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As filed with the Securities and Exchange Commission on January 9, 2008

Registration Statement No. 333-146958

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 1 to
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Global Aero Logistics Inc.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	4512 (Primary Standard Industrial Classification Code Number)	No. 20-4222196 (I.R.S. Employer Identification Number)
HLH Building 101 World Drive Peachtree City, Georgia 30269 (770) 632-8000 (Address, including ZIP Code, and telephone number, including area code, of registrant's principal executive offices)

Mark M. McMillin, Esq.
Senior Vice President, General Counsel and Secretary
Global Aero Logistics Inc.
HLH Building
101 World Drive
Peachtree City, Georgia 30269
(770) 632-8215
(Name, address, including ZIP Code, and telephone number, including area code, of agent for service)

Copy to:
Ronald Cami, Esq.
Cravath, Swaine & Moore LLP
825 Eighth Avenue
New York, New York 10019
(212) 474-1000

Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.

        If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: o

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Offering Price Per Unit	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee
Subscription rights	$14.00	$50,000,000	(3)
Shares of Class A common stock issuable upon exercise of subscription rights	$14.00	$50,000,000	$1535.00(4)

(1)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o).

(2)

The maximum aggregate offering price is based on the $14.00 offering price per share. There is no market price for the Class A common stock.

(3)

Pursuant to Rule 457(g), no separate registration fee is required for the subscription rights, since they are being registered in the same registration statement as the Class A common stock underlying the subscription rights.

(4)

Previously paid.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JANUARY 9, 2008

PRELIMINARY PROSPECTUS

                 Shares

Global Aero Logistics Inc.

Class A Common Stock, par value $0.0001 per Share
Rights to Purchase up to                        Shares of Common Stock
at $14.00 per Share

        All holders of our Class A common stock as of 5:00 p.m., New York City time, on                        , 2008, are being granted rights to purchase additional shares of our common stock from our largest stockholder, MatlinPatterson ATA Holdings LLC.

        Nontransferable subscription certificates are being delivered to you along with this prospectus.

        Each right entitles you to purchase one share of our common stock for a subscription price of $14.00 per share. Each shareholder is being granted            rights for each share of our common stock held as of 5:00 p.m., New York City time, on                        , 2008, but fractional rights held by a shareholder after aggregating all rights to which the shareholder is entitled will be rounded up to the nearest whole number. You will be able to exercise your rights until 5:00 p.m., New York City time, on                        , 2008, unless we extend the expiration date to a date not later than            , 2008.

        Global Aero Logistics Inc. intends to have its common stock quoted on the Pink Sheets under the symbol "            ."

The shares are being offered directly by the selling stockholder, MatlinPatterson. Global will not receive any of the proceeds from the sale of the shares being sold, and all proceeds from this offering will be paid to MatlinPatterson.

        You should consider carefully the risks that we have described in "Risk Factors" beginning on page 18 before deciding whether to invest in our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is                        , 2008

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Summary Consolidated Historical Financial and Operating Data of Global	12
Summary Consolidated Historical Financial and Operating Data of World Air Holdings	15
Summary Unaudited Pro Forma Combined Statements of Operations Information	17
Risk Factors	18
Forward-Looking Statements	39
Industry and Market Data	40
Use of Proceeds	40
Dividend Policy	40
Dilution	40
Capitalization	41
Unaudited Pro Forma Combined Statements of Operations	42
Selected Consolidated Historical Financial and Operating Data of Global	50
Selected Consolidated Historical Financial and Operating Data of World Air Holdings	54
Management's Discussion and Analysis of Financial Condition and Results of Operations of Global	56
Management's Discussion and Analysis of Financial Condition and Results of Operations of World Air Holdings	83
Business	99
Management	111
Security Ownership	136
Certain Relationships	138
Description of Certain Indebtedness	140
The Rights Offering	144
Plan of Distribution	150
Description of Capital Stock	151
Shares Eligible for Future Sale	155
Material U.S. Federal Income Tax Consequences	156
Legal Matters	157
Experts	157
Where You Can Find More Information	158
Index to Consolidated Financial Statements	F-1

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PROSPECTUS SUMMARY

The following summary highlights selected information contained elsewhere in this prospectus. It does not contain all the information that may be important to you. You should read this entire prospectus carefully, particularly the "Risk Factors" section and the financial statements and related notes to those financial statements contained in this prospectus. As used in this prospectus, the terms "we," "us," "Global," "our Company" and "the Company" refer to Global Aero Logistics Inc. and its subsidiaries on a consolidated basis as of the date hereof unless the context requires otherwise. As used in this prospectus, the term "common stock" refers to our Class A common stock, par value $0.0001 per share, which is the only class of common stock issued and authorized under our Certificate of Incorporation. As used in this prospectus, the term "MatlinPatterson" refers to MatlinPatterson ATA Holdings LLC, a Delaware limited liability company, our principal shareholder and an affiliate of MatlinPatterson Global Advisers LLC.

        Global and World Air Holdings, Inc. ("World Air Holdings") consummated their merger (as described below) on August 14, 2007. Pro forma combined information in this prospectus gives pro forma effect to, among other things, the merger and the financing (as described below) as if they had occurred on January 1, 2006, for statement of operations purposes. See "Summary Unaudited Pro Forma Combined Statements of Operations Information" and "Unaudited Pro Forma Combined Statements of Operations" and the related notes thereto.

Our company

        We are a global provider of diversified contract airlift services, offering our customers a range of aircraft types, configurations, payloads and capabilities. Our contracted flying can range from a single trip to contracts that span more than a year. We offer military and commercial charter services through our three operating airlines: ATA Airlines, Inc. ("ATA"), North American Airlines, Inc. ("North American"), and World Airways, Inc. ("World"). Our fleet of 55 aircraft consists of a combination of passenger and freighter aircraft that support our three business lines. Our business lines—Military/Commercial Charter, ACMI and scheduled service—are diversified by service offering, customer base and geography, which we believe reduces our vulnerability to economic downturns.

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Our Military/Commercial Charter business is the largest transporter of U.S. military personnel and their families to and from overseas deployments, during times of conflict as well as peacetime. To a lesser extent, we provide customers of our Military/Commercial Charter business with cargo capacity. The U.S. Department of Defense relies almost exclusively on the commercial sector for its passenger transportation needs, and in 2006 we earned approximately 73% of the $1.2 billion in spending for international troop movement.



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Our ACMI business, which refers to arrangements in which our customers lease our aircraft at a rate based on aircraft, crew, maintenance and insurance costs, services primarily the global air cargo market. The air cargo market has experienced strong growth in the past ten years and is projected to grow at a rate of more than 6% annually over the next 20 years as international trade continues to expand.



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Our scheduled service business is primarily designed around ATA's codeshare arrangement with Southwest Airlines ("Southwest"). A codeshare agreement is an agreement between airlines which allows an airline to sell seats on another airline's flights. Our codeshare agreement enables us to connect Southwest customers to destinations that Southwest does not serve, primarily Hawaii, while also allowing us to sell ATA-only itineraries on southwest.com. We also continue to explore strategic opportunities for our scheduled service businesses, including network restructuring, international expansion, business combinations and partial or complete divestitures.

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        The following chart sets forth our total revenues by business line for the year ended December 31, 2006, on a pro forma basis:

(dollars in billions)

Total Revenues = $1.6 billion

        For the year ended December 31, 2006, after giving pro forma effect to the merger, we generated revenues of $1.6 billion.

Military/Commercial Charter

        We have been active in the business of transporting military service personnel and their families to and from overseas destinations since 1952. The U.S. Department of Defense relies almost exclusively on the commercial sector for its passenger transportation needs, and in 2006, we earned approximately 73% of the $1.2 billion in spending for international troop movement. We contract with the U.S. Department of Defense's Air Mobility Command (the "AMC"), participating primarily in their International Program. To a lesser extent, we provide AMC cargo capacity mainly to move military supplies overseas. We are currently operating two McDonnell Douglas DC-10-30 wide-body freighters to service this market.

        Our military charter service contracts reimburse us based on the average costs of all participating airlines, plus a fixed operating margin. Because our contracts provide for a pass-through of actual fuel costs to the military, this business is insulated from fuel price volatility.

        New entrants into the AMC's International Program must typically overcome significant obstacles. Participants in the AMC's International Program must (1) be U.S. registered airlines, (2) demonstrate twelve continuous months of comparable flying as will be utilized in AMC charters, (3) have the fleet capability to fly long-range, over-water and heavy payload flights, (4) have labor contracts that allow for flexibility to conduct extended international missions with relatively short notice as to specific routings and (5) be admitted as a member of a participating AMC team or be otherwise entitled to fly international missions under the AMC program. These requirements have historically precluded international carriers, as well as most low cost carriers and major domestic airlines from participating in these programs.

        We also sell charter services to other governmental and commercial customers using our military charter fleet, primarily during off-peak periods in our military service. Our recent charter air travel customers include tour operators, professional and collegiate sports teams and organizations and

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corporations. Typically, we enter into charter agreements that limit our exposure to variability in the price of fuel.

        For the year ended December 31, 2006 and the nine months ended September 30, 2007, our Military/Commercial Charter business generated pro forma revenues of $941 million and $778 million, respectively, which represented approximately 62% and 62% of our total pro forma revenues, respectively. For the year ended December 31, 2006, our AMC business represented approximately 56% of our total pro forma revenue.

ACMI

        We participate in the global air cargo market primarily through the operation of freighter aircraft under ACMI contracts and believe we are well-positioned to capitalize on the growing ACMI cargo market. ACMI, or wet lease, contracts offer our airline customers the flexibility to supplement capacity in existing markets, and/or to serve increased demand in seasonal markets, all without committing dedicated aircraft for extended periods. The customer leases aircraft from us at a revenue rate based on aircraft, crew, maintenance and insurance costs, and is responsible for paying for all other operating expenses, including fuel.

        We currently operate six McDonnell Douglas MD-11 wide-body freighters and up to two McDonnell Douglas DC-10-30 wide-body freighters to service this growing market and have entered into long-term lease agreements for two Boeing 747-400 freighter aircraft delivering in mid-2008. Currently, we have ACMI cargo contracts with Lufthansa, DHL, and other carriers in American, European, and Asian markets, and the Persian Gulf.

        We also provide ACMI passenger services with aircraft that are well-suited to provide supplemental capacity to other airlines in times of increased demand and/or operational challenges. We have provided ACMI passenger services for carriers such as Air Jamaica, Aer Lingus and JetBlue over the last twelve months. We also operate a specifically configured MD-11 aircraft on behalf of Sonair Servico Aero, SARL, a subsidiary of the Angolan national oil company, transporting oil workers and executives within the U.S.-Africa Energy Association, a not-for-profit corporation, three times a week between Houston and Luanda, Angola.

        For the year ended December 31, 2006 and in the nine months ended September 30, 2007, our ACMI business generated pro forma revenues of $165 million and $122 million, respectively, which represented approximately 10% and 10% of our total pro forma revenues, respectively.

Scheduled service

        We offer scheduled passenger service through ATA and North American. ATA designs its scheduled service operations around a codeshare agreement with Southwest. We operate more than 45 daily scheduled service flights from various western U.S. airports to Hawaii and over certain routes on the U.S. mainland.

        A significant portion of our passengers purchase ATA tickets through Southwest distribution channels or come to ATA on connecting flights through Southwest focus cities. Most of our domestic flights are available for purchase on southwest.com.

        Our North American subsidiary provides international non-stop scheduled flights to Georgetown, Guyana; Accra, Ghana; and Lagos, Nigeria.

        For the year ended December 31, 2006 and in the nine months ended September 30, 2007, our scheduled service business generated pro forma revenues of $448 million and $353 million, respectively, which represented approximately 28% and 28% of our total pro forma revenues, respectively. We also

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continue to explore strategic opportunities for our scheduled service businesses including network restructuring, international expansion, business combinations and partial or complete divestitures.

Our Aircraft

        Our fleet of 55 aircraft consists of a combination of passenger and freighter planes that support our three businesses. We lease all of our aircraft, except as indicated below:

	Number of Each Aircraft Type
Aircraft Type	ATA		World		North American	Total	Average Age (in years)
Boeing 737-300	1		—		—	1	17
Boeing 737-800	12		—		—	12	6
Boeing 757-200	6		—		5	11	9
Boeing 757-300	4		—		—	4	5
Boeing 767-300	—		—		5	5	11
Lockheed L-1011-500	3	*	—		—	3	25
McDonnell Douglas MD-11	—		8		—	8	14
McDonnell Douglas DC-10-30	2		1	*	—	3	30
McDonnell Douglas DC-10-30 freighter	—		2		—	2	32
McDonnell Douglas MD-11 freighter	—		6		—	6	13
	28		17		10	55

*

Owned aircraft.

Competitive strengths

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Diversified revenue base—Each of our business lines—Military/Commercial Charter, ACMI and scheduled service—relies on a different customer base with diverse underlying performance drivers that we believe reduce our exposure to downturns in any single market. Our Military Charter service is primarily dependent upon U.S. military spending for transporting troops and cargo overseas, which in turn is partially driven by current geo-political events affecting the United States. ACMI is primarily dependent on international freight transportation, which in turn is driven by global trade. Scheduled service is primarily dependent upon the general health of the travel and tourism industry and the level of

corporate spending on business travel, which in turn are driven by the Gross Domestic Product ("GDP") growth.

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Unique business model—We believe that our unique business model cushions our operating and financial results from many of the economic and other factors that affect other airlines, and distinguishes us from our competitors. A significant percentage of our revenues are derived from contracts that are payable regardless of the number of passengers flown and freight carried. As a result, our operating and financial results are not disproportionately affected by factors such as changes in consumer preferences, perceptions, spending patterns, or demographic trends that can result in a change in the number of passengers. Additionally, a significant portion of our business is generated from customer contracts designed to reimburse us for actual fuel purchased and used. Therefore, we have reduced exposure to fluctuations in the price of jet fuel, which has increased dramatically since December 31, 2001. Finally, our military and many of our commercial charter and ACMI contracts are designed with a cost-plus pricing structure, and new entrants into the AMC's International Program must typically overcome significant obstacles. We believe interest from potential new competitors is limited as a result of AMC aircraft payload and range requirements and the inflexibility of U.S. commercial airline labor work rules.



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Largest provider of military passenger transport services—According to publicly available data published by the AMC, collectively, our airline subsidiaries are the largest provider of military

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passenger transport services to the AMC. Through our teaming arrangements, we have the ability to capture approximately three-quarters of the AMC expenditures for the current government fiscal year. The U.S. Department of Defense continues to rely almost exclusively on the commercial sector to meet its passenger transportation needs.

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Well-positioned to benefit from increase in international trade—The air cargo market has experienced tremendous growth due to continued global economic expansion. The market is expected to more than triple over the next 20 years, growing at a rate of more than 6% annually. We believe our wide-body fleet is well positioned to capture this market, particularly on transatlantic, North-South America, transpacific and intra-Asia cargo routes. World currently operates six McDonnell Douglas MD-11 and two McDonnell Douglas DC-10-30 wide-body freighter aircraft and has entered into long-term lease agreements for two Boeing 747-400 freighter aircraft, which we believe are attractive aircraft in the current cargo market due to their superior capabilities and limited availability.



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Proven management team—We believe that our strong management team has enabled us and will continue to allow us to effectively execute our growth strategies. Our President and Chief Executive Officer, Subodh Karnik, has 18 years of airline experience that includes broad leadership experience at three major carriers, including Delta Air Lines. The chief operating officers of our three airline subsidiaries have an aggregate of over 50 years of aviation experience. Our executive team has eight executives with prior CEO, CFO and COO-level experience in the airline industry.

Business strategy

        Our strategy is to offer different product lines to a range of customers in order to diversify our revenue base and reduce risk. The key elements of our strategy are:

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Optimize the fleet to support our diverse product portfolio—We will continue to optimize our fleet to meet the increasing demand in aircraft transportation for the markets we serve. We are expanding our fleet to include seven McDonnell Douglas DC-10-30 passenger wide-body aircraft and have entered into long-term lease agreements for two Boeing 747-400 freighter aircraft. Our fleet strategy is designed to enable us to maximize our share of the AMC market and capture more of the growing ACMI market. In addition, we will have the flexibility to shift aircraft among our business lines to effectively manage future changes in the markets we serve.



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Expand ACMI cargo business—We are focused on further diversifying our revenue base by continuing the expansion of our ACMI cargo business. We plan to increase our freighter fleet to include aircraft suited for Transpacific and intra-Asia routes, which are forecasted to be two of the fastest growing air cargo markets. We have entered into long-term lease agreements for two Boeing 747-400 freighter aircraft.



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Selectively pursue strategic acquisitions and opportunities in our core business lines—We believe that there are significant opportunities for future growth through a select number of strategic acquisitions, particularly in our international AMC and ACMI cargo business. We regularly evaluate potential acquisition candidates, which we believe could fit our business strategy, which may or may not be material in size and scope. We intend to continue to apply a selective and disciplined acquisition strategy, which is focussed on improving our financial performance in the long-term, expanding the services we provide to existing customers and, in some cases, providing us with new customers, who further diversify our customer base. An important component of our strategy is to achieve substantial profit growth and shift our resources to focus on the expansion of our international AMC and ACMI cargo business and the continued integration of World. As such, we continue to evaluate selective and strategic opportunities in our scheduled

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service business at our airline entities-including significant restructuring of the network, international expansion, business combinations and partial or complete divestitures.

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Maintain efficient cost structure and extract synergies—Our contract airlift business model has required us to develop and maintain a competitive cost structure. In addition to having a fuel-efficient business model, we have reduced our fixed costs by outsourcing our maintenance, ground handling and reservation systems. We will continue to seek other opportunities to streamline our operations. As we complete the integration of the World Air Holdings acquisition, we plan to further reduce our costs through rationalization of back office and other functions and by leveraging the commonality of our fleets.

Industry overview

        According to data from the International Civil Aviation Organization ("ICAO"), the global airline industry reported revenues of more than $450 billion in 2006, representing approximately 8% of the GDP. The state of the airline industry continues to improve both financially and operationally after three of the worst years in its history from 2001 through 2003. Since 2002, the global economy has expanded rapidly, driving sustained growth in worldwide travel demand. As a result of positive economic trends and recent recovery, the global airlines are set to achieve operating profits of almost $16 billion in 2007 and approximately $21 billion in 2008.

        Similar to the recent resurgence in global airline activity, years of progress in reducing operating costs within U.S. passenger and cargo airlines were finally matched by a strong revenue environment. According to the Air Transport Association of America, U.S. airline revenues increased by approximately 8% between 2005 and 2006 to approximately $164 billion, with load factors steadily increasing in the last five years. At the same time, operating profits increased to $7.5 billion in 2006 from an operating profit of approximately $427 million in 2005.

        The charter, or non-scheduled, business segment of the airline industry in the U.S. is a significant source of revenue, representing between $4.3 billion and $5.6 billion in revenue during the years 1999 through 2006. Of these results, approximately $1.6 billion to a peak of $2.5 billion in 2005 represented passenger charters, with the balance earned from cargo charters.

        The air cargo industry generally consists of airline operators that have dedicated fleets of freighter aircraft as well as airlines that offer cargo capacity in the belly compartments of their aircraft flown on passenger missions. North America is the largest air cargo market in the world, carrying over 7.2 billion metric tons in 2006, according to the International Air Transport Association. The greatest areas of growth are on routes between North America and Asia, between Europe and Asia and intra-Asia, which are benefiting from the rapid economic and trade growth in the Asia Pacific region. ACMI is a method of pricing wet-lease charters within the air cargo industry. ACMI operators play a key role in the cargo market by supplying additional capacity in existing markets and providing services on a short-term basis when demand is uncertain and/or highly seasonal.

Our recent consolidation

The merger

        On August 14, 2007, Global acquired World Air Holdings for an aggregate purchase price of approximately $313 million or $12.50 per share for each outstanding share of common stock of World Air Holdings and $9.9 million of direct acquisition costs. Pursuant to an agreement and plan of merger dated April 5, 2007 between Global, Hugo Acquisition Corp. ("Hugo"), an indirect wholly owned subsidiary of Global and World Air Holdings, Hugo was merged with and into World Air Holdings with World Air Holdings as the surviving entity (the "merger"). As a result of the merger, the combined company operates three independent airlines under one umbrella: ATA, North American and World.

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The financing

        In order to fund the acquisition of World Air Holdings, on August 14, 2007, Global's subsidiary, New ATA Acquisition Inc. ("ATA Acquisition") entered into a $340.0 million senior secured payment-in-kind ("PIK") term loan agreement with the lenders party thereto (which are JPMorgan Chase Bank, N.A. ("JPMorgan") and Jefferies Finance LLC ("Jefferies") as of the date of this prospectus), Jefferies as documentation agent, and JPMorgan as administrative agent (the "JPMorgan Term Loan"). See "Description of Certain Indebtedness—JPMorgan Term Loan."

        JPMorgan and Jefferies also, respectively, received 1,808,986 and 452,247 immediately exercisable warrants to purchase Global's common stock at an exercise price of $0.01 per share, (the "Warrants"). On October 23, 2007, MatlinPatterson purchased the Warrants held by JPMorgan and on that date, MatlinPatterson exercised these Warrants, resulting in MatlinPatterson owning 1,808,986 shares of Global's common stock, in addition to the 7,500,000 shares of common stock that MatlinPatterson owned prior to this exercise. The Warrants acquired by Jefferies continue to be owned by Jefferies and remain unexercised.

        In addition, Global issued 11,507,142 shares of Series A preferred convertible stock (the "Series A preferred stock") to MatlinPatterson for an aggregate purchase price of $161.1 million or $14.00 per share. The Series A preferred stock has an annual cumulative dividend rate of 16.0% payable in common stock upon conversion but in no event will such dividend be equal to a value less than $8.0 million. In connection with the completion of this rights offering, MatlinPatterson will convert its Series A preferred stock into common stock.

        We refer to the borrowing of $340.0 million under the JPMorgan Term Loan, the issuance of the Warrants and the issuance of the Series A preferred stock collectively as the "financing". In connection with funding the acquisition of World Air Holdings, we used the proceeds from, or exchanged for securities issued in, the financing to repay or extinguish $135.9 million in previously outstanding indebtedness, consisting of (1) the exchange for Series A preferred stock of $54.3 million owed to MatlinPatterson in respect of borrowings under a $24.2 million term loan and a $28.0 million bridge loan and (2) the repayment of $81.6 million owed to the Air Transportation Stabilization Board ("ATSB"), International Lease Finance Corporation, Citibank, Boeing Capital Corporation and GECAS ("ATSB loan"). The proceeds of this repaid or extinguished indebtedness were previously used for general corporate purposes.

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Summary of the Rights Offering

The following material is qualified in its entirety by the information appearing elsewhere in this prospectus, including the section entitled "The Rights Offering."

Issuer	Global Aero Logistics Inc.
Background	As part of the financing in connection with the merger, Global obtained additional equity by issuing 11,507,142 shares of Series A preferred stock to MatlinPatterson at a purchase price of $14.00 per share. The Series A preferred stock will be converted into common stock in connection with this offering and a portion of the converted shares will be offered to existing shareholders in connection with the offering.
Rights	Each holder of common stock (other than MatlinPatterson) will be granted rights for each share of common stock held as of 5:00 p.m., New York City time, on                        2008, the record date. The number of rights granted to each holder of common stock will be rounded up to the nearest whole number. An aggregate of up to        rights will be granted pursuant to the rights offering. Each right will be exercisable for one share of common stock. An aggregate of up to         shares of common stock will be sold upon exercise of the rights. Any shares of common stock which are not purchased pursuant to the rights offering will be held by MatlinPatterson.
Subscription Privilege	Holders of rights are entitled to purchase for the subscription price one share of common stock for each right.
Oversubscription Right	Each holder of common stock that exercises all of its rights offered pursuant to this rights offering will also have the right to purchase a portion of the shares remaining after giving effect to the aggregate amount initially subscribed for in this offering. These additional shares will be sold at the subscription price. Stockholders wishing to purchase additional shares must complete an additional subscription form and deliver it, along with payment in full for the number of remaining shares for which such stockholder elects to subscribe to our subscription agent with its completed subscription agreement prior to the offering expiration date.
	The number of extra shares that each holder will have the right to purchase will be equal to the product of (x) the number of shares to be issued less the total number of shares that are initially subscribed for by each holder times (y) a fraction the numerator of which will be the aggregate number of shares of common stock on the record date owned by all offerees hereunder and the denominator of which will be the total number of outstanding shares of common stock on the record date times (z) a fraction, the numerator of which will be the number of shares of common stock on the record date owned by such purchaser and the denominator of which will

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	be the total number of shares of common stock on the record date owned by all offerees that elected to exercise all of their rights in this rights offering and MatlinPatterson.
Subscription Price	$14.00 in cash per share of common stock subscribed for. This amount is payable by personal check, certified check, cashiers check or wire transfer. As described in greater detail under "The Rights Offering", this subscription price was established as part of the process by which we sold the Series A preferred stock to MatlinPatterson on August 14, 2007, the proceeds of which were used in part to complete the acquisition of World Air Holdings. An independent investment bank issued an opinion on August 14, 2007, indicating that the price paid by MatlinPatterson for the Series A Preferred Stock was fair to our stockholders. This price of $14.00 per share is the same price paid by MatlinPatterson for the Series A preferred stock, as negotiated on our behalf by an independent special committee of our board.
Shares of Common Stock outstanding after Rights Offering	24,071,816 based on the number of shares outstanding on September 30, 2007 and giving pro forma effect to the conversion of the Series A preferred stock (but without giving effect to any payment of dividends in respect of the preferred stock in the form of accretion) and the purchase by MatlinPatterson of the 1,808,986 Warrants held by JPMorgan and their subsequent exercise into an equal number of common stock.
Transferability of Rights	Except in the limited circumstances described under "The Rights Offering—Transferability of Rights," the rights are not transferable and may be exercised only by the persons to whom they are granted. Any attempt to transfer rights will render them null and void. The subsequent transfer after the record date of shares of common stock for which rights were granted will not have any effect on the selling stockholder's subscription privilege in respect of any such rights.
Record Date	As of 5:00 p.m., New York City time, on                        , 2008.
Expiration Date	As of 5:00 p.m., New York City time, on                        , 2008. The Expiration Date may be extended to a date not later than                        , 2008. The Rights Offering will be open for a period of not longer than 30 days.
Procedure to Exercise Rights	Subscription privileges may be exercised by properly completing a subscription certificate and forwarding such subscription certificate, with payment of the subscription price for each share subscribed for, to the subscription agent at or prior to 5:00 p.m., New York City time, on the Expiration Date. Uncertified personal checks used to pay the subscription price must be received by the subscription agent at least five business days before the Expiration Date to allow sufficient time for the check to clear. Accordingly, rights holders who wish to pay the subscription price by means of uncertified personal check are urged to consider, in the alternative, payment by means of certified check, bank draft or money order. If the mail is used to forward subscription certificates, it is recommended that insured, registered mail be used. See "The Rights Offering—Procedure to Exercise Rights." Once you exercise your rights, you cannot revoke your exercise, even if there is a decline in the price of our common stock. See "Risk Factors—Risks Relating to the Rights Offering—Once you exercise your rights, you may not revoke your exercise."

9

Persons Holding Shares, or Wishing to Exercise Rights, Through Others	Persons holding shares of common stock, to whom rights are granted with respect thereto, through a broker, dealer, trustee, depository for securities, custodian bank or other nominee, should contact the appropriate institution or nominee and request it to effect the transaction for them. See "The Rights Offering—Procedure to Exercise Rights."
Delivery of Common Stock	As soon as practicable after the completion of the offering, shares of common stock subscribed for pursuant to exercise of the rights will be delivered to subscribers. Such shares will be issued in the same form, certificated or book-entry, as the shares of common stock held by the subscriber exercising rights for such shares.
Federal Income Tax Consequences	The granting of rights to you pursuant to this rights offering should not be taxable to you, and we will take this position for tax reporting purposes. However, the tax consequences to you of the rights offering are unclear, and it is possible that the IRS would take the position that you would be subject to tax upon receipt of the rights, whether or not you exercise the rights.
Use of Proceeds	MatlinPatterson will receive all proceeds from the sale of the securities under this offering.
Subscription Agent	Computershare Trust Company, N.A.
Information Agent	Georgeson Inc. will act as our information agent to respond to any questions that you may have regarding the mechanics of exercising your subscription rights for this offering. All questions or requests for assistance concerning the method of exercising rights or requests for additional copies of this prospectus or the ancillary documents should be directed to the information agent at the address and telephone numbers set forth below:
	Georgeson 199 Water St., 26th Floor New York, NY 10038
	Shareholders should call (toll-free): (866) 733-9485. Banks and brokers should call (212) 440-9800.

10

Risk Factors
Exercising subscription rights for shares of our common stock involves a high degree of risk. See the "Risk Factors" section of this prospectus for a description of certain of the risks you should carefully consider before exercising your rights.

        Our principal executive office is located at HLH Building, 101 World Drive, Peachtree City, Georgia 30269 and our telephone number at this address is (770) 632-8000.

11

SUMMARY CONSOLIDATED HISTORICAL FINANCIAL AND
OPERATING DATA OF GLOBAL

        The following table sets forth Global's summary consolidated historical financial and operating data for each of the periods indicated. The summary historical financial data for the dates and periods ended prior to March 1, 2006 were derived from the audited consolidated financial statements of ATA's former parent, ATA Holdings Corp., which we sometimes refer to as our "predecessor." The statement of operations data for the years ended December 31, 2004 and 2005, for the two months ended February 28, 2006, for the ten months ended December 31, 2006 and the balance sheet data as of December 31, 2004, 2005 and 2006, were derived from Global's or its predecessor's audited consolidated financial statements included elsewhere in this prospectus. The statement of operations data for the nine month period ended September 30, 2006 was derived from Global's unaudited consolidated financial statements for the seven month period ended September 30, 2006 and from Global's predecessor's audited consolidated financial statements for the two months ended February 28, 2006 included elsewhere in this prospectus. The statement of operations data for the nine month period ended September 30, 2007 and the balance sheet data as of September 30, 2007, were derived from Global's unaudited interim financial statements included elsewhere in this prospectus. In the opinion of management, the unaudited interim financial statements for Global and its predecessor included in this prospectus include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of that information for such unaudited interim periods. The financial information presented for the interim periods has been prepared in a manner consistent with the accounting policies of Global described elsewhere in this prospectus, and should be read in conjunction therewith. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period. The summary historical financial information should be read in conjunction with the sections entitled "Summary Unaudited Pro Forma Combined Statements of Operations Information", "Use of Proceeds," "Capitalization," "Unaudited Pro Forma Combined Statements of Operations," "Selected Consolidated Historical Financial and Operating Data of Global," "Management's Discussion and Analysis of Financial Condition and Results of Operations of Global" and the consolidated financial statements of Global and its predecessor and the related notes included elsewhere in this prospectus.

        The comparability of Global's summary historical financial and operating data has been affected by its reorganization. As we discuss more fully in "Note 1—Fresh-Start Reporting" of the notes to Global's audited consolidated financial statements as of and for the ten months ended December 31, 2006, Global's predecessor and certain of its affiliates, including ATA, Global's principal operating subsidiary, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in October 2004. Global emerged from bankruptcy protection on February 28, 2006 with a new capital structure. Global has applied fresh-start accounting as of March 1, 2006 for its consolidated financial statements. As a result of the fresh-start change in the basis of accounting for Global's underlying assets and liabilities, Global's results of operations and cash flows are separated as pre-March 1, 2006 (predecessor) and post-February 28, 2006 (successor). Global includes as a reporting period of its predecessor its pre-emergence two-month period ended February 28, 2006. The historical periods of our predecessor also do not reflect the impact of the fundamental changes in Global's assets and operations it effected through its reorganization. As a result of these changes, Global does not believe that its business operations or its operating results for periods prior to March 1, 2006 are comparable to its current business operations or its operating results since that date.

12

		Predecessor									Global			Predecessor and Global			Global
		Year Ended December 31,						Two Months Ended February 28,			Ten Months Ended December 31,			Nine Months Ended September 30,			Nine Months Ended September 30,
		2004(1)			2005(1)			2006(1)(2)			2006(2)			2006(1)(2)(3)			2007
														(unaudited)			(unaudited)
		(Dollars in thousands, except per share data)
Statement of Operations Data:
Operating revenues:
	Scheduled service	$	1,099,944		$	635,232		$	53,527		$	332,255		$	294,398		$	306,241
	Charter		358,870			408,714			58,753			288,256			276,979			372,186
	Other		73,757			48,355			2,771			16,551			15,069			15,072
Total operating revenues			1,532,571			1,092,301			115,051			637,062			586,446			693,499
Operating expenses:
	Fuel and oil		368,273			322,094			37,086			202,613			186,075			227,929
	Salaries, wages and benefits		422,430			281,791			36,066			150,929			145,441			153,885
	Aircraft rentals		242,602			148,614			16,181			69,439			64,840			82,146
	Flight costs		100,327			82,243			11,488			52,769			48,682			59,354
	Handling, landing and navigation fees		119,963			89,453			8,077			48,553			43,730			55,069
	Selling and marketing		111,041			66,050			7,624			36,452			34,674			38,187
	Aircraft maintenance, materials and repairs		74,992			44,801			3,103			29,051			24,306			44,324
	Depreciation and amortization		52,013			36,270			5,219			17,386			16,716			23,352
	Asset impairments and aircraft retirements		7,887			403			—			13,476			—			4,844
	Other		133,206			101,973			10,197			41,045			42,455			40,653
Total operating expenses			1,632,734			1,173,692			135,041			661,713			606,919			729,743
Operating loss			(100,163	)		(81,391	)		(19,990	)		(24,651	)		(20,473	)		(36,244	)
Other income (expenses):
	Reorganization items, net		(638,479	)		(369,632	)		1,456,000			—			1,456,000			—
	Interest income		2,283			2,467			397			6,154			4,552			6,959
	Interest expense		(51,145	)		(6,235	)		(4,666	)		(18,231	)		(17,757	)		(23,333	)
	Loss on extinguishment of debt		(27,314	)		—			—			—			—			—
	Other		(911	)		(796	)		(233	)		266			(180	)		(820	)
Total other income (expenses)			(715,566	)		(374,196	)		1,451,498			(11,811	)		1,442,615			(17,194	)
Income (loss) before income taxes			(815,729	)		(455,587	)		1,431,508			(36,462	)		1,422,142			(53,438	)
Income taxes			—			—			—			—			—			488
Net income (loss)			(815,729	)		(455,587	)		1,431,508			(36,462	)		1,422,142			(53,926	)
Preferred stock dividends			(1,125	)		—			—			—			—			(3,435	)
Income (loss) available to common stockholders(4)		$	(816,854	)	$	(455,587	)	$	1,431,508		$	(36,462	)	$	1,422,142		$	(57,361	)
Basic earnings per common share:
	Weighted average shares outstanding											10,752,688						10,755,358
	Net loss per share										$	(3.39	)				$	(5.33	)
Diluted earnings per common share:
	Average shares outstanding											10,752,688					$	10,755,358
	Net loss per share										$	(3.39	)				$	(5.33	)
Financial and Other Data:
Cash flows provided by (used in):
	Operating activities	$	(26,200	)	$	(67,010	)	$	(19,577	)	$	(34,847	)	$	(57,682	)	$	(25,456	)
	Reorganization activities		66,194			18,309			(6,014	)		—			(6,014	)		—
	Investing activities		531			(18,731	)		(10,406	)		8,689			973			(318,755	)
	Financing activities		(61,517	)		6,997			(6,777	)		51,924			48,750			379,968
Capital expenditures			(26,660	)		(22,884	)		(8,447	)		(27,570	)		(15,528	)		(28,335	)
Selected Consolidated Operating Statistics (Unaudited):
Revenue passengers carried (thousands)			11,653.4			5,868.1			449.0			2,519.8			2,274.4			2,387.9
Revenue passenger miles (millions)			14,678.5			8,709.7			816.2			4,799.2			4,302.9			4,664.7
Available seat miles (millions)			21,242.0			13,360.2			1,362.9			6,804.2			6,239.4			6,338.2
Passenger load factor			69.1	%		65.2	%		59.9	%		70.5	%		69.00	%		73.60	%

13

	Predecessor						Global
	As of December 31,						As of December 31,		As of September 30,
	2004			2005			2006		2006(2)		2007
									(unaudited)
	(Dollars in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	139,652		$	79,217		$	62,209	$	65,244	$	97,966
Property and equipment, net	$	182,759		$	101,267		$	89,947	$	83,551	$	143,678
Total assets	$	651,065		$	389,450		$	370,366	$	411,785	$	1,009,570
Total debt	$	41,000		$	54,600		$	146,662	$	147,190	$	357,102
Liabilities subject to compromise(5)	$	1,279,676		$	1,475,447		$	—	$	—	$	—
Mandatorily redeemable preferred stock(6)	$	—		$	—		$	—	$	—	$	—
Convertible redeemable preferred stock	$	—		$	—		$	—	$	—	$	158,644
Stockholders' equity (deficit)	$	(920,556	)	$	(1,376,143	)	$	72,290	$	98,785	$	178,992

(1)

The consolidated financial statements of our predecessor have been prepared in accordance with American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code and on a going-concern basis, which contemplates continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business. Reorganization expenses identify those costs that are not in the ordinary course of business and include aircraft lease rejection charges, impairments and professional fees related to the predecessor's Chapter 11 filing. See Note 1 to our predecessor's audited consolidated financial statements for more information.

(2)

As of February 28, 2006, the effective date of the plan of reorganization, we adopted fresh-start accounting for our financial statements. See Note 1 to our audited consolidated financial statements with respect to our fresh-start financial reporting. Because of the emergence from bankruptcy and adoption of fresh-start accounting, the historical financial data for Global is not comparable to that of our predecessor.

(3)

The statement of operations data for the nine month period ended September 30, 2006 was derived from Global's unaudited consolidated financial statements for the seven month period ended September 30, 2006 and from Global's predecessor's audited consolidated financial statements for the two months ended February 28, 2006.

(4)

Preferred stock dividends of $1.1 million were recorded in 2004. No preferred stock dividends were recorded in 2005 and for the ten months ended December 31, 2006. No common stock dividends were paid in any period presented.

(5)

Liabilities subject to compromise refers to liabilities to be accounted for under a plan of reorganization, including claims incurred prior to the petition date. These amounts result from known or potential claims to be resolved through the Chapter 11 process and such claims remain subject to future adjustments.

(6)

Mandatorily redeemable preferred stock of $50.0 million was outstanding as of December 31, 2003 and as of December 31, 2004 and December 31, 2005 was classified on the balance sheet as a liability subject to compromise.

14

SUMMARY CONSOLIDATED HISTORICAL FINANCIAL AND
OPERATING DATA OF WORLD AIR HOLDINGS

        The following tables set forth World Air Holdings' summary historical financial and operating data for the periods ended and at the dates indicated below. World Air Holdings' summary historical financial information for the fiscal years ended, and as of, 2004, 2005 and 2006 has been derived from World Air Holdings' audited annual financial statements included elsewhere in this prospectus. The summary historical financial information for the six month periods ended, and as of, June 30, 2006 and 2007 has been derived from World Air Holdings' unaudited interim financial statements included elsewhere in this prospectus, which, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of that information for such unaudited interim periods. The financial information presented for the interim periods has been prepared in a manner consistent with the accounting policies of World Air Holdings described elsewhere in this prospectus, and should be read in conjunction therewith. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period.

        The summary historical financial information should be read in conjunction with the sections entitled "Summary Unaudited Pro Forma Combined Statements of Operations Information," "Use of Proceeds," "Capitalization," "Unaudited Pro Forma Combined Statements of Operations," "Selected Consolidated Historical Financial and Operating Data of World Air Holdings," "Management's Discussion and Analysis of Financial Condition and Results of Operations of World Air Holdings" and the Consolidated Financial Statements of World Air Holdings and the related notes included elsewhere in this prospectus.

				Years Ended December 31,									Six Months Ended June 30,
				2004			2005(1)			2006(2)			2006			2007
													(unaudited)			(unaudited)
				(in thousands except per share data)
Statement of Operations Data:
	Operating revenues
		Flight operations		$	501,698		$	783,939		$	824,098		$	392,167		$	452,180
		Other			2,202			3,199			1,558			743			703
			Total operating revenues		503,900			787,138			825,656			392,910			452,883
Operating expenses
	Flight				157,147			218,498			233,951			115,370			137,023
	Maintenance				76,004			113,769			147,241			66,875			65,045
	Aircraft costs				77,243			109,562			121,114			59,950			64,781
	Fuel				74,474			168,526			194,515			89,299			108,743
	Flight operations subcontracted to other carriers				1,812			2,928			3,759			2,111			238
	Commissions				23,352			36,265			38,050			18,352			23,703
	Depreciation and amortization				5,283			6,286			7,514			3,310			3,688
	Sales, general and administrative				48,302			72,588			80,292			41,145			42,650
	Legal expense—California matter				—			2,100			—
		Total operating expenses			463,617			730,522			826,436			396,412			445,871
Operating income/(loss)					40,283			56,616			(780	)		(3,502	)		7,012
Other income (expense)
	Interest expense				(5,139	)		(4,467	)		(3,657	)		(3,573	)		(27	)
	Interest income				584			1,173			1,655			767			800
	Other, net				(1,696	)		(1,721	)		135			(314	)		(110	)
		Total other income (expense)			(6,251	)		(5,015	)		(1,867	)		(3,120	)		663
Earnings/(loss) before income tax expense					34,032			51,601			(2,647	)		(6,622	)		7,675
Income tax expense/(benefit)					8,445			19,973			(355	)		(2,685	)		3,256
	Net earnings/(loss)			$	25,587		$	31,628		$	(2,292	)	$	(3,937	)	$	4,419

15

Basic earnings/(loss) per share
	Net earnings/(loss)		$	1.95		$	1.40		$	(0.10	)	$	(0.16	)	$	0.20
Weighted average shares outstanding				13,095			22,588			23,643			23,986			22,541
Diluted earnings/(loss) per share
	Net earnings/(loss)		$	1.09		$	1.19		$	(0.10	)	$	(0.16	)	$	0.18
Weighted average shares outstanding				24,591			26,824			23,643			23,986			25,038
Financial and Other Data:
	Cash flows provided by (used in):
		Operating activities	$	25,150		$	33,855		$	36,098		$	14,966		$	13,990
		Investing activities		(21,649	)		(1,099	)		(7,538	)		(22,086	)		(17,762	)
		Financing activities	$	(3,730	)	$	(2,860	)	$	(43,564	)	$	(23,064	)	$	1,054
Selected Consolidated Operating Statistics (Unaudited):
	Block Hours			47,759			75,690			83,577			39,552			44,570
	Revenue per Block Hour		$	10,551		$	10,400		$	9,879		$	9,934		$	10,161
	Operating expense per Block Hour		$	9,707		$	9,652		$	9,888		$	10,023		$	10,004
	Average daily utilization (block hours flown per day per aircraft)			8.1			8.4			9.0			8.4			9.2

		As of December 31,						As of June 30,
		2004		2005(1)		2006(2)		2006		2007
								(unaudited)		(unaudited)
		(in thousands)
Balance Sheet Data:
	Cash and cash equivalents	$	16,306	$	46,202	$	31,198	$	16,018	$	28,480
	Property and equipment, net		33,193		33,726		35,435		35,030		39,097
	Total assets		179,317		260,646		198,750		219,004		225,839
	Total liabilities		148,919		173,808		131,619		134,490		152,553
	Stockholders' equity	$	30,398	$	86,838	$	67,131	$	84,514	$	73,286

(1)

Financial and statistical data include the results of North American from April 28, 2005 to December 31, 2005.

(2)

Financial and statistical data include the full year results of North American for 2006.

16

SUMMARY UNAUDITED PRO FORMA COMBINED
STATEMENTS OF OPERATIONS INFORMATION

        The following table sets forth summary unaudited pro forma combined statements of operations information for the year ended December 31, 2006 and the nine months ended September 30, 2007.

        The pro forma combined statement of operations information gives effect to the merger and the financing as if they occurred on January 1, 2006. The summary unaudited pro forma combined statement of operations information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of Global would have been had the merger, the financing and the rights offering occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations.

        The pro forma information has been derived from, and should be read in conjunction with, the "Unaudited Pro Forma Combined Statements of Operations" and related notes, which are included in this prospectus and give pro forma effect to the merger, the financing and the rights offering.

		Pro Forma Year Ended December 31, 2006			Pro Forma Nine Months Ended September 30, 2007
		(Dollars in millions)			(Dollars in millions)
Statement of Operations Information:
	Revenues	$	1,578		$	1,268
	Costs and expenses		1,624			1,320
	Operating loss		(46	)		(51	)
	Interest expense, net		(61	)		(40	)
	Loss available to common shareholders		(106	)		(92	)

17

RISK FACTORS

You should carefully consider the risks described below and all other information contained in this prospectus before you make a decision to participate in the rights offering.

Risks Relating to Our Business

We may not be able to successfully implement our business plan and, even if we do so, this business plan may not result in the combined company being profitable.

        Our business plan was developed by, and reflects the current intentions of, Global's management and board of directors. See "Business—Business strategy". The success of this business plan is subject to, among other things, our ability to:

•

successfully integrate Global's and World Air Holdings' businesses following the merger;



•

benefit from ATA's codeshare agreement with Southwest;



•

expand Global's Hawaii and international routes and acquire the aircraft to support this growth;



•

reduce workforce costs and related expenses;



•

induct seven McDonnell Douglas DC-10-30 wide-body passenger aircraft and two Boeing 747-400 freighter aircraft into our fleet and successfully deploy these aircraft in our business; and



•

generally improve the efficiency and effectiveness of the combined company's business processes.

        We cannot assure you that our business plan will be successful or that we will be able to operate profitably even if the new business plan is successfully executed. If implementation of our business plan is not successful and we are unable to generate sufficient operating revenues to pay debt service requirements and aircraft leasing obligations, we cannot assure you that alternative sources of financing will be available or, if available, that such financing will be available on terms that we can afford.

Global and World Air Holdings may experience difficulties in integrating their businesses, which could cause the combined company to fail to realize many of the anticipated potential benefits of the merger.

        Achieving the anticipated benefits of the merger will depend in part upon whether our two companies integrate our businesses in an efficient and effective manner. We may not be able to accomplish this integration process smoothly or successfully. The difficulties of combining the two companies' businesses potentially will include, among other things:

•

the necessity of coordinating geographically separated organizations and addressing possible differences in corporate cultures and management philosophies, and the integration of certain operations following the transactions will require the dedication of significant management resources, which may temporarily distract management's attention from the day-to-day business of the combined company;



•

any inability of our management to integrate successfully the operations of our two companies or to adapt to the addition of any lines of business in which Global has not historically engaged; and



•

any inability of our management to cause best practices to be applied to the combined company's businesses.

        An inability to realize the full extent of the anticipated benefits of the merger, as well as any delays encountered in the transition process, could have an adverse effect upon the revenues, level of expenses and operating results of the combined company.

18

We are highly dependent on revenues from our military charter business. The success of our military charter business is dependent on it continuing at current demand levels, the method by which the U.S. military awards contracts and the availability of suitable aircraft.

        For the years ended December 31, 2006 and 2005, revenues from the AMC represented 43.4% and 36.0% of Global's total revenues, respectively, and 67.4% and 73.8% of World Air Holdings' total revenues, respectively. Each year, the AMC grants a certain portion of its business to different airlines based on a point system. The number of points an airline can accrue is determined by the number and types of aircraft pledged to the Civil Reserve Air Fleet ("CRAF"). Our airline subsidiaries currently participate in the CRAF program through teaming arrangements with other airlines. We intend to continue operating our participating airlines in their respective teams. The formation of competing teaming arrangements, an increase by other carriers in their commitment of aircraft to the program or the withdrawal of either team's current partners could adversely affect the amount of our AMC business in future years. In addition, if any of either team's members were to cease or restructure its operations, the number of planes pledged to the CRAF program by the applicable team could be reduced. As a result, the number of points allocated to such team could be reduced and such team's allocation of AMC business would likely decrease. If we lose military charter contracts, or if the military reduces substantially the amount of business it awards to the teams on which we participate, or if either of the teams reduces the number of points it awards to us, we may not be able to replace the lost business and our financial condition and results of operations could be materially adversely affected.

        Our revenues and net income from the AMC are derived from one-year contracts that the AMC is not obligated to renew. In addition, the AMC can typically terminate or modify its contracts with us for convenience, if we fail to perform or if we fail to pass semi-annual inspections. Any such termination would result in a loss of revenue and net income and could expose us to significant liability or hinder our ability to compete for future contracts with the federal government. If the AMC were to terminate its business with us or if our AMC business declines significantly, it would have a material adverse effect on our financial condition and results of operations. Even if the AMC continues to award business to us, we cannot assure you that we will continue to generate the same level of revenue and net income from our military charter operations that Global and World Air Holdings have independently derived in the past or that we currently derive. The volume of the AMC business that is available to us is sensitive to changes in national and international political priorities and the U.S. federal budget.

As a U.S. government contractor, we are subject to a number of procurement and other laws and regulations.

        In order to do business with U.S. government agencies, we must comply with and are affected by many laws and regulations governing the formation, administration and performance of U.S. government contracts. These laws and regulations, among other things:

•

require, in some cases, certification and disclosure of all cost and pricing data in connection with contract negotiations;



•

impose accounting rules that define allowable costs and otherwise govern our right to reimbursement under certain cost-based U.S. government contracts; and



•

restrict the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.

        These laws and regulations have affected how we have conducted business with their respective customers and we expect that they will affect how we do business with our customers in the future. In addition, in some instances, these laws and regulations have imposed added costs on our respective businesses, and we expect that such added costs will be applicable to us going forward. A violation of

19

these laws and regulations by us or by any of our employees could result in the imposition of fines and penalties or the termination of our U.S. government contracts. In addition, the violation of certain other generally applicable laws and regulations could result in our suspension or termination as a government contractor.

Our substantial indebtedness and fixed obligations could adversely affect our financial condition and prevent us from fulfilling our obligations under our outstanding indebtedness.

        We will have incurred significant debt to fund the cash consideration paid to the World Air Holdings shareholders in the merger. As of December 31, 2006, on a pro forma basis giving effect to the merger and the financing and to the repayment and/or satisfaction of certain of our outstanding indebtedness, we had long-term debt (including capital leases) of $384.0 million. In addition to long-term debt, we have a significant amount of fixed obligations under operating leases related to our aircraft, airport terminal space, other airport facilities and office space. As of December 31, 2006, future minimum lease payments under non-cancelable operating leases with initial or remaining terms in excess of one year were approximately $1.7 billion and we expect to incur significantly more fixed obligations as we take delivery of additional aircraft and other equipment and continue to expand into new regions. Our level of indebtedness and other fixed obligations has important consequences for our business. For example, it could:

•

make it difficult for us to satisfy our debt obligations;



•

increase our vulnerability to general adverse economic and industry conditions;



•

require us to dedicate a substantial portion of our cash flow from operations and proceeds of any equity issuances (including proceeds from this offering) to payments on our indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures, acquisitions and investments and other general corporate purposes;



•

make it difficult for us to optimally capitalize and manage the cash flow for our businesses;



•

limit our flexibility in planning for, or reacting to, changes in our businesses and the industry and markets in which we operate and compete;



•

place us at a competitive disadvantage to our competitors that have less debt; and



•

limit our ability to borrow money or sell stock to fund our working capital, capital expenditures, acquisitions and debt service requirements and other financing needs.

        If we are unable to make payments on our debt and other fixed obligations, we could be forced to renegotiate those obligations or obtain additional equity or debt financing. We cannot assure you that any renegotiation efforts would be successful or timely, or that we would be able to refinance our obligations on terms acceptable to us, if at all.

        In addition, we may need to incur additional indebtedness in the future in the ordinary course of business. To the extent we finance our activities or future aircraft acquisitions with additional debt, we may become subject to financial and other covenants that may restrict our ability to pursue our growth strategy. If new debt is added to current debt levels, the risks described above could intensify. Furthermore, if future debt financing is not available to us when required or is not available on acceptable terms, we may be unable to grow our business, take advantage of business opportunities, respond to competitive pressures or refinance maturing debt, any of which could have a material adverse effect on our results of operations and financial condition. Moreover, our ability to satisfy financial tests may be adversely impacted if our credit ratings are downgraded below current levels.

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We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions that may not be successful, in order to satisfy our obligations under our indebtedness.

        Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and certain financial, business and other factors beyond our control. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. See "Forward-Looking Statements", "Management's Discussion and Analysis of Financial Condition and Results of Operations of Global" and "Management's Discussion and Analysis of Financial Condition and Results of Operations of World Air Holdings". If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We cannot assure you that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of our existing or future debt agreements. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Our future indebtedness may restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them. In addition, these proceeds may not be adequate to meet any debt service obligations then due. See "Description of Certain Indebtedness." If we cannot make scheduled payments on our debt, we will be in default and, as a result, our debt holders could declare all outstanding principal and interest to be due and payable and we could be forced into bankruptcy or liquidation, which could result in you losing your investment in the stock. The holders of our debt will be entitled to receive any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding-up of us prior to receipt of any such proceeds by holders of our common stock.

The terms of our indebtedness and our operating leases contain and/or may in the future contain various covenants that limit our financial and operating flexibility and in some cases require us to meet certain financial ratios and maintenance tests. The failure to comply with such ratios, tests and covenants could have a material adverse effect on us.

        The terms of the JPMorgan Term Loan and our operating leases relating to most of our aircraft contain restrictive covenants that impose significant operating and financial restrictions on us, including those that restrict our ability to:

•

incur certain additional indebtedness;



•

pay dividends and make certain distributions, investments and other restricted payments;



•

create certain liens;



•

limit the ability of restricted subsidiaries to make payments to us;



•

agree to certain restrictions on the ability of restricted subsidiaries to make payments to Global or ATA Acquisition, as applicable;



•

sell or otherwise dispose of assets, including capital stock of subsidiaries;



•

enter into transactions with affiliates;



•

merge, consolidate, sell or otherwise dispose of all or substantially all of our assets;



•

designate subsidiaries as unrestricted subsidiaries;



•

enter into sale/leaseback transactions; and

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•

enter into new lines of business.

        Any failure to comply with the restrictions in any agreement governing our indebtedness or operating leases may result in an event of default under those agreements. Such default may allow our creditors to accelerate our obligations under the JPMorgan Term Loan, or allow the lessors to repossess the equipment leased under our operating leases, which acceleration or repossession may trigger cross-acceleration or cross-default provisions in other debt. Our assets and cash flow may not be sufficient to fully repay borrowings under our outstanding debt instruments and operating leases, either upon maturity or, if accelerated, upon an event of default. See "Description of Certain Indebtedness."

