**Exhibit 4.2**

 

THE SECURITIESREPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER EITHER THESECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOTBE SOLD, TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED FORVALUE UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT ANDSUCH LAWS COVERING SUCH SECURITIES, OR THE COMPANY RECEIVES AN OPINION OFCOUNSEL ACCEPTABLE TO THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT,OFFER, PLEDGE OR OTHER DISTRIBUTION FOR VALUE IS EXEMPT FROM THE REGISTRATIONAND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

 

**AMENDED AND RESTATED WARRANT**

**to Purchase 4,112,500 Shares of Common Stock**

**of**

**MAIR Holdings, Inc.**

 

**ThisAmended and Restated Warrant** (the “Warrant”), dated as of August 29,2005, certifies that for value received, Northwest Airlines, Inc., aMinnesota corporation (“Northwest”), or its permitted assigns, is entitled tosubscribe for and purchase from MAIR Holdings, Inc., a Minnesota corporation(the “Company”), at any time after the date hereof up to and including 5:00 p.m.Minneapolis, Minnesota time on August 28, 2015 (the “Expiration Date”),4,112,500 fully paid and nonassessable shares (subject to adjustment as hereinprovided) of the Common Stock of the Company at the price of $8.74 per share(the “Exercise Price”).  Contemporaneouswith the issuance of this Warrant, Northwest shall present to the Company forcancellation the existing Stock Purchase Warrants issued by the Company toNorthwest on each of October 25, 1996, June 4, 1997, April 1,1998 and June 2, 1998, all exercisable for an aggregate of 4,151,922shares of the Company’s Common Stock.

 

The shares which may beacquired upon exercise of this Warrant (as adjusted in accordance with theterms hereof and together with such other securities receivable in accordancewith the terms hereof) are referred to herein as the “Warrant Shares.”  As used herein, the term “Holder” meansNorthwest or any party who acquires all or a part of this Warrant as aregistered transferee of Northwest.  Asused herein, the term “Common Stock” means and includes the Company’s presentlyauthorized common stock, par value $0.01 per share.

 

This Warrant has beenissued to Northwest in consideration of that certain Airline ServicesAgreement, dated August 29, 2005, between Northwest and Mesaba Aviation, Inc.(“Mesaba”) (the “ASA “) and in consideration of that certain Agreement, dated August 29,2005, between Northwest and the Company. This Warrant is subject to the following provisions, terms, andconditions:

 

1.                                       **Exercise and Issuance of the Warrant Shares**.  The rights represented by this Warrant may beexercised by the Holder hereof, in whole or in part (but not as to a fractionalshare of Common Stock), by written notice of exercise (in the form attachedhereto) delivered to the Company at the principal office of the Company prior tothe Expiration Date and accompanied by or preceded by the surrender of thisWarrant and a check in payment of the

 

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Warrant Exercise Price for such shares.  The Company agrees that the shares sopurchased shall be deemed to be issued as of the close of business on the dateon which this Warrant shall have been surrendered and payment made for suchshares as aforesaid.  Certificates forthe Warrant Shares so purchased shall be delivered to the Holder as soon aspracticable after the purchase rights represented by this Warrant shall havebeen so exercised, but in no event longer than three (3) business days,and, unless this Warrant has expired, a new Warrant representing the right topurchase the number of Warrant Share, if any, with respect to which thisWarrant shall not then have been exercised shall also be delivered to theHolder within such time.  This Warrantmay not be exercised in part for the purchase of any number of Warrant Sharesless than 50,000, unless such number represents the total number of WarrantShares then remaining subject to purchase pursuant to this Warrant.

 

2.                                       **Exchange and Replacement**.  Subject to Section 6 hereof, thisWarrant is exchangeable upon the surrender hereof by the Holder to the Companyat its office for new Warrants of like tenor and date representing in theaggregate the right to purchase the number of Warrant Shares purchasablehereunder, each of such new Warrants to represent the right to purchase suchnumber of Warrant Shares (not to exceed the aggregate total number purchasablehereunder) as shall be designated by the Holder at the time of such surrender.Upon receipt by the Company of evidence reasonably satisfactory to it of theloss, theft, destruction, or mutilation of this Warrant, and, in case of loss,theft or destruction, of indemnity or security reasonably satisfactory to it,and upon surrender and cancellation of this Warrant, if mutilated, the Companywill make and deliver a new Warrant of like tenor, in lieu of thisWarrant.  This Warrant shall be promptlycanceled by the Company upon the surrender hereof in connection with anyexchange or replacement.

