-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IY7DuMAFRCXU1PuDBHh+BPOIDTWcMK7AnvrAIXdHrTHvbSCB3ybRgNioMKBVJCZW a8l/MSnnkqBPSSNj+/zqyw== 0001159154-09-000028.txt : 20090624 0001159154-09-000028.hdr.sgml : 20090624 20090624154759 ACCESSION NUMBER: 0001159154-09-000028 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20090623 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20090624 DATE AS OF CHANGE: 20090624 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REPUBLIC AIRWAYS HOLDINGS INC CENTRAL INDEX KEY: 0001159154 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 061449146 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-49697 FILM NUMBER: 09907498 BUSINESS ADDRESS: STREET 1: 8909 PURDUE ROAD STREET 2: SUITE 300 CITY: INDIANAPOLIS STATE: IN ZIP: 46268 BUSINESS PHONE: 317-484-6000 MAIL ADDRESS: STREET 1: 8909 PURDUE ROAD STREET 2: SUITE 300 CITY: INDIANAPOLIS STATE: IN ZIP: 46268 8-K 1 form8k.htm REPUBLIC AIRWAYS ENTERS INTO AGREEMENT WITH MIDWEST AIR GROUP form8k.htm
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): June 23, 2009

Republic Airways Holdings Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)

000-49697                                          06-1449146
(Commission File Number)                     (IRS Employer Identification No.)

8909 Purdue Road
Suite 300
Indianapolis, IN 46268
(Address of principal executive offices) (Zip Code)
 
 
Registrant’s telephone number, including area code (317) 484-6000
 
 
None.
(Former name or former address, if changed since last report.)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨           Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
Item 1.01
Entry into a Material Definitive Agreement.
 
On June 23, 2009, Republic Airways Holdings Inc. (the “Company”) entered into (i) an Agreement and Plan of Merger, by and among the Company, RJET Acquisition, Inc. and Midwest Air Group, Inc., pursuant to which, subject to numerous closing conditions, including, without limitation, that the results of the Company’s due diligence review of Midwest be satisfactory to the Company in its sole discretion, the Company would acquire the equity of Midwest Air Group, Inc. through the merger of RJET Acquisition, Inc. with and into the Company; and (ii) an Investment Agreement, by and among TPG Midwest US V, LLC, TPG Midwest International V, LLC (together, the “TPG Entities”) and the Company, pursuant to which the TPG Entities assigned to the Company all of the TPG Entities’ rights and obligations in their capacities as lenders under the Amended and Restated Senior Secured Credit Agreement, dated as of September 3, 2008, among Midwest Airlines, Inc. (“Midwest”), Midwest Air Group, Inc., each of the subsidiaries of Midwest from time to time party thereto, each of the TPG Entities, the Company, and Wells Fargo Bank Northwest, National Association, as administrative agent and as collateral agent, as amended.  Under the Investment Agreement, the Company will acquire the TPG Entities’ $31 million secured note from Midwest.  Consideration will be $6 million in cash and a $25 million Convertible Note having a five-year maturity.  Under the Convertible Note, a form of which is attached as an annex to the Investment Agreement, each TPG Entity may elect to convert the amount owed into shares of the Company’s common stock at a $10.00 conversion price.
 
A copy of the Merger Agreement is filed herewith as Exhibit 10.62(f).
 
A copy of the Investment Agreement is filed herewith as Exhibit 10.62(g).
 
A copy of the press release of the Company dated June 23, 2009 is filed herewith as Exhibit 99.1.
 
 
Item 9.01  Financial Statements and Exhibits.
                    

(d)           Exhibits.

10.62(f)
Agreement and Plan of Merger, by and among Republic Airways Holdings Inc., RJET Acquisition, Inc. and Midwest Air Group, Inc., dated as of June 23, 2009.
   
10.62(g) Investment Agreement, by and among TPG Midwest US V, LLC, TPG Midwest International V, LLC and Republic Airways Holdings Inc., dated as of June 23, 2009.
   
99.1 Press Release of Republic Airways Holdings Inc. issued on June 23, 2009.


 
(All other items on this report are inapplicable.)

 
 
 
 
 
SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
  REPUBLIC AIRWAYS HOLDINGS INC.  
       
 
By:
/s/ Robert H. Cooper  
    Name: Robert H. Cooper   
    Title: Executive Vice President and Chief Financial Officer   
Dated: June 24, 2009
      

 
 


 


 

 
 
 
EXHIBIT INDEX
 
Exhibit Number                                                                Description

10.62(f)
Agreement and Plan of Merger, by and among Republic Airways Holdings Inc., RJET Acquisition, Inc. and Midwest Air Group, Inc., dated as of June 23, 2009.
   
10.62(g) Investment Agreement, by and among TPG Midwest US V, LLC, TPG Midwest International V, LLC and Republic Airways Holdings Inc., dated as of June 23, 2009.
   
99.1 Press Release of Republic Airways Holdings Inc. issued on June 23, 2009.

EX-10.62(F) 2 exhibit10_62f.htm AGREEMENT AND PLAN OF MERGER exhibit10_62f.htm
 
EXHIBIT 10.62(f)
 
 
 
 
AGREEMENT AND PLAN OF MERGER
 
 
BY AND AMONG
 
 
REPUBLIC AIRWAYS HOLDINGS INC.,
 
 
RJET ACQUISITION, INC.
 
AND
 
MIDWEST AIR GROUP, INC.
 

 

 
Dated as of June 23, 2009
 
 
 

 
 
ARTICLE 1 - THE MERGER
1.1
           Merger 
1.2
           Closing 
1.3
           Effective Time 
1.4
           Effect of the Merger 
1.5
           Surviving Corporation’s Charter Documents 
1.6
           Surviving Corporation’s Directors and Officers 
1.7
           Conversion of Securities 
1.8
           Exchange Procedures 
1.9
           Adjustments for Dilution and Other Matters 
1.10
         Company Deliverables 
1.11
         Tax Treatment of Merger
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1
           Organization, Good Standing and Qualification 
2.2
           Capitalization 
2.3
           Subsidiaries 
2.4
           Authority; Approval 
2.5
           Third Party Consents; No Violations 
2.6
           Financial Statements 
2.7
           Absence of Certain Changes 
2.8
           Litigation 
2.9
           Employee Benefits 
2.10
         Compliance with Laws; Licenses 
2.11
         Material Contracts 
2.12
         Property 
2.13
         Environmental Matters 
2.14
         Taxes 
2.15
         Labor Matters 
2.16
         Intellectual Property 
2.17
         Aircraft 
2.18
         Slots 
2.19
         Gate Interests 
2.20
         U.S. Citizen; Air Carrier 
2.21
         Insurance 
2.22
         Brokers and Finders 
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE MERGER SUB
3.1
           Organization 
3.2
           Authority 
3.3
           Consents and Approvals 
3.4
           No Conflicts 
3.5
           Brokers and Finders 
ARTICLE 4 - COVENANTS
4.1
           Conduct of the Business Pending Closing 
4.2
           Notice of Incidents; Accidents and Litigation 
4.3
           Information Rights and Access 
4.4
           Governmental Consents 
4.5
           Third Party Consents 
4.6
           Publicity 
ARTICLE 5 – ADDITIONAL AGREEMENTS.
5.1
           No Control of Other Party’s Business 
5.2
           Transfer Taxes 
5.3
           Takeover Statute 
ARTICLE 6 - CONDITIONS OF MERGER
6.1
           Conditions to Both the Parent’s and the Company’s Obligations 
6.2
           Additional Conditions Applicable to Parent and Merger Sub 
6.3
           Additional Conditions Applicable to Company 
ARTICLE 7 - TERMINATION
7.1
           Termination 
7.2
           Notice of Termination; Effect of Termination 
ARTICLE 8 - GENERAL PROVISIONS
8.1
           Non-Survival of Representations and Warranties 
8.2
           Notices 
8.3
           Amendments and Waivers 
8.4
           Interpretation 
8.5
           Fee and Expenses 
8.6
           Further Assurances 
8.7
           Entire Agreement 
8.8
           Severability 
8.9
           Assignment 
8.10
         Governing Law 
8.11
         Injunctive Relief 
8.12
         No Third Party Beneficiaries 
8.13
         Counterparts 
8.14
         Time is of the Essence. 

 
Exhibit A
Glossary of Defined Terms
Exhibit B
Calculation of Per Shareholder Consideration
 
 

 

AGREEMENT AND PLAN OF MERGER
 
THIS AGREEMENT AND PLAN OF MERGER is dated and effective as of June 23, 2009, by and among Republic Airways Holdings Inc., a Delaware corporation (the “Parent”), RJET Acquisition, Inc., a Delaware corporation and wholly owned subsidiary of the Parent (the “Merger Sub”), and Midwest Air Group, Inc. a Wisconsin corporation (the “Company”).  A glossary of defined terms is attached to this Agreement as Exhibit A.
 
RECITALS
 
WHEREAS, the Merger Sub’s Board of Directors (the “Merger Sub Board”) has determined that it is advisable to, fair to and in the best interests of its stockholders for the Merger Sub to merge with and into the Company (the “Merger”) upon the terms and subject to the conditions set forth in this Agreement and in accordance with the DGCL and the WBCL;
 
WHEREAS, the Company’s Board of Directors (the “Company Board”), the Parent’s Board of Directors (the “Parent Board”) and the Merger Sub Board have each approved the Merger, upon the terms and subject to the conditions set forth in this Agreement;
 
WHEREAS, the Company, the Parent and the Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated hereby and also to prescribe various conditions to consummation of the transactions contemplated hereby; and
 
WHEREAS, concurrently with the execution of this Agreement, TPG Midwest US V, LLC and TPG Midwest International V, LLC (together, the “TPG Entities”) and the Parent, are entering into an Investment Agreement, dated as of the date hereof (the “Investment Agreement”), pursuant to which, and on the terms and subject to the conditions of which, the TPG Entities have agreed to assign to the Parent all of the TPG Entities’ rights and obligations in their capacities as “Lenders” under the Amended and Restated Senior Secured Credit Agreement, dated as of September 3, 2008, among Midwest Airlines, Inc., a Wisconsin corporation, the Company, each of the subsidiaries of Midwest from time to time party thereto, each of the TPG Entities, the Parent, Wells Fargo Bank Northwest, National Association, as administrative agent and as collateral agent, as amended by Amendment No. 1 to Amended and Restated Credit Agreement, dated as of October 28, 2008, Amendment No. 2 to Amended and Restated Credit Agreement, dated as of January 28, 2009 and Amendment No. 3 to Amended and Restated Credit Agreement, dated as of June 2, 2009, and as further amended, modified or supplemented from time to time.
 
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and subject to the terms and conditions set forth herein, the Company, the Parent and the Merger Sub hereby agree as follows:
 
 
ARTICLE 1 - THE MERGER
 
 
1.1 Merger.  Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, a certificate of merger to be prepared in accordance with the DGCL, the WBCL and a plan of merger to be prepared in accordance with the WBCL, at the Effective Time the Merger Sub shall be merged with and into the Company.  As a result of the Merger, the separate corporate existence of the Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the “Surviving Corporation”) as a wholly owned subsidiary of the Parent incorporated under the laws of the State of Wisconsin.
 
1.2 Closing.  The Closing shall be held at such time, date (the “Closing Date”) and location as may be mutually agreed by the Parent and the Company.  In the absence of such agreement, the Closing shall be held at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 300 South Grand Avenue, Los Angeles, California, commencing at 10:00 a.m., local time, on the second (2nd) Business Day after satisfaction or waiver of the conditions set forth in Article 6, below (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions), unless this Agreement has been theretofore terminated pursuant to Article 7, below.
 
1.3 Effective Time.  Contemporaneously with the Closing, the parties shall cause the Merger to be consummated by filing a Certificate of Merger (the “Certificate of Merger”) with the SSSD and Articles of Merger (the “Articles of Merger”) with the DFI in accordance with the DGCL and the WBCL, respectively, and any other required documents, in such form as required by applicable law, and executed in accordance with the relevant provisions of the DGCL or WBCL, as applicable.
 
1.4 Effect of the Merger.  At the Effective Time, the Merger shall have the effect provided in this Agreement and the applicable provisions of the DGCL and the WBCL.  Without limiting the generality of the foregoing, at the Effective Time, all of the property, rights, privileges, powers and franchises of the Merger Sub and the Company shall vest in the Surviving Corporation, and all debts, liabilities, obligations and duties of the Merger Sub and the Company shall become the debts, liabilities, obligations and duties of the Surviving Corporation.
 
1.5 Surviving Corporation’s Charter Documents.  At the Effective Time, each of the Articles of Incorporation and By-Laws of the Company, as in effect immediately before the Effective Time, shall be the Articles of Incorporation and By-Laws of the Surviving Corporation upon and after the Effective Time until thereafter amended as provided by law and such Articles of Incorporation and By-Laws.
 
1.6 Surviving Corporation’s Directors and Officers.  At the Effective Time, the directors and officers of the Merger Sub immediately prior to the Effective Time shall be the initial directors and officers of the Surviving Corporation, each to hold office in accordance with the Surviving Corporation’s Articles of Incorporation and By-Laws.
 
1.7 Conversion of Securities.  At the Effective Time, by virtue of the Merger and without action on the part of any of the Parent, the Merger Sub, the Company or any of their respective Boards of Directors or shareholders or stockholders:
 
            (a) Conversion of Shares.  The shares of the common stock, $.01 par value, of the Company (“Company Common Stock” or “Shares”) issued and outstanding immediately prior to the Effective Time, other than (i) Shares held in the treasury of the Company, (ii) Shares owned by the Parent, the Merger Sub or any other Parent Subsidiary, and (iii) Shares owned by the Company (clauses (i) through (iii) hereof, collectively, “Excluded Shares”), shall cease to be outstanding and shall be converted into the right to receive an aggregate amount in cash equal to $1.00, which amount shall be allocated among the holders of the Shares as set forth on Exhibit B attached hereto opposite the name of such shareholder under the heading “Purchase Price Allocation,” it being agreed that the dollar amount that each shareholder is entitled to receive is being rounded to the nearest whole cent and that amounts payable that are equal to or less than $0.005 are being rounded down to $0.00 (the “Consideration”).
 
            (b) Cancellation of Excluded Shares.  Each Excluded Share shall be cancelled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor.
 
            (c) Conversion of Merger Sub Shares.  Each outstanding share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall cease to be outstanding and shall be converted into one share of capital stock, of the same class and series, of the Surviving Corporation and shall constitute the only outstanding shares of capital stock of the Surviving Corporation.  Each outstanding option, warrant or other instrument or security of the Merger Sub which is convertible into, exchangeable for or exercisable for shares of capital stock of the Merger Sub and is outstanding immediately prior to the Effective Time shall cease to be outstanding and shall be converted into an option, warrant or other instrument or security with the same terms and that is convertible into, exchangeable for or exercisable for shares of capital stock of the Surviving Corporation, of the same class and series.  The Articles of Merger shall specifically provide that all classes and series of capital stock of Merger Sub shall be treated at the Effective Time as provided in this Section 1.7.
 
1.8 Exchange Procedures.
 
            (a) Exchange.  The Parent shall deliver or cause to be delivered the Consideration to the holders of Shares entitled to any Consideration, as indicated in Exhibit B, in exchange for each such holder’s stock certificate, if such holder’s Shares are certificated.  In the event that a holder is not entitled to any Consideration for such holder’s shares pursuant to Section 1.7(a), such holder’s Shares shall be deemed cancelled as of the Effective Time, and shall be retired and shall cease to exist, in exchange for no consideration.
 
            (b) No Further Rights in the Shares.  Each Share shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the applicable Consideration, if any, as contemplated by Section 1.7. The Consideration, if any, paid as set forth in Section 1.7(a) shall be deemed to have been issued and paid in full satisfaction of all rights pertaining to the Shares.
 
            (c) No Liability.  Notwithstanding anything herein to the contrary, neither the Parent nor the Merger Sub shall be liable to any holder of Shares for any cash or other payment delivered to a Governmental Entity pursuant to any abandoned property, escheat or similar Laws.
 
            (d) Withholding Right.  The Parent shall be entitled to deduct and withhold from the Consideration otherwise payable pursuant to this Agreement such amounts as the Parent is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of applicable Law, and the Parent shall timely pay over such withheld amounts to the appropriate Governmental Entity.  To the extent that amounts are so withheld by the Parent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the former holder of the Shares in respect of which such deduction and withholding was made.
 
            (e) Lost, Stolen or Destroyed Certificate.  If any Share certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Share certificate to be lost, stolen or destroyed and, if requested by the Parent, the posting by such Person of a bond, in such reasonable amount as the Parent may direct, as indemnity against any claim that may be made against it with respect to such Share certificate, Parent will pay, in exchange for such lost, stolen or destroyed Share certificate, the applicable Consideration to be paid in respect of the Shares represented by such Share certificate.
 
1.9 Adjustments for Dilution and Other Matters.  If, between the date of this Agreement and the Effective Time, there is a recapitalization, reclassification, stock split, stock dividend, subdivision, combination or exchange of shares with respect to, or rights issued in respect of, the Shares (each, an “Adjustment”), the Consideration shall be adjusted accordingly, without duplication, to provide the holders of Shares with the same economic effect as contemplated by this Agreement prior to such Adjustment.
 
1.10 Company Deliverables.  At or prior to the Effective Time, the Company shall deliver or cause to be delivered to the Parent a copy of a resolution of the Company Board canceling, effective immediately prior to the Effective Time, all outstanding options issued under the Midwest Air Group, Inc. Incentive Plan (the “Plan”) pursuant to Section 7(c)(B) thereof in exchange for no consideration, being that the exercise price per share of such options is greater than the per share Consideration that a holder of a Share is entitled to receive under Section 1.7(a) of this Agreement.
 
1.11 Tax Treatment of Merger.  The parties agree that for United States federal and state income tax purposes the Merger shall be treated as a taxable purchase of all of the outstanding Shares (other than Excluded Shares) by Parent for the Consideration, and the parties further agree that they shall report and file all Tax Returns consistent with such treatment.
 
 
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
 
Except as set forth in the corresponding section of the disclosure letter to be delivered to the Parent and the Merger Sub by the Company on or prior to July 3, 2009 (the “Disclosure Letter”), it being understood that matters disclosed pursuant to one section of the Disclosure Letter shall be deemed disclosed with respect to any other section of the Disclosure Letter where it is reasonably apparent that the matters so disclosed are applicable to such other section, the Company hereby represents and warrants that:
 
2.1 Organization, Good Standing and Qualification.  The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Wisconsin and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership or leasing of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, validly existing, qualified or in good standing or active status, or to have such power or authority, would not reasonably be expected to result in a Material Adverse Effect.  Attached as Schedule 2.1 of the Disclosure Letter are the complete and correct copies of the Company’s Articles of Incorporation and By-Laws, each as amended to date.
 
2.2 Capitalization.  The authorized capital stock of the Company consists of 1,000,000,000 shares of Common Stock.  The Shares constitute all of the issued and outstanding shares of Common Stock and except for stock options granted to certain employees of the Company under the Plan, which options are being canceled for no consideration as set forth in Section 1.10 hereof, there are no outstanding securities, options, warrants, calls, rights, contracts, commitments, agreements, arrangements or understandings to which the Company or any of its subsidiaries is a party, or by which any of them is bound, obligating the Company or any of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, shares of capital stock or other securities of the Company or any of its subsidiaries.  There are no obligations of the Company to repurchase, redeem or otherwise acquire any shares of Common Stock or the capital stock or other equity interests of any of its subsidiaries or to provide funds to or make any investment in any of its subsidiaries or any other Person.
 
2.3 Subsidiaries.  All of the outstanding shares of capital stock of each subsidiary of the Company that is a corporation have been duly authorized and validly issued and are fully paid and nonassessable, subject to the personal liability which may be imposed on shareholders by former Section 180.0622(2)(b) of the Wisconsin Business Corporation Law and the rules and regulations promulgated thereunder, if any, each as amended from time to time (the “WBCL”) for debts incurred prior to June 14, 2006 (for debts incurred on or after such date, Section 180.0622(2)(b) of the WBCL has been repealed) owing to employees for service performed, but not exceeding six (6) months service in any one case, and were not issued in violation of any preemptive or similar right of any shareholder of the Company or any other Person. No shares of any subsidiary of the Company are owned by any Person other than the Company. Except for the capital stock and other equity interests of subsidiaries of the Company, the Company does not own, directly or indirectly, any capital stock or other ownership interest in any Person.
 
2.4 Authority; Approval.
 
            (a) The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Merger and the other transactions contemplated hereby are within the Company’s corporate powers and, except for the filing and recordation of the Certificate of Merger in accordance with the DGCL and the Articles of Merger in accordance with the WBCL, have been duly and validly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by the Company and, assuming that this Agreement constitutes the legal, valid and binding obligation of the Parent and the Merger Sub, constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
 
            (b) The Company Board at a meeting duly called and held on or prior to the date hereof has approved and adopted this Agreement and the transactions contemplated hereby, including the Merger.
 
2.5 Third Party Consents; No Violations.
 
            (a) No notices, reports or other filings are required to be made by the Company with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained or any actions required to be taken, by the Company from, as applicable, any Governmental Entity or other Person in connection with the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby, except for notification to the DOT of the substantial change in ownership and management of subsidiaries of the Company and such filings, if applicable, as the DOT might require with respect to the international and exemption authority of subsidiaries of the Company.
 
            (b) The execution, delivery and performance of this Agreement by the Company does not, and the consummation by the Company of the transactions contemplated hereby will not, constitute or result in (i) a breach or violation of, or a default under, the Company’s Articles of Incorporation or By-Laws, or (ii) with or without notice, lapse of time or both, a breach or violation of, a termination or default under, the creation or acceleration of any obligations under or the creation of a Lien on any of the assets of the Company pursuant to, (x) any Contract binding upon the Company or (y) any material Law to which the Company is subject or any Company License; except in the case of clause (ii)(x), above, for any such breach, violation, termination, default, creation, acceleration or change that would not reasonably be expected to result in a Material Adverse Effect.
 
2.6 Financial Statements.
 
            (a) The Company has delivered to the Parent copies of the Company’s audited consolidated financial statements as of, and for the years ended, December 31, 2007 and 2006 and unaudited consolidated financial statements as of, and for the three months ended, March 31, 2009.
 
            (b) The consolidated financial statements (including, in each case, any related notes thereto) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and each fairly presents in all material respects the consolidated financial position of the Company and subsidiaries of the Company as of the respective dates thereof and the consolidated results of its operations and cash flows and changes in financial position for the periods indicated, except that any unaudited interim financial statements do not contain the notes required by GAAP and were or are subject to normal and recurring year-end adjustments, which were not or are not expected to be material in amount, either individually or in the aggregate.
 