Our military charter business operates in volatile overseas regions and could be negatively impacted by changes in U.S. foreign relations, foreign governments and foreign economies.

        Our military charter business is sensitive to changes in economic and political conditions that could increase our security and insurance costs or reduce our aircraft utilization rates. Changes in any of the following areas of risk could disrupt or adversely affect our military charter operations in overseas regions:

•

potential adverse changes in diplomatic relations between foreign countries and the United States;



•

instability of foreign governments and risks of insurrections;



•

terrorism and foreign hostility directed at U.S. companies;



•

U.S. government policies that restrict the conduct of business by U.S. citizens in certain foreign countries; and



•

policies of foreign governments that restrict the ownership or conduct of business by non-nationals.

        Any disruption in our military charter operations could have a material adverse effect on our business, financial condition and results of operations.

ATA's codeshare agreement with Southwest is essential to the operations of the combined company's scheduled service business.

        The success of our scheduled service business is highly dependent upon ATA's codeshare agreement with Southwest. Our scheduled service business is focused on flying between (1) airports where Southwest has a significant presence, such as Chicago Midway, Phoenix Sky Harbor and Las Vegas McCarran and (2) airports that are not served by Southwest, such as Hawaii. See "Business—Our business lines—Scheduled service—Codeshare agreement". For the year ended December 31, 2006, the codeshare agreement with Southwest accounted for 9.6% of Global's consolidated revenues. We cannot assure you that the codeshare agreement that ATA has entered into will enable our scheduled service business to operate profitably, or that it will deliver the benefits expected. We also cannot assume that Southwest will not alter its strategy and thereby diminish the benefits of ATA's codeshare agreement and adversely affect our financial condition and results of operations. Finally, we cannot assure you that Southwest will be able to implement in a timely manner the technical changes to its systems to enable the extension of ATA's codeshare arrangements to international flights.

        ATA's codeshare agreement is directly affected by the financial and operating strength of Southwest. Any event that negatively impacts the financial strength of Southwest or that has a long-term effect on the use of Southwest by airline travelers will have a material adverse effect on the benefits ATA derives from the codeshare agreement and, therefore, on our financial condition and results of operations. In the event of a substantial decrease in the financial or operational strength of

22

Southwest, it may seek to reduce, or be unable to make, the payments due to ATA under the codeshare agreement, which would also have such a material adverse effect.

        Southwest has wide discretion concerning which flights are eligible for codeshare status. Southwest could, for instance, choose to limit such flights based on minimum and maximum connecting times that would limit the number of codeshare flights. Southwest could also choose not to price codeshare flights aggressively, which would limit the number of codeshare tickets likely to be sold through its distribution channels and reduce overall revenues in our scheduled service business.

        Under the codeshare agreement, ATA and Southwest are subject to customer service-related and other covenants. The agreement is subject to early termination by either party if the other party materially breaches the agreement. Any termination of ATA's codeshare agreement with Southwest would have a material adverse effect on our financial condition and results of operations.

Our scheduled service business is heavily dependent on a limited number of regions, and a reduction in demand or an increase in competition for air travel in these regions could adversely affect our business.

        The combined company offers scheduled service travel in a limited number of regions. We will be adversely affected by any circumstance that causes a reduction in demand for air transportation to or from those regions, such as adverse changes in local economic conditions, political disruptions or violence (including any terrorist attacks), negative public perception of the cities or regions or significant price increases linked to increases in airport access costs and fees imposed on passengers. Likewise, any disruption of services or facilities that support our scheduled service in these regions could adversely affect this business. We may decide to discontinue either particular routes or the entire scheduled service line of our business in the future. For example, we recently decided to discontinue our Chicago Midway routes to NY-LaGuardia, effective January 7, 2008; Washington D.C., effective November 28, 2007; and Honolulu to Ontario, effective January 7, 2008. Moreover, it is possible other airlines will begin to provide non-stop services to and from these regions or otherwise target these regions. Any increase in competition with respect to these regions could cause us to reduce fares or take other competitive measures that might adversely affect our financial condition and results of operations.

We depend on a limited number of significant customers for our ACMI business, and the loss of one or more of these customers could adversely affect our financial condition and results of operations.

        We depend on a limited number of significant customers for our ACMI business. There is a risk that our customers may not renew their ACMI contracts with us on favorable terms or at all. Entering into ACMI contracts with new customers generally requires a long sales cycle. As a result, if our ACMI contracts are not renewed and if we are not able to obtain other business in a timely manner or at all, our financial condition and results of operations could be adversely affected.

If our mix of business creates lower yields relative to the cost per block hour, our financial condition and results of operations could be adversely affected.

        Due to the high fixed costs of leasing and maintaining our aircraft and the costs for cockpit crewmembers and flight attendants, each of our contracts must achieve an appropriate balance between utilization of the aircraft and yield in order to operate profitably. We look to expand contracts with existing customers while at the same time searching for new opportunities that will allow us to increase both utilization and yields. Our current contracts do not fully utilize all aircraft each day. New customer needs may not fit with the available time on each aircraft. In addition, we may not be able to charge a rate sufficient to cover the total cost of providing the service including overhead. Our financial condition and results of operations could be adversely affected by periods of low aircraft utilization and low yields.

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We do not in most cases execute customer contracts that match aircraft lease lives to the terms of such customer contracts.

        Although we seek to enter into long-term contracts with certain of our customers, the terms of our existing customer contracts are in most cases substantially shorter than the terms of our aircraft lease obligations. We cannot provide assurance that we will be able to enter into additional contracts with new or existing customers or that we will be able to obtain enough additional business to fully utilize each aircraft over the remaining term of our leases for our aircraft. Our financial condition and results of operations could be adversely affected by the mismatch between our aircraft lease obligations and customer contracts.

Insurance availability and costs have fluctuated significantly since the September 11, 2001 terrorist attacks.

        As a result of the terrorist attacks on September 11, 2001, the amount of insurance coverage available to commercial air carriers for claims resulting from acts of terrorism, war and similar events has fluctuated significantly. At the same time, the cost for such coverage, and for aviation insurance in general, has also fluctuated. The U.S. government currently provides us with such insurance coverage, but this program is set to expire on March 30, 2008. Therefore, there is the risk that after that date, this coverage may only be available to us through commercial aviation insurers which may have substantially less desirable terms, result in higher costs and not be adequate to protect our respective risks, any of which could have a material adverse effect on our financial condition and results of operations. Future terrorist attacks involving aircraft, or the threat of such attacks, as well as other factors, could result in further volatility in the availability and cost of aviation insurance.

Our results of operations are affected materially by the price and availability of aircraft fuel.

        Fuel costs have constituted a substantial portion of our total operating expenses. On a pro forma basis, fuel costs would have comprised 27% of the combined company's total operating expenses for 2006. The historically high fuel costs experienced in the last two years negatively affected Global and World Air Holdings' results of operations even though for the international military charter business we passed fuel price increases to the U.S. Department of Defense. Due to the highly competitive nature of the airline industry, we have generally not been able to increase fares for our scheduled service business sufficiently to offset the immediate rise in fuel prices in the past, and we may not be able to do so in the future. Further increases in fuel costs or a shortage of supply would adversely affect our financial condition and results of operations.

        Fuel costs typically are subject to wide price fluctuations based on geopolitical issues and supply and demand. Fuel availability is also affected by demand for home heating oil, gasoline and other petroleum products, oil refining capacity and the occurrence of natural catastrophes, such as hurricanes. Because of the effect of these events on the price and availability of fuel, the cost and future availability of fuel cannot be predicted with any degree of certainty. A fuel supply shortage or further increases in fuel prices could affect our scheduled service business, particularly if market conditions continue to restrict our ability to implement price increases to pass fuel cost increases to our customers. Moreover, there can be no assurance that any such price increases would realize sufficient revenue to offset increases in fuel prices or would not reduce the competitive advantage we seek by offering affordable prices. In addition, there is no assurance that our creditworthiness will be sufficient to enable us to implement a hedging program that could provide some protection against significant increases in fuel prices for our scheduled service business.

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Union disputes, employee strikes and other labor-related disruptions may adversely affect our operations.

        Our business plan includes assumptions about labor costs for the combined company going forward. Currently, we believe our labor costs will be competitive within the airline industry. However, we cannot assure you that our labor costs will in fact be competitive, either because agreements to which our airline subsidiaries are parties become amendable or in the event competitors may significantly reduce their labor costs.

        Relations between air carriers and labor unions in the United States are governed by the Railway Labor Act (the "RLA"). Under the RLA, collective bargaining agreements generally contain "amendable dates" rather than expiration dates, and the RLA requires that a carrier maintain the existing terms and conditions of employment following the amendable date through a lengthy, multi- stage series of bargaining processes overseen by the National Mediation Board. This process continues until either the parties have reached agreement on a new collective bargaining agreement, or the parties have been released to "self-help" by the National Mediation Board. After release by the National Mediation Board, carriers and unions are free to engage in self-help measures such as strikes and lock-outs. None of ATA's labor agreements are currently amendable; however, certain World and North American labor contracts are currently being renegotiated.

        The majority of our employees are unionized and a majority of our employees will be represented for collective bargaining purposes by labor unions. Employees of the combined company are organized into 11 labor groups. The collective bargaining agreement covering World's flight attendants became amendable in August 2006, and a tentative agreement was reached on July 30, 2007. World's collective bargaining agreement for its pilots does not become amenable until March 1, 2009. North American's pilots rejected a tentative agreement on October 10, 2007 and, if it is determined that there is a case for further discussions the parties will resume negotiations, while its flight attendants continue to negotiate the terms of their first collective bargaining agreement. ATA's pilots are represented by Air Line Pilot's Association ("ALPA") while its flight attendants are represented by the Association of Flight Attendants ("AFA"). Both World's and North American's pilots and flight attendants, respectively, are represented by the International Brotherhood of Teamsters (the "IBT").

        We are subject to risks of work interruption or stoppage and we may incur additional expenses associated with the union representation of our employees. We cannot assure you that disputes, including disputes with any certified collective bargaining representative of our employees, will not arise in the future or will result in an agreement on terms satisfactory to us. Such disputes and the inherent costs associated with their resolution could have a material adverse effect on our financial condition and results of operations.

        There is also a risk that disgruntled employees, either with or without union involvement, could engage in illegal slow-downs, work stoppages, partial work stoppages, sick-outs or other action short of a full strike that could, individually or collectively, adversely affect our operations and impair our financial performance.

We may not be able to successfully integrate any businesses that are acquired.

        We continuously consider acquisition opportunities, and we expect to make acquisitions in the future, including acquisitions of companies that may constitute a significant part of our consolidated operations. Although we intend to actively pursue our growth strategy in the future, we cannot provide any assurance that we will be able to identify appropriate acquisition candidates, or, if we do, that we will be able to negotiate successfully the terms of the acquisition, finance the acquisition or integrate the acquired business effectively and profitably into our existing operations. Acquired businesses may not achieve the levels of revenue, profit or productivity anticipated or otherwise perform as expected. Acquisitions involve special risks, including the potential assumption of unanticipated liabilities and contingencies that could have a material adverse effect on our financial condition and difficulties in

25

integrating acquired businesses. While it is intended that our acquisitions will improve competitiveness and profitability, we cannot assure you that future acquisitions will be accretive to earnings or otherwise meet our operational or strategic expectations.

        The integration of an acquisition involves a number of factors that may affect our operations. These factors include:

•

diversion of management's attention;



•

incurrence of significant amounts of additional debt;



•

creation of significant contingent earn-out obligations or other financial liabilities;



•

difficulties in the integration of acquired operations and retention of personnel;



•

unanticipated problems or legal liabilities; and



•

tax and accounting issues.

        A failure to integrate acquisitions may be disruptive to our operations and negatively impact our revenues or increase our expenses.

Any inability to acquire and maintain additional compatible aircraft, engines or spare parts, on terms favorable to us or at all, would increase our operating costs and could adversely affect our profitability.

        Any increase in demand for the types of aircraft we fly, or will fly in the future, could impair our ability to obtain additional aircraft, engines and spare parts. We may be unable to obtain additional suitable aircraft, engines or spare parts on satisfactory terms or at the time needed for our operations or for the implementation of our growth plan. If applicable available aircraft, whether by purchase or lease, are not compatible with the rest of our fleet in terms of takeoff weight, avionics, engine type or other factors, we would incur potentially significant costs of fleet induction and modification. For example, World has entered into long-term lease agreements for two Boeing 747-400 freighter aircraft and because we do not currently operate any Boeing 747-400 aircraft, these aircraft will not share components used in other aircraft we currently operate, which could result in increased maintenance costs for the fleet as a whole. There is also greater risk associated with acquiring used aircraft because we may incur additional costs to remedy any mechanical issues and, generally, the cost to maintain used aircraft exceeds the cost to maintain new aircraft. In addition, our ability to retain a significant market share of the military charter business will depend on our ability to obtain aircraft suitable for such business.

Our maintenance costs will increase as our fleet ages.

        Our aircraft were manufactured between 1975 and 2003. In general, the cost to maintain aircraft increases as they age and exceeds the cost to maintain new aircraft. FAA regulations require additional maintenance inspections for older aircraft. We also need to comply with other programs that require enhanced inspections of aircraft, including Aging Aircraft Airworthiness Directives, which typically increase as an aircraft ages and vary by aircraft or engine type depending on the unique characteristics of each aircraft and/or engine. In April 2006, the FAA proposed to issue regulations limiting the age of aircraft that may be flown by U.S. airlines. The announcement did not indicate the maximum age that would be allowed, the effective date of the regulation or any grandfathering provisions. Comments regarding this proposal were submitted in September 2006, and it is unclear when a final decision will be made. This proposal, if and when implemented, may have a material effect on our future operations.

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Our reputation and financial results could be adversely affected in the event of an accident or incident involving any of our aircraft or involving the same types of aircraft operated by other airlines.

        An accident or incident involving one of our aircraft could involve repair or replacement of a damaged aircraft, its consequential temporary or permanent loss from service and significant potential claims made against us for injured passengers and others. Substantial claims resulting from an accident in excess of our insurance coverage would adversely affect our business. Moreover, any aircraft accident or incident, even if fully insured, could cause a public perception that we are less safe or reliable than other airlines, which would adversely affect our business. Because we operate small airlines, an accident would be likely to adversely affect us to a greater degree than it would a larger, more established airline.

        Our business would be significantly adversely affected if a mechanical problem with any of our aircraft was discovered that caused such aircraft to be grounded while any such problem was corrected, assuming it could be corrected at all. The FAA could also suspend or restrict the use of certain of our aircraft in the event of any actual or perceived mechanical problems, whether involving our aircraft or another U.S. or foreign airline's aircraft, while it conducted its own investigation. Our business would also be significantly adversely affected if the public avoided flying our aircraft, or if the U.S. military avoided using our aircraft, due to an adverse perception of our aircraft because of safety concerns or other problems, whether real or perceived, or in the event of an accident involving one of our aircraft types.

Due to our limited fleet size, if any of our aircraft become unavailable, we may suffer greater damage to our service, reputation and profitability than airlines with larger fleets.

        We currently operate a fleet of 55 aircraft. Given the limited number of aircraft we operate, if an aircraft becomes unavailable due to unscheduled maintenance, repairs or other reasons, we could suffer greater adverse financial and reputational impacts than larger airlines if our flights are delayed or cancelled due to the absence of replacement aircraft. If we are unable to operate those aircraft for a prolonged period of time for reasons outside of our control, for example, due to a catastrophic event or a terrorist act, our financial condition and results of operations could be disproportionately adversely affected.

Our lack of an established line of credit or borrowing facility will make the combined company highly dependent upon its operating cash flows.

        We have no lines of credit and rely on operating cash flows to provide working capital. Unless we secure a line of credit or borrowing facility, we will be dependent upon our operating cash flows and cash balances to fund our operations and to make scheduled payments on our debt and other fixed obligations. If we fail to generate sufficient funds from operations to meet these cash requirements or do not secure a line of credit, other borrowing facility or equity financing, we could default on our debt and other fixed obligations. Our inability to meet our obligations as they become due would materially restrict our ability to grow and would materially adversely affect our financial condition and results of operations.

        Our operations are capital intensive and will be financed from operating cash flows and term loan debt. Many airlines, including ours, have defaulted on debt securities and bank loans in recent years and have had their equity eliminated in bankruptcy reorganizations. This history has led to limited access to the capital markets by companies in our industry. Our access to the capital markets may also be limited for the foreseeable future due to limited liquidity in our securities, among other things. Restrictions on our ability to access capital and obtain sufficient financing to fund our operations may diminish our financial and operational flexibility and could curtail our operations and adversely affect

27

our ability to take advantage of opportunities for expansion of our business. We cannot assure you, however, that any additional financing will be available on terms that are favorable or acceptable to us.

If all credit card processing companies serving us were to require 100% holdbacks for processing credit card transactions for the purchase of air travel and other services, as they have from time to time in the past, our cash flows would be adversely affected.

        Credit card companies frequently require significant holdbacks when future air travel and other future services are purchased through credit card transactions. A holdback is a portion of the cash from a merchant's credit card transactions held in reserve by the credit card processing companies to cover possible disputed charges, chargeback fees and other expenses. After a predetermined time, holdbacks are turned over to the merchant. Global's credit card processing companies maintain significant holdbacks for processing Global's credit card transactions for the purchase of air travel and other services. As we expect that virtually all of our scheduled service and ancillary services will be paid for with credit cards as has been the practice for payments for such services at Global and World Air Holdings in the past, if all the credit card processing companies were to increase holdbacks to 100%, cash flows would be adversely affected. This risk would be exacerbated by the fact that we do not currently anticipate that we will have any established line of credit or borrowing facility.

If we develop problems with any of our third party service providers, our operations could be adversely affected by a resulting decline in revenue, increase in expenses or negative public perception about our services.

        We rely upon others to provide essential services on behalf of their operations and we expect the combined company to continue to do so. This reliance upon others may result in our relative inability to control the efficiency and timeliness of contract services. We have entered into outsourcing agreements with contractors to provide various services required for our operations, including aircraft maintenance, ground facilities operations and baggage handling. In addition to these existing agreements, it is likely that that we will enter into similar agreements in any new regions we decide to serve. Any material problems with the efficiency and timeliness of contract services under new or existing service agreements with third parties could have a material adverse effect on our financial condition and results of operations.

Government regulations impose requirements and restrictions on our operations that increase our operating costs.

        We are subject to extensive regulatory and legal requirements, both domestically and internationally, that involve significant compliance costs. In the last several years, Congress has passed laws, and the FAA, the Department of Transportation and the Transportation Security Administration have issued regulations, relating to the operation of airlines that have required significant expenditures. Local governments and authorities in certain regions also have adopted regulations governing various aspects of aircraft operations, including noise abatement procedures, curfews and use of airport facilities. We expect to continue to incur increased expenses in connection with complying with government regulations, including continuing costs for new security measures. Historically, we have been unable to recoup these increased costs through increased prices. Additional laws, regulations, taxes and airport charges have been proposed from time to time that could significantly increase the cost of airline operations or reduce the demand for air travel. If adopted, these measures could have the effect of raising ticket prices, reducing revenue and increasing costs. We can give no assurance that these and other laws or regulations enacted in the future will not adversely affect our business.

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        In addition, we are subject to various laws, rules and regulations relating to the Internet and online commerce, consumer protection and privacy, and sales, use, occupancy, value-added and other taxes. Any new laws or changes in existing laws could decrease demand for our services, increase our costs and/or subject us to additional liabilities, which could adversely affect our business. For example, there is, and will likely continue to be, an increasing number of laws and regulations pertaining to Internet and online commerce, which may relate to liability for information retrieved from or transmitted over the Internet, user privacy, taxation and the quality of products and services. Furthermore, the growth and development of online commerce may prompt calls for more stringent consumer protection laws that may impose additional burdens on online businesses generally.

        In addition, the application of various sales, use, occupancy, value-added and other tax laws, rules and regulations to our products and services is subject to interpretation by the applicable taxing authorities. We cannot assure you taxing authorities will not take a contrary position, or that such positions would not materially adversely affect our financial condition and results of operations.

        Furthermore, our operating authority in international regions is subject to aviation agreements between the United States and foreign governments and to considerations of comity and reciprocity between the United States and the concerned foreign government. The combined company will be subject to these bilateral agreements, which are in turn subject to periodic renegotiation or renewal, and comity and reciprocity are subject to review by the relevant governments. Any alteration or termination of such agreements, or restrictions on airline operations by governments based on considerations of comity and reciprocity, could diminish the value of route authorities or otherwise adversely affect our international operations.

Our processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements or differing views of personal privacy rights.

        In the processing of customer transactions, we have received and stored a large volume of identifiable personal data. This data is increasingly subject to legislation and regulation. This government action is typically intended to protect the privacy of personal data that is collected, processed and transmitted. We could be adversely affected if legislation or regulations are expanded to require changes in our business practices in ways that negatively affect our business, financial condition and results of operations. As privacy and data protection become more sensitive issues, we also may become exposed to potential liabilities as a result of differing views on the privacy of travel data. These and other privacy developments are difficult to anticipate and could adversely affect our financial condition and results of operations.

Our results of operations will vary among quarters, which will make comparison of our quarterly results difficult.

        We expect our operating results to fluctuate among quarters in the future based on a variety of factors, including:

•

changes in fuel, security and insurance costs;



•

the timing and amount of maintenance expenditures;



•

the timing and success of our growth or strategic plans;



•

fluctuations in demand in the military charter business line; and



•

increases in personnel, marketing, aircraft ownership and other operating expenses to support our anticipated growth.

        In addition, our scheduled service business is seasonal by nature, with peak activity occurring during the Spring and Summer holiday seasons. This typically results in a decline in demand for these services in the first and fourth quarters of our fiscal year. Quarter-to-quarter comparisons of our operating results may not be good indicators of our future performance. It is also possible that our

29

operating results in any future quarter could be below the expectations of investors or any published reports or analyses regarding our company.

Our business could be adversely affected if we do not successfully deploy our newly leased McDonnell Douglas DC-10-30 wide-body aircraft and two Boeing 747-400 freighter aircraft for which we have entered into long-term lease agreements, or if such aircraft do not meet their performance specifications.

        ATA has entered into lease agreements for seven McDonnell Douglas DC-10-30 wide-body passenger aircraft that we expect to be fully operational by the first quarter of 2008. World has entered into long-term agreements for two Boeing 747-400 freighter aircraft that are scheduled to be delivered in mid-2008. If ATA experiences delays in the initial dates of operation of any of these DC-10-30 aircraft, we may not be able to fly our full allocation of passenger requirements for the FedEx and Alliance teams. In addition, if World experiences delays in the conversion or initial date of operations with the Boeing 747-400 freighter aircraft, we may default on the long-term ACMI contracts entered into prior to delivery and our financial condition and results of operations could be adversely affected. If we are not able to otherwise successfully deploy these additional aircraft in our business, our financial condition and results of operations could be adversely affected. There is also a risk that the new aircraft may not meet the performance specifications that are important to our customers or that there exists a limited availability of qualified flight crews to operate, or FAA personnel required to approve the operation of, these aircraft pursuant to the related operating certificate. Each of these risks could adversely affect our ability to deploy these aircraft in a timely manner or on favorable terms.

ATA may be unable to renew its gate leases or continue to access slots at the major domestic airports we serve.

        ATA currently leases one gate at Chicago's Midway Airport. Our U.S. mainland scheduled service business depends upon ATA's ability to maintain continued access to this airport on favorable terms. Any adverse change in ATA's gate lease agreements at Midway could have a material adverse effect on our financial condition and results of operations.

The combined company operates on a broader geographical and operational scope than either Global or World Air Holdings did prior to the merger and is exposed to a broader range of political, social, geographical and operational risks than either company had been exposed to on an individual basis.

        Global's scheduled service business, through ATA, is focused on flights to and from Chicago's Midway Airport and between the western United States and Hawaii while North American's scheduled service business has been focused on providing non-stop service to niche international markets such as Georgetown, Guyana; Accra, Ghana; and Lagos, Nigeria from New York's JFK Airport. In addition to its military transport services and scheduled service travel, North American and Global also provide customized transportation services that Global has not traditionally provided, including providing air transport services for cargo carriers and international freight forwarders.

World Air Holdings identified material weaknesses in its internal control over financial reporting, and its failure to remedy effectively the five material weaknesses identified as of December 31, 2006 could result in material misstatements in our consolidated financial statements going forward.

        When we acquired World Air Holdings we became subject to a number of risks associated with inadequate internal control over financial reporting at World Air Holdings. World Air Holdings' management was responsible for establishing and maintaining adequate internal control over its financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act. World Air Holdings' management identified five material weaknesses in its internal control over financial reporting as of December 31, 2006. A material weakness is defined by the Public Company Accounting Oversight Board (United States) as a control deficiency, or combination of control 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 deleted.

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        The material weaknesses identified by World Air Holdings' management as of December 31, 2006 consisted of:

1.

World Air Holdings' control environment did not sufficiently promote effective internal control over financial reporting throughout the organization. Specifically, the following deficiencies in the control environment existed as of December 31, 2006:



(a)

World Air Holdings lacked formal policies and procedures to clearly communicate management's and employees' roles and responsibilities in the company's internal control over financial reporting.



(b)

World Air Holdings lacked formal written accounting policies and procedures for the initiation and processing of transactions and formal account reconciliations and related management review.



2.

World Air Holdings' information and communication controls did not sufficiently promote effective internal control over financial reporting throughout the organization. Specifically, World Air Holdings did not have formal policies and procedures in place to ensure that potential accounting or disclosure matters relevant to financial reporting were communicated to its accounting and finance personnel by others within the company in an appropriate form or timeframe to enable accurate financial reporting.

        Each of the material weaknesses described above contributed to the material weaknesses discussed in the following items 3 through 5:

3.

World Air Holdings did not maintain effective policies and procedures regarding the accounting for income taxes, including taxes payable, deferred income tax assets and liabilities and the related income tax provision. Specifically, the company's policies and procedures did not provide for the effective internal preparation and review of complex tax calculations, the review of the tax provision, or the preparation of sufficient documentation of the company's income tax accounting. These deficiencies resulted in material errors in World Air Holdings' income tax provision in its preliminary 2006 consolidated financial statements.



4.

World Air Holdings did not maintain effective policies and procedures related to its accounting for accrued liabilities. Specifically, the company did not effectively perform and document procedures to evaluate the reasonableness of assumptions used to estimate liabilities associated with maintenance, flight costs, legal and other expense accruals. Further, existing procedures were not subject to adequate supervisory review. This deficiency resulted in material errors in maintenance, flight costs, legal and other expense accruals within its preliminary 2006 consolidated financial statements.



5.

World Air Holdings did not have effective controls over the financial reporting close process. Specifically, the company did not have a sufficient number of accounting professionals with requisite technical and financial reporting knowledge to ensure the proper selection of accounting policies and the correct application of generally accepted accounting principles in the consolidated financial statements, and to ensure that accurate and reliable financial statements were prepared and reviewed on a timely basis. Also, World Air Holdings lacked effective policies and procedures to identify and record correctly the accounting implications of complex and non-routine transactions and to provide for sufficient review of financial information and related presentation and disclosures. These deficiencies resulted in material errors in its preliminary 2006 consolidated financial statements.

        Each of the aforementioned material weaknesses results in more than a remote likelihood that a material misstatement in World Air Holdings' annual or interim consolidated financial statements would not be prevented or detected.

        World Air Holdings was implementing remedial measures designed to address the five material weaknesses identified as of December 31, 2006 prior to the merger, and this work will continue by

31

Global. If these remedial measures are insufficient to address these material weaknesses and significant deficiencies, or if additional material weaknesses or significant deficiencies in our internal controls are discovered or occur in the future, our consolidated financial statements may contain material misstatements, we could be required to restate our prior period financial results, our operating results may be harmed and we may be subject to class action litigation. Internal control deficiencies could also cause investors to lose confidence in our reported financial information. We can give no assurance that the measures World Air Holdings has taken to date, or any future measures by Global, will remediate the material weaknesses and significant deficiencies identified or that any additional material weaknesses and significant deficiencies or additional restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our consolidated financial statements.

The historical consolidated financial information included in this prospectus does not reflect the added costs we expect to incur in order to implement and comply with internal control reporting standards.

        As a public company, we will be required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), which will require annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent registered public accounting firm that addresses our internal controls. This requirement will apply to us starting with our annual report for the year ended December 31, 2008. The Sarbanes-Oxley Act, as well as new rules subsequently implemented by the SEC and the Public Company Accounting Oversight Board, also require changes in the corporate governance practices and controls of public companies. We expect these rules and regulations to result in both a significant initial cost to us as we initiate certain internal controls and other procedures designed to comply with the requirements of the Sarbanes-Oxley Act, and an ongoing increase in our legal, audit and financial compliance costs. Compliance could also divert management's attention from operations and strategic opportunities and will make legal, accounting and administrative activities more time-consuming and costly. We also expect to incur higher costs to maintain directors and officers insurance. As a result of, among other things, the history of inadequate internal control over financial reporting at World Air Holdings, we currently anticipate increased annual costs following this offering and we expect to incur additional costs during the first year following the offering in implementing and verifying internal control procedures as required by Section 404 of the Sarbanes-Oxley Act, and the rules and regulations thereunder, and in connection with preparing our financial statements on a timely basis to meet the SEC reporting requirements.

        During the course of documenting and testing our internal control procedures to satisfy the requirements of Section 404, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which likely would cause investors to lose confidence in our reported financial information. This could lead to a significant decline in the market price of our common stock. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets, regulatory investigations and civil or criminal sanctions. Similar adverse effects could result if our auditors express an adverse opinion or disclaim or qualify an opinion on management's assessment or on the effectiveness of our internal control over financial reporting.

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        Moreover, due to inadequate internal control over financial reporting at World Air Holdings, and its consequent failure to timely produce financial statements, during the time that World Air Holdings was a public reporting company it did not file its Annual Report on Form 10-K for fiscal years 2005 and 2006 on a timely basis, and did not file its Quarterly Reports on Form 10-Q on a timely basis since the first quarter of 2005. As a result of World Air Holdings' failure to timely file its annual and quarterly reports, World Air Holdings' common stock was delisted from the Nasdaq National Market in May 2006 and began trading on the Pink Sheets. We may similarly be unable to timely produce financial statements and to timely file our periodic reports with the SEC. We may become subject to disciplinary action by the SEC as a result of any such failure to meet our filing obligations.

We may not be able to retain or attract the senior management and other key employees that we need to integrate World Air Holdings with Global or to execute our strategy for the combined company.

        Our success will depend in part upon our ability to retain senior management and other key employees of all our airlines. We will depend on the services of senior management and other key employees to integrate Global's and World Air Holdings' businesses and to execute our strategy. Competition for qualified personnel can be very intense. In addition, senior management and key employees may depart because of issues relating to the uncertainty or difficulty associated with the continuing integration of the companies or a desire not to remain with the combined company. Departures of senior management personnel and other key employees could adversely affect our ability to combine Global and World Air Holdings and our ability to execute our strategy and as a result our business, financial condition and results of operations may suffer.

We recently emerged from a Chapter 11 bankruptcy reorganization, have a history of losses and may not achieve or maintain profitability.

        We emerged from a Chapter 11 bankruptcy reorganization on February 28, 2006, approximately 16 months after filing a voluntary petition for bankruptcy reorganization. ATA recorded a consolidated net loss of $455.6 million for the year ended December 31, 2005, and a consolidated net loss of more than $1.2 billion during the three years ended December 31, 2005. Despite significant labor cost reductions and other cost savings we achieved through our reorganization, our consolidated net loss for the ten months ended December 31, 2006 was $36.5 million. Our return to profitability will be affected by a number of factors, including the successful implementation of our new business plan and our ability to continue to successfully integrate ATA, North American and World's businesses.

We may be subject to claims that were not discharged in our bankruptcy proceedings.

        Substantially all of the material claims against us that arose prior to the date of the bankruptcy filing were addressed during the Chapter 11 proceedings or were resolved in connection with the Plan and Confirmation Order adopted by the U.S. Bankruptcy court. In addition, the Bankruptcy Code provides that the confirmation of a plan of reorganization discharges a debtor from substantially all debts arising prior to confirmation and certain debts arising afterwards. Circumstances in which claims and other obligations that arose prior to the bankruptcy filing were not discharged primarily relate to certain actions by governmental units under police power authority, instances where we agreed to preserve a claimant's claims, as well as, potentially, instances where a claimant had inadequate notice of the bankruptcy filing. In addition, except in limited circumstances, claims against non-debtor subsidiaries, including foreign subsidiaries, are generally not subject to discharge under the Bankruptcy Code. To the extent any pre-filing liability remains, the ultimate resolution of such claims and other obligations may have a material adverse effect on our financial condition and results of operations.

You will not be able to compare some of our historical financial information to our current financial information, which will make it more difficult to evaluate the performance of our business.

        As a result of our emergence from bankruptcy, we have operated our business with a new capital structure, fewer aircraft, more economical aircraft lease terms, significantly different and reduced

33

scheduled service and significantly reduced employee and occupancy costs. We adopted fresh start accounting prescribed by generally accepted accounting principles. Accordingly, unlike other companies that have not previously filed for bankruptcy protection, our financial condition and results of operations are not comparable to the financial condition and results of operations reflected in its predecessor's financial statements for periods prior to February 28, 2006, contained in this prospectus. Without historical financial statements to compare to our current performance, it may be more difficult for you to assess our future prospects when evaluating our business.

A significant stockholder controls us and may have conflicts of interest with us or you in the future.

        As of December 31, 2007, on a pro forma basis, MatlinPatterson owned approximately 74.1% of our outstanding shares of common stock, assuming the conversion of the 11,507,142 shares of Series A preferred stock by MatlinPatterson and that the amount of shares to be sold in this rights offering is 2,980,350. To the extent that all offerees do not subscribe for their fully entitled amount pursuant to this rights offering, MatlinPatterson's ownership of our common stock will increase relative to the other shareholders.

        As a result of its substantial ownership of our common stock, MatlinPatterson has the ability to effectively control all matters requiring stockholder approval, including the determination to enter into a corporate transaction or to prevent any transaction, regardless of whether or not our other stockholders believe that any such transaction is in their own best interests. For example, MatlinPatterson could cause us to make acquisitions that increase the amount of our indebtedness or could cause us to sell revenue-generating assets.

        Additionally, MatlinPatterson may invest in entities that directly or indirectly compete with us, or companies in which it currently invests may begin competing with us. MatlinPatterson may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. As a result of these relationships, when conflicts between the interests of MatlinPatterson and the interests of our other stockholders or our noteholders arise, our directors who were nominated by MatlinPatterson may not be disinterested. So long as MatlinPatterson continues to own a substantial number of shares of our common stock, MatlinPatterson will effectively control all of our corporate decisions.

Risks Relating to the Airline Industry

The airline industry has recently incurred significant losses resulting in airline restructurings, consolidations and bankruptcies, which could result in further changes in the industry.

        In 2006, the domestic airline industry as a whole reported a net profit of only approximately $3 million after five consecutive years of losses. These losses have resulted in airlines renegotiating aircraft leases, reconfiguring flight schedules, furloughing or terminating employees and implementing other efficiency and cost-cutting measures. Despite these actions, several airlines commenced cases under Chapter 11 of the U.S. Bankruptcy Code in the past several years, enabling these airlines to reduce labor rates, restructure debt, terminate pension plans and generally reduce their cost structure. Such events may have a greater impact during time periods when the airline industry encounters continued financial losses, as passenger air carriers under financial pressures may institute pricing structures to achieve near-term survival rather than long-term viability. Further airline reorganizations, bankruptcies or consolidations may occur, the effects of which we are unable to predict but which could adversely affect our competitive position in the industry.

The airline industry is highly competitive and is characterized by low profit margins and high fixed costs.

        The airline industry is highly competitive, fragmented and capital intensive. Successful competition depends on price, quality, safety and reliability of service. Greater financial resources, newer aircraft, larger facilities and lower cost structures provide air carriers with financial and operating advantages over their competitors. The U.S. airline industry is characterized generally by low profit margins and

34

high fixed costs, primarily for personnel, aircraft fuel, aircraft and engine leases and debt service. The expenses of a passenger aircraft flight do not vary significantly with the number of passengers carried. As a result, a relatively small change in the number of passengers or in pricing can have a disproportionate effect on a passenger air carrier's operating and financial results. Accordingly, shortfalls in expected passenger levels significantly adversely affect our business. In addition, the U.S. airline industry in general, and the low-fare sector in particular, is highly competitive and is particularly susceptible to price discounting because airlines incur only nominal costs to provide service to passengers occupying otherwise unsold seats. The advent of Internet websites has lowered the cost to airlines of selling tickets. However, it has also had a significant negative impact on airline revenues because travel consumers now have access to nearly perfect pricing information and, as a result, have become more efficient in finding lower fare alternatives.

The airline and travel industry tends to experience adverse financial results during general economic downturns.

        Since a substantial portion of airline travel, for both business and leisure, is discretionary, the airline and travel industries tend to experience adverse financial results during general economic downturns. Any general downturn in the U.S. or global economies could lead to a reduction in airline passenger traffic, which likely would adversely affect the airline industry, including us.

Future terrorist attacks, the threat of such attacks or the escalation of U.S. military involvement overseas could materially adversely affect our scheduled service and commercial charter businesses.

        The terrorist attacks of September 11, 2001 materially adversely affected the airline industry. Increased security procedures have adversely affected the air travel experience and increased our costs. Additional terrorist attacks, even if not made directly on the airline industry, or fear of such attacks, could have a further adverse effect on us and the rest of the airline industry. In the event of a terrorist attack, we may experience significantly reduced demand for our travel services, which could have an adverse effect on our financial condition and results of operations.

Airlines often are affected by factors beyond their control, including traffic congestion at airports, weather conditions, increased security measures and public health threats, any of which could adversely affect our operating results and financial condition.

        Like other airlines, our business is affected by factors beyond our control, including air traffic congestion at airports, adverse weather conditions, increased security measures and the outbreak of disease. Delays frustrate passengers and increase costs, which in turn affect profitability. During periods of fog, snow, rain, storms or other adverse weather conditions, flights may be cancelled or significantly delayed. Cancellations or delays due to weather conditions, traffic control problems and breaches in security could adversely affect our financial condition and results of operations. Additionally, public health threats that affect travel behavior, such as SARS or avian flu, could have a material adverse effect on the airline industry, including us.

Risks Relating to our Common Stock

The market price of our common stock may be volatile.

        The market price of our common stock may fluctuate substantially due to a variety of factors, many of which are beyond our control, including those described above under "Risks Relating to our Business" and "Risks Relating to the Airline Industry" and the following:

•

our financial performance or the performance of our competitors and similar companies;



•

announcements concerning our competitors, the airline industry or the economy in general;



•

strategic actions by us or our competitors, such as acquisitions or restructurings;



•

media reports and publications about the safety of our aircraft or the aircraft type we operate;

35

•

new regulatory pronouncements and changes in regulatory guidelines;



•

general and industry-specific economic conditions;



•

changes in financial estimates or recommendations by securities analysts;



•

sales of our common stock or other actions by investors with significant shareholdings;



•

general market conditions;



•

loss of key personnel; and



•

availability of capital.

        The stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of particular companies. These types of broad market fluctuations may adversely affect the trading price of our common stock.

        In the past, stockholders have sometimes instituted securities class action litigation against companies following periods of volatility in the market price of their securities. Any similar litigation against us could result in substantial costs, divert management's attention and resources, and adversely affect our business or results of operations.

There has not been an existing market for our common stock and we do not know if one will develop to provide our stockholders with adequate liquidity.

        There has not been a public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market or how liquid that market might become. If an active trading market does not develop, our stockholders may have difficulty selling any shares of our common stock that they own.

We intend to have our securities quoted on the Pink Sheets, which will limit the liquidity and price of our securities more than if our securities were quoted or listed on the NASDAQ Stock Market or a national exchange.

        A market maker has applied to have our common stock quoted for trading on the Pink Sheets, maintained by the National Quotation Bureau. We cannot assure you that our stock will be accepted for quotation on the Pink Sheets. If our stock is quoted on the Pink Sheets, it will limit our ability to have a liquid trading market develop for our common stock and it will make it difficult for our stockholders to dispose of their common stock. This could significantly diminish the value of our common stock.

If a significant number of shares of our common stock are sold into the market, the market price of our common stock could decline significantly, even if our business is doing well.

        Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could cause the prevailing market price of our common stock to decline significantly.

        We may sell shares of our common stock in public offerings. We may also issue shares of our common stock to finance future acquisitions. As at the date of this prospectus, 12,564,674 shares of our common stock are outstanding. 9,311,986 of these shares are owned by our executive officers, directors (including Messrs. Tepner and Han, each of whom resigned from our board, on November 15, 2007 and November 16, 2007, respectively) and "affiliates", as that term is defined under Rule 144 of the Securities Act of 1933, as amended (the "Securities Act"), and thus are "restricted securities" under the Securities Act and may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available. 11,507,142 shares of Series A preferred stock are outstanding as of the date of this prospectus.

36

        In addition, as at the date of this prospectus, 3,481,093 shares of our common stock are issuable upon the exercise of outstanding stock options. 900,276 shares of our common stock also are issuable upon the exercise of outstanding warrants as of the date of this prospectus.

        We cannot predict the size of future issuances of our common stock or the effect, if any, that future issuances and sales of shares of our common stock will have on the market price of our common stock. Sales of a substantial number of shares of our common stock in the public market (including shares issued in connection with an acquisition), or the perception that such sales may occur, could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.

We do not intend to pay cash dividends.

        We have not in the past paid, and do not currently intend to pay, cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. In addition, the terms of our current financing agreements preclude us, and any future financing agreements may preclude us, from paying any dividends. As a result, appreciation, if any, in the market value of our common stock will be the sole source of potential financial gain from our common stock for the foreseeable future.

Our certificate of incorporation and by-laws contain provisions that could delay, deter or prevent a change of control.

        Our amended and restated certificate of incorporation, as amended, and our amended and restated by-laws contain provisions that might enable our management to resist a proposed takeover of our company. These provisions could discourage, delay or prevent a change of control of our company or an acquisition of our company at a price that our stockholders may find attractive. These provisions also may discourage proxy contests and make it more difficult for our stockholders to elect directors and take other corporate actions. The existence of these provisions could limit the price that investors might be willing to pay in the future for shares of our common stock. The provisions include:

•

limitations as to who may call special meetings of both our board of directors and stockholders;



•

advance notice requirements for stockholder proposals; and



•

the authority of our board to issue, without stockholder approval, preferred stock with such terms as our board may determine.

Our certificate of incorporation and by-laws include provisions limiting voting by non-U.S. citizens.

        To comply with restrictions imposed by federal law on foreign ownership of U.S. airlines, our amended and restated certificate of incorporation, as amended, and amended and restated by-laws restrict voting of shares of our capital stock by non-U.S. citizens. The restrictions imposed by federal law currently require no more than 25% of our stock be voted, directly or indirectly, by persons who are not U.S. citizens, that our president and at least two-thirds of the members of our board of directors be U.S. citizens, and that we remain under the actual control of U.S. citizens. The "actual control" doctrine, among other things, limits the amount of non-voting equity that may be held by non-U.S. citizens. Our by-laws provide that no shares of our capital stock may be voted by or at the direction of non-U.S. citizens unless such shares are registered on a separate stock record, which we refer to as the foreign stock record.

Risks Relating to the Rights Offering

The subscription price is not an indication of our value.

        The subscription price does not necessarily bear any relationship to the book value of our assets, past operations, cash flows, losses, financial condition or any other established criteria for value. You

37

should not consider the subscription price an indication of our value or any assurance of future value. After the date of this prospectus, our common stock may trade at prices above or below the subscription price.

Once you exercise your rights, you may not revoke your exercise.

        Once you exercise your rights, unless we materially amend the terms of the rights offering, you cannot revoke your exercise even if there is a decline in the price of our common stock or you learn information about us that you consider unfavorable before the expiration date. You should not exercise your rights unless you are certain that you wish to purchase additional shares of our common stock at the subscription price.

The subscription rights are not transferable and there is no market for the subscription rights.

        You may not sell, give away or otherwise transfer your subscription rights. Because the subscription rights are nontransferable, there is no market or other means for you to directly realize any value associated with the subscription rights. You must exercise the subscription rights and acquire additional shares of our common stock to realize any value.

If you exercise your subscription rights, you may be unable to sell any shares you purchase at a profit and your ability to sell may be delayed by the time required to deliver the stock certificates.

        The public trading market price of our common stock may decline after you elect to exercise your subscription rights. If that occurs, you will have committed to buy shares of common stock at a price above the prevailing market price and you will have an immediate unrealized loss. Moreover, we cannot assure you that following the exercise of subscription rights you will be able to sell your shares of common stock at a price equal to or greater than the subscription price. Until shares are delivered after completion of the rights offering, you may not be able to sell the shares of our common stock that you purchase in the rights offering. Certificates representing shares of our common stock purchased in the rights offering will be delivered as soon as practicable after completion of the rights offering. We will not pay you interest on any funds delivered to the subscription agent pursuant to the exercise of subscription rights.

To exercise your subscription rights, you must act promptly and follow the subscription instructions carefully.

        Eligible shareholders who desire to purchase shares in the rights offering must act promptly to ensure that all required forms and payments are actually received by the subscription agent at or prior to the expiration date. If you fail to complete and sign the required subscription forms, send an incorrect payment amount, or otherwise fail to follow the subscription procedures that apply to your desired transaction, the subscription agent may, depending on the circumstances, reject your subscription or accept it to the extent of the payment received. Neither we, the subscription agent or the information agent has any obligation to contact you concerning, or attempt to correct, an incomplete or incorrect subscription form or payment. We have the sole discretion to determine whether a subscription exercise properly follows the subscription procedures.

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FORWARD-LOOKING STATEMENTS

        This prospectus includes forward-looking statements relating to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies. The statements contained in this prospectus that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.

        We have used the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will" and similar terms and phrases, including references to assumptions, in this prospectus to identify forward-looking statements. These forward-looking statements are made based on our management's expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements. The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

•

high fuel costs, significant disruptions in the supply of aircraft fuel and further significant increases in fuel prices;



•

terrorist attacks;



•

risks inherent to airlines, such as demand for air services to and from the regions served by us and our ability to implement our growth strategy;



•

our relationship with Southwest;



•

our dependence on certain regions;



•

our competitive environment, including significant fare pricing activities by major airlines;



•

our ability to secure and maintain any necessary financing for aircraft acquisitions and other purposes;



•

relations with unionized employees generally and the impact and outcome of future labor negotiations;



•

our fixed obligations;



•

problems with our aircraft;



•

levels of military spending for the transportation of military personnel and their families;



•

economic and other conditions in regions in which we operate;



•

governmental regulation of our operations;



•

increases in maintenance and security costs and insurance premiums;



•

cyclical and seasonal fluctuations in our operating results;



•

the risk that future acquisitions and divestitures will have a negative impact on us; and



•

risks related to our divestiture and acquisition strategies, including the risks related to the integration of acquired business.

        All of our forward-looking statements should be considered in light of these factors. We undertake no obligation to update our forward-looking statements or risk factors to reflect new information, future events or otherwise.

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INDUSTRY AND MARKET DATA

        Unless otherwise indicated, information contained in this prospectus concerning the airline industry, its segments, business lines and related markets and our general expectations concerning such industry and its segments and related markets are based on management estimates. Such estimates are derived from publicly available information released by third-party sources, as well as data from our internal research and on assumptions made by us based on such data and our knowledge of such industry and markets, which we believe to be reasonable.

        While we believe the industry and similar data presented herein that is derived from information released by third-party sources is accurate, we have not independently verified this information. Industry and market data involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading "Risk Factors" in this prospectus.

USE OF PROCEEDS

        Global will not receive any of the proceeds from the sale of the stock being offered in this prospectus. All of the proceeds will be received by the issuer, MatlinPatterson.

DIVIDEND POLICY

        We have not in the past paid, and do not currently intend to pay, cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. In addition, the terms of our current financing agreements preclude us, and any future financing agreements may preclude us, from paying any dividends.

DILUTION

        No new shares will be issued by the Company as part of this rights offering. The shares being offered to existing stockholders are currently held by MatlinPatterson.

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CAPITALIZATION

        The following table shows Global's cash and cash equivalents and capitalization as of September 30, 2007, as follow:

•

on an actual basis; and



•

on a pro forma, as adjusted, basis to give effect to the conversion of 11,507,142 shares of Series A preferred stock into 11,507,142 shares of common stock in connection with the completion of this rights offering and the purchase and subsequent exercise by MatlinPatterson of 1,808,986 Warrants previously held by JPMorgan.

        This financial information in this table is unaudited and should be read in conjunction with "Use of Proceeds", "Unaudited Pro Forma Combined Financial Statements", "Selected Consolidated Historical Financial and Operating Data of Global", "Selected Consolidated Historical Financial and Operating Data of World Air Holdings", "Management's Discussion and Analysis of Financial Condition and Results of Operations of Global", "Management's Discussion and Analysis of Financial Condition and Results of Operations of World Air Holdings" and the financial statements and related notes of Global and World Air Holdings, which are included elsewhere in this prospectus.

		As of September 30, 2007
(Dollars in thousands)		Actual			Pro Forma, as Adjusted
Cash and cash equivalents		$	97,966		$	97,966
Debt(1):
	Existing indebtedness of Global		42,893			42,893
	JPMorgan Term Loan, including PIK interest		345,349			345,349
	Discount on Notes related to Warrants		(31,140	)		(31,140	)
	Total debt		357,102			357,102
Shareholders equity (deficit)
	Series A Convertible Cumulative Preferred Stock, $.0001 par value: 15,000,000 shares authorized, 11,507,142 shares issued and outstanding, actual and 0 shares issued and outstanding, as adjusted		158,644			—
	Common Stock, $.0001 par value: 50,000,000 shares authorized and 10,755,688 shares outstanding, actual and 24,071,816 outstanding, as adjusted		1			2
	Warrants		1,434			1,434
	Additional paid in capital(2)		109,029			292,998
	Other comprehensive income		272			272
	Accumulated earnings (deficit)		(90,388	)		(90,388	)
Total stockholders' equity			178,992			204,318
Total capitalization		$	536,094		$	561,420

(1)

In addition to the items listed below, both Global and World Air Holdings have substantial operating lease obligations. For a description of these obligations, see "Management's discussion and analysis of financial condition and results of operations of Global—Off-Balance Sheet Arrangements", "Management's discussion and analysis of financial condition and results of operations of World Air Holdings—Off-Balance Sheet Arrangements" and "Description of certain indebtedness—Aircraft Operating Leases".

(2)

The pro forma, as adjusted, additional paid in capital balance includes:

	As of September 30, 2007
Actual balance	$	109,029
Conversion of Series A preferred stock into common shares		158,643
Exercise of 1,808,986 Warrants		25,326
	$	292,998

41

UNAUDITED PRO FORMA COMBINED
STATEMENTS OF OPERATIONS

        The following unaudited pro forma combined statements of operations are based on Global's and World Air Holdings' historical annual and interim statements of operations included elsewhere in this prospectus, adjusted to illustrate the pro forma effect of the merger, the financing and the rights offering and should be read in conjunction with "Summary Unaudited Pro Forma Combined Statements of Operations Information".

        The unaudited pro forma combined statements of operations for the year ended December 31, 2006 and for the nine months ended September 30, 2007 give effect to the merger and the financing as if they had occurred on January 1, 2006.

        The unaudited pro forma adjustments are based upon currently available information and certain assumptions that we believe to be reasonable under the circumstances. The acquisition of World Air Holdings has been accounted for, and the unaudited pro forma combined statements of operations have been prepared, using the purchase method of accounting. The pro forma combined column represents the combination of Global and World Air Holdings' historical results, adjusted for the financing and purchase accounting adjustments necessary to reflect the fair value of World Air Holdings' net assets. The pro forma, as adjusted column represents the pro forma combined statement of operations adjusted for the conversion of the Series A preferred stock by MatlinPatterson to common stock in connection with the rights offering and the purchase and subsequent exercise by MatlinPatterson of 1,808,986 Warrants previously held by JPMorgan.

        The unaudited pro forma combined and pro forma, as adjusted statements of operations are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of Global would have been had the merger, the financing and the rights offering occurred on the date assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. In this regard, the reader should note that the unaudited pro forma combined statements of operations do not give effect to (1) any integration costs that may be incurred as a result of the merger, or (2) synergies, operating efficiencies and cost savings that are expected to result from the merger.

        The allocation of the purchase price to acquired assets and liabilities in the unaudited pro forma combined statements of operations is based on preliminary valuation estimates. Such allocations will be finalized based on valuation and other studies to be performed by management with the services of outside valuation specialists in accordance with Financial Accounting Standards Board Financial Accounting Standards No. 141, Business Combinations. Accordingly, the purchase price allocation adjustments and related impacts on the unaudited pro forma combined statements of operations are preliminary and are subject to revision, which may be material, until final completion of the valuations.

        The unaudited pro forma combined and pro forma, as adjusted statements of operations should be read in conjunction with the section entitled "Summary Unaudited Pro Forma Combined Statements of Operations" and the separate historical consolidated financial statements and accompanying notes of Global and World Air Holdings included elsewhere in this prospectus.