 

3.                                       **Vesting**.  This Warrant shall become exercisable ininstallments in accordance with the following schedule:  60% of the Warrant Shares upon delivery toMesaba, pursuant to the ASA, of the 15th CRJ-200 or CRJ-440aircraft, and an additional 4% of the Warrant Shares on each of the ten dateson which an additional CRJ-200 or CRJ-440 aircraft is delivered to Mesabapursuant to the ASA.  This Warrant willexpire on the Expiration Date unless terminated earlier pursuant to the termshereof.

 

4.                                       **Covenants of the Company**.  The Company covenants and agrees that all WarrantShares issued upon the exercise of the purchase rights represented by thisWarrant will, upon issuance, be validly issued, fully paid, nonassessable, andfree from all taxes, liens and charges with respect to the issuancethereof.  The Company further covenantsand agrees that until the expiration of this Warrant it will at all times haveauthorized and reserved for the purpose of issue or transfer upon exercise ofthe purchase rights evidenced by this Warrant a sufficient number of shares ofits Common Stock to provide for the exercise of the purchase rights representedby this Warrant.

 

5.                                       **Securities Regulations**.  The Company shall not be required to deliverany certificate for the Warrant Shares upon exercise of this Warrant except inaccordance with exemptions from the applicable securities registrationrequirements or registrations under applicable securities laws.  The Holder shall also provide the Companywith written representations from the Holder and the proposed transfereesatisfactory to the Company regarding the transfer or, at the election of theCompany, an opinion of counsel reasonably

 

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satisfactory to the Company to the effect that theproposed transfer of this Warrant or disposition of shares may be effectedwithout registration or qualification (under any Federal or State law) of thisWarrant or the Warrant Shares.  Uponreceipt by the Company of such written notice and either such representationsor opinion, such Holder shall be entitled to transfer this Warrant, or toexercise this Warrant in accordance with its terms and dispose of the WarrantShares, all in accordance with the notice delivered by such Holder to theCompany, provided that an appropriate legend, if any, respecting the aforesaidrestrictions on transfer and disposition may be endorsed on this Warrant or thecertificates for the Warrant Shares.  TheCompany acknowledges that the Warrant Shares are subject to registration by theCompany pursuant to that certain Registration Rights Agreement dated as of August 29,2005 between the Company and Northwest. The Holder agrees to execute such documents and make suchrepresentations, warranties, and agreements as may be required solely to complywith the exemption relied upon by the Company, or the registration made, forthe issuance of the Warrant Shares.

 

6.                                       **Transfer of Warrant**.  This Warrant shall not be transferable orassignable by Northwest and may be exercised only by Northwest; provided, however,that Northwest may transfer or assign this Warrant to any affiliate (as suchterm is defined in Rule 405 promulgated under the Securities Act of 1933,as amended) of Northwest and any successor corporation (or other entity)resulting from its merger, consolidation, or other reorganization or the saleof all or substantially all of its assets.

 

7.                                       **Adjustments to Warrant Shares**.  In case the Company shall declare a stockdividend or other distribution upon its common stock payable in common stock ofthe Company, then the total maximum number of Warrant Shares issuable upon theexercise of this Warrant shall be increased by an amount equal to the number ofshares of common stock which would have been issued to the Holder as a resultof the issuance of such dividend or other distribution if, immediately prior tothe record date relating to such dividend or other distribution, the Holder hadexercised its purchase rights under this Warrant with respect to the totalnumber of Warrant Shares then remaining subject to purchase.  The Exercise Price in effect immediatelyprior to such dividend or other distribution shall be proportionately reduced.

 

8.                                       **Adjustment to Exercise Price**.  In case the Company shall at any timesubdivide or split its outstanding shares of common stock into a greater numberof shares, the Exercise Price in effect immediately prior to such subdivisionor split shall be proportionately reduced, and conversely, in case theoutstanding shares of common stock of the Company shall be combined into asmaller number of shares, the Exercise Price in effect immediately prior tosuch combination shall be proportionately increased.  Upon each adjustment of the Exercise Pricepursuant to this Section 8, the Holder shall thereafter be entitled topurchase, at the then applicable Exercise Price, the number of shares obtainedby multiplying the Exercise Price in effect immediately prior to suchadjustment by the number of shares purchasable pursuant hereto immediatelyprior to such adjustment and dividing the product thereof by the applicableExercise Price resulting from such adjustment.