            (c) The Company has established and maintains “disclosure controls and procedures” (as defined in Rule 13a-15(e) promulgated under the Exchange Act) that are reasonably designed to ensure that material information (both financial and non-financial) relating to the Company and the subsidiaries of the Company is recorded, processed, summarized and reported, and that such information is accumulated and communicated to the Company’s principal executive officer and principal financial officer, or persons performing similar functions. For purposes of this Agreement, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in Sarbanes-Oxley.
 
            (d) The Company has established and maintains a system of internal control over financial reporting (as defined in Rule 13a-15(f) promulgated under the Exchange Act) (“internal controls”). To the Knowledge of the Company, such internal controls are sufficient to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP.
 
            (e) To the Knowledge of the Company, the Company has disclosed, based on its most recent evaluation of internal controls prior to the date hereof, to the Company’s auditors and audit committee (i) any significant deficiencies and material weaknesses known to the Company in the design or operation of internal controls which are reasonably likely to adversely affect in a material respect the Company’s ability to record, process, summarize and report financial information and (ii) any material fraud known to the Company that involves management or other employees who have a significant role in internal controls. The Company has made available to the Parent a summary of any such disclosure regarding material weaknesses and fraud made by management to the Company’s auditors and audit committee since January 1, 2006. For purposes of this Agreement, a “significant deficiency” in controls means an internal control deficiency that adversely affects an entity’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with GAAP. A “significant deficiency” may be a single deficiency or a combination of deficiencies that results in more than a remote likelihood that a misstatement of the annual or interim financial statements that is more than inconsequential will not be prevented or detected. For purposes of this Agreement, a “material weakness” in internal controls means a significant deficiency or a combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
 
2.7 Absence of Certain Changes.  Since December 31, 2008, the business of the Company and the subsidiaries of the Company has been conducted in the ordinary course consistent with past practice.
 
2.8 Litigation.  There is no Proceeding pending or, to the Knowledge of the Company, threatened against the Company or any of the subsidiaries of the Company that would reasonably be expected to result in a Material Adverse Effect or challenge, prevent or materially impair or delay the consummation of the transactions contemplated by this Agreement. Neither the Company nor any of the subsidiaries of the Company is subject to or bound by any outstanding Order that would reasonably be expected to (i) result in a Material Adverse Effect or (ii) prevent or materially impair or delay the consummation of the transactions contemplated by this Agreement.
 
2.9 Employee Benefits.
 
            (a) The Company has made available to the Parent a complete and correct copy of (to the extent applicable): (i) all material employee benefit plans (as defined in Section 3(3) of ERISA), and all bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance, flight benefits and other benefit plans, programs or arrangements, and all written employment, termination, severance and other employment Contracts or written employment arrangements, with respect to which the Company or any Company ERISA Affiliate has any obligation, whether absolute, accrued, contingent or otherwise due or to become due (each, a “Company Benefit Plan”) (or, if such Company Benefit Plan is not written, a written summary thereof) and all amendments thereto; (ii) each trust or insurance policy relating to each Company Benefit Plan; (iii) the most recent summary plan description or other written explanation of each Company Benefit Plan provided to participants; (iv) the most recent annual report (Form 5500) filed with the U.S. Department of Labor; and (v) the most recent determination letter, if any, issued by the IRS with respect to any Company Benefit Plan intended to be qualified under Section 401(a) of the Code.  There has been no material change in flight benefits to employees in the last twelve (12) months.
 
            (b) Except as would not reasonably be expected to result in a Material Adverse Effect, (i) each Company Benefit Plan maintained by the Company or any of the Company ERISA Affiliates has been maintained in compliance with its terms and, both as to form and in operation, with the requirements of applicable Law, and (ii) all employer or employee contributions, premiums and expenses to or in respect of each Company Benefit Plan have been paid in full or, to the extent not yet due, have been adequately accrued on the applicable financial statements of the Company in accordance with GAAP. Neither the Company nor any of the Company ERISA Affiliates has at any time during the five (5) year period immediately preceding the date hereof maintained, contributed to, been obligated to contribute to or incurred any liability under any “multiemployer plan” (as defined in Section 3(37) of ERISA) or any ERISA Benefit Plan that is subject to Title IV of ERISA or Section 412 of the Code.
 
            (c) As of the date of this Agreement, there are no pending or, to the Knowledge of the Company, threatened Proceedings involving a Company Benefit Plan (other than routine claims for benefits payable under any such Company Benefit Plan) that would reasonably be expected to result in a Material Adverse Effect.
 
            (d) Each Company Benefit Plan that is intended by its terms to be qualified under Section 401(a) of the Code has been determined by the IRS to be so qualified, a timely application for such determination is now pending or is not yet required to be filed or the Company or the Company ERISA Affiliate has duly adopted a prototype plan and is relying on the opinion letter for such prototype plan, and, except as would not reasonably be expected to result in a Material Adverse Effect, each such Company Benefit Plan is qualified in operation. Except as would not reasonably be expected to result in a Material Adverse Effect, neither the Company nor any of the Company ERISA Affiliates has any liability or obligation under any welfare plan or agreement to provide benefits after termination of employment to any employee or dependent other than as required by Section 4980B of the Code or applicable Law or the terms of a separation or retention plan or agreement.
 
            (e) On and after the effectiveness of the Pension Protection Act of 2006, no Company Benefit Plan currently is, or is reasonably expected to be, in at risk status (within the meaning of Title IV of ERISA).
 
            (f) No amounts payable under any of the Company Benefit Plans or any other contract, agreement or arrangement with respect to which the Company or any subsidiary of the Company may have any liability could fail to be deductible for federal income tax purposes by virtue of Section 280G of the Code or Section 162(m) of the Code.
 
2.10 Compliance with Laws; Licenses.
 
            (a) The businesses of the Company and each subsidiary of the Company have not been, and are not being, conducted in violation of any applicable operating certificates, airworthiness directives (“ADs”), Federal Aviation Regulations (“FARs”) or any other rules, regulations, directives or policies of the FAA, DOT, FCC, DHS or any other Governmental Entity, except for such violations that would not reasonably be expected to result in a Material Adverse Effect. No investigation or review by any Governmental Entity with respect to the Company or any of the subsidiaries of the Company is pending or, to the Knowledge of the Company, threatened, nor has any Governmental Entity indicated an intention to conduct the same, except for any such investigations or reviews that would not reasonably be expected to result in a Material Adverse Effect. Each of the Company and the subsidiaries of the Company has obtained and is in compliance with all Licenses necessary to conduct its business as presently conducted (each, a “Company License”), except for any failures to have or to be in compliance with such Company Licenses which would not reasonably be expected to result in a Material Adverse Effect.
 
            (b) Each of the Company and the subsidiaries of the Company is, and since December 31, 2008, has been, in compliance with (i) its obligations under each of the material Company Licenses and (ii) any applicable material Laws and the rules and regulations of the Governmental Entity issuing such Company Licenses. There is not pending or, to the Knowledge of the Company, threatened before the FAA, DOT or any other Governmental Entity any material proceeding, notice of violation, order of forfeiture or complaint or investigation against the Company or any of the subsidiaries of the Company relating to any of the material Company Licenses. The actions of the applicable Governmental Authorities granting all Company Licenses have not been reversed, stayed, enjoined, annulled or suspended, and there is not pending or, to the Knowledge of the Company, threatened any material application, petition, objection or other pleading with the FAA, DOT or any other Governmental Entity which challenges or questions the validity of or any rights of the holder under any material Company License.  Neither the DOT nor FAA nor any other Governmental Entity has taken any action or proposed or, to the Knowledge of the Company, threatened to take any action, to amend, modify, suspend, revoke, terminate, cancel, or otherwise affect such Company Licenses, in each case, in a materially adverse manner.
 
2.11 Material Contracts.  Neither the Company nor any subsidiary of the Company is a party to or obligated under any Contract which (i) obligates the Company or any subsidiary of the Company for payments in any future calendar year in excess of $500,000, in the aggregate, and which is not terminable by the Company or the subsidiary of the Company without additional payment or penalty within one hundred eighty (180) days of delivery of notice of such termination, (ii) would be considered a material contract pursuant to Item 601(b)(10) of Regulation S-K under the Exchange Act (assuming such regulation applied to the Company), and (iii) any Contract restricting the Company (or the subsidiaries of the Company or Affiliates) from engaging in any line of business or in any geographic region (collectively, “Material Contracts”). Except as would not reasonably be expected to have a Material Adverse Effect, (a) neither the Company nor any subsidiary of the Company is in breach of or default (with or without notice, lapse of time or both) under the terms of any Material Contract, (b) to the Knowledge of the Company, as of the date hereof, no other party to any Material Contract is in breach of or default (with or without notice, lapse of time or both) under the terms of any Material Contract and (c) each Material Contract is a valid and binding obligation of the Company or the subsidiary of the Company a party thereto and is in full force and effect assuming that each such Material Contract is a valid and binding obligation of the other party or parties to the Material Contract.
 
2.12 Property.
 
            (a) With respect to each material real property owned by the Company or any subsidiary of the Company (“Owned Real Property”), (i) either the Company or subsidiary of the Company has good and marketable title in fee simple to such Owned Real Property, free and clear of all Liens other than Permitted Liens, (ii) there are no outstanding purchase options, rights of first refusal or similar rights in favor of any other Person to purchase such Owned Real Property or any portion thereof or interest therein, and (iii) there are no leases, subleases, licenses, options, rights, concessions or other contracts affecting the ownership, possession or use of any portion of such Owned Real Property, other than, in the case of clause (ii) or (iii) above, as would not reasonably be expected to have a Material Adverse Effect. There are no physical conditions or defects at any of the Owned Real Properties that impair or would impair the continued use of such Owned Real Property in the ordinary course of business as presently conducted at each such Owned Real Property, except for any such conditions or defects that would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any subsidiary of the Company has received notice of any pending, and to the Knowledge of the Company, there is no threatened, condemnation with respect to any of the Owned Real Properties, except for any such condemnations that would not reasonably be expected to have a Material Adverse Effect.
 
            (b) With respect to all leases, subleases and other contracts under which the Company or any subsidiary of the Company uses or occupies any material real property (“Real Property Leases”), except as would not reasonably be expected to have a Material Adverse Effect, (i) to the Knowledge of the Company, each Real Property Lease is valid, binding and in full force and effect and neither the Company nor any subsidiary of the Company nor any other party thereto is in breach or default (with or without notice, lapse of time or both) under any Real Property Lease, and (ii) no termination event or condition or uncured default on the part of the Company or any subsidiary of the Company or, to the Knowledge of the Company, the landlord thereunder exists under any Real Property Lease. Except as would not reasonably be expected to have a Material Adverse Effect, the Company and each subsidiary of the Company has a good and valid leasehold interest in each parcel of material real property leased by it, free and clear of all Liens except for Permitted Liens. Neither the Company nor any subsidiary of the Company has received notice of any pending, and to the Knowledge of the Company there is no threatened, condemnation with respect to any material real property leased pursuant to any of the Real Property Leases, except for any such condemnations that would not reasonably be expected to have a Material Adverse Effect.
 
            (c) The Company and the subsidiaries of the Company have good and marketable title to, or valid and enforceable rights to use under existing material franchises, easements or licenses, or valid and enforceable leasehold interests in, all of their material tangible personal properties and assets necessary to carry on their businesses as such businesses are now being conducted, free and clear of all Liens, except for Permitted Liens.
 
2.13 Environmental Matters.
 
            (a) (i) The Company and the subsidiaries of the Company are in compliance in all material respects with all applicable Environmental Laws and Environmental Licenses; (ii) no property currently or, to the Knowledge of the Company, formerly owned or leased by the Company or any of the subsidiaries of the Company has been the subject of any investigation by any Governmental Entity or of any demand of another Person alleging the presence of any Hazardous Substances that would require material remediation or other material response actions pursuant to any Environmental Law; (iii) neither the Company nor any of the subsidiaries of the Company (nor, to the Knowledge of the Company, any Person for whom they may be liable by Law or Contract) has received any written notice, demand, letter, claim or request for information alleging that the Company or any of the subsidiaries of the Company may be in material violation of or subject to material liability under any Environmental Law; (iv) neither the Company nor any of the subsidiaries of the Company is subject to any material Environmental Claim; and (v) to the Knowledge of the Company, there are no past or present actions, activities, circumstances, conditions, events or incidents, including, the release, emission, discharge, presence or disposal of any Hazardous Substances, that could form the basis of any material Environmental Claim against the Company or any of the subsidiaries of the Company (nor, to the Knowledge of the Company, any Person for whom they may be liable by Law or Contract), or otherwise result in any material costs or liabilities under any Environmental Law, except for matters that would not reasonably be expected to result in a Material Adverse Effect.
 
            (b) The Company has made available to the Parent all material assessments, reports, data, results of investigations or audits, and other information that is in the possession of or reasonably available to the Company and the subsidiaries of the Company regarding environmental matters pertaining to the environmental condition of the business of the Company and the subsidiaries of the Company, or the compliance (or noncompliance) by the Company and the subsidiaries of the Company with any Environmental Laws.
 
            (c) The Company would not be required by virtue of the transactions set forth herein and contemplated hereby, or as a condition to the effectiveness of any transactions contemplated hereby, to remove or remediate Hazardous Substances where any such removal or remediation would reasonably be expected to have a Material Adverse Effect. The Company and the subsidiaries of the Company are not required by virtue of the transactions set forth herein and contemplated hereby, or as a condition to the effectiveness of any transactions contemplated hereby, (i) to perform a site assessment for Hazardous Substances (ii) to give notice to or receive approval from any Governmental Entity, except where such failure to give notice or receive approval would not reasonably be expected to result in a Material Adverse Effect, or (iii) record or deliver with respect to Owned Real Property to any person or entity any disclosure document or statement pertaining to environmental matters.
 
2.14 Taxes.  The Company and each of the subsidiaries of the Company has timely filed (after taking into account all applicable extensions) all Tax Returns required to be filed by them, except where the failure to timely file would not reasonably be expected to result in a Material Adverse Effect. All such Tax Returns are complete and correct in all respects, except where the failure of such Tax Returns to be complete and correct would not reasonably be expected to result in a Material Adverse Effect. Each of the Company and the subsidiaries of the Company has paid or caused to be paid all Taxes shown as due on such Tax Returns and all Taxes owed by the Company and the subsidiaries of the Company for which no return was required to be filed, except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect. No deficiencies for any Taxes have been asserted in writing, proposed in writing or assessed in writing against the Company or any of the subsidiaries of the Company that have not been paid or otherwise settled or are not otherwise being challenged under appropriate procedures, except for deficiencies that, if finally resolved in a manner adverse to the Company or relevant subsidiary of the Company, would not reasonably be expected to result in a Material Adverse Effect. No written requests for waivers of the time to assess any material Taxes of the Company or the subsidiaries of the Company are pending as of the date hereof. There are no audits pending or, to the Knowledge of the Company, threatened against the Company or any of the subsidiaries of the Company that would reasonably be expected to have a Material Adverse Effect.
 
2.15 Labor Matters.
 
            (a) The Company has made available to the Parent complete and correct copies of all collective bargaining agreements and other labor union contracts (including all amendments thereto) applicable to any employees of the Company or any of the subsidiaries of the Company (the “Company CBAs”).
 
            (b) No labor union, labor organization or group of employees of the Company or any of the subsidiaries of the Company has made a demand for recognition or certification pending as of the date hereof, and there are no representation or certification proceedings or petitions seeking a representation proceeding pending as of the date hereof or, to the Knowledge of the Company, threatened as of the date hereof to be brought or filed with any labor relations tribunal or authority. To the Knowledge of the Company, there are no labor union organizing activities pending or threatened as of the date hereof with respect to any employees of the Company or any of the subsidiaries of the Company.
 
            (c) Neither the Company nor any of the subsidiaries of the Company is currently engaged in any layoffs or employment terminations sufficient in number to trigger application of the Worker Adjustment and Retraining Notification Act of 1988, as amended (the “WARN Act”), the Wisconsin WARN Act, Section 109.07 of the Wisconsin Statutes, or any similar state, local or foreign law, and neither the Company nor any of the subsidiaries of the Company has any liabilities under the WARN Act that have had or would reasonably be expected to have a Material Adverse Effect.
 
            (d) To the Knowledge of the Company, no employee of the Company or any of the subsidiaries of the Company is in any material respect in violation of any term of any employment-related agreement, nondisclosure agreement, noncompetition agreement, restrictive covenant or other obligation to a former employer of any such employee relating (A) to the right of any such employee to be employed by the Company or any of the subsidiaries of the Company or (B) to the knowledge or use of trade secrets or proprietary information.
 
            (e) To the Knowledge of the Company, no current officer or key employee of the Company or any of the subsidiaries of the Company intends to terminate his or her employment, whether on account of the transactions contemplated by this Agreement or for any other reason.
 
            (f) The Company and each of the subsidiaries of the Company are and have been in compliance with all applicable Laws respecting employment and employment practices, including, all laws respecting terms and conditions of employment, health and safety, wages and hours, child labor, immigration, employment discrimination, disability rights or benefits, equal opportunity, plant closures and layoffs, affirmative action, workers’ compensation, labor relations, employee leave issues and unemployment insurance, except where any failure to be in compliance would not reasonably be expected to result in a Material Adverse Effect. To the Knowledge of the Company, the Company and each of the subsidiaries of the Company are not delinquent in payments to any employees or former employees for any services or amounts required to be reimbursed or otherwise paid. Neither the Company nor any of the subsidiaries of the Company is a party to, or otherwise bound by, any Order relating to employees or employment practices.
 
            (g) From December 31, 2008 to the date of this Agreement, there has been no actual, or, to the Knowledge of the Company, threatened labor disputes, strikes, slowdowns, work stoppages or lockouts by or with respect to any employee of the Company or any of the subsidiaries of the Company.
 
            (h) There are no arbitrations, written grievances or written complaints outstanding or, to the Knowledge of the Company, threatened against the Company or any of the subsidiaries of the Company under any of the Company CBAs, except for such matters as would not reasonably be expected to result in a Material Adverse Effect. None of the Company or any of the subsidiaries of the Company has received (i) notice of any unfair labor practice charge or complaint pending or, to the Knowledge of the Company, threatened before the National Labor Relations Board or any other Governmental Entity against them, (ii) written notice of any charge or complaint with respect to or relating to them pending before the Equal Employment Opportunity Commission or any other Governmental Entity responsible for the prevention of unlawful employment practices, (iii) notice of the intent of any Governmental Entity responsible for the enforcement of labor, employment, wages and hours of work, child labor, immigration, or occupational safety and health laws to conduct an investigation with respect to or relating to them or notice that such investigation is in progress, or (iv) notice of any complaint, lawsuit or other proceeding pending or, to the Knowledge of the Company, threatened in any forum by or on behalf of any present or former employee of such entities, any applicant for employment or classes of the foregoing alleging breach of any express or implied contract of employment, any applicable law governing employment or the termination thereof or other discriminatory, wrongful or tortious conduct in connection with the employment relationship, except for any notice pertaining to matters which would not reasonably be expected to result in a Material Adverse Effect.
 
2.16 Intellectual Property.  The Company and the subsidiaries of the Company exclusively own free and clear of any Liens other than Permitted Liens, or are validly licensed or otherwise have the right to use as currently used, all Intellectual Property used in the conduct of the business of the Company and the subsidiaries of the Company taken as a whole (“Intellectual Property”), except for such Intellectual Property where the failure to so own, be validly licensed or have the right to use would not reasonably be expected to result in a Material Adverse Effect. The Company and the subsidiaries of the Company have taken all actions reasonably necessary to ensure full protection of their respective owned Intellectual Property under all applicable Laws, except where the failure to take any such actions would not reasonably be expected to result in a Material Adverse Effect. To the Knowledge of the Company, no claims are pending that allege that the Company or any of the subsidiaries of the Company is infringing or otherwise adversely affecting the rights of any Person with regard to any Intellectual Property other than claims that would not reasonably be expected to result in a Material Adverse Effect. To the Knowledge of the Company, no Person is infringing the rights of the Company or any of the subsidiaries of the Company with respect to any of their respective owned Intellectual Property in a manner that would reasonably be expected to result in a Material Adverse Effect.
 
2.17 Aircraft.
 
            (a) All aircraft owned or leased by the Company or any of the subsidiaries of the Company (each, a “Company Aircraft”) are in airworthy condition and are being maintained according to applicable FAA standards and the FAA-approved maintenance program of the Company and the subsidiaries of the Company, except for any Company Aircraft that is not in airworthy condition or any failures to maintain Company Aircraft as would not reasonably be expected to result in a Material Adverse Effect. The Company and the subsidiaries of the Company have implemented maintenance schedules with respect to their respective Company Aircraft and engines that, if complied with, would result in the satisfaction of all requirements under all applicable Ads and FARs required to be complied with in accordance with the FAA-approved maintenance program of the Company and the subsidiaries of the Company, and the Company and the subsidiaries of the Company are in compliance with such maintenance schedules and currently have no reason to believe that they will not satisfy any component of such maintenance schedules on or prior to the dates specified in such maintenance schedules, except, in each case, for such instances of noncompliance as would not reasonably be expected to result in a Material Adverse Effect.
 
            (b) The Company has made available to the Parent complete and correct copies of all Contracts (other than existing aircraft leases) pursuant to which the Company or any of the subsidiaries of the Company may purchase or lease aircraft, including the manufacturer and model of all aircraft subject to each Contract.
 
            (c) Each Company Aircraft has a validly issued, current individual aircraft FAA Certificate of Airworthiness with respect to such Company Aircraft that satisfies all requirements for the effectiveness of such FAA Certificate of Airworthiness.
 
            (d) Each Company Aircraft is listed on Schedule 2.17 of the Disclosure Letter.
 
2.18 Slots.  The Company and the subsidiaries of the Company have complied with the requirements of the Aviation Act and any other applicable Laws with respect to each Company Slot used by the Company or any of the subsidiaries of the Company on the date hereof at any domestic or international airport, except for such instances of noncompliance as would not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any of the subsidiaries of the Company has received any notice of any proposed withdrawal of the Company Slots by the FAA, the DOT or any other Governmental Entity as of the date hereof. As of the date hereof, the Company Slots have not been designated for the provision of essential air services in accordance with the regulations issued under the Aviation Act, have not been acquired pursuant to 14 C.F.R. Section 93.219 and have not been designated for international operations, as more fully detailed in 14 C.F.R. Section 93.217. All reports required by the FAA or any other Governmental Entity relating to the Company Slots have been filed in a timely manner, except for such failures to so file as would not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any of the subsidiaries of the Company has agreed to any trade, purchase, sale or other transfer of any of the Company Slots.  Each Company Slot is listed in Schedule 2.18 of the Disclosure Letter.
 