42

Unaudited Pro Forma Combined Statement of Operations for the Year Ended December 31, 2006
(dollars in thousands, except share and per share amounts)

		Global Successor Ten Months Ended December 31, 2006 Historical			Global Predecessor Two Months Ended February 28, 2006 Historical			Global Fresh Start Adjustments			Global Adjusted Year Ended December 31, 2006			World Air Holdings Historical*			Purchase Accounting Adjustments			Pro Forma Combined			Preferred Stock Conversion			Pro Forma, as Adjusted
Operating revenues:
	Scheduled service	$	332,255		$	53,527		$	—		$	385,782		$	62,371		$	—		$	448,153		$	—		$	448,153
	Charter		288,256			58,753			—			347,009			759,911			—			1,106,920						1,106,920	(f)
	Other		16,551			2,771			—			19,322			3,374			—			22,696						22,696
Total operating revenues			637,062			115,051			—			752,113			825,656			—			1,577,769			—			1,577,769
Operating expenses:
	Fuel and oil		202,613			37,086			—			239,699			194,517			—			434,216						434,216
	Salaries, wages and benefits		150,929			36,066			—			186,995			146,098			—			333,093						333,093
	Aircraft rentals		69,439			16,181			(673	)		84,947			113,462			—			198,409						198,409
	Flight costs		52,769			11,488			—			64,257			75,976			—			140,233						140,233
	Handling, landing and navigation fees		48,553			8,077			—			56,630			50,578			—			107,208						107,208
	Selling and marketing		36,452			7,624			—			44,076			41,798			—			85,874						85,874
	Aircraft maintenance, materials and repairs		29,051			3,103			—			32,154			142,959			(63,206	)(e)		111,907						111,907
	Depreciation and amortization		17,386			5,219			(1,742	)		20,863			6,641			65,960	(a)		93,464						93,464
	Asset impairments and aircraft retirements		13,476			—			—			13,476			—			—			13,476						13,476
	Other		41,045			10,197			—			51,242			54,407			—			105,649						105,649
Total operating expenses			661,713			135,041			(2,415	)		794,339			826,436			2,754			1,623,529			—			1,623,529
Operating income (loss)			(24,651	)		(19,990	)		2,415			(42,226	)		(780	)		(2,754	)		(45,760	)		—			(45,760	)
Other income (expense):
	Reorganization items, net		—			1,456,000			(1,456,000	)		—			—			—			—						—
	Interest income		6,154			397			—			6,551			1,655			—			8,206						8,206
	Interest expense		(18,231	)		(4,666	)		829			(22,068	)		(3,657	)		(43,487	)(b)		(69,212	)					(69,212	)
	Other		266			(233	)		269			302			135			—			437						437
Other income (expense)			(11,811	)		1,451,498			(1,454,902	)		(15,215	)		(1,867	)		(43,487	)		(60,569	)		—			(60,569	)
Income (loss) before income taxes			(36,462	)		1,431,508			(1,452,487	)		(57,441	)		(2,647	)		(46,241	)		(106,329	)					(106,329	)
Income tax (benefit)			—			—			—			—			(355	)		299	(g)		(56	)					(56	)
Net income (loss)			(36,462	)		1,431,508			(1,452,487	)		(57,441	)		(2,292	)		(46,540	)		(106,273	)					(106,273	)
Preferred stock dividends			—			—			—			—			—			(25,776	)(c)		(25,776	)		25,776	(d)		—
Income (loss) available to common shareholders		$	(36,462	)	$	1,431,508		$	(1,452,487	)	$	(57,441	)	$	(2,292	)	$	(72,316	)	$	(132,049	)		25,776		$	(106,273	)
Basic and diluted earnings per common share:
	Average shares outstanding (in thousands)		10,753									10,753									10,753						24,069	(d)
	Net loss per share	$	(3.39	)							$	(5.34	)							$	(12.28	)				$	(4.42	)

*

Certain amounts have been reclassified to conform with Global's presentation.

See accompanying notes to these pro forma combined financial statements.

43

Unaudited pro forma combined statement of operations for the nine months ended September 30, 2007
(dollars in thousands, except share and per share amounts)

	Global Historical			World Air Holdings Historical*			Purchase Accounting Adjustments			Pro Forma Combined			Preferred Stock Conversion			Pro Forma, as Adjusted
Operating revenues:
Scheduled service	$	306,241		$	46,376		$	—		$	352,617		$	—		$	352,617
Charter		372,186			527,607			—			899,793			—			899,793	(f)
Other		15,072			816			—			15,888			—			15,888
Total operating revenues		693,499			574,799			—			1,268,298			—			1,268,298
Operating expenses:
Fuel and oil		227,929			138,543			—			366,472			—			366,472
Salaries, wages and benefits		153,885			112,424			—			266,309			—			266,309
Aircraft rentals		82,146			79,037			—			161,183			—			161,183
Flight costs		59,354			54,913			—			114,267			—			114,267
Handling, landing and navigation fees		55,069			39,828			—			94,897			—			94,897
Selling and marketing		38,187			29,768			—			67,955			—			67,955
Aircraft maintenance, materials and repairs		44,324			74,316			(24,859	)(e)		93,781			—			93,781
Depreciation and amortization		23,352			4,671			44,398	(a)		72,421			—			72,421
Asset impairments and aircraft retirements		4,844			—			—			4,844			—			4,844
Other		40,653			36,877			—			77,530			—			77,530
Total operating expenses		729,743			570,377			19,539			1,319,659			—			1,319,659
Operating income (loss)		(36,244	)		4,422			(19,539	)		(51,361	)		—			(51,361	)
Other income (expense):
Reorganization items, net		—			—			—			—			—			—
Interest income		6,959			1,011			—			7,970			—			7,970
Interest expense		(23,333	)		(83	)		(24,812	)(b)		(48,228	)		—			(48,228	)
Other		(820	)		699			—			(121	)		—			(121	)
Other income (expense)		(17,194	)		1,627			(24,812	)		(40,379	)		—			(40,379	)
Income (loss) before income taxes		(53,438	)		6,049			(44,351	)		(91,740	)		—			(91,740	)
Income taxes		488			2,427			(2,539	)(g)		376			—			376
Net income (loss)		(53,926	)		3,622			(41,812	)		(92,116	)					(92,116	)
Preferred stock dividends		(3,435	)		—			(18,990	)(c)		(22,425	)		22,425	(d)		—
Income (loss) available to common shareholders	$	(57,361	)	$	3,622		$	(60,802	)	$	(114,541	)		22,425		$	(92,116	)
Basic and diluted earnings per common share:
Average shares outstanding (in thousands)		10,755									10,755			—			24,071	(d)
Net loss per share	$	(5.33	)							$	(10.65	)		—		$	(3.83	)

*

Certain amounts have been reclassified to conform with Global's presentation. Amounts represent results from January 1, 2007 through August 14, 2007.

See accompanying notes to these pro forma combined financial statements.

44

Notes to the unaudited pro forma combined statements of operations

(dollars in thousands)

Note 1. Basis of Presentation, the merger and the financing

        The historical financial information for the year ended December 31, 2006 and the nine months ended September 30, 2007 is derived from the historical consolidated financial statements of Global and World Air Holdings. The pro forma adjustments have been prepared as if the merger, the financing and the rights offering had taken place on January 1, 2006.

        The unaudited pro forma combined column reflects the following:

•

the acquisition of World Air Holdings by Global for $323,200 (which includes $9,900 of related acquisition costs);



•

the issuance of 11,507,152 shares or $161,100 of Series A preferred stock;



•

borrowing of $340,000 under the JPMorgan Term Loan and related issuance of 2,261,333 Warrants, which were valued at $14.00 per Warrant using the Black-Scholes option pricing method;



•

repayment of $81,557 debt, including interest and a prepayment penalty, guaranteed by the Air Transportation Stabilization Board, or ATSB; and



•

repayment of $54,261 debt, including interest owed to MatlinPatterson.

        The unaudited pro forma combined statements of operations, as adjusted column reflects the conversion of the preferred stock into common stock in connection with the rights offering.

Note 2. Sources and uses of funds related to the merger and the financing

Proceeds received from:
	Issuance of preferred stock(1)	$	161,100
	Borrowings under JP Morgan Term Loans and issuance of Warrants(2)		340,000
		$	501,100
Use of proceeds:
	Acquisition of World Air Holdings(3)	$	323,233
	Repayment of ATSB debt(4)		79,282
	Repayment of MatlinPatterson debt(5)		51,318
	Debt issuance costs		15,108
	Interest on MatlinPatterson debt		2,943
	ATSB extinguishment costs		2,275
	Preferred stock issuance costs		2,456
	General corporate purposes(6)		17,285
	Restricted cash(6)		7,200
		$	501,100

(1)

Reflects the recording of $161,100 of proceeds of the issuance of 11,507,142 shares of preferred stock at $14 per share.



(2)

Reflects borrowings of $340,000 under the JPMorgan Term Loan.



(3)

Reflects aggregate purchase price of World Air Holdings which includes $313,300 cash paid for the stock of World Air Holdings plus related acquisition costs of $9,900.

45

(4)

Reflects repayment of $21,802 of current and $57,480 of long term debt guaranteed by the Air Transportation Stabilization Board.



(5)

Reflects repayment of $34,384 of current and $16,834 of long term owed to MatlinPatterson.



(6)

Reflects cash received for general corporate purposes including $7,200 required to be restricted cash related to collateralize World Air Holdings letters of credit.

Note 3. Merger and Purchase Price Allocation

The Company commenced the consolidation of World Air Holdings on August 15, 2007 and the acquisition was accounted for using the purchase method of accounting in accordance with Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 141, Business Combinations ("SFAS 141"). The following summarizes the total purchase price for World Air Holdings (in thousands):

Cash consideration	$	313,315
Direct acquisition costs		9,918
	$	323,233

        Under the purchase method of accounting, the total purchase price will be allocated to World Air Holdings' net tangible and intangible assets based upon their estimated fair value as of the date of the acquisition with any amount paid in excess of the fair value of the net assets recorded as goodwill. This allocation is preliminary. Specifically, the Company is in the process of finalizing the fair value assigned to inventory, property and equipment, maintenance reserve deposits with lessors, lease contracts, military contract intangibles, other intangibles and other liabilities.

        Based upon the purchase price and review of the net assets acquired and liabilities assumed, the preliminary purchase price allocation is as follows (in thousands):

		Fair Value of Assets Acquired and Liabilities Assumed
Cash and cash equivalents		$	39,646
Other current assets			131,326
Property and equipment, net			39,696
Deposits and other assets			62,250
Intangible assets acquired:
	Military contracts		256,680
	Other intangibles		5,130
Goodwill			64,446
	Total assets acquired		599,174
Liabilities assumed:
	Current liabilities		144,889
	Long-term liabilities		131,052
Net assets acquired		$	323,233

46

Note 4. Statement of Operations Pro forma Adjustments and Assumptions

(a)

Represents adjustments to conform World Air Holdings to the method of accounting which has been followed by Global to amortize heavy maintenance. Adjustments also include the incremental depreciation on property and equipment and amortization on intangible assets resulting from purchase accounting.

	Year Ended December 31, 2006	Nine Months Ended September 30, 2007
Amortization on heavy maintenance activities(1)	$37,910	$	27,333
Amortization on newly acquired intangibles(2)	25,898		15,451
Incremental depreciation on property and equipment(3)	2,152		1,614
Total adjustment to depreciation and amortization expense	$65,960	$	44,398

(1)

Reflects an adjustment to conform World Air Holdings to the capitalize and amortize method of accounting for heavy maintenance.



(2)

Reflects the addition of definite-lived intangible assets or adjustments to intangible assets to be recorded as a result of the acquisition, consisting of the following;

		Asset Lives	Amount			2006 Amortization			January 1, 2007 to August 14, 2007 Amortization
Amortized intangible assets
	Military contracts(i)	10 years	$	256,680		$	25,668		$	15,901
	Tradenames(ii)	1 year		1,130			1,130			—
	Less historical amortization			(6,187	)		(900	)		(450	)
			$	251,623		$	25,898		$	15,451

(i)

Reflects estimated values of the World and North American AMC contracts.



(ii)

Reflects estimated values of the World and North American tradenames.



(3)

Reflects an adjustment to report World Air Holdings' property and equipment at fair value as part of purchase accounting. The estimated fair value of World Air Holdings' property and equipment resulted in total increase to property and equipment of $15,063. This increase in value was depreciated over the estimated weighted average useful lives of the assets of seven years.

47

(b)

Represents adjustment to interest expense to reflect borrowings in connection with the acquisition of World Air Holdings:

		Year Ended December 31, 2006			Nine Months Ended September 30, 2007
Interest expense on JPMorgan Term Loan:
	JPMorgan Term Loan(1)	$	43,109		$	40,359
	Amortization of deferred financing costs(2)		12,274			304
	Amortization of discount on debt(3)		3,957			2,968
	Interest expense recorded on borrowings which were not extinguished		9,872			4,597
Total pro forma interest expense		$	69,212		$	48,228
Less historical interest expense and related amortization of deferred financing costs			(25,725	)		(23,416	)
Adjustment to interest expense		$	43,487		$	24,812

(1)

Represents interest on the JPMorgan Term Loan, which is calculated as follows:

	Year Ended December 31, 2006			Nine Months Ended September 30, 2007
Estimated average outstanding borrowings	$	356,137		$	399,854
Interest rate		12.10	%		13.46	%
Portion of year outstanding		100	%		75	%
Calculated interest	$	43,109		$	40,359

(2)

The 2006 adjustment represents amortization of deferred financing costs of $12,300 over the initial term of the JPMorgan Term Loan of 12 months. The 2007 adjustment represents amortization of deferred financing costs of $2,800 over the automatic extension period of the JPMorgan Term Loan of 7 years.



(3)

Represents amortization of discount on debt related to the issuance of 2,261,233 Warrants in connection with the financing over the entire period of the JPMorgan Term Loan of 8 years.



(c)

Assumes preferred dividends declared at 16% for entire period, are cumulative, shall accrete day to day and remain unpaid.



(d)

Represents adjustment to eliminate preferred stock dividends to reflect conversion of Series A preferred stock into common stock in connection with the rights offering, and an increase number of shares of common stock by 11,507,142. Share number also reflects the purchase of 1,808,986 Warrants by MatlinPatterson from JPMorgan and subsequent exercise into shares of Global's common stock.

48

(e)

Represents adjustments to conform World Air Holdings to the method of accounting which has been followed by Global for heavy maintenance activities from expense as incurred to capitalize and amortize, as well as from expense as incurred to capitalize for maintenance reserve payments and reimbursements.



(f)

Charter revenue is comprised of the following:

	Year Ended December 31, 2006		Nine Months Ended September 30, 2007
Military/Commercial Charter Revenue	$	941,804	$	778,099
ACMI Revenue		165,116		121,694
	$	1,106,920	$	899,793

(g)

Adjustment to reflect no federal income tax expense or benefit due to Global's losses in both periods.

49

SELECTED CONSOLIDATED HISTORICAL FINANCIAL AND OPERATING DATA OF GLOBAL

        The following table sets forth Global's selected consolidated historical financial and operating data for each of the periods indicated. The selected historical financial data for the dates and periods ended prior to March 1, 2006 were derived from the audited consolidated financial statements of ATA's former parent, ATA Holdings Corp., which we sometimes refer to as our "predecessor". The statement of operations data for the years ended December 31, 2002, 2003, 2004 and 2005, for the two months ended February 28, 2006, for the ten months ended December 31, 2006 and the balance sheet data as of December 31, 2003, 2004, 2005 and 2006, were derived from Global's or its predecessor's audited consolidated financial statements included elsewhere in this prospectus. The statement of operations data for the nine month period ended September 30, 2006 was derived from Global's unaudited consolidated financial statements for the seven month period ended September 30, 2006 and from Global's predecessor's audited consolidated financial statements for the two months ended February 28, 2006 included elsewhere in this prospectus. The statement of operations data for the nine month period ended September 30, 2007 and the balance sheet data as of September 30, 2007, were derived from Global's unaudited interim financial statements included elsewhere in this prospectus. In the opinion of management, the unaudited interim financial statements for Global and its predecessor included in this prospectus include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of that information for such unaudited interim periods. The financial information presented for the interim periods has been prepared in a manner consistent with the accounting policies of Global described elsewhere in this prospectus, and should be read in conjunction therewith. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period. The selected historical financial information should be read in conjunction with the sections entitled "Summary Unaudited Pro Forma Combined Statements of Operations Information", "Use of Proceeds", "Capitalization", "Unaudited Pro Forma Combined Statements of Operations", "Selected Consolidated Historical Financial and Operating Data of Global", "Management's Discussion and Analysis of Financial Condition and Results of Operations of Global" and the consolidated financial statements of Global and its predecessor and the related notes included elsewhere in this prospectus.

        The comparability of Global's selected historical financial and operating data has been affected by its reorganization. As we discuss more fully in "Note 1—Fresh-Start Reporting" of the notes to Global's audited consolidated financial statements as of and for the ten months ended December 31, 2006, Global's predecessor and certain of its affiliates, including ATA. Global's principal operating subsidiary, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in October 2004. Global emerged from bankruptcy protection on February 28, 2006 with a new capital structure. Global has applied fresh-start accounting as of March 1, 2006 for its consolidated financial statements. As a result of the fresh-start change in the basis of accounting for Global's underlying assets and liabilities, Global's results of operations and cash flows are separated as pre-March 1, 2006 (predecessor) and post-February 28, 2006 (successor). Global includes as a reporting period of its predecessor its pre-emergence two-month period ended February 28, 2006. The historical periods of our predecessor also do not reflect the impact of the fundamental changes in Global's assets and operations it effected through its reorganization. As a result of these changes, Global does not believe

50

that its business operations or its operating results for periods prior to March 1, 2006 are comparable to its current business operations or its operating results since that date.

		Predecessor															Global			Predecessor and Global			Global
		Year Ended December 31,												Two Months Ended Feb. 28,			Ten Months Ended Dec. 31,			Nine Months Ended September 30,			Nine Months Ended September 30,
		2002			2003			2004(1)			2005(1)			2006(1)(2)			2006(2)			2006(1)(2)(3)			2007
																				(unaudited)			(unaudited)
		(in thousands, except per share data)
Statement of Operations Data:
Operating revenues:
	Scheduled service	$	886,579		$	1,085,420		$	1,099,944		$	635,232		$	53,527		$	332,255		$	294,398		$	306,241
	Charter		309,242			366,207			358,870			408,714			58,753			288,256			276,979			372,186
	Other		81,549			66,906			73,757			48,355			2,771			16,551			15,069			15,072
Total operating revenues			1,277,370			1,518,533			1,532,571			1,092,301			115,051			637,062			586,446			693,499
Operating expenses:
	Fuel and oil		206,574			276,057			368,273			322,094			37,086			202,613			186,075			227,929
	Salaries, wages and benefits		355,201			399,622			422,430			281,791			36,066			150,929			145,441			153,885
	Aircraft rentals		190,148			226,559			242,602			148,614			16,181			69,439			64,840			82,146
	Flight costs		93,119			105,055			100,327			82,243			11,488			52,769			48,682			59,354
	Handling, landing and navigation fees		110,528			113,781			119,963			89,453			8,077			48,553			43,730			55,069
	Selling and marketing		107,288			110,527			111,041			66,050			7,624			36,452			34,674			38,187
	Aircraft maintenance, materials and repairs		52,254			45,741			74,992			44,801			3,103			29,051			24,306			44,324
	Depreciation and amortization		76,727			56,729			52,013			36,270			5,219			17,386			16,716			23,352
	U.S. Government grants		16,221			(37,156	)		—			—			—			—						—
	Asset impairments and aircraft retirements		66,787			5,288			7,887			403			—			13,476			—			4,844
	Goodwill impairment		6,893			—			—			—			—			—						—
	Other		155,667			138,789			133,206			101,973			10,197			41,045			42,455			40,653
Total operating expenses			1,437,407			1,440,992			1,632,734			1,173,692			135,041			661,713			606,919			729,743
Operating income (loss)			(160,037	)		77,541			(100,163	)		(81,391	)		(19,990	)		(24,651	)		(20,473	)		(36,244	)
Other income (expenses):
	Reorganization items, net		—			—			(638,479	)		(369,632	)		1,456,000			—			1,456,000			—
	Interest income		2,829			2,878			2,283			2,467			397			6,154			4,552			6,959
	Interest expense		(35,746	)		(56,324	)		(51,145	)		(6,235	)		(4,666	)		(18,231	)		(17,757	)		(23,333	)
	Loss on extinguishment of debt		—			—			(27,314	)		—			—			—			—			—
	Other		(1,260	)		(2,350	)		(911	)		(796	)		(233	)		266			(180	)		(820	)
Total other income (expenses)			(34,177	)		(55,796	)		(715,566	)		(374,196	)		1,451,498			(11,811	)		1,442,615			(17,194	)
Income (loss) before income taxes			(194,214	)		21,745			(815,729	)		(455,587	)		1,431,508			(36,462	)		1,422,142			(53,438	)
Income taxes (credits)			(24,950	)		1,311			—			—			—			—			—			488
Net income (loss)			(169,264	)		20,434			(815,729	)		(455,587	)		1,431,508			(36,462	)		1,422,142			(53,926	)
Preferred stock dividends			(5,720	)		(4,642	)		(1,125	)		—			—			—			—			(3,435	)
Income (loss) available to common stockholders(4)		$	(174,984	)	$	15,792		$	(816,854	)	$	(455,587	)	$	1,431,508		$	(36,462	)	$	1,422,142		$	(57,361	)
Basic earnings per common share:
	Weighted average shares outstanding																	10,752,688						10,755,358
	Net loss per share																$	(3.39	)				$	(5.33	)

51

Diluted earnings per common share:
	Average shares outstanding																	10,752,688						10,755,358
	Net loss per share																$	(3.39	)				$	(5.33	)
Other Financial Data:
Cash flows provided by (used in):
	Operating activities	$	(59,014	)	$	93,779		$	(26,200	)	$	(67,010	)	$	(19,577	)	$	(34,847	)	$	(57,682	)	$	(25,456	)
	Reorganization activities		—			—			66,194			18,309			(6,014	)		—			(6,014	)		—
	Investing activities		88,931			(98,694	)		531			(18,731	)		(10,406	)		8,689			973			(318,755	)
	Financing activities		(14,196	)		(34,601	)		(61,517	)		6,997			(6,777	)		51,924			48,750			379,968
Capital expenditures			(59,346	)		(42,534	)		(26,660	)		(22,884	)		(8,447	)		(27,570	)		(15,528	)		(28,335	)
Selected Consolidated Operating Statistics (Unaudited):
Revenue passengers carried (thousands)			10,046.7			11,226.9			11,653.4			5,868.1			449.0			2,519.8			2,274.4			2,387.9
Revenue passenger miles (millions)			12,384.2			14,358.7			14,678.5			8,709.7			816.2			4,799.2			4,302.9			4,664.7
Available seat miles (millions)			17,600.0			21,125.9			21,242.0			13,360.2			1,362.9			6,804.2			6,239.4			6,338.2
Passenger load factor			70.4	%		68.0	%		69.1	%		65.2	%		59.9	%		70.5	%		69.00	%		73.60	%

	Predecessor									Global		Global
	As of December 31,									As of December 31,		As of September 30,
	2003			2004			2005			2006		2006(2)		2007
												(unaudited)		(unaudited)
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	160,644		$	139,652		$	79,217		$	62,209	$	65,244	$	97,966
Property and equipment, net		253,482			182,759			101,267			89,947		83,551		143,678
Total assets		869,987			651,065			389,450			370,366		411,785		1,009,570
Total debt		494,696			41,000			54,600			146,662		147,190		357,102
Liabilities subject to compromise(5)		—			1,279,676			1,475,447			—		—		—
Mandatorily redeemable preferred stock(6)		56,330			—			—			—		—		—
Convertible redeemable preferred stock		32,907			—			—			—		—		158,644
Stockholders' equity (deficit)	$	(104,007	)	$	(920,556	)	$	(1,376,143	)	$	72,290	$	98,785	$	178,992

(1)

The consolidated financial statements of our predecessor have been prepared in accordance with American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code and on a going-concern basis, which contemplates continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business. Reorganization expenses identify those costs that are not in the ordinary course of business and include aircraft lease rejection charges, impairments and professional fees related to the predecessor's Chapter 11 filing. See Note 1 to our predecessor's audited consolidated financial statements for more information.

(2)

As of February 28, 2006, the effective date of the plan of reorganization, we adopted fresh-start accounting for our financial statements. See Note 1 to our audited consolidated financial

52

statements with respect to our fresh-start financial reporting. Because of the emergence from bankruptcy and adoption of fresh-start accounting, the historical financial data for Global is not comparable to that of our predecessor.

(3)

The statement of operations data for the nine month period ended September 30, 2006 was derived from Global's unaudited consolidated financial statements for the seven month period ended September 30, 2006 and from Global's predecessor's audited consolidated financial statements for the two months ended February 28, 2006.

(4)

Preferred stock dividends of $5.7 million, $4.6 million, $1.1 million were recorded in 2002, 2003 and 2004. No preferred stock dividends were recorded in 2005, for the ten months ended December 31, 2006 or for the nine months ended September 30, 2007. No common stock dividends were paid in any period presented.

(5)

Liabilities subject to compromise refers to liabilities to be accounted for under a plan of reorganization, including claims incurred prior to the petition date. These amounts result from known or potential claims to be resolved through the Chapter 11 process and such claims remain subject to future adjustments.

(6)

Mandatorily redeemable preferred stock of $50.0 million was outstanding as of December 31, 2003 and as of December 31, 2004 and December 31, 2005 was classified on the balance sheet as a liability subject to compromise.

53

SELECTED CONSOLIDATED HISTORICAL FINANCIAL AND OPERATING DATA OF WORLD AIR HOLDINGS

        The following tables set forth World Air Holdings' selected consolidated historical financial and operating data for the periods ended and at the dates indicated below. World Air Holdings' consolidated historical financial information for the fiscal years ended, and as of, 2004, 2005 and 2006 has been derived from World Air Holdings' audited annual financial statements included elsewhere in this prospectus. The consolidated historical financial information for the six month periods ended, and as of, June 30, 2006 and 2007 has been derived from World Air Holdings' unaudited interim financial statements included elsewhere in this prospectus, which, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of that information for such unaudited interim periods. The financial information presented for the interim periods has been prepared in a manner consistent with the accounting policies of World Air Holdings described elsewhere in this prospectus, and should be read in conjunction therewith. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year period.

        The consolidated historical financial information should be read in conjunction with the sections entitled "Summary Unaudited Pro Forma Combined Statements of Operations Information," "Use of proceeds," "Capitalization," "Unaudited Pro Forma Combined Statements of Operations", "Management's Discussion and Analysis of Financial Condition and Results of Operations of World Air Holdings" and the consolidated financial statements of World Air Holdings and the related notes included elsewhere in this prospectus.

	Year Ended December 31,											Six Months Ended June 30,
	2002		2003(1)		2004		2005(2)		2006(3)			2006			2007
												(unaudited)			(unaudited)
	(in thousands except per share data)
Statement of Operations Data:
Operating revenues	$	384,489	$	474,850	$	503,900	$	787,138	$	825,656		$	392,910		$	452,883
Operating expenses		377,367		446,422		463,617		730,522		826,436			396,412			445,871
Operating income (loss)		7,122		28,428		40,283		56,616		(780	)		(3,502	)		7,012
Earnings (loss) before income taxes		2,041		19,123		34,032		51,601		(2,647	)		(6,622	)		7,675
Income tax expense/(benefit)		—		3,802		8,445		19,973		(355	)		(2,685	)		3,256
Net earnings (loss)	$	2,041	$	15,321	$	25,587	$	31,628		(2,292	)		(3,937	)		4,419
Basic earnings (loss) per common share	$	0.18	$	1.37	$	1.95	$	1.40	($	0.10	)		(0.16	)		0.20
Basic weighted average common shares outstanding		11,073		11,224		13,095		22,588		23,643			23,986			22,541
Diluted earnings (loss) per common share	$	0.18	$	0.95	$	1.09	$	1.19	($	0.10	)	($	0.16	)	$	0.18
Diluted weighted average common shares outstanding		11,073		17,783		24,591		26,824		23,643			23,986			25,038

54

	As of December 31,									As of June 30,
	2003(1)			2004		2005(2)		2006(3)		2006		2007
										(unaudited)		(unaudited)
	(in thousands)
Balance Sheet Data:
Total assets	$	157,301		$	179,317	$	260,646	$	198,750	$	219,004	$	225,839
Notes payable and long-term debt including current maturities		76,534			49,879		24,000		—		—		—
Stockholders' equity (deficiency)	$	(8,030	)	$	30,398	$	86,838	$	67,131	$	84,514	$	73,286

(1)

Includes the impact of a $3.0 million loss on debt extinguishment.

(2)

On April 27, 2005, World Air Holdings completed the acquisition of North American for approximately $34.8 million in cash. The financial data includes the results of North American from April 28, 2005 to December 31, 2005.

(3)

Financial data include the full year results of North American for 2006.

55

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF GLOBAL

        As used in this "Management's Discussion and Analysis of Financial Condition and Results of Operations of Global", the terms "we", "us", "Global", and "the Company", refer to Global Aero Logistics Inc. and its subsidiaries on a consolidated basis as of September 30, 2007, unless the context requires otherwise. This section should be read in conjunction with the financial statements and related notes of Global, which are included elsewhere in this prospectus. For further information about Global, see "Prospectus Summary—Our company" and "Business."

Overview

        On August 14, 2007, Global acquired World Air Holdings and its wholly-owned subsidiaries World Airways, North American and World Risk Solutions, Ltd ("World Risk Solutions"). World Airways provides long-range passenger and cargo charter and wet-lease air transportation serving the U.S. Government, international freight and passenger airlines, tour operators, and customers requiring specialized aircraft services. North American provides passenger charter and wet-lease air transportation serving the U.S. Government, tour operators and other airlines. North American also operates international scheduled passenger service in selected markets. World Risk Solutions is a corporation whose business operation is to underwrite certain risk mainly associated with Global's aircraft. In addition, Global owns ATA which is a diversified passenger airline operating in two principal business lines: a low cost carrier providing scheduled service that leverages a codeshare agreement with Southwest Airlines ("Southwest"), and a charter operator that focuses primarily on serving the U.S. Government/military. We also continue to explore strategic opportunities for our scheduled service businesses—including network restructuring international expansion, business combinations and partial or complete divestitures. The results of operations for World Air Holdings and its subsidiaries from the date of acquisition, as well as ATA, have been consolidated into Global's financial statements as of and for the period ended September 30, 2007.

        The comparability of Global's historical financial data has been affected by ATA's reorganization. As discussed more fully in "Note 1—Fresh-Start Reporting" of the notes to Global's audited consolidated financial statements as of and for the ten months ended December 31, 2006, Global's predecessor and certain of its affiliates, including ATA, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in October 2004. Global emerged from bankruptcy protection on February 28, 2006 with a new capital structure. Global has applied fresh-start accounting as of March 1, 2006 for its consolidated financial statements. As a result of the fresh-start change in the basis of accounting for Global's underlying assets and liabilities, its results of operations and cash flows are separated as pre-March 1, 2006 (predecessor) and post-February 28, 2006. Global includes as a reporting period of its predecessor the pre-emergence two-month period ended February 28, 2006. The historical periods of Global's predecessor also do not reflect the impact of the changes in Global's assets and operations Global effected through its reorganization. As a result of these changes, we do not believe that Global's business operations or its operating results for periods prior to March 1, 2006 are comparable to Global's current business operations or Global's operating results since that date.

        The current environment in our business lines and the completion of the acquisition of World Air Holdings presents several opportunities as well as challenges for the Company. One of our key objectives is to take advantage of our fleet, especially with the acquisition of the World Air Holdings which provided us with 27 additional aircraft. Consistent with our strategy, we intend to use the additional aircraft to better optimize our fleet in order to more effectively meet the increasing demand in aircraft transportation for the markets we serve. In addition, as a result of the acquisition, we have the flexibility to shift aircraft among our business lines to manage future changes in the markets we serve more effectively. Managing and optimizing the additional aircraft, if effectively done, should result in greater revenues and reduced costs for our business. To the extent we are unable to optimize

56

our fleet, however, our results may suffer. In addition, we intend to diversify our revenue base by continuing the expansion of our military charter and ACMI cargo businesses, which is when a customer leases our aircraft, mainly in the cargo market, at a rate based on the aircraft, crew, maintenance, and insurance costs. Expanding our ACMI cargo business will involve increasing our freighter fleet to include aircraft suited for transpacific and intra-Asia routes, which are forecasted to be two of the fastest growing air cargo markets. Expanding our military charter cargo business involves providing the U.S. military contoured, wide-body cargo capacity to meet its specialized international cargo requirements on aircraft with payloads ranging between 65 and 90 tons. In this regard, on December 14, 2007, we entered into lease agreements on two Boeing 747-400 freighter aircraft. This expansion, however, may not succeed if our expectations regarding market demand are not correct, our management is unable to execute the expansion effectively, or for reasons beyond our control.

        We also continue to seek opportunities to streamline our operations and cost structure. As we execute the integration of the World Air Holdings acquisition, we plan to reduce our costs through rationalization of back office and other functions and leveraging the commonality in our newly combined fleet. We face the risk that we may not realize anticipated synergies or may otherwise face difficulties and costs in integrating the businesses of Global and World Air Holdings, which could have a material impact on our results of operations.

        Finally, we continue to face challenges in our scheduled service markets, where the competitive landscape is particularly difficult. For example, we recently announced that ATA discontinued routes from Chicago Midway to Washington Reagan (effective November 28, 2007), and will discontinue routes from Chicago Midway to New York—La Guardia (effective January 7, 2008) and from Chicago-Midway to Ontario/Honolulu (effective January 7, 2008) due to extreme financial pressure on our East Coast scheduled service segment. Due to a competitive pricing environment in these markets, ATA experienced low fares and yields, which negatively impacted its cash flow and results of operations, resulting in ATA management's decision to discontinue these routes. ATA currently has an agreement to enhance its current codeshare with Southwest to include near international markets in 2009. Our fleet has the long-range, over-water capability that Southwest's fleet does not provide, allowing us to fly Southwest's customers to Hawaii and near international destinations. Because of the numerous challenges in the scheduled service business, many of which are beyond our control, we may not succeed in achieving our plans.

57

Results of Operations

        The following tables set forth, for the periods indicated, selected statement of operations data of Global and its Predecessor.

		Predecessor									Global
		Year Ended December 31,						Ten Months Ended December 31,			Ten Months Ended December 31,
		2004			2005			2005			2006
		(in thousands)						(unaudited)
Operating revenues:
	Scheduled service	$	1,099,944		$	635,232		$	526,435		$	332,255
	Charter		358,870			408,714			333,081			288,256
	Other		73,757			48,355			37,006			16,551
Total operating revenues			1,532,571			1,092,301			896,522			637,062
Operating expenses:
	Fuel and oil		368,273			322,094			267,095			202,613
	Salaries, wages and benefits		422,430			281,791			219,777			150,929
	Aircraft rentals		242,602			148,614			116,927			69,439
	Flight costs		100,327			82,243			67,774			52,769
	Handling, landing and navigation fees		119,963			89,453			69,710			48,553
	Selling and marketing		111,041			66,050			53,611			36,452
	Aircraft maintenance, materials and repairs		74,992			44,801			34,576			29,051
	Depreciation and amortization		52,013			36,270			28,107			17,386
	Asset impairments and aircraft retirements		7,887			403			214			13,476
	Other		133,206			101,973			79,570			41,045
Total operating expenses			1,632,734			1,173,692			937,361			661,713
Operating income (loss)			(100,163	)		(81,391	)		(40,839	)		(24,651	)
Other income (expenses):
	Reorganization items, net		(638,479	)		(369,632	)		(363,811	)		—
	Interest income		2,283			2,467			2,177			6,154
	Interest expense		(51,145	)		(6,235	)		(5,162	)		(18,231	)
	Loss on extinguishment of debt		(27,314	)		—			—			—
	Other		(911	)		(796	)		(639	)		266
Other expense			(715,566	)		(374,196	)		(367,435	)		(11,811	)
Income (loss) before income taxes			(815,729	)		(455,587	)		(408,274	)		(36,462	)
Income taxes			—			—			—			—
Net income (loss)		$	(815,729	)	$	(455,587	)	$	(408,274	)	$	(36,462	)

58

        The following tables set forth, for the periods indicated, selected statement of operations data of Global and its Predecessor. The results of World Air Holdings and its wholly-owned subsidiaries, World Airways, North American and World Risk Solutions, have been included since the date of acquisition on August 14, 2007.

															Predecessor
			Three Months Ended September 30,
									Nine Months Ended September 30, 2007			Seven Months Ended September 30, 2006			Two Months Ended February 28, 2006
			2007			2006
			(in thousands) (unaudited)
Operating revenues
	Charter		$	211,676		$	102,041		$	372,186		$	218,226		$	58,753
	Scheduled service			134,023			107,645			306,241			240,871			53,527
	Other			7,134			5,169			15,072			12,298			2,771
		Total operating revenues		352,833			214,855			693,499			471,395			115,051
Operating expenses
	Fuel and oil			114,649			68,532			227,929			148,989			37,086
	Salaries, wages, and benefits			65,181			44,566			153,885			109,375			36,066
	Aircraft rentals			40,686			20,786			82,146			48,659			16,181
	Flight cost			30,494			20,293			59,354			37,194			11,488
	Handling, landing and navigation fees			29,536			16,427			55,069			35,653			8,077
	Aircraft maintenance, materials and repairs			21,697			11,279			44,324			21,203			3,103
	Selling and marketing			19,213			12,800			38,187			27,050			7,624
	Depreciation and amortization			11,579			5,350			23,352			11,497			5,219
	Asset impairment and aircraft retirements			1,195			—			4,844			—			—
	Other expenses			16,731			10,564			40,653			32,258			10,197
		Total operating expenses		350,961			210,597			729,743			471,878			135,041
Operating income (loss)				1,872			4,258			(36,244	)		(483	)		(19,990	)
Other income (expense)
	Interest income			2,933			1,790			6,959			4,155			397
	Interest expense			(11,196	)		(5,541	)		(23,333	)		(13,091	)		(4,666	)
	Other, net			(992	)		(19	)		(820	)		53			(233	)
	Reorganization items, net			—			—			—			—			1,456,000
		Total other income (expense)		(9,255	)		(3,770	)		(17,194	)		(8,883	)		1,451,498
Income (loss) before income tax expense				(7,383	)		488			(53,438	)		(9,366	)		1,431,508
Income tax expense				488			—			488			—			—
Net income (loss)			$	(7,871	)	$	488		$	(53,926	)	$	(9,366	)	$	1,431,508
Preferred stock dividend				(3,435	)		—			(3,435	)		—			—
Income (loss) available to common shareholders			$	(11,306	)	$	488		$	(57,361	)	$	(9,366	)	$	1,431,508

59

Three and Nine Months Ended September 30, 2007 Compared to Three and Nine Months Ended September 30, 2006

        The following table sets forth selected segment information for the periods indicated. In April 2006, Global began reporting results of operations for ATA's two business lines: military charter and scheduled service. For additional information regarding Global's operating business lines, see "Note 10—Segment Reporting" of Global's unaudited interim financial statements as of and for the period end September 30, 2007. Comparative data for the nine months ended September 30, 2006 is not available. The results of World Air Holdings and its wholly-owned subsidiaries, World Airways, North American and World Risk Solutions have been included since the date of acquisition on August 14, 2007.

		Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended September 30,
		2007			2007			2006
		(unaudited)			(unaudited)			(unaudited)
Operating revenue
	ATA Airlines—Scheduled Service	$	126,907		$	306,438		$	111,585
	ATA Airlines—Military Charter		87,148			248,283			103,270
	World Airways		89,050			89,050			—
	North American		50,204			50,204			—
	Other, including eliminations		(476	)		(476	)		—
Total operating revenue			352,833			693,499			214,855
Operating expense
	ATA Airlines—Scheduled Service		131,473			357,308		$	116,033
	ATA Airlines—Military Charter		87,762			240,456			94,564
	World Airways		86,370			86,370			—
	North American		45,162			45,162			—
	Other, including eliminations		194			447			—
Total operating expense			350,961			729,743			210,597
Operating income (loss)		$	1,872		$	(36,244	)	$	4,258

        The following table sets forth selected key metrics related to ATA, World Airways and North American's financial and statistical performance. The results of World Air Holdings, World Airways, and North American have been included since the date of acquisition on August 14, 2007.

		Three Months Ended September 30,
		2007			2006
ATA Airlines—Scheduled Service
	Passengers enplaned		804,129			693,046
	Revenue passenger miles ("RPMs") (000s)		1,425,910			1,104,772
	Available seat miles ("ASMs") (000s)		1,571,070			1,298,978
	Load factor (RPMs divided by ASMs)		90.76	%		85.05	%
	Operating revenue per ASMs (in cents)		7.80	¢		8.29	¢
	Number of aircraft in fleet, end of period		20			19
	Average daily aircraft utilization (block hours flown per day per aircraft)		11.33			10.73

60

ATA Airlines—Charter
	Block hours		6,500		7,827
	Operating revenue per block hour	$	13,407	$	13,194
	Number of aircraft in fleet, end of period		9		10
	Average daily aircraft utilization (block hours flown per day per aircraft)		7.57		8.30
World Airways
	Block hours		7,258		—
	Operating revenue per block hour	$	12,269	$	—
	Number of aircraft in fleet, end of period		17		—
	Average daily aircraft utilization (block hours flown per day per aircraft)		9.5		—
North American
	Block hours		4,434		—
	Operating revenue per block hour	$	11,323	$	—
	Number of aircraft in fleet, end of period		10		—
	Average daily aircraft utilization (block hours flown per day per aircraft)		9.8		—

		Nine Months Ended September 30,
		2007			2006
ATA Airlines—Scheduled Service
	Passengers enplaned		2,078,275			2,015,211
	Revenue passenger miles ("RPMs") (000s)		3,512,314			3,054,596
	Available seat miles ("ASMs") (000s)		4,052,988			3,817,871
	Load factor (RPMs divided by ASMs)		86.67	%		80.01	%
	Operating revenue per ASMs (in cents)		7.27	¢		7.71	¢
	Number of aircraft in fleet, end of period		19			19
	Average daily aircraft utilization (block hours flown per day per aircraft)		10.60			10.56
ATA Airlines—Charter
	Block hours		19,776			21,031
	Operating revenue per block hour	$	12,555		$	13,170
	Number of aircraft in fleet, end of period		10			10
	Average daily aircraft utilization (block hours flown per day per aircraft)		7.33			7.75
World Airways
	Block hours		7,258			—
	Operating revenue per block hour	$	12,269		$	—
	Number of aircraft in fleet, end of period		17			—
	Average daily aircraft utilization (block hours flown per day per aircraft)		9.5			—
North American
	Block hours		4,434			—
	Operating revenue per block hour	$	11,323		$	—
	Number of aircraft in fleet, end of period		10			—
	Average daily aircraft utilization (block hours flown per day per aircraft)		9.8			—

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Operating Revenues

        Total operating revenues for the three months ended September 30, 2007 increased 64.2% to $352.8 million, as compared to $214.9 million for the three months ended September 30, 2006; and total operating revenues for the nine months ended September 30, 2007 increased 18.3% to $693.5 million, as compared to $586.4 million for the nine months ended September 30, 2006.

        Military and Commercial Charter Revenues.    Military and commercial charter revenues for the three months ended September 30, 2007 increased $109.7 million, or 107.5%, to $211.7 million, as compared to $102.0 million for the three months ended September 30, 2006; and military and commercial charter revenues for the nine months ended September 30, 2007 increased $95.2 million, or 34.4%, to $372.2 million, as compared to $277.0 million in the nine months ended September 30, 2006. World Air Holdings accounted for $127.4 million of the increases for the three and nine months ended September 30, 2007, respectively. Collectively 10,579 block hours, or 90.5% of the block hours, operated by World Airways and North American are on military and commercial charters. ATA's military and commercial charter revenues decreased $17.7 million and $32.2 million for the three and nine months ended September 30, 2007, respectively, as compared to the same periods of 2006. These decreases were primarily the result of fewer block hours having been flown, due to a change in the mix of aircraft flying.

        Scheduled Service Revenues.    Scheduled service revenues for the three months ended September 30, 2007 increased $26.4 million, or 24.5%, to $134.0 million, as compared to $107.6 million in the three months ended September 30, 2006; and scheduled service revenues for the nine months ended September 30, 2007 increased $11.8 million, or 4.0%, to $306.2 million, as compared to $294.4 million in the nine months ended September 30, 2006. North American accounted for $11.4 million of the increases for the three and nine months ended September 30, 2007, respectively. ATA's scheduled service revenue increased $15.0 million and $0.4 million for the three and nine months ended September 30, 2007, respectively, as compared to the same periods of 2006. These increases were the result of increases in ATA's scheduled service load factor in both periods of 2007. This was partially offset by ATA experiencing lower yields in both periods of 2007, as compared to the same periods of 2006, due to a more competitive pricing environment in 2007 mainly in ATA's East Coast markets.

Operating Expenses

        Total operating expenses for the three months ended September 30, 2007 increased 66.7% to $351.0 million, as compared to $210.6 million for the three months ended September 30, 2006; and total operating expenses for the nine months ended September 30, 2007 increased 20.2% to $729.7 million, as compared to $606.9 million for the nine months ended September 30, 2006.

        Fuel and Oil.    Fuel and oil expenses for the three months ended September 30, 2007 increased $46.1 million, or 67.3%, to $114.6 million, as compared to $68.5 million for the three months ended September 30, 2006; and fuel and oil expense for the nine months ended September 30, 2007 increased $41.8 million, or 22.5%, to $227.9 million, as compared to $186.1 million for the nine months ended September 30, 2006. World Air Holdings accounted for $40.0 million of the increases for the three and nine months ended September 30, 2007, respectively.

        ATA's increases in fuel and oil expense for the three and nine months ended September 30, 2007, as compared to the same periods of 2006, were primarily due to an increase in fuel consumption driven by the change in the mix of aircraft flying, which resulted in an increase in fuel and oil expense of $5.5 million and $0.7 million, respectively. These increases were partially offset by a decrease in the average cost per gallon of jet fuel of 1.8% and 0.1% resulting in a decrease in fuel and oil expense of $1.3 million for the three months ended September 30, 2007 and $0.6 million for the nine months ended September 30, 2007.

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        Salaries, Wages and Benefits.    Salaries, wages and benefits expense includes the cost of salaries and wages paid to Global's employees, together with Global's cost of employee benefits and payroll-related local, state and federal taxes. Salaries, wages and benefits expense for the three months ended September 30, 2007 increased $20.6 million, or 46.2%, to $65.2 million, as compared to $44.6 million for the three months ended September 30, 2006; and salaries, wages and benefits expense for the nine months ended September 30, 2007 increased $8.5 million, or 5.8%, to $153.9 million, as compared to $145.4 million for the nine months ended September 30, 2006. World Air Holdings accounted for $21.8 million of the increases for the three and nine months ended September 30, 2007, respectively. ATA's salaries, wages and benefits decreased $1.2 million and $13.3 million in the three and nine months ended September 30, 2007, as compared to the same periods of 2006, due to the average number of employees decreasing 6.9% and 21.4%, respectively, partially offset by an increase in the average employee wage.

        Aircraft Rentals.    Aircraft rental expense for the three months ended September 30, 2007 increased $19.9 million, or 95.7%, to $40.7 million, as compared to $20.8 million for the three months ended September 30, 2006; and aircraft rental expense for the nine months ended September 30, 2007 increased $17.3 million, or 26.7%, to $82.1 million, as compared to $64.8 million for the nine months ended September 30, 2006. World Air Holdings accounted for $17.7 million of the increases for the three and nine months ended September 30, 2006, respectively. ATA's aircraft rental expense for the three months ended September 30, 2007 increased $2.2 million, as compared to the same period of 2006, mainly due to new lease agreements entered into for seven McDonnell Douglas DC-10-30 ("DC-10") aircraft in 2007. ATA's aircraft rental expense for the nine months ended September 30, 2007 decreased $0.4 million primarily due to ATA returning six aircraft to the lessors between January 1, 2006 and September 30, 2007, partially offset by the additional aircraft rental expense for the seven DC-10s.

        Flight Costs.    Flight costs are primarily the cost of air transportation, hotels and per diem incurred to position crewmembers away from their bases to operate flights throughout the world. Additionally, they include the onboard costs of meal and non-alcoholic beverage catering, the cost of alcoholic beverages and the cost of onboard entertainment programs, together with certain costs incurred for mishandled baggage and passengers inconvenienced due to flight delays or cancellations.

        Flight costs for the three months ended September 30, 2007 increased $10.2 million, or 50.2%, to $30.5 million, as compared to $20.3 million for the three months ended September 30, 2006; and flight costs for the nine months ended September 30, 2007 increased $10.7 million, or 22.0%, to $59.4 million, as compared to $48.7 million for the nine months ended September 30, 2006. World Air Holdings accounted for $12.3 million of the increases for the three and nine months ended September 30, 2007, respectively. ATA's flight costs decreased $2.1 million and $1.6 million for the three and nine months ended September 30, 2007, respectively, as compared to the same periods of 2006, primarily due to the decrease in military charter flying in 2007.

        Handling, Landing, and Navigation Fees.    Handling and landing fees include the costs incurred at airports to land and service Global's aircraft and to handle passenger check-in, security, cargo and baggage where Global elects to use a third-party contract service in lieu of its own employees. Where Global uses its own employees to perform ground handling functions, the resulting costs appear within salaries, wages and benefits expense. Air navigation fees are incurred when Global's aircraft fly through certain foreign space.

        Handling, landing, and navigation fees for the three months ended September 30, 2007 increased $13.1 million, or 79.9%, to $29.5 million, as compared to $16.4 million for three months ended September 30, 2006; and handling, landing and navigation fees for the nine months ended September 30, 2007 increased $11.4 million, or 26.1%, to $55.1 million, as compared to $43.7 million for the nine months ended September 30, 2006. World Air Holdings accounted for $10.7 million of the

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increases for the three and nine months ended September 30, 2007, respectively. ATA's handling, landing and navigation fees increased $2.4 million for the three months ended September 30, 2007, as compared to the same period of 2006, primarily due to increased system-wide flight activity (departures) and a change in the mix of flying including operating out of more costly airports. ATA's handling, landing, and navigation fees increased $0.7 million for the nine months ended September 30, 2007, as compared to the same period of 2006, due to the receipt of a landing credit of $2.1 million from an airport in early 2006, partially offset by a decrease in flight activity (departures) between periods.

        Aircraft Maintenance, Materials, and Repairs.    Aircraft maintenance, materials, and repairs expense includes the cost of expendable aircraft spare parts, repairs to repairable and rotable aircraft components, contract labor for maintenance activities and other non-capitalized direct costs related to fleet maintenance, including spare engine leases, parts loan and exchange fees and shipping costs. It also includes the costs incurred under hourly engine maintenance agreements Global has on certain of its aircraft fleets. These agreements provide for Global to pay monthly fees based on a specified rate per engine flight hour in exchange for major engine overhauls and maintenance.

        Aircraft maintenance, materials, and repairs expense for the three months ended September 30, 2007 increased $10.4 million, or 92.0%, to $21.7 million, as compared to $11.3 million for the three months ended September 30, 2006; and aircraft maintenance, materials, and repairs expense for the nine months ended September 30, 2007 increased $20.0 million, or 82.3%, to $44.3 million, as compared to $24.3 for the nine months ended September 30, 2006. World Air Holdings accounted for $11.1 million of the increases for the three and nine months ended September 30, 2007, respectively.

        Aircraft maintenance, materials, and repairs expense for ATA for the three months ended September 30, 2007, as compared to the same period of 2006, decreased $0.7 million. This decrease was mainly due to less contract labor due to changes in the mix of maintenance activities; and the removal of two Boeing 737-300 aircraft from revenue service in May 2007 and September 2007. Aircraft maintenance, materials, and repairs expense for ATA for the nine months ended September 30, 2007 increased $8.9 million, as compared to the same period of 2006, due to the outsourcing of maintenance inventory management beginning in mid-2006, the addition of DC-10 aircraft to ATA's fleet, and unscheduled maintenance work related to unexpected aircraft parts breakage or damage, which was required on ATA's fleet in the first half of 2007 but that was not required in the same periods of 2006. ATA is not able to predict the level of unscheduled maintenance work in future periods.

        Selling and Marketing.    Selling and marketing expenses are comprised primarily of commissions on scheduled service sales by travel agents and on certain military and commercial charter flights, credit card processing fess incurred when selling to customers using credit cards for payments, and advertising costs.

        Selling and marketing expenses for the three months ended September 30, 2007 increased $6.4 million, or 50.0%, to $19.2 million, as compared to $12.8 million for the three months ended September 30, 2006; and selling and marketing expenses for the nine months ended September 30, 2007 increased $3.5 million, or 10.1%, to $38.2 million, as compared to $34.7 million for the nine months ended September 30, 2006. World Air Holdings accounted for $7.5 million of the increases for the three and nine months ended September 30, 2007, respectively. ATA's selling and marketing expenses decreased $1.1 million and $4.0 million for the three and nine months ended September 30, 2007, respectively, as compared to the same periods of 2006, primarily due to fewer commissionable military charter flights. For the three months ended September 30, 2007, this decrease was partially offset by an increase in selling and marketing expenses related to the increase in scheduled service flying, as compared to the same period of 2006.

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        Depreciation and Amortization.    Depreciation reflects the periodic expensing of the recorded cost of owned airframe and engines, leasehold improvements, and rotable parts for all fleet types, together with our property and equipment. Amortization reflects the periodic expensing of the recorded value of Global's definite-lived intangible assets. Depreciation and amortization expense for the three months ended September 30, 2007 increased $6.2 million, or 114.8%, to $11.6 million, as compared to $5.4 million for the three months ended September 30, 2006; and depreciation and amortization expense for the nine months ended September 30, 2007 increased $6.7 million, or 40.1%, to $23.4 million, as compared to $16.7 million for the nine months ended September 30, 2006. World Air Holdings accounted for $4.6 million of the increases for the three and nine months ended September 30, 2007, respectively. ATA's depreciation and amortization expense increased $1.6 million and $2.1 million for the three and nine months ended 2007, respectively, as compared to the same periods of 2006, primarily due to engine and airframe overhauls, completed in late 2006 and the first nine months of 2007, which were and are being amortized over their useful lives.

        Asset Impairments and Aircraft Retirements.    In the first nine months of 2007, Global entered into agreements with two of its aircraft lessors to return its fleet of three Boeing 737-300 aircraft earlier than the termination dates set forth in the leases. One aircraft was removed from revenue service and returned in May 2007, one aircraft was removed from revenue service in September 2007 and returned in the fourth quarter of 2007, and the third aircraft was removed from revenue service and returned to the lessor in the fourth quarter of 2007. Global determined that it no longer needed these aircraft to support its scheduled service business. For the three and nine months ended September 30, 2007, the Company recorded $1.2 million and $4.8 million, respectively, to asset impairments and aircraft retirements expense related to the return of these aircraft.