 

9.                                       **Reorganization or Reclassification**.  If any capital reorganization orreclassification of the capital stock of the Company or consolidation or mergerof the Company with another corporation, or the sale of all or substantiallyall of its assets to another corporation shall be effected in such a way thatholders of shares of Common Stock of the Company shall be

 

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entitled to receive stock, securities or assets withrespect to or in exchange for Common Stock, then, as a condition of suchreorganization, reclassification, consolidation, merger or sale, lawful andadequate provision shall be made whereby the Holder shall thereafter have theright to receive upon the basis and upon the terms and conditions specified inthis Warrant, such shares of stock, securities or assets as may be issued orpayable with respect to or in exchange for a number of outstanding shares of CommonStock of the Company equal to the number of Warrant Shares immediatelytheretofore receivable upon the exercise of this Warrant had suchreorganization, reclassification, consolidation, merger or sale not takenplace, and in any such case appropriate provision shall be made with respect tothe rights and interests of the Holder to the end that the provisions hereof(including without limitation provision for adjustments of the then applicableExercise Price and of the number of shares or other kinds of securities orother property receivable upon the exercise of this Warrant) shall thereafterbe applicable, as nearly as may be, in relation to any shares of stock,securities or assets thereafter receivable upon the exercise of this Warrant.  The Company shall not effect any suchconsolidation, merger or sale, unless, prior to the consummation thereof, thesurviving corporation (if other than the Company) resulting from suchconsolidation or merger or the corporation purchasing such assets shall assumeby written instrument executed and mailed to the Holder at the last address ofthe Holder appearing on the books of the Company, the obligation to deliver to theHolder such shares of stock, securities or assets as, in accordance with theforegoing provisions, the Holder may be entitled to receive.

 

10.                                 **Notice of Adjustments**.  Upon any adjustment of the Exercise Price orthe number of Warrant Shares or other kinds of securities or other propertyreceivable upon exercise of this Warrant, then and in each case the Companyshall give written notice thereof, by nationally recognized overnight courierservice to the Holder at the address set forth below or such other addressspecified by Holder pursuant to Section 12 hereof, which notice shallstate the then applicable Exercise Price resulting from such adjustment, theincrease or decrease, if any, in the number of Warrant Shares or other kinds ofsecurities or other property receivable upon exercise of this Warrant and setforth in reasonable detail the method of calculation and the facts upon whichsuch calculation is based.

 

11.                                 **Notice of Certain Events**.  In case any time:

 

(i)                                     theCompany shall pay or make any stock dividend or other distribution payable instock upon its Common Stock or make any distribution (other than regular cashdividends) to the holders of its Common Stock;

 

(ii)                                  theCompany shall offer for subscription pro rata to the holders of its Common Stockany additional shares of stock of any class or other rights;

 

(iii)                               thereshall be any capital reorganization, reclassification of the capital stock ofthe Company, or consolidation or merger of the corporation with, or sale of allor substantially all of its assets to, another corporation; or

 

(iv)                              thereshall be a voluntary or involuntary dissolution, liquidation or winding up ofthe Company;

 

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then, in any one or moreof said cases, at least 21 days prior to the applicable date specified below,the Company shall give written notice, by nationally recognized overnightcourier service, addressed to the Holder at the address specified by Holderpursuant to Section 12 below, of the date on which (aa) the books of theCompany shall close or a record shall be taken for such stock dividend,distribution or subscription rights, or (bb) such reorganization,reclassification, consolidation, merger, sale, dissolution, liquidation orwinding up shall take place, as the case may be.  Such notice shall also specify the date as ofwhich the holders of Common Stock of record shall participate in such dividend,distribution or subscription rights, or shall be entitled to exchange theirshares of Common Stock for securities or other property deliverable upon suchreorganization, reclassification, consolidation, merger, sale, dissolution,liquidation or winding up, as the case may be. Failure to give such notice or any defect therein shall not affect thelegality or validity of any such proceeding or transaction and shall not affectthe right of the holder to participate in any said dividend, distribution,subscription or exchange.

 

12.                                 **Notices**.  All notices or other communications requiredor permitted to be given under this Warrant shall be in writing and shall bedeemed to have been duly given and received when delivered personally or onebusiness day after being sent by a nationally recognized overnight courierservice to the parties at their respective addresses stated below.  All such notices or other communicationsshall be delivered as follows:

 
|   | if to Northwest:   |   | Northwest Airlines, Inc.                    |
|--------|--------------------|--------|--------------------------------------------------|
|   |               |   | 2700 Lone Oak Parkway                            |
|   |               |   | Dept. A4400                                      |
|   |               |   | Eagan, MN 55121                                  |
|   |               |   | Attention:  Chief Financial Officer         |
|   |               |   |                                             |
|   |               |   | Northwest Airlines, Inc.                    |
|   |               |   | 2700 Loan Oak Parkway                            |
|   |               |   | Dept. A6110                                      |
|   |               |   | Eagan, MN 55121                                  |
|   |               |   | Attention:  Vice President Network Planning |
|   |               |   |                                             |
|   | with a copy to:    |   | Northwest Airlines, Inc.                    |
|   |               |   | 2700 Lone Oak Parkway                            |
|   |               |   | Dept. A1180                                      |
|   |               |   | Eagan, MN 55121                                  |
|   |               |   | Attention:  General Counsel                 |
|   |               |   |                                             |
|   | if to the Company: |   | MAIR Holdings, Inc.                         |
|   |               |   | 150 South Fifth Street,  Suite 1360         |
|   |               |   | Minneapolis, MN 55402                            |
|   |               |   | Attention:  Chief Executive Officer         |
|   |               |   |                                             |
|   | with a copy to:    |   | MAIR Holdings, Inc.                         |
|   |               |   | 150 South Fifth Street,  Suite 1360         |
|   |               |   | Minneapolis, MN 55402                            |
|   |               |   | Attention:  Chief Financial Officer         |