2.19 Gate Interests.  The Company and the subsidiaries of the Company have complied with the requirements of the Aviation Act and any other applicable Laws with respect to all Gate Interests held or used by the Company or any of the subsidiaries of the Company on the date hereof at any domestic or international airport, except for such instances of noncompliance as would not reasonably be expected to result in a Material Adverse Effect. Each such Gate Interest is listed in Schedule 2.19 of the Disclosure Letter, and neither the Company nor any of the subsidiaries of the Company has received any notice of any proposed withdrawal of the Gate Interests by any Governmental Entity as of the date hereof.  Neither the Company nor any of the subsidiaries of the Company has agreed to any trade, purchase, sale or other transfer of any of the Gate Interests.
 
2.20 U.S. Citizen; Air Carrier.  Midwest Airlines, Inc. is a “citizen of the United States” as defined in the Aviation Act and is an “air carrier” within the meaning of the Aviation Act operating under certificates issued pursuant to 49 U.S.C. Sections 41101-41112.
 
2.21 Insurance.  Each insurance policy maintained by, at the expense of or for the benefit of the Company or any of the subsidiaries of the Company with respect to its assets, properties or operations is in full force and effect and neither the Company nor any subsidiary of the Company is in default with respect to its obligations under any such insurance policy, except as would not be reasonably expected to result in a Material Adverse Effect. The insurance coverage of the Company and the subsidiaries of the Company is customary for business entities of similar size engaged in similar lines of business. Neither the Company nor any subsidiary of the Company has received any written notice regarding any (i) cancellation or invalidation of any material insurance policy, (ii) refusal of any coverage or rejection of any material claim under any material insurance policy or (iii) material adjustment in the amount of premiums payable with respect to any material insurance policy.
 
2.22 Brokers and Finders.  No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company.
 
 
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE MERGER SUB
 
 
Except as expressly contemplated or permitted under this Agreement, the Parent and the Merger Sub hereby jointly and severally represent and warrant to the Company that:
 
3.1 Organization.  Each of the Parent and the Merger Sub is a legal entity duly organized, validly existing and in good standing under the Laws of the State of Delaware.
 
3.2 Authority. Each of the Parent and the Merger Sub has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement.  Each of the Parent and the Merger Sub has taken all requisite action to, and no other action or proceeding on the part of the Parent or the Merger Sub is necessary for, the execution and delivery by the Parent or the Merger Sub of this Agreement, the performance by the Parent or the Merger Sub of its obligations under this Agreement or the consummation by the Parent or the Merger Sub of the transactions contemplated by this Agreement.  This Agreement has been duly executed and delivered by the Parent and the Merger Sub and, assuming due authorization, execution and delivery of this Agreement by the Company, is a valid and binding obligation of the Parent and the Merger Sub and is enforceable by the Company against the Parent and the Merger Sub in accordance with its terms, subject, as to enforcement, to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereinafter in effect affecting creditors’ rights generally and general principles of equity.
 
3.3 Consents and Approvals.  No Authorization of or from any Governmental Entity or any other person on the part of the Parent is required in connection with the execution or delivery by the Parent or the Merger Sub of this Agreement, the performance by the Parent or the Merger Sub of its obligations under this Agreement or consummation by the Parent or the Merger Sub of the transactions contemplated by this Agreement except for notification to the DOT of the substantial change in ownership and management of subsidiaries of the Company and such filings, if applicable, as the DOT might require with respect to the international and exemption authority of subsidiaries of the Company.
 
3.4 No Conflicts.  The execution and delivery by the Parent and the Merger Sub of this Agreement does not, and the performance by the Parent and the Merger Sub of its obligations under this Agreement or the consummation by the Parent and the Merger Sub of any of the transactions contemplated by this Agreement will not, (a) conflict with, or result in or constitute any violation or breach of or default under, or give rise (either with or without due notice or the passage of time or both or the happening or occurrence of any other event (including through the action or inaction of any person)) to any right of termination, amendment, cancellation or acceleration or any obligation to pay or repay with respect to, or result in the loss of any benefit under, any provision of (i) the certificate of incorporation, bylaws or similar organizational documents of the Parent or any of its subsidiaries (including the Merger Sub) or (ii) any material agreement to which the Parent or the Merger Sub is a party, or by which the Parent or the Merger Sub is bound, or to which any of the Parent’s or the Merger Sub’s properties or assets may be subject; (b) conflict with, or result in or constitute any violation of any law applicable to the Parent or the Merger Sub; or (c) result in the creation or imposition of (or the obligation to create or impose) any Liens on the assets of the Parent or the Merger Sub.
 
3.5 Brokers and Finders.  No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement that, if the Merger is not consummated, would be payable by the Company, based upon arrangements made by or on behalf of the Parent or the Merger Sub.
 
 
ARTICLE 4 - COVENANTS
 
 
4.1 Conduct of the Business Pending Closing.  From the date of this Agreement until the earlier of (x) the Effective Date and (y) the termination of  this Agreement, except as (i) otherwise contemplated hereby or provided herein or by or in the Investment Agreement, (ii) set forth in Schedule 4.1 of the Disclosure Letter, (iii) required by applicable Law or Governmental Entity or (iv) consented to in writing by the Parent (such consent not to be unreasonably withheld or delayed), the Company shall, and shall cause each of its subsidiaries to:
 
            (a) (i) carry on its business in the ordinary course consistent with past practice, (ii) use commercially reasonable efforts to preserve intact its present business organizations, operations and assets, (iii) use commercially reasonable efforts to keep available the services of its material customers, suppliers, distributors, licensors, and licensees, in each case in the ordinary course of business consistent with past practice, and (iv) communicate reasonably promptly to the Parent any concerns conveyed to the executive officers of the Company by key employees with respect to their continued employment at the Company or its subsidiaries;
 
            (b) obtain, renew and otherwise keep in full force and effect all Company Licenses, authorizations, licenses, certificates, permits, Slots, and Gate Interests from the appropriate federal, state and local Governmental Entities, including, without limitation, the FAA, DOT and all Governmental Entities, necessary to authorize the Company and each of its subsidiaries to lawfully engage in air transportation and to carry on commercial passenger service as currently conducted and as may from time to time be necessary to enable it lawfully to own, lease or operate aircraft and to perform the obligations herein undertaken by it, and observe and comply with the terms and conditions of any such authorizations, licenses, certificates and permits;
 
            (c) keep all owned and leased aircraft in such condition as may be necessary to enable the FAA Certificate of Airworthiness of such aircraft to be maintained in good standing;
 
            (d) conduct their business in such a manner that, on the Closing Date, the representations and warranties of the Company contained in this Agreement (as modified by the Disclosure Letter) which are qualified as to materiality shall be true, correct and complete and the representations and warranties (as modified by the Disclosure Letter) not so qualified shall be true, correct and complete in all material respects as if such representations and warranties were made on and as of such date, provided that representations and warranties (as modified by the Disclosure Letter) made as of a specific date shall be required to be so true and correct (subject to such qualifications) as of such date only;
 
            (e) maintain its books of account and records consistent with its past practice in all material respects;
 
            (f) not amend its Articles of Incorporation or By-Laws;
 
            (g) not declare or pay any dividends on or make other distributions in respect of any of their capital stock;
 
               
            (h) not split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its capital stock;
 
            (i) not redeem, repurchase or otherwise acquire any shares of its capital stock other than intercompany acquisitions of capital stock;
 
            (j) not merge or consolidate with, or purchase substantially all of the assets of, or otherwise acquire the business of, any person;
 
            (k) not sell, transfer, lease or otherwise dispose of any assets other than in the ordinary course of business and consistent with past practice;
 
            (l) not enter into any employment or severance agreements with any director, officer or employee;
        
            (m) not issue any capital stock or issue or become a party to any subscriptions, warrants, rights, options, convertible securities or other agreements or commitments of any character relating to its issued or unissued capital stock, or its other equity securities, if any, or grant any stock appreciation or similar rights;
 
            (n) not make any material change in any method of accounting or accounting practice or policy other than those required by GAAP;
               
            (o) not make any election with respect to Taxes, change any currently or previously effective election relating to Taxes, adopt or change any accounting method relating to Taxes, enter into any closing agreement relating to Taxes, settle or consent to any claim or assessment relating to Taxes, waive the statute of limitations for any such claim or assessment, or file any amended Tax Return or claim for refund for Taxes;
               
            (p) not adopt or enter into any new employee benefit plan or amend any existing benefit plan and not increase the compensation or benefits payable to any officers, directors or employees of the Company or its subsidiaries (except for increases required under employment agreements or collective bargaining agreements or any benefit plans existing on the date hereof); and
 
            (q) not agree or commit to do any of the foregoing referred to in clauses (f) through (p) of this Section 4.1.
 
4.2 Notice of Incidents; Accidents and Litigation.
 
            (a) The Company shall or shall cause the Company’s subsidiaries to notify the Parent in writing or via electronic mail of any (i) incidents or accidents that are reportable events under FAR occurring on or after the date hereof involving any property owned or operated by any of the Companies or (ii) any accidents occurring after the date hereof involving any property owned and operated by the Companies that resulted or could reasonably be expected to result in damages or losses in excess of $1,000,000.
 
            (b) Promptly after obtaining knowledge of the commencement of or the threatened occurrence of any material Proceeding against or with respect to the Company, any subsidiary or any capital stock of the Company, the Company shall give written notice thereof to the Parent.
 
4.3 Information Rights and Access.  Upon reasonable notice and subject to the terms of the Confidentiality Agreements, from and after the date hereof, the Company shall, and shall cause each of the Company’s subsidiaries, representatives and affiliates to, afford to the Parent, its affiliates and their respective representatives reasonable access, upon reasonable notice during normal business hours and in such manner as will not unreasonably interfere with the conduct of the Company and its subsidiaries’ respective businesses, to their respective facilities, properties, books, contracts, commitments, records (including information regarding any pending or threatened Proceeding to which any of the Company or any of its subsidiaries are, or reasonably expect to be, a party), key personnel, officers, independent accountants and legal counsel; provided, however, that such access shall only be provided to the extent that such access would not violate applicable Law; and provided, further, that the foregoing shall not require the Company (a) to permit any inspection, or to disclose any information, that violates any of the Company’s obligations with respect to confidentiality if the Company shall have used commercially reasonable efforts to obtain the consent of such third Person to such inspection or disclosure, (b) to disclose any privileged information of the Company or any subsidiary of the Company (provided that the Company shall use its reasonable best efforts to enter into a joint defense or similar agreement to prevent the loss of any such privilege), or (c) to permit invasive testing of any real property of the Company or any of the subsidiaries of the Company.  All requests for information made pursuant to this Section 4.3 shall be directed to the Company’s General Counsel.  In no event shall the Company be required to supply to the Parent, or the Parent’s officers, employees, accountants, counsel or other representatives, any information relating to indications of interest from, or discussions with, any other potential acquirors of the Company.  In the event this Agreement is terminated for any reason, the Parent shall, in accordance with the terms of the Confidentiality Agreements, return or destroy, or cause to be returned or destroyed, all nonpublic information obtained from the Company or any of the subsidiaries of the Company and any copies made of such documents for the Parent.
 
4.4 Governmental Consents.  The Parent and the Company shall, as promptly as practicable following the execution and delivery of this Agreement, make or cause to be made all filings, notices, petitions, statements, registrations, submissions of information, application or submission of other documents required by any Governmental Entity in connection with the transactions contemplated hereby.  Each of the Parent and the Company will use its reasonable best efforts to cause all documents that it is responsible for filing with any Governmental Entity under this Section 4.4 to comply in all material respects with all applicable Laws.  Each such party shall furnish to the other such necessary information and reasonable assistance as the other may reasonably request in connection with its preparation of such filings or submissions.  Each such party shall keep the other apprised of the status of any communications with, and any inquiries or requests for additional information from, any Governmental Entity and shall use its reasonable best efforts to comply promptly with any such inquiry or request.  Each such party shall use its reasonable best efforts to obtain any clearance required under applicable Law for the consummation of the transactions contemplated hereby.
 
4.5 Third Party Consents.  The Company shall use commercially reasonable efforts to obtain all consents from third parties which are required by the terms of any Material Contract to which it is a party to be obtained in connection with the consummation by it of the transactions contemplated hereby.  The Parent shall use its reasonable efforts to cooperate in obtaining any such consents, so long as the Parent is not required to make any payments with respect thereto.
 
4.6 Publicity.  Except as required by Law or by obligations pursuant to any listing agreement with or requirement of any national securities exchange or national quotation system, neither the Company (nor any of its Affiliates) nor the Parent (nor any of its Affiliates) shall, without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed, make any public announcement or issue any press release with respect to the transactions contemplated by this Agreement.  Prior to making any public disclosure required by applicable Law or pursuant to any listing agreement with or requirement of any relevant national exchange or national quotation system, the Company or the Parent, as applicable, as the disclosing party shall consult with the other, to the extent feasible, as to the content and timing of such public announcement or press release.
 
 
ARTICLE 5 - ADDITIONAL AGREEMENTS
 
 
5.1 No Control of Other Party’s Business.  Nothing contained in this Agreement is intended to give the Parent or the Merger Sub as relates to the Company or any subsidiary of the Company, or vice versa, directly or indirectly, the right to control or direct the other party’s or its subsidiary’s operations prior to the Effective Time.
 
5.2 Transfer Taxes.  The Company and the Parent shall cooperate in the preparation, execution and filing of all returns, questionnaires, applications or other documents regarding any real property transfer or gains, sales, use, transfer, value added, stock transfer and stamp Taxes, and transfer, recording, registration and other fees and any similar Taxes that become payable in connection with the transactions contemplated by this Agreement (together with any related interest, penalties or additions to Tax, “Transfer Taxes”).  All Transfer Taxes shall be paid by the Surviving Corporation and expressly shall not be a liability of any shareholder of the Company.
 
5.3 Takeover Statute.  If any “fair price”, “moratorium”,  “business combination”, “control share acquisition” or other form of anti-takeover statute or regulation shall become applicable to the Merger or the other transactions contemplated by this Agreement after the date of this Agreement, each of the Company, the Merger Sub and the Parent and their respective boards of directors shall grant such approvals and take such actions as are reasonably necessary so that the Merger and the other transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated herein and otherwise act to eliminate or minimize the effects of such statute or regulation on the Merger and the other transactions contemplated hereby.
 
 
ARTICLE 6 - CONDITIONS OF MERGER
 
 
6.1 Conditions to Both the Parent’s and the Company’s Obligations.  The respective obligations of each party to effect the Merger and the other transactions contemplated hereby is subject to the satisfaction or waiver at or prior to the Effective Time of each of the following conditions precedent:
 
            (a) Investment Agreement Closing.  The closing of the transactions contemplated by the Investment Agreement shall occur concurrently with the Closing.
 
            (b) Compliance with Laws, No Adverse Action or Decision.  Since the date hereof, (i) no Law shall have been promulgated, enacted or entered by any Governmental Entity and shall remain in effect that enjoins, prevents or prohibits the consummation of the transactions contemplated hereby or by the other Transaction Documents; and (ii) no preliminary or permanent injunction or other order by any Governmental Entity that enjoins, prevents or prohibits the consummation of the transactions contemplated hereby or by the other Transaction Documents shall have been issued by a court of competent jurisdiction and shall be continuing and remain in effect; provided, however, that the parties hereto shall use their respective reasonable best efforts to have any such injunction, prevention or prohibition vacated; provided, further, that the right to assert this condition shall not be available to any party whose breach of any provision of the Transaction Documents resulted in the imposition of any such Laws, injunction or order, or the failure of such Laws, injunction or order to be vacated, as applicable.
 
            (c) Consents and Approvals.  The Company shall have received all (i) Regulatory Approvals and (ii) all other approvals, consents and authorizations listed on Schedule 2.5(a) of the Disclosure Letter, which approvals, consents and authorizations shall not have been vacated.
 
6.2 Additional Conditions Applicable to Parent and Merger Sub.  The respective obligations of the Parent and the Merger Sub to effect the Merger and the other transactions contemplated hereby is subject to the satisfaction or waiver by the Parent and the Merger Sub at or prior to the Effective Time of the following additional conditions:
 
            (a) Representations and Warranties; Covenants.
 
                (i) Parent shall not have given written notice to the Company on or prior to July 13, 2009 that it has determined in its sole discretion that the representations and warranties of the Company set forth in Article 2 hereof, as modified by the Disclosure Letter, or that Section 4.1 hereof, as modified by the Disclosure Letter, are not satisfactory to the Parent (such notice, the “Representation Notice”) (if the Parent shall not have delivered to the Company the Representation Notice on or prior to July 13, 2009, the Parent shall be deemed to have waived this condition).
 
                (ii) (A) The representations and warranties of the Company set forth in Article 2 hereof, as modified by the Disclosure Letter, which are not qualified by materiality or by a Material Adverse Effect shall have been true and correct in all material respects as of the date of this Agreement and shall be true and correct in all material respects as of the Effective Time, and (B) the representations and warranties of the Company set forth in Article 2 hereof, as modified by the Disclosure Letter, which are qualified by materiality or by a Material Adverse Effect shall have been true and correct as of the date of this Agreement and shall be true and correct as of the Effective Time (except in the case of each of clauses (A) and (B), where such representation and warranty speaks by its terms of a different date, in which case it shall be true and correct in all material respects (in the case of clause (A)) and in all respects (in the case of clause (B)), as of such date); provided, however, that notwithstanding the foregoing, the conditions set forth in this Section 6.2(a)(ii) shall be deemed to be satisfied notwithstanding the failure of any such representations and warranties to be true and correct under the standards set forth in clauses (A) and (B), as applicable, so long as the representations and warranties of the Company contained in Article 2 hereof, as modified by the Disclosure Letter (disregarding all qualifications or limitations as to “materiality,” “Material Adverse Effect” and words of similar import set forth therein), shall have been true and correct as of the date of this Agreement and shall be true and correct as of the Effective Time (in each case except to the extent such representations and warranties are made as of another date, in which case such representations and warranties shall be true and correct as of such other date) in each case except where the failure of such representations and warranties to be so true and correct would not result in a Material Adverse Effect.  The Company shall have performed in all material respects all obligations and complied with all agreements, undertakings, covenants and conditions required to be performed by it hereunder (in the case of Section 4.1, as modified by the Disclosure Letter) at or prior to the Effective Time, and the Company shall have delivered to the Parent at the Closing a certificate dated the Closing Date and signed by an officer of the Company to the effect that the conditions set forth in this Section 6.2(a)(ii) have been satisfied.
 
 
            (b) Settlement.  The Effective Date (as defined in the Settlement Agreement) shall have occurred.
 
                     
            (c) No Material Adverse Effect.  Since the date of this Agreement, no event, circumstance or matter shall have occurred or arisen that has had, or would reasonably be expected to have, a Material Adverse Effect.
 
            (d) Tax Returns.  The Company and each of the subsidiaries of the Company has filed (after taking into account all applicable extensions) all state and federal income Tax Returns required to be filed by them prior to the Effective Time.
 
            (e) Audited Financial Statements.  The Company shall have delivered to the Parent consolidated balance sheets as of December 31, 2008 and January 31, 2008, and the related consolidated statements of operations, shareholders’ equity and cash flows for the eleven month period ended December 31, 2008 and the one month period ended January 31, 2008, prepared in accordance with GAAP, audited and accompanied by a report and opinion of Deloitte & Touche LLP.
 
            (f) Due Diligence.  Parent shall not have given written notice to the Company on or prior to July 13, 2009 that it has determined, in its sole discretion and without qualification, that the results of its due diligence review of the Company and the Company’s subsidiaries or the content of the Disclosure Letter are not satisfactory to the Parent (such notice, the “Diligence Notice”) (if the Parent shall not have delivered to the Company the Diligence Notice on or prior to July 13, 2009, the Parent shall be deemed to have waived this condition).
 
6.3 Additional Conditions Applicable to Company.  The obligation of the Company to effect the Merger and the other transactions contemplated hereby is subject to the satisfaction or waiver by the Company at or prior to the Effective Time of the following additional conditions:
 
            (a) Representations and Warranties; Covenants.  (i) The representations and warranties of the Parent and the Merger Sub set forth in Article 3 hereof which are not qualified by materiality shall have been true and correct in all material respects as of the date of this Agreement and shall be true and correct in all material respects as of the Effective Time, and (ii) the representations and warranties of the Parent and the Merger Sub set forth in Article 3 hereof, which are qualified by materiality shall have been true and correct as of the date of this Agreement and shall be true and correct as of the Effective Time  (except in the case of each of clauses (i) and (ii), where such representation and warranty speaks by its terms of a different date, in which case it shall be true and correct in all material respects (in the case of clause (i)) and in all respects (in the case of clause (ii)), as of such date) in each case except to the extent that such inaccuracies have not, and would not, individually or in the aggregate, reasonably be expected to prevent or materially delay or impede the Parent’s or the Merger Sub’s ability to consummate the transactions contemplated hereby.  The Parent and the Merger Sub shall have performed in all material respects all obligations and complied with all agreements, undertakings, covenants and conditions required to be performed by them hereunder at or prior to the Effective Time, and the Parent shall have delivered to the Company at the Closing a certificate dated the Closing Date and signed by an officer of the Parent to the effect that the conditions set forth in this Section 6.3(a) have been satisfied.
 