        Other.    Other operating expenses primarily includes the cost of hull and liability insurance, the cost of general insurance policies such as worker's compensation insurance, facility and equipment rentals, technology related expense, external professional services and other items. Other operating expenses for the three months ended September 30, 2007 increased $6.1 million, or 57.5%, to $16.7 million, as compared to $10.6 million for the three months ended September 30, 2006; and other operating expenses for the nine months ended September 30, 2007 decreased $1.8 million, or 4.2%, to $40.7 million, as compared to $42.5 million for the nine months ended September 30, 2006. World Air Holdings accounted for a $6.0 million increase in other operating expenses for the three and nine months ended September 30, 2007, respectively. For the three and nine months ended September 30, 2007, as compared to the same periods of 2006, ATA's other operating expenses increased $0.1 million and decreased $7.8 million. In both periods of 2007, ATA experienced declining costs related to Global's restructuring and changes in flight activity. However, in the three months ended September 30, 2006, ATA recognized a one-time favorable adjustment of $1.5 million to its allowance for uncollectible accounts related to the collection of a significantly aged receivable. A similar adjustment was not recognized in the three months ended September 30, 2007.

        Reorganization Expense.    In accordance with SOP 90-7, Global's costs associated with the reorganization and restructuring of the business were reported separately as reorganization items in the consolidated statement of operations for the two months ended February 28, 2006.

        Global did not recognize reorganization expenses in the nine months ended September 30, 2007 or the seven months ended September 30, 2006, as Global had emerged from Chapter 11 bankruptcy. For

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the two months ended February 28, 2006, Global recognized the following reorganization expenses in the consolidated statement of operations:

	Two Months Ended February 28, 2006
Discharge of claims	$	(1,304,653	)
Revaluation of assets and liabilities		(178,895	)
Aircraft and engine lease rejection charges		10,522
Other agreement and lease rejection charges		3,364
Professional fees		11,046
Interest income		(387	)
Other		3,003
Total	$	(1,456,000	)

        The discharge of claims primarily relates to those unsecured claims arising during the bankruptcy process. In accordance with the Plan (as defined below), the Company discharged its obligations to unsecured creditors in exchange for cash or shares of Class A Common Stock of New ATA Holdings.

        The revaluation of assets and liabilities relates to the revaluing of Global's assets and liabilities at their estimated fair values or present values of amounts to be paid.

        The aircraft and engine lease rejection charges are non-cash charges comprised of Global's estimate of claims resulting from the rejection or return of the aircraft and engines as part of the bankruptcy process. They also include the write-off of assets and liabilities related to aircraft and engine leases that Global has rejected and returned to the lessor. The other agreement and lease rejection charges are non-cash charges that are comprised of Global's estimate of claims resulting from the rejection of non-aircraft agreements and leases.

        Interest Expense.    Interest expense for the three months ended September 30, 2007 increased $5.7 million, or 103.6%, to $11.2 million, as compared to $5.5 million for the three months ended September 30, 2006; and interest expense for the nine months ended September 30, 2007 increased $5.5 million, or 30.9%, to $23.3 million, as compared to $17.8 million for the nine months ended September 30, 2006. The increases were attributable to the recognition of interest expense related to a $28.0 million loan agreement entered into on January 16, 2007. In addition, 2007 includes interest expense related to a $340.0 million loan agreement entered into on August 14, 2007 in connection with the acquisition of World Air Holdings, partially offset by the repayment of $130.6 million in other indebtedness. See "Liquidity and Capital Resources—Financing Transactions" below for further information.

        Income Taxes.    Global did not record federal income tax expense or benefit for the three or nine month periods ended September 30, 2007 and 2006 due to its sustained losses. Global recorded $0.5 million of state income taxes in the three and nine month periods ended September 30, 2007. Global did not record state income tax expense in either period of 2006.

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Ten Months Ended December 31, 2006 Compared to Ten Months Ended December 31, 2005

Results of Operations in Cents Per ASM

        The following tables set forth, for the periods indicated, Global's operating revenues and expenses expressed as cents per ASM.

		Cents per ASM Ten Months Ended December 31
		2005		2006
Consolidated operating revenues		8.52		9.36
Consolidated operating expenses:
	Fuel and oil	2.54		2.98
	Salaries, wages and benefits	2.09		2.22
	Aircraft rentals	1.11		1.02
	Flight costs	0.64		0.78
	Handling, landing and navigation fees	0.66		0.71
	Aircraft maintenance, materials and repairs	0.33		0.43
	Selling and marketing	0.51		0.54
	Depreciation and amortization	0.27		0.26
	Aircraft impairments and retirements	0.00		0.20
	Other	0.76		0.59
Total consolidated operating expenses		8.91		9.73
Consolidated operating loss		(0.39	)	(0.37	)
ASMs (000s)		10,520,439		6,804,230

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Key Operating and Financial Data

        The following table sets forth certain key operating and financial data for Global for the periods indicated.

		Ten Months Ended December 31,
											Change (%)
		2005			2006			Change
Scheduled Service:
	Departures		37,428			17,085			(20,343	)	(54.35	)
	Block Hours		102,084			61,171			(40,913	)	(40.08	)
	RPMs (000s)(a)		5,545,854			3,477,503			(2,068,351	)	(37.30	)
	ASMs (000s)(b)		7,500,735			4,265,534			(3,235,201	)	(43.13	)
	Load Factor(c)		73.94			81.53			7.59		10.27
	Passengers Enplaned(d)		4,442,602			2,226,307			(2,216,295	)	(49.89	)
	Revenue (000s)	$	526,435		$	332,255		$	(194,180	)	(36.89	)
	RASM in cents(e)		7.02			7.79			0.77		10.97
	Yield in cents(f)		9.49			9.55			0.06		0.63
	Revenue per passenger enplaned	$	118.50		$	149.24		$	30.74		25.94
Military/Commercial Charter:
	Departures		5,574			5,202			(372	)	(6.67	)
	Block Hours		25,748			22,384			(3,364	)	(13.07	)
	ASMs (000s)(b)		2,983,894			2,503,921			(479,973	)	(16.09	)
	Revenue (000s)	$	333,081		$	288,256		$	(44,825	)	(13.46	)
	RASM in cents(e)		11.16			11.51			0.35		3.14
	RASM excluding fuel escalation(g)		10.82			11.33			0.51		4.71
Percentage of Consolidated Revenues:
	Scheduled Service		58.7	%		52.2	%		(6.5	)
	Military/Commercial Charter		37.2	%		45.3	%		8.0

(a)

Revenue passenger miles (RPMs) represent the number of seats occupied by revenue passengers multiplied by the number of miles those seats are flown. RPMs are an industry measure of the total seat capacity actually sold by Global.

(b)

Available seat miles (ASMs) represent the number of seats available for sale to revenue passengers multiplied by the number of miles those seats are flown. ASMs are an industry measure of the total seat capacity offered for sale by Global, whether sold or not.

(c)

Passenger load factor is the percentage derived by dividing RPMs by ASMs.

(d)

Passengers enplaned are the number of revenue passengers who occupied seats on Global's flights.

(e)

Revenue per ASM (expressed in cents), or RASM, is total operating revenue divided by total ASMs. RASM measures Global's unit revenue using total available seat capacity.

(f)

Revenue per RPM (expressed in cents), or yield, is total operating revenue divided by total RPMs.

(g)

The military assumes an average fuel price for each contract year. If actual fuel prices differ from the contract rate, revenues are adjusted up or down to neutralize the impact on Global. Certain commercial charter contracts also provide for reimbursement to Global for certain fuel costs.

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Operating Revenues

        Total operating revenues for the ten months ended December 31, 2006 decreased 28.9% to $637.1 million, as compared to $896.5 million for the ten months ended December 31, 2005.

        Scheduled Service Revenues.    Scheduled service revenues for the ten months ended December 31, 2006 decreased 36.9% to $332.3 million, as compared to $526.4 million for the ten months ended December 31, 2005. The decrease in revenues was mainly due to Global returning 26 jet aircraft, or 49% of its total aircraft fleet, to lessors between March 1, 2005 and December 31, 2006 as part of its reorganization.

        Military and Commercial Charter Revenues.    Military and commercial charter revenues for the ten months ended December 31, 2006 decreased 13.4% to $288.3 million, as compared to $333.1 million for the ten months ended December 31, 2005. The decrease in revenues was mainly the result of Global's continuing retirement of Lockheed L-1011 aircraft, partially offset by Global's utilization of additional narrow-body aircraft on military and commercial charters.

Operating Expenses

        Fuel and Oil.    Fuel and oil expense for the ten months ended December 31, 2006 decreased 24.1% to $202.6 million, as compared to $267.1 million for the ten months ended December 31, 2005. For the ten months ended December 31, 2006, system-wide block hours decreased by 34.5% as compared to the ten months ended December 31, 2005, resulting in a decrease in fuel and oil expense of approximately $94.1 million between these periods. This decrease was partially offset by an increase in the average cost per gallon of jet fuel. For the ten months ended December 31, 2006, the average cost per gallon of jet fuel consumed increased by 16.3% compared to the ten months ended December 31, 2005, resulting in an increase in fuel and oil expense of approximately $28.3 million between periods. Global also benefited from fuel reimbursement clauses and guarantees in its military/government and commercial charter contracts, as well as bulk scheduled service, but the benefit of these price guarantees was accounted for as revenue when realized during these periods.

        Salaries, Wages and Benefits.    Salaries, wages and benefits expense for the ten months ended December 31, 2006 decreased 31.3% to $150.9 million, as compared to $219.8 million for the ten months ended December 31, 2005. This decrease was mainly due to Global's average number of employees decreasing 40.0% between periods, partially offset by an increase in benefits expenses per employee between these periods.

        Aircraft Rentals.    Aircraft rentals expense for the ten months ended December 31, 2006 decreased 40.6% to $69.4 million, as compared to $116.9 million for the ten months ended December 31, 2005. This decrease was mainly due to Global returning 26 jet aircraft to lessors between March 1, 2005 and December 31, 2006 as part of its reorganization.

        Flight Costs.    Flight costs for the ten months ended December 31, 2006 decreased 22.1% to $52.8 million, as compared to $67.8 million for the ten months ended December 31, 2005. This decrease was due primarily to the decrease in system-wide jet departures of 45.7% between periods, partially offset by an increase in crewmember hotel and positioning costs primarily associated with military flying.

        Handling, Landing and Navigation Fees.    Handling, landing and navigation fees for the ten months ended December 31, 2006 decreased by 30.3% to $48.6 million, as compared to $69.7 million for the ten months ended December 31, 2005. This decrease was due primarily to a 45.7% decrease in system-wide jet departures between periods, partially offset by an increase in costs per departure for handling and landing between periods due mainly to less frequent flying to scheduled service stations.

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        Selling and Marketing.    Selling and marketing expenses for the ten months ended December 31, 2006 decreased 31.9% to $36.5 million, as compared to $53.6 million for the ten months ended December 31, 2005. This decrease was primarily due to the decline in scheduled service activity between these periods.

        Aircraft Maintenance, Materials and Repairs.    Aircraft maintenance, materials and repairs expense for the ten months ended December 31, 2006 decreased 15.9% to $29.1 million, as compared to $34.6 million for the ten months ended December 31, 2005. This decrease was due to the rejection by Global of hourly engine maintenance agreements related to its Boeing 757-200 and Boeing 757-300 aircraft in the first half of 2005. This decrease was partially offset by outsourcing of maintenance activities and unscheduled maintenance work required on the Lockheed L-1011 fleet in 2006 that was not required in 2005.

        Depreciation and Amortization.    Depreciation and amortization expense for the ten months ended December 31, 2006 decreased 38.1% to $17.4 million, as compared to $28.1 million for the ten months ended December 31, 2005, due mainly to the reduction of certain aircraft parts and the revaluation of assets as part of Global's application of fresh-start accounting under American Institute of Certified Public Accountants Statement of Position No. 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, or SOP 90-7, in 2006.

        Asset Impairments and Aircraft Retirement.    In November 2006, Global executed an agreement to purchase seven McDonnell Douglas DC-10-30 wide-body aircraft from a third party, along with associated engines and two spare airframes. The DC-10-30s will go into service throughout 2007 and Global expects to hold the Lockheed L-1011 fleet as operational spares while transitioning to the DC-10-30 fleet. Beyond the fourth quarter of 2007, Global has no revenue commitments for use of Lockheed L-1011 time. In accordance with Financial Accounting Standards Board, or FASB, Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, or FAS 144, Global determined that the estimated future undiscounted cash flows expected to be generated by the Lockheed L-1011 fleet were less than the current net book value of these aircraft and the related rotable parts and inventory. In 2006, Global recorded an asset impairment charge of $13.5 million to reduce the carrying amount of the Lockheed L-1011 aircraft and related assets to their estimated fair market value. In 2005, Global recorded an asset charge of $0.2 million related to the remaining net book value of its Boeing 727-200 aircraft.

        Other Operating Expense.    Other operating expense for the ten months ended December 31, 2006 decreased 48.5% to $41.0 million, as compared to $79.6 million for the ten months ended December 31, 2005. This decrease was attributable mainly to declining costs related to Global's reduction in fleet size and Global exiting leased space in certain airport locations.

        Reorganization Expense.    In accordance with SOP 90-7, Global's revenues, expenses (including professional fees), realized gains and losses and provision for losses that can be directly associated with the reorganization and restructuring of the business were reported separately as reorganization items in the consolidated statement of operations for 2005.

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        Global did not recognize reorganization expenses for the ten months ended December 31, 2006 as Global had emerged from Chapter 11 bankruptcy. For the ten months ended December 31, 2005, Global recognized the following reorganization expenses in the consolidated statement of operations:

		Ten Months Ended December 31, 2005
		(in thousands)
Aircraft and engine lease rejection charges		$	138,180
Other agreement and lease rejection charges			39,240
ALPA claim			128,850
Impairment of assets held for sale			10,799
Aircraft impairment			18,347
Professional fees			23,761
Interest income			(2,107	)
Goodwill impairment			—
Other			6,741
	Total	$	363,811

        The aircraft and engine lease rejection charges are non-cash charges comprised of Global's estimate of claims resulting from the rejection or return of the aircraft and engines as part of the bankruptcy process. They also include Global's write-off of assets and liabilities related to aircraft and engine leases that Global has rejected and returned to the lessor. The other agreement and lease rejection charges are non-cash charges that are comprised of Global's estimate of claims resulting from the rejection of non-aircraft agreements and leases.

        The ALPA claim includes an unsecured pre-petition claim against Global by the Air Line Pilots Association, or ALPA, for the benefit of its members in the total amount of $128.9 million. On September 28, 2005, the cockpit crewmembers voted to ratify a new collective bargaining agreement effective October 1, 2005, which included, among other things, wage and benefit concessions and the pre-petition claim. The Bankruptcy Court approved the claim on October 12, 2005.

        The impairment of assets held for sale is a non-cash charge related to the discontinuance of the operations of C8 Airlines, Inc. (f/k/a Chicago Express Airlines, Inc.), or C8, and the sale of certain related assets. The aircraft impairment charge is related to repairable and rotable parts related to Global's Boeing 757-200, Boeing 757-300 and Boeing 737-800 fleets. Global conducted an impairment review on these parts in 2005 based on impairment indicators under FAS 144.

        Interest Expense.    Interest expense for the ten months ended December 31, 2006 increased 250% to $18.2 million, as compared to $5.2 million for the ten months ended December 31, 2005. In accordance with SOP 90-7, following its Chapter 11 filing, Global did not record interest expense with respect to pre-petition unsecured debt or secured debt in which the collateral value was less than the principal amount of the debt in 2005. Upon emergence from bankruptcy on February 28, 2006, Global began recording interest expense on its post-emergence outstanding debt.

        Income Taxes.    Global did not record any income tax expense or benefit for the ten months ended December 31, 2006 applicable to its pre-tax loss of $36.5 million for that period, nor did it record any income tax expense or benefit for the ten months ended December 31, 2005 applicable to its pre-tax loss of $408.3 million for that period. Global has recorded a full valuation allowance against its net deferred tax asset.

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Fiscal Year Ended December 31, 2005 Compared to Fiscal Year Ended December 31, 2004

Results of Operations in Cents Per ASM

        The following table sets forth, for the periods indicated, operating revenues and expenses expressed as cents per available seat mile.

		Cents per ASM Fiscal Year Ended December 31,
		2004		2005
Consolidated operating revenues		7.21		8.18
Consolidated operating expenses:
	Fuel and oil	1.73		2.41
	Salaries, wages and benefits	1.99		2.11
	Aircraft rentals	1.14		1.11
	Flight costs	0.47		0.62
	Handling, landing and navigation fees	0.56		0.67
	Aircraft maintenance, materials and repairs	0.35		0.34
	Selling and marketing	0.52		0.49
	Depreciation and amortization	0.24		0.27
	Asset impairments and aircraft retirements	0.04		0.00
	Other	0.64		0.76
Total consolidated operating expenses		7.68		8.78
Consolidated operating loss		(0.47	)	(0.60	)
ASMs (000s)		21,242,000		13,360,194

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Key Operating and Financial Data

        The following table sets forth, for the periods indicated, certain key operating and financial data.

		Fiscal Year Ended December 31,
											Change (%)
		2004			2005			Change
Scheduled Service:
	Departures		130,338			51,693			(78,645	)	(60.34	)
	Block Hours		276,287			134,701			(141,586	)	(51.25	)
	RPMs (000s)(a)		12,728,760			6,783,054			(5,945,706	)	(46.71	)
	ASMs (000s)(b)		17,450,098			9,610,306			(7,839,792	)	(44.93	)
	Load Factor(c)		72.94			70.58			(2.36	)	(3.24	)
	Passengers Enplaned(d)		11,190,961			5,493,998			(5,696,963	)	(50.91	)
	Revenue (000s)	$	1,099,944		$	635,232		$	(464,712	)	(42.25	)
	RASM in cents(e)		6.30			6.61			0.31		4.92
	Yield in cents(f)		8.64			9.36			0.72		8.33
	Revenue per passenger enplaned	$	98.29		$	115.62		$	17.33		17.63
Military/Commercial Charter:
	Departures		7,366			7,015			(351	)	(4.77	)
	Block Hours		32,520			32,460			(60	)	(0.18	)
	ASMs (000s)(b)		3,755,547			3,711,171			(44,376	)	(1.18	)
	Revenue (000s)	$	358,870		$	408,714		$	49,844		13.89
	RASM in cents(e)		9.56			11.01			1.45		15.17
	RASM excluding fuel escalation(g)		9.16			10.74			1.58		17.25
Percentage of Consolidated Revenues:
	Scheduled Service		71.8	%		58.2	%		(13.6	)
	Military/Commercial Charter		23.4	%		37.4	%		14.0

(a)

Revenue passenger miles (RPMs) represent the number of seats occupied by revenue passengers multiplied by the number of miles those seats are flown. RPMs are an industry measure of the total seat capacity actually sold by Global.

(b)

Available seat miles (ASMs) represent the number of seats available for sale to revenue passengers multiplied by the number of miles those seats are flown. ASMs are an industry measure of the total seat capacity offered for sale by Global, whether sold or not.

(c)

Passenger load factor is the percentage derived by dividing RPMs by ASMs.

(d)

Passengers enplaned are the number of revenue passengers who occupied seats on Global's flights.

(e)

Revenue per ASM (expressed in cents), or RASM, is total operating revenue divided by total ASMs. RASM measures Global's unit revenue using total available seat capacity.

(f)

Revenue per RPM (expressed in cents), or yield, is total operating revenue divided by total RPMs.

(g)

The military assumes an average fuel price for each contract year. If actual fuel prices differ from the contract rate, revenues are adjusted up or down to neutralize the impact on Global. Certain commercial charter contracts also provide for reimbursement to Global for certain fuel costs.

Operating Revenues

        Global's total operating revenues for the year ended December 31, 2005 decreased 28.8% to $1.092 billion, as compared to $1.533 billion for the year ended December 31, 2004.

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        Scheduled Service Revenues.    Scheduled service revenues for the year ended December 31, 2005 decreased 42.3% to $635.2 million, as compared to $1.1 billion for the year ended December 31, 2004, consistent with the decline in ASMs. During 2005, Global returned 33 jet aircraft to lessors as part of its reorganization under Chapter 11. Approximately 51.1% of Global's scheduled service capacity was generated by flights either originating or terminating at Chicago-Midway in 2005, as compared to 64.8% in 2004. The Hawaiian market generated approximately 31.1% of scheduled service capacity in 2005, as compared to 14.9% in 2004. Another 13.4% of scheduled service capacity was generated in the Indianapolis market in 2005, as compared to 14.7% in 2004. On January 9, 2006, Global suspended scheduled service to and from Indianapolis.

        Military and Commercial Charter Revenues.    Military and commercial charter revenues for the year ended December 31, 2005 increased 13.9% to $408.7 million, as compared to $358.9 million for the year ended December 31, 2004. Military charter revenues increased due to increased demand and a change in the mix of aircraft flying as narrow body aircraft, which result in a higher yield, continued to replace retired wide-body aircraft. Offsetting this increase was a less significant decrease in commercial charter revenues due primarily to the retirement of certain Lockheed L-1011 aircraft that Global traditionally used in commercial charter flying.

Operating Expenses

        Fuel and Oil.    Fuel and oil expense for the year ended December 31, 2005 decreased 12.5% to $322.1 million in 2005, as compared to $368.3 million for the year ended December 31, 2004. During 2005, system-wide block hours decreased by 45.8% compared to 2004, resulting in a decrease in fuel and oil expense of approximately $136.2 million between periods. This decrease was partially offset by an increase in the average cost per gallon of jet fuel. During 2005, the average cost per gallon of jet fuel consumed increased by 37.8% compared to 2004, resulting in an increase in fuel and oil expense of approximately $91.4 million between periods. Global also benefited from fuel reimbursement clauses and guarantees in its military/government and commercial charter contracts, as well as bulk scheduled service, which were recorded as revenue.

        Salaries, Wages and Benefits.    Salaries, wages and benefits expense for the year ended December 31, 2005 decreased 33.3% to $281.8 million, as compared to $422.4 million for the year ended December 31, 2004, consistent with the average number of Global's full-time equivalent employees decreasing by approximately 35.4% between periods. On September 28, 2005, the cockpit crewmembers, who are represented by ALPA, voted to ratify a new three-year collective bargaining agreement that became effective October 1, 2005 and amendable on September 30, 2008. Under the new agreement, the cockpit crewmembers agreed to an 18% reduction in wages until January 1, 2007, modifications to the Cockpit Crewmember Money Purchase Plan and conversion to a new health insurance plan. The new agreement also provides the cockpit crewmembers with additional future wage compensation and incentives, as well as stock options representing 4% of Global's common stock.

        In October 2004, Global and its cabin crewmembers who are represented by the Association of Flight Attendants, or AFA, executed an amendment to the AFA agreement. Under the amended AFA agreement, the cabin crewmembers agreed to reduce their base hourly pay rate by 10% for the period from October 15, 2004 through October 15, 2006.

        Aircraft Rentals.    Aircraft rentals expense for the year ended December 31, 2005 decreased 38.7% to $148.6 million, as compared to $242.6 million for the year ended December 31, 2004. This decrease was partially attributable to the renegotiation of aircraft lease rates related to Boeing 757-300 and Boeing 757-200 aircraft after Global filed for bankruptcy protection. In addition, during 2005, Global returned 33 jet aircraft to lessors as part of its reorganization.

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        Flight Costs.    Flight costs for the year ended December 31, 2005 decreased 18.0% to $82.2 million, as compared to $100.3 million for the year ended December 31, 2004. This decrease was mainly attributable to the decrease in scheduled service activity between periods, partially offset by an increase in military/government activity during 2005. Military flying requires more crew positioning costs and passengers on these flights require a more expensive catering product.

        Handling, Landing and Navigation Fees.    Handling, landing and navigation fees for the year ended December 31, 2005 decreased by 25.5% to $89.4 million, as compared to $120.0 million for the year ended December 31, 2004. This decrease was due primarily to a 38.1% decrease in system-wide jet departures between periods, partially offset by an increase in costs per departure for handling and landing between periods, mainly due to less frequent flying to scheduled service stations.

        Selling and Marketing.    Selling and marketing expenses for the year ended December 31, 2005 decreased 40.5% to $66.1 million, as compared to $111.0 million for the year ended December 31, 2004. This decrease was primarily due to the decline in scheduled service activity between periods.

        Aircraft Maintenance, Materials and Repairs.    Aircraft maintenance, materials and repairs expense for the year ended December 31, 2005 decreased 40.3% to $44.8 million, as compared to $75.0 million for the year ended December 31, 2004. This decrease was due primarily to the rejection by Global of hourly engine maintenance agreements related to its Boeing 757-200 and Boeing 757-300 aircraft in the first half of 2005. This decrease was also due to Global having a smaller aircraft fleet in 2005 as compared to 2004.

        Depreciation and Amortization.    Depreciation and amortization expense for the year ended December 31, 2005 decreased 30.2% to $36.3 million, as compared to $52.0 million for the year ended December 31, 2004. In the fourth quarter of 2004, Global recorded a significant impairment charge against its L1011-500 fleet. As a result, the fleet's depreciable value in 2005 was considerably less than its depreciable value in 2004. At the same time, the depreciable life of the fleet was shortened to reflect the most current planned fleet retirement schedule. In addition, depreciation expense in 2005 decreased as compared to 2004 as assets associated with furniture and fixtures, computer hardware and software, equipment and buildings became fully depreciated.

        Asset Impairments and Aircraft Retirements.    Global began performing impairment reviews on its 727-200 fleet in 2000 and the fleet became impaired in 2001, subsequent to the terrorist attacks of September 11. Global continues to monitor current fair market values of previously impaired assets. In 2004, Global recorded an asset impairment charge of $7.9 million against its investment in BATA Leasing LLC, or BATA, a joint venture with The Boeing Company that leases 727-200 aircraft as freighters to third parties.

        Other Operating Expense.    Other operating expense for the year ended December 31, 2005 decreased 23.4% to $102.0 million, as compared to $133.2 million for the year ended December 31, 2004. This decrease was primarily attributable to exiting or reducing lease space in certain airport locations, the reduction of fleet size and the reduction of the workforce as part of Global's restructuring.

        Reorganization Expenses.    In accordance with SOP 90-7, Global's revenues, expenses (including professional fees), realized gains and losses and provision for losses that can be directly associated with the reorganization and restructuring of the business are reported separately as reorganization items in the consolidated statement of operations.

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        For the years ended December 31, 2005 and December 31, 2004, Global recognized the following reorganization expenses in the consolidated statement of operations:

		Fiscal Year Ended December 31,
		2004			2005
		(in thousands)
Aircraft lease rejection charges		$	568,317		$	140,969
Other agreement and lease rejection charges			—			39,240
ALPA claim			—			128,850
Impairment of assets held for sale			—			10,799
Aircraft and related parts impairment charges			44,499			18,347
Professional fees			8,747			27,895
Interest income			(275	)		(2,532	)
Goodwill impairment			6,399			4,576
Other			10,792			1,488
	Total	$	638,479		$	369,632

        The aircraft and engine lease rejection charges are non-cash charges comprised of Global's estimate of claims resulting from the rejection or return of the aircraft and engines as part of the bankruptcy process. They also include the write-off of assets and liabilities related to aircraft and engine leases that Global has rejected, committed to return dates with the lessor or intended to reject as of December 31, 2005. The other agreement and lease rejection charges are non-cash charges that are comprised of Global's estimate of claims resulting from the rejection of non-aircraft agreements and leases.

        The ALPA claim includes an unsecured pre-petition claim against Global by ALPA for the benefit of its members in the total amount of $128.9 million. On September 28, 2005, the cockpit crewmembers voted to ratify a new collective bargaining agreement effective October 1, 2005, which included, among other things, wage and benefit concessions and the pre-petition claim. The Bankruptcy Court approved the claim on October 12, 2005.

        The impairment of assets held for sale is a non-cash charge related to the discontinuance of C8 operations and the sale of certain related assets.

        Interest Expense.    Interest expense for the year ended December 31, 2005 decreased 87.9% to $6.2 million, as compared to $51.1 million for the year ended December 31, 2004. In accordance with SOP 90-7, following its Chapter 11 filing, Global did not record interest expense with respect to pre-petition unsecured debt or secured debt in which the collateral value was less than the principal amount of the debt.

        Loss on Extinguishment of Debt.    On January 30, 2004, Global completed exchange offers and issued Senior Notes due 2009 ("2009 Notes") and cash consideration for certain of its $175.0 million 10¹/2% Senior Notes due August 2004 ("2004 Notes") and issued Senior Notes due 2010 ("2010 Notes") and cash consideration for certain of its $125.0 million 9⁵/8% Senior Notes due December 2005 ("2005 Notes"). Global issued $163.1 million in aggregate principal amount of 2009 Notes and delivered $7.8 million in cash in exchange for $155.3 million in aggregate principal amount of 2004 Notes tendered. Global also issued $110.2 million in aggregate principal amount of 2010 Notes and delivered $5.2 million in cash in exchange for $105.0 million in aggregate principal of 2005 Notes tendered. As a result of these transactions, Global recorded a non-operating loss on extinguishment of debt of $27.3 million in the first quarter of 2004 in accordance with FASB Emerging Issues Task Force Issue

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No. 96-19, Debtor's Accounting for Modification of Exchange of Debt Terms. The loss mainly related to the accounting for the $13.0 million cash consideration paid at the closing of the exchange offers and the $13.0 million of incremental notes issued during the exchange offers.

        Income Taxes.    Global did not record any income tax expense or benefit for the year ended December 31, 2005 applicable to its pre-tax loss of $455.6 million for that period, nor did it record any income tax expense or benefit for the year ended December 31, 2004 applicable to its pre-tax loss of $815.7 million for that period. Global has recorded a full valuation allowance against its net deferred tax asset.

Liquidity and Capital Resources

        Predecessor Bankruptcy.    In the fourth quarter of 2004, ATA Holdings Corp. ("Holdings") and seven of its subsidiaries, including ATA, C8 and Ambassadair Travel Club, Inc. ("Ambassadair"), filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Indiana.

        Holdings, ATA, American Trans Air ExecuJet, Inc. ("ExecuJet"), ATA Cargo, Inc. ("ATA Cargo") and ATA Leisure Corp. ("Leisure") received an order approving the Amended Joint Chapter 11 Plan for the Reorganizing Debtors as immaterially modified (the "Plan") on January 31, 2006. The Plan of reorganization became effective on February 28, 2006. Holdings did not reorganize and, prior to February 28, 2006, a new holding company, Global (f/k/a New ATA Holdings Inc.), was formed. ATA Cargo and Leisure were merged into Global prior to February 28, 2006. Holdings dissolved in mid-2006. The Chapter 11 cases of Ambassadair, Amber Travel, Inc. and C8 continue separately.

        The Plan of reorganization provided for the full payment pursuant to the Bankruptcy Code of all allowed administrative and priority claims, and provided for the restructuring of the loan agreement with, and the allowed secured loan indebtedness claim of, the Air Transportation Stabilization Board (or the ATSB) and other lenders. Holders of general unsecured claims of $1.0 million or less were approved to be paid a pro rata share, based on 1.0% recovery, up to a maximum total payout of $1.5 million. Holders of general unsecured claims over $1.0 million recovered an estimated 0.7% of their respective claims in shares and warrants of New ATA Holdings, based on the Company's value as estimated in the Plan. There were no material unresolved claims as of September 30, 2007.

        Liquidity.    As of September 30, 2007, Global had unrestricted cash of $98.0 million and a restricted cash balance of $26.1 million, which primarily secures letters of credit. In addition, Global had $53.8 million of cash on advance scheduled service ticket sales held by credit card processors until service is provided and recorded as a receivable on Global's balance sheet as of September 30, 2007. Global had no revolving credit facility and had no funds available through other unused financing options. Global expects that cash generated by operations will be sufficient to fund operations during the next twelve months.

        In the nine months ended September 30, 2007, net cash used in operating activities was $25.5 million mainly related to the Company's operating loss for the period. Cash used by the changes in operating assets and liabilities was $15.3 million. This mainly represented an increase in accounts receivable primarily associated with ATA's advanced scheduled service tickets sales for future flights held by credit card processors until service is provided as well as ATA's accounts receivable from its military charter business. This was partially offset by an increase in ATA's air traffic liability for advanced scheduled service ticket sales for future flights.

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        Net cash used in investing activities in the nine months ended September 30, 2007 was $318.8 million, which mainly consisted of the acquisition of World Air Holdings, net of cash acquired, of $283.6 million and capital expenditures of $28.3 million.

        Net cash provided by financing activities for the nine months ended September 30, 2007 was $380.0 million, which mainly consisted of the receipt of $340.0 million under a term loan agreement and the receipt of $161.1 million related to the issuance of preferred stock. (See "Financing Transactions" below for further details) These receipts were offset by the net repayment of long-term debt of $107.1 million in the nine months ended September 30, 2007, and the payment of costs incurred related to the issuance of the term loan agreement and preferred stock.

        Financing Transactions.    On August 14, 2007, Global entered into a $340.0 million senior secured payment-in-kind ("PIK") term loan agreement with JPMorgan Chase Bank N.A. ("JPMorgan"), and Jefferies Finance LLC (the "Term Loan") in order to fund the acquisition of World Air Holdings. The Term Loan bears interest annually at LIBOR, plus a margin, payable-in-kind through August 14, 2009, and cash thereafter. The Term Loan has an automatic extension feature pursuant to which its final maturity is August 14, 2015. The lenders under the Term Loan may convert the loans into notes due in 2015 having terms substantially similar to the Term Loan. The Term Loan is secured by a significant portion of the Global's unencumbered assets. The lenders under the Term Loan received warrants to purchase 2.3 million shares of Global Common Stock with an exercise price of $0.01 per share immediately exercisable. On October 23, 2007, MatlinPatterson purchased the warrants held by JPMorgan and on that date MatlinPatterson exercised these warrants. Global has allocated $31.7 million as the total fair value of the warrants issued and has recorded this amount as a discount on the Term Loan. The discount will be accreted to interest expense over the stated term of the debt. The effective rate on the Term Loan, including the impact of the discount is 12.9%.

        In addition, on August 14, 2007 Global issued approximately $161.1 million of Series A preferred stock to an affiliate of MatlinPatterson with an annual cumulative dividend rate of 16.0% payable in common stock upon conversion but in no event will such dividend be equal to a value less than $8.0 million. The Series A preferred stock is convertible into common stock of Global at $14 per share. Upon conversion of the Series A preferred stock to common stock (the "Conversion Shares"), MatlinPatterson is required to complete a rights offering to shareholders of Global's common stock to purchase a pro rata share of the Conversion Shares at a price per share equal to the conversion price. In the fourth quarter of 2007, MatlinPatterson initiated both the process of converting the Series A preferred stock into shares of Global's common stock and the rights offering. The Company expects this transaction to be completed in the first quarter of 2008.

        Additionally on August 14, 2007, using funds from the Term Loan and the Series A preferred stock, Global repaid an $81.6 million loan, including accrued interest and a prepayment premium, totaling $2.3 million, which was partially guaranteed by the Air Transportation Stabilization Board ("ATSB"). Furthermore, Global repaid its two loans from MatlinPatterson totaling $54.3 million, including accrued interest.

        See "Note 11—Shareholder's Equity" on Global's unaudited financial statements as of and for the period ending September 30, 2007 for further information on the Series A preferred stock and warrants.

        Aircraft and Fleet Transactions.    In the fourth quarter of 2006, the Company signed a definitive purchase agreement with a third party in which the Company agreed to purchase seven McDonnell Douglas DC 10-30 ("DC-10") aircraft, two McDonnell Douglas DC 10-30 airframes, two spare engines, and certain other related property. The Company received a commitment from a lessor under which the Company assigned its purchase rights, and leased back the aircraft and other equipment. In

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addition to the assignment, the Company and lessor agreed to share in the capital investment necessary to make the fleet operational. Then lease agreements require the Company to make payments aggregating approximately $38.0 million over approximately six years. As of September 30, 2007, one of these aircraft was in revenue service.

        On December 14, 2007 the Company entered into 10-year lease agreements for two Boeing 747-400 freighter aircraft. The aircraft are expected to be delivered in March and October 2008, respectively.

Critical Accounting Policies and Estimates

        The preparation of Global's financial statements in conformity with generally accepted accounting principles requires management to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosures of contingent assets and liabilities. Certain significant account policies used in the preparation of the financial statements require management to make difficult, subjective or complex judgments and are considered critical accounting policies by Global. Global has identified the following areas as critical accounting policies.

        Revenue Recognition.    Passenger revenue derived from ticket sales is recognized when transportation is provided. Passenger ticket sales for which transportation has not yet been provided are recorded as air traffic liability. The balance of the air traffic liability fluctuates throughout the year based on seasonal travel patterns and fare changes. Tickets that are sold but not flown on the scheduled travel date can be exchanged and reused for another flight, up to a year from the date of sale, or can be refunded if the ticket is sold under a refundable tariff. A small percentage of tickets (or partially used tickets) expire unused. Revenue from unused tickets is recognized upon the expiration of the ticket.

        Fresh-Start Reporting.    In accordance with SOP 90-7, Global adopted fresh-start reporting as of February 28, 2006. Fresh-start reporting required Global to value its assets and liabilities at their estimated fair value in accordance with FASB Statement of Financial Accounting Standards No. 141, Business Combinations, or FAS 141. The fair values of assets and liabilities represent Global's best estimates.

        Accounting for Long-Lived Assets.    As of December 31, 2006, Global had $89.9 million of net property and equipment and $51.6 million of definite-lived net intangible assets on its balance sheet. Generally, property and equipment is depreciated to residual values over their estimated useful service lives using the straight-line method. Leasehold improvements and rotable parts related to Global's aircraft are depreciated over the period of benefit or the terms of the related leases, whichever is less. Properties under capital lease are amortized on a straight-line basis over the life of the lease. Global's facilities and ground equipment is generally depreciated over lives of three to seven years. Definite-lived intangible assets are amortized on a straight-line basis over the estimated lives of the related assets.

        In accordance with FASB Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, or FAS 144, Global evaluates it long-lived assets, including definite lived intangible assets, for impairment when events or changed in circumstances indicate that the book value of the asset may not be recoverable. In testing for impairment, FAS 144 requires the undiscounted estimated future cash flows from the expected use of those assets to be compared to their net book value to determine if impairment is indicated. FAS 144 requires that assets deemed impaired be written down to their estimated fair value through a charge to earnings. Fair values may be estimated using discounted cash flow analysis or quoted market prices, together with other available

79

information. The application of FAS 144 requires the exercise of significant judgment and the preparation of numerous significant estimates.

        Stock-Based Compensation.    Upon emergence from Chapter 11 bankruptcy, Global adopted share-based compensation plans for officers and key employees of Global, including Global's board of directors ("Management Plans"), and for cockpit crewmember employees (the "ALPA Plan"). Options under both the Management Plans and the ALPA Plan were granted with an exercise price not less that the market price at the grant date. None of Global's grants include performance-based or market-based vesting conditions. Global accounts for these plans in accordance with FASB Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment, or FAS 123R. FAS 123R requires companies to measure the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of the awards.

        Global estimates the fair value of stock option awards on the date of grant utilizing a modified Black-Scholes option-pricing model. Utilizing this method requires Global to make assumptions, some of which are subjective, including risk-free interest rate, stock price volatility and expected life of the options.

        The risk-free rate is based on the U.S. Treasury yield curve in effect for the expected term of the option at the time of grant. Stock price volatility assumptions were based on historical volatilities of comparable airlines whose shares are traded using weekly stock price returns equivalent to the contracts term of the option. The expected life of the options was determined based upon a simplified assumption that the options will be exercised evenly from vesting to expiration under the transitional guidance of Staff Accounting Bulletin No. 107, Topic 14, Shared-Based Payments.

        As of December 31, 2006, Global had $5.1 million of total unrecognized compensation costs related to share-based compensation arrangements. Global expects to recognize this expense over a weighted-average period of 2.38 years.

Off-Balance Sheet Arrangements

        Debt and Operating Lease Cash Payment Obligations.    Global finances most of its aircraft with operating leases and consequently does not include assets and obligations associated with operating leases in its consolidated balance sheet. The following table summarizes Global's material contractual obligations and commitments and their currently scheduled impact on liquidity and cash flows as of September 30, 2007.

	Cash Payments Currently Scheduled
	Total As of September 30, 2007		Q4 2007		2008		2009		2010–2011		After 2011
	(in thousands)
Current and long-term debt(1)	$	349,209	$	349	$	1,443	$	497	$	208	$	346,712
Capital leases		72,450		1,350		5,400		5,400		10,800		49,500
Operating leases(2)		1,483,274		57,819		201,764		188,144		332,588		702,959
Total contractual cash obligations	$	1,904,933	$	59,518	$	208,607	$	194,041	$	343,596	$	1,099,171

(1)

Amounts reflect scheduled principal payments. Amounts do not include scheduled interest payments, including payment of the PIK interest on the Term Loan. The Term Loan, which represents the most significant portion of Global's outstanding indebtedness, bears interest

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annually at LIBOR, plus a margin. (See "Liquidity and Capital Resources—Financing Transactions" for further information).

(2)

Amounts include estimated payments related to Global's acquisition of seven McDonnell Douglas DC-10- 30 aircraft leased beginning in January, 2007.

        Global is secondarily liable for gates and a hangar facility at Chicago Midway Airport assigned to Southwest. This position has been interpreted as a guaranty that is accounted for in accordance with FIN 45. In accordance with FIN 45, Global estimates the maximum potential amount of future payments (undiscounted) that could be required under this guaranty to be approximately $12.9 million as of September 30, 2007. However, Global has estimated the fair value of the guaranty as of September 30, 2007 to be minimal due to the remote likelihood that Global would be required to perform under the obligation and the mitigating steps that could be taken to eliminate the liability if such a need arose.

Inflation.

        To date, inflation has not had a significant effect on Global's operations.

Seasonality.

        Our scheduled service operations are seasonal by nature, with peak activity occurring during the spring and summer holiday seasons. This typically results in a decline in demand for these services in the first and fourth quarters of Global's fiscal year.

Quantitative and Qualitative Disclosures About Market Risk

        Global is subject to certain market risks, including commodity price risk resulting from aircraft fuel price fluctuations and interest rate risk. The adverse effects of potential changes in these market risks are discussed below. The sensitivity analyses presented do not consider the effects that such adverse changes may have on overall economic activity, nor do they consider additional actions management might take to mitigate the adverse impact of such changes on Global. See the notes to Global's consolidated financial statements for a description of Global's accounting policies and other information related to these financial instruments.

        Aircraft fuel.    Global's results of operations are impacted by changes in the price of aircraft fuel. For the three and nine months ended September 30, 2007, aircraft fuel accounted for approximately 32.7% and 31.2%, respectively, of Global's operating expenses.

        World Airways, North American and ATA obtain fuel price fluctuation protection for their military and commercial charter flights. The military contracts include a fuel reconciliation process whereby the military compensates the airlines to the extent fuel costs exceed a fixed price, and the airlines reimburse the military to the extent fuel costs are below this fixed price. World Airways, North American and ATA also include fuel escalation clauses in certain commercial and bulk scheduled service contracts.

        ATA and North American's results of operations are affected by changes in the price of fuel for scheduled service flights and maintenance ferries. Market risk is estimated as a hypothetical 10% increase in the average 2007 cost per gallon of fuel. Based on the fuel usage for scheduled service flights and maintenance ferries, such a change would have resulted in an increase in aircraft fuel expense for Global of approximately $11.7 million. Based on the projected fuel usage for the 12 months

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following September 30, 2007 for scheduled service flights and maintenance ferries, such a change would result in an increase in Global's aircraft fuel expense of approximately $16.7 million.

        Interest Rates.    Global's results of operations are affected by fluctuations in market interest rates. As of September 30, 2007, Global's variable-rate debt was comprised of the $340.0 million Term Loan. Holding other variables constant (such as debt levels), a one-hundred basis point change in interest rates on Global's variable-rate debt as of September 30, 2007 would be expected to have an impact on net income and cash flows of approximately $3.4 million.

        Foreign currency exchange rate risks.    Although some of the Company's revenues are derived from foreign customers, all revenues and substantially all expenses are denominated in U.S. dollars. The Company maintains minimal balances in foreign bank accounts to facilitate the payment of expenses.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF WORLD AIR HOLDINGS

As used in this "Management's Discussion and Analysis of Financial Condition and Results of Operations of World Air Holdings", the term "World Air Holdings" refers to World Air Holdings, Inc. and its subsidiaries on a consolidated basis as of June 30, 2007, unless the context requires otherwise. This section does not reflect Global's acquisition of World Air Holdings and should be read in conjunction with the financial statements and related notes of World Air Holdings, which are included elsewhere in this prospectus. For further information about the combined company, see "Prospectus Summary—Our company", "Summary Unaudited Pro Forma Combined Statements of Operations Information" and "Business".

Overview and Results of Operations

Overview

        World Air Holdings' consolidated net loss was $2.3 million for the year ended December 31, 2006, as compared to net earnings of $31.6 million for the year ended December 31, 2005, and net earnings of $25.6 million for the year ended December 31, 2004. Net earnings were $4.4 million for the six months ended June 30, 2007, as compared to a net loss of $3.9 million for the six months ended June 30, 2006.

Results of Operations

        The following table sets forth selected information for the periods indicated:

		Year Ended December 31,									Six Months Ended June 30,
		2004			2005*			2006			2006			2007
		(in thousands)
Operating revenue
	World	$	503,900		$	623,719		$	559,809		$	273,987		$	283,302
	North American		—			163,333			267,195			119,290			170,372
	World Air Holdings, World Risk Solutions and Eliminations		—			86			(1,348	)		(367	)		(791	)
Total operating revenue			503,900			787,138			825,656			392,910			452,883
Operating expense
	World		463,617			570,059			557,211			275,247			274,722
	North American		—			162,201			271,144			121,212			171,926
	World Air Holdings, World Risk Solutions and Eliminations		—			(1,738	)		(1,919	)		(47	)		(777	)
Total operating expense			463,617			730,522			826,436			396,412			445,871
Operating income/(loss)			40,283			56,616			(780	)		(3,502	)		7,012
Total other income/(expense)			(6,251	)		(5,015	)		(1,867	)		(3,120	)		663
Earnings/(loss) before income tax expense			34,032			51,601			(2,647	)		(6,622	)		7,675
Income tax expense/(benefit)			8,445			19,973			(355	)		(2,685	)		3,256
Net earnings/(loss)		$	25,587		$	31,628		$	(2,292	)	$	(3,937	)	$	4,419

Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006.

        For the second quarter of 2007, World Air Holdings' consolidated operating income was $6.2 million compared to operating loss of $12.9 million for the same period in 2006, an increase of

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$19.1 million or 148.1%. Net income for the 2007 second quarter was $3.9 million compared to a net loss of $7.5 million for the second quarter of 2006, an increase of $11.4 million or 152.0%.

        The following table sets forth selected information for the periods indicated:

		Three Months Ended June 30,
		2006			2007
		(in thousands)
Operating revenue
	World	$	115,605		$	144,495
	North American		61,192			85,545
	World Air Holdings, World Risk Solutions and Eliminations		(140	)		(8	)
Total operating revenue			176,657			230,032
Operating expense
	World		126,614			139,124
	North American		63,426			85,123
	World Air Holdings, World Risk Solutions and Eliminations		(435	)		(397	)
Total operating expense			189,605			223,850
Operating income (loss)			(12,948	)		6,182
Total other income			228			397
Earnings (loss) before income tax expense			(12,720	)		6,579
Income tax expense (benefit)			(5,241	)		2,678
Net earnings (loss)		$	(7,479	)	$	3,901

        The following table sets forth selected key metrics related to World Airways and North American Airlines financial and statistical performance:

		Three Months Ended June 30,
		2006		2007
Block Hours
	World		13,000		13,693
	North American		5,944		7,930
Total			18,944		21,623
Revenue per Block Hour
	World	$	8,893	$	10,552
	North American	$	10,295	$	10,788
Total		$	9,325	$	10,638
Operating Expense per Block Hour
	World	$	9,740	$	10,160
	North American	$	10,671	$	10,734
Total		$	10,009	$	10,352
Operating aircraft at quarter end
	World		16		17
	North American		9		10
Average available aircraft per day
	World		16.3		17.0
	North American		9.0		10.0
Average daily utilization (Block Hours flown per day per aircraft)
	World		8.8		8.9
	North American		7.3		8.7

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        Operating Revenues.    Total consolidated operating revenues increased $53.3 million, or 30.2%, to $230.0 million in the second quarter of 2007. The increase was primarily driven by a $55.9 million or 49% increase in AMC revenues, a $33.2 million increase at World and $22.7 million increase at North American. The increase at World is primarily driven by the AMC penalty status in the second quarter of 2006 not repeating in the second quarter of 2007. Additionally, in April 2007 World received $1.4 million related to certain AMC ferry flights flown in 2002 through 2004, which had previously been denied by AMC. The increase at North American is primarily a result of joining the largest teaming arrangement servicing the military during the fourth quarter of 2006. Additionally, North American's scheduled service revenues increased $7.2 million or 70% associated with the maturing West Africa routes. These increases were partially offset by a consolidated $9.4 million decrease in commercial charter passenger revenue as commercial capacity utilized in second quarter 2006 was utilized by AMC demand in second quarter 2007.

        Operating Expenses.    Total consolidated operating expenses increased $34.2 million, or 18.0%, to $223.8 million for the second quarter of 2007, compared to $189.6 million for the comparable quarter in 2006.

        Consolidated flight expenses increased $14.9 million, or 27.6%, to $68.9 million in the second quarter of 2007. The increase was due to an $8.5 million increase at North American and a $6.4 million increase at World. The increase at North American was primarily the result of a 55% increase in full service block hours flown during the second quarter of 2007. The increase at World was primarily the result of a 45% increase in full service military block hours flown.

        Consolidated maintenance expenses decreased $4.9 million, or 13.5%, to $31.5 million in the second quarter of 2007. North American increased by $1.1 million resulting from more time driven maintenance expense related to the increase in block hours flown. World decreased $6.0 million due to fewer heavy engine maintenance and normal scheduled airframe structural checks. In second quarter 2006, World Air Holdings was also impacted by airworthiness directive compliance costs related to MD-11 engines that did not repeat in second quarter of 2007.

        Consolidated aircraft costs which include aircraft rent and insurance, increased $2.3 million, or 7.5%, to $33.0 million in the second quarter of 2007. This is primarily due the B-767 aircraft added at North American in the first quarter of 2007.

        Consolidated fuel expenses were higher by $17.0 million, or 42.5%, increasing to $57.0 million in the second quarter of 2007. This was primarily driven by the 46% increase in consolidated full service block hours flown and a 1.6% increase in the average fuel price per gallon. The exposure to fuel cost at World is partially reduced by contracts with customers to provide for a pass-through of fuel costs on approximately 97% of fuel purchased. North American is exposed to changes in fuel prices for its scheduled service operations, which accounted for 24% of North American's block hours during the second quarter of 2007.

        Consolidated commission expense increased $4.5 million, or 60.8% to $11.9 million in the second quarter of 2007. This increase was primarily due to the 55% increase in consolidated AMC block hours flown.

        Consolidated other income (expense) net, increased $0.2 million to $0.4 million income in the second quarter of 2007. This favorable variance was primarily a result of the prepayment of the loan guaranteed by the Air Transportation Stabilization Board. The impact of the prepayment was that World Air Holdings did not incur any interest expense, amortization of debt issuance, warrant costs, or guarantee fees associated with this loan during the second quarter of 2007.

        The effective income tax rate for World Air Holdings was 40.7% for the second quarter of 2007 compared to a benefit of 41.2% in the same quarter of 2006. The increase in the effective rate is due to the impact of certain non-deductible items that do not fluctuate with the level of income, such as meal and entertainment expenses and penalties.

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Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006

        For the first six months of 2007, World Air Holdings' consolidated operating income was $7.0 million compared to operating loss of $3.5 million for the same period of 2006, an increase of $10.5 million or 300.0%. Net income for the first six months of 2007 was $4.4 million compared to net loss of $3.9 million for the same period in 2006, an increase of $8.3 million or 212.8%.

        The following table sets forth selected information for the periods indicated:

		Six Months Ended June 30,
		2006			2007
		(in thousands)
Operating revenue
	World	$	273,987		$	283,302
	North American		119,290			170,372
	World Air Holdings, World Risk Solutions and Eliminations		(367	)		(791	)
Total operating revenue			392,910			452,883
Operating expense
	World		275,247			274,722
	North American		121,212			171,926
	World Air Holdings, World Risk Solutions and Eliminations		(47	)		(777	)
Total operating expense			396,412			445,871
Operating income/(loss)			(3,502	)		7,012
Total other income/(expense)			(3,120	)		663
Earnings/(loss) before income tax expense			(6,622	)		7,675
Income tax expense/(benefit)			(2,685	)		3,256
Net earnings/(loss)			(3,937	)		4,419

        The following table sets forth selected key metrics related to World and North American financial and statistical performance:

		Three Months Ended June 30,
		2006		2007
Block Hours
	World		27,772		28,354
	North American		11,780		16,216
Total			39,552		44,570
Revenue per Block Hour
	World	$	9,866	$	9,992
	North American	$	10,126	$	10,506
Total		$	9,934	$	10,161
Operating Expense per Block Hour
	World	$	9,911	$	9,689
	North American	$	10,290	$	10,602
Total		$	10,023	$	10,004
Operating aircraft at year or quarter end
	World		16		17
	North American		9		10
Average available aircraft per day
	World		16.7		17.0
	North American		8.6		9.7
Average daily utilization (Block Hours flown per day per aircraft)
	World		9.2		9.2
	North American		7.6		9.2

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        Operating Revenues.    Total consolidated operating revenues increased $60.0 million, or 15.3%, to $452.9 million during the six months ended June 30, 2007. The increase was primarily driven by a $51.1 million increase in revenues at North American. The North American performance was driven by a 62% increase in military revenue, primarily as a result of joining the largest teaming arrangement servicing the military during the fourth quarter of 2006. Additionally, North American's scheduled service revenues increased 67% associated with the maturing West Africa routes. World Airways' revenue increased $9.3 million primarily driven by a 7% increase in cargo demand and a 3% increase in military revenue. Additionally, in April 2007 World received $1.4 million related to certain AMC ferry flights flown in 2002 through 2004, which had previously been denied by AMC.

        Operating Expenses.    Total consolidated operating expenses increased $49.4 million, or 12.5%, to $445.8 million for the first six months of 2007, compared to $396.4 million for the comparable period in 2006.

        Consolidated flight expenses increased $21.7 million, or 18.8%, to $137.0 million during the first six months of 2007. The increase was due to a $20.7 million increase at North American which was primarily the result of a 38% increase in block hours flown during the first six months of 2007.