 

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13.                                 **Transfers**.  Any permitted transfer of this Warrant may beeffected by delivery to the principal office of the Company of a notice in theform attached hereto specifying the party to whom the Warrant has beentransferred, and the surrender of this Warrant properly endorsed.  Northwest and each permitted transfereeconsents and agrees that Northwest may be treated by the Company and all otherpersons dealing with this Warrant as the absolute owner hereof for any purpose andas the person entitled to exercise the rights represented by this Warrant, orto the transfer hereof on the books of the Company, in the absence of anyactual written notice to the contrary.

 

14.                                 **No Voting Rights**.  This Warrant shall not entitle the Holder toany voting rights or other rights as a shareholder of the Company.

 

15.                                 **Fractional Shares**.  Fractional shares shall not be issued uponthe exercise of this Warrant.

 

16.                                 **Early Termination**.  Notwithstanding any other provisions setforth in this Warrant to the contrary, the rights of Northwest granted in thisWarrant shall terminate (i) immediately uponthe termination of the ASA, if the ASA is terminated by Northwest (provided,that if Northwest terminates the ASA pursuant to Section 10.02, Sections10.03(a)-(i) or Section 10.03(k), this Warrant shall terminate onlywith respect to any Warrant Shares that have not yet vested pursuant to Section 3hereof) or (ii) 30 days after Northwest’sreceipt of notice from Mesaba of Mesaba’s termination of the ASA, if the ASA isterminated as the result of such notice.

 

17.                                 **Amendments**.  Neither this Warrant nor any term hereof maybe changed, waived, discharged or terminated orally but only by an instrumentin writing signed by the party against which enforcement of the change, waiver,discharge or termination is sought.

 

**INWITNESS WHEREOF**, the Company has caused this Warrant to besigned by its duly authorized officer as of the day and year first abovewritten.

 

 
| ** ** | **MAIR  HOLDINGS, INC.** |
|------------|--------------------------|
| ** ** | ** **               |
| ** ** | ** **               |
|       | By                       | /s/ Paul F.  Foley |   |
|       | Paul F. Foley            |   |
|       | Chief Executive  Officer |   |

 

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**NOTICE OF EXERCISE OF WARRANT**

 

(To be executed by the registered holder

if such holder desires to exercise the Warrant.)

 

TO:                            MAIRHoldings, Inc.

 

The undersigned hereby irrevocably elects to exercise the attachedWarrant to purchase for cash                             of the shares issuable upon the exercise of such Warrant, and requests that certificatesfor such shares (together with a new Warrant to purchase the number of shares,if any, with respect to which this Warrant is not exercised) shall be issued inthe name of:

 
|                                       |         |
|--------------------------------------------|--------------|
|                                       | (Print Name) |
|                                       |         |
| Please insert social security or other tax |         |
| Identification number of registered        |         |
| Holder of certificate:                     |         |
|                                       |         | Address: |
|                                       |         |   |
|                                       |         |
|                                       |         |
|                                       |         |
|                                       |         |
|                                       |         |
|                                       |         |
| Dated:                                     |         |   |   |
|                                       | Signature*   |
|                                            |              |  |  |  |

 

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* The signature on theNotice of Exercise of Warrant must correspond to the name as written upon theface of the Warrant in every particular without alteration or enlargement orany change whatsoever.  When signing onbehalf of a corporation, partnership, trust or other entity, please indicateyour position(s) and title(s) with such entity.

 

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**FORM OF ASSIGNMENT**

 

(To be executed by the registered holder

if such holder desires to transfer the Warrant.)

 

FOR VALUE RECEIVED, theundersigned hereby sells, assigns and transfers unto                                                           the right to purchase all or a portion of the securities of MAIR Holdings, Inc.to which the within Warrant relates (as specified below) and appoints                                                   ,attorney, to transfer said right on the books of MAIR Holdings, Inc. withfull power of substitution in the premises.

 

 
| Dated: |      |   |   |   |
|--------|-----------|--------|--------|--------|
|   | Signature |   |
|   |      |   |
|   |      |   |
|   | Address:  |   |
|   |      |   |
|   |      |   |
|   |      |   |
|   |      |   |

 

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