 
ARTICLE 7 - TERMINATION
 
 
7.1 Termination.  This Agreement may be terminated at any time prior to the Effective Time:
 
            (a) by mutual consent of the Parent and the Company;
 
            (b) by the Parent,
 
                (i) if, on or prior to July 13, 2009, the Parent shall have delivered to the Company the Representation Notice pursuant to Section 6.2(a)(i) and a written notice of termination of this Agreement pursuant to Section 7.2, or
 
                (ii) upon a breach of any covenant or agreement (in the case of Section 4.1, as modified by the Disclosure Letter) on the part of the Company set forth in this Agreement, provided, that if such breach by the Company of a covenant or agreement was unintentional and is curable by the Company through exercise of its commercially reasonable efforts, then the Parent may not terminate this Agreement pursuant to this Section 7.1(b) for ten (10) consecutive days after delivery of written notice from the Parent to the Company of such breach, so long as the Company continues to exercise commercially reasonable efforts to cure such breach (it being understood that the Parent may not terminate this Agreement pursuant to this Section 7.1(b) if such breach by the Company is cured during such ten (10) day period); provided, that the Parent cannot terminate the Agreement pursuant to this clause (b) if it or the Merger Sub has materially breached this Agreement at or prior to the time of termination and such breach has not been cured;
 
            (c) by the Company, upon a breach of any covenant or agreement on the part of the Parent or the Merger Sub set forth in this Agreement, or if any representation or warranty of the Parent or the Merger Sub shall have been untrue when made or shall have become untrue, in either case such that the conditions set forth in Section 6.3(a) hereof would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, provided, that if such inaccuracy in the Parent’s or the Merger Sub’s representations and warranties or breach by the Parent or the Merger Sub of a covenant or agreement was unintentional and is curable by the Parent or the Merger Sub through exercise of commercially reasonable efforts, then the Company may not terminate this Agreement pursuant to this Section 7.1(c) for ten (10) consecutive days after delivery of written notice from the Company to the Parent of such breach, so long as the Parent and the Merger Sub continue to exercise commercially reasonable efforts to cure such breach (it being understood that the Company may not terminate this Agreement pursuant to this Section 7.1(c) if such breach by the Parent or the Merger Sub is cured during such ten (10) day period); provided, that the Company cannot terminate this Agreement pursuant to this clause (c) if it has materially breached this Agreement at or prior to the time of termination and such breach has not been cured; or
 
            (d) if, on or prior to July 13, 2009, the Parent shall have delivered to the Company the Diligence Notice pursuant to Section 6.2(f) and a written notice of termination of this Agreement pursuant to Section 7.2.
 
7.2 Notice of Termination; Effect of Termination.  Any termination of this Agreement under Section 7.1 hereof will be effective immediately upon (or if termination is pursuant to Section 7.1(b)(ii) or 7.1(c) hereof and the proviso therein is applicable, ten (10) consecutive days after) the delivery of written notice thereof by the terminating party to the other party.  In the event of termination of this Agreement as provided in Section 7.1 hereof, this Agreement shall be of no further force or effect, with no liability of any party to the other parties, except (i) the provisions set forth in the last sentence of Section 4.3 hereof, this Section 7.2 and Article 8 hereof shall survive the termination of this Agreement indefinitely, (ii) the provisions of the Confidentiality Agreements shall survive the termination of this Agreement (subject to the time period set forth therein), and (iii) each party shall bear its own costs and expenses; provided, however, nothing herein shall relieve any party from liability for any intentional or willful breach of this Agreement.  Termination of this Agreement pursuant to Section 7.1(b) shall be the sole and exclusive remedy of the Parent and the Merger Sub in respect of any breach of or inaccuracy contained in any of the Company’s covenants, agreements, representations or warranties other than an intentional or willful breach of this Agreement.
 
 
ARTICLE 8 - GENERAL PROVISIONS
 
 
8.1 Non-Survival of Representations and Warranties.  None of the representations, warranties or covenants in this Agreement or in any officer’s certificate delivered pursuant to Section 6.2(a)(ii) or 6.3(a) shall survive the Closing Date.  Nothing in this Section 8.1 shall in any way affect the survival of the covenants and agreements contained in the Investment Agreement and the Note.
 
8.2 Notices.  Unless otherwise provided, any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by facsimile or electronic mail, or 48 hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed as follows (or at such other address for a party as shall be specified by like notice):
 
 
If to the Company:
 
Midwest Air Group, Inc.
6774 S. Howell Avenue, HQ-6
Oak Creek, Wisconsin 53154-1402
 
with a copy (which shall not constitute notice) to:
 
c/o TPG Capital, L.P.
301 Commerce Street, Suite 3300
Fort Worth, TX  76102
Attention:  Clive Bode
Telephone No.:   (817) 871-4651
Facsimile No.:     (817) 871-4010
 
and
 
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
Attention:  Nicholas P. Saggese and Rick C. Madden
Telephone No.:  (213) 687-5550 and (213) 687-5379
Facsimile No.:  (213) 621-5550 and (213) 621-5379
 
and
 
if to Parent or Merger Sub, to:
 

Republic Airways Holdings Inc.
8909 Purdue Road, Suite 300
Indianapolis, IN 46268
Attention: President
Telephone No.: (317) 484-6047
Facsimile No:  (317) 484-4547
 
with copies (which shall not constitute notice) to:
 

Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Gregg J. Berman
Telephone No.:  (212) 318-3400
Facsimile No.: (212) 318-3388
 

 
8.3 Amendments and Waivers.  Any term of this Agreement may be amended or waived only with the written consent of each of the parties hereto.
 
8.4 Interpretation.  When a reference is made in this Agreement to Sections, paragraphs, clauses or Exhibits, such reference shall be to a Section, paragraph, clause or Exhibit to this Agreement unless otherwise indicated.  The words “include,” “includes,” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.”  The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  This Agreement has been negotiated by the respective parties hereto and their attorneys and the language hereof will not be construed for or against any party.  The phrases “the date of this Agreement,” “the date hereof,” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to June 23, 2009.  The words “hereof,” “herein,” “herewith,”  “hereby” and “hereunder” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement.  All references in this Agreement to the representations and warranties and to Section 4.1 hereof, whether made as of the date of this Agreement, the Effective Time, the Closing Date or any other date, shall mean the representations and warranties and Section 4.1 hereof, as the case may be, as modified by the Disclosure Letter, notwithstanding the fact that the Disclosure Letter is delivered after the date of this Agreement.
 
8.5 Fee and Expenses.  Each party shall pay all costs and expenses incurred by it in connection with the execution and delivery of this Agreement and the transactions contemplated hereby, including fees of legal counsel; provided, however, that (i) the Company shall pay for the first $400,000 of legal fees incurred by the Company in connection with the negotiation and preparation of this Agreement and the other Transaction Documents, and (ii) the TPG Entities shall pay or reimburse the Company for legal fees in excess of $400,000 incurred by the Company in connection with the negotiation and preparation of this Agreement and the other Transaction Documents.
 
8.6 Further Assurances.  Each party to this Agreement shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such agreements, certificates, instruments and documents as the other party hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
 
8.7 Entire Agreement.  This Agreement and all other documents required to be delivered pursuant hereto constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior documents, agreements and understandings, both written and verbal, among the parties with respect to the subject matter hereof and the transactions contemplated hereby.
 
8.8 Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, then, if possible, such illegal, invalid or unenforceable provision will be modified to such extent as is necessary to comply with such present or future laws and such modification shall not affect any other provision hereof; provided that if such provision may not be so modified such illegality, invalidity or unenforceability will not affect any other provision, but this Agreement will be reformed, construed and enforced as if such invalid, illegal or unenforceable provision had never been contained herein.
 
8.9 Assignment.  This Agreement shall not be assignable by operation of law (other than in connection with a merger, consolidation or similar transaction) or otherwise (any attempted assignment in contravention hereof being null and void), except that the Parent or the Merger Sub, upon written notice to the Company, may assign any or all of its rights and interests hereunder to any of its Affiliates, provided that no such assignment shall relieve the Parent of its obligations hereunder.
 
8.10 Governing Law.  Except to the extent that the laws of the State of Wisconsin or the State of Delaware are mandatorily applicable to the Merger, the terms of this Agreement shall be construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York applicable to contracts made and to be performed in the State of New York, including Sections 5-1401 and 5-1402 of the New York General Obligations Law and Rule 327(b) of the New York Civil Practice Law and Rules. Any action against the Company, the Parent or the Merger Sub, including any action for provisional or conservatory measures or action to enforce any judgment entered by any court in respect of any thereof, may be brought in any federal or state court of competent jurisdiction located in the Borough of Manhattan in the State of New York, and each of the Company, the Parent and the Merger Sub irrevocably consents to the jurisdiction and venue in the United States District Court for the Southern District of New York and in the courts hearing appeals therefrom unless no federal subject matter jurisdiction exists, in which event, each of the Company, the Parent and the Merger Sub irrevocably consents to jurisdiction and venue in the Supreme Court of the State of New York, New York County, and in the courts hearing appeals therefrom.  Each of the Company, the Parent and the Merger Sub hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve process in accordance with this Agreement, that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and to the fullest extent permitted by applicable law, that the suit, action or proceeding in any such court is brought in an inconvenient forum, that the venue of such suit, action or proceeding is improper, or that this Agreement, or the subject matter hereof or thereof, may not be enforced in or by such courts and further irrevocably waives, to the fullest extent permitted by applicable law, the benefit of any defense that would hinder, fetter or delay the levy, execution or collection of any amount to which such person is entitled pursuant to the final judgment of any court having jurisdiction.  Each of the Company, the Parent and the Merger Sub expressly acknowledges that the foregoing waiver is intended to be irrevocable under the laws of the State of New York and of the United States of America.  EACH OF THE COMPANY, THE PARENT AND THE MERGER SUB HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
8.11 Injunctive Relief.  The Company and the Parent each agrees that the other’s remedies at law in the event of any default or threatened default by the Company or by the Parent or the Merger Sub, respectively, in the performance of or compliance with any of the terms of this Agreement are not and will not be adequate to the fullest extent permitted by law, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise without the Parent or the Company, respectively, having to prove actual damage or post any bond or other security.
 
8.12 No Third Party Beneficiaries.  Nothing contained in this Agreement, expressed or implied, is intended to confer upon any person other than the parties hereto and their permitted successors and assigns, any benefit right or remedies.
 
8.13 Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to each of the other parties, it being understood that all parties need not sign the same counterpart.
 
8.14 Time is of the Essence.Time is of the essence as to all performance under this Agreement.
 
 
[signatures pages follow]
 
 
 
 
 
IN WITNESS WHEREOF, the Parent, the Merger Sub and the Company have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
 
 
 
  PARENT:  
     
 
REPUBLIC AIRWAYS HOLDINGS INC.
  
       
 
By:
/s/ Bryan Bedford  
    Name; Bryan Bedford   
    Title: President & CEO   
       
 
 
 
 
  MERGER SUB:  
     
 
RJET ACQUISITION, INC.
  
       
 
By:
/s/ Bryan Bedford  
    Name: Bryan Bedford   
    Title: President & CEO   
       
 
 

 
 
COMPANY:
  
     
 
MIDWEST AIR GROUP, INC.
  
       
 
By:
/s/ Christopher S. Hennessy  
    Name: Christopher S. Hennessy   
    Title: V.P. Controller   
       
 
 
 

 
Exhibit A
 
Glossary of Defined Terms
 
“Adjustment” has the meaning set forth in Section 1.9 of the Agreement.
 
“ADs” has the meaning set forth in Section 2.10(a) of the Agreement.
 
“Affiliate” means, with reference to any Person, another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned Person.  For purposes of this definition, “control” shall mean the possession, direct or indirect, of the power to direct or cause the direction of management and policies of a Person, whether through the ownership of voting securities, by Contract or otherwise.  Notwithstanding the foregoing, no “portfolio company” of any shareholder of the Company shall be deemed to be an Affiliate of the Company or such shareholder.
 
“Agreement” means the Agreement and Plan of Merger dated June 23, 2009, by and among the Parent, the Merger Sub and the Company, as the same may be amended from time to time in accordance with the terms and conditions thereof.
 
“Articles of Merger” has the meaning set forth in Section 1.3 of the Agreement.
 
“Aviation Act” means Title 49 of the United States Code, as amended and in effect from time to time, and the regulations promulgated pursuant thereto.
 
“Business Day” means any day except a Saturday, Sunday or other day on which commercial banking institutions in the State of Wisconsin, the State of Delaware or New York, New York are required or authorized by applicable Law or executive order to be closed.
 
“Certificate of Merger” has the meaning set forth in Section 1.3 of the Agreement.
 
“Closing” means the consummation of the transactions contemplated by the Agreement, including the Merger.
 
“Closing Date” has the meaning set forth in Section 1.2 of the Agreement.
 
“Code” means the Internal Revenue Code of 1986 and the rules and regulations promulgated thereunder, each as amended from time to time.
 
“Company” has the meaning set forth in the opening paragraph of the Agreement.
 
“Company Aircraft” has the meaning set forth in Section 2.17(a) of the Agreement.
 
“Company Benefit Plan” has the meaning set forth in Section 2.9(a) of the Agreement.
 
“Company Board” has the meaning set forth in the recitals to the Agreement.
 
“Company CBAs” has the meaning set forth in Section 2.15(a) of the Agreement.
 
“Company Common Stock” has the meaning set forth in Section 1.8(a) of the Agreement.
 
“Company ERISA Affiliate” means any trade or business, whether or not incorporated, which is treated as a single employer with the Company pursuant to Subsections (b), (c), (m) or (o) of Section 414 of the Code.
 
“Company License” has the meaning set forth in Section 2.10(a) of the Agreement.
 
“Confidentiality Agreements” means the confidentiality agreements executed between Parent and Company.
 
“Consideration” has the meaning set forth in Section 1.8(a) of the Agreement.
 
“Contract” means any agreement, lease, license, note, mortgage, indenture, contract or other legally binding obligation.
 
“DFI” means the Wisconsin Department of Financial Institutions and any successor thereto.
 
“DGCL” means the Delaware General Corporation Law and the rules and regulations promulgated thereunder, if any, each as amended from time to time
 
“DHS” means the United States Department of Homeland Security and any successor thereto.
 
“Disclosure Letter” has the meaning set forth in Article 2 of the Agreement.
 
“DOT” means the United States Department of Transportation and any successor thereto.
 
“Effect” has the meaning set forth in the definition of “Material Adverse Effect” in this Exhibit A.
 
“Effective Time” means the date and time at which the Certificate of Merger is filed with the SSSD and the Articles of Merger are filed with the DFI or such later date and time as is agreed to by the Parent and the Company and set forth in the Certificate of Merger and the Articles of Merger.
 
“Environmental Claim” means any written or, to the Knowledge of the Company, oral investigation, suit, proceeding, notice, Order, demand, letter, claim or request for information alleging that the Company or any of the Company Subsidiaries (or, to the Knowledge of the Company, any Person for whom they may be liable by Law or Contract) has been, is or may be in violation of or subject to liability under any Environmental Law, or relating to Hazardous Substances including contamination or pollution of the environment or any property therefrom, and exposure of any person thereto.
 
“Environmental Law” means any applicable Law, common law (as it relates to Hazardous Substances) or Order relating to any matter of pollution, protection of human health, the environment, natural resources or environmental regulation or control or regarding Hazardous Substances.
 
“Environmental License” means any License required under any applicable Environmental Law.
 
“ERISA” means the Employee Retirement Income Security Act of 1974 and the rules and regulations promulgated thereunder, each as amended from time to time.
 
“ERISA Benefit Plan” means an employee benefit plan or program that is also an “employee pension benefit plan “ (as defined in Section 3(2) of ERISA) or that is also an “employee welfare benefit plan” (as defined in Section 3(1) of ERISA).
 
“Exchange Act” means the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, each as amended from time to time.
 
“Excluded Shares” has the meaning set forth in Section 1.7(a) of the Agreement.
 
“FAA” means the Federal Aviation Administration of the United States and any successor thereto.

“FAA Certificate of Airworthiness” means the certificate of airworthiness issued by the FAA with respect to the Company Aircraft.
“FARs” has the meaning set forth in Section 2.10(a) of the Agreement.
 
“FCC” means the United States Federal Communications Commission and any successor thereto.
 
“GAAP” means United States generally accepted accounting principles, consistently applied.
 
“Gate Interests” shall mean all of the right, title, privilege, interest, and authority now or hereafter acquired or held by the Company or any of the subsidiaries of the Company in connection with the right to use or occupy holdrooms, jetways and passenger boarding and deplaning space and any related airport facilities used by the Company or any of the subsidiaries of the Company for its operations, including ticket counter space, baggage claim and baggage makeup space, lounge space, maintenance/hangar facilities, and administrative office space, in any airport at which the Company or any of the subsidiaries of the Company conducts scheduled operations.

“Governmental Entity” means any federal, state, local or foreign government, or political subdivision thereof, or any multinational organization or authority or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, any court or tribunal (or any department, bureau or division thereof).
 
“Hazardous Substances” means chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum products, asbestos or asbestos-containing materials or products.
 
“Intellectual Property” has the meaning set forth in Section 2.16 of the Agreement.
 
“internal controls” has the meaning set forth in Section 2.6(d) of the Agreement.
 
“Investment Agreement” has the meaning set forth in the recitals to the Agreement.
 
“IRS” means the United States Internal Revenue Service and any successor thereto.
 
“Knowledge of the Company” means (i) those facts that are actually known by any executive officer of the Company, and (ii) those facts that would reasonably be expected to have come to the attention of any executive officer of the Company if such executive officer conducted a reasonable due diligence review of the assets, liabilities and operations of the Company and each subsidiary of the Company.
 
“Law” means any federal, state, local, municipal, foreign, international, multinational, territorial or other administrative order, constitution, law, ordinance, rule, regulation, requirement, permit, authorization, statute or treaty and any guidance issued thereunder, including any transitional relief or rules provided in connection therewith.
 
“Lien” means, with respect to any asset, pledges, mortgages, title defects or objections, claims, liens, charges, encumbrances or security interests of any kind or nature.
 
“Material Adverse Effect” means any change, circumstance, event or effect (each, an “Effect”) that, when considered either individually or together with all other Effects, is materially adverse to the business, properties, assets, liabilities, financial condition or results of operations of the Company and the subsidiaries of the Company taken as a whole; provided, however, that in no event shall any of the following Effects be deemed to constitute, or be taken into account in determining whether there has been, a “Material Adverse Effect” hereunder: (i) any Effect that resulted from the entry into or announcement of the execution of the Agreement, including any loss or threatened loss of, or adverse change or threatened adverse change in, the relationship of the Company or any of the subsidiaries of the Company with its customers, employees, financing sources, suppliers, or strategic partners that resulted from entry into or the announcement of the execution of the Agreement; (ii) the performance by the Company of obligations required to be taken under the Agreement (provided that this clause (ii) shall not apply to Effects resulting from compliance with Section 4.1); (iii) changes affecting the economy or the securities, credit or financial markets in general in the United States; (iv) changes that are the result of factors generally affecting any business in which the Company and/or any subsidiaries of the Company operate; (v) any adoption, implementation, proposal or change in any applicable Law or required change in GAAP or interpretation of any of the foregoing; (vi) any action taken or not taken to which the Parent has consented; or (vii) the commencement, occurrence or continuation of any war, armed hostilities or acts of terrorism (except to the extent any of the foregoing causes any damage or destruction to or renders unusable any facility or property of the Company or any of the subsidiaries of the Company); provided, however, that changes set forth in clauses (iii), (iv), (v) and (vii), above, may be taken into account in determining whether there has been or is a Material Adverse Effect to the extent such changes have a disproportionate impact on the Company and the subsidiaries of the Company, taken as a whole (after taking into account the size of the Company and the subsidiaries of the Company relative to such other participants), relative to the other participants in the industries and in the geographic markets in which the Company conducts its business and are not otherwise excluded by any of clauses (i), (ii) or (vi) above.
 
“Material Contracts” has the meaning set forth in Section 2.11 of the Agreement.
 
“Merger” has the meaning set forth in the recitals to the Agreement.
 
“Merger Sub” has the meaning set forth in the opening paragraph of the Agreement.
 
“Merger Sub Board” has the meaning set forth in the recitals to the Agreement.
 
“Note” means the Convertible Note, dated as of the Closing Date, in the amount of $25,000,000 made by the Parent in favor of the holders identified on the signature pages thereto under the caption “Holders” or their respective assigns.
 
“Order” means any award, decision, decree, injunction, judgment, order, ruling, subpoena or verdict entered, issued, made or rendered by, or any agreement entered into with, any court, administrative agency or any other Governmental Authority or arbitrator.
 
“Owned Real Property” has the meaning set forth in Section 2.12(a) of the Agreement.
 
“Parent” has the meaning set forth in the opening paragraph of the Agreement.
 
“Parent Board” has the meaning set forth in the recitals to the Agreement.
 
“Parent Subsidiary” means any direct or indirect Subsidiary of the Parent, including the Merger Sub.
 
“Permitted Liens” means (i) statutory liens for Taxes, assessments or other charges by Governmental Authorities not yet due and payable or the amount or validity of which is being contested in good faith and by appropriate Proceedings, (ii) mechanics’, materialmen’s, carriers’, workmen’s, warehouseman’s, repairmen’s, landlords’ and similar liens granted or which arise in the ordinary course of business, (iii) the interest of a landlord under a lease or a licensor under a license, and (iv) such other Liens or imperfections that are not material in amount or do not materially detract from the value of or materially impair the existing use of the property affected by such Lien or imperfection, in each case of clauses (i) through (iv), above, that would not reasonably be expected to result in a Material Adverse Effect.
 
“Person” means any individual, corporation, partnership, association, trust, unincorporated organization, limited liability company, other entity or Governmental Authority.
 
“Plan” has the meaning set forth in Section 1.11 of the Agreement.
 
“Proceeding” means any action, arbitration, claim, complaint, criminal prosecution, demand letter, governmental or other examination or investigation, hearing, inquiry, administrative or other proceeding.
 
“Real Property Leases” has the meaning set forth in Section 2.12(b) of the Agreement.
 
“Regulatory Approvals” means, to the extent necessary in connection with the consummation of the transactions contemplated by the Transaction Documents, any and all certificates, permits, licenses, franchises, concessions, grants, consents, approvals, orders, registrations, authorizations, waivers, exemptions, variances or clearances from, or filings or registrations with, Governmental Entities (and shall not include waiting periods otherwise imposed by Law).
 
“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, each as amended from time to time.
 
“SEC” means the United States Securities and Exchange Commission and any successor thereto.
 
“Securities Act” means the Securities Act of 1933 and the rules and regulations promulgated thereunder, each as amended from time to time.
 
“Settlement Agreement” means the Settlement Agreement and Release, dated as of June 12, 2009, among Skyway Airlines, Inc. (as successor to Astral Aviation, Inc., doing business under the name Midwest Connect), a Delaware corporation, the Company, Parent, KfW (formerly known as Kreditanstalt Für Wiederaufbau), an organization organized under the laws of Germany, and Midwest SPV, as in effect as of the date hereof (without giving effect to any amendment, waiver, restatement or other modification of, or supplement or addition to, such agreement without the consent of the TPG Entities in accordance with Section 4.5 of the Investment Agreement).
 
“Shares” has the meaning set forth in Section 1.8(a) of the Agreement.
 