        Consolidated maintenance expenses decreased $1.9 million, or 2.8%, to $65.0 million during the first six months of 2007. The decrease was driven by a $5.2 million decrease at World Airways resulting from fewer heavy engine maintenance and normal scheduled airframe structural checks. During the first six months of 2006, the Company was also impacted by airworthiness directive compliance costs related to MD-11 engines that did not repeat in first six months of 2007. North American maintenance expense increased $3.3 million due to increased maintenance expenses related to the 38% increase in block hours flown and an increase in the number of scheduled airframe maintenance events. During the first quarter of 2007, the Company received $1.4 million insurance proceeds related to a maintenance event. This amount was recorded as a reduction to maintenance expense during the first six months of 2007.

        Consolidated aircraft costs, which include aircraft rent and insurance, increased by $4.8 million, or 8.0%, to $64.8 million during the first six months of 2007. This is primarily due to the addition of a B-767 aircraft during the first quarter of 2007, plus the full quarter effect of the B-767 added in March 2006.

        Consolidated fuel expenses were higher by $19.4 million, or 21.7%, increasing to $108.7 million during the first six months of 2007. This was primarily driven by the 24% increase in consolidated full service block hours flown and a 2.8% increase in the average fuel price per gallon. The exposure to fuel cost at World Airways is partially reduced by contracts with customers to provide for a pass-through of fuel costs on approximately 97% of fuel purchased. North American is exposed to changes in fuel prices for its scheduled service operations, which accounted for 24% of North American's block hours during the first six months of 2007.

        Consolidated flight operations subcontracted to other carriers decreased $2.0 million to $0.2 million. During the first quarter of 2006, the Company incurred increased subcontracted flights to other carriers as a result of a pilot strike at World Airways, which did not repeat in 2007.

        Consolidated commission expense increased $5.4 million, or 29.5% to $23.7 million during the first six months of 2007. This increase was primarily due to the 29% increase in consolidated AMC block hours flown.

        Consolidated other income (expense) net, increased $3.7 million to $0.6 million income during the first six months of 2007. This favorable variance was primarily a result of the prepayment of the ATSB Loan. The impact of the prepayment was that the Company did not incur any interest expense, amortization of debt issuance, warrant costs, or guarantee fees associated with this loan during the first quarter of 2007.

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        The effective income tax rate for the Company was 42.4% for the first six months of 2007 compared to a benefit of 40.5% in the same period of 2006. The increase in the effective rate is due to the impact of certain non-deductible items that do not fluctuate with the level of income, such as meal and entertainment expenses and penalties.

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

        The following table sets forth selected key metrics related to World Airways and North American Airlines financial and statistical performance for the periods presented:

		Year Ended December 31,
		2004		2005*		2006
Block Hours
	World		47,759		58,515		56,102
	North American		—		17,175		27,475
Total			47,759		75,690		83,577
Revenue per Block Hour
	World	$	10,551	$	10,659	$	9,978
	North American	$	—	$	9,510	$	9,725
Total		$	10,551	$	10,400	$	9,879
Operating Expense per Block Hour
	World	$	9,707	$	9,742	$	9,932
	North American	$	—	$	9,444	$	9,869
Total		$	9,707	$	9,652	$	9,888
Operating aircraft at year or quarter end
	World		16		17		17
	North American		—		8		9
Average available aircraft per day
	World		16.0		16.6		16.6
	North American		—		8.0		8.8
Average daily utilization (block hours flown per day per aircraft)
	World		8.1		9.7		9.3
	North American		—		8.7		8.6

*

Financial and statistical data include the results of North American from April 28, 2005 to December 31, 2005

Operating revenues increased $38.6 million, or 4.9%, to $825.7 million in 2006 from $787.1 million in 2005. The increase was primarily driven by the full year impact of North American offset by a decline in revenues at World. The decline at World was driven by lower flying under the World contract with the AMC of $78.9 million partially offset by an increase of $16.4 million in full service and ACMI cargo and passenger flying. The majority of the decrease in AMC flying at World was due to being placed on penalty status by the AMC during the second quarter. This occurred due to World failing to maintain minimum performance standards in the prior quarter. AMC capacity was further reduced by the conversion of an aircraft from passenger to freighter service and the curtailment of troop movement during the fourth quarter of 2006.

Operating expenses increased $96.0 million or 13.1% to $826.5 million in 2006 from $730.5 million in 2005. Flight operation expenses include all costs related directly to the operation of the aircraft other than maintenance, aircraft rent, insurance and fuel. Flight operations expense increased

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$15.5 million, or 7.1%, in 2006 to $234.0 million from $218.5 million in 2005. The full year impact of North American operations was partially offset by a cost decrease at World of $16.5 million primarily due to an overall decrease in total block hours. The decrease in expense at World was partially offset by a $2.6 million signing bonus paid to the cockpit crewmembers under the terms of the amended collective bargaining agreement.

        Maintenance expenses increased $33.4 million in 2006, or 29.3% to $147.2 million compared to $113.8 million in 2005. Maintenance cost at World increased $19.9 million mainly driven by incremental vendor-based maintenance events and related parts and material costs which included airworthiness directive compliance costs primarily related to MD-11 engines and significant maintenance required on the airframe of a purchased DC-10 aircraft.

        Aircraft costs, which include aircraft rent and insurance, increased $11.5 million, or 10.5%, to $121.1 million in 2006 compared to $109.6 million in 2005. The full year impact of North American operations was partially offset by lower hull liability insurance rates and a decrease in certain lease restructuring fees payable to a lessor.

        Fuel expenses increased $26.0 million, or 15.4%, to $194.5 million in 2006 from $168.5 million in 2005. Total gallons consumed decreased 2.3 million and the average price per gallon of fuel increased 18.4% to $2.20. World's contracts with its customers provided for a pass-through of fuel costs of approximately 96% of fuel gallons purchased. North American's exposure to fluctuations in fuel prices is limited to scheduled service operations, which accounted for approximately 24% of North American's block hours.

        Commissions increased $1.8 million, or 5.0%, to $38.1 million in 2006 compared to $36.3 million in 2005. The increase in overall block hours primarily drove the increase in commissions as they represent a percentage of revenue.

        Sales, general and administrative expenses increased $7.7 million, or 10.6%, to $80.3 million in 2006 from $72.6 million in 2005. The increase was primarily due to the impact of a full year of North American, and additional stock compensation expense. As a percent of total revenue, sales, general and administrative expenses increased from 9.2% to 9.7%.

        Operating income/loss decreased $57.4 million to a $0.8 million loss compared to a $56.6 million income in 2005.

        Other income (expense), net decreased $3.1 million or 62.0% to a $1.9 million expense in 2006 compared to a $5.0 million expense in 2005. As a result of the prepayment of World Air Holdings' loan from the ATSB, World Air Holdings recorded approximately $2.3 million in additional interest expense, representing the write-off of unamortized debt issuance, warrant costs and guarantee fees associated with this loan during the first quarter of 2006 which was offset by a $3.1 million reduction in interest expense for the remainder of 2006, a $0.5 million increase in interest income and a $1.8 million decrease in miscellaneous other expense due to the lower losses from disposal of assets.

        Income tax expense decreased $20.3 million to $0.4 million benefit in 2006 from $19.9 million expense in 2005. Tax expense includes a benefit from a decrease in state income taxes based on actual and expected state activity, partially offset by an increase in foreign taxes. The effective tax rate for the year ended December 31, 2006 was 13.4% compared to an effective tax rate of 38.7% for the year ended December 31, 2005.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

        The consolidated financial statements for World Air Holdings include North American's results from April 28 through December 31, 2005. The comparative financial information shown below is

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derived from World Air Holdings consolidated financial statements for the year ended December 31, 2005.

        Total consolidated operating revenues increased $283.2 million, or 56.2%, to $787.1 million in 2005 from $503.9 million in 2004. North American revenues were $163.3 million. The higher operating revenue was primarily attributable to an $86.9 million increase in flying under the World contract with the AMC, as well as an increase of $39.5 million in commercial cargo ACMI flying. These increases were offset by lower commercial full service cargo revenue of $3.1 million and commercial passenger revenue of $5.3 million than in 2004.

        Total consolidated operating expenses increased $266.9 million or 57.6% to $730.5 million in 2005 from $463.6 million in 2004.

        Flight expense increased $61.4 million, or 39.1%, in 2005 to $218.5 million from $157.1 million in 2004. The impact of North American on flight expense for 2005 was $44.5 million. The higher flight costs for World are directly attributable to the overall increase in total block hours.

        Maintenance expenses increased $37.8 million in 2005, or 49.7% to $113.8 million compared to $76.0 million in 2004. North American represented $19.7 million of the increase. World incurred higher maintenance expenses principally due to the increase in overall block hours and $8.8 million in incremental engine overhaul expense.

        Aircraft costs, which include aircraft rent and insurance, increased $32.4 million, or 42.0%, to $109.6 million in 2005 compared to $77.2 million in 2004. The increase reflects $22.5 million of cost related to North American and an increase of $9.9 million related to World. This is primarily due to the three additional MD-11 aircraft added to the fleet in late 2004 and in 2005, as well as short-term leasing of additional spare engines during 2005.

        Fuel expenses increased $94.0 million, or 126.2%, to $168.5 million in 2005 from $74.5 million in 2004. The inclusion of North American in consolidated results accounted for $40.4 million of the increase. Total gallons consumed increased due to the overall increase in block hours flown. Fuel prices increased 45.2% in 2005 compared to 2004. However, fluctuations in the price of fuel did not have a significant impact on operating income in 2005 because World's contracts with its customers provided for a pass-through of fuel costs of 97.2% of fuel purchased. North American's exposure to fuel prices is limited to scheduled service operations, which accounted for 25.6% of North American's block hours since its acquisition on April 27, 2005.

        Commissions increased $12.9 million, or 55.1%, to $36.3 million in 2005 compared to $23.4 million in 2004. The increase in overall block hours primarily drove the increase in commissions as they represent a percentage of revenue.

        Sales, general and administrative expenses increased $24.3 million, or 50.3%, to $72.6 million in 2005 from $48.3 million in 2004. The increase reflects $26.6 million of cost related to North American and a decrease of $2.3 million of costs related to World Air Holdings, World, and World Risk Solutions. These decreases were partially offset by professional fees and other costs associated with the acquisition of North American, increased audit fees, and costs associated with Sarbanes-Oxley Act compliance efforts. Also, included in 2004 were $1.1 million of personnel costs associated primarily with contractual obligations arising from the retirement of World Air Holdings' former Chairman/CEO on May 6, 2004.

        World Air Holdings recorded legal expense of $2.1 million in 2005 representing the settlement in 2006 of a wrongful termination lawsuit brought by a former pilot at North American.

        Income tax expense increased $11.5 million to $19.9 million in 2005 from $8.4 million in 2004. The effective tax rate for the year ended December 31, 2005 was 38.7% compared to an effective tax rate of 24.8% for the year ended December 31, 2004. For further information regarding this matter, see

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Note 12 of World Air Holdings' "Notes to Consolidated Financial Statements". The change in the tax rate for 2005 was a result of a minimal change in the valuation allowance for deferred tax assets as compared to a significant reduction in the valuation allowance for 2004.

Liquidity and Capital Resources

        At June 30, 2007, World Air Holdings had $38.7 million of cash and cash equivalents and short-term investments compared to $31.2 million at December 31, 2006. Restricted cash was $2.0 million at June 30, 2007 and $1.1 million at December 31, 2006 representing prepayments from customers for flights that are scheduled to be flown within 30 to 60 days of the respective balance sheet date (unearned revenue).

        At December 31, 2006, World Air Holdings had $31.2 million of cash and cash equivalents and short-term investments compared to $47.0 million at December 31, 2005. Restricted cash was $1.1 million at December 31, 2006, representing prepayments from customers for flights that are scheduled to be flown within 30 to 60 days of the balance sheet date (unearned revenue). Restricted cash, current and non-current, was $7.1 million at December 31, 2005, which consisted of $4.2 million for letters of credit that had to be collateralized, $2.1 million of prepayments from customers for flights that are scheduled to be flown within 30 days of the balance sheet date (unearned revenue) and approximately $0.8 million held by the courts in the Dominican Republic. The acquisition of North American in April 2005 represented a cash cost of $36.2 million to World Air Holdings, less North American's unrestricted cash of $8.6 million.

Cash Flows from Operating Activities

        Operating activities provided $14.0 million in cash for the six-months ended June 30, 2007. The cash provided in 2007 principally reflects the $4.4 million net earnings, an $18.5 million effect in cash due to changes in operating assets and liabilities other than trade accounts receivable, a $1.6 million increase from net non-cash charges, and a $10.5 million decrease due to an increase in trade accounts receivable. For the six-months ended June 30, 2006, operating activities provided $15.0 million in cash. The cash provided in 2006 principally reflects the $3.9 million net loss, a $26.0 million decrease in cash due to changes in operating assets and liabilities other than trade accounts receivable, net non-cash statement of income charges of $9.1 million, and a $35.8 million increase due to a reduction in trade accounts receivable.

        Operating activities provided $36.1 million in cash for the year ended December 31, 2006 as compared to $33.9 million in 2005. The cash provided in 2006 principally reflects the $2.3 million net loss, an $8.9 million decrease in cash due to changes in operating assets and liabilities other than trade accounts receivable, a $13.0 million increase from net non-cash charges, and a $34.3 million increase due to a reduction in trade accounts receivable. The cash provided in 2005 principally reflects the $31.6 million net earnings, a $5.1 million increase in cash due to changes in operating assets and liabilities other than trade accounts receivable, and net non-cash statement of operations charges of $12.2 million, offset by a $15.0 million decrease due to an increase in trade accounts receivable.

Cash Flows from Investing Activities

        Investing activities used $17.8 million of cash for the six-months ended June 30, 2007. World Air Holdings' capital expenditures for the first six-months of 2007 were approximately $7.6 million, principally for the purchase of aircraft-related assets. Additionally World Air Holdings purchased $10.2 million in short term investments. Investing activities used $22.1 million of cash for the six months ended June 30, 2006. World Air Holdings' capital expenditures for the first six months of 2006 were approximately $4.7 million, principally for the purchase of aircraft-related assets. Cash flow from

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investing activities also includes the proceeds from disposals of equipment and property of $0.3 million. Additionally World Air Holdings purchased $17.7 million in short term investments.

        Investing activities used $7.5 million in cash for the year ended December 31, 2006, compared to using $1.1 million in 2005. Cash flow from investing activities includes the proceeds from disposals of equipment and property of $0.6 million and the sale and purchase of short-term investments, which increased by a net amount of $0.8 million during 2006 compared to a decrease of $32.8 million in the prior year. In addition, during 2005, $26.9 million in net cash was used by World Air Holdings to acquire North American.

        World Air Holdings' capital expenditures for the year ended December 31, 2006 were approximately $8.9 million, principally for the purchase of aircraft-related assets. World Air Holdings financed these capital expenditures through internally generated funds.

        In April 2005, World Air Holdings purchased North American for approximately $34.8 million in an all-cash transaction plus direct acquisition costs of $1.4 million. See Note 10 of World Air Holdings' "Notes to Consolidated Financial Statements" for additional information.

        The following is a reconciliation of the purchase price paid for North American to the net acquisition cost:

Cash paid for acquisition of North American	$	34,750
Direct acquisition cost		1,408
Total cash cost		36,158
Less:
North American cash and cash equivalents at April 27, 2005		(8,640	)
Adjustment to distribution made to Seller to cover tax payments as provided in Stock Purchase Agreement		(565	)
Total cash used to acquire North American	$	26,953

Cash Flows from Financing Activities

        Financing activities provided $1.1 million in cash for the six-months ended June 30, 2007, primarily the result of proceeds and related tax benefits from the exercise of stock options. For the six-months ended June 30, 2006, financing activities used $23.1 million, which was principally due to the use of $24.0 million of cash to prepay the remaining balance of the ATSB loan and $0.4 million of debt issuance cost associated with the March 30, 2006 Wachovia loan described below. This amount was partially offset by proceeds and related tax benefits from the exercise of stock options of $1.3 million.

        Financing activities used $43.6 million in cash for the year ended December 31, 2006. This was principally due to the use of $20.8 million of cash for the repurchase of 2.22 million shares of World Air Holdings' common stock and a $24.0 million principal repayment of the ATSB loan. These amounts were partially offset by proceeds and related tax benefits from the exercise of stock options of $1.7 million and $0.5 million in debt issuance cost associated with the Wachovia Loan (described below). For the year ended December 31, 2005, financing activities used $2.9 million, which was primarily due to the $1.7 million used to repay the contractual aircraft rent obligations to a lessor and a $6.0 million principal repayment of the ATSB loan. These amounts were partially offset by proceeds from the exercise of warrants and stock options of $2.5 million and $2.3 million, respectively.

        In the first quarter of 2005, The Boeing Company exercised warrants to purchase 1,000,000 shares of common stock at $2.50 per share. In addition, the ATSB exercised warrants to purchase 111,111 shares, and pursuant to the net exercise provisions of the warrants, received 76,345 shares of World Air Holdings' common stock.

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        On February 22, 2005, World Air Holdings issued a notice of redemption of its Debentures, giving the holders until March 22, 2005 to exercise their conversion rights at a conversion price of $3.20 per share. The holders converted all of the Debentures outstanding by March 22, 2005. Future annual interest expense has been reduced by approximately $2.0 million due to the conversion of all of the Debentures.

Description of Certain Indebtedness.

        On December 30, 2003, World Air Holdings secured a $30.0 million ATSB loan. At December 31, 2005, World Air Holdings' indebtedness of $24.0 million outstanding under its $30.0 million ATSB loan was secured by substantially all of the company's assets. On March 30, 2006 World Air Holdings prepaid the remaining principal balance of $24.0 million under the ATSB Loan with working capital. World Air Holdings had recorded the $24.0 million outstanding balance as a current liability as of December 31, 2005 in the Consolidated Balance Sheets due to covenant violations. As a result of this prepayment, during the first quarter of 2006, World Air Holdings expensed $2.3 million in unamortized debt issuance cost and unamortized warrant costs associated with the ATSB loan.

        On March 30, 2006 the Company prepaid the remaining principal balance of $24.0 million outstanding under the $30.0 million the ATSB loan, which was 90% guaranteed by the ATSB and 10% guaranteed by a third party, with working capital. As a result of this prepayment, World Air Holdings expensed an additional $2.3 million in unamortized debt issuance and warrant costs associated with the ATSB loan during the first quarter of 2006.

        Additionally on March 30, 2006, World and North American entered a Loan and Security Agreement with Wachovia Bank, National Association, for the issuance of loans and letters of credit up to $50.0 million subject to certain terms, conditions, and limitations. World Air Holdings had no borrowings outstanding at June 30, 2007 or December 31, 2006. As part of the acquisition of World Air Holdings by Global on August 14, 2007 the Wachovia loan agreement was terminated.

Contractual Cash Obligations and Other Commitments and Contingencies

        World Air Holdings has significant long-term obligations relating to operating leases for aircraft and spare engines. In 2002 and 2001, World Air Holdings' predecessor paid amounts less than its original contractual aircraft rent obligations pursuant to agreements with its lessors that amended the terms of the original aircraft lease agreements to provide for the repayment of the unpaid contractual rent obligations. In April 2005, World Air Holdings made a final payment of $1.7 million related to these unpaid contractual aircraft rent obligations. In the first quarter of 2004, World Air Holdings reached an agreement with one of its MD-11 aircraft lessors to restructure certain leases. In exchange for reduced fixed monthly lease rates and a reduction in the lease term, World Air Holdings agreed to an annual restructuring fee based on net income. Payments commenced in 2005 based on 2004 results, and continue through the lease terminations in 2011, which will be paid in 2012. Over the term of the agreement, the total obligation of World Air Holdings is limited to $24.2 million on a cumulative basis. In individual years, the cash payment is limited to $1.6 million for 2005, $3.6 million per year for 2006 through and including 2011, and $1.0 million in 2012. Although cash disbursements are limited each year, due to the cumulative nature of the agreement, expense recognized in a given year may differ from the related cash obligation to be disbursed in the following year. During the second quarter of 2005, World Air Holdings and the lessor agreed to a definitive methodology used to calculate the restructuring fee. As a result, the company recognized a credit of $0.7 million related to the expense recorded during 2004. World Air Holdings paid $3.6 million and $1.6 million of this liability in the third quarter of 2006 and second quarter of 2005, respectively.

        Due to its bankruptcy filing, Delta Air Lines rejected and terminated certain subleases with World, as lessee, for three MD-11 aircraft. In October 2005, World signed a forbearance agreement, to extend

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the leases, with the Indenture Trustee, who represented the owners of the aircraft, to prevent the repossession of the aircraft until November 30, 2005, and this forbearance agreement was subsequently extended until March 31, 2006. The lease payments prior to the bankruptcy were based on block hours flown, while the maximum monthly lease payment during the interim period was $0.3 million per aircraft. On March 31, 2006, World signed lease agreements with the new owner for two of the three aircraft, which will keep the aircraft in the World fleet through February 2008 and March 2008, respectively. On May 2, 2006, World signed a lease agreement with the new owner for the remaining MD-11 aircraft, with a lease term expiring in December 2007.

        World Air Holdings' aircraft leases require the company to pay certain maintenance reserves for airframes, engines, auxiliary power units and landing gears based on flight hours. Certain return conditions also must be met prior to returning the aircraft to the lessor. World Air Holdings also pays maintenance fees to certain maintenance providers for auxiliary power units based on flight hours. The aggregate amount World Air Holdings paid and expensed in 2006, 2005, and 2004 for maintenance reserves for airframes, engines, auxiliary power units and landing gears and maintenance fees for auxiliary power units was $50.5 million, $45.3 million, and $29.8 million, respectively.

        The following table presents aggregated information about World Air Holdings' contractual obligations, excluding contingent rentals related to maintenance reserve payments, at the date of issuance:

	Payment Due by Period
Contractual Obligations(1)	Total		1 Year		2-3 Years		4-5 Years		More than 5 Years
	(in thousands)
Operating leases	$	636,738	$	124,980	$	214,551	$	164,441	$	132,766
Accrued post-retirement benefits		6,138		353		873		1,112		3,800
Total	$	642,876	$	125,333	$	215,424	$	165,553	$	136,566

(1)

Contractual obligations including lease extensions and aircraft commitments signed by World Air Holdings as of December 31, 2006.

        Under the Wachovia loan agreement, certain restrictions and requirements may limit World Air Holdings' financial and operating flexibility. In addition, if the company fails to comply with these restrictions or to satisfy these requirements, its obligations under the loan agreement and its operating leases may be accelerated. World Air Holdings cannot assure its stockholders that it would be able to satisfy all of these obligations upon acceleration. The failure to satisfy these obligations would materially adversely affect the company's business, operations, financial results or liquidity as well as the value of its common stock. There were no amounts outstanding on this loan facility at December 31, 2006.

        Although there can be no assurances, World Air Holdings believes that the combination of its existing contracts and additional business that it expects to obtain, along with its existing cash and financing arrangements, will be sufficient to allow World Air Holdings to meet its cash requirements related to operating and capital requirements through 2007.

Critical Accounting Policies and Estimates.

        The preparation of World Air Holdings financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amount reported in the consolidated financial statements and accompanying notes. World Air Holdings believes its estimates and assumptions are reasonable; however, actual results and the timing of the recognition

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of such amounts could differ from those estimates. World Air Holdings' significant accounting policies are described in Note 1 of World Air Holdings' "Notes to Consolidated Financial Statements".

        The following are explanations of World Air Holdings' critical accounting policies, the judgments and uncertainties affecting the application of these policies, and the likelihood that materially different amounts would be reported under different conditions or using different assumptions.

Accounting for Aircraft Repair and Maintenance Costs.

        World Air Holdings' maintenance costs, including Manufacturers Service Bulletins ("MSBs") and FAA Airworthiness Directives ("ADs"), are expensed as incurred. Under this method, costs are recognized when maintenance services are completed and as nonrefundable maintenance payments required by lease agreements and when maintenance contracts with outside maintenance providers become due.

        World Air Holdings' aircraft are maintained by outside maintenance providers. In certain cases, aircraft maintenance costs are covered by maintenance "reserve" payments made to the lessors of World Air Holdings' aircraft. In these cases, World Air Holdings is required to set aside funds monthly through nonrefundable payments to lessors to cover future maintenance work. After qualifying maintenance is completed, World Air Holdings records a maintenance receivable from the lessors and is reimbursed for amounts paid from the funds held by the lessors. The result of this arrangement is that World Air Holdings recognizes maintenance costs each month based on the amount of nonrefundable maintenance reserves required to be paid to its lessors (usually based on a rate per hour flown). In some cases, maintenance work does not qualify for reimbursement from maintenance reserves held by the lessor. This could be due to the type of maintenance performed or whether the aircraft component being maintained is covered by a lease agreement. For maintenance that is not covered by lessor reserves, World Air Holdings recognizes the costs when maintenance services are completed. Therefore, maintenance costs will fluctuate from period to period as scheduled maintenance work comes due or in the event unscheduled maintenance work must be performed. It is also important to note that aggregate maintenance reserves paid to each of World Air Holdings' lessors may not be sufficient to cover actual maintenance costs incurred. In these cases, the company incurs the cost of any shortfall when the maintenance services are completed and the costs are determinable.

Impairment of Long-Lived Assets.

        World Air Holdings reviews its long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. To the extent that appraisals of long-lived assets or the future undiscounted net cash flows expected to be generated from an asset are less than the carrying amount of the asset, an impairment loss will be recognized based on the difference between the asset's carrying amount and its estimated fair market value. Assets to be disposed of are reclassified as assets held for sale at the lower of their carrying amount or fair value less cost to sell.

Goodwill and Intangible Assets.

        Under the purchase method of accounting, the total purchase price was allocated to North American's net tangible and intangible assets based upon their estimated fair value at the date of acquisition with any amount paid in excess of the fair value of net assets recorded as goodwill. Intangible assets from the North American acquisition included the trademark, aircraft leases at market rates in excess of rental rates, Extended Range Two Engine Operations ("ETOPs") and goodwill (see Note 10 of World Air Holdings' "Notes to Consolidated Financial Statements"). World Air Holdings accounted for the intangible assets of North American in accordance with Statement of Financial Accounting Standards No. 142 ("SFAS No. 142"), Goodwill and Other Intangible Assets. Pursuant to

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SFAS No. 142, goodwill and indefinite-lived intangibles, such as the trademark and ETOPs, are not amortized but are subject to periodic impairment reviews. World Air Holdings performed an annual impairment test as of October 1, 2006 for goodwill and indefinite-lived intangibles. This test indicated that goodwill and indefinite-lived intangibles were not impaired as of such date.

        The aircraft leases at net market rates in excess of rental rates of $2.8 million are being amortized on a straight-line basis over a weighted average of 31 months, which was the average remaining life of the aircraft leases at the date of the North American acquisition. World Air Holdings expensed $0.9 million and $0.7 million in 2006 and 2005, respectively. For the years ending December 31, 2007, 2008, and 2009, the annual amortization expense is estimated to be $0.6 million, $0.5 million, and $0.1 million, respectively.

Allowance for Doubtful Accounts and Bad Debt Expense.

        In the normal course of business, World Air Holdings reviews its accounts receivable and uses judgment to assess its ability to collect receivables. Based on this assessment, an allowance for doubtful accounts is maintained for specifically identified accounts receivable deemed to be uncollectible. For those receivables not specifically identified, an allowance is maintained based upon World Air Holdings' historical collection experience and current economic conditions. If the financial condition of the company's customers were to deteriorate and result in an impairment of their ability to make payments, additional allowances may be required.

        During the year ended December 31, 2006, World Air Holdings recorded $0.3 million in bad debt expense related to accounts receivable. During the year ended December 31, 2005, the Company recorded $1.6 million in bad debt expense, including $1.0 million related to accounts receivable from Gemini Air Cargo, Inc., which filed for bankruptcy on March 15, 2006. During the year ended December 31, 2004, the Company recorded $2.5 million in bad debt expense related to accounts receivable from TM Travel Services, Inc. ("TM Travel"), as World Air Holdings determined that TM Travel would not be able to meet its financial obligations and its accounts receivable from TM Travel were uncollectible.

Employee Benefit Plans.

        World Air Holdings provides a range of benefits to its employees and certain retired employees, including retirement plans, post-retirement health care and life insurance benefits. The annual amounts recorded within the Consolidated Financial Statements relating to these plans are determined by using various actuarial assumptions, such as discount rates, assumed rates of return on plan assets, compensation increases, turnover rates and health care cost trend rates. World Air Holdings reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when it is deemed appropriate to do so. The company believes that the assumptions utilized in recording its obligations under its plans, which are presented in Note 11 of World Air Holdings' "Notes to Consolidated Financial Statements", are reasonable based on advice from its actuaries.

        On December 31, 2006 World Air Holdings adopted Statement of Financial Accounting Standards No. 158 ("SFAS 158"), Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans". SFAS 158 required the company to recognize the funded status of its pensions and postretirement plans in the Consolidated Balance Sheet as of December 31, 2006 with a cumulative-effect adjustment of $0.2 million to accumulated other comprehensive income (loss).

Aircraft Leases.

        The majority of World Air Holdings' aircraft are leased from third parties. In order to determine the proper classification of its leased aircraft as either operating leases or capital leases, World Air

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Holdings must make certain estimates at the inception of the lease relating to the economic useful life and the fair value of an asset as well as select an appropriate discount rate to be used in discounting future lease payments. These estimates are utilized by management to determine whether the lease is classified as an operating lease or a capital lease. All of the company's aircraft leases have been classified as operating leases, which results in rental payments being charged to expense over the terms of the related leases. World Air Holdings recognizes lease expense on a straight-line basis over the expected term of the lease. Additionally, operating leases are not reflected in our Consolidated Balance Sheet and accordingly, neither a lease asset nor an obligation for future lease payments is reflected in our Consolidated Balance Sheet. Deferred gains realized in connection with the sale-leaseback of aircraft and equipment are amortized over the periods of the respective leases.

Income Taxes.

        World Air Holdings' effective tax rate is based on historical and anticipated future taxable income, statutory tax rates and tax planning opportunities available to the company. Tax regulations require items to be included in the tax returns at different times than the items are reflected in the financial statements. As a result, World Air Holdings' effective tax rate reflected in the Consolidated Financial Statements is different than that reported in its income tax returns. Deferred tax assets generally represent items that can be used as a tax deduction or credit in the company's tax returns in future years for which it has already recorded the tax benefit in the Consolidated Financial Statements. World Air Holdings provides a valuation allowance for deferred tax assets when it is more likely than not that some portion, or all of its deferred tax assets, will not be realized. In assessing the realizability of the deferred tax assets, management considers whether it is more likely than not that some portion, or all of the deferred tax assets, will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income (including reversals of deferred tax liabilities) during the periods in which those temporary difference will become deductible. Deferred tax liabilities generally represent tax expense recognized in the Consolidated Financial Statements for which payment has been deferred, or expense for which a deduction has already been taken on World Air Holdings' income tax returns but has not yet been recognized as an expense in the Consolidated Financial Statements.

        In June 2003, the Georgia Department of Revenue approved World Air Holdings' application for the Georgia Headquarters Job Tax Credit (the "HQC"). The HQC is available for corporate taxpayers (a) establishing or relocating their headquarters to Georgia, (b) investing a minimum of $1 million in certain property, and (c) employing a minimum number of new full-time employees in the State of Georgia that pay at or above a required wage level. This credit may be used for either corporate state income tax or payroll withholding tax. World Air Holdings utilized $765,000, $655,000 and $590,000 of tax credits in 2006, 2005 and 2004, respectively, which reduced the company's payroll tax expense. If World Air Holdings continues to meet the statutory requirements for each year that it is eligible, its total potential future net estimated benefit could be in excess of $1.4 million on a pre-tax basis.

Recently Issued Accounting Standards.

        In September 2006, the FASB issued FASB Staff Position AUG AIR-1 (the "FSP"), "Accounting for Planned Major Maintenance Activities" that eliminates the accrue-in-advance method as an acceptable method of accounting for planned major maintenance activities. The FSP is applicable to fiscal years beginning after December 15, 2006 and requires retrospective application to all financial statements presented. World Air Holdings does not believe the impact of the adoption of this FSP will have a material impact on its financial statements.

        In July 2006, the FASB, issued FASB Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes" which clarifies the accounting and disclosure requirements for uncertainty in tax positions, as defined. This interpretation is effective for fiscal years beginning after December 15, 2006. FIN 48 requires a two-step approach to evaluate tax positions and determine if they should be

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recognized in the financial statements. The two-step approach involves recognizing any tax positions that are "more likely that not" to occur and then measuring those positions to determine if they are recognizable in the financial statements. World Air Holdings will adopt FIN 48 effective January 1, 2007 and does not believe its adoption will result in a material cumulative-effect adjustment.

Quantitative and Qualitative Disclosures About Market Risk.

        World Air Holdings is subject to certain market risks, including commodity prices (i.e., aircraft fuel) and interest rates. The adverse effects of certain changes in these markets pose a potential loss as discussed below. The sensitivity analyses do not consider the effects that such adverse changes may have on overall economic activity, nor do they consider additional actions that World Air Holdings may take to mitigate its exposure to such changes. Actual results may differ. See World Air Holdings' "Notes to Consolidated Financial Statements", for a description of World Air Holdings' policies and additional information.

        Aircraft fuel:    North American's results of operations are affected by changes in the price and availability of aircraft fuel. Based on North American's fuel consumption for scheduled service and maintenance ferries for the first six months of 2007, a 10% increase in the average price per gallon of fuel would have increased fuel expense by approximately $4.5 million for the six-month period ended June 30, 2007. Based on North American's 2007 projected fuel consumption for scheduled service and maintenance ferries, a 10% increase in the average price per gallon of fuel would increase fuel expense for 2007 by approximately $7.0 million annually. World Air Holdings does not currently purchase fuel under long-term contracts or enter into futures or swap contracts.

        World is not exposed to commodity price risks except with respect to the purchase of aircraft fuel. Fluctuations in the price of fuel have not had a significant impact on World's operations in recent years because, in general, World's charter contracts with its customers limit World Air Holdings' exposure to increases in fuel prices.

        Interest rates:    Under the Wachovia loan agreement, World Air Holdings' borrowings bear interest at fluctuating rates. The applicable rate is determined by either the bank's base lending rate, the Federal Funds Rate, the Eurodollar or LIBOR plus an applicable percentage. The rates applicable to outstanding borrowings fluctuate based on many factors including, but not limited to, general economic conditions and interest rates, including the prime rate, and the supply of and demand for credit in the London interbank market. There were no amounts outstanding on this loan facility at June 30, 2007.

        Foreign currency exchange rate risks:    Although some of World Air Holdings' revenues are derived from foreign customers, all revenues and substantially all expenses are denominated in U.S. dollars. The company maintains minimal balances in foreign bank accounts to facilitate the payment of expenses.

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BUSINESS

Overview of the combined company's business

        We are a global provider of diversified contract airlift services, offering our customers a range of aircraft types, configurations, payloads and capabilities. Our contracted flying can range from a single trip to contracts that span more than a year. We offer military and commercial charter services through our three operating airlines: ATA; World; and North American. Our fleet of 55 aircraft consists of a combination of passenger and freighter aircraft that support our three business lines. Our business lines—Military/Commercial Charter, ACMI and scheduled service—are diversified by service offering, customer base and geography, which we believe reduces our vulnerability to economic downturns.

        Our Military/Commercial Charter business is the largest transporter of U.S. military personnel and their families to and from overseas deployments, during times of conflict as well as peacetime. To a lesser extent, we provide customers of our Military/Commercial Charter business with cargo capacity. The U.S. Department of Defense relies almost exclusively on the commercial sector for its passenger transportation needs, and in 2006 we earned approximately 73% of the $1.2 billion in spending for international troop movement.

        Our ACMI business, which refers to arrangements in which our customers lease our aircraft at a rate based on aircraft, crew, maintenance and insurance costs, services primarily the global air cargo market. The air cargo market has experienced strong growth in the past ten years and is projected to grow at a rate of more than 6% annually over the next 20 years as international trade continues to expand.

        Our scheduled service business is primarily designed around ATA's codeshare arrangement with Southwest. A codeshare agreement is an agreement between airlines which allows an airline to sell seats on another airline's flights. Our codeshare agreement enables us to connect Southwest customers to destinations that Southwest does not serve, primarily Hawaii, while also allowing us to sell ATA-only itineraries on southwest.com. We also continue to explore strategic opportunities for our scheduled service businesses—including network restructuring international expansion, business combinations and partial or complete divestitures.

        The following chart sets forth our total revenues by business line for the year ended December 31, 2006, on a pro forma basis:

(dollars in billions)

Total revenues = $1.6 billion

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        For the year ended December 31, 2006, after giving pro forma effect to the merger, we generated revenues of $1.6 billion.

Competitive strengths

        Diversified revenue base—Each of our business lines—Military/Commercial Charter, ACMI and scheduled service—relies on a different customer base with diverse underlying performance drivers which we believe reduce our exposure to downturns in any single market. Our Military Charter service is primarily dependent upon U.S. military spending for transporting troops and cargo overseas, which in turn is partially driven by current geo-political events affecting the United States. ACMI is primarily dependent on international freight transportation, which in turn is driven by global trade. Scheduled service is primarily dependent upon the general health of the travel and tourism industry and the level of corporate spending on business travel, which in turn are driven by GDP growth.

        Unique business model—We believe that our unique business model cushions our operating and financial results from many of the economic and other factors that affect other airlines, and distinguishes us from our competitors. A significant percentage of our revenues are derived from contracts that are payable regardless of the number of passengers flown and freight carried. As a result, our operating and financial results are not disproportionately affected by factors such as changes in consumer preferences, perceptions, spending patterns, or demographic trends that can result in a change in the number of passengers. Additionally, a significant portion of our business is generated from customer contracts designed to reimburse us for actual fuel purchased and used. Therefore, we have reduced exposure to fluctuations in the price of jet fuel, which has increased dramatically since December 31, 2001. Finally, our military and many of our commercial charter and ACMI contracts are designed with a cost-plus pricing structure, and new entrants into the AMC's International Program must typically overcome significant obstacles. We believe interest from potential new competitors is limited as a result of the AMC aircraft payload and range requirements and the inflexibility of U.S. commercial airline labor work rules.

        Largest provider of military passenger transport services—According to publicly available data published by the AMC, collectively, our airline subsidiaries are the largest provider of military passenger transport services to the AMC. Through our teaming arrangements, we have the ability to capture approximately three-quarters of the AMC expenditures for the current government fiscal year. The U.S. Department of Defense continues to rely almost exclusively on the commercial sector to meet its passenger transportation needs.

        Well-positioned to benefit from increase in international trade—The air cargo market has experienced tremendous growth due to continued global economic expansion. The market is expected to more than triple over the next 20 years, growing at a rate of more than 6% annually. We believe our wide-body fleet is well positioned to capture this market, particularly on transatlantic, North-South America, transpacific and intra-Asia cargo routes. World currently operates six McDonnell Douglas MD-11 and two McDonnell Douglas DC-10-30 wide-body freighter aircraft and has entered into long-term lease agreements for two Boeing 747-400 freighter aircraft, which we believe are attractive aircraft in the current cargo market due to their superior capabilities and limited availability.

        Proven management team—We believe that our strong management team has enabled us and will continue to allow us to effectively execute our growth strategies. Our executive team has eight executives with prior CEO, CFO and COO-level experience in the airline industry, as follows:

Subodh Karnik has served as Global's President and Chief Executive Officer since January 1, 2007. Mr. Karnik joined Global in May 2005 as Senior Vice President and Chief Commercial Officer. Prior to his tenure at Global, Mr. Karnik held various management roles with Delta Airlines, Continental Airlines and Northwest Airlines;

Douglas Yakola, Chief Integration Officer of Global, who was formerly Senior Vice President and CFO of Global, with 20 years of finance and operations experience at ATA and Northwest Airlines;

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Josef Loew, Chief Strategy Officer of Global was formerly Senior Vice President, Passenger Service at ATA, with prior experience as Vice President at America West Airlines and as an executive at Priceline, Northwest Airlines and Canadian Airlines;

Robert R. Binns, Chief Marketing Officer of Global, with prior experience as CEO of TransMeridian Airlines and as an executive at Pegasus Aviation;

Gary Ellmer, Senior Vice President and COO of ATA, with prior experience as COO at Executive Airlines, Business Express and as an executive at American Eagle and Mesa Airlines;

Charles P. McDonald, Senior Vice President and COO of World, with prior experience as COO of TransMeridian Airlines and as an executive at British Aerospace and American Eagle; and

Jeffrey W. Wehrenberg, Senior Vice President and COO of North American, with prior experience as President of Chicago Express and as an executive with Mesaba and Express I.

Business strategy

        Our strategy is to offer different product lines to a range of customers in order to diversify our revenue base and reduce risk. The key elements of our strategy are:

        Optimize the fleet to support our diverse product portfolio—We will continue to optimize our fleet to meet the increasing demand in aircraft transportation for the markets we serve. We are expanding our fleet to include seven McDonnell Douglas DC-10-30 passenger wide-body aircraft and have entered into long-term lease agreements for two Boeing 747-400 freighter aircraft. Our fleet strategy is designed to enable us to maximize our share of the AMC market and capture more of the growing ACMI market. In addition, we will have the flexibility to shift aircraft among our business lines to effectively manage future changes in the markets we serve.

        Expand ACMI cargo business—We are focused on further diversifying our revenue base by continuing the expansion of our ACMI cargo business. We plan to increase our freighter fleet to include aircraft suited for Transpacific and intra-Asia routes, which are forecasted to be two of the fastest growing air cargo markets. We have entered into long-term lease agreements for two Boeing 747-400 freighter aircraft.

        Selectively pursue strategic acquisitions and opportunities in our core business lines—We believe that there are significant opportunities for future growth through a select number of strategic acquisitions, particularly in our international AMC and ACMI cargo business. We regularly evaluate potential acquisition candidates, which we believe could fit our business strategy, which may or may not be material in size and scope. We intend to continue to apply a selective and disciplined acquisition strategy, which is focussed on improving our financial performance in the long-term, expanding the services we provide to existing customers and, in some cases, providing us with new customers, who further diversify our customer base. An important component of our strategy is to achieve substantial profit growth and shift our resources to focus on the expansion of our international AMC and ACMI cargo business and the continued integration of World. As such, we continue to evaluate selective and strategic opportunities in our scheduled service business at our airline entities—including significant restructuring of the network, international expansion, business combinations and partial or complete divestitures.

        Maintain efficient cost structure and extract synergies—Our contract airlift business model has required us to develop and maintain a competitive cost structure. In addition to having a fuel-efficient business model, we have reduced our fixed costs by outsourcing our maintenance, ground handling and reservation systems. We will continue to seek other opportunities to streamline our operations. As we complete the integration of the World Air Holdings acquisition, we plan to further reduce our costs

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through rationalization of back office and other functions and by leveraging the commonality of our fleets.

Our business lines

Military/Commercial Charter.

        We have been active in the business of transporting military service personnel and their families to and from overseas destinations since 1952. The U.S. Department of Defense relies almost exclusively on the commercial sector for its passenger transportation needs, and in 2006 we earned approximately 73% of the $1.2 billion in spending for international troop movement. We contract with the AMC, participating primarily in their International Program. To a lesser extent, we provide AMC cargo capacity mainly to move military supplies overseas. We are currently operating two McDonnell Douglas DC-10-30 wide-body freighters to service this market. The U.S. military, through the AMC, contracts with commercial airlines to provide nearly all of the airlift requirements for its personnel. The AMC assigns its peacetime airlift business by awarding entitlement points to air carriers in proportion to the number and type of aircraft they pledge to make available to CRAF. By participating in CRAF, airlines are able to fly AMC charter missions as well as contract with the General Services Administration, which purchases seats on their scheduled service flights. Most airlines choose not to fly AMC charters, and instead enter into teaming arrangements which allow them to monetize their unused entitlement points by receiving commissions from airlines such as ATA and World that fly on behalf of the teams. There are currently two large teams, FedEx and Alliance, that in government fiscal year 2008 account for approximately 42% and 49%, respectively, of the entitlement points. ATA is a member of the FedEx team while North American and World are members of the Alliance team. The teams allocate points from team members that do not fly AMC missions to other team members, such as ATA, North American and World, and collect a commission on the charter revenue derived from those points. Omni Air International, Inc. and ATA fly most of the passenger requirements of the FedEx team. For government fiscal year 2008, World and North American are entitled to fly 100% of the Alliance team's passenger requirements.

        Our contract with the AMC is designed to reimburse contracting airlines based on the average costs of all participating airlines, plus a fixed operating margin. Because our contracts provide for a pass-through of actual fuel costs to the military, this business is insulated from fuel price volatility.

        Participants in the AMC's International Program must (1) be U.S. registered airlines, (2) demonstrate twelve continuous months of comparable flying as will be utilized in AMC charters, (3) have the fleet capability to fly long-range, over-water and heavy payload flights, (4) have labor contracts that allow for flexibility to conduct extended international missions with relatively short notice as to specific routings and (5) be admitted as a member of a participating AMC team or be otherwise entitled to fly international missions under the AMC program. These requirements have historically precluded international carriers, as well as most low cost carriers and major domestic airlines from participating in these programs.

        We also sell charter services to other governmental and commercial customers using our military charter fleet, primarily during off-peak periods in our military service. Our recent charter air travel customers include tour operators, professional and collegiate sports teams and organizations and corporations. Typically, we enter into charter agreements that limit our exposure to variability in the price of fuel. The AMC also runs a much smaller domestic program, in which we also compete, that is open to bids, on an individual flight basis, from all U.S. airlines that participate in CRAF. These flights are awarded based on comprehensive bidding rather than entitlement, and there is no fuel cost pass-through on domestic military business.

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ACMI.

        We participate in the global air cargo market primarily through the operation of freighter aircraft under ACMI contracts and believe we are well-positioned to capitalize on the growing ACMI cargo market. ACMI, or wet lease, contracts offer our airline customers the flexibility to supplement capacity in existing markets, and/or to serve increased demand in seasonal markets, all without committing dedicated aircraft for extended periods. The customer leases aircraft from us at a revenue rate based on aircraft, crew, maintenance and insurance costs, and is responsible for paying for all other operating expenses, including fuel.

        We currently operate six McDonnell Douglas MD-11 wide-body freighters and up to two McDonnell Douglas DC-10-30 wide-body freighters to service this growing market and have entered into long-term lease agreements for two Boeing 747-400 freighter aircraft delivering in mid-2008. Currently, we have ACMI cargo contracts with Lufthansa, DHL, and other carriers in American, European, and Asian markets and the Persian Gulf.

        We also provide ACMI passenger services with aircraft that are well-suited to provide supplemental capacity to other airlines in times of increased demand and/or operational challenges. We have provided ACMI passenger services for carriers such as Air Jamaica, Aer Lingus and JetBlue over the last twelve months. We also operate a specifically configured McDonnell Douglas MD-11 aircraft on behalf of Sonair Services Aero, SARL, a subsidiary of the Angolan national oil company, transporting oil workers and executives within the U.S.-Africa Energy Association, a not-for-profit corporation, three times a week between Houston and Luanda, Angola.

Scheduled service.

        We offer scheduled passenger service through ATA and North American. ATA designs its scheduled service operations around a codeshare agreement with Southwest Airlines. We currently operate more than 48 daily scheduled service flights from various western U.S. airports to Hawaii and over certain routes on the U.S. mainland. We may, however, decide to discontinue particular routes in the future. For example, we recently decided to discontinue our Chicago Midway routes to New York-LaGuardia, effective January 7, 2008; Washington D.C., effective November 28, 2007 and Honolulu to Ontario, effective January 7, 2008.

        A significant portion of our passengers purchase ATA tickets through Southwest distribution channels or come to ATA on connecting flights through Southwest focus cities. Most of our domestic flights are available for purchase on southwest.com.

        Our North American subsidiary provides international non-stop scheduled flights between New York's John F. Kennedy International Airport and Georgetown, Guyana, and Lagos, Nigeria. North American also provides weekly scheduled service from Accra, Ghana, nonstop to JFK with continuing service to Baltimore/Washington International Thurgood Marshall Airport.

        We also continue to explore strategic opportunities for our scheduled service businesses—including network restructuring, international expansion, business combinations and partial or complete divestitures.

        Codeshare agreement.    ATA's codesharing with Southwest began in February 2005 and has two components:

•

a "connect" codeshare service whereby both ATA and Southwest sell passenger itineraries consisting of both ATA and Southwest flight legs; and



•

a "local" codeshare service whereby Southwest acts as ATA's distribution channel selling ATA-only itineraries on Southwest's website and via Southwest reservations.

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Our Aircraft

        Our fleet of 55 aircraft consists of a combination of passenger and freighter planes that support our three businesses. We lease of all our aircraft, except as indicated below:

	Number of Each Aircraft Type
Aircraft Type	ATA		World		North American	Total	Average Age (in years)
Boeing 737-300	1		—		—	1	17
Boeing 737-800	12		—		—	12	6
Boeing 757-200	6		—		5	11	9
Boeing 757-300	4		—		—	4	5
Boeing 767-300	—		—		5	5	11
Lockheed L-1011-500	3	*	—		—	3	25
McDonnell Douglas MD-11	—		8		—	8	14
McDonnell Douglas DC-10-30	2		1	*	—	3	30
McDonnell Douglas DC-10-30 freighter	—		2		—	2	32
McDonnell Douglas MD-11 freighter	—		6		—	6	13
	28		17		10	55

*

Owned aircraft.

        In 2005, ATA certified its B737-800 aircraft for Extended-range Twin-engine Operational Performance Standards, or ETOPS, allowing them to operate on over-water routes from the western United States to Hawaii. ATA's Boeing 757 aircraft also are certified for ETOPS and are well suited for medium-haul scheduled service operations, deployed in both our military charter service and our scheduled service, including on western United States to Hawaii routes. ATA uses its Lockheed L-1011 aircraft exclusively in its military charter service as their long-range capabilities and seating configuration are well suited to the AMC's passenger transportation needs. ATA is in the process of retiring its B737-300 fleet.

        World's operating fleet consists of 17 aircraft, of which nine are passenger aircraft and eight are freighter aircraft. North American's operating fleet consists of ten aircraft, all of which are operated in passenger configurations. A core concept of World Air Holdings' business model is having a flexible aircraft fleet, which has allowed it to cross utilize the same passenger aircraft in its AMC, charter or scheduled service businesses. This flexibility has allowed World Air Holdings to maximize aircraft utilization.

        In addition, ATA has entered into lease agreements for seven McDonnell Douglas DC-10-30 wide-body aircraft, entered into revenue service on a phased-in basis beginning in the second quarter of 2007. We expect all of these DC-10-30 aircraft to be operational by the first quarter of 2008. World has entered into long-term lease agreements for two Boeing 747-400 freighter aircraft beginning in late 2008.

Competition

        Military Charter Service.    The passenger charter business is highly fragmented, and Global faces competition both from charter airlines as well as scheduled service airlines seeking to utilize marginal capacity. Much of the U.S. leisure charter business has been replaced by scheduled service offered by low cost carriers. We believe that the most important criteria for competition in the charter business includes the range, as well as passenger capabilities, of the aircraft, in addition to the price, flexibility, quality and reliability of the air transportation service provided. In the AMC International Program, airlines that desire to fly for the U.S. military use teaming arrangements to increase their entitlement.

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The two principal teams are FedEx and Alliance. For government fiscal year 2008, the FedEx team has 42% of the AMC International Program's entitlement points. The Alliance team has 49% of the AMC International Program's entitlement points and World and North American are entitled to fly 100% of the Alliance team's passenger requirements.

        ACMI.    The market for ACMI services is highly competitive. We believe that the most important basis for competition in the ACMI business are the age of the aircraft fleet, the payload and cubic capacities of the aircraft and the price, flexibility, quality and reliability of the air transportation services provided. We believe that our ability to grow the ACMI business depends upon economic conditions, the level of commercial activity and our continuing ability to convince major international airlines that outsourcing their air cargo needs is more effective and efficient than undertaking cargo operations with their own incremental capacity and with other resources.

        Scheduled service.    The airline industry is highly competitive. Airline profit levels are sensitive to adverse changes in fuel costs, average fare levels and passenger demand. Passenger demand and fare levels have historically been influenced by, among other things, the general state of the economy, international events, industry capacity and pricing actions taken by other airlines. The principal competitive factors in the airline industry are flight schedules, fare pricing, appeal to frequent flyers and reputation for customer service. Many of our competitors are larger than we are and have significantly greater financial resources and serve more routes than Global does. Some of these competitors have chosen, and may in the future choose, to add service, reduce their fares or both, on current or future routes.

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Employees

        As of the date of this prospectus, we employed 4,560 personnel, of whom 3,063 were represented under collective bargaining agreements. The following summarizes the status of our collective bargaining agreements at our three airlines and the number of included employees as of September 30, 2007:

Employee Group	Number of Employees	Union	Contract Status
ATA
Cockpit Crew	599	Airline Pilots Association (ALPA)	Amendable on October 1, 2008
Flight Attendants	839	Association of Flight Attendants (AFA)	Amendable on October 31, 2008
Mechanics	108	Aircraft Mechanics Fraternal Association (AMFA)	Amendable on June 1, 2009
Ramp	0	International Association of Machinists (IAM)	Amendable on September 20, 2008
Storekeepers/Toolroom	26	IAM	Amendable on February 7, 2010
Dispatchers	13	Transport Workers Union (TWU)	Amendable on May 1, 2010
World
Cockpit Crew	409	International Brotherhood of Teamsters (IBT)	Amendable in March 1, 2009
Flight Attendants	567	IBT	Tentative agreement reached
Dispatchers	12	TWU	Amendable in December 2008
North American
Cockpit Crew	160	IBT	Under negotiation
Flight Attendants	330	IBT (status of representation pending)	Under negotiation

        Relations between air carriers and labor unions in the United States are governed by the Railway Labor Act, or the RLA. Under the RLA, collective bargaining agreements generally contain "amendable dates" rather than expiration dates, and the RLA requires that a carrier maintain the existing terms and conditions of employment following the amendable date through a multi-stage bargaining process overseen by the National Mediation Board. This process continues until either the parties have reached agreement on a new collective bargaining agreement, or the parties have been released to "self-help" by the National Mediation Board. Although in most circumstances the RLA prohibits strikes, after release by the National Mediation Board, airlines and unions are free to engage in self-help measures such as strikes and lock-outs. Four of our labor agreements become amendable during 2008.

