

Related-Party Agreements
2.5(b)

Reports
3.17(f)

Restricted Period
5.3(a)

Rubb Lease
5.15

Saab 340 DCA
1.3(e)

Section 338(h)(10) Elections
5.6(a)

Security Agreement
1.1(a)

Seller
Preamble

Seller Cap
6.2(a)(ii)(C)

Seller Indemnified Party
6.2(b)

Seller Losses
6.2(b)

Seller Representations
6.2(a)(i)

Seller’s Closing Schedule
1.1(b)

Seller’s Dispute Notice
1.4(a)

Seller-Vendor Agreements
2.5(c)

Shares
1.1(a)

Third-Party Claim
6.2(d)

Transition Services Agreement
1.3(f)

 
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