“Slots” or “Company Slots” mean each and every (i) “slot” as defined in 14 CFR §93.213(a)(2), as that section may be amended or re-codified from time to time, including slots at Ronald Reagan Washington National Airport; (ii) operating authorization for a landing or takeoff operation at a specified time period at any airport in the United States subject to orders or regulations issued by the FAA (including, but not limited to, operating authorizations at New York LaGuardia Airport, as defined in the FAA's final order, Operating Limitations at New York LaGuardia Airport, Docket No. FAA 2006-25755-82 dated December 13, 2006, published in the Federal Register at 71 Fed. Reg. 77854 (Dec. 27, 2006)), as such order may be amended or re-codified from time to time, and in any subsequent order or regulation issued by the FAA, as such order may be amended or re-codified from time to time, (iii) authorization granted by a Governmental Entity to conduct a landing or takeoff during a specific hour or other period at any United States or foreign airport, and (iv) slot exemption pursuant to 49 U.S.C. §§ 41716 and 41718, as such statute may be amended or re-codified from time to time, including but not limited to slot exemptions at New York LaGuardia Airport and Ronald Reagan Washington National Airport, in each case of the Company or any of the subsidiaries of the Company now held or hereafter acquired (other than “slots” which prior to the date of this Agreement have been permanently allocated to another air carrier and in which the Company or any of the subsidiaries of the Company holds temporary use rights).
 
“SSSD” means the Secretary of State of the State of Delaware and any successor thereto.
 
“Surviving Corporation” has the meaning set forth in Section 1.1 of the Agreement.
 
“Tax” means taxes, charges, fees, levies and other governmental assessments and impositions of any kind payable to any Governmental Authority, including all interest, penalties and additions to tax imposed with respect thereto.
 
“Tax Return” means returns, reports and information statements with respect to Taxes required to be filed with the IRS or any other Governmental Authority, including consolidated, combined and unitary tax returns.
 
“TPG Entities” has the meaning set forth in the recitals to the Agreement.
 
“Transaction Documents” means this Agreement, the Investment Agreement and the Note.
 
“Transfer Taxes” has the meaning set forth in Section 5.7 of the Agreement.
 
“WARN Act” has the meaning set forth in Section 2.15(c) of the Agreement.
 
“WBCL” has the meaning set forth in Section 2.3 of the Agreement.
 

 

 
Exhibit B
 
List of Shareholders
 
 
 

[Intentionally omitted]

 

 

 EX-10.62(G) 3 exhibit10_62g.htm INVESTMENT AGREEMENT exhibit10_62g.htm
 
EXHIBIT 10.62(g)
 
 
 
INVESTMENT AGREEMENT
 
This Investment Agreement (this “Agreement”) is made as of June 23, 2009, by and among TPG Midwest US V, LLC and TPG Midwest International V, LLC (each, a “Purchaser” and, together, the “Purchasers”), and Republic Airways Holdings Inc., a Delaware corporation (the “Company”).
 
WHEREAS, each of the Purchasers and the Company is a “Lender” (including under any related promissory note) under the Amended and Restated Senior Secured Credit Agreement (the “Credit Agreement”), dated as of September 3, 2008, among Midwest Airlines, Inc., a Wisconsin corporation (“Midwest”), Midwest Air Group, a Wisconsin corporation (“MAG”), each of the subsidiaries of Midwest from time to time party thereto, each of the Purchasers, the Company, Wells Fargo Bank Northwest, National Association, as administrative agent and as collateral agent, as amended by Amendment No. 1 to Amended and Restated Credit Agreement, dated as of October 28, 2008, Amendment No. 2 to Amended and Restated Credit Agreement, dated as of January 28, 2009 and Amendment No. 3 to Amended and Restated Credit Agreement, dated as of June 2, 2009, and as further amended, modified or supplemented from time to time;
 
WHEREAS, the Purchasers desire to assign to the Company, and the Company desires to acquire from the Purchasers, all of the Purchasers’ rights and obligations in their capacities as “Lenders” under the Credit Agreement; and
 
WHEREAS, concurrently with the execution of this Agreement, the Company, Midwest Air Group, Inc., a Wisconsin corporation (“MAG”), and RJET Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of the Company, are entering into an Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”), pursuant to which, and on the terms and subject to the conditions of which, the Company will acquire MAG.
 
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, mutual covenants and agreements set forth herein, the parties hereto agree as follows:
 
SECTION 1. TRANSACTIONS; CLOSING
 
  1.1 Agreement to Purchase and Sell.  Upon the basis of the representations, warranties and covenants, and on the terms and subject to the conditions set forth in this Agreement, at the Closing (as defined below), the Purchasers shall assign to the Company, pursuant to Section 12.07(b) of the Credit Agreement, all of each Purchaser’s rights and obligations in its capacity as a “Lender” under the Credit Agreement, in exchange for:
 
(a)  an amount in cash equal to the sum of (i) Six Million Dollars ($6,000,000.00), plus (ii) accrued and unpaid interest through the Closing Date (as defined below) on the Term Loans extended by the Purchasers under the Credit Agreement, plus (iii) any Cure Payments (as defined in the Agreement, dated as of June 2, 2009 (the “Indemnity Agreement”), among the Company, TPG Partners V, L.P. (“TPG Fund”) and each of the Purchasers) for which TPG Fund has indemnified the Company, and actually paid, under the Indemnity Agreement (the sum of clauses (i), (ii) and (iii), the “Cash Consideration”); and
 
(b) a convertible note issued by the Company, having a principal amount of Twenty-Five Million Dollars ($25,000,000.00), in the form attached as Annex A hereto (the “Convertible Note”).
 
        1.2 Closing.  The closing (the “Closing”) of the transactions contemplated by this Agreement shall be held at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 300 South Grand Avenue, Suite 3400, Los Angeles, California 90071, concurrently with the closing of the transactions contemplated by the Merger Agreement (the date of the Closing under this Agreement is hereinafter referred to as the “Closing Date”).
 
        1.3 Deliverables.  At the Closing:
 
(a) the Purchasers shall deliver or cause to be delivered to the Company:
 
                (i) an Assignment and Assumption, substantially in the form of Exhibit C to the Credit Agreement, duly executed by the Purchasers and the Company, evidencing the assignment of all of each Purchaser’s rights and obligations in its capacity as a “Lender” under the Credit Agreement to the Company, and the assumption by the Company of all of each Purchaser’s rights and obligations in its capacity as a “Lender” under the Credit Agreement;
 
                (ii) a copy of the letter agreement attached as Annex B hereto, executed by the Purchasers and TPG Fund, terminating the Indemnity Agreement; and
 
                (iii) a resignation of Midwest Air Partners, LLC as a manager of Midwest SPV (as defined in Section 4.3 hereof).
 
(b) the Company shall deliver or cause to be delivered to the Purchasers:
 
                (i) the Cash Consideration, by wire transfer of immediately available funds to an account designated by the Purchasers,
 
                (ii) the Convertible Note executed by the Company, and
 
                (iii) a copy of the letter agreement attached as Annex B hereto, executed by the Company, terminating the Indemnity Agreement.
 
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
Except as set forth in the Company’s required reports, proxy statements, forms, and other documents filed with the Securities and Exchange Commission (the “SEC”) since January 1, 2006 (excluding, in each case, any disclosures set forth in any “forward looking statements” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or in the correspondingly identified schedule attached hereto, the Company hereby represents and warrants to the Purchasers, as of the Closing Date (except to the extent expressly made only as of a specified date in which case as of such date), as follows:
 
2.1 Incorporation and Organization.  The Company (a) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware; (b) has the requisite corporate power and authority to conduct, operate and carry on its business and operations as currently conducted, and to manage, use, control, own, lease and operate its properties and assets; and (c) is duly qualified or licensed to do business as a foreign corporation and is in good standing in every jurisdiction in which such qualification or licensing is required, except where the failure to be so qualified or licensed and in good standing, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the business, condition (financial or otherwise), operations, assets or liabilities of the Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”).
 
2.2 Issuance and Delivery of the Convertible Note.  The Convertible Note has been duly authorized and executed by the Company and, when issued and delivered to and paid for by the Purchasers in accordance with the terms of this Agreement, (a) shall be free and clear of all liens, security interests, options, claims, encumbrances and restrictions (collectively, “Liens”), (b) assuming accuracy of the Purchasers’ representations in Section 3.3 hereof, shall have been issued in compliance with all applicable federal and state securities laws and (c) shall be a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject, as to enforcement, to (i) applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and (ii) general principles of equity.  The shares of the Company’s common stock, par value $.001 per share (“Common Stock”), issuable upon conversion of the Convertible Note (the “Conversion Shares”) have been duly authorized and reserved for issuance and, when issued upon conversion of the Convertible Note in accordance with the terms thereof, will be validly issued, fully paid and nonassessable, and not subject to any preemptive or similar rights.
 
2.3 Capital Structure.  The authorized capital stock of the Company consists of 150,000,000 shares of Common Stock, and 5,000,000 shares of preferred stock, par value $.001 per share (“Preferred Stock”)  As of June 1, 2009, (i) 34,448,683 shares of Common Stock were issued and outstanding (not including 9,332,433 shares of Common Stock held in treasury), and no shares of Preferred Stock were issued and outstanding, and (ii) 4,845,271 shares of Common Stock were reserved for issuance upon exercise of outstanding options to purchase shares of Common Stock and 2,334,729 shares of Common Stock reserved for future issuance under the Company’s existing stock plans.  There are no outstanding securities, options, warrants, calls, rights, contracts, commitments, agreements, arrangements or understandings to which the Company or any of its subsidiaries is a party, or by which any of them is bound, obligating the Company or any of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, shares of capital stock or other securities of the Company or any of its subsidiaries, or any securities convertible into or exercisable or exchangeable for any shares of capital stock or other securities of the Company or any of its subsidiaries, or obligating the Company or any of its subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, contract, commitment, agreement, arrangement or understanding.  There are no contracts, commitments, agreements, arrangements or understandings to which the Company or any of its subsidiaries is a party, or by which any of them is bound, granting to any person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company or requiring the Company to include such securities with the Conversion Shares registered pursuant to any registration statement.
 
2.4 Subsidiaries.  Each of the subsidiaries of the Company (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization; (b) has the requisite power and authority to conduct, operate and carry on its business and operations as currently conducted, and to manage, use, control, own, lease and operate its properties and assets; and (c) is duly qualified or licensed to do business and is in good standing in every jurisdiction in which such qualification or licensing is required, except where the failure to be so qualified or licensed and in good standing, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.  All of the outstanding shares of capital stock of, other securities of or other interests in, each of the Company’s subsidiaries are owned by the Company, directly or indirectly through one or more of the Company’s subsidiaries.
 
2.5 Authorization; Validity of Agreement; Company Action.  The Company has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement.  The execution and delivery by the Company of this Agreement and the consummation by the Company of the transactions contemplated by this Agreement have been duly authorized by, and this Agreement and each of the transactions contemplated by this Agreement have been validly approved by, the requisite vote of the Company’s Board of Directors (the “Board”).  No other corporate action or proceeding on the part of the Company is necessary for the execution and delivery by the Company of this Agreement, the performance by the Company of its obligations under this Agreement or the consummation by the Company of the transactions contemplated by the this Agreement.  This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery of this Agreement by the Purchasers, is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject, as to enforcement, to (a) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereinafter in effect affecting creditors’ rights generally and (b) general principles of equity.
 
2.6 Consents and Approvals.  Assuming the accuracy of the representations of the Purchasers set forth in Section 3 hereof, no registration (including any registration under the Securities Act) or filing with, or any notification to, or any approval, permission, consent, ratification, waiver, authorization, order, finding of suitability, permit, license, franchise, exemption, certification or similar instrument or document (each, an “Authorization”) of or from, any court, arbitral tribunal, arbitrator, administrative or regulatory agency or commission or other governmental or regulatory authority, agency or governing body, domestic or foreign, including any national securities exchange or national quotation system (each, a “Governmental Entity”), or any other person, or under any statute, law, ordinance, rule, regulation or agency requirement of or listing agreement with any Governmental Entity (each, a “Law”), on the part of the Company or any of its subsidiaries is required in connection with the execution or delivery by the Company of this Agreement, the performance by the Company of its obligations under this Agreement or the consummation by the Company of the transactions contemplated by this Agreement, except for such filings as will be required to be made in connection with the consummation of the transactions contemplated by the Merger Agreement and any additional listing application that may be required in respect of the Conversion Shares.
 
2.7 No Conflict.  The execution and delivery by the Company of this Agreement does not, and the performance by the Company of its obligations under this Agreement or the consummation by the Company of any of the transactions contemplated by this Agreement will not, (a) conflict with, or result in or constitute any violation or breach of or default under, or give rise (either with or without due notice or the passage of time or both or the happening or occurrence of any other event (including through the action or inaction of any person)) to any right of termination, amendment, cancellation or acceleration or any obligation to pay or repay with respect to, or result in the loss of any benefit under, any provision of (i) the certificate of incorporation, bylaws or similar organizational documents of the Company or any of its subsidiaries or (ii) any indenture, loan agreement, mortgage, guarantee, other indebtedness, lease or other agreement, contract, instrument, obligation, understanding or arrangement to which the Company or any of its subsidiaries is a party, or by which the Company or any of its subsidiaries may be bound, or to which any of the respective properties or assets of the Company or any of its subsidiaries may be subject; (b) conflict with, or result in or constitute any violation of, any award, decision, judgment, decree, injunction, writ, order, subpoena, ruling, verdict or arbitration award entered, issued, made or rendered by any federal, state, local or foreign government or any other Governmental Entity (each an “Order”), or any Law, applicable to the Company or any of its subsidiaries, or to any of their respective properties or assets; (c) result in the creation or imposition of (or the obligation to create or impose) any Liens on any of the properties or assets of the Company or any of its subsidiaries; or (d) conflict with, or result in or constitute any violation of, or result in the termination, suspension or revocation of, any Authorization applicable to the Company or any of its subsidiaries, or to any of their respective properties or assets, or result in any other impairment of the rights of the holder of any such Authorization, except in the case of clauses (a)(ii), (b), (c) and (d), where such conflict, violation, breach, default, termination, amendment, cancellation, acceleration, obligation to repay or loss of benefit, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
 
2.8 Authorizations; Compliance with Law.  Each of the Company and its subsidiaries has such Authorizations of, and has made all registrations and filings with and notices to, all Governmental Entities as are necessary to manage, use, control, own, lease and operate its properties and assets and to conduct, operate and carry on its business and operations as currently conducted, except where the failure to have any such Authorization or to make any such registration, filing or notice, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Each of the Company and its subsidiaries is in compliance with all Laws and Orders applicable to the Company or any of its subsidiaries, or to any of their respective properties or assets, or to any Shares, except where the failure to be in compliance, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
 
2.9 No Solicitation.  Neither the Company nor any of its subsidiaries or affiliates, nor any person acting on its or their behalf, (a) has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Convertible Note or (b) has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under any circumstances that would require registration of the Convertible Note under the Securities Act, nor will the Company or any of its subsidiaries or affiliates take any action or steps that would require registration of any of the Convertible Note under the Securities Act.  Assuming the accuracy of the representations and warranties of the Purchasers in Section 3 of this Agreement, the offer and sale of the Convertible Note by the Company to the Purchasers pursuant to this Agreement will be exempt from the registration requirements of the Securities Act.
 
2.10 Investment Company Act.  The Company is not and, after giving effect to the transactions contemplated by this Agreement, will not be an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
 
2.11 Sufficient Funds.  The Company has, and will have at the Closing, sufficient immediately available funds in cash to pay the Cash Consideration and all costs and expenses incurred by the Company in connection with the execution and delivery of this Agreement and the transactions contemplated hereby, including fees of legal counsel.
 
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
 
The Purchasers hereby, jointly and severally, represent and warrant to the Company, as of the Closing Date, that:
 
3.1 Authority.  Each of the Purchasers has the requisite limited liability company power and authority to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement.  Each of the Purchasers has taken all requisite action to, and no other action or proceeding on the part of the Purchasers is necessary for, the execution and delivery by the Purchasers of this Agreement, the performance by the Purchasers of their obligations under this Agreement or the consummation by the Purchasers of the transactions contemplated by this Agreement.  This Agreement has been duly executed and delivered by the Purchasers and, assuming due authorization, execution and delivery of this Agreement by the Company, is a valid and binding obligation of the Purchasers and is enforceable by the Company against the Purchasers in accordance with its terms, subject, as to enforcement, to (a) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereinafter in effect affecting creditors’ rights generally and (b) general principles of equity.
 
3.2 Consents and Approvals.  No Authorization of or from any Governmental Entity or any other person on the part of the Purchasers is required in connection with the execution or delivery by the Purchasers of this Agreement, the performance by the Purchasers of their obligations under this Agreement or consummation by the Purchasers of the transactions contemplated by this Agreement.
 
3.3 Ownership of Securities; Purpose of Investment.  The Purchasers are acquiring the Convertible Note and the Conversion Shares solely for the purpose of investment and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act and applicable state securities or “blue sky laws.”  Each Purchaser is an “accredited investor” as such term is defined in Regulation D of the Securities Act.  Each Purchaser has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Convertible Note and the Conversion Shares, and each Purchaser is capable of bearing the economic risks of such investment, including a complete loss of its investment.  Each Purchaser has been given the opportunity to ask questions of and receive answers from the Company regarding the Company, the Convertible Note, the Conversion Shares and other related matters.  Each Purchaser has been furnished with all information it deems necessary or desirable to evaluate the merits and risks of the acquisition of the Convertible Note and the Conversion Shares and that the Company has made available to the Purchasers or its agents all documents and information relating to an investment in the Convertible Note and the Conversion Shares requested by or on behalf of the Purchasers.  In evaluating the suitability of an investment in the Convertible Note and the Conversion Shares and in making the investment, the Purchasers have not relied upon any representations or warranties of any person by or on behalf of any of the Company other than those representations and warranties that are expressly set forth in this Agreement, whether oral or written.
 
SECTION 4. ADDITIONAL AGREEMENTS
 
4.1 Board Representation.  After the Closing, for so long as the Purchasers and their affiliates (collectively, the “TPG Entities”) in the aggregate beneficially hold at least 50% of the principal amount of the Convertible Note or beneficially own at least 50% of the Conversion Shares:
 
(a) The TPG Entities shall have the collective right to designate one person for nomination for election to the Board (such designee, a “Holder Director”), and the Company shall use its reasonable best efforts to cause the election of such person to the Board, including by (i) nominating such individual to be elected as a director as provided herein, (ii) including such nomination and other required information regarding such individual in the Company’s proxy statement for its annual meeting of stockholders and (iii) soliciting or causing the solicitation of proxies in connection with the election of such individual as a director.  The Company shall take all necessary or desirable actions as may be required under applicable law or regulatory requirements to cause the individual designated by the TPG Entities as the initial Holder Director to be appointed or elected to the Board as soon as practicable but not later than ten (10) business days after the date hereof.
 
(b) In the event that a vacancy is created at any time by the death, disability, retirement, resignation or removal (with or without cause) of a Holder Director, the TPG Entities shall have the collective right to designate a replacement to fill such vacancy, and the Company shall take all necessary or desirable actions as may be required under applicable law to cause the individual designated by the TPG Entities to be appointed or elected.  The Company shall not take any action to cause the removal of a Holder Director without cause unless it is directed to do so by the TPG Entities, and if the Company is so directed, the Company shall take all necessary or desirable actions to effect such removal and to elect a replacement Holder Director as provided in the immediately preceding sentence.
 
(c) In respect of any newly proposed Holder Director (other than the initial Holder Director), the TPG Entities shall notify the Company of the proposed Holder Director, in writing, a reasonable time in advance of the mailing of any proxy statement, information statement or registration statement in which any Board nominee or Board member of the Company would be named, together with all information concerning such nominee reasonably requested by the Company and necessary in order for the Company to comply with applicable disclosure rules.
 
(d) The Company agrees to reimburse each Holder Director for all reasonable and documented out-of-pocket expenses incurred in connection with the performance of his or her duties as a Holder Director, including reasonable and documented out-of-pocket expenses incurred in attending meetings of the Board or any committee thereof, and each Holder Director shall be entitled to indemnification arrangements and director and officer insurance coverage equivalent to such arrangements and insurance coverage applicable to all non-employee directors of the Company or to which all non-employee directors of the Company are entitled or receive.
 
(e) All obligations of the Company pursuant to this Section 4.1 relating to a Holder Director shall terminate immediately, and the TPG Entities shall cause the Holder Director to resign promptly from the Board (and the Company shall be entitled to take all action to remove the Holder Director from the Board), when the TPG Entities in the aggregate both (i) beneficially hold less than 50% of the principal amount of the Convertible Note and (ii) beneficially own less than 50% of the Conversion Shares.  Without prejudice to the foregoing, at any such time, the Purchasers shall cause the Holder Director not to vote or exercise any other rights or powers of office during the period pending resignation.  Any vacancy created by such resignation may be filled by the Board or the stockholders of the Company in accordance with the Company’s certificate of incorporation and bylaws and applicable law.
 
4.2 Registration Rights.
 
(a) The Company shall prepare and file or cause to be prepared and filed with the SEC, on or before the first anniversary of the Closing Date (the “Filing Deadline Date”), a registration statement for an offering to be made on a delayed or continuous basis pursuant to Rule 415 of the Securities Act (a “Shelf Registration Statement”) registering the resale from time to time by Holders (as defined below) of Registrable Securities (as defined below) (the “Initial Shelf Registration Statement”).  The Initial Shelf Registration Statement shall be on Form S-3 or another appropriate form permitting registration of such Registrable Securities for resale by the Holders in accordance with the methods of distribution elected by the Holders and set forth in the Initial Shelf Registration Statement.  The Company shall use its reasonable best efforts to cause the Initial Shelf Registration Statement to be declared effective under the Securities Act on or before the date that is one-hundred and twenty (120) days after the Filing Deadline Date (the “Effectiveness Deadline Date”), and to keep the Initial Shelf Registration Statement continuously effective under the Securities Act (including using its reasonable best efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof and as promptly as is practicable amending the Shelf Registration Statement in a manner reasonably expected to obtain the withdrawal of such order suspending the effectiveness thereof, or filing and using its reasonable best efforts to cause to become effective as promptly as is practicable after such filing, an additional Shelf Registration Statement covering all of the Registrable Securities) until the date that all Registrable Securities have ceased to be Registrable Securities (the “Effectiveness Period”).  At the time the Initial Shelf Registration Statement is declared effective, each Holder shall be named as a selling securityholder in the Initial Shelf Registration Statement and the related prospectus in such a manner as to permit such Holder to deliver such prospectus to purchasers of Registrable Securities in accordance with applicable law.  The Company shall use its reasonable best efforts to ensure that none of the Company’s securityholders (other than the Holders of Registrable Securities) shall have the right to include any of the Company’s securities in the Shelf Registration Statement.  The Company shall supplement and amend the Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement, if required by the Securities Act or as necessary to name a Holder as a selling securityholder.
 