        While we believe that relations with our employees are satisfactory, any prolonged dispute with employees or work stoppages, whether or not the affected employees are represented by a union, could have a material adverse impact on our financial condition, results of operations and cash flows.

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Fuel

        Prices and availability of aviation fuel are subject to political, economic and market factors that are generally outside of our control. Prices may be affected by many factors including: the impact of political instability and crude oil production, unexpected changes in the availability of petroleum products due to disruptions at distribution systems or refineries, unpredicted increases in demand due to weather or the pace of economic growth, inventory levels of crude oil and other petroleum products, and the relative fluctuation between the U.S. dollar and other major currencies.

        On a pro forma basis, fuel costs constituted our largest operating expenses, comprising 27% of our pro forma total operating expenses for 2006. Military contracts and certain full service charter contracts contain terms that have limited World Air Holdings' exposure to increases in fuel prices. However, the terms of such contracts are renewed annually and take into consideration estimated market prices for fuel for the period under contract and are reconciled based on actual fuel prices. ATA purchases a portion of its fuel needs on a spot basis, taking delivery in the Gulf Coast and shipping it through pipelines to certain scheduled service locations. ATA generally makes these purchases six to twelve weeks in advance of consuming the fuel. To date, Global has not chosen to enter into futures or fuel swap contracts.

Flight Operations and Aircraft Maintenance

        Each of our airline subsidiaries maintain a 24-hour operations center to enable the worldwide dispatch of our aircraft. We are able to dispatch maintenance and operational personnel and equipment as necessary to support flight operations around the world. Each of our airline subsidiaries use both internal staff and contract personnel to maintain our aircraft under programs approved by the FAA.

Insurance

        Global and World Air Holdings carry types and amounts of insurance we believe to be customary in the airline industry, including coverage for public liability, passenger liability, property damage, aircraft loss or damage, baggage and cargo liability and workers' compensation.

        Following the terrorist attacks of September 11, 2001, commercial aviation insurers significantly increased the premiums and reduced the amount of war-risk coverage available to commercial carriers. The U.S. government has provided supplemental war-risk coverage to U.S. air carriers, including Global and World Air Holdings, as a result of the reduction in coverage offered by the commercial market. This insurance program has been extended to March 30, 2008. We are unable to predict whether the government will extend this insurance coverage past March 30, 2008, whether alternative commercial insurance with comparable coverage will become available at reasonable premiums, and what impact this will have on our ongoing operations or future financial performance.

Regulation

        General.    We are subject to regulation by the Department of Transportation, or DOT, the Federal Aviation Administration, or FAA, the Transportation Security Administration, or TSA, and numerous other governmental agencies.

        The DOT principally regulates economic matters affecting air service, including air carrier citizenship, certification and fitness, insurance, leasing arrangements, allocation of route rights, authorization of proposed scheduled and charter operations, allocation of certain airport slots not controlled by the FAA, consumer protection and competitive practices. The DOT has the authority to investigate and institute proceedings to enforce its economic regulations and may assess civil penalties, order carriers to cease and desist from violations, revoke operating authority and seek criminal sanctions. Our current certificates of public convenience and necessity, issued by DOT to ATA in 1981 (and reissued in 2003), North American in 1990 and World in 1948, authorize us to engage in air transportation within the United States, its territories and possessions and to perform charter trips in

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both domestic and international regions. The DOT may revoke such certificate, in whole or in part, for intentional failure to comply with certain provisions of the U.S. Transportation Code, or any order or regulation issued thereunder, or any term of such certificate after notice to the certificate holder and an opportunity to appeal.

        The FAA primarily regulates flight operations, particularly matters affecting air safety, including airworthiness requirements for each type of aircraft, the licensing of pilots, mechanics and dispatchers and the certification of flight attendants. The FAA requires each carrier to obtain an operating certificate authorizing the carrier to fly to specific airports using specified equipment. We have, and maintain, FAA certificates of airworthiness for all of their respective aircraft, and have the necessary FAA authority to fly to all of the cities that they currently serve.

        Like all U.S. certificated carriers, we cannot fly to new destinations without the prior authorization of the FAA. If we fail to comply with FAA regulations, the FAA has the authority to modify, suspend temporarily or revoke permanently our authority, or that of our licensed personnel, to provide air transportation, after providing notice and opportunity for a hearing. The FAA can assess civil penalties for such failures or institute proceedings for the imposition and collection of monetary fines for the violation of certain FAA regulations. The FAA can revoke our authority to provide air transportation on an emergency basis, without providing notice and a hearing, where significant safety issues are involved. The FAA monitors our compliance with maintenance, flight operations and safety regulations, maintains onsite representatives and performs frequent spot inspections of our aircraft, employees and records.

        The FAA also has the authority to issue maintenance directives and other mandatory orders relating to, among other things, inspection of aircraft and engines, fire retardant and smoke detection devices, increased security precautions, collision and windshear avoidance systems, noise abatement and the mandatory removal and replacement of aircraft parts that have failed or may fail in the future.

        The civil aviation security functions of the FAA were transferred to the TSA under the Aviation Security Act. The TSA operates under the Department of Homeland Security and is responsible for all civil aviation security, including passenger and baggage screening, cargo security measures, airport security, assessment and distribution of intelligence, and security research and development. The TSA also has law enforcement powers and the authority to issue regulations. In cases of national emergency it may issue regulations without a notice or comment period.

        Based upon bilateral aviation agreements between the United States and other nations, or, in the absence of such agreements, comity and reciprocity principles, we, as charter carriers, are generally not restricted as to the frequency of our flights to and from most foreign destinations. However, these arrangements generally restrict us to the carriage of passengers and cargo on flights which either originate in the United States and terminate in a single foreign nation, or which originate in a single foreign nation and terminate in the United States. The civil aeronautics authorities in the relevant countries must generally specifically approve proposals for any charter service unless specifically authorized by bilateral agreements. Approval of such requests is typically based on considerations of comity and reciprocity and cannot be guaranteed. Charter worthiness rules specifying the terms and conditions under which charter traffic may be carried are generally established either by the terms of the applicable bilateral agreement or by the country of origin of the charter traffic.

        We believe that Global and World Air Holdings are currently operating in material compliance with DOT, FAA and TSA regulations and hold all necessary operating and airworthiness authorizations and certificates. A modification, suspension or revocation of any of our DOT or FAA authorizations or certificates could have a material adverse effect on our respective business or on the business of the combined company.

        Airport Access.    JFK Airport, LaGuardia Airport and Ronald Reagan National Airport are subject to the high-density traffic rule established by the FAA in 1968. This rule limits the number of scheduled flights at each of the subject airports during specified periods of time. At JFK, LaGuardia and Reagan

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National there is a limit on the number of scheduled flights from 6:00 a.m. to midnight, and carriers must obtain slots from the FAA or, in certain cases, exemptions from the DOT in order to operate at these airports during the restricted period.

        The FAA is currently working on a revision to the high-density rule and is working with all interested parties. The FAA's current rulemaking proposals do not indicate any negative impact on us, but there can be no assurance that these rules will not be changed, including in a manner that adversely affects us.

        In addition to various federal regulations, local governments and authorities in certain regions have adopted regulations governing various aspects of aircraft operations, including noise abatement procedures, curfews and restrictions on the use of airport facilities.

        CRAF.    Our airline subsidiaries are participants in the CRAF program, which permits the U.S. Department of Defense to utilize our aircraft during national emergencies when the need for military airlift exceeds the capability of military aircraft. Only twice, during the Persian Gulf War and again during the war in Iraq, have commercial air carriers been mobilized by the military to use their aircraft. By participating in this program, we are eligible to bid on and be awarded certain airlift contracts with the military.

        Foreign Ownership.    Under federal law and DOT regulations, we must be a citizen of the United States. In this regard, we must be incorporated under the laws of the United States or one of the states, our president and at least two-thirds of our board of directors and key management officials must be U.S. citizens and not more than 25% of our voting interest may be owned or controlled by non-U.S. citizens. In addition, under existing precedent and policy, actual control of us must reside with U.S. citizens. As a matter of regulatory policy, the DOT has stated that it will not permit aggregate equity ownership of a domestic air carrier by non-U.S. citizens in an amount in excess of 25% in the case of ownership by citizens of countries not having liberal "open skies" bilateral agreements. Citizens of countries having open skies bilateral agreements may own additional equity taking the total foreign equity to 49%. We currently are in compliance with these ownership provisions.

        Other Regulations.    Various aspects of airline operations are subject to regulation or oversight by federal agencies other than the DOT, FAA and TSA. The U.S. Postal Service has jurisdiction over certain aspects of the transportation of mail and related services provided by ATA. Employee relations in the air transportation industry are generally regulated under the Railway Labor Act, which vests in the National Mediation Board certain regulatory powers with respect to disputes between airlines and employee unions arising under collective bargaining agreements. We also are subject to the jurisdiction of the Federal Communications Commission regarding the utilization of radio equipment. In addition, the Immigration and Naturalization Service, the U.S. Customs Service, and the Animal and Plant Health Inspection Service of the Department of Agriculture have jurisdiction over inspection of our aircraft, passengers and cargo to ensure compliance with U.S. immigration, customs and import laws. Moreover, while our aircraft are in foreign countries, we must comply with the requirements of similar authorities in those countries. The U.S. Commerce Department also regulates the export and re-export of our U.S.-manufactured aircraft and certain equipment.

        We are also subject to state and local laws and regulations at locations where we operate and the regulations of various local authorities that operate the airports we serve.

        Future Regulation.    Congress, the DOT, the FAA, the TSA and other governmental agencies have under consideration, and in the future may consider and adopt, new laws, regulations and policies regarding a wide variety of matters that could affect, directly or indirectly, our operations, ownership and profitability. In the past, during a period of fuel scarcity, air carrier access to jet fuel was subject to allocation regulations promulgated by the Department of Energy. We cannot predict what other matters might be considered in the future by the FAA, the DOT or Congress, nor can we judge what impact, if any, the implementation of any future proposals or changes might have on our business.

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Environmental Matters

        Our operations are subject to comprehensive federal, state, and local laws and regulations relating to pollution and the protection of the environment, including those governing aircraft noise, the discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, and the cleanup of contaminated sites. Some of our respective operations require environmental permits and controls, and these permits are subject to modification, renewal and revocation by issuing authorities.

        The Airport Noise and Capacity Act of 1990 recognizes the right of airport operators with special noise problems to implement local noise abatement procedures as long as those procedures do not interfere unreasonably with the interstate and foreign commerce of the national air transportation system. Certain airports, including Reagan National Airport, have established restrictions to limit noise, which can include limits on the number of hourly or daily flights and the time of such flights. These limitations serve to protect the noise-sensitive communities surrounding the airport. As a result, ATA has been and may continue to be required to reduce our hours of operation at particular airports, to install noise abatement equipment on our aircraft or to change operational procedures during takeoff and landing. At the present time, we believe that our airline equipment and scheduled flights are in material compliance with these and other local noise abatement requirements to which we are subject. For example, ATA's scheduled flights at Ronald Reagan National Airport are in compliance with the noise curfew limit, but when ATA has experienced irregular operations, on occasion it has violated this curfew. We do not believe any such restrictions or violations will have a material adverse effect on the combined company's financial condition, results of operations or cash flows.

        At our aircraft maintenance facilities and the airports we serve, materials are used such as aircraft deicing fluids, fuel, oils and other materials that are regulated as hazardous under federal, state or local laws. We are required to maintain programs to protect the safety of the employees who use these materials and to manage and dispose of any wastes generated by the use of these materials in compliance with applicable laws. The Environmental Protection Agency regulates operations, including air carrier operations that affect the quality of air in the United States, such as the discharge of aircraft emissions exhaust into the environment. We believe we have made all necessary modifications to their respective operating fleets to meet fuel-venting requirements and smoke-emissions standards.

        Although we believe we are in compliance in all material respects with applicable environmental laws, we could incur substantial costs, including cleanup costs, fines, civil or criminal penalties, or third-party property damage or personal injury claims as a result of violations of, or liabilities under, environmental laws or noncompliance with the environmental permits required for our operations. In addition, the adoption of new or more stringent requirements could increase the cost of our operations, require significant capital expenditures or result in material restrictions on our operations.

Facilities

        Global's corporate offices are located in Peachtree City, Georgia. The lease expires on April 30, 2019.

        World Air Holdings leases office space in Peachtree City, Georgia for its corporate headquarters and substantially all of the administrative employees of World Air Holdings and World. Additionally, North American leases office space in Jamaica, New York for its administrative employees.

        ATA leases office space in Indianapolis, Indiana. This lease expires in 2010.

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MANAGEMENT

Directors and executive officers

        Set forth below is information with respect to our directors and executive officers as of the date of this prospectus.

Name	Age	Position
Subodh Karnik	46	Director, President and Chief Executive Officer
William Garrett	42	Executive Vice President and Chief Financial Officer
Doug Yakola	42	Chief Integration Officer
Gary Ellmer	53	Senior Vice President and Chief Operating Officer, ATA
Josef Loew	51	Chief Strategy Officer
Robert R. Binns	43	Chief Marketing Officer
Charles P. McDonald	43	Senior Vice President and Chief Operating Officer, World
Jeffrey W. Wehrenberg	47	Senior Vice President and Chief Operating Officer, North American
Mark M. McMillin	53	Senior Vice President, General Counsel and Company Secretary
Richard W. Meyer, Jr.	59	Senior Vice President, Human Resources Policy
John Denison	62	Chairman of the Board of Directors
Gen. Duane H. Cassidy	73	Director
Marc Chodock	29	Director
David Matlin	45	Director
Peter Schoels	34	Director
Lawrence M. Teitelbaum	52	Director
Randy J. Martinez	52	Director

        Subodh Karnik has served as Global's President and Chief Executive Officer since January 1, 2007 and was appointed to Global's board of directors in May 2007. Mr. Karnik joined Global in May 2005 as Senior Vice President and Chief Commercial Officer. In January, 2006, he was promoted to Executive Vice President and Chief Operating Officer. Prior to joining Global, Mr. Karnik was Senior Vice President of Marketing Planning at Delta Air Lines from 2001 to 2004. Before joining Delta in 1999, he worked as Staff Vice President of International Finance at Continental Airlines and Chief Financial Officer of a subsidiary, Continental Micronesia, from 1996 to 1999. He moved to Continental from Northwest Airlines, where he maintained responsibilities in alliances, international sales, revenue management and strategic planning commencing in 1991. Prior to entering the airline industry, Mr. Karnik held internal and external consultant roles with Ernst & Young and Unilever India. A native of Mumbai, India, Mr. Karnik holds a BS in Mechanical Engineering from the Birla Institute of Technology and Science and an MBA from the University of Michigan Ross School of Business.

        William Garrett joined Global in November 2007 as Executive Vice President and Chief Financial Officer. In this role, Mr. Garrett has direct responsibility over all aspects of Global's financial departments and related functions. During 2007, Mr. Garrett was previously employed by MatlinPatterson Global Advisors LLC, providing senior advisory and restructuring management services to its international aviation investments. Prior to joining MatlinPatterson, from 2000 through 2006, Mr. Garrett served as the Chief Operating Officer and previously as the Chief Financial Officer of Gemini Air Cargo, an international cargo airline operating widebody, freighter aircraft primarily under ACMI

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contracts. Mr. Garrett served as the Chief Financial Officer of Vanguard Airlines, Inc. from 1996 through 1999. Prior to entering the airline industry, Mr. Garrett spent nine years in public accounting, providing accounting and auditing services, most recently with Ernst & Young LLP and initially with PriceWaterhouse Cooper LLP. While in public accounting, Mr. Garrett had a concentration in transportation and high growth companies. Mr. Garrett holds a B.S. in Business Administration and Accounting from Washington and Lee University.

        Doug Yakola has served as Global's Chief Integration Officer since September 2007. Mr Yakola joined Global in 2003 as Vice President, Station Operations and Cargo. In 2005, he was promoted to Senior Vice President, Customers and Ground operations and in January 2006, he was promoted to Senior Vice President and Chief Financial Officer. In addition to his finance and accounting responsibilities, Mr. Yakola is responsible for Strategic Sourcing, Information Technology, and Real Estate. Prior to joining Global in 2003, Mr. Yakola spent 18 years at Northwest Airlines in various capacities. Mr. Yakola holds a BS in Business Administration from the University of Central Florida and an MBA from the Kellogg School of Management—Northwestern University.

Gary Ellmer joined Global in September 2006 and since September 2007 has served as Senior Vice President and Chief Operating Officer of ATA. He has direct responsibility for flight and technical operations as well as Global's Charter business. Mr. Ellmer served as Senior Vice President, Operations and General Manager, Charter at ATA from September 2006 to September 2007. Mr. Ellmer has 25 years of extensive and diverse airline management experience and joined Global from American Eagle, where he was Vice President of Business Development from May 2006 to August 2006. Mr. Ellmer has previously served in various leadership positions, including President and Chief Operating Officer of Executive Airlines, a division of American Eagle Airlines, from August 2002 to May 2006, President and Chief Operating Officer of Business Express Airlines from April 1994 to June 2000, and Vice President, Maintenance and Engineering at WestAir Commuter Airlines/Mesa Airlines from 1988 to 1994. Prior to entering the commercial airline industry, in 1980, Mr. Ellmer spent eight years in the U. S. Marine Corps as a mechanic and crewmember aboard UH-1 helicopters and as a flight engineer and instructor on KC-130 Tanker Aircraft. Mr. Elmer holds a BS in Aeronautics from Long Beach City College.

Josef Loew joined Global in March 2006 as Senior Vice President, Scheduled Service. In this role, Mr. Loew has direct responsibility for Global's Marketing and Market Planning functions as well as Inflight, Station Operations and Cargo. Mr. Loew previously served as Vice President for Revenue Management at America West Airlines and held various other roles at Northwest Airlines and Canadian Airlines. Immediately prior to joining Global, Mr. Loew served as Head of Product at SITA INC Canada Inc., driving the development and marketing of its Airline Pricing and Fares Management business unit. He holds a BS in Applied Physics from Fachhochschule Munich and an MBA in Finance from the University of Calgary.

Robert R. Binns was appointed Chief Marketing Officer of Global in September 2007. He had previously served as Chief Marketing Officer of World from August 2005 to September 2007. He joined World in April 2004 as Senior Vice President of Marketing and Planning. Prior to joining World, Mr. Binns was President and Chief Executive Officer of TransMeridian Airlines from April 2002 to April 2004 and previously had been its Chief Financial Officer from December 2001 to April 2002. Mr. Binns was Vice President and Controller for the technical division of Pegasus Aviation from April 2000 through December 2001, and also spent several years with TWA in a variety of positions, including General Auditor.

Charles P. McDonald was appointed Senior Vice President and Chief Operating Officer of World in September 2007. He had previously served as Chief Operating Officer of World from April 2005 to September 2007. His responsibilities include Flight Operations, Aircraft Maintenance and Engineering, In-Flight Services, Customer Service, Safety, and Human Resources. He first joined World in May 2004 as Senior Vice President of Operations. Mr. McDonald has over 18 years of aviation experience, most recently as Chief Operating Officer of TransMeridian Airlines from 1999 through 2004. Prior to this position, Mr. McDonald held senior-level positions with British Aerospace Regional Aircraft from 1995

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to 1999 and the AMR Corporation, including Director of Aircraft Maintenance for Flagship Airlines from 1988 through 1995.

Jeffrey W. Wehrenberg was appointed Senior Vice President and Chief Operating Officer of North American. He had previously served as Chief Operating Officer of North American from February 2006 to September 2007. Prior to joining North American, Mr. Wehrenberg served as President of New Heights Aviation Services, LLC from August 2005 until February 2006. Mr. Wehrenberg served as Vice President—Ground Operations and Director—System Operations Control at Mesaba Aviation (Northwest Airlink) from September 2000 through June 2005.

Mark M. McMillin was appointed Global's Senior Vice President, General Counsel and Secretary on September 27, 2007. He had previously served as the General Counsel and Corporate Secretary of World Air Holdings from May 2005 to September 27, 2007. Mr. McMillin was the Assistant General Counsel for World Air Holdings from December 2003 to May 2005. Mr. McMillin has nearly 19 years of general corporate, transactional and litigation experience including serving as general counsel for companies in the telecommunications and pharmaceutical industries. He is a member of the New York, Connecticut, Virginia, and Washington D.C. bar associations. Prior to entering the legal profession, Mr. McMillin joined GTE through its management training program in 1980 and before that served as a platoon leader with the 11th Armored Cavalry "Black Horse" Regiment in Germany during the late 1970's and was honorably discharged from the service at the rank of captain.

Richard W. Meyer, Jr. was appointed Global's Senior Vice President, Human Resources Policy on September 27, 2007. He joined Global in 1989 as Vice President of Human Resources with responsibility for both Human Resources and Labor Relations. In 2005 he was promoted to Senior Vice President of Employee Relations and served in that capacity until he was appointed to his current position earlier this year. Mr. Meyer spent 13 years at Cummins Engine Company in a variety of human resources management positions, followed by three years in various consulting roles prior to joining Global. Mr. Meyer holds a BS degree in Journalism from Ball State University.

John Denison has served as Chairman of Global's board of directors since January 2006. Mr. Denison joined Global as Co-Chief Restructuring Officer in January 2005. He served as President and Chief Executive Officer of ATA, Inc. from February 2005 until December 2006. Mr. Denison joined Global following a three-year period of retirement from Southwest Airlines. While at Southwest, Mr. Denison's responsibilities included serving as Executive Vice President of Corporate Services and Chief Financial Officer. Prior to joining Southwest, Mr. Denison served for six years in various corporate finance roles at LTV Corporation in Dallas, Texas. Among other responsibilities, he assisted in the financial restructuring of the conglomerate that held interests in aerospace defense, steel and energy. Prior to LTV, Mr. Denison spent more than a decade at the Chrysler Corporation where he was part of a team responsible for obtaining the government assistance that was necessary for the automaker's restructuring efforts. Mr. Denison holds a BA in Economics from Oakland University in Rochester, Michigan and an MBA in Finance from Wayne State University.

General Duane H. Cassidy (USAF Ret.) has served as director on Global's board of directors since April 2006. General Cassidy attained the rank of four stars in 1985 and served as Commander in Chief of the Military Airlift Command and the U.S. Transportation Command before retiring in 1989. Upon retirement, General Cassidy joined CSX Corporation and served in senior management positions as President of CSX/Sealand logistics, Senior Vice President for Sales and Marketing of CSX Transportation and as the Corporate Senior Vice President and Chairman of the Commercial Board before retiring in 2000. Since retirement from CSX, he has served on several boards and consulted principally in the field of transportation. General Cassidy holds a BS in Geography from University of Nebraska and a MS from Troy State University. General Cassidy has attended management schools at The Kellogg School at Northwestern University and at the Kennedy School of Government at Harvard University. General Cassidy currently serves on the board, as immediate past Chairman, of the Airlift/Tanker Association and on the board of the Special Operations Warrior Foundation. He served as a Commissioner on a Base Realignment and Closure Commission and recently co-chaired a similar commission for the Governor of the State of Florida.

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        Marc Chodock has served as a director on Global's board of directors since March 2006. Mr. Chodock is currently a principal at MatlinPatterson, where he started as an analyst in February 2003. Prior to joining MatlinPatterson Global Advisers LLC, Mr. Chodock served as a management consultant at McKinsey & Company. Mr. Chodock holds a Bachelor of Science in Economics from the University of Pennsylvania's Wharton School of Business and a Bachelor of Applied Science in Biomedical Science from the University of Pennsylvania's School of Engineering and Applied Science.

David Matlin has served as a director on Global's board of directors since November 2006. Mr. Matlin serves as the Chief Executive Officer of MatlinPatterson Global Advisers LLC, an $8.9 billion private equity firm that he co-founded in 2002 in a spin-off from Credit Suisse First Boston. Prior to the formation of MatlinPatterson in 2002, Mr. Matlin was a Managing Director at Credit Suisse First Boston and the head of its Distressed Securities Group since its formation in 1994. Prior to joining Credit Suisse First Boston, Mr. Matlin was co-founder and Managing Director of Distressed Securities of Merrion Group, L.P., a successor to Scully Brothers & Foss L.P., from 1988 to 1994. Mr. Matlin holds a BS in Economics from the University of Pennsylvania's Wharton School of Business and a JD from UCLA School of Law.

Peter Schoels has served as a director on Global's board of directors since March 2006. Mr. Schoels joined MatlinPatterson in 2002 as a partner. Prior to joining MatlinPatterson Global Advisers LLC, Mr. Schoels served as a member of Credit Suisse First Boston's Distressed Securities Group, making investments in North America, Latin America, Europe and the CIS. Prior to joining Credit Suisse First Boston, Mr. Schoels served as Director of Finance and Strategy for Tradeledger and Knowledge Platform, both subsidiaries of Itim Group Plc. Prior to these roles, he was Manager, Mergers and Acquisitions for Ispat International NV, specializing in buying distressed steel assets in emerging markets. Mr. Schoels is a Belgian citizen and holds a BA in International Business from Eckerd College in St. Petersburg, Florida and an MBA from U.B.I. (University of Wales and Mercer University) in Brussels, Belgium.

        Lawrence M. Teitelbaum has served as a director on Global's board of directors since March 2006. Mr. Teitelbaum joined MatlinPatterson Global Advisers LLC as Partner and Chief Financial Officer in October 2002. He was previously Chief Financial Officer of Fenway Partners from 1996 to 2002. Prior to Fenway Partners, Mr. Teitelbaum was Treasurer and Vice President for Financial Planning for Petrie Retail Inc. following an extensive career at Ernst & Young LLP. While at Ernst & Young, he provided due diligence and investment advisory services to private equity clients on more than 30 leveraged buyout transactions. Mr. Teitelbaum began his career as Chief Accountant for Real Estate at Madison Square Garden. Mr. Teitelbaum holds a BS in Accounting from the State University of New York at Buffalo and is a Certified Public Accountant. He is a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants.

Randy J. Martinez has served as a director on Global's board of directors since September 2007. Mr. Martinez served as Chief Executive Officer of World Air Holdings from April 2005 until August 2007, as President and Chief Executive Officer of World Air Holdings and World from April 2004 to April 2005 and as President and Chief Operating Officer of World Air Holdings from November 2003 to April 2004. Mr. Martinez also served as Executive Vice President, Marketing & Administration of World from June 2002 until November 2003. He joined World Air Holdings in October 1998 as the Director of Crew Resources and was appointed to be the Special Assistant to the Chairman in May 1999. Mr. Martinez came to World Air Holdings after a distinguished 21-year career with the United States Air Force (Colonel, retired, and Command Pilot). Prior to his leaving the United States Air Force, he was the Principal Advisor to the Chief of Staff of the North Atlantic Treaty Organization's senior-most strategic planning staff. Mr. Martinez also served as the Senior Aide-de-Camp to the Chairman of the Joint Chiefs of Staff at the Pentagon, Commander of the 457th Airlift Squadron at Andrews Air Force Base in Maryland and Chief of the Wing Standardization & Evaluation Division at Rhein Main Air Base, Germany. He is a combat experienced pilot and highly decorated officer.

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Board of directors

        Global's board of directors comprises eight directors, four of whom (Messrs. Chodock, Matlin, Schoels and Teitelbaum) are associated with Global's majority stockholder, MatlinPatterson ATA Holdings LLC. Of these eight directors, Mr. Cassidy, satisfies the independence requirements of the federal securities laws.

        Harvey L. Tepner, who had served on our board of directors since March 2006, and Bernard L. Han, who had also served on our board of directors since March 2006, each resigned on November 15, 2007 and November 16, 2007, respectively. Messrs. Tepner and Han also satisfied the independence requirements of the federal securities laws.

Committees of the board of directors

        Pursuant to Global's amended and restated by-laws, Global's board of directors is permitted to establish committees of one or more directors from time to time as it deems appropriate. Currently, Global's board of directors has an audit committee and a compensation committee. On November 26, 2007, our Board authorized the creation of a Nominating and Corporate Governance Committee, and we are currently in the process of drafting a charter for this committee. Messrs. Denison, Cassidy and Martinez and were duly appointed to serve on our Nominating and Corporate Governance Committee.

        The membership and function of each of the audit and compensation committees are described below.

Audit Committee

        The principal duties of the audit committee are as follows:

•

to retain, compensate, oversee, evaluate and terminate any registered public accounting firm in connection with the preparation or issuance of an audit report, and to approve all audit fees and terms and any permissible non-audit services provided by the independent auditors;



•

to review the auditor's annual audit plan, including the scope of the audit, and to recommend changes, discuss difficulties during the audit's course, and to review any alternative treatments of financial information;



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to review and discuss annual audited and quarterly unaudited financial statements with management and the independent auditors;



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to periodically meet separately with management, internal auditors and the independent auditors;



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to establish procedures to receive, retain and treat complaints regarding accounting, internal accounting controls or auditing matters;



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to consider our major financial risk exposures and steps taken to monitor and control them;



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to review, at least annually, our accounting principles and financial statement presentations, any analyses prepared by management or the auditor regarding significant financial reporting issues, the effect of regulatory and accounting initiatives and off-balance sheet structures on our financial statements, and other related matters;



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to periodically review any changes, fraud, or deficiencies with respect to our internal controls;



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to retain independent counsel and other outside advisors, including experts in the area of accounting, as it determines necessary to carry out its duties; and



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to report regularly to the full board of directors with respect to any issues raised by the foregoing.

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        Messrs. Cassidy, Chodock and Martinez currently serve on the audit committee. Mr. Cassidy is deemed to be "independent", as that term is defined by the federal securities laws, including Rule 10A-3(b)(i) under the Securities Exchange Act of 1934, as amended, for purposes of the audit committee. Because we have elected to have our common stock quoted on the Pink Sheets, these independence requirements do not apply to us.

Compensation Committee

        The principal duties of the compensation committee are as follows:

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to review key employee compensation policies, plans and programs;



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to review and approve the compensation of our chief executive officer and the other executive officers of Global and its subsidiaries;



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to review and approve any employment contracts or similar arrangement between Global and any executive officer of Global;



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to review and consult with Global's chief executive officer concerning selection of officers, management succession planning, performance of individual executives and related matters; and



•

to administer Global's stock plans, incentive compensation plans and any such plans that the board of directors may from time to time adopt and to exercise all the powers, duties and responsibilities of the board of directors with respect to such plans.

        Messrs. Chodock (Chair), Cassidy, Martinez and Schoels currently serve on the compensation committee. Mr. Cassidy satisfies the director independence requirements of the rules of the NASDAQ Global Market for service on the compensation committee. Because we have elected to have our common stock quoted on the Pink Sheets, these independence requirements do not apply to us.

Compensation Discussion and Analysis

Overview of Executive Compensation Philosophy and Objectives

        In connection with the compensation committee's responsibility of determining and approving the compensation for our management employees, including our Chief Executive Officer (CEO), current Chief Financial Officer, former Chief Financial Officer and three other most highly compensated executive officers (our named executive officers), its primary objectives are to:

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attract and retain high quality management employees by providing total compensation opportunities with a combination of compensation elements that are competitive and comparable to those offered by peer companies in the aviation industry; and



•

align shareholder interests and management rewards by providing meaningful incentive opportunities to be earned by management if they meet pay-for-performance standards designed to increase long-term shareholder value.

        Therefore, the compensation packages we provide to management, including the named executive officers, include both cash and stock-based compensation that reward performance as measured against established goals.

        In determining compensation for a specific named executive officer, the compensation committee considers many factors, including the nature of the individual's job, the individual's job performance compared to individual goals and objectives established at the beginning of the year, the individual's historical performance at the Company and experience level in the individual's current position, the compensation levels of competitive jobs and our financial performance. In considering compensation levels of competitive jobs, the compensation committee benchmarks key elements of total compensation

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(such as base salary, annual cash bonuses and cash incentive bonuses, and long-term equity incentive awards) against similar elements of compensation provided by the Company's peer group of regional and low-cost airline companies within the airline industry. For purposes of establishing base salaries, the peer group of companies included AirTran Airways, Alaska Airlines, Express Jet, Frontier Airlines, Hawaiian Airlines, Jet Blue Airlines, Pinnacle Airlines, Republic Airlines and Sky West Airlines. For purposes of establishing annual cash bonuses, cash incentive bonuses and long-term equity-incentive awards, the peer group of companies included AirTran Airlines, Alaska Airlines, Hawaiian Airlines, Jet Blue Airlines and Southwest Airlines. The compensation committee gave moderate weight to these comparisons. The compensation committee does not have a policy for setting the compensation of the Company's executive officers within a specified range of compensation levels of the Company's peer group of companies.

        The compensation committee reviews the total compensation for the named executive officers but sees each element as distinct. The compensation program is designed to provide a proper balance of fixed versus variable and cash versus equity compensation in order to align both short and long-term interests with overall business objectives. We have no specific formula for allocating between cash and non-cash compensation. Actual earned compensation may increase when performance is outstanding relative to individual and/or company goals. To the extent that performance goals are not achieved, compensation may be negatively impacted.

The Compensation Committee's Processes and Procedures

        The compensation committee's primary processes and procedures for establishing and overseeing the compensation of its named executive officers include the following:

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Meetings. The compensation committee meets several times each year (four times in 2007). Compensation committee meeting agendas are established in consultation with the compensation committee Chairman, the compensation committee's independent compensation consultant and members of our management team.



•

Role of Independent Consultant. The compensation committee engaged a compensation consultant (Organizational Concepts International, LLC) beginning in August 2006. Pursuant to the instructions of the compensation committee, the consultant assisted it in a review of our management compensation programs and provided recommendations on potential changes to ensure that such programs facilitate the attraction, retention and motivation of the our management team and are aligned with the short-term and long-term objectives of our shareholders. The consultant participated in compensation committee meetings and also advised the compensation committee with respect to the design of a long-term incentive plan for management intended to align management interests with the interests of shareholders and to provide management with the opportunity to share in our long-term value creation. The long-term incentive plan is described in more detail below in "—Compensation Components for Executive Officers—Long-Term Equity Incentive Awards".



•

Assessment of Company Performance. The compensation committee has established specific Company performance measures that determine the size of the payouts under our incentive bonus plans. Such plans are discussed below in "—Compensation Components for Executive Officers—Annual Cash Bonuses and Cash Incentive Awards". The performance measures for Mr. Karnik included determining the overall strategic direction of ATA related to the scheduled service and military charter segments of its business and determining strategic growth alternatives. Performance measures for Mr. Loew included managing controllable codeshare agreement covenants and managing flight attendant staffing and productivity. Performance measures for Mr. Ellmer included successfully executing on the DC-10 aircraft project, achieving operational performance goals and revising procedures to reduce crew positioning expenses.

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Performance measures for Mr. Yakola included successfully executing debt, equity and transaction support, establishing formal forecasting processes for ATA's charter business unit and developing a post DC-10 induction process for fleet management. Because Mr. Garrett joined the Company in late 2007, there were no 2007 performance measures for Mr. Garrett and Mr. Garrett did not, in fact, receive a bonus in 2007. In addition, the compensation committee considers the impact of significant Company events, such as our acquisition of World Air Holdings, Inc., in making compensation decisions.

•

Assessment of Individual Performance. Our CEO meets each named executive officer to decide on performance objectives specific to the named executive officers' job function that will be

considered for purposes of determining annual compensation. Performance objectives that may be considered are listed above in the description of performance measures applicable to each named executive officer. The compensation committee then meets with our CEO annually to agree upon the performance objectives for the CEO as well as our other named executive officers. At the end of the year, the compensation committee meets in executive session to conduct a review of the individual performance goals of each named executive officer. Such review is used to determine eligibility for payouts under our incentive cash bonus plans and forms the base of the compensation committee's decisions with respect to other elements of compensation for the following year.

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Role of Executive Officers. Our CEO is involved in formulating recommendations on matters of compensation philosophy and plan design and the specific compensation recommendations for each of the named executive officers. The CEO gives the compensation committee a performance assessment and compensation recommendation for each of the other named executive officers. Those recommendations are then considered by the compensation committee in approving the final determination of compensation. The compensation committee has the authority to make all final decisions on actual compensation for each of the named executive officers. The compensation committee also determines the compensation of the CEO with advice from the Chairman of our board of directors. The actual compensation of the named executive officers is consistent with the recommendation of the CEO and the actual compensation of the CEO is consistent with the recommendations of the Chairman of the Board.

Compensation Components for Executive Officers

        Our compensation program consists of the following components:

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base salary;



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annual cash bonuses and cash incentive bonuses;



•

long-term equity incentive awards;



•

severance and change of control benefits; and



•

other benefits.

        The compensation committee believes this program balances both the mix of cash and equity compensation and the mix of short-term and long-term compensation necessary to further the compensation objectives discussed above. The same policies are applied to all named executive officers. Differences in the amount of the various components of compensation (base salary and/or equity awards, for example) are based on job responsibilities. Following is a discussion of the compensation committee's considerations in establishing each of the components of compensation for the named executive officers.

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Base Salary

        Base salaries paid to our named executive officers are the fixed portion of annual compensation and are intended to recognize the fundamental skills and experience of our named executive officers. The base salaries are reviewed annually by the compensation committee and are adjusted from time to time based on level of responsibility, outstanding individual performance, length of service, our financial performance, promotions and internal equity considerations. The compensation committee also takes into account the salaries paid to executives of a comparison group of other airlines and the salary provisions of its employment agreements with the named executive officers. See "Executive Compensation—Employment Agreements" for a description of the salary requirements under the employment agreements.

        The compensation committee made adjustments to the base salaries of Messrs. Denison, Karnik, Yakola and Ellmer in 2007. Effective January 1, 2007, Mr. Denison's base salary was reduced to $175,000 to reflect his relinquishing the day-to-day leadership of the Company as President and Chief Executive Officer. Increases in base salary were provided in 2007 to the following named executive officers in connection with their entering into new employment agreements with the Company, or ATA, and to reflect their increased responsibilities as a result of the acquisition and integration of World Air Holdings, Inc.: Mr. Karnik's base salary was increased to $400,000, effective October 22, 2007; Mr. Yakola's base salary was increased to $300,000, effective September 15, 2007 and Mr. Ellmer's base salary was increased to $235,000 effective August 27, 2007.

Annual Cash Bonuses and Cash Incentive Awards

        In 2006, we paid senior management, including our named executive officers, both a discretionary cash bonus and an incentive cash bonus earned as a result of our achieving certain financial goals. See "Executive Compensation—Employment Agreements" for provisions in the employment agreements with the named executive officers providing for eligibility to participate in our bonus and cash incentive bonus plans.

Discretionary Cash Bonus

        In 2007, we paid certain key management personnel a discretionary cash bonus based on additional responsibilities as part of the acquisition and subsequent integration involving World Air Holdings. Mr. Karnik received $187,500 and Mr. Yakola received $125,000. The amount of the bonus was not based on any specific financial targets being achieved or any formula, but was determined by the compensation committee in its discretion based upon the time commitments and tasks involved in the acquisition and integration of World Air Holdings, Inc.

Incentive Cash Bonuses

        Our objective of providing short-term incentives to our management is met by using cash-based, pay-for-performance annual incentive plans. We pay annual incentive bonuses to reward management for achieving or surpassing annual performance goals. At the beginning of each year, the compensation committee establishes performance targets for the annual incentive program. These performance targets are developed based on economic and industry factors, general market conditions and other considerations. Each eligible member of management, including the named executive officers, has a target bonus potential, expressed as a percentage of base salary that is based on his or her roles and responsibility, internal equity considerations and external competitive compensation data.

        In 2007, we maintained one annual incentive cash bonus plan: the Annual Incentive Bonus Plan ("AI Bonus Plan"). The AI Bonus Plan was designed to supplement base salaries and to reward management, including the named executive officers and other key employees, for meeting specific financial goals. The AI Bonus Plan called for annual incentive compensation awards based on our

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budget EBITDA for the twelve month period ended December 31, 2007, as compared to the actual EBITDA for the same period. The target EBITDA for 2007 was $129 million. The aggregate payout for the named executive officers and other key employees at target was $1 million, the maximum payout was at 150% of target and the threshold payout was at 80% of target. The maximum payout for Mr. Karnik was 100% of base salary, the maximum payout for Mr. Garrett was 75% of base salary and the maximum payout for Messrs. Yakola, Ellmer and Loew was 70% of base salary.

        Inasmuch as the actual EBITDA target was not achieved in 2007, no cash bonuses were paid to the named executive officers or other employees under the AI Bonus Plan.

Long-Term Equity Incentive Awards

        In 2007, our long-term incentive program was based on the award of stock options. The award of stock options furthers our objectives to enhance the link between the creation of shareholder value and long-term executive incentive compensation; provide an opportunity for increased equity ownership by management; and maintain competitive levels of total compensation.

        In 2006, we issued options to management, including the named executive officers, under two stock option plans: The Stock Option Plan for Management Employees of New ATA Holdings Inc. and its Subsidiaries (the "Chapter 11 Emergence Plan") and the Global Aero Logistics 2006 Long-Term Incentive Plan (the "LTIP"). In 2007, options were issued only under the LTIP. The same policy regarding the amount of awards is applied to all named executive officers. Differences in the amounts of the awards are based primarily on job responsibility. The amount of a particular named executive officer's total compensation was not a factor in determining the amount of the equity award. The awards are not tied to the achievement of any targets or goals. See "Executive Compensation—Employment Agreements" for provisions in the employment agreements with the named executive officer providing for eligibility for equity-based compensation awards.

        Chapter 11 Emergence Plan.    Pursuant to ATA's Chapter 11 Plan of Reorganization approved by the Bankruptcy Court on January 31, 2006, our management team was granted 5% of the fully diluted shares of the Company. The compensation committee was responsible for allocation of the stock options to the individual members of the management team. The compensation committee issued stock options, as opposed to an outright distribution of shares, because it believed stock options provide our management team with long-term incentive opportunities that are aligned with the shareholder benefits of an increased common stock value. Stock options are "pay-for-performance" awards because they have no value unless the share price appreciates.

        On March 23, 2006, the compensation committee granted stock options under the Chapter 11 Emergence Plan to approximately 40 employees. The seven-year options help focus employees on long-term growth. These options vest and become exercisable in three equal annual installments, with the first installment vesting March 1, 2007. The per share exercise price for the stock options granted under the Chapter 11 Emergence Plan on March 23, 2006, is $10.00. On October 4, 2006, the compensation committee granted stock options to Mr. Ellmer, who joined us in September 2006, at a per share exercise price of $14.00, based on its assessment of the increase in the value of our shares since MatlinPatterson's February 28, 2006 purchase of Company shares. Options under the Chapter 11 Emergence Plan were granted with an exercise price equal to the fair market value of a share on the date of the grant.

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        In addition, on January 1, 2007, the Company granted 30,000 stock options under the Chapter 11 Emergence Plan to Mr. Karnik. The per share exercise price for these options was $14.00. These options vest and become exercisable in three equal annual installments, with the first installment vesting January 1, 2008.

        LTIP.    The objectives of the LTIP are to reward achievement over a multi-year period, align the interests of executives with those of shareholders by focusing executives on the shareholder return performance of the Company and provide a retention mechanism through multi-year vesting.

        Only seven members of our management participated in the LTIP in 2006, including the named executive officers (but excluding Mr. Garrett) and two non-executive officers. The seven-year options granted under the LTIP were divided into four tranches, with exercise prices of shares within each tranche ranging from $30.00 per share to $60.00 per share. A portion of shares issued under each tranche vest and become exercisable in three equal annual installments with the first installment vesting September 12, 2008. Information with respect to exercise and vesting is provided in the "Outstanding Equity Awards at Fiscal Year End" table.

        In addition, additional options were granted under the LTIP in November 2007. Such options have an exercise price that is not less than $14.00 per share and vest in three annual installments with the first installment vesting on August 15, 2008.

        In addition, on January 1, 2007, the Company granted 100,000 stock options under the LTIP to Mr. Karnik. The per share exercise price for these options was $20.00. These options vest and become exercisable in three equal installments, with the first installment vesting January 1, 2008.

        Grant Timing and Price.    The compensation committee procedure for the timing of equity grants provides assurance that grant timing is not being manipulated to result in a price that is favorable to management. We do not plan to time, and have not timed, our release of material non-public information for the purpose of affecting the value of compensation to our management team. We do not have any program, plans or practices of awarding stock options and setting the exercise price based on the stock's price on a date other than the actual grant date.

        The stock options granted under the Chapter 11 Emergence Plan on March 23, 2006 were granted with an exercise price of $10.00 per share, the fair market value of our common shares on such grant date. The stock options granted to Mr. Ellmer on October 4, 2006 under the Chapter 11 Emergence Plan were granted with an exercise price of $14.00 per share, which the compensation committee determined to be the fair market value of the shares on the date of grant based on its assessment of the increase in the value of our shares since MatlinPatterson's February 28, 2006 purchase of Company shares. The 2006 options granted under the LTIP were granted on September 12, 2006, at exercise prices substantially in excess of the market value of our common shares on such date. The 2007 options granted under the LTIP were granted on January 1, 2007 and November 26, 2007 at an exercise price that is not less than $14.00 per share, which the Compensation Committee determined to be the fair market value of our shares based on the opinion of the Special Committee to the Board of Directors on the value of the convertible preferred shares issued to MatlinPatterson.

        Accelerated Vesting of Stock Options.    As set forth in the employment agreements of the named executive officers, as well as the stock option agreements executed pursuant to the Chapter 11 Emergence Plan and LTIP, upon the occurrence of a change of control (referred to in the Chapter 11 Emergence Plan, LTIP and/or the stock option agreements as a "Significant Event" and defined in "Executive Compensation—Potential Payments Upon Termination or a Change of Control") or a Tag Along Event (as defined in Executive Compensation—Potential Payments Upon Termination or a Change of Control"), or upon the termination of the optionee's full time employment because of a termination without cause, death, disability, or retirement after age 60, the options granted under such plans immediately vest and become exercisable in full with respect to all shares.

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Severance and Change of Control Benefits

        We entered into employment agreements with certain members of our management team, including the named executive officers. The agreements were entered into as a means of providing more certainty and stability for both us and the management employees upon our emergence from bankruptcy and in light of the changes to our ownership, including the majority ownership by MatlinPatterson. Upon termination of employment, the employment agreements with each of our named executive officers provide for certain severance payments, the amount of which is affected by the reason for the termination and whether such termination is in connection with a change of control.

•

Severance Payments. Severance payments, which are payable upon a termination by us without cause, a termination by the named executive officer for material breach, or a termination due to death or disability, include a multiple of such officer's annual base pay, any target bonus under the AI Bonus Plan and certain welfare and travel benefits, including a tax gross up for welfare benefits in certain cases. The provisions for severance payments and benefits were a result of individual negotiations with the named executive officers. The compensation committee also determined that providing for severance payments in the executive officers' employment agreements was in the best interest of the Company and our shareholders because the executive officer must comply with certain post-termination restrictions set forth in the employment agreement in order to obtain such severance payments. These restrictions include providing us with a release agreement, agreeing not to disclose any of our confidential information or trade secrets, and agreeing to certain provisions relating to non-competition, non-solicitation of employees and non-interference with contractors and vendors.



•

Severance Payments in Connection with a Change in Control. The compensation committee considers the retention of an effective management team to be essential to protecting and enhancing the best interests of the Company and our shareholders. To that end, the compensation committee recognizes that the possibility of a change in control may exist from time to time, and that this possibility, and the uncertainty and questions it may raise among senior management, including the named executive officers, may result in the departure or distraction of senior management personnel to the detriment of the Company and our stockholders. Accordingly, the compensation committee determined that appropriate steps should be taken to encourage the continued attention and dedication of our senior management to assigned duties without the distraction that may arise from the possibility of a change in control. These steps are also intended to preserve employee morale and productivity and encourage retention in the face of the disruptive impact of an actual or rumored change in control of the Company. In addition, these steps are intended to align senior management and shareholder interests by enabling senior management to consider corporate transactions that are in the best interest of the shareholders without undue concern whether transactions may jeopardize such individuals' own employment. As a result, the employment agreements with our named executive officers contain a change in control severance feature that utilizes a "double trigger." In order for change in control severance benefits to be "triggered", a change in control must occur and the named executive officer must be terminated by us without cause or have "good reason" to terminate his employment, in each case, within 90 days of a change in control.

        For a description of benefits provided as part of a severance payment and as part of a severance payment in connection with a change in control, see "Executive Compensation—Potential Payments Upon Termination or Change of Control" below.

Other Benefits

        We provide our named executive officers with benefits that are generally available to all our employees, including a 401(k) plan matching contribution, medical, dental, vision, life insurance, accidental death & dismemberment, long term disability, employee assistance plan, flexible spending accounts and travel benefits. With respect to short-term disability, we provide a self-funded salary continuance program for management based on years of service; other employees participate in our short term disability plan. For 2007, no amounts were paid under this program to the named executive officers. We believe that these welfare benefits are appropriate and reasonable.

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Executive Compensation

Summary Compensation Table

        The following table sets forth information with respect to compensation earned by our Chief Executive Officer, our current Chief Financial Officer, our former Chief Financial Officer and our three other most highly compensated executive officers (referred to as our "named executive officers") for the fiscal year ended December 31, 2007.

Name and Principal Position	Year	Salary ($)	Bonus ($)	Option Awards ($)(1)	Non-Equity Incentive Plan Compensation ($)	All Other Compensation ($)(2)	Total ($)
John Denison Chairman of the Board of Directors(3)	2007 2006	183,077 280,000	0 50,000	425,333 315,719	0 115,500	0 0	608,410 761,219
Subodh Karnik President and Chief Executive Officer, Director(4)	2007 2006	354,616 270,000	187,500 50,000	593,762 169,132	0 111,375	4,770 4,290	1,140,648 604,797
Douglas Yakola Chief Integration Officer Former Chief Financial Officer	2007 2006	258,425 225,450	125,000 50,000	248,142 106,899	0 76,107	7,341 8,580	638,908 467,036
Gary Ellmer Senior VP, Operations and Charter Sales(5)	2007 2006	220,000 57,885	0 0	138,966 36,177	0 0	0 0	358,966 94,062
Josef Loew Senior VP, Marketing and Scheduled Service Sales(6)	2007 2006	225,000 168,750	74,062 0	184,017 106,899	0 75,938	1,687 0	484,766 351,587
William Garrett Chief Financial Officer(7)	2007 2006	39,373 —	0 —	62,817 —	0 —	0 —	102,190 —

(1)

The amounts in this column reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2007, in accordance with FAS 123R, of awards pursuant to the Chapter 11 Emergence Plan and the LTIP. The Black-Scholes option pricing method was used to determine fair value of the options. This method requires the Company to make several assumptions, including risk-free interest rate, stock price volatility and expected life. The weighted-average fair value of options granted in 2006 was determined to be $3.15 based on a weighted-average risk-free interest rate of 4.71%, expected life of options of 5.81 and an expected stock volatility of 55%. The weighted-average fair value of options granted in 2007 was determined to be $4.11 based on a weighted-average risk-free interest rate of 3.48%, expected life of options of 5.50 and an expected stock volatility of 49%. For additional information about the assumptions used in the calculation of these amounts, refer to Note 8, "Stock Option Plans," in our audited financial statements for the fiscal year ended December 31, 2006, included elsewhere in this Form S-1 filing. However, as required the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.

(2)

The amounts in this column reflect our matching contribution under our 401(k) plan. No named executive officer received perquisites in 2007 with an aggregate value greater than $10,000.

(3)

As of December 31, 2006, Mr. Denison served as our President and Chief Executive Officer. Mr. Denison resigned from this position on January 1, 2007 and currently serves as Chairman of our board of directors.

(4)

As of December 31, 2006, Mr. Karnik served as our Chief Operating Officer. Mr. Karnik became President and Chief Executive Officer on January 1, 2007, following Mr. Denison's resignation from that position, and became a director in May 2007.

(5)

Mr. Ellmer commenced his employment with us on September 11, 2006.

(6)

Mr. Loew commenced his employment with us on March 20, 2006.

(7)

Mr. Garrett commenced employment with us on November 1, 2007.

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Grants of Plan-based Awards

        The following table sets forth information on stock option awards and awards under our non-equity incentive plans to our named executive officers during the fiscal year ending as of December 31, 2007.

			Estimated Future Payouts Under Non-Equity Incentive Plan Awards
Name	Grant Date		Threshold ($)	Target ($)	Maximum ($)	All Other Option Awards: Number of Securities Underlying Options (#)	Exercise or Base Price of Option Awards ($/sh)	Grant Date Fair Value of Stock and Option Awards ($)
Subodh Karnik	1/1/07					30,000	14.00	215,000
	1/1/07					100,000	20.00	581,000
	11/26/07					15,000	14.00	102,600
	11/26/07					35,000	20.00	160,300
	11/26/07					35,000	30.00	160,300
	5/2/07	(1)	320,000	400,000	600,000
Douglas Yakola	11/26/07					25,000	14.00	171,800
	5/2/07	(1)	168,000	210,000	315,000
Gary Ellmer	11/26/07					3,333	14.00	22,798
	5/2/07	(1)	131,600	164,500	246,750
Josef Loew	5/2/07	(1)	198,000	247,500	371,250
William Garrett	11/1/07	(1)	198,000	247,500	371,250
	11/26/07					35,000	14.00	239,400
	11/26/07					50,000	30.00	137,500
	11/26/07					33,333	40.00	91,666
	11/26/07					33,333	50.00	91,666
	11/26/07					33,333	60.00	91,666

(1)

Represents awards under the 2007 AI Bonus Plan. Because Company targets were not met for the applicable performance period, none of these awards has been or will be paid out.

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Outstanding Equity Awards at Fiscal Year-End

        The following table sets forth the outstanding equity awards as of December 31, 2007, held by each of our named executive officers.

	Option Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)	Option Expiration Date
John Denison	—	110,000	(1)	10.00	3/23/2013
	—	150,000	(2)	30.00	9/11/2013
	—	100,000	(2)	40.00	9/11/2013
	—	100,000	(2)	50.00	9/11/2013
	—	100,000	(2)	60.00	9/11/2013
Subodh Karnik	—	80,000	(3)	10.00	3/23/2013
	—	100,000	(2)	30.00	9/11/2013
	—	66,667	(2)	40.00	9/11/2013
	—	66,667	(2)	50.00	9/11/2013
	—	66,666	(2)	60.00	9/11/2013
	—	30,000	(5)	14.00	1/1/2014
	—	100,000	(6)	20.00	1/1/2014
	—	15,000	(7)	14.00	8/15/2014
	—	35,000	(8)	20.00	8/14/2014
	—	35,000	(8)	30.00	8/14/2014
Douglas Yakola	—	55,000	(3)	10.00	3/23/2013
	—	50,000	(2)	30.00	9/11/2013
	—	33,334	(2)	40.00	9/11/2013
	—	33,333	(2)	50.00	9/11/2013
	—	33,333	(2)	60.00	9/11/2013
	—	25,000	(7)	14.00	8/15/2014
	—
Gary Ellmer	—	30,000	(4)	14.00	10/4/2013
	—	50,000	(2)	30.00	9/11/2013
	—	33,334	(2)	40.00	9/11/2013
	—	33,333	(2)	50.00	9/11/2013
	—	33,333	(2)	60.00	9/11/2013
	—	3,333	(7)	14.00	8/15/2014
Josef Loew	—	55,000	(3)	10.00	3/23/2013
	—	50,000	(2)	30.00	9/11/2013
	—	33,334	(2)	40.00	9/11/2013
	—	33,333	(2)	50.00	9/11/2013
	—	33,333	(2)	60.00	9/11/2013

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William Garrett	—	35,000	(9)	14.00	11/1/2014
	—	50,000	(10)	30.00	11/1/2014
	—	33,333	(10)	40.00	11/1/2014
	—	33,333	(10)	50.00	11/1/2014
	—	33,333	(10)	60.00	11/1/2014

(1)

These awards vest as follows: 55,000 on 3/1/2007 and 27,500 each on March 1, 2008 and March 1, 2009.

(2)

These awards vest as follows: 20% on 9/12/2008, 30% on 9/12/2009, and 50% on September 12, 2010.

(3)

These awards vest as follows: three equal installments on each of March 1, 2007, March 1, 2008 and March 1, 2009.

(4)

These awards vest as follows: three equal installments on each of October 4, 2007, October 4, 2008 and October 4, 2009.

(5)

These awards vest as follows: three equal installments on each of January 1, 2008; January 1, 2009 and January 1, 2010.

(6)

These awards vest as follows: three equal installments on each of January 1, 2008, January 1, 2009 and January 1, 2010.

(7)

These awards vest as follows: three equal installments on each of August 15, 2008, August 15, 2009 and August 15, 2010.

(8)

These awards vest as follows: 34% on August 15, 2008, 34% on August 15, 2009 and 32% on August 15, 2010.

(9)

These awards vest as follows: three equal installments on each of November 1, 2008, November 1, 2009 and November 1, 2010.

(10)

These awards vest as follows: 20% on November 1, 2008, 30% on November 1, 2009 and 50% on November 1, 2010.

        None of the named executive officers exercised any stock options in 2006 or 2007.

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        The Company does not provide any nonqualified deferred compensation to the named executive officers.

Employment Agreements

        The Company entered into employment agreements with each of the named executive officers in 2006. On January 1, 2007, the employment agreement with Mr. Karnik was amended and restated to reflect his promotion to the position of President and Chief Executive Officer and the employment agreement with Mr. Denison was amended and restated to reflect his new position as Chairman of the Board of Directors. Due to a realignment of responsibilities to be undertaken as a result of the Company's acquisition of World Air Holdings, Inc., the following named executive officers entered into new employment agreements with the Company (or, in the case of Mr. Ellmer, ATA): (i) Mr. Karnik on October 22, 2007, (ii) Mr. Yakola on September 15, 2007, (iii) Mr. Ellmer on August 27, 2007, (iv) Mr. Loew on August 27, 2007 and (v) Mr. Garrett on November 1, 2007. The following is a description of the material terms of the compensation provided to the named executive officers during their employment pursuant to the employment agreements. See "Potential Payments Upon Termination or Change of Control" for a description of the payments and benefits that would be provided to the named executive officers in connection with a termination of their employment or a change in control of the Company.

        The employment agreements provide for indefinite terms and annual base salary amounts as follows: Mr. Denison ($175,000); Mr. Karnik ($400,000) (the base salary applicable in 2007 pursuant to the employment agreement in effect prior to October 22, 2007 was $350,000); Mr. Yakola ($300,000) (the base salary applicable in 2007 pursuant to the employment agreement in effect prior to September 15, 2007 was $225,000); Mr. Ellmer ($235,000) (the base salary applicable in 2007 pursuant to the employment agreement in effect prior to August 27, 2007 was $215,000); Mr. Loew ($225,000) (the base salary applicable in 2007 pursuant to the employment agreement in effect prior to August 27, 2007 was $225,000) and Mr. Garrett ($330,000). The base salary for Mr. Garrett, which is shown in the "Summary Compensation Table", was pro-rated for his employment during 2007. Pursuant to the employment agreements, the base salary will be reviewed on an annual basis.

        Pursuant to the employment agreements, each named executive officer is eligible for awards under various of the Company's cash and equity incentive plans as follows:

•

Mr. Denison: Pursuant to his employment agreement, Mr. Denison is eligible to participate in the Company's Chapter 11 Emergence Plan and LTIP.



•

Mr. Karnik: Pursuant to his employment agreement, Mr. Karnik is eligible to participate in the AI Bonus Plan, LTIP and Chapter 11 Emergence Plan (the "Plans"). The target bonus payable under the AI Bonus Plan in 2008 is 100% of base salary.



•

Mr. Yakola: Pursuant to his employment agreement, Mr. Yakola is eligible to participate in the AI Bonus Plan. The target bonus payable in 2008 under the AI Bonus Plan is 70% of base salary.



•

Mr. Ellmer: Pursuant to his employment agreement, Mr. Ellmer is eligible to participate in the AI Bonus Plan. The target bonus payable under the AI Bonus Plan in 2008 is 70% of base salary.



•

Mr. Loew: Pursuant to his employment agreement, Mr. Loew is eligible to participate in the AI Bonus Plan. The target bonus payable in 2008 under the AI Bonus Plan in 2008 is 70% of base salary.

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•

Mr. Garrett: Pursuant to his employment agreement, Mr. Garett is eligible to participate in the AI Bonus Plan. The target bonus payable in 2008 under the AI Bonus Plan is 75% of base salary.

        For 2007, no payments were made under the AI Bonus Plan.

        Pursuant to the employment agreements, each named executive officer is entitled to participate in employee health and welfare benefits generally made available to employees of the Company and their eligible dependents. The named executive officer and his spouse and dependents are also entitled to lifetime, positive space passes on ATA, and other carriers with whom ATA has reciprocal pass arrangements.

        The following named executive officers have housing and other allowances under their employment agreements:

•

Mr. Karnik: Pursuant to his employment agreement, Mr. Karnik is entitled to a housing allowance of $3,000 per month through September 2008.



•

Mr. Yakola: Pursuant to his employment agreement, Mr. Yakola is entitled to a housing allowance of up to $2,500 per month for up to 12 months (i.e., through September 2008) to support a second residence in the Atlanta/Peachtree City area.



•

Mr. Garrett: Pursuant to his employment agreement, Mr. Garrett is entitled to a car and housing allowance of $3,000 per month, as well as reimbursement of commuting expenses.

Equity-Incentive Plans

        The Company maintains two equity-based compensation plans under which awards have been granted to the named executive officers: the Stock Option Plan for Management Employees of New ATA Holdings, Inc. (the "Chapter 11 Emergence Plan") and the Global Aero Logistics 2006 Long Term Incentive Plan (the "LTIP").

Chapter 11 Emergence Plan

        For reasons discussed in the "Compensation Discussion and Analysis", the compensation committee granted options under the Chapter 11 Emergence Plan to its named executive officers on March 23, 2006, and to Mr. Ellmer on October 4, 2006. Other than as specified below, each award contains the same principal terms and conditions, which are described below.

        Exercise price.    The exercise price for the grants on March 23, 2006 to the named executive officers other than Mr. Ellmer, was $10.00, which was the price paid by MatlinPatterson for Company shares on February 28, 2006, in connection with the Plan of Reorganization. The exercise price for the grant on October 4, 2006, to Mr. Ellmer was based on the compensation committee's determination that $14.00 per share was the fair market value of shares underlying the options on that date.

        Vesting.    The vesting schedule for each stock option award is indicated in the notes to the "Outstanding Equity Awards at Fiscal Year End" table. However, upon the occurrence of a change in control (referred to in the award agreements as a "Significant Event") and a "Tag Along Event" (each as defined below in "—Potential Payments Upon Termination or Change of Control"), or upon the termination of the optionee's full-time employment because of a termination without cause, death, disability or retirement after age 60, the options will become immediately exercisable in full.

        Forfeiture.    Under the terms of the award agreements, in the event the optionee ceases to be a full-time employee other than for "cause", the option will terminate at the end of three months following the date the optionee ceases to be a full-time employee. In the event of a termination for "cause", the option will expire on the date of termination. In the event of a termination due to death,

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disability or retirement after age 60 while a full-time employee of the Company, the option will terminate at the end of one year following the date of termination.

        Exercise.    Each stock option may be exercised solely to the extent vested.

        Term.    Each stock option grant will expire as indicated in the "Outstanding Equity Awards at Fiscal Year End" table.

LTIP

        In 2006, the Company granted its named executive officers stock options under the LTIP on September 12, 2006, and to Mr. Ellmer on October 4, 2006. In 2007, the Company granted its named executive officers stock options under the LTIP on November 26, 2007. The compensation committee's reasons for making these grants are discussed in the "Compensation Discussion and Analysis". The principal terms and conditions of these grants are described below.

        Vesting and Exercise Price.    2006 Options awarded under the LTIP vest in three installments as follows: 20% on September 12, 2008; 30% on September 12, 2009; and 50% on September 12, 2010. See the "Outstanding Equity Awards at Fiscal Year End" table for exercise price and vesting schedules of options granted under the LTIP. The exercise price of the options are all greater than the fair market value of the shares on the date of grant, which was $10.00, on March 28, 2006 and $14.00, on October 4, 2006. However, upon the occurrence of a change in control (referred to in the award agreement as a "Significant Event") and a "Tag Along Event" (each as defined below in "—Potential Payments Upon Termination or Change of Control"), or upon the termination of the optionee's full-time employment because of a termination without cause, death, disability or retirement after age 60, the options will become immediately exercisable in full.

        2007 options granted under the LTIP vest in three annual installments in 2008, 2009 and 2010. See the "Outstanding Equity Awards at Fiscal Year End" table for exercise price and vesting schedules of options granted under the LTIP in 2007. The exercise price of the 2007 LTIP options is not less than $14.00 per share, which is based upon the opinion of the Special Committee to the Board of Directors on the value of the convertible preferred shares issued to MatlinPatterson.

        Forfeiture.    Under the terms of the award agreements, in the event the optionee ceases to be a full-time employee other than for "cause", the option will terminate at the end of three months following the date the optionee ceases to be a full-time employee. In the event of a termination for "cause", the option will expire on the date of termination. In the event of a termination due to death, disability or retirement after age 60 while a full-time employee of the Company, the option will terminate at the end of one year following the date of termination.

        Exercise.    Each stock option may be exercised solely to the extent vested.

        Term.    Each stock option grant will expire as indicated in the "Outstanding Equity Awards at Fiscal Year End" table.

Non-Equity Incentive Plans

        The Company maintained one non-equity incentive plan in 2007, the 2007 Annual Incentive Bonus Plan (the "AI Bonus Plan"). The plan provides for payments to be made in the event certain EBITDA targets were met. In 2007, targets were not met and no payments were made under the annual bonus plan. For an additional discussion of the AI Bonus Plan, see "Compensation Discussion and Analysis—Compensation Components for Executive Officers—Annual Cash Bonuses and Cash Incentive Awards".

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Potential Payments Upon Termination or Change of Control

        This section outlines the potential payments that may be made to the named executive officers in the event of termination or change of control pursuant to their employment agreements and our benefit plans. As indicated in the "Compensation Discussion and Analysis", we entered into new employment agreements in 2007 with Messrs. Karnik, Yakola, Loew, Ellmer and Garrett. There were no changes made to Mr. Denison's January 1, 2007 agreement. The descriptions and amounts in "Employment Agreements" and "Potential Payments Upon Termination or Change in Control Table" below reflect the employment agreements in effect on the last business day of the fiscal year ended December 31, 2007.

        As further described below, the named executive officer is entitled to twelve (12) months of severance benefits and supplemental severance benefits in the event of a termination without cause or by the named executive officer for "good reason." In the event of a termination by the Company without cause or by the executive for "good reason" if such termination were to occur within 90 days following a change in control, the named executive officer is entitled to 12 months (in the event of a termination for "good reason" by the executive) or 24 months (in the event of a termination without cause by the Company) of severance and supplemental severance benefits and other continued benefits. The severance benefit levels and periods were recommended by the CEO and approved by the Compensation Committee.

        The decision of the Compensation Committee to include termination payments and change in control payments in the employment agreements of the named executive officers is consistent with the Company's objective to attract and retain high quality management employees. The named executive officers are promised severance benefits in order to compensate them if they are terminated despite their performance in accordance with the terms of their employment agreements.

Employment Agreements

        Under the employment agreements, if the named executive officer's employment is terminated by us (or, in the case of Mr. Ellmer, ATA) without cause (as defined in the employment agreement) or by the named executive officer due to a "good reason" (defined below), the named executive officer is entitled to the following payments and benefits in addition to accrued rights (which includes vesting of equity as described in "Equity Based Compensation" below):

        (a)   lump sum cash severance equal to 12 months of base salary; and

        (b)   a lump sum payment equal to target bonus under the AI Bonus Plan for the year of termination; and

        (c)   supplemental severance compensation of 12 monthly payments, each equal to the sum of the monthly COBRA premium the named executive officer would pay if he elected to exercise his COBRA rights, grossed up for taxes, until the named executive officer obtains equal or greater coverage under the plans of a subsequent employer.

        Named executive officers are also entitled to lifetime positive space passes on ATA and other carriers with whom ATA has reciprocal pass arrangements.

        In addition, Mr. Loew has a on-time right to terminate his employment as of August 31, 2008 by giving notice of an intent to do so during the period beginning July 16, 2008 and ending August 1, 2008. In the event Mr. Loew exercises the right to so terminate his employment, he will receive the benefits and payments to which he would have been entitled if his employment had been terminated by us without cause or by Mr. Loew for good reason. Mr. Loew will also receive a one-time payment of $45,000 as a result of any such termination.

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        The term "good reason" means (i) a material reduction in the nature or scope of the named executive officer's authority or duties; (ii) any material decrease in the named executive officer's compensation; or (iii) relocation of the Company's principal office or the relocation of the named executive officer's own office location to a location more than 50 miles from the (as applicable) current Peachtree City or Indianapolis, Indiana location, in each case which is not cured within 30 business days following receipt by the Company of written notice of such event or events. (In the case of Mr. Ellmer, "Company" refers to ATA, except under the definition of change in control.)

        In the event of a termination by us for cause, the named executive officer is entitled to payment of accrued rights, except that, if the named executive officer is terminated due to any of the following, accrued or vested bonuses or stock options after such event will be forfeited: (a) the executive's gross neglect of employment duties; (b) the executive officer's conviction of, pleading guilty to, or pleading nolo contendere or its equivalent to, a felony or any crime involving moral turpitude; (c) the executive officer's engaging in any illegal conduct or willful misconduct in the performance of the executive officer's employment duties; (d) the executive officer's engaging in any fraudulent or unfavorable conduct in the executive officer's dealing with, or on behalf of, either the Company (or its affiliates); (e) the named executive officer's continued failure or refusal to follow the lawful written instructions of the CEO or the Board; (f) the named executive officer's knowing breach of restrictive covenants and nondisclosure requirements under the agreement; and (g) the named executive officer's misuse of alcohol or unlawful drugs which materially interferes with his performance of duties.

        In the event the named executive officer's employment terminates due to his disability (not defined in the employment agreement), the named executive officer will be entitled to the following payments and benefits in addition to accrued rights (which includes vesting of equity as described in "Equity Based Compensation" below):

        (a)   six months of continued base salary; and

        (b)   six months of continued health and welfare benefits and travel benefits.

        In the event the named executive officer's employment terminates due to death, the named executive officer will be entitled to the following payments and benefits in addition to accrued rights (which include vesting of equity as described in "Equity Based Compensation" below):

        (a)   payment of base salary for an additional three months following the date of death;

        (b)   three months of health and welfare benefits for the named executive officer's spouse and dependents; and

        (c)   12 months of travel benefits for the named executive officer's spouse and dependents.

        If the named executive officer terminates his employment without good reason, he is entitled to accrued payments and benefits; provided, however, that the named executive officer will not be entitled to travel benefits if he has not been employed by the Company for at least five years.

        The named executive officers are also entitled to certain "double trigger" benefits in the event of termination by the Company without cause (defined above) or by the named executive officer for "good reason" (defined above), in each case within 90 days following a change in control (as defined below). In the event of such termination, the named executive officer will be entitled to the following payments and benefits in addition to accrued rights (which include vesting of equity as described in "Equity Based Compensation" below):

        (a)   severance compensation equal to 12 months (24 months if terminated without cause) of base salary plus target bonus under the AI Bonus Plan for the year of termination.

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        (b)   continued payments for 12 months (24 months if terminated without cause) of the amount equal to the monthly COBRA premium (grossed-up for certain taxes) for the executive officer and any eligible dependents; and

        (c)   continued travel benefits.

        For purposes of the employment agreements, the term "change of control" is defined as: (a) the consummation of a sale or other disposition of all or substantially all of the assets of the Company or all of the issued and outstanding stock of the Company; (b) the acquisition by any individual, entity or group (excluding any individual, entity or group which already has beneficial ownership of more than 50% of the outstanding equity interests of the Company or certain of its affiliates) of beneficial ownership of more than 50% of the outstanding equity interests of any of the Company; or (c) the acquisition by any individual, entity or group (excluding MatlinPatterson) of a controlling interest (i.e. "golden share") that would allow such individual, entity or group to exercise effective control of and/or veto power with respect to the Company; or (d) solely for purposes of triggering the period during which the named executive officer may terminate the employment agreement for "good reason", a merger, consolidation, acquisition or other business combination.

        In order to receive severance payments, the named executive officer must sign a release. In addition, each employment agreement contains covenants for the benefit of the Company relating to non-competition during the term of employment and post-employment benefits, protection of our confidential information, and non-solicitation of Company employees for one year following termination of the named executive officer's employment for any reason. Mr. Garrett's noncompetition restriction period in the upon termination of his employment for cause, without good reason or due to disability is 6 months.

New Employment Agreements with Mr. Denison

        Pursuant to the terms of his new employment agreement dated January 1, 2007, Mr. Denison will receive substantially the same payments and benefits as under his prior agreement with the following exceptions:

        (a)   in the event of a termination by us without cause, by Mr. Denison for material breach, due to death or disability or by Mr. Denison for good reason, Mr. Denison will only receive accrued rights; and

        (b)   Mr. Denison no longer receives double trigger benefits in the event of a change in control if his employment is terminated by us without cause or by Mr. Denison for good reason following the change in control.

Equity-Based Compensation

        Options granted to the named executive officers are granted pursuant to the Chapter 11 Emergence Plan and the LTIP (together, the "Management Plans").

        Pursuant to the Management Plans, in the event of a termination of the optionee's full-time employment because of a termination without cause, death, disability (as defined in the option award agreement) or retirement after age 60, the options will immediately become exercisable in full. Furthermore, in the event the optionee ceases to be a full-time employee other than for "cause", the option will terminate at the end of three months following the date the optionee ceases to be a full-time employee. In the event of a termination for "cause" the option will expire on the date of termination. In the event of a termination due to death, disability or retirement after age 60 while a full-time employee of the Company, the option will terminate at the end of one year following the date of termination.

132

        Pursuant to the terms of the Management Plans or the award agreements with the named executive officers, in the event of a change of control (which are referred to in the Management Plans as a "Significant Event") or a Tag Along Event (each as defined below), all unvested options immediately vest. For purposes of the equity-based compensation plans, the term "change of control" is defined as: (a) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of capital stock of the Company entitled to vote generally in any election of directors ("Voting Stock") would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the outstanding Voting Stock immediately prior to the merger have the same proportionate voting interests in the capital stock of the surviving corporation immediately after the merger, (b) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company, (c) the adoption of any plan for the liquidation or dissolution of the Company or (d) during any period of two consecutive years, individuals who at the beginning of such period constituted the entire board of directors ceased for any reason to constitute a majority thereof unless the election, or the nomination for election by our shareholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.

        A "Tag Along Event" is defined as: a sale of our Class A Common Stock, par value $0.0001, by a holder of Class A Common Stock of the Company which holds at least 25% of the voting stock of the Company in which the purchaser of such stock acquires shares representing 50% or more of the then outstanding Class A Common Stock of such 25% holder.

Potential Payments Upon Termination or Change of Control Table

        The following table sets forth the estimated payments and other benefits that would have been received by each named executive officer employed by us as of December 31, 2007, or his or her estate, under existing agreements, plans and arrangements, if the named executive officer's employment had terminated on December 31, 2007 under the following circumstances:

•

voluntary termination by the named executive officer,



•

termination by the named executive officer for material breach by us,



•

termination by us without cause,



•

termination by the named executive officer with good reason following a change of control,



•

termination by us without cause following a change of control,



•

termination by us for cause,



•

termination as a result of disability or



•

termination as a result of death.

        The amounts are calculated based on a per share price of $14.00 as of December 31, 2007.

        The amounts do not include amounts payable pursuant to our contract, agreements, plans or arrangements to the extent they do not discriminate in scope, terms or operation, in favor of executive officers of the Company and that are available generally to all salaried employees, such as accrued base salary and vacation and long-term disability payments. Amounts also do not include the value of travel benefits as there is no incremental cost to the Company for providing such benefits. As indicated above, the amounts are based on the employment agreement in effect for the fiscal year ended

133

December 31, 2007. The amounts below are only estimates, and actual amounts to be paid out can only be determined at the time of such executive's separation from the Company.

Executive Benefits and Payments Upon Separation	Voluntary Termination on 12/31/2007 ($)	Voluntary Termination for Good Reason on 12/31/07 ($)	Involuntary Without Cause Termination on 12/31/2007 ($)	Voluntary Termination for Good Reason (Change of Control) on 12/31/2007 ($)	Involuntary Without Cause Termination (Change of Control) on 12/31/2007 ($)	For Cause Termination on 12/31/2007 ($)	Disability on 12/31/2007 ($)	Death on 12/31/2007 ($)
John Denison
Cash Severance(1)	0	175,000	175,000	175,000	350,000	0	87,500	43,750
Health and Welfare Benefits(2)	0	0	0	0	0	0	0	0
Equity Treatment(3)	0	220,000	220,000	220,000	220,000	0	220,000	220,000
Gross-Up for Welfare Benefits(4)	0	0	0	0	0	0	0	0
TOTAL	0	395,000	395,000	395,000	570,000	0	307,500	263,750
Subodh Karnik
Cash Severance(1)	0	400,000	400,000	400,000	800,000	0	200,000	100,000
Health and Welfare Benefits(2)	0	16,625	16,625	16,625	33,250	0	6,192	3,096
Equity Treatment(3)	0	213,333	213,333	213,333	213,333	0	213,333	213,333
Gross-Up for Welfare Benefits(4)	0	9,234	9,234	9,234	20,668	0	0	0
TOTAL	0	639,192	639,192	639,192	1,067,251	0	419,525	316,429
Douglas Yakola
Cash Severance(1)	0	300,000	300,000	300,000	600,000	0	150,000	75,000
Health and Welfare Benefits(2)	0	15,311	15,311	15,311	30,622	0	6,240	3,120
Equity Treatment(3)	0	146,667	146,667	146,667	146,667	0	146,667	146,667
Gross-Up for Welfare Benefits(4)	0	11,240	11,240	11,240	21,814	0	0	0
TOTAL	0	473,218	473,218	473,218	799,103	0	302,907	224,787
Gary Ellmer
Cash Severance(1)	0	235,000	235,000	235,000	470,000	0	117,500	58,750
Health and Welfare Benefits(2)	0	11,004	11,004	11,004	22,008	0	3,988	1,011
Equity Treatment(3)	0	0	0	0	0	0	0	0
Gross-Up for Welfare Benefits(4)	0	5,850	5,850	5,850	13,146	0	0	0
TOTAL	0	251,854	251,854	251,854	505,154	0	121,488	59,761
Josef Loew
Cash Severance(1)	0	225,000	225,000	225,000	450,000	0	112,500	56,520
Health and Welfare Benefits(2)	0	9,631	9,631	9,631	19,262	0	4,133	1,048
Equity Treatment(3)	0	146,667	146,667	146,667	146,667	0	146,667	146,667
Gross-Up for Welfare Benefits(4)	0	4,494	4,494	4,494	11,118	0	0	0
TOTAL	0	385,792	385,792	385,792	627,047	0	263,300	204,235
William Garrett
Cash Severance(1)	0	330,000	330,000	330,000	666,000	0	166,500	83,520
Health and Welfare Benefits(2)	0	19,623	19,623	19,623	39,245	0	7,849	3,925
Equity Treatment(3)	0	0	0	0	0	0	0	0
Gross-Up for Welfare Benefits(4)	0	12,362	12,362	12,362	24,724	0	0	0
TOTAL	0	361,985	361,985	361,985	729,969	0	174,349	87,445

(1)

Represents following amounts of base salary: (a) 12 months for Voluntary Termination for Good Reason, Without Cause Termination, and Voluntary Termination for Good Reason (Change of Control) columns; (b) 24 months for Involuntary Without Cause Termination (Change of Control) column; (c) 6 months for Disability column; and (d) 3 months for Death column.

(2)

Represents estimated value of health and welfare benefits for financial accounting purposes for the following periods after termination: (a) 12 months for Voluntary Termination for Good Reason, Without Cause Termination, and Voluntary Termination for Good Reason (Change of Control) columns; (b) 24 months for Involuntary Without Cause Termination (Change of Control) column; (c) 6 months for Disability column; and (d) 3 months for Death column.

134

(3)

Represents difference between the exercise price of the option and the fair market value of a common share on December 31, 2007, which was $14.00, as determined by the compensation committee, multiplied by the number of unvested options held by the named executive officer on December 31, 2007.

(4)

Represents tax gross up for welfare benefits, as applicable.

Director Compensation

        We do not provide compensation to our employee directors or to directors who are appointed to our board of directors by MatlinPatterson. For our other directors, our general practice is to provide annual fees of $25,000 per director. Harvey Tepner, our former audit committee chairman, received an addition $10,000 fee. In addition, we provide a $2,500 fee per board meeting attended and $1,000 fee per committee meeting attended. Generally, we hold twelve board meetings, four audit committee meetings and four compensation committee meetings per year. All stock options and restricted shares granted to the non-employee directors remain outstanding.

        We also provided each non-employee, non-MatlinPatterson-appointed director with options to purchase 10,000 shares and 1,000 restricted shares, each of which vests in three equal annual installments. These grants were made upon the appointment of the director to the board. No option awards or stock awards have been previously granted to those directors.

        The following table sets forth information with respect to compensation earned by our non-employee directors and former non-employee directors other than directors appointed to our board of directors by MatlinPatterson for the fiscal year ended December 31, 2007. We do not provide compensation to our employee directors or our directors appointed by MatlinPatterson.

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($) (3)		Option Awards ($) (4)		All Other Compensation ($)	Total ($)
Gen. Duane H. Cassidy	75,000	10,000(1	)	18,000(1	)	—	103,000
Bernard L. Han	67,000	10,000(2	)	17,833(2	)	—	94,833
Harvey L. Tepner	95,710	10,000(2	)	17,833(2	)	—	123,543
Randy Martinez	13,750	—		—		—	13,750

(1)

Gen. Cassidy was awarded options to purchase 10,000 shares of the Company's common stock. Gen. Cassidy's options were granted on April 18, 2006, and vest in three equal installments on each of April 18, 2007, April 18, 2008 and April 18, 2009. Gen. Cassidy was also awarded 1000 restricted shares of the Company's common stock. Dividends will not be paid on the restricted shares until the shares become vested. Gen. Cassidy's restricted shares were granted on April 18, 2006, and vest in three equal installments on each of April 18, 2006, April 18, 2007 and April 18, 2008. The exercise price of the options and the fair market value of the restricted shares on the date of grant were $10.00 per share.

(2)

Messrs. Han and Tepner were each awarded options to purchase 10,000 shares of the Company's common stock. Messrs. Han and Tepner's options were granted on March 23, 2006 and vest in three equal installments on each of March 1, 2007, March 1, 2008 and March 1, 2009. Messrs. Han and Tepner were also awarded 1000 restricted shares of the Company's common stock. Dividends will not be paid on the restricted shares until the shares become vested. Messrs. Han and Tepner's restricted shares were granted on March 23, 2006, and vested in three equal installments on March 23, 2006, March 23, 2007 and March 23, 2008. The exercise price of the options and the fair market value of the restricted shares on their respective dates of grant were $10.00 per share. Messrs. Tepner and Han resigned from the Board of Directors on November 15, 2007 and November 16, 2007, respectively.

(3)

The amounts in this column represent the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2007, in accordance with FAS 123R.

(4)

The amounts in this column represent the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2007, in accordance with FAS 123R, of the awards described. Assumptions used in the calculation of these amounts are included in Note 8, "Stock Option Plans," to our audited financial statements for the fiscal year ended December 31, 2007, included elsewhere in this Form S-1 filing. However, as required the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.

(5)

Mr. Martinez was appointed to the Board of Directors on August 28, 2007.

135

SECURITY OWNERSHIP

        The following table sets forth the number of shares of Global's common stock that are held by Global's directors, executive officers and each stockholder known by Global to be a beneficial owner of more than 5% of Global common stock: (1) on an actual basis as of December 31, 2007 and (2) on a pro forma basis as of December 31, 2007 after giving effect to this rights offering (and the conversion of 11,507,142 shares of Series A preferred stock in connection therewith) and assuming that all of the shares being offered pursuant to this rights offering are subscribed for by shareholders who are not officers or directors. The number of shares beneficially owned by each person is determined under rules promulgated by the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the person has the sole or shared voting power or investment power and also any shares which the person has the right to acquire within 60 days of December 31, 2007 through the exercise of any stock option, warrant or other right. Except as indicated in this table, each person or entity listed has sole investment and voting power (or, in the case of individuals, shares such power with his or her spouse) with respect to the shares set forth in the table. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of such shares. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares subject to options or warrants held by that person that are or will become exercisable within 60 days of December 31, 2007 are deemed outstanding, although the shares are not deemed outstanding for purposes of computing percentage ownership of any other person.

	Shares Beneficially Owned as of December 31, 2007(2)			Pro Forma December 31, 2007(2)(3)
Name and address of beneficial owner(1)
	Number	Percent		Number	Percent
Greater than 5% Stockholders:
MatlinPatterson ATA Holdings LLC 520 Madison Avenue New York, NY 10022-4213(4)	9,308,986	74.1	%	17,835,778	74.1	%
Delaware Street Capital, LLC 900 N. Michigan Avenue Chicago, IL 60611(5)	808,676	6.4	%	808,676	3.4	%
Executive Officers and Directors:
Gen. Duane H. Cassidy, Director(6)	4,333	*
Marc Chodock, Director	—	—
John Denison, Chairman(7)	55,000	*
Gary E. Ellmer, Executive Officer(8)	10,000	*
Bernard L. Han, Director(9)	4,333	*
Subodh Karnik, Executive Officer(10)	70,000	*
Josef Loew, Executive Officer(11)	18,333	*
David Matlin, Director(12)	9,308,986	74.1	%	17,835,778	74.1	%
Peter Schoels, Director	—	—
Lawrence M. Teitelbaum, Director	—	—
Harvey L. Tepner, Director(13)	4,333	*
Randy J. Martinez, Director
Doug Yakola, Executive Officer(14)	18,333	*
Robert R. Binns, Executive Officer	—	—
Charles P. McDonald, Executive Officer	—	—
Jeffrey W. Wehrenberg, Executive Officer	—	—
Mark M. McMillin, Executive Officer	—	—
Richard W. Meyer, Jr., Executive Officer(15)	15,000	*
All executive officers and directors as a group (18 persons)	9,508,651	74.5	%	18,035,443	74.3	%

*

less than 1%

136

(1)

Unless otherwise noted, the address of each beneficial owner listed is c/o Global Aero Logistics Inc., HLH Building, 101 World Drive, Peachtree City, Georgia 30269.

(2)

The number of shares of Global common stock deemed outstanding for the purposes of determining the percentage of common stock held by a person or entity includes 12,564,674 shares outstanding, plus any shares of common stock subject to options or warrants held by such beneficial owner that are exercisable within 60 days of December 31, 2007.

(3)

Assumes the conversion of 11,507,142 shares of Series A preferred stock by MatlinPatterson and that the amount of shares to be sold in this rights offering is 2,980,350.

(4)

Includes 9,308,986 shares of Class A common stock.

(5)

Includes 808,676 shares of Class A common stock.

(6)

Includes 3,333 shares subject to options that are exercisable within 60 days of December 31, 2007 and 1,000 shares of restricted stock as of December 31, 2007.

(7)

Includes 55,000 shares subject to options that are exercisable within 60 days of December 31, 2007.

(8)

Includes 10,000 shares subject to options that are exercisable within 60 days of December 31, 2007.

(9)

Includes 3,333 shares subject to options that are exercisable within 60 days of December 31, 2007 and 1,000 shares of restricted stock as of December 31, 2007. Mr. Han resigned from our board of directors on November 16, 2007.

(10)

Includes 70,000 shares subject to options that are exercisable within 60 days of December 31, 2007.

(11)

Includes 18,333 shares subject to options that are exercisable within 60 days of December 31, 2007.

(12)

Includes 9,308,986 shares of Class A common stock held by MatlinPatterson ATA Holdings LLC. Mr. Matlin may be deemed to have voting and/or investment control over such shares. Mr. Matlin disclaims beneficial ownership of such shares in accordance with Rule 13d-4 of the Exchange Act.

(13)

Includes 3,333 shares subject to options that are exercisable within 60 days of December 31, 2007 and 1,000 shares of restricted stock as of December 31, 2007. Mr. Tepner resigned from our board of directors on November 15, 2007.

(14)

Includes 18,333 shares subject to options that are exercisable within 60 days of December 31, 2007.

(15)

Includes 15,000 shares subject to options that are exercisable within 60 days of December 31, 2007.

137

CERTAIN RELATIONSHIPS

Transactions with MatlinPatterson

        As of September 30, 2007, MatlinPatterson owns approximately 69.7% of Global's outstanding shares of common stock as well as 11,507,142 shares of Series A preferred stock. In order to fund, in part, the acquisition of World Air Holdings, JPMorgan and Jefferies, respectively, received 1,808,986 and 452,247 immediately exercisable Warrants to purchase Global's common stock at an exercise price of $0.01 per share. On October 23, 2007, MatlinPatterson purchased the Warrants held by JPMorgan and on that date, MatlinPatterson exercised these Warrants, resulting in MatlinPatterson owning 1,808,986 shares of Global's common stock, in addition to the 7,500,000 shares of common stock that MatlinPatterson owned prior to this exercise. The Warrants acquired by Jefferies continue to be owned by Jefferies and remain unexercised. As of December 31, 2007, on a pro forma basis, MatlinPatterson owned approximately 74.1% of our outstanding shares of common stock, assuming the conversion of the 11,507,142 shares of Series A preferred stock by MatlinPatterson and that the amount of shares to be sold in this rights offering is 2,980,350.

        In addition, four of Global's directors—Messrs. Chodock, Matlin, Schoels and Teitelbaum—serve in various executive capacities at MatlinPatterson. MatlinPatterson and these directors are "related persons" of Global under the Securities Exchange Act of 1934, as amended, and these directors may be considered to have an indirect interest in transactions involving MatlinPatterson given these relationships.

        In February 2006, in connection with Global's Chapter 11 reorganization, ATA entered into a term loan agreement with MatlinPatterson pursuant to which ATA borrowed $24.2 million. In January 2007, ATA entered into a bridge loan agreement with MatlinPatterson pursuant to which ATA borrowed $28.0 million.

        In connection with the merger and the other transactions, Global and MatlinPatterson agreed to convert outstanding amounts under the term loan and bridge loan into additional Global equity. The conversion was effected through the issuance and sale by Global of Series A preferred stock to MatlinPatterson in an aggregate amount of $161.1 million, which amount was sufficient to repay or otherwise satisfy $54.3 million of outstanding indebtedness owed by Global to certain affiliates of MatlinPatterson as of June 30, 2007 and to partially finance the cash requirements of the merger. The issuance and sale of the Series A preferred stock was consummated at the time of the closing of the merger. The terms of such issuance and sale (including this rights offering) were approved by a special committee of the board of directors formed for the purpose of reviewing the terms of such transaction and determining its fairness to our stockholders. The Special Committee consisted of Mr. Bernard L. Han, Gen. Duane H. Cassidy and Mr. Harvey L. Tepner all of whom were independent directors. Messrs. Tepner and Han resigned from our Board on November 15, 2007 and November 16, 2007, respectively.

        In connection with the merger, MatlinPatterson agreed to sell to us 1,068,100 shares of World Air Holdings then owned by MatlinPatterson at a price per share of $8.25, which represented the average cost per share purchased by MatlinPatterson. MatlinPatterson's agreement to sell us such shares at such price had the effect of reducing merger consideration payable by us by $4.5 million. In consideration for MatlinPatterson's willingness to sell us such shares at such price and to purchase the $161.1 million of Series A preferred stock, we agreed to pay certain expenses incurred by MatlinPatterson in the merger and financing, which totalled $4.0 million.

        We believe that the terms of our transactions with MatlinPatterson are as favorable as those we could have negotiated with third parties.

138

Related party transaction policy

        Global currently does not have a written, stand-alone policy for evaluating related party transactions. The audit committee of Global's board of directors reviews any related party transactions in which Global is or will be a participant and that involves an amount exceeding $120,000. The audit committee's review procedures include evaluating the following:

•

the nature of the relationships among the parties;



•

the materiality of the transaction to Global;



•

the related person's interest in the transaction; and



•

the benefit of the transaction to the related person and to Global.

        Additionally, in cases of transactions in which a director or executive officer may have an interest, the audit committee also will evaluate the effect of the transaction on such individual's willingness or ability to properly perform his or her duties at Global. The audit committee may utilize, as necessary, Global's Code of Ethics, which may be viewed at www.ata.com.

        Global's bridge loan from MatlinPatterson described above under "—Transactions with MatlinPatterson" was not independently reviewed by the audit committee but was unanimously approved by Global's board of directors.

139

DESCRIPTION OF CERTAIN INDEBTEDNESS

Overview

        The following descriptions of the JPMorgan Term Loan, leases, lease common terms agreements, notes and other instruments, as applicable, are only summaries of certain material provisions of the applicable documents, do not purport to be complete and are qualified in their entirety by reference to the provisions of the applicable documents.

JPMorgan Term Loan

        Overview.    In order to fund the acquisition of World Air Holdings pursuant to the merger agreement, on August 14, 2007, the Company's subsidiary, ATA Acquisition entered into a $340.0 million senior secured payment-in-kind (PIK) term loan agreement with the lenders party thereto (JPMorgan and Jefferies as of the date of this prospectus) or JPMorgan, as administrative agent.

        Interest Rates.    The JPMorgan Term Loan bears interest at a floating interest rate not to exceed 13.63% per annum. Subject to this cap, the floating interest rate for each interest period is calculated as a rate per annum equal to the sum of (i) 75 basis points, plus (ii) (A) 131 divided by 340 multiplied by (B) the greater of (x) the reserve-adjusted LIBOR for such interest period plus 425 basis points, and (y) the treasury rate for such interest period plus 500 basis points, plus (iii) (A) 209 divided by 340 multiplied by (B) the reserve-adjusted LIBOR for such interest period plus 625 basis points. The treasury rate is the rate borne by direct obligations of the United States maturing on the eighth anniversary of the first day of the relevant interest period. Subject to the cap, such floating interest rate will increase by an additional 100 basis points at the end of the six-month period which commenced on August 14, 2007 and will increase by a further 50 basis points at the end of each subsequent three- month period.

        Maturity and exchange notes.    The JPMorgan Term Loan initially matures on August 14, 2008, the initial maturity date, and finally matures on August 14, 2015. At any point after the initial maturity date, the JPMorgan Term Loan may be exchanged in whole or in part, at the option of the lenders under the JPMorgan Term Loan, for senior secured payment-in-kind exchange notes ("exchange notes") having an equal principal amount (including any accrued and unpaid interest not required to be paid in cash) of loans for which they are exchanged.

        Prepayments and take-out debt.    ATA Acquisition may at any time prepay the loans, in whole or in part, without premium or penalty. If ATA Acquisition publicly sells or privately places securities (in the form of cash pay or non-cash pay securities) that will provide proceeds sufficient to repay all or any portion then outstanding of the principal amount under the JPMorgan Term Loan ("take-out debt") 100% of such proceeds shall be applied to the prepayment of the loans. At any time after a reasonable marketing period and no earlier than 180 days from August 14, 2007 (and prior to the initial maturity date), an investment bank may issue to ATA Acquisition a notice to effect an offering of securities ("securities demand") requiring ATA Acquisition to issue take-out debt on terms set by the investment bank, subject to certain conditions, including that (i) the interest rate (whether floating or fixed) or dividend rate, as the case may be, may not exceed 12.88% per annum (excluding the PIK Margin), (ii) the maturity of any such debt shall be no less than eight years from issuance and (iii) the terms of the debt (including conditions and covenants) will be customary and satisfactory to ATA Acquisition, the investment bank and JPMorgan.

        Guarantee and security.    Pursuant to a guarantee and collateral agreement between Global, New ATA Investment and ATA Acquisition, ATA, World Air Holdings, World, North American and World Airways Parts, as guarantors, and JPMorgan, as administrative agent for the secured lenders, each guarantor provided an unconditional guarantee of all payments owed by ATA Acquisition under the

140

JPMorgan Term Loan and issued to JPMorgan a first-priority perfected lien in substantially all of its respective assets to secure the guarantee.

        Certain affirmative covenants.    The JPMorgan Term Loan contains certain affirmative covenants, including, to:

•

deliver to the administrative agent audited or review financial statements, as the case may be, of Global and its consolidated subsidiaries (including World Air Holdings and its subsidiaries acquired pursuant to the merger) and a narrative discussion and analysis of the financial condition and results of operations of Global and its consolidated subsidiaries within certain applicable delays;



•

deliver to the administrative agent quarterly internal management reports no later than 45 days after the end of each fiscal quarter;



•

take any action reasonably necessary or desirable so that take-out debt (as described above) may be issued;



•

deliver quarterly within certain applicable delays preliminary offering memoranda for an offering of senior notes of ATA Acquisition and usable in a customary high-yield roadshow;



•

prior to the initial maturity date of the loans, enter into an indenture for the exchange notes; and



•

take such action as to perfect liens and security interests in favor of the lenders in any additional collateral acquired by ATA Acquisition, Global or its consolidated subsidiaries.

        Certain negative covenants and events of default.    The JPMorgan Term Loan contains certain covenants that, among other things, restrict, subject to certain exceptions, the ability of ATA Acquisition, as borrower, Global, as parent, and Global's consolidated subsidiaries, to:

•

incur additional indebtedness, including indebtedness secured by any lien;



•

create liens on assets;



•

sell assets or stock of subsidiaries;



•

serve as guarantors of additional obligations;



•

engage in mergers or consolidations or change lines of business;



•

pay dividends and distributions or repurchase common stock;



•

engage in certain affiliate transactions;



•

make investments, loans or advances;



•

engage in certain transactions with affiliates; and



•

enter into certain sale and leaseback transactions.

Aircraft Capital Leases

        On February 28, 2006, as a result of adopting fresh-start accounting, ATA entered into two 15-year capital leases for two Boeing 757-200 aircraft and related engines. This equipment continues to be leased pursuant to lease agreements previously recorded as operating leases and entered into with Wilmington Trust Company and Wells Fargo Bank Northwest, National Association, as respective lessors, on customary aircraft lease terms. The base interest rate on the obligations under the capital leases, payable monthly, is 13.3% per annum. As of September 30, 2007, the two aircraft have a carrying amount of $30.2 million.

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City of Chicago Midway Airport Note

        ATA is the debtor under a promissory note made payable to the City of Chicago and issued pursuant to a loan agreement among ATA, as borrower, and the City of Chicago, as lender, for borrowings to finance ATA expansion gates at Chicago's Midway Airport. The underlying source of funds loaned was Midway Airport Revenue Bonds issued by the City of Chicago, which may not be prepaid, and upon which ATA is obliged to make debt service payments. The promissory note accrues interest at the rate of 7.7% per annum, equivalent to the debt service payments on the Midway Revenue Bonds, and payments of principal and interest under the promissory notes are made in equal monthly installments. At September 30, 2007, borrowings outstanding under the note were $7.1 million and were secured by a letter of credit issued for the account of Southwest. In addition, ATA has issued a back-up letter of credit to Southwest.

Aircraft Operating Leases

        Global's operating subsidiary, ATA, leases a total of 28 aircraft* and related engines under operating leases and two aircraft and related engines under capital leases. As of September 30, 2007, scheduled future minimum lease payments under capital leases and operating leases having initial non-cancelable lease terms of more than one year were approximately $1.0 billion in the aggregate.

*

Includes leases for seven McDonnell Douglas DC-10-30 wide-body aircraft entered into with Wells Fargo Bank Northwest, National Association in the first quarter of 2007.

†

The Boeing 757-300 equipment leased from Wells Fargo Bank Northwest, National Association may be purchased at the end of the respective lease terms.

        General.    ATA leases a total of 28 aircraft pursuant to lease agreements or lease common terms agreements with the following lessors: GATX Third Aircraft Corporation, International Lease Finance Corporation, Wells Fargo Bank Northwest, National Association^[nc_cad,217], and Wilmington Trust Company. Certain of the leases provide for a guarantee by Global of ATA's obligations under the leases.

        Certain covenants and events of default.    These leases or lease common terms agreements contain all or some of the following customary covenants, including covenants whereby ATA agrees, subject to certain exceptions, not to:

•

incur any liens on or with respect to the lease, any item of leased equipment or any interest in the lease;



•

engage in a merger, consolidation or sale or transfer of substantially all of its assets;



•

voluntarily suspend its certificated operations of the leased aircraft or its fleet; and



•

permit to be revoked any permit or authorization required to conduct business.



•

These leases or lease common terms agreements contain all or some of the following customary events of default, which, subject to certain exceptions, may result in default and the lessor repossessing the leased equipment:



•

failure to pay rent or fees;



•

violation of covenants or agreements;



•

failure to timely bring the leased equipment into service;



•

certain bankruptcy and insolvency events;



•

lessee's suspension of its airline business or failure to maintain status as a certificated air carrier;



•

default under certain other agreements, contracts and leases;



•

a judgment or award of money shall be rendered against lessee;

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•

notification by Eurocontrol to lessor that there are unpaid Eurocontrol charges due from lessee; and



•

attachments or liens shall be entered against substantially all the assets of lessee, other than liens for debt incurred or obligations agreed to in the ordinary course of business.

        World Air Holdings' operating subsidiaries, World and North American, together lease a total of 26 aircraft and related engines under operating leases. As of September 30, 2007, scheduled future minimum lease payments under operating leases having initial non-cancelable lease terms of more than one year were approximately $550 million in the aggregate.

        General.    World and North American together lease at total of 26 aircraft and related engines pursuant to lease agreements and lease common terms agreements with the following lessors: Aviation Financial Services, Inc., CBSA Partners LLC, GECAS FSC Carpenter-J, Inc., International Lease Finance Corporation, Lift Trust—Sub 1, MDFC—Knoxville Company, MDFC—Memphis Corporation, United Parcel Service Co., Wells Fargo Bank Northwest, National Association, and Wilmington Trust Company.

        Certain covenants and events of default.    These leases or lease common terms agreements contain all or some of the following customary covenants, including covenants whereby World or North American, as applicable, agrees, subject to certain exceptions, not to:

•

incur any liens on or with respect to the lease, any item of leased equipment or any interest in the lease;



•

engage in a merger, consolidation or sale or transfer of substantially all of its assets; and



•

fail to hold any permit or authorization required to conduct business.



•

These leases or lease common terms agreements contain all or some of the following customary events of default, which, subject to certain exceptions, may result in default and the lessor repossessing the leased equipment:



•

failure to pay rent or fees;



•

failure to maintain insurance;



•

violation of covenants or agreements;



•

representation, warranty or statement made by lessee is incorrect or misleading in any material respect;



•

failure to timely take possession of the leased equipment (does not apply to CBSA lease);



•

certain bankruptcy and insolvency events;



•

lessee's suspension of its airline business or failure to maintain permits required to conduct its business;



•

failure of lessee to maintain unencumbered control of the leased equipment;



•

certain obligations of the lessee for borrowed money become due before maturity or lessee default on payment of certain obligations;



•

material adverse change in lessee's financial condition;



•

sublessee acts which prevent performance by lessee of its lease obligations;



•

judgment against lessee in excess of $1,000,000 which is not covered by insurance;



•

failure to return the aircraft upon expiration of lease term;



•

lessee or its affiliate disposes, conveys or transfers all or a material part of its assets, or there is a change of control of lessee, without lessor's consent;



•

notification by Eurocontrol to lessor that there are unpaid Eurocontrol charges due from lessee; and



•

lessee defaults under any lease or other agreement between lessee and lessor or any agreement pursuant to which lessee has possession of an aircraft.

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THE RIGHTS OFFERING

Before exercising any rights, you should read carefully the information set forth under the caption "Risk Factors" in this prospectus.

Background of the Rights Offering

        As part of the financing in connection with the merger, Global obtained additional equity by issuing 11,507,142 shares of Series A preferred stock to MatlinPatterson at a purchase price of $14.00 per share. The Series A preferred stock will be converted into common stock in connection with this offering and a portion of the converted shares will be offered to existing shareholders in connection with this offering.

The Rights

        Holders of our shares of common stock (other than MatlinPatterson) as of 5:00 p.m., New York City time, on the record date,                         , 2008, are being granted, at no charge,            non-transferable subscription rights for every share of common stock owned at that time. Each right entitles you to purchase one share of common stock for $14.00 per share from MatlinPatterson. No fractional subscription rights will be granted. Instead, the number of subscription rights you are entitled to will be rounded to the nearest whole number after aggregating all rights to which you are entitled. Any shares of common stock which are not purchased pursuant to the rights offering will be held by MatlinPatterson.

Record Date

        As of 5:00 p.m., New York City time, on                        , 2008. Rights to subscribe for shares of our common stock are being granted only to holders of our common stock (other than MatlinPatterson) as of the record date.

Subscription Price

        The subscription price is $14.00 per share, payable in cash. All payments must be cleared on or before the expiration date.

Subscription Privilege

        You are entitled to purchase one share of common stock at the subscription price for each right exercised.

Oversubscription Right

        Each holder of common stock that exercises all of its rights offered pursuant to the rights offering will also have the right to purchase a portion of the shares remaining after giving effect to the aggregate amount initially subscribed for in this offering. These additional shares will be sold at the subscription price. Stockholders wishing to purchase additional shares must complete an additional subscription form and deliver it, along with payment in full for the number of remaining shares for which such stockholder elects to subscribe to Computershare Trust Company, N.A., our subscription agent with its completed subscription agreement prior to the offering expiration date.

        The number of extra shares that each holder will have the right to purchase will be equal to the product of (x) the number of shares to be issued less the total number of shares that are initially subscribed for by each holder times (y) a fraction the numerator of which will be the aggregate number of shares of common stock on the record date owned by all offerees hereunder and the denominator of which will be the total number of outstanding shares of common stock on the record date times (z) a

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fraction, the numerator of which will be the number of shares of common stock on the record date owned by such purchaser and the denominator of which will be the total number of shares of common stock on the record date owned by all offerees that elected to exercise all of their rights in this rights offering and MatlinPatterson.

Method of Offering

        This rights offering is being made directly by MatlinPatterson. Global will not receive any of the proceeds from the sale of the shares being sold. We will not pay any underwriting discounts or commissions, finder's fees or other remuneration in connection with the granting of the rights offered by this prospectus other than the fees and expenses paid to the subscription agent and the information agent. We estimate that the expenses of the offering will total approximately $                  .

Treatment of Fractional Rights

        No fractional rights or cash in lieu of fractional rights will be issued or paid. Instead, the number of rights issued to a holder will be rounded up to the nearest whole number after aggregating all rights to which the holder is entitled.

Expiration Date

        The rights will expire at 5:00 p.m., New York City time, on            , 2008, subject to extension at our discretion. No rights exercised following the expiration date will be honored, including any purported exercise of rights received by the subscription agent after the expiration date, regardless of when the documents relating to that exercise were sent. The rights offering will be open for a period not longer than 30 days.

Extension, Withdrawal and Amendment

        MatlinPatterson may extend the period for exercising your rights, with such extension not to exceed 30 business days after the expiration date, although we understand that it does not intend to do so at this time. MatlinPatterson also may withdraw or terminate this offering at any time and for any reason, so your participation in the rights offering is not assured. In the event that this offering is withdrawn or terminated, all funds received from subscriptions will be returned within approximately 15 days from the date of withdrawal or termination of the rights offering. Interest will not be paid on any returned funds. Shareholders will be notified if this rights offering is extended, withdrawn or terminated by issuing a press release.

        The terms of this offering may also be amended and if an amendment is material:

•

a notice of the amendment will be mailed to all shareholders of record as of the record date;



•

the expiration date will be extended by at least ten days; and



•

offer all subscribers will be offered no less than ten days to revoke any subscription already submitted.

        The extension of the expiration date will not, in and of itself, be treated as a significant amendment for these purposes.

Mailing of Subscription Certificates, Additional Subscription Form and Record Holders

        A subscription certificate and additional subscription form are being sent to each record holder of our common stock (other than MatlinPatterson), together with this prospectus and related instructions to exercise the rights. In order to exercise rights, you must fill out and sign the subscription certificate and, if desired, an additional subscription form and timely deliver them to the subscription agent,

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together with full payment for the shares desired to be purchased. Only the holders of record of our common stock as of 5:00 p.m., New York City time, on the record date may exercise rights.

        A depository bank, trust company or securities broker or dealer which is a record holder for more than one beneficial owner of shares may divide or consolidate subscription certificates to represent shares held as of the record date by their beneficial owners, upon providing the subscription agent with certain required information.

        If you own shares held in a brokerage, bank or other custodial or nominee account, in order to exercise your rights you must promptly send the proper instruction form to the nominee holding your shares. Your broker, dealer, trustee, depository for securities, custodian bank or other nominee holding your shares is the record holder of your shares and will have to act on your behalf in order for you to exercise your rights. We have asked brokers, dealers, trustees, depositories for securities, custodian banks and other nominee holders of our common stock to contact the beneficial owner(s) thereof and provide them with instructions concerning the rights the beneficial owner(s) they represent are entitled to exercise.