(b) The rights of each Holder to registration of Registrable Securities pursuant to Section 4.2(a) may be assigned by any of the Holders, in whole or in part, to any transferee or assignee of Registrable Securities; provided, however, the transferor shall, within ten (10) days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the number and type of Registrable Securities that are being assigned.
 
(c) All expenses incurred in connection with any Shelf Registration Statement or registered offering covering the Registrable Securities, including without limitation, reasonable legal fees of counsel selected by the Company, reasonable accounting fees, registration filing fees and additional listing fees,  will be borne collectively by each Holder named as selling securityholder, pro rata based on the number of Registrable Securities registered by such Holder.
 
(d) For the purposes of this Section 4.2, the following definitions apply: (i) “Holder” means either of the Purchasers or their respective assigns; (ii) “Registrable Securities” means the Conversion Shares and any securities into or for which such Conversion Shares have been converted or exchanged or into which the Convertible Note may be converted, and any security issued with respect thereto upon any stock dividend, split or similar event until, in the case of any such security, the earliest of: (A) the date on which such security has been registered under the Securities Act and disposed of pursuant to an effective registration statement; (B) the date on which such security may be sold or transferred by the Holder thereof under Rule 144 under the Securities Act without any volume restrictions; and (C) the date on which such security ceases to be outstanding (whether as a result of repurchase and cancellation, conversion or otherwise).
 
4.3 Midwest SPV Upside Payments; Payments under the KfW Guaranty after Conversion.
 
(a) After the Closing, in the event that the Company receives any distributions from Midwest SPV (as defined in the KfW Settlement Agreement (as defined below)) pursuant to Section III.(D)(4) of the KfW Settlement Agreement, exclusive of any repayments of any Republic Cure Amount (as defined below) (any such distribution, an “SPV Distribution”), then, for each such SPV Distribution, promptly (and in any event within five (5) business days) after the receipt by the Company of such SPV Distribution) (a) the Company shall notify the Purchasers of the amount of such SPV Distribution so received and the cumulative amount of all SPV Distributions received and (b) the Company shall pay the Purchasers in cash to an account designated by the Purchasers: (i) for the first $1,500,000 of SPV Distributions, dollar for dollar for such SPV Distributions, and (ii) to the extent that the aggregate SPV Distributions exceed $1,500,000, by an amount equal to one half of the aggregate SPV Distributions in excess of $1,500,000. The term “Republic Cure Amount” shall have the meaning ascribed to such term in the Settlement Agreement and Release, dated as of June 12, 2009, among Skyway Airlines, Inc. (as successor to Astral Aviation, Inc., doing business under the name Midwest Connect), a Delaware corporation, MAG, the Company, KfW (formerly known as Kreditanstalt Für Wiederaufbau), an organization organized under the laws of Germany (“KfW”), and Midwest SPV, as in effect as of the date hereof (without giving effect to any amendment, waiver, restatement or other modification of, or supplement or addition to, such agreement without the consent of the Purchasers in accordance with Section 4.5 hereof (such consent not to be unreasonably withheld)) (the “KfW Settlement Agreement”).
 
(b) If, after the Closing, the Company is required to make, and actually makes, a payment to KfW under the KfW Guaranty (as defined in Section 4.5 below) of any of the Guaranteed Obligations (as defined in the KfW Guaranty), but the Convertible Note is no longer outstanding or the outstanding principal amount of the Convertible Note has been reduced to zero pursuant to Section 2(f) thereof, then promptly (and in any event within five (5) business days) after the receipt by the Purchasers of a notice from the Company that it has made such a payment, the Purchasers shall pay to the Company in cash (to the extent such payment has not been paid or satisfied pursuant to Section 2(f) of the Convertible Note): (i) for the first $1,500,000 paid by the Company pursuant to the terms of the KfW Guaranty, dollar for dollar for such payment, and (ii) to the extent that the aggregate payments so made by the Company exceed $1,500,000, by an amount equal to one half of the aggregate payments so made by the Company in excess of $1,500,000.  For the avoidance of doubt, in determining whether the $1,500,000 threshold has been met, all payments paid by the Company pursuant to the terms of the KfW Guaranty, including any such payment that has been reimbursed or satisfied pursuant to Section 2(f) of the Convertible Note, shall be taken into account.
 
4.4 Consent.  Each of the parties hereto, in its capacity as a “Lender” under the Credit Agreement, hereby consents to the transactions contemplated by the Merger Agreement.
 
4.5 No Modification
 
4.6 .  From the date hereof until the Closing Date, the Company shall not agree or consent to or execute any amendment, waiver, restatement or other modification of, or supplement or addition to, the KfW Guaranty (as defined below) or the KfW Settlement Agreement, in each case without the prior written consent of the Purchasers (such consent not to be unreasonably withheld).  “KfW Guaranty” means the Guarantee Agreement, to be dated as of the Effective Date (as defined in the KfW Settlement Agreement), between Payor and KfW, in the form attached as Exhibit K to the KfW Settlement Agreement as of the date hereof (without giving effect to any amendment, waiver, restatement or other modification of, or supplement or addition to, such form without the consent of the Purchasers in accordance with this Section 4.5 (such consent not to be unreasonably withheld)).
 
4.7 TPG Payment of Company Expenses.  The TPG Entities shall pay or reimburse the Company for legal fees in excess of $400,000 incurred by the Company in connection with the negotiation and preparation of this Agreement, the Merger Agreement and the Convertible Note in accordance with Section 8.5 of the Merger Agreement.
 
SECTION 5. CONDITIONS
 
5.1 Conditions to the Parties’ Obligations.  The respective obligations of each of the parties to this Agreement to effect the Closing shall be subject to the satisfaction (or waiver by the party entitled to make such a waiver) of all of the conditions to the Closing set forth in Section 6 of the Merger Agreement (other than the condition set forth in Section 6.1(a) of the Merger Agreement).
 
5.2 Conditions to the Purchasers’ Obligations.  The obligation of the Purchasers to effect the Closing is subject to satisfaction of the following conditions precedent, unless waived by the Purchasers:
 
(a) Representations and Warranties; Covenants.  The representations and warranties of the Company set forth in Section 2 hereof which are not qualified by materiality or by a Material Adverse Effect shall be true and correct in all material respects and the representations and warranties of the Company set forth in Section 2 hereof which are qualified by materiality or by a Material Adverse Effect shall have been true and correct on as of the date hereof and shall be true and correct at the time immediately prior to the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms of a different date, in which case it shall be true and correct as of such date).  The Company shall have performed in all material respects all obligations and complied with all agreements, undertakings, covenants and conditions required to be performed by it under this Agreement at or prior to the Closing.  The Company shall have delivered to the Purchasers at the Closing a certificate dated the Closing Date and signed by an officer of the Company to the effect that the conditions set forth in this Section 5.2(a) have been satisfied.
 
(b) Holder Director.  The Company shall have taken all actions to cause the Holder Director to be appointed to the Board effective as of the Closing.
 
5.3 Conditions to the Company’s Obligations.  The obligation of the Company to effect the Closing is subject to satisfaction of the following condition precedent, unless waived by the Company:
 
(a) Representations and Warranties; Covenants.  The representations and warranties of the Purchasers set forth in Section 3 hereof which are not qualified by materiality shall be true and correct in all material respects and the representations and warranties of the Purchasers set forth in Section 3 hereof which are qualified by materiality shall have been true and correct on as of the date hereof and shall be true and correct at the time immediately prior to the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms of a different date, in which case it shall be true and correct as of such date).  The Purchasers shall have performed in all material respects all obligations and complied with all agreements, undertakings, covenants and conditions required to be performed by them under this Agreement at or prior to the Closing.  The Purchasers shall have delivered to the Company at the Closing a certificate dated the Closing Date and signed by an officer of the Purchasers to the effect that the conditions set forth in this Section 5.3(a) have been satisfied.
 
SECTION 6. MISCELLANEOUS
 
6.1 Termination.  If the Merger Agreement is terminated pursuant to Article 7 thereof  at any time prior to the Closing, then upon such termination, this Agreement shall immediately and automatically terminate without any action by the parties hereto and shall be of no further force or effect, with no liability of any party to the other parties, except that this Article 6 shall survive the termination of this Agreement indefinitely; provided, however, nothing herein shall relieve any party from liability for any intentional or willful breach of this Agreement or the Merger Agreement.
 
6.2 Non-Survival of Representations and Warranties; Survival of Covenants.  None of the representations and warranties in Section 2 or 3 of this Agreement or in any agreement, instrument or document delivered pursuant to this Agreement shall survive the Closing.  The covenants set forth in Section 4 of this Agreement shall survive the Closing for the periods specified therein or, if no period is specified therein, indefinitely.
 
6.3 Notices
 
.  Unless otherwise provided, any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by facsimile or electronic mail, or 48 hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed as follows (or at such other address for a party as shall be specified by like notice):
 
 
 
 (i)
in the case of any of the Purchasers, to:
 
 
c/o TPG Capital, L.P.
 
301 Commerce Street, Suite 3300
 
Fort Worth, TX  76102
 
Attention:  Clive Bode
 
Telephone No.: (817) 871-4651
 
Facsimile No.:  (817) 871-4010
 
 
with a copy to:
 
 
Skadden, Arps, Slate, Meagher & Flom LLP
 
300 South Grand Avenue
 
Los Angeles, California 90071
 
Attention:  Nicholas P. Saggese and Rick C. Madden
 
Telephone No.:  (213) 687-5550 and (213) 687-5379
 
Facsimile No.:  (213) 621-5550 and (213) 621-5379
 
 
(ii)
in the case of the Company, to:
 
Republic Airways Holdings Inc.
8909 Purdue Road, Suite 300
Indianapolis, IN 46268
Attention: President
Telephone No.:  (317) 484-6047
 
Facsimile No.:  (317) 484-4547
 
with a copy to:

Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Gregg J. Berman
Telephone No.:  (212) 318-3388
Facsimile No.: (212) 318-3400

6.4 Amendments and Waivers.  Any term of this Agreement may be amended or waived only with the written consent of the Company and the Purchasers.
 
6.5 Interpretation.  When a reference is made in this Agreement to Sections, paragraphs, clauses or Exhibits, such reference shall be to a Section, paragraph, clause or Exhibit to this Agreement unless otherwise indicated.  The words “include,” “includes,” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.”  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  This Agreement has been negotiated by the respective parties hereto and their attorneys and the language hereof will not be construed for or against any party.  The phrases “the date of this Agreement,” “the date hereof,” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to June 23, 2009.  The words “hereof,” “herein,” “herewith,”  “hereby” and “hereunder” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement.
 
6.6 Fee and Expenses
 
(a) .  Each party shall pay all costs and expenses incurred by it in connection with the execution and delivery of this Agreement and the transactions contemplated hereby, including fees of legal counsel, except as specified in Section 4.2(c) hereof with respect to registration expenses.
 
6.7 Further Assurances.  Each party to this Agreement shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such agreements, certificates, instruments and documents as the other party hereto may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
 
6.8 No Third Party Beneficiaries.  Nothing contained in this Agreement, expressed or implied, is intended to confer upon any person other than the parties hereto and their respective permitted successors and assigns any benefit right or remedies, except that the provisions of Section 4.2 shall inure to the benefit of the persons to whom the registration rights conferred by this Agreement have been transferred in compliance with Section 4.2(b) hereof.
 
6.9 Assignment.  This Agreement shall not be assignable by operation of law (other than in connection with a merger, consolidation or similar transaction) or otherwise (any attempted assignment in contravention hereof being null and void); provided that each Purchaser may assign all or part of its rights and obligations under this Agreement (a) to one or more affiliates, but only if the transferee agrees in writing for the benefit of the Company (with a copy thereof to be furnished to the Company) to be bound by the terms of this Agreement (any such transferee shall be included in the term “Purchaser”), and (b) as provided in Section 4.2.
 
6.10 Entire Agreement.  This Agreement and all other documents required to be delivered pursuant hereto constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior documents, agreements and understandings, both written and verbal, among the parties with respect to the subject matter hereof and the transactions contemplated hereby.
 
6.11 Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, then, if possible, such illegal, invalid or unenforceable provision will be modified to such extent as is necessary to comply with such present or future laws and such modification shall not affect any other provision hereof; provided that if such provision may not be so modified such illegality, invalidity or unenforceability will not affect any other provision, but this Agreement will be reformed, construed and enforced as if such invalid, illegal or unenforceable provision had never been contained herein.
 
6.12 Governing Law.  The terms of this Agreement shall be construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York, including Sections 5-1401 and 5-1402 of the New York General Obligations Law and Rule 327(b) of the New York Civil Practice Law and Rules.  Any action against the Company or any Purchaser, including any action for provisional or conservatory measures or action to enforce any judgment entered by any court in respect of any thereof, may be brought in any federal or state court of competent jurisdiction located in the Borough of Manhattan in the State of New York, and each of the Company and each Purchaser irrevocably consents to the jurisdiction and venue in the United States District Court for the Southern District of New York and in the courts hearing appeals therefrom unless no federal subject matter jurisdiction exists, in which event, each of the Company and each Purchaser irrevocably consents to jurisdiction and venue in the Supreme Court of the State of New York, New York County, and in the courts hearing appeals therefrom.  Each of the Company and each Purchaser hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve process in accordance with this Agreement, that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and to the fullest extent permitted by applicable law, that the suit, action or proceeding in any such court is brought in an inconvenient forum, that the venue of such suit, action or proceeding is improper, or that this Note, or the subject matter hereof or thereof, may not be enforced in or by such courts and further irrevocably waives, to the fullest extent permitted by applicable law, the benefit of any defense that would hinder, fetter or delay the levy, execution or collection of any amount to which such person is entitled pursuant to the final judgment of any court having jurisdiction.  Each of the Company and each Purchaser expressly acknowledges that the foregoing waiver is intended to be irrevocable under the laws of the State of New York and of the United States of America.  EACH OF THE COMPANY AND EACH PURCHASER HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
6.13 Injunctive Relief.  The Company agrees that the Purchasers’ remedies at law in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Agreement are not and will not be adequate to the fullest extent permitted by law, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise without the Purchasers having to prove actual damage or post any bond or other security.
 
6.14 Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to each of the other parties, it being understood that all parties need not sign the same counterpart.
 
 
[Signature Pages Follow]
 

 
 
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.
 
 
 
TPG MIDWEST US V, LLC
  
     
 
By: TPG Advisors V, Inc.
 
Its: Managing Member
       
 
By:
/s/ Clive Bode  
    Name: Clive Bode  
    Title: Vice President  
       
 
 
 
 
TPG MIDWEST INTERNATIONAL V, LLC
  
       
  By: TPG GenPar V.L.P.
  Its: Managing Member
  By: TPG Advisors V, Inc.
  Its: General Partner
       
 
By:
/s/ Clive Bode  
    Name: Clive Bode   
    Title: Vice President   
       
 
 
 
  REPUBLIC AIRWAYS HOLDINGS INC.  
       
 
By:
/s/ Bryan Bedford  
    Name: Bryan Bedford   
    Title:  President & CEO  
       
 
 

 
 
Annex A

 
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”).  NO SALE OF THIS NOTE MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT RELATED THERETO OR, IF REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE COMPANY OR OTHER EVIDENCE THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.
 
CONVERTIBLE NOTE
 
$25,000,000.00
[__], 2009 (the “Issue Date”)1
 
Indianapolis, Indiana

FOR VALUE RECEIVED, Republic Airways Holdings Inc., a Delaware corporation (“Payor”), promises to pay to the order of the holders identified on the signature pages hereto under the caption “Holders” or their respective assigns (each a “Holder”), in accordance with their respective Pro Rata Shares (as defined in Section 14 hereof), the principal amount of $25,000,000.00 (Twenty-Five Million Dollars) (subject to reduction pursuant to Section 2(f) hereof), and interest on the outstanding principal amount at the rate of 8% per annum (computed on the basis of a 360-day year of twelve 30-day months), in the manner and at the times set forth in this Convertible Note (this “Note”).  Interest shall accrue from and including the Issue Date and continue to accrue on the outstanding principal amount until paid in full or until this Note is converted in full in accordance with Section 2 hereof.  Accrued interest shall be payable monthly in arrears on the [     ] of each month (or if any such day is not a business day (as defined in Section 14 hereof), on the next succeeding business day).  Interest and principal shall be payable at such address or by wire transfer to such account as each Holder shall specify by written notice or in the absence of such notice at the address set forth for such Holder in the Note Register (as defined in Section 8(d) hereof).  Certain terms used herein have the respective meanings set forth in Section 14 hereof.
 
As a condition to the issuance of this Note, each of TPG Midwest US V, LLC and TPG Midwest International V, LLC (each, a “TPG Entity”) has assigned to Payor, all of each such TPG Entity’s rights and obligations in its capacity as a “Lender” (including under any related note thereunder) under the Amended and Restated Senior Secured Credit Agreement (the “Credit Agreement”), dated as of September 3, 2008, among Midwest Airlines, Inc., a Wisconsin corporation (“Midwest”), Midwest Air Group, Inc., a Wisconsin corporation (“MAG”), each of the subsidiaries of Midwest from time to time party thereto, each lender from time to time party thereto, Wells Fargo Bank Northwest, National Association, as administrative agent and as collateral agent, as amended by Amendment No. 1 to Amended and Restated Credit Agreement, dated as of October 28, 2008, Amendment No. 2 to Amended and Restated Credit Agreement, dated as of January 28, 2009, and Amendment No. 3 to Amended and Restated Credit Agreement, dated as of June 3, 2009, and as further amended, modified or supplemented from time to time.  Such assignment by the TPG Entities has been made pursuant to Section 12.07(b) of the Credit Agreement.
 
This Note has been executed and delivered pursuant to and in accordance with the terms of the Investment Agreement, dated as of June 23, 2009 (as it may be amended, supplemented or otherwise modified from time to time, the “Investment Agreement”), by and among the TPG Entities and Payor.
 
1. Payments.
 
(a) Form of Payment.  All payments of interest and principal shall be in lawful money of the United States of America in immediately available funds.  All payments shall be applied first to accrued interest, and thereafter to principal.
 
(b) Scheduled Payment.  The unpaid principal amount and all accrued and unpaid interest shall be due and payable on [     ], 20142 (the “Maturity Date”) unless all of the principal amount of and accrued and unpaid interest on this Note has been converted earlier pursuant to Section 2 hereof.
 
(c) Prepayment.  Principal of and accrued and unpaid interest on this Note may be prepaid, in whole or in part, but only to the extent this Note has not been converted pursuant to Section 2 hereof prior to such prepayment.  At least ten (10) business days prior to any such prepayment, Payor shall deliver to each Holder written notice thereof, specifying the amount of the principal of and accrued and unpaid interest on this Note to be prepaid and the date of such prepayment. Each such prepayment shall be allocated among the Holders of this Note in accordance with their respective Pro Rata Shares.  For the avoidance of doubt, each Holder shall have the right to convert all, or from time to time any portion, of the outstanding principal amount of and accrued and unpaid interest on this Note held by such Holder, including any principal and accrued interest to be so prepaid, pursuant to Section 2 prior to such prepayment.  Payor shall maintain a record in the Note Register showing the principal amount of and accrued and unpaid interest on this Note prepaid and the date of each prepayment.
 
2. Conversion.
 
(a) Holder Voluntary Conversion.  Prior to and continuing to and including the Maturity Date, each Holder may, in its sole discretion, elect to convert (the “Conversion”) all, or from time to time any portion, of the outstanding principal amount of and accrued and unpaid interest on this Note held by such Holder (any such amount of principal and interest being converted, a “Conversion Amount”) into such number of shares of Payor’s common stock, par value $.001 per share (the “Common Stock”) (or cash, securities and/or other assets as provided in Section 3 hereof), as is obtained by multiplying (A) each $1,000 of the Conversion Amount by (B) the Conversion Rate then in effect (the “Conversion Shares”).
 
(b) Issuance of Conversion Shares Upon Voluntary Conversion.  To convert all or any portion of the principal amount of and accrued and unpaid interest on this Note into shares of Common Stock pursuant to Section 2(a), a Holder shall deliver to Payor the original or facsimile of the form entitled “Voluntary Conversion Notice” attached as Exhibit A to this Note, duly completed and manually signed (the “Voluntary Conversion Notice”), specifying the Conversion Amount and, if required by Section 2(c) hereof, this Note in its original form duly endorsed for cancellation (or an affidavit in a form reasonably satisfactory to Payor that the original copy of this Note has been lost or destroyed).  Payor shall, as soon as practicable thereafter (but in any event within three (3) business days), issue and deliver to such Holder a certificate or certificates, registered in such name or names and denomination or denominations as such Holder has specified, for the Conversion Shares or, if Payor’s transfer agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of such Holder, credit the Conversion Shares to such Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system (in each case, bearing such legends as are required by the Securities Act).  The conversion of the Conversion Amount pursuant to Section 2(a) shall be deemed to have been made on the date that Payor actually receives the Voluntary Conversion Notice (each such date, a “Conversion Date”), and such Holder shall be treated for all purposes as the record holder of the Conversion Shares as of the Conversion Date; provided, however, that if Payor shall fail to issue and deliver to such Holder the Conversion Shares or to credit the Conversion Shares to such Holder’s or its designee’s balance account with DTC, as applicable, within three (3) business days after receipt of the Voluntary Conversion Notice in accordance with this paragraph, the principal amount of this Note that such Holder specified to be converted shall continue to bear interest from and including the Conversion Date at a rate equal to the rate borne by this Note, the accrued and unpaid interest that such Holder specified to be converted shall remain outstanding and the Conversion Amount shall remain convertible, in each case until the Conversion Shares are issued in respect of the Conversion Amount or such Holder shall have been paid the Conversion Amount in full.
 
(c) Book Entry.  Upon conversion of this Note, a Holder shall not be required to physically surrender this Note to Payor unless (i) the entire principal amount of and all accrued and unpaid interest on this Note is being converted or (ii) less than the entire principal amount of and accrued and unpaid interest on this Note is being converted and the Required Holders have provided Payor with prior written notice (which notice may be included in the Voluntary Conversion Notice) requesting reissuance of the unconverted portion of his Note upon physical surrender.  Payor shall maintain a record in the Note Register showing the principal amount of and accrued and unpaid interest on this Note converted and the date of each conversion.
 
(d) Fractional Shares.  Payor shall not issue fractional shares of Common Stock upon any Conversion but, instead, the number of shares of Common Stock to be issued upon each Conversion shall be rounded up to the nearest whole share.
 
(e) Effect of Conversion.  Upon conversion of the entire principal amount of and all accrued and unpaid interest on this Note pursuant to the terms of this Section 2, Payor shall be forever released from all of its obligations and liabilities under this Note other than the obligation to issue the certificates representing the Conversion Shares or credit the Conversion Shares to each Holder’s or its designee’s balance account with DTC, as applicable, pursuant to Section 2(b).
 
(f) Adjustment to Note Principal Amount. To the extent that Payor is required to make, and actually makes, a payment to KfW under the KfW Guaranty of any of the Guaranteeed Obligations (as defined in the KfW Guaranty), then promptly (and in any event within five (5) business days) after the receipt by the Holders of a notice from Payor that Payor has made such a payment, at the option of the Holders, pursuant to notice to Payor, either (x) the principal amount of this Note shall be decreased by, or (y) the Holders shall pay Payor in cash (or some combination of (x) and (y)): (i) for the first $1,500,000 paid by Payor pursuant to the terms of the KfW Guaranty, dollar for dollar for such payment, and (ii) to the extent that the aggregate payments so made by Payor exceed $1,500,000, by an amount equal to one half of the aggregate payments so made by Payor in excess of $1,500,000.
 
3. Adjustments to Conversion Rate.  The Conversion Rate shall be subject to adjustment from time to time as set forth in this Section 3.  Payor shall give each Holder notice of any event described below which requires an adjustment pursuant to this Section 3 in accordance with the notice provisions set forth in Section 13 hereof.
 
(a) Certain Corporate Events.  Upon the consummation of any merger, consolidation, business combination, tender or exchange offer, spin-off, sale of assets, reclassification, recapitalization or other transaction or event pursuant to or as a result of which holders of Common Stock are entitled to receive cash, securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), and as a condition to the consummation of each such Corporate Event, upon the basis and the terms and in the manner provided in this Note, this Note shall be, and the successor or purchasing person, as the case may be, if other than Payor, shall execute and deliver to each Holder an agreement in form and substance reasonably satisfactory to the Required Holders, providing (in addition to any provisions required by the Investment Agreement) that this Note shall be convertible into the number or amount of the cash, securities and/or other assets to which a holder of a number of shares of Common Stock issuable upon conversion of this Note in full immediately prior thereto (including the right of a stockholder to elect the type of consideration it shall receive upon a Corporate Event) would have been entitled upon the consummation of such Corporate Event. Such agreement also shall provide for adjustments (subsequent to such Corporate Event) as nearly equivalent as possible to the adjustments provided for elsewhere in this Section 3, and to the extent any Registrable Securities (as defined in the Investment Agreement) remain outstanding, shall make the provisions of Section 4(b) of the Investment Agreement applicable to any other securities included in the consideration referred in this Section 3(a).  In determining the kind and amount of cash, securities and/or other assets receivable upon conversion of this Note following the consummation of such Corporate Event, if the holders of Common Stock have the right to elect the kind or amount of consideration receivable upon consummation of such Corporate Event, then each Holder shall have the right to make a similar election upon conversion of this Note with respect to the kind and amount of cash, securities and/or other assets which Holder shall receive upon conversion of this Note.  The provisions of this Section 3(a) shall apply similarly and equally to successive Corporate Events unless or until this Note is converted in full or repaid in full.
 
(b) Stock Dividends, Subdivisions and Combinations. If at any time Payor shall:
 
                (i) make or issue, or set a record date for the holders of Common Stock for the purpose of entitling them to receive, a dividend payable in, or other distribution of, shares of Common Stock,
 
(ii) subdivide or reclassify outstanding shares of Common Stock into a larger number of shares of Common Stock, or
 
(iii) combine or reclassify outstanding shares of Common Stock into a smaller number of shares of Common Stock,
 
then the Conversion Rate shall be adjusted to equal the product of (A) the Conversion Rate as of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification, as applicable, multiplied by (B) a fraction (1) the numerator of which shall be the number of shares of Common Stock outstanding, after giving effect to such dividend, distribution, subdivision, combination or reclassification, as applicable, and (2) the denominator of which shall be the number of shares of Common Stock outstanding as of such record date or date of such dividend or distribution, before giving effect to such dividend, distribution, subdivision, combination or reclassification, as applicable.
 
(c) Certain Other Distributions. If at any time Payor shall make or issue, or set a record date for the holders of the Common Stock for the purpose of entitling them to receive, any dividend or other distribution of:
 
                (i) any evidences of indebtedness, any shares of capital stock or any other securities or property of any nature whatsoever of any person (other than cash or Common Stock under Section 3(b)), or
 
                (ii) any warrants or other rights to subscribe for or purchase any evidences of indebtedness, any shares of capital stock or any other securities or property of any nature whatsoever of any person (other than cash or Common Stock under Section 3(b)),
 
then the Conversion Rate shall be adjusted to equal the product of (A) the Conversion Rate as of such record date or date of such dividend or distribution multiplied by (B) a fraction (1) the numerator of which shall be the Per Share Market Value of Common Stock as of such record date or date of such dividend or distribution and (2) the denominator of which shall be such Per Share Market Value minus the amount allocable to one share of Common Stock of any such cash so distributable and of the Fair Market Value of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable.  A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by Payor to the holders of the Common Stock of such shares of such other class of stock within the meaning of this Section 3(c) and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision, combination or reclassification, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 3(b).
 
(d) Other Provisions applicable to Adjustments under this Section. The following provisions shall be applicable to the making of adjustments of the Conversion Rate then in effect provided for in this Section 3:
 
                (i) Timing of Adjustments. The adjustments required by this Section 3 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment in the Conversion Rate may be postponed (except in the case of a subdivision, combination or reclassification of shares of the Common Stock, as provided for in Section 3(b)) up to but not beyond the Conversion Date if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than one-half percent (0.5%) of the Conversion Rate immediately prior to the making of such adjustment; provided, however, that Payor upon request of a Holder shall deliver to such Holder a due bill or other appropriate instrument evidencing such Holder’s right to receive such additional shares, upon the occurrence of the event requiring such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made on the earlier of (A) as soon as such adjustment, together with other adjustments required by this Section 3 and not previously made, would result in a minimum adjustment and (B) on the Conversion Date. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence.
 
                (ii) Fractional Interests. In computing adjustments under this Section 3, fractional interests in Common Stock shall be taken into account to the nearest one one-hundredth (1/100th) of a share and calculations of dollar amounts shall be made to the nearest one-tenth (1/10th) of a cent.
 
                (iii) When Adjustment Not Required. If Payor shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, prior to vesting any rights to any stockholders, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.
 
                (iv) Adjustment for Unspecified Actions.  If Payor takes any action affecting the Common Stock, other than actions described in this Section 3, which would materially and adversely affect the conversion rights of a Holder, then the Conversion Rate shall be adjusted for such Holder’s benefit, to the extent permitted by law, in such manner, and at such time, as the Board after consultation with such Holder shall reasonably determine to be equitable in the circumstances.
 
                (v) Proceedings Prior to Any Action Requiring Adjustment.  As a condition precedent to the taking of any action which would require an adjustment pursuant to this Section 3, Payor shall take any action which is necessary, including obtaining regulatory, Securities and Exchange Commission (“SEC”), Nasdaq Global Market System (or any other applicable securities exchange or market), Financial Industry Regulatory Authority or stockholder approvals or exemptions, in order that Payor may thereafter validly and legally issue as fully paid and nonassessable all shares of Common Stock, cash and other securities or assets, as applicable, that a Holder is entitled to receive upon conversion of this Note pursuant to and after giving effect to the adjustments set forth in this Section 3.
 
(e) Form of Note after Adjustments. Except as provided in Section 3(a) hereof, the form of this Note need not be changed because of any adjustments in the Conversion Rate or the number and kind of securities purchasable upon the conversion of this Note.
 
4. Events of Default.  Payor shall give each Holder prompt (within 24 hours) written notice of any event that is or with notice or passage of time or both would be an Event of Default hereunder.  The occurrence of any one or more of the following events (herein called “Events of Default”) shall constitute a default hereunder:
 
(a) Payor defaults in the payment of any principal under this Note when due; or
 
(b) Payor defaults in the payment of any interest or (other than as specified in Section 4(a) or 4(d)) any other obligation involving the payment of money under this Note and such default continues for more than five (5) business days after the due date thereof; or
 
(c) Payor fails to convert this Note in accordance with Section 2(b) hereof within three (3) business days after the receipt of the Voluntary Conversion Notice; or
 
(d) Payor fails to provide timely notice of any Designated Event in accordance with Section 7 hereof or Payor fails to pay, within three (3) business days after the receipt of the Designated Event Repurchase Notice, the Designated Event Purchase Price in accordance with Section 7 hereof; or
 
(e) Payor fails to observe, comply with or perform any other covenant or agreement contained in this Note and such failure is not curable (it being understood that a failure to observe, comply with or perform Section 8(a) hereof shall be deemed to be not curable) or, if curable, is not cured within five (5) business days after such failure; or
 
(f) a default occurs (after giving effect to any waivers, amendments, applicable grace periods or any extension of any maturity date) in Payor’s or any Significant Subsidiary’s indebtedness (other than this Note, which default is addressed by clauses (a) through (e) above) with an aggregate amount outstanding of Ten Million Dollars ($10,000,000) or more (1) resulting from the failure to pay principal of or interest on such indebtedness, or (2) if as a result of such default, the maturity of such indebtedness has been accelerated prior to its stated maturity; or
 
(g) one or more judgments in an aggregate amount of Ten Million Dollars ($10,000,000) or more shall have been rendered against Payor or any of its subsidiaries and remain undischarged, unpaid or unstayed for a period of sixty (60) days after such judgment or judgments become final and nonappealable; or
 
(h) Payor or any Significant Subsidiary shall make an assignment for the benefit of creditors, or shall fail to pay its debts as they become due or shall admit in writing its inability to pay its debts as they become due, or shall file a voluntary petition in bankruptcy, or shall file any petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future bankruptcy or other statute, law or regulation, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver, custodian, sequestrator, liquidator or similar official of Payor, any Significant Subsidiary or of all or any substantial part (i.e., 33-1/3% or more) of the properties of Payor or any Significant Subsidiary; or Payor or any Significant Subsidiary or its directors shall take any action initiating the dissolution or liquidation of Payor or any Significant Subsidiary, or Payor or any Significant Subsidiary or its directors shall take any action for the purpose of effecting any of the foregoing; or
 
(i) sixty (60) days shall have elapsed after the commencement of an action by or against Payor or any Significant Subsidiary seeking, or after the entry of an order or decree by a court of competent jurisdiction ordering or granting relief against Payor or any Significant Subsidiary with respect to, the reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future bankruptcy or other statute, law or regulation or the appointment of any trustee, receiver, custodian, sequestrator, liquidator or similar official of Payor, any Significant Subsidiary or of all or any substantial part (i.e., 33-1/3% or more) of the properties of Payor or any Significant Subsidiary, without such action, order or decree, as applicable, being dismissed or all orders or proceedings thereunder affecting the operations or the business of Payor or any Significant Subsidiary being stayed; or a stay of any such order or proceedings shall thereafter be set aside and the action setting it aside shall not be timely appealed; or Payor or any Significant Subsidiary shall file any answer admitting or not contesting the material allegations of a petition filed against Payor or any Significant Subsidiary in any such proceedings or fail to respond to such petition in a timely and appropriate manner; or the court in which such proceedings are pending shall enter a decree or order granting the relief sought in any such proceedings; or
 
(j) sixty (60) days shall have elapsed after the appointment, without the consent or acquiescence of Payor or any Significant Subsidiary, of any trustee, receiver, custodian, sequestrator, liquidator or similar official of Payor, any Significant Subsidiary or of all or any substantial part (i.e., 33-1/3% or more) of the properties of Payor or any Significant Subsidiary without such appointment being vacated;
 
provided, that the references to “subsidiaries” or “Significant Subsidiaries” in clauses (f), (g), (h), (i) and (j) of this Section 4 shall not include (x) MAG and its subsidiaries as of the date hereof, (y) Mokulele Flight Service, Inc. and its subsidiaries as of the date hereof and (z) Frontier Airlines Holdings, Inc. and its subsidiaries as of the date hereof.
 
5. Remedies.
 
(a) Acceleration.  Upon the occurrence of an Event of Default described in clause (a), (b), (c), (d), (e), (f) or (g) of Section 4 hereof and during the continuance thereof, the Required Holders shall have the right by notice to Payor to accelerate the payment of the principal amount and accrued interest hereon by Payor and any other amounts owing hereunder so that all such amounts are immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Payor.  Upon the occurrence of an Event of Default described in clause (h), (i) or (j) of Section 4 hereof, without any action on the part of any Holder, the principal amount, accrued interest and any other amounts owing under this Note shall become immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Payor.  Upon an acceleration hereof, each Holder may enforce this Note by exercise of the rights and remedies granted to it by applicable law (including, without limiting any other rights, the right to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Holder or its affiliates to or for the credit or the account of the Payor against any of and all the obligations of Payor now or hereafter existing under this Note, irrespective of whether or not such Holder shall have made any demand under this Note and although such obligations may be unmatured).  No course of dealing and no delay on the part of any Holder in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such Holder’s rights, powers or remedies.  The rights and remedies of each Holder under this Note shall be cumulative.  No right, power or remedy conferred by this Note upon any Holder shall be exclusive of any other right, power or remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.  Payor shall pay all fees (including attorneys’ fees), expenses and court costs incurred by each Holder for any claim or controversy arising out of or relating to this Note, including (i) in investigating any event which could be an Event of Default and (ii) in connection with the protection or enforcement of any of such Holder’s rights in connection with this Note or the collection of any amounts due under this Note.
 
(b) Default Interest.  Every amount overdue under this Note shall bear interest from and after the date on which such amount first became overdue at an annual rate of ten percent (10%) per annum (the “Default Interest Rate”).  Such interest on overdue amounts under this Note shall be payable on demand and shall accrue and be compounded annually until the obligation of Payor with respect to the payment of such interest has been discharged (whether before or after judgment).
 
6. Enforcement.  Payor hereby waives demand, notice, presentment, protest and notice of dishonor.  All payments by Payor under this Note shall be made without set-off, defense or counterclaim and be free and clear and without any deduction or withholding for any taxes or fees of any nature whatever, unless the obligation to make such deduction or withholding is imposed by law.
 
7. Repurchase of Securities at Option of the Holder Upon A Designated Event.
 
(a)  In the event that a Designated Event shall occur, then each Holder shall have the right, at such Holder’s option, to require Payor to repurchase, and upon the exercise of such right Payor shall repurchase, all or a portion of the principal amount of this Note held by such Holder at a purchase price equal to 100% of the principal amount of this Note plus accrued and unpaid interest to, but excluding, the repurchase date (the “Designated Event Repurchase Price”).  On or before the fifth (5th) business day after the occurrence of a Designated Event, Payor shall give to each Holder notice (the “Designated Event Notice”) of the occurrence of the Designated Event and of the repurchase right set forth herein arising as a result thereof.
 
(b) To exercise its repurchase right pursuant to Section 7(a), a Holder shall deliver to Payor the original or facsimile of the form entitled “Designated Event Repurchase Notice” attached as Exhibit B to this Note, duly completed and manually signed (the “Designated Event Repurchase Notice”), specifying the principal amount and accrued and unpaid interest to be so repurchased and, if required by Section 7(c) hereof, this Note in its original form duly endorsed for cancellation (or an affidavit in a form reasonably satisfactory to Payor that the original copy of this Note has been lost or destroyed).  Payor shall, as soon as practicable thereafter (but in any event within three (3) business days), pay to such Holder cash in the amount of the Designated Event Repurchase Price with respect to the principal amount and accrued and unpaid interest to be so repurchased by wire transfer to such account as such Holder shall specify by written notice or in the absence of such notice at the address set forth for such Holder in the Note Register.
 
(c) Upon repurchase of this Note, a Holder shall not be required to physically surrender this Note to Payor unless (i) the entire principal amount of and all accrued and unpaid interest on this Note is being repurchased or (ii) less than the entire principal amount of and accrued and unpaid interest on this Note is being repurchased and the Required Holders have provided Payor with prior written notice (which notice may be included in the Designated Event Repurchase Notice) requesting reissuance of the portion of his Note not being repurchased upon physical surrender.  Payor shall maintain a record in the Note Register showing the principal amount of and accrued and unpaid interest on this Note repurchased and the date of each repurchase.
 
8. Other Covenants and Agreements.
 
(a) Merger, Consolidation and Sale of Assets.  Payor shall not, in a single transaction or series of related transactions, consolidate or merge with or into or effect a share exchange with (whether or not Payor is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets to, any person as an entirety or substantially as an entirety unless:
 
                (i) either (A) Payor shall be the surviving corporation, or (B) the person formed by or surviving any such consolidation, merger or share exchange (if other than Payor) or the person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of Payor (1) shall be a corporation organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and (2) shall expressly assume, by agreement in form reasonably satisfactory to the Required Holders, executed and delivered to each Holder, the due and punctual payment of the principal of and interest on this Note and the performance of every covenant of this Note on the part of Payor to be performed or observed, including, without limitation, the rights of holders to cause the repurchase of all or any portion of this Note upon a Designated Event in accordance with Section 7 hereof, the conversion rights in accordance with Section 2 hereof, the adjustments to the Conversion Rate set forth in Section 3 hereof and the rights set forth in Section 4 of the Investment Agreement, in addition to any provisions required by Section 3(a) hereof; and
 
(ii) immediately after giving effect to such transaction no default under this Note and no Event of Default shall have occurred and be continuing.
 
For purposes of this Section 8(a), the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more subsidiaries of Payor, the capital stock of which individually or in the aggregate constitutes all or substantially all of the properties and assets of Payor, shall be deemed to be the transfer of all or substantially all of the properties and assets of Payor.
 
Upon any such consolidation, merger, share exchange, sale, assignment, conveyance, lease, transfer or other disposition in accordance with this Section 8(a), the successor person formed by such consolidation or share exchange or into which Payor is merged or to which such sale, assignment, conveyance, lease, transfer or other disposition is made will succeed to, and be substituted for, and may exercise every right and power of, Payor under this Note with the same effect as if such successor had been named as Payor herein, and thereafter (except in the case of a lease) the predecessor corporation will be relieved of all further obligations and covenants under this Note.
 
This Section 8(a) does not affect the obligations of Payor (including without limitation any successor to Payor) under Section 7.
 
(b) Reservation of Conversion Shares.  Payor shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock (and any other securities which the Holders shall be entitled to receive upon the conversion of this Note), solely for the purpose of issuance upon the conversion of this Note, such number and type of Conversion Shares issuable upon full conversion of this Note.  All Conversion Shares shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges.  Payor shall not take any action which would cause the number of authorized but unissued shares of Common Stock (or any other securities which the Holders shall be entitled to receive upon the conversion of this Note) to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of this Note.
 
Payor shall take all such actions as may be necessary to assure that all Conversion Shares may be so issued on each applicable Conversion Date without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance which shall be immediately delivered by Payor upon each such issuance).  If any Conversion Shares required to be reserved for issuance upon conversion of this Note or as otherwise provided hereunder require registration or qualification with any governmental authority under any federal or state law before such shares may be so issued, Payor shall cause such shares to be duly registered or qualified.  So long as shares of Common Stock are listed on the Nasdaq Global Market System or listed or quoted on any other securities exchange or market, Payor shall, at its expense, list or cause to have quoted thereon, maintain and increase when necessary such listing or quotation, of, all Conversion Shares from time to time issued upon conversion of this Note or as otherwise provided hereunder, and, to the extent permissible under the applicable securities exchange rules, all unissued Conversion Shares which are at any time issuable hereunder, so long as any shares of Common Stock shall be so listed or quoted.  Payor shall also so list or cause to have quoted on each securities exchange or market, and shall maintain such listing or quotation of, any other securities which the Holders shall be entitled to receive upon the conversion of this Note if at the time any securities of the same class shall be listed or quoted on such securities exchange or market by Payor.
 
(c) Certain Actions.  Payor shall not by any action, including amending the certificate of incorporation or the bylaws of Payor, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Note, but shall at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of each Holder against dilution (to the extent specifically provided herein) or impairment.
 
(d) Note Register.  Payor shall cause to be kept at its principal executive office a register (the “Note Register”) in which Payor shall maintain a record of the Pro Rata Share of each Holder and shall provide for the registration of this Note, the conversion, repurchase and prepayment of all or any portion of this Note, and the transfer of this Note or any interest in this Note.  The Note Register shall be in written form or in any form capable of being converted into written form within a reasonably prompt period of time. Payor is hereby appointed “Note Registrar” for the purpose of registering Notes and transfers of Notes as herein provided.
 
Upon surrender for registration of transfer of this Note to the Note Registrar, Payor shall execute and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Note.  This Note may be exchanged for other Notes of any authorized denominations and of a like aggregate principal amount, upon surrender of this Note at the principal executive office of Payor. Whenever this Note is so surrendered for exchange (including pursuant to Section 2(c)(ii) or Section 7(c)(ii) hereof), Payor shall execute the Note or Notes which the Holder(s) making the exchange is or are entitled to receive bearing registration numbers not contemporaneously outstanding. All Notes so issued upon any registration of transfer or exchange of this Note shall be the valid obligations of Payor, evidencing the same debt, and entitled to the same benefits, as the Note or Notes surrendered upon such registration of transfer or exchange.  No service charge shall be made to any Holder for any registration of, transfer or exchange, repurchase or conversion of this Note or any interest therein.
 
(e) Existence.  Payor shall, and shall cause each Significant Subsidiary to, do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business.
 
(f) Stay, Extension and Usury Laws.  Payor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive Payor from paying all or any portion of the principal of or interest (including interest at the Default Interest Rate) on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and Payor (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holders, but will suffer and permit the execution of every such power as though no such law had been enacted.
 
(g) Mutilated, Destroyed, Lost or Stolen Notes. Upon receipt of an affidavit reasonably satisfactory to Payor of the ownership of and the loss, theft, destruction or mutilation of this Note and, in the case of any such mutilation, upon surrender and cancellation of this Note, Payor shall make and deliver, in lieu of such lost, stolen, destroyed or mutilated Note, a new Note of like tenor and convertible into the same number of shares of Common Stock.
 
(h) Payment of Taxes.
 
                (i) Stamp Taxes.  Payor shall pay or discharge, or cause to be paid or discharged, before the same may become delinquent, all stamp taxes and other duties, if any, which may be imposed by the United States or any political subdivision thereof or therein in connection with the issuance, transfer or conversion of this Note.  The issuance of Conversion Shares shall be made without charge to any Holder for any issue or transfer tax or other expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by Payor.
 
                (ii) Withholding Taxes.  Payor shall exclude and withhold from each payment due under any Note any and all withholding taxes applicable thereto to the extent required by law.  Each Holder (or successor or permitted assign) hereby agrees to provide to Payor two properly completed and executed copies of the certificates and/or U.S. Treasury Forms (such as Forms W-9, W-8BEN, W-8ECI, W-8IMY, or any successor forms thereto) that are required for Payor to determine whether or to what extent United States federal income withholding taxes apply to payments to such Holder (or successor or permitted assign) hereunder.
 
(i) KfW Guaranty.  Payor shall not agree or consent to or execute any amendment, waiver, restatement or other modification of, or supplement or addition to, the KfW Guaranty or the KfW Settlement Agreement, in each case without the prior written consent of the Required Holders.
 
9. Governing Law.  The terms of this Note shall be construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York, including Sections 5-1401 and 5-1402 of the New York General Obligations Law and Rule 327(b) of the New York Civil Practice Law and Rules.  Any action against Payor or any Holder, including any action for provisional or conservatory measures or action to enforce any judgment entered by any court in respect of any thereof, may be brought in any federal or state court of competent jurisdiction located in the Borough of Manhattan in the State of New York, and each of Payor and each Holder irrevocably consents to the jurisdiction and venue in the United States District Court for the Southern District of New York and in the courts hearing appeals therefrom unless no federal subject matter jurisdiction exists, in which event, each of Payor and each Holder irrevocably consents to jurisdiction and venue in the Supreme Court of the State of New York, New York County, and in the courts hearing appeals therefrom.  Each of Payor and each Holder hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Note, any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve process in accordance with this Note, that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise), and to the fullest extent permitted by applicable law, that the suit, action or proceeding in any such court is brought in an inconvenient forum, that the venue of such suit, action or proceeding is improper, or that this Note, or the subject matter hereof or thereof, may not be enforced in or by such courts and further irrevocably waives, to the fullest extent permitted by applicable law, the benefit of any defense that would hinder, fetter or delay the levy, execution or collection of any amount to which such person is entitled pursuant to the final judgment of any court having jurisdiction.  Each of Payor and each Holder expressly acknowledges that the foregoing waiver is intended to be irrevocable under the laws of the State of New York and of the United States of America.  EACH OF PAYOR AND EACH HOLDER HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
10. Amendments and Waivers.  Any term of this Note may be amended or waived only with the written consent of Payor and the Required Holders; provided that no such amendment or waiver shall, without the consent of each Holder:  (a) extend the fixed maturity of this Note; (b) reduce the rate or extend the time for payment of interest on this Note; (c) reduce the principal amount of this Note; (d) reduce any amount payable on repurchase of this Note; (e) impair the right of any Holder to institute suit for the payment of this Note; (f) make the principal of this Note or interest on this Note payable in any coin or currency other than that provided in this Note; (g) change the obligation of Payor to repurchase this Note upon a Designated Event in a manner adverse to the Holders; (h) affect the right of a Holder to convert this Note; or (i) reduce the percentage of Notes, the holders of which are required to consent to any amendment or waiver or otherwise modify any of the provisions of this Section 10, except to increase any such percentage or to provide that certain other provisions of this Note cannot be modified or waived without the consent of each Holder. 
 
11. Assignment.  This Note shall bind Payor and each Holder and their respective successors and permitted assigns.  The obligations of Payor under this Note shall not be sold, assigned, encumbered or otherwise disposed of or transferred (whether for or without consideration, whether voluntarily or involuntarily or by operation of law, except in accordance with Section 8(a) hereof) without the prior written consent of the Required Holders.  This Note may be sold, assigned, encumbered, conveyed or otherwise disposed of or transferred (whether for or without consideration, whether voluntarily or involuntarily or by operation of law), in whole or in part, by any Holder without the consent of Payor; provided, however, that such Holder shall provide Payor with notice that such transfer has been made within five (5) business days after the making of such transfer.
 
12. Injunctive Relief.  Payor agrees that a Holder’s remedies at law in the event of any default or threatened default by Payor in the performance of or compliance with any of the terms of this Note are not and will not be adequate to the fullest extent permitted by law, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise without such Holder having to prove actual damage or post any bond or other security.
 
13. Notices.  Unless otherwise provided, any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by facsimile or electronic mail, or 48 hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such address set forth on the signature page hereto below such person’s signature, in the Note Register or as otherwise furnished to Payor in writing by the Holder.
 
Whenever the Conversion Rate shall be adjusted pursuant to Section 3 hereof (for purposes of this Section 13, each an “adjustment”), Payor shall cause its Chief Financial Officer to prepare and execute a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board made any determination hereunder), and the Conversion Rate after giving effect to such adjustment, and shall cause copies of such certificate to be delivered to each Holder promptly (and in no event later than five (5) business days) after each event giving rise to an adjustment.
 
14. Definitions.  For the purposes of this Note, the following terms have the following meanings:
 
(a)  “business day” means any day except a Saturday, Sunday or other day on which commercial banking institutions in the State of Indiana or the State of New York are required or authorized by applicable law or executive order to be closed.
 
(b) “Change in Control” means the occurrence of one or more of the following events
 
                (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of shares representing more than 50% of the combined voting power of the then outstanding Voting Stock of Payor;
 
                (ii) Payor consolidates with or merges into any other person, any other person merges into Payor, or Payor effects a share exchange, and, in the case of any such transaction, the outstanding Common Stock is reclassified into or exchanged for any other property or securities, unless the stockholders of Payor immediately before such transaction own, directly or indirectly immediately following such transaction, a majority of the combined voting power of the then outstanding Voting Stock of the person resulting from such transaction;
 
                (iii) Payor, or Payor and its subsidiaries taken as a whole, sells, assigns, transfers, leases, conveys or otherwise disposes of all or substantially all of the properties or assets of Payor, or of Payor and its subsidiaries taken as a whole, as applicable;
 
(iv) any time the Continuing Directors do not constitute a majority of the Board (or, if applicable, the board of directors of a successor corporation to Payor); or
 
                (v) Payor undertakes a liquidation, dissolution or winding up.
 
(c) “Continuing Directors” means, as of any date of determination, any member of the Board who (i) was a member of the Board on the Issue Date or (ii) was nominated for election or elected to the Board with the approval of a majority of the Continuing Directors who were members of the Board at the time of such nomination or election.
 
(d) “Conversion Rate” means 100 shares of Common Stock per $1,000, subject to adjustment as provided in Section 3 hereof.
 
(e) “Designated Event” means the occurrence of any of the following:
 
                (i) any transaction or event (whether by means of a Corporate Event or otherwise) in connection with which 50% or more of the then outstanding shares of Common Stock are exchanged for, converted into or constitute solely the right to receive consideration that is not at least 90% shares of common stock that are listed on, or immediately after the transaction or event will be listed on, a United States national securities exchange;
 
(ii) a Change in Control; or
 
                (iii) the Common Stock (or other securities into which this Note is then convertible) is not listed on the Nasdaq Global Market System or any other United States national securities exchange.
 
(f) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time.
 
(g) “Fair Market Value” means, with respect to any security or other property, the fair market value of such security or other property, as determined by the Board acting in good faith, assuming a willing buyer and a willing seller, provided that no minority or illiquidity discount shall be taken into account and no consideration shall be given to any restrictions on transfer, or to the existence or absence of, or any limitations on, voting rights.
 
(h) The words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation.”
 
(i) “KfW” means KfW (formerly known as Kreditanstalt Für Wiederaufbau), an organization organized under the laws of Germany.
 
(j) “KfW Guaranty” means the Guarantee Agreement, dated as of [      ], 2009, between Payor and KfW, as in effect on the date hereof (without giving effect to any amendment, waiver, restatement or other modification of, or supplement or addition to, such form without the consent of the Holders in accordance with Section 8(i) hereof).
 
(k) “KfW Settlement Agreement” means the Settlement Agreement and Release, dated as of June 12, 2009, among Skyway Airlines, Inc. (as successor to Astral Aviation, Inc., doing business under the name Midwest Connect), a Delaware corporation, MAG, Payor, KfW and a new special purpose entity that is an indirect subsidiary of MAG, as in effect on the date hereof (without giving effect to any amendment, waiver, restatement or other modification of, or supplement or addition to, such agreement without the consent of the Holders in accordance with Section 8(i) hereof).
 
(l) “Per Share Market Value” means on any particular date (i) the last sale price per share of the Common Stock on such date on the Nasdaq Global Market System or another registered national stock exchange on which the Common Stock is then listed, or if there is no such price on such date, then the closing bid price or last sale price, as applicable, on such exchange or quotation system on the date nearest preceding such date, or (ii) if the Common Stock is not then listed on the Nasdaq Global Market System or any registered national stock exchange, the closing bid price or last sale price, as applicable, for a share of Common Stock in the over-the-counter market, as reported by the OTC Bulletin Board or by the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or (iii) if the Common Stock is not then reported by the OTC Bulletin Board or the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), then the average of the “Pink Sheet” quotes for the five (5) Trading Days preceding such date of determination, or (iv) if the Common Stock is not then publicly traded the Fair Market Value of a share of Common Stock; provided, that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period.
 
(m) “Pro Rata Share” means, with respect to a Holder at any time, a fraction (expressed as a percentage carried out to the ninth decimal place), the numerator of which is the aggregate outstanding principal amount of this Note owing to such Holder and the denominator of which is the total aggregate outstanding principal amount of this Note.
 
(n) “person” means an individual, corporation, limited liability company, partnership, joint stock company, trust, unincorporated organization, joint venture or other entity of whatever nature.
 
(o) “Required Holders” means (i) as used in Section 4 hereof, the holders of at least 25% in aggregate outstanding principal amount of this Note; and (ii) otherwise, the holders of a majority in aggregate outstanding principal amount of this Note.
 
(p) “Significant Subsidiary” has the meaning ascribed to such term in Rule 1-02(w) of Regulation S-X of the SEC (17 CFR Part 210).
 
(q) “Trading Day” means (i) a day on which the Common Stock is traded on the Nasdaq Global Market System, or (ii) if the Common Stock is not traded on the Nasdaq Global Market System, a day on which the Common Stock is quoted in the over-the-counter market as reported by the OTC Bulletin Board or by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (i) or (ii) hereof, then Trading Day shall mean any business day.
 
(r) “Voting Stock” of a person means all classes of capital stock of such person then outstanding and normally entitled to vote in the election of directors.
 
15. Captions. The section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Note and will not be deemed to limit or otherwise affect any of the provisions hereof.
 
16. Severability. If any provision of this Note or the application thereof to any person (including the officers and directors of the parties hereto) or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to Payor or any Holder. Upon such determination, Payor and the Holders shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of Payor and the Holders.
 
[Remainder of this Page Intentionally Left Blank]
 

 
1To be the Closing Date under the Investment Agreement to which this Note is attached as an Exhibit.
 
2
To be the fifth anniversary of the Issue Date.
 
 
 
 
 
IN WITNESS WHEREOF, Payor and the Holders set forth below have caused this Note to be duly executed as of the date first written above.
 
REPUBLIC AIRWAYS HOLDINGS INC.
 

By:__________________________________
Name:
Title:
 
Address: 8909 Purdue Road
Suite 300
Indianapolis, IN  46268
Attention: President and Chief Executive Officer


ACKNOWLEDGED AND AGREED:
 
HOLDERS:
 
TPG MIDWEST US V, LLC
 

By:__________________________________
Name:
Title:
 
Address: [_____]
[_____]
[_____]
Attention: [_____]


TPG MIDWEST INTERNATIONAL V, LLC
 

By:__________________________________
Name:
Title:
 
Address: [_____]
[_____]
[_____]
Attention: [_____]
 
 
 
 
Annex B
 
 
REPUBLIC AIRWAYS HOLDINGS INC.
8909 Purdue Road, Suite 300
Indianapolis, IN 46268
 
 
__________, 20091
 
 
TPG Partners V, L.P.
TPG Midwest US V, LLC
TPG Midwest International V, LLC
 
RE: Termination of Indemnity Agreement
 
 
Ladies and Gentlemen:
 
 
    Reference is made to the Agreement, dated as of June 2, 2009 (the “Indemnity Agreement”), among Republic Airways Holdings Inc., a Delaware corporation (“Republic”), TPG Partners V, L.P. (“TPG Fund”), TPG Midwest US V, LLC (“TPG US”), and TPG Midwest International V, LLC (“TPG International”).
 
 
    Each of Republic, TPG Fund, TPG US and TPG International hereby agrees that, as of the date hereof, the Indemnity Agreement and all of the parties’ rights and obligations thereunder are hereby terminated and are of no further force and effect, and none of the parties hereto shall have any liabilities or obligations to, or rights against, any other party hereto with respect to or under the Indemnity Agreement.
 
 
    This letter agreement shall be construed in accordance and governed by the laws of the State of New York, without regard to the principles of conflicts of law. This letter agreement may be executed in one or more counterparts and by the different parties hereto on separate counterparts, each of which, when executed, shall constitute one and the same agreement.
 
 
[signature page follows]
 
 
 

 
1
To be dated as of the Closing Date of the Investment Agreement to which this letter is an Annex.
 
 
 
 
The parties have executed this letter agreement as of the date first above written intending to be legally bound hereby.
 
 
REPUBLIC AIRWAYS HOLDINGS INC.
  
       
 
By:
/s/ Bryan Bedford
  
   
Name: Bryan Bedford
  
   
Title: President & CEO
  
       
 

 
 
TPG PARTNERS V, L.P.,
  
       
 
By: TPG GenPar V, L.P.,
  
 
Its: Managing Member
  
 
By: TPG Advisors V, Inc.
  
 
Its: General Partner
  
     
 
By:
/s/ Clive Bode
  
   
Name: Clive Bode
  
   
Title: Vice President
  
       
 
 
TPG MIDWEST US V, LLC
  
     
  By: TPG Advisors V, Inc.  
  Its: Managing Member  
       
 
By:
/s/ Clive Bode  
    Name: Clive Bode   
    Title: Vice President   
       
 
 
TPG MIDWEST INTERNATIONAL V, LLC
  
     
  By: TPG GenPar V.L.P.  
  Its: Managing Member  
  By: TPG Advisors V, Inc.  
  Its: General Partner  
       
 
By:
/s/ Clive Bode  
    Name: Clive Bode   
    Title: Vice President   
       
 

 
 

 
Exhibit A
 
 
VOLUNTARY CONVERSION NOTICE
 
TO:
REPUBLIC AIRWAYS HOLDINGS INC.
 
 
Re:
$25,000,000 Convertible Note dated [        ], 2009, issued by Republic Airways Holdings Inc. to TPG Midwest US V, LLP and TPG Midwest International V, LLP or their respective assigns (the “Note”)

Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Note.
 
The undersigned registered Holder of $  aggregate principal amount of the Note hereby exercises the option to convert all of the aggregate outstanding principal amount of and accrued and unpaid interest of the Note held by such Holder, or the portion thereof below designated, in accordance with the terms of Section 2(a) of the Note, and directs that the Conversion Shares issuable and deliverable upon such conversion be issued and delivered to the undersigned registered Holder unless a different name has been indicated below.
 
Dated:  _________________________                                                              
 
Dollar Amount of Principal and Accrued Interest
to be Converted if Less than All Held by Such Holder:
_______________________________
 

 
                                     
                                     
Name of Registered Holder (please type or print)
 

Signature of Registered Holder

Fill in the information below for the person in whose name the registration of the Conversion Shares is to be made, if to be made other than in the name of the registered Holder (please type or print):
 
______________________________
(Name)
 
______________________________
(Street Address)
 
______________________________
(City, State and Zip Code)
 
______________________________
(Social Security or Other Taxpayer Identification Number)
 
 
Exhibit B
 
 
DESIGNATED EVENT REPURCHASE NOTICE
 
TO:
REPUBLIC AIRWAYS HOLDINGS INC.
 
 
Re:
$25,000,000 Convertible Note dated [        ], 2009, issued by Republic Airways Holdings Inc. to TPG Midwest US V, LLP and TPG Midwest International V, LLP or their respective assigns (the “Note”)

Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Note.
 
The undersigned registered Holder of $  aggregate principal amount of the Note hereby acknowledges receipt of a Designated Event Notice from Payor regarding the right of Holders to elect to require Payor to repurchase all or a portion of the principal amount of the Note held by such Holder and requests and instructs Payor to repay the entire principal amount of the Note held by such Holder, or the portion thereof below designated, in cash, in accordance with the terms of Section 7 of the Note, at the price of 100% of such principal amount, together with accrued and unpaid interest to, but excluding, the Designated Event Repurchase Date, to the undersigned registered Holder unless a different name has been indicated below.
 
Dated:   _____________________________                                                             
 
Dollar Amount of Principal to be Repurchased
if Less than All Held by Such Holder:
___________________________________
 

 
Name of Registered Holder (please type or print)
 

Signature of Registered Holder
 

Fill in the information below for the person to whom the Designated Event Purchase Price is to be paid, if to be paid other than to the registered Holder (please type or print):
 
______________________________
(Name)
 
______________________________
(Street Address)
 
______________________________
(City, State and Zip Code)
 
______________________________
(Social Security or Other Taxpayer Identification Number)
 
 
 
Exhibit C
 
ASSIGNMENT
 
TO:
REPUBLIC AIRWAYS HOLDINGS INC.
 
 
Re:
$25,000,000 Convertible Note dated [        ], 2009, issued by Republic Airways Holdings Inc. to TPG Midwest US V, LLP and TPG Midwest International V, LLP or their respective assigns (the “Note”)

Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Note.
 
For value received, the undersigned registered Holder of $  aggregate principal amount of the Note hereby sell(s), assign(s) and/or transfer(s) to the person designated below the entire principal amount of the Note held by such Holder, or the portion thereof below designated, and hereby irrevocably constitutes and appoints the Secretary or Assistant Secretary of Payor as attorney, with full power of substitution and re-substitution, to transfer such principal amount of the Note on the Note Register.

 

Dollar Amount of Principal Sold, Assigned and/or
 
Transferred if Less than All Held by Such Holder:
 
__________________________
 

 


 
Fill in the information below for the person to whom such principal amount is to be sold, assigned and/or transferred (please type or print):
 
__________________________
(Name)
______________________________
(Street Address)
______________________________
(City, State and Zip Code)
 

______________________________
(Social Security or Other Taxpayer Identification Number)

 

[signature page follows]
 
 
 
 
 
In connection with such sale, assignment and/or transfer, the undersigned confirms that such principal amount of the Note is being sold, assigned and/or transferred:
 
 

To Payor or any subsidiary thereof; or
 
 

To a “qualified institutional buyer” in compliance with Rule 144A under the Securities Act of 1933, as amended; or
 
 

Pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933, as amended, or another exemption (specify exemption:                                                                                                                     ); or
 
 

Pursuant to a registration statement that has been declared effective under the Securities Act of 1933, as amended, and which continues to be effective at the time of such transfer.
 

 

 
Dated: ______________________                                                                           
 

 
 

Name of Registered Holder (please type or print)
 

Signature of Registered Holder














[signature page to Convertible Note Assignment]
 
 EX-99.1 4 exhibit99_1.htm PRESS RELEASE OF REPUBLIC AIRWAYS HOLDINGS INC. ISSUED ON JUNE 23, 2009 exhibit99_1.htm
 
EXHIBIT 99.1
 
For Immediate Release:
 
Contact: Carlo Bertolini
Republic Airways Holdings
Tel. (317) 484-6069
 

RAH Logo
 
 
 
Republic Airways to Acquire Midwest Airlines
 
 

Indianapolis, Indiana, (June 23, 2009) – Republic Airways Holdings (NASDAQ/NM: RJET) today announced that it is acquiring Milwaukee-based Midwest Airlines from TPG Capital, a Fort Worth, Texas-based private equity firm. The transaction is subject to customary regulatory approvals and is expected to close in four to six weeks.

Republic will acquire 100% of the equity of Midwest and TPG’s $31 million secured note from Midwest. Consideration will be $6 million in cash and a $25 million, five-year note, which may be converted to RJET stock at $10 per share. In addition, TPG will have the right to nominate a member to the Republic Board of Directors.

“This acquisition will enhance the strategic positioning of Republic Airways,” said Bryan Bedford, chairman, president and CEO of Republic Airways. “Midwest has built a strong brand, a loyal base of customers and dedicated team of employees. We look forward to welcoming them to the Republic family and continuing the Midwest tradition of excellent customer care.”

Bedford added: “As Midwest celebrates its 25th anniversary, I want to make sure I recognize what the employees of Midwest – past and present – have built and sustained through both good and difficult times. This is a great brand built on superior customer service that will continue under new ownership.”

Under the agreement, Midwest will become a wholly owned subsidiary of Republic Airways, with the Midwest brand continuing. Midwest’s Boeing 717s will be replaced with Embraer 190 aircraft, enhancing Midwest’s ability to offer nonstop service to key destinations important to its frequent flyers.

Republic Airways Holdings, based in Indianapolis, Indiana is an airline holding company that owns Chautauqua Airlines, Republic Airlines and Shuttle America. The airlines offer scheduled passenger service on approximately 1,200 flights daily to 101 cities in 37 states, Canada and Mexico through airline services agreements with seven U.S. airlines. All of the airlines’ flights are operated under their airline partner brand, such as AmericanConnection, Continental Express, Delta Connection, United Express, Midwest Connect, Mokulele Airlines and US Airways Express. The airlines currently employ approximately 4,500 aviation professionals and operate 212 regional jets.

In addition to historical information, this release contains forward-looking statements. Republic Airways may, from time-to-time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements encompass Republic Airways’ beliefs, expectations, hopes or intentions regarding future events. Words such as "expects," "intends," "believes," "anticipates," "should," "likely" and similar expressions identify forward-looking statements. All forward-looking statements included in this release are made as of the date hereof and are based on information available to Republic Airways as of such date. Republic Airways assumes no obligation to update any forward-looking statement. Actual results may vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of reasons, including, among others, the risk factors disclosed in the Company’s most recent filing with the Securities and Exchange Commission.

 
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