Right to Block Exercise Due to Regulatory Issues

        The exercise of rights by any holder of rights who would, in our opinion, be required to obtain prior clearance or approval from any state, federal or non-U.S. regulatory authority for the exercise of rights or ownership of additional shares if, at the expiration date, this clearance or approval has not been obtained may be refused. We are not undertaking to advise you of any such required clearance or approval, nor to pay any expenses incurred in seeking such clearance or approval.

        No offer or sale or solicitation of any purchase of, shares is being made or undertaken in any state or other jurisdiction in which this offering is not permitted. The commencement of this offering in certain states or other jurisdictions may be delayed if necessary to comply with local laws. Shares may not be offered to residents of any state or other jurisdiction whose laws would require a change in this offering in order to carry out this offering in such state or jurisdiction.

Procedure to Exercise Rights

        Rights holders may exercise their rights by delivering to the subscription agent, at one of the addresses specified below, at or prior to 5:00 p.m., New York City time, on the expiration date, the properly completed and executed subscription certificate or certificates evidencing those rights, with any signatures guaranteed as required, together with payment in full of the subscription price for each share of common stock that you desire to purchase pursuant to your basic rights or your oversubscription rights. Except as provided below, a right will not be deemed exercised until the subscription agent receives both payment of the subscription price, including the subscription price for your entire desired oversubscription amount (if applicable), and a duly executed subscription certificate and additional subscription form in respect of any desired oversubscription amount at or prior to 5:00 p.m., New York City time, on the expiration date.

        Payment may be made only by check or bank draft drawn upon a U.S. bank, or postal, telegraphic or express money order, payable to "                        ."

        The subscription price will be deemed to have been received by the subscription agent only upon:

•

clearance of any uncertified check or



•

receipt by the subscription agent of any certified check or bank draft drawn upon a U.S. bank or any postal, telegraphic or express money order.

        Uncertified personal checks used to pay the subscription price must be received by the subscription agent at least five business days before the expiration date to allow sufficient time for the check to

146

clear. Rights holders who wish to pay the subscription price by means of uncertified personal check are urged to consider, in the alternative, payment by means of certified check, bank draft or money order.

        All funds received in payment of the subscription price shall be held by the subscription agent.

        The subscription certificates and payment of the subscription price must be delivered by mail, overnight courier or hand to the subscription agent at one of the following addresses:

By Mail:	By Overnight Courier:
Computershare Trust Company, N.A., Attn: Corporate Actions P.O. Box 859508 Braintree, MA 02185-9208	Computershare Trust Company, N.A. Attn: Corporate Actions 161 Bay State Drive Braintree, MA 02184

        Delivery to an address or by a method other than those set forth above does not constitute valid delivery.

        We will pay the fees and expenses of the subscription agent and have also agreed to indemnify the subscription agent from certain liabilities which it may incur in connection with the offering.

        If an exercising rights holder does not indicate the number of rights being exercised, or does not forward full payment of the aggregate subscription price for the number of rights that the rights holder indicates are being exercised, then the rights holder will be deemed to have exercised its rights with respect to the maximum number of rights that may be exercised for the aggregate payment delivered by the rights holder. If the aggregate payment delivered by the rights holder, including such rights holder's desired oversubscription amount, exceeds the product of the subscription price multiplied by the number of rights evidenced by the subscription certificate or certificates delivered by the rights holder plus such rights holder's actual oversubscription amount, any amount remaining after application of the foregoing procedures shall be returned to the rights holder promptly by mail without interest or deduction.

        As soon as practicable after the completion of the offering, shares of common stock subscribed for and issued pursuant to exercise of the rights, including actual oversubscription amounts, will be delivered to subscribers. Such shares will be issued in the same form, certificated or book-entry, as the shares of common stock held by the subscriber exercising rights for such shares.

        Unless a subscription certificate and additional subscription form, either provides that the shares to be issued pursuant to the exercise of the rights represented thereby are to be issued to the holder of such rights or is submitted for the account of an eligible institution, signatures on each subscription certificate must be guaranteed by an eligible institution.

        Persons who hold shares of common stock for the account of others, such as brokers, dealers, trustees, depositories for securities, custodian banks or other nominees should contact the respective beneficial owners of such shares as soon as possible to ascertain these beneficial owners' intentions and to obtain instructions with respect to their rights. If a beneficial owner so instructs, the record date holder of that beneficial owners' rights should complete appropriate subscription certificates and submit them to the subscription agent with the proper payment. In addition, beneficial owners of rights through such a nominee holder should contact the nominee holder and request the nominee holder to effect transactions in accordance with the beneficial owners' instructions. If a beneficial owner wishes to obtain a separate subscription certificate, the beneficial owner should contact the nominee as soon as possible and request that a separate subscription certificate be issued. A nominee may request any subscription certificate held by the nominee to be split into such smaller denominations as the nominee

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wishes, provided that the subscription certificate is received by the subscription agent, properly endorsed, at or prior to 5:00 p.m., New York City time, on the expiration date.

The instructions accompanying the subscription certificates and additional subscription form should be read carefully and followed in detail. Subscription certificates should be sent with payment to the subscription agent.

The method of delivery of subscription certificates, additional subscription forms, and payment of the subscription price to the subscription agent will be at your election and risk. If subscription certificates, additional subscription forms and payments are sent by mail, you are urged to send such materials by registered mail, properly insured, with return receipt requested, and you are urged to allow a sufficient number of days to ensure delivery to the subscription agent and clearance of payment at or prior to 5:00 p.m., New York City time, on the expiration date. Because uncertified checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment, by means of certified check, bank draft or money order.

        All questions concerning the timeliness, validity, and eligibility of any exercise of rights will be determined by us, and our determination will be final and binding. We may, in our sole discretion, waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine, or reject the purported exercise of any right. Subscription certificates and additional subscription forms will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as we determine, in our sole discretion. Neither we nor the subscription agent will be under any duty to give notification of any defect or irregularity in connection with the submission of subscription certificates or incur any liability for failure to give such notification. We reserve the right to reject any exercise if such exercise is not in accordance with the terms of the offering or not in proper form or if the acceptance thereof or the issuance of the common stock pursuant thereto could be deemed unlawful.

Information Agent

        Georgeson Inc. will act as our information agent to respond to any questions you may have regarding the mechanics of exercising your subscription rights for this offering. All questions or requests for assistance concerning the method of exercising rights or requests for additional copies of this prospectus or the ancillary documents should be directed to the information agent at the address and telephone numbers set forth below:

Georgeson
199 Water Street, 26th Floor
New York, NY 10038

Shareholders should call (toll-free) (866) 733-9485.
Banks and brokers should call (212) 440-9800.

        We will pay the fees and expenses of the information agent.

No Revocation

        Once you send in your subscription certificate, additional subscription form and payment, you cannot revoke the exercise of your rights.

Transferability of Rights

        Except in the limited circumstances described below, the rights are not transferable and may be exercised only by the persons to whom they are issued. Any attempt to transfer rights will render them null and void. The subsequent transfer after the record date of shares of common stock for which the

148

rights were granted will not have any affect on the selling holder's subscription privilege in respect of any such rights.

        Notwithstanding the foregoing, your subscription rights may be transferred by operation of law; for example, a transfer of subscription rights to the estate of the recipient upon the death of the recipient would be permitted. If the subscription rights are transferred as permitted, evidence satisfactory to us that the transfer was proper must be received by us prior to the expiration date of the rights offering.

Determination of Subscription Price

        Prior to this Offering, there has been no public market for our shares of common stock. The subscription price was established by us as part of the process by which we sold the Series A preferred stock to MatlinPatterson on August 14, 2007, the proceeds of which were used in part to complete the acquisition of World Air Holdings. An independent investment bank issued an opinion on August 14, 2007, indicating that the price paid by MatlinPatterson for the Series A Preferred Stock was fair to our stockholders. Our by-laws provide each of our Class A stockholders with so-called preemptive rights, pursuant to which our common stockholders have the right to purchase, on the basis of such stockholder's pro rata portion of all outstanding shares of the Company, all or any part of any stock that the Company may sell and issue. Accordingly, the issuance of the 11,507,142 shares of Series A preferred stock to MatlinPatterson, would have triggered our stockholders' preemptive rights. Our by-laws, however, permit our Board to effectively waive these preemptive rights. Upon the recommendation of a special committee of directors, as a condition for issuing the Series A preferred stock to MatlinPatterson without immediately triggering our other stockholders' preemptive rights, and thereby providing MatlinPatterson with a preferential right in respect of our outstanding equity securities, the Board established $14.00 per share of common stock as the subscription price for this rights offering, among other reasons. By establishing the same purchase price for the Series A preferred shares purchased by MatlinPatterson on August 14, 2007 and the common stock to be subscribed for in this rights offering, the Board has effectively provided the Company's Class A stockholders with the preemptive rights they otherwise would have been entitled to, on a delayed basis.

        The fairness opinion considered, among other things: (1) Global's audited financial statements for the fiscal years ended December 31, 2004, December 31, 2005 and December 31, 2006, and Global-prepared interim financial statements for the three-month periods ended March 31, 2006 and March 31, 2007; (2) World Air Holding's annual reports to shareholders on Form 10-K for the fiscal years ended December 31, 2004, December 31, 2005 and December 31, 2006, and the World Air-prepared interim financial statements for the three-month periods ended March 31, 2006 and March 31, 2007; (3) Global's Articles of Incorporation and Bylaws; (4) conversations with certain members of the management of Global regarding the operations financial condition, future prospects and projected operations and performance of Global and regarding the common stock; (5) financial forecasts and projections prepared by the management of Global with respect to Global for the fiscal years ended December 31, 2007 through 2015, as well as the analyses and forecasts of certain cost savings, operating efficiencies, revenue effects, strategic benefits and other synergies expected by the management of Global to result from the Merger; (6) certain publicly available financial data for certain companies that were deemed relevant; and (7) such other financial studies, analyses and inquiries as were deemed appropriate.

        The $14.00 per share subscription price should not be considered an indication of the actual value of our common stock.

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PLAN OF DISTRIBUTION

        Promptly following the effective date of the registration statement of which this prospectus forms a part, persons who were holders of common stock (other than MatlinPatterson) as of 5:00 p.m., New York City time, on                        , 2008 (the record date) will be granted rights and will be distributed copies of this prospectus.

        This rights offering is being made directly by MatlinPatterson. Global will not receive any of the proceeds from the sale of the shares being sold. We will not pay any underwriting discounts or commissions, finder's fees or other remuneration in connection with the granting of the rights offered by this prospectus other than the fees and expenses paid to the subscription agent and the information agent.

        We will pay the fees and expenses of Computershare Trust Company, N.A., the subscription agent, which are estimated to be approximately $              . We will also pay the fees and expenses of Georgeson Inc., the information agent, which are estimated to be approximately $              . We estimate that our total expenses in connection with the rights offering, including fees and expenses of the subscription agent and information agent, will be $                .

        Certain of our employees, officers or directors may solicit responses from you to the rights offering, but such individuals will not receive any commissions or compensation for such services other than their normal employment compensation.

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DESCRIPTION OF CAPITAL STOCK

        The following description summarizes the material terms of our capital stock and provisions of our amended and restated certificate of incorporation, as amended ("certificate of incorporation") and amended and restated by-laws ("by-laws"). Because this is only a summary, it does not contain all of the information that may be important to you. For a complete description, you should refer to our certificate of incorporation and by-laws, copies of which are filed as exhibits to this Form S-1, and to the applicable provisions of the Delaware General Corporation Law, or the DGCL.

Authorized Capitalization

        As of September 30, 2007, our authorized capital stock consisted of 50,000,000 shares, as follows:

•

35,000,000 shares of common stock, par value $0.0001 per share, of which 29,896,855 shares were designated as Class A common stock and 10,712,549 shares were issued; and



•

15,000,000 shares of preferred stock, par value $0.0001 per share, of which 11,507,142 shares were designated, issued and outstanding as Series A preferred stock.

        As of September 30, 2007, there were 1,249 holders of record of our Class A common stock and one holder of record of our Series A preferred stock.

Class A Common Stock

        Voting Rights.    The holders of our Class A common stock are entitled to one vote per share. Except as otherwise required by law, holders of Class A common stock will vote as a single class on all matters presented to the stockholders for a vote. Our certificate of incorporation and by-laws do not provide for cumulative voting with respect to the election of directors. Directors will be elected by a plurality of the votes cast in the election of directors once a quorum is present. All other matters will be decided by holders of stock having a majority of the votes that could be cast by the holders of all stock entitled to vote on such matters present at the meeting or by proxy.

        Dividend Rights.    All shares of our Class A common stock are entitled to share equally in any dividends our board of directors may declare from legally available sources.

        Liquidation Rights.    Upon liquidation or dissolution of the Company, whether voluntary or involuntary, all shares of our Class A common stock are entitled to share equally in the assets available for distribution to stockholders after payment of all of our prior obligations, including our preferred stock, if any.

        Preemptive Rights.    Our by-laws provide that, prior to an initial public offering of the Company's common stock, following which our common stock is worth at least $75 million, excluding shares held by MatlinPatterson or the date on which no stockholder holds a majority of our voting equity securities or has the power to elect a majority of our board of directors, whenever the Company proposes to sell and issue (i) any shares of its common or preferred stock, (ii) any rights, options or warrants to purchase shares of its common or preferred stock or (iii) securities of any type that are or may become convertible into or exchangeable for shares of its common or preferred stock, each holder of the Company's Class A common stock shall have the right to purchase such securities in proportion to its ownership of the Company's outstanding common stock. If such preemptive rights are not exercised within a designated period of time, the Company may proceed with such sale to a third party. Certain issuances of securities by the Company, including in connection with equity compensation plans, mergers and acquisitions, stock splits and dividends, as well as issuances expressly designated by our board of directors, are exempt from these preemptive rights.

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        Co-Sale Rights.    Our by-laws provide that, prior to an initial public offering of the Company's common stock, following which our common stock is worth at least $75 million, excluding shares held by MatlinPatterson or the date on which no stockholder holds a majority of our voting equity securities or has the power to elect a majority of our board of directors in the event that any holder of the Company's Class A common stock that holds at least 25% of the Company's voting stock and proposes to sell shares to a purchaser who will, by virtue of such transaction, acquire (i) shares representing 20% or more of the then-outstanding shares of the Company or (ii) the power to appoint a majority of the members of our board of directors, such holder must offer the other holders of Class A common stock the right to participate in such sale in proportion to their respective ownership percentages of the Company's common stock relative to that of all holders of Class A common stock. To the extent such rights are exercised, the number of shares that the original selling stockholder may sell in such transaction shall be correspondingly reduced.

        Other Matters.    The holders of our Class A common stock have no conversion rights and our Class A common stock is not subject to further calls or assessments by us. There are no redemption or sinking fund provisions applicable to our Class A common stock. All outstanding shares of our Class A common stock are fully paid and non-assessable.

Preferred Stock

        Overview.    As part of the financing in connection with the merger, Global obtained additional equity by issuing 11,507,142 shares of Series A preferred stock to MatlinPatterson at a purchase price of $14.00 per share. The Series A preferred stock will be converted into common stock in connection with this offering.

        Liquidation Preference.    In the event of any liquidation or winding up of Global, holders of the Series A preferred stock are entitled to receive in preference to holders of (i) all other series of preferred stock that are junior and (ii) common stock an amount per share equal to the purchase price paid for the Series A preferred stock, plus any declared and unpaid dividends.

        Dividends.    Holders of the Series A preferred stock are entitled to receive cumulative dividends in preference to holders of common stock cumulative dividends accreting at the annual rate of 16% of the liquidation preference. In the event of a conversion, if and to the extent that the accrued and unpaid dividends as of such conversion is an amount less than $8,000,000, then $8,000,000 of accrued and unpaid dividends will be added to the liquidation preference.

        Conversion.    The Series A preferred stock is convertible into common stock at the applicable conversion price (the purchase price adjusted subject to certain anti-dilution provisions) in the following circumstances: (i) a majority of the holders of the Series A preferred stock consent to such a conversion, (ii) Global consummates an initial public offering, subject to certain conditions, and (iii) the independent members of Global's board of directors issue a notice requiring such a conversion. In connection with any conversion, the holders of the Series A preferred stock, together, shall be required to offer to each holder of common stock (that is not then a holder of Series A preferred stock) the right to purchase such holder's pro rata percentage of the purchase price of the Series A preferred stock divided by the applicable conversion price plus an oversubscription right for shares of common stock remaining after such offering.

        No other shares of our preferred stock currently are outstanding. Under our certificate of incorporation, our board of directors, without further action by our stockholders, is authorized to issue shares of preferred stock with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting or other powers or rights of holders of our Class A common stock. The issuance of preferred stock also could have the effect, under certain circumstances, of delaying, deferring or preventing a change of control of our company.

152

Registration Rights

        Our by-laws provide that if the Company proposes, in connection with a public stock offering for cash, to register under the Securities Act any equity securities owned by a holder of the Company's Class A common stock that holds at least 25% of the Company's voting stock, the Company shall offer each other holder of Class A common stock the opportunity to have its shares included in such registration, subject to certain exceptions and underwriter cutbacks.

Anti-Takeover Effects of Our Certificate of Incorporation and By-laws

        Our certificate of incorporation and by-laws contain some provisions that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors. These provisions also may have the effect of delaying, deferring or preventing a future takeover or change in control unless the takeover or change in control is approved by our board of directors.

        Undesignated Preferred Stock.    The ability to authorize undesignated preferred stock makes it possible for our board of directors to issue one or more series of preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. This ability may have the effect of deferring hostile takeovers or delaying changes in control or management of our company.

        Advance Notice Requirements for Stockholder Proposals.    Our bylaws provide that stockholders seeking to bring business before an annual meeting of stockholders must provide written notice of their proposal to the corporate secretary not less than 90 days nor more than 135 days prior to the anniversary date of the immediately preceding annual meeting. Our by-laws also specify requirements as to the form and content of a stockholder's notice. These provisions may impede stockholders' ability to bring matters before an annual meeting of stockholders or make nominations for directors at an annual meeting of stockholders.

        Special Meetings of Stockholders.    Our by-laws provide that special meetings of our stockholders may be called only by the chairman of our board of directors, if any, or pursuant to a resolution approved by a majority of our board of directors, or a committee of the board of directors authorized to call such meetings.

        Authorized but Unissued Shares.    Our authorized but unissued shares of Class A common stock and preferred stock will be available for future issuance without stockholder approval. We may use additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of Class A common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

Certain Other Provisions of Our Certificate of Incorporation and By-Laws and Delaware Law

        Stockholder Action by Written Consent.    Pursuant to our by-laws, any action required or permitted to be taken at an annual or special stockholders' meeting may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on such action were present and voted.

        Amendments to Our Certificate of Incorporation and By-Laws.    Pursuant to our certificate of incorporation, our board of directors may amend our by-laws, subject to any specific limitation on such power contained in any by-laws adopted by stockholders, except that the stockholders are not entitled

153

to amend the by-laws in a manner that would materially and adversely affect the rights of the holders of our Class A common stock unless such amendment has been approved by our board of directors. The stockholders are not entitled to amend the foregoing provision in our certificate of incorporation in a manner that would materially and adversely affect the rights of the holders of our Class A common stock unless such amendment has been approved by our board of directors.

        Limitations on Non-U.S. Citizen Ownership.    Non-U.S. citizens may not own or control more than 25% of the voting power of our outstanding capital stock entitled to vote.

        Limitations on Liability and Indemnification of Officers and Directors.    The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors' fiduciary duties as directors. Our organizational documents include provisions that eliminate, to the extent allowable under the DGCL, the personal liability of directors for monetary damages for actions taken as a director. Our organizational documents also provide that we must indemnify and advance reasonable expenses to our directors and officers to the fullest extent authorized by the DGCL. We will also be expressly authorized to purchase and maintain directors' and officers' insurance for our directors, officers and certain employees for some liabilities.

        The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

Transfer Agent and Registrar

        The transfer agent and registrar for our Class A common stock is Registrar & Transfer Company. Its address is 10 Commerce Drive, Cranford, New Jersey 07015.

154

SHARES ELIGIBLE FOR FUTURE SALE

        After completion of this rights offering, based on the number of shares outstanding on the date of this prospectus and assuming full subscription (without giving effect to any rounding up of fractional rights), we will have 24,071,816 shares of common stock outstanding. All of these shares are freely transferable without restriction under the Securities Act unless owned or purchased by our "affiliates" (as such term is used under the Securities Act and the regulations promulgated thereunder).

        All outstanding warrants on issue will remain outstanding after the completion of the rights offering. The warrants provide the holders thereof with the right to acquire 900,276 shares of our common stock. These securities are deemed to be "restricted" securities by the Securities Act and may not be resold unless registered under the Securities Act or pursuant to an exemption from registration, including an exemption under Rule 144 under the Securities Act, which rules are described below.

        Warrant holders may demand registration of their securities upon the earlier to occur of (i) an underwritten public offering of common stock by Global for an aggregate price of at least $100,000,000 made pursuant to an effective registration statement under the Securities Act or (ii) Global's common stock being listed on a national securities exchange or becoming eligible for quotation in the NASDAQ market system.

        Holders of Warrants are entitled to tag-along rights to require a purchase to which Global may propose to transfer or sell its shares of common stock to purchase all or any portion of the holder's pro rata allocation of the shares proposed to be transferred or sold. These tag-along rights do not apply to a sale to the public pursuant to Rule 144 (as described below) or an effective registration statement under the Securities Act.

Rule 144.

        In general, under Rule 144, as amended effective as of February 15, 2008, any person (or persons whose shares must be aggregated), including any of our "affiliates", who has beneficially owned restricted securities for at least six months, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of either of the following:

•

1% of the then-outstanding shares of the class of restricted securities in question; and



•

the average weekly reported volume of trading of the class of restricted securities in question on all national securities exchanges and/or reported through the automated quotation system of a registered securities association during the four calendar weeks preceding the date on which notice of the sale is filed pursuant to Rule 144, subject to restrictions; and



•

the average weekly volume of trading of the class of restricted securities reported through the consolidated transaction reporting system, contemplated by Rule 11Aa3-1 under the Securities Exchange Act of 1934, during the four calendar weeks preceding the date on which notice of the sale is filed pursuant to Rule 144.

        Sales of restricted shares under Rule 144, as amended effective February 15, 2008, are also subject to requirements regarding the manner of sale, notice and the availability of current public information about us. For a person who has not been deemed to have been one of our "affiliates" at any time during the 90 days preceding a sale, sales of our securities held longer than six months, but less than one year, will be subject only to the current public information requirement. Rule 144 also provides that "affiliates" that sell our common shares that are not restricted shares must nonetheless comply with the same restrictions applicable to restricted shares, other than the holding period requirement.

155

Rule 144(k).

        Under Rule 144(k), as amended effective February 15, 2008, a person (or persons whose shares must be aggregated) who is not deemed to have been our "affiliate" at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than an "affiliate", may sell those shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

156

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

        The following discussion is a summary of the material U.S. federal income tax consequences of the rights offering to holders of Global common stock that hold such stock as a capital asset for United States federal income tax purposes. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the "Code"), regulations thereunder, rulings and decisions in effect on the date hereof, all of which are subject to change (possibly with retroactive effect) and to differing interpretations. This discussion applies only if you are a U.S. person as defined under the Code and does not address all aspects of U.S. federal income taxation that may be relevant to you in light of your particular circumstances or to holders who may be subject to special tax treatment under the Code, including, without limitation, holders who are dealers in securities or foreign currency, foreign persons, insurance companies, tax-exempt organizations, banks, financial institutions, broker-dealers, or holders who hold common stock as part of a hedge, straddle, conversion or other risk reduction transaction, or who acquired common stock pursuant to the exercise of compensatory stock options or otherwise as compensation.

        Moreover, this summary does not address the tax consequences of the rights offering under state, local or foreign tax laws. ACCORDINGLY, YOU SHOULD CONSULT YOUR OWN TAX ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE RIGHTS OFFERING TO YOU.

Issuance of the rights

        Global believes that the granting of rights to you pursuant to this rights offering should not be taxable to you, and Global will take this position for tax reporting purposes. However, the tax consequences to you of the rights offering are unclear, and it is possible the IRS would take the position that you would have ordinary taxable income upon receipt of the rights, in an amount equal to the fair market value of the rights.

        The following discussion assumes that the granting of the rights will not be taxable to you.

Exercise of the rights, basis and holding period of acquired shares

        You will not recognize any gain or loss upon the exercise of your rights. Your basis in each share of Global common stock you acquire through exercise of your rights will equal the price you paid to exercise your rights. Your holding period for the Global common stock you acquire through exercise of your rights will begin on the date you exercise your rights.

Sale or exchange of common stock

        If you sell or exchange shares of Global common stock, you will generally recognize gain or loss on the transaction. The gain or loss you recognize will be equal to the difference between the amount you realize on the transaction and your basis in the shares you sell. Such gain or loss generally will be capital gain or loss so long as you held the shares as a capital asset at the time of the sale or exchange. Gain or loss from a capital asset held for more than one year will generally be taxable as long term capital gain or loss.

THIS SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY. YOU SHOULD
CONSULT YOUR OWN TAX ADVISORS REGARDING THE CONSEQUENCES OF THE RIGHTS
OFFERING TO YOUR PARTICULAR TAX SITUATION, INCLUDING FOREIGN, STATE AND
LOCAL INCOME AND OTHER TAX LAWS.

157

LEGAL MATTERS

        Certain legal matters with respect to the securities offered hereby, as well as the material U.S. federal income tax consequences of the rights offering, will be passed upon for us by Cravath, Swaine & Moore LLP, New York, New York.

EXPERTS

Global and its Predecessor

        Ernst & Young LLP, independent registered public accounting firm, has audited the consolidated financial statements of Global Aero Logistics Inc. (f/k/a New ATA Holdings Inc.) and Subsidiaries at December 31, 2006, and the ten month period ended December 31, 2006, and the consolidated financial statements of ATA Holdings Corp. and Subsidiaries (the Predecessor) at December 31, 2005, and 2004, and for the two month period ended February 28, 2006, and each of the three years ended in the period ended December 31, 2005, as set forth in their reports.

        We have included our financial statements in the prospectus and elsewhere in the registration statement in reliance on Ernst & Young LLP's reports, given on their authority as experts in accounting and auditing.

World Air Holdings

        The consolidated financial statements of World Air Holdings as of December 31, 2006 and 2005 and each of the years in the three-year period ended December 31, 2006 and management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2006 have been included herein and in the registration statement in reliance upon the reports of KPMG LLP, independent registered public accounting, appearing elsewhere herein and upon the authority of such firm of experts in accounting and auditing.

        Our report on management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2006 expresses our opinion that World Air Holdings, Inc. did not maintain effective internal control over financial reporting as of December 31, 2006, because of the effect of material weaknesses on the achievement of the objectives of the control criteria and contains an explanatory paragraph that states that material weaknesses were identified in the following areas: accounting policies and procedures, information and communication, accounting for income taxes, accounting for accrued liabilities, and financial reporting close process.

        Our report contains an explanatory paragraph that states that effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, and effective December 31, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 158, Employers' Accounting for Defined Benefit Pension and Other Post-Retirement Plans.

158

WHERE YOU CAN FIND MORE INFORMATION

        Prior to its acquisition, World Air Holdings filed and following the effectiveness of this Registration Statement on Form S-1, Global will file reports, proxy statements and other information with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. You may read and copy this information at the following location of the Securities and Exchange Commission:

Public Reference Room
100 F Street, N.E.
Room 1580
Washington, D.C. 20549

        You may also obtain copies of this information by mail from the Public Reference Section of the Securities and Exchange Commission, 100 F Street, N.E., Room 1580, Washington, D.C. 20549, at prescribed rates. You may obtain information on the operation of the Securities and Exchange Commission's Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission also maintains an Internet worldwide web site that contains reports, proxy statements and other information about issuers, like Global and World Air Holdings, who file electronically with the Securities and Exchange Commission. The address of the site is http://www.sec.gov.

        We have not authorized anyone to give any information or make any representation about the transactions or our companies that is different from, or in addition to, that contained in this document or in any of the materials that have been incorporated into this document. Therefore, if anyone gives you information of this sort, you should not rely on it. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this document or the solicitation of proxies is unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this document does not extend to you. The information contained in this document speaks only as of the date of this document unless the information specifically indicates that another date applies.

159

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

			Page
Global Aero Logistics Inc. (f/k/a New ATA Holdings Inc.)
	Audited Consolidated Financial Statements
		Report of Independent Registered Public Accounting Firm	F-3
		Consolidated Balance Sheet at December 31, 2006	F-4
		Consolidated Statements of Operations for the ten months ended December 31, 2006	F-5
		Consolidated Statements of Shareholders' Equity for the ten months ended December 31, 2006	F-6
		Consolidated Statements of Cash Flows for the ten months ended December 31, 2006	F-7
		Notes to Consolidated Financial Statements	F-8
	Unaudited Interim Consolidated Financial Statements
		Unaudited Consolidated Balance Sheet at September 30, 2007 and December 31, 2006	F-28
		Unaudited Consolidated Statements of Operations for the nine months ended September 30, 2007 and 2006	F-30
		Unaudited Consolidated Statements of Shareholders' Equity for the nine months ended September 30, 2007 and December 31, 2006	F-31
		Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006	F-32
		Notes to Unaudited Consolidated Financial Statements	F-34
Predecessor to Global
	Audited Consolidated Financial Statements
		Report of Independent Registered Public Accounting Firm	F-47
		Consolidated Balance Sheets at December 31, 2005 and December 31, 2004	F-48
		Consolidated Statements of Operations for the two months ended February 28, 2006 and for the years ended December 31, 2005, 2004 and 2003	F-49
		Consolidated Statements of Shareholders' Deficit for the two months ended February 28, 2006 and for the years ended December 31, 2005, 2004 and 2003	F-50
		Consolidated Statements of Cash Flows for the two months ended February 28, 2006 and for the years ended December 31, 2005, 2004 and 2003	F-51
		Notes to Consolidated Financial Statements	F-53
World Air Holdings, Inc.
	Audited Consolidated Financial Statements
		Report of Independent Registered Public Accounting Firm	F-71
		Consolidated Balance Sheets at December 31, 2006 and 2005	F-72

F-1

	Consolidated Statements of Operations for the years ended December 31, 2006, 2005 and 2004	F-73
	Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2006, 2005 and 2004	F-74
	Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004	F-75
	Notes to Consolidated Financial Statements	F-76
	Report of Independent Registered Public Accounting Firm	F-105
	Management's Report on Internal Control Over Financial Reporting	F-108
Unaudited Interim Condensed Consolidated Financial Statements
	Unaudited Condensed Consolidated Balance Sheet at June 30, 2007 and December 31, 2006	F-110
	Unaudited Condensed Consolidated Statements of Operations for the three months ended June 30, 2007 and 2006	F-111
	Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity for the six months ended June 30, 2007 and December 31, 2006	F-112
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006	F-114
	Notes to Unaudited Condensed Consolidated Financial Statements	F-115

F-2

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders
Global Aero Logistics Inc.

        We have audited the accompanying consolidated balance sheet of Global Aero Logistics Inc. (f/k/a New ATA Holdings Inc.) and Subsidiaries as of December 31, 2006, and the related consolidated statements of operations, shareholders' equity, and cash flows for the ten month period ended December 31, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Global Aero Logistics Inc. and Subsidiaries at December 31, 2006, and the consolidated results of their operations and their cash flows for the ten month period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.

Ernst & Young LLP

Indianapolis, Indiana
March 16, 2007,
except paragraph 2 of Note 13, as
to which the date is April 2, 2007

F-3

GLOBAL AERO LOGISTICS INC. (f/k/a NEW ATA HOLDINGS INC.) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
(Dollars in thousands)

	December 31, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	62,209
Receivables, net of allowance for doubtful accounts—$1,808		64,520
Inventories, net		28,663
Prepaid expenses and other current assets		31,047
Total current assets		186,439
Property and equipment:
Flight equipment		77,187
Facilities and ground equipment		21,737
		98,924
Accumulated depreciation		(8,977	)
		89,947
Restricted cash		27,696
Military contract intangible, net of amortization $4,377		48,111
Other intangibles, net of amortization $941		5,421
Deposits and other assets		12,752
	$	370,366
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt	$	8,530
Current maturities of long-term debt from affiliates		2,619
Accounts payable		4,984
Air traffic liabilities		61,523
Accrued compensation and benefits		31,500
Accrued flight expenses		21,612
Other accrued expenses and current liabilities		23,673
Total current liabilities		154,441
Long-term debt, less current maturities		114,813
Long-term debt, less current maturities, from affiliates		20,700
Other deferred items		8,122
Total long-term liabilities		143,635
Commitments and contingencies
Shareholders' equity:
Common stock at par, $.0001 par value; authorized 50,000,000 shares; issued—10,710,150 shares		1
Warrants		1,434
Additional paid-in capital		107,317
Accumulated deficit		(36,462	)
Total shareholders' equity		72,290
Total liabilities and shareholders' equity	$	370,366

The accompanying notes are an integral part of these consolidated financial statements.

F-4

GLOBAL AERO LOGISTICS INC. (f/k/a NEW ATA HOLDINGS INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)

		10 Month Period Ended December 31, 2006
Operating revenues:
	Scheduled service	$	332,255
	Charter		288,256
	Other		16,551
Total operating revenues			637,062
Operating expenses:
	Fuel and oil		202,613
	Salaries, wages and benefits		150,929
	Aircraft rentals		69,439
	Flight Costs		52,769
	Handling, landing and navigation fees		48,553
	Selling and marketing		36,452
	Aircraft maintenance, materials and repairs		29,051
	Depreciation and amortization		17,386
	Asset impairments and aircraft retirements		13,476
	Other		41,045
Total operating expenses			661,713
Operating loss			(24,651	)
Other income (expense):
	Interest income		6,154
	Interest expense		(18,231	)
	Other		266
Other expense			(11,811	)
Loss before income taxes			(36,462	)
Income taxes			—
Net loss		$	(36,462	)
Basic and diluted earnings per common share:
Weighted Average Shares Outstanding (in thousands)		$	10,753
Net loss per share			(3.39	)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

GLOBAL AERO LOGISTICS INC. (f/k/a NEW ATA HOLDINGS INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands)

	Common Stock		Warrants		Additional Paid-in Capital		Accumulated Deficit			Total Shareholders' Equity
Balance as of February 28, 2006 (Predecessor Company)	$	—	$	—	$	—	$	—		$	—
Allocation of New ATA Holdings Inc. reorganization value in connection with emergence from Chapter 11; 10.75 million shares of common stock		1		1,434		106,092		—		$	107,527
Balance as of March 1, 2006		1		1,434		106,092		—		$	107,527
Net loss		—		—		—		(36,462	)		(36,462	)
Stock-based compensation		—		—		1,225		—			1,225
Balance as of December 31, 2006	$	1	$	1,434	$	107,317	$	(36,462	)	$	72,290

The accompanying notes are an integral part of these consolidated financial statements.

F-6

GLOBAL AERO LOGISTICS INC. (f/k/a NEW ATA HOLDINGS INC.) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

		10 Months Ended December 31, 2006
Operating activities:
Net loss		$	(36,462	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization		17,386
	Asset impairments and aircraft retirements		13,476
	Other non-cash items		7,459
Changes in operating assets and liabilities:
	Receivables		18,694
	Inventories		3,031
	Prepaid expenses and other current assets		(10,579	)
	Accounts payable		3,729
	Accrued expenses		(40,928	)
	Air traffic liabilities		(10,653	)
	Net cash used in operating activities		(34,847	)
Investing activities:
Capital expenditures			(27,570	)
Proceeds from sale of assets			20,561
Proceeds from sale of Investment in BATA			18,350
Additions to deposits			(3,047	)
Proceeds from sales of property and equipment			395
	Net cash provided by investing activities		8,689
Financing activities:
Emergence financing, net of re-payment of DIP financing			68,651
Payments on long-term debt			(19,158	)
Payments on long-term debt from affiliates			(860	)
Decrease in other restricted cash			3,291
	Net cash provided by financing activities		51,924
Increase in cash and cash equivalents			25,766
Cash and cash equivalents, beginning of period			36,443
Cash and cash equivalents, end of period		$	62,209
Supplemental disclosures:
Cash payments for:
	Interest	$	17,445
	Income tax refunds, net	$	(301	)
Finance and investing activities not affecting cash:
	Notes payable issued in connection with property and equipment purchase	$	1,900

The accompanying notes are an integral part of these consolidated financial statements.

F-7

GLOBAL AERO LOGISTICS INC. (F/K/A NEW ATA HOLDINGS INC.) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Fresh-Start Reporting

        Global Aero Logistics Inc. (formerly known as New ATA Holdings Inc.) through its principal subsidiary, ATA Airlines, Inc. ("ATA") is a low cost airline providing scheduled service to more than 60 markets and charter service throughout the world to the U.S. military, independent tour operators and specialty charter customers. ATA has been operating for 33 years.

        In the fourth quarter of 2004, ATA Holdings Corp. ("Holdings" and collectively with its subsidiaries, the "Predecessor Company") and seven of its subsidiaries including ATA, C8 Airlines, Inc. ("C8") and Ambassadair Travel Club, Inc. ("Ambassadair" and collectively, with the other seven entities, the "Debtors"), filed voluntary petitions for relief (the "Filing") under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Indiana (the "Bankruptcy Court").

        Holdings, ATA, American Trans Air ExecuJet, Inc. ("ExecuJet"), ATA Cargo, Inc. ("ATA Cargo"), and ATA Leisure Corp. ("Leisure") (collectively, the "Reorganizing Debtors") received an order approving the Amended Joint Chapter 11 Plan for the Reorganizing Debtors as immaterially modified (the "Plan") on January 31, 2006. The Plan became effective on February 28, 2006 (the "Effective Date"). Holdings did not reorganize and, prior to the Effective Date a new holding company was formed ("New ATA Holdings"). ATA Cargo and Leisure were merged into ATA prior to the Effective Date. ATA, ExecuJet, ATA Cargo, and Leisure, together with their new parent companies Global Aero Logistics Inc., New ATA Investment Inc., and New ATA Acquisition Inc., are referred to collectively as the "Company" or "Successor Company." Holdings dissolved in mid-2006. The Chapter 11 cases of Ambassadair, Amber Travel and C8 continue separately.

        Upon the Effective Date, an investment agreement was executed with MatlinPatterson Global Opportunities Partners II, L.P. and/or MatlinPatterson Global Opportunities Partners (Cayman) II, L.P. (including affiliates, "MatlinPatterson" or "New Investor"). As a result, MatlinPatterson holds 69.75% of the outstanding Class A Common Stock of Global Aero Logistics Inc.

        The Plan provided for the full payment pursuant to the Bankruptcy Code of all allowed administrative and priority claims, and provided for the restructuring of the loan agreement with, and the allowed secured loan indebtedness claim of, the Air Transportation Stabilization Board ("ATSB") and other lenders (the ATSB and such other lenders collectively referred to as the "ATSB Loan Lenders"). Holders of general unsecured claims of $1.0 million or less ("Convenience Class Claims") were approved to be paid a pro rata share, based on 1.0% recovery, up to a maximum total payout of $1.5 million. Holders of general unsecured claims over $1.0 million will recover an estimated 0.57% to 0.71% of their claim in shares and warrants of Global Aero Logistics Inc. On the Effective Date, unsecured creditors receiving shares owned approximately 7.0% of the Class A Common Stock of Global Aero Logistics Inc., prior to the issuance of shares under warrants and options. This percentage does not include shares of Global Aero Logistics Inc. purchased by unsecured creditors pursuant to a rights offering which was a part of the Plan. Claim amounts can be resolved for up to 120 days after the Effective Date, unless otherwise extended by the Bankruptcy Court. There are no material unresolved claims as of December 31, 2006.

        All outstanding shares of Holdings were cancelled on the Effective Date under the Plan and pursuant to the Bankruptcy Code.

        In accordance with American Institute of Certified Public Accountants ("AICPA") Statement of Position No. 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code,"

F-8

("SOP 90-7"), the Company adopted fresh-start reporting as of the Effective Date. As of the Effective Date, the Company was a new reporting entity with no retained earnings or accumulated deficit.

        Fresh-start reporting reflects the value of the Company as determined in the Plan. Fresh-Start reporting required the Company to allocate its reorganization value to its assets and liabilities based upon their estimated fair value in conformity with Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards No. 141, Business Combinations ("FAS 141"). In addition, fresh-start reporting also requires that all liabilities, other than deferred taxes, be stated at the present value of amounts to be paid using appropriate interest rates. The determination of the fair value of assets and liabilities is subject to significant estimation and assumptions and there can be no assurances that the estimates, assumptions and values reflected in the valuations will be realized and actual results could vary materially. In accordance with FAS 141, the preliminary allocation of the reorganization value is subject to additional adjustments within one year from the Effective Date to the extent that improved information on assets and liability valuations become available.

        The equity value of the Company of $107.5 million was determined pursuant to Company's Plan and the terms of the Investment Agreement and Rights Offering. Under the terms of the Investment Agreement and Rights Offering, ten million shares of the Class A Common Stock of Global Aero Logistics Inc. were issued at the Effective Date for an aggregate equity investment of $100.0 million. In addition, under the Plan, unsecured creditors of the Predecessor Company will receive approximately 753,000 shares of the Class A Common Stock of Global Aero Logistics Inc., (valued at $7,530,000) and 448,029 warrants as settlement of their pre-petition claims. These shares were valued consistently with the shares issued under the Investment Agreement and Rights Offering for the purpose of determining equity value.

        In applying fresh-start reporting, adjustments to reflect the fair value of assets and liabilities, on a net basis, and the write-off of the Predecessor Company's equity accounts resulted in a gain of $178.9 million. In addition, a gain of $1.305 billion was recorded related to the discharge of pre-petition debt and liabilities. The Company's fair value assigned to its net assets exceeded its reorganization value (defined as "excess"). In accordance with FAS 141, this excess of $6.8 million was allocated as a pro-rata reduction to the fair value assigned to certain long-lived assts including property and equipment and intangible assets.

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        The effects of the Plan of Reorganization and fresh-start reporting on the Company's balance sheet were as follows (in thousands):

Fresh-Start Adjustments

		Predecessor February 28, 2006			(a) Exit Financing			(b) Reinstatment of Liabilities and Extinguisment of Debt			(c) Revaluation of Assets and Liabilities			Successor March 1, 2006
ASSETS
Current assets:
	Cash and cash equivalents	$	36,443		$	68,651	(1)	$	—		$	—		$	105,094
	Receivables, net of allowance for doubtful accounts		82,697			—			(352	)(1)		869	(8)		83,214
	Inventories, net		30,426			—			—			2,344	(1)		32,770
	Assets held for sale		—			—			—			21,191	(2)		21,191
	Prepaid expenses and other current assets		22,507			—			—			(2,241	)(8)		20,266
Total Current Assets			172,073			68,651			(352	)		22,163			262,535
Property and Equipment:
	Flight equipment		114,717			34,942	(2)		—			(88,372	)(1)		61,287
	Facilities and ground equipment		121,967			—			—			(101,136	)(1)		20,831
			236,684			34,942			—			(189,508	)		82,118
	Accumulated depreciation		(138,089	)		—			—			138,089	(1)		—
Property and equipment, net			98,595			34,942			—			(51,419	)		82,118
Military contract intangible			—			—			—			52,488	(3)		52,488
Other intangibles			—			—			—			6,362	(4)		6,362
Goodwill			2,411			—			—			(2,411	)(9)		—
Prepaid aircraft rent			154			—			—			(154	)(8)		—
Investment in BATA			4,539			—			—			13,811	(5)		18,350
Restricted cash			33,960			—			—			—			33,960
Deposits and other assets			14,639			—			—			(4,934	)(8)		9,705
Total Assets		$	326,371		$	103,593		$	(352	)	$	35,906		$	465,518

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LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
Current liabilities:
	Current maturities of long-term debt	$	652		$	1,648	(3)	$	3,450	(3)	$	—		$	5,750
	Short-term debt		54,777			(54,777	)(3)		—			—			—
	Accounts payable		1,255			—			—			—			1,255
	Air traffic liability		58,828			—			—			13,348	(8)		72,176
	Accrued expenses and other current liabilities		132,570			(579	)(3)		11,825	(2)		(26,637	)(8)		117,179
Total current liabilities			248,082			(53,708	)		15,275			(13,289	)		196,360
Long-term debt, less current maturities			8,058			57,473	(3)		93,500	(3)		—			159,031
Other deferred items			65,847			—			—			(63,247	)(7)		2,600
Liabilities subject to compromise			1,423,502			(172	)(3)		(1,421,307	)(1)		(2,023	)(8)		—
Shareholders' equity (deficit):
	Holdings preferred stock		—			—			—			—			—
	Holdings common stock		66,013			—			—			(66,013	)(6)		—
	New ATA Holdings common stock		—			1	(4)		—			—			1
	Holdings Treasury stock		(24,778	)		—			—			24,778	(6)		—
	Warrants		—			1,434	(4)		—			—			1,434
	Additional paid-in capital		18,166			98,565	(4)		7,527	(4)		(18,166)	(6)		106,092
	Retained earnings		(1,478,519	)		—			1,304,653			173,866	(6)		—
Total shareholders' equity (deficit)			(1,419,118	)		100,000			1,312,180			114,465			107,527
Total liabilities and shareholders' equity (deficit)		$	326,371		$	103,593		$	(352	)	$	35,906		$	465,518

(a)

Exit Financing.    This column represents the conversion of debtor-in-possession financing ("DIP Loan") from MatlinPatterson, including interest, of $34,179 into Class A Common Stock of Global Aero Logistics Inc., the additional purchase by MatlinPatterson of 40.8 million shares of Class A Common Stock of Global Aero Logistics Inc., and emergence financing from MatlinPatterson of $24,180. It also represents the $25,000 received under the Rights Offering for 2.5 million shares of Class A Common Stock of Global Aero Logistics Inc., the issuance of 448,029 warrants with an exercise price of $10.00 per share for unsecured creditors immediately exercisable and the payoff of the debtor-in-possession financing ("Southwest DIP Loan") from Southwest Airlines Co. ("Southwest") of $21,177. In addition, the column reflects the impact of ATA amending two capital leases on Boeing 757-200 aircraft on the Effective Date. The impact of these transactions is detailed below.

F-11

(1)

The following table reconciles the net cash received under the exit financing transactions:

Description	Amount
Purchase of 40.8 million shares of common stock at $10 per share by MatlinPatterson	$	40,821
Purchase of 25.0 million shares of common stock at $10 per share under Rights Offering		25,000
Exit financing loan proceeds from MatlinPatterson		24,179
Pay-off of Southwest DIP Loan, including accrued interest		(21,349	)
	$	68,651

(2)

The $34,942 represents the value of the two Boeing 757-200 aircraft in accordance with FASB Financial Accounting Standards No. 13 Accounting for leases..



(3)

The following table reconciles the adjustments to debt and accrued liabilities resulting from the exit financing transactions:

Description	Amount
Current portion of capital leases	$	787
Current portion of emergence financing loan		861
Long-term portion of capital leases		34,154
Long-term portion of emergence financing loan		23,319
Pay-off of Southwest DIP Loan, including accrued interest		(21,349	)
Conversion of DIP Loan into 34.2 million shares of common stock at $10 per share		(34,179	)
	$	3,593

Subsequent to exit financing, total short and long term debt was $67,831, consisting of $34,942 of capital leases, $24,179 exit financing loan from MatlinPatterson and $8,710 of other debt.

(4)

The following table reconciles the adjustments to the equity accounts for the exit financing transactions:

Description	Amount
Conversion of DIP Loan into 34.2 million shares of common stock at $10 per share	$	34,179
Purchase of 40.8 million shares of common stock at $10 per share by MatlinPatterson		40,821
Purchase of 25.0 million shares of common stock at $10 per share under Rights Offering		25,000
	$	100,000

A portion of the equity value was allocated to the warrants issued to the unsecured creditors and valued using the Black-Scholes pricing method.

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(b)

Reinstatement of Liabilities and Debt Extinguishment.    This column reflects the following:

(1)

Represents the discharge of $1,421,307 of liabilities subject to compromise, net of offsetting receivables, pursuant to the Plan. Most of these claimants are only entitled to receive such distributions of cash and equity as provided under the Plan.

(2)

This adjustment reflects the reinstatement of $11,825 of estimated administrative, cure and priority claims that were unpaid as of the Effective Date. In the fourth quarter of 2006, the Company recorded a reduction of approximately $500 to the estimated administrative, cure and priority claims amount to reflect current estimates of the claims.

(3)

As of the Effective Date, ATA entered into an amended and restated loan agreement ("Restructured ATSB Loan") with the ATSB Loan Lenders. The principal amount of the Restructured ATSB Loan (being the unpaid balance of the allowed secured claim on the ATSB Loan Lenders) was $96,950. The adjustments reflect the reinstatement of the $96,950 loan on the balance sheet.

(4)

Represents the equity allocation to the unsecured creditor group of $7,527, based on 7.5 million common shares at a value of $10 per share, pursuant to the terms of the Plan of Reorganization.

(c)

Revaluation of Assets and Liabilities.    This column represents adjustments made to reflect assets and liabilities at estimated fair value including:

(1)

Represents the following:

Description	Amount
Addition to the value of inventory to reflect its estimated fair value	$	4,463
Reclassification of inventory to assets held for sale		(2,119	)
		2,344
Reduction to the value of property and equipment to reflect its estimated fair value		(32,346	)
Reclassification of the value of property and equipment to assets held for sale		(19,073	)
		(51,419	)
	$	(49,075	)

(2)

Represents reclassification of $21,191 of property and equipment to assets held for sale.



(3)

Represents the recognition of a $52,488 intangible asset related to the Company's contract with the U.S Government to carry military passengers. (See "Note 2—"Summary of Significant Accounting Policies")



(4)

Represents the recognition of $6,362 in other identifiable intangible assets. (See "Note 2—"Summary of Significant Accounting Policies")



(5)

Reflects an adjustment in the Company's investment in BATA Leasing LLC ("BATA"), a ⁵⁰/50 joint venture with Boeing Capital Corporation—Equipment Leasing Corporation to reflect its estimated fair value, based on the value of the Boeing 727-200 aircraft in BATA. BATA

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subsequently sold all of its aircraft to a third-party vendor in the third quarter of 2007. The Company did not recognize a gain or loss on the sale. BATA was subsequently dissolved.

(6)

Reflects the elimination of the Predecessor Company's equity accounts.



(7)

Reflects the elimination of certain deferred gain accounts related to the Company's aircraft leases and assignment of gates at Chicago Midway Airport to Southwest.



(8)

Reflects an adjustment to other asset and liabilities to record reflect their fair value in accordance with FAS 141.



(9)

Reflects the elimination of the Predecessor Company's goodwill.

2. Summary of Significant Accounting Policies

Basis of Presentation

        The consolidated financial statements include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated. ATA accounted for over 99% of the Company's operating revenues for the ten-months ended December 31, 2006. ATA is a U.S.-certificated air carrier providing domestic and international charter and scheduled passenger air services.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash Equivalents

        Cash equivalents are carried at cost, which approximates market, and are primarily comprised of money market funds of $60.3 million and investments in U.S. Treasury repurchase agreements of $1.9 million. All cash equivalents have maturity dates of three months or less at the time of purchase.

Inventories

        Inventories consist primarily of expendable aircraft spare parts, fuel and other supplies. In accordance with fresh-start accounting, inventories were stated at fair value as of March 1, 2006. Inventories purchased after this date are recorded at average cost. The Company records an allowance for obsolescence against its aircraft parts inventory by amortizing the book value of the aircraft parts inventory, net of an estimated residual value, over the related fleet's estimated useful service life. The obsolescence allowance at December 31, 2006 was $1.1 million. Inventories are charged to expense when consumed.

Prepaid Expenses and Other Current Assets

        Prepaid expenses and other current assets consist mainly of deposits under leases or other agreements that will be returned within the next 12 months and the prepayment of goods or services to be realized in future months. Also included are deposits received in advance of certain charter flights, which are held in an escrow account until the charter service is provided. In addition to these usual components, as of December 31, 2006, the Company had $10.5 million of deposits related to its commitment to acquire seven McDonnell Douglas DC-10-30 aircraft. The Company expects these

F-14

deposits to be returned once financing is completed by mid-2007. (See "Note 11—Commitments and Contingencies")

Property and Equipment

        In accordance with fresh-start accounting, property and equipment, including owned aircraft, was recorded at its fair value as of March 1, 2006. The Company records additions to property and equipment at cost. Property and equipment is depreciated to residual values over their estimated useful service lives using the straight-line method. Leasehold improvements and rotable parts related to the Company's aircraft are depreciated over the period of benefit or the terms of the related leases, whichever is less. Properties under capital leases are amortized on a straight-line basis over the life of the lease. The Company's facilities and ground equipment is generally depreciated over lives of three to seven years.

Airframe and Engine Maintenance

        The Company has an engine manufacturers' maintenance agreement for engines that power the Boeing 737-800 aircraft that provides for the Company to pay a monthly fee per engine flight hour in exchange for major overhaul and maintenance of those engines. The Company expenses the cost per flight hour under this agreement as incurred. The cost of engine overhauls for remaining fleet types, and the cost of airframe overhauls for all fleet types are capitalized when performed and amortized over estimated useful lives based upon usage, or to earlier fleet or aircraft retirement dates, for both owned and leased aircraft.

        Under certain of its aircraft and engine leases, the Company is required to make periodic maintenance reserve payments for certain future maintenance work such as engine and airframe overhauls. The Company records the payments as deposits on its balance sheet. Under certain leases, the deposits are not refundable to the Company, and the Company periodically reviews the balances of the maintenance reserve deposits and writes off any amounts that are no longer probable of being used to offset the liability for future maintenance costs. In determining whether it is probable that maintenance deposits will be used to offset the liability for future maintenance costs, the Company considers the condition of the aircraft, including but not limited to the airframe and engines and the projected future usage of the aircraft based on the Company's business and fleet plan. As of December 31, 2006, the Company had $3.0 million of maintenance reserve payments recorded as a deposit on its consolidated balance sheet as the maintenance reserve payments were refundable or it was probable that the nonrefundable payments would be used to offset the liability for future maintenance costs. In addition, in the ten months ended December 31, 2006, the Company expensed $2.3 million of nonrefundable maintenance reserve payments on certain aircraft leases where the Company determined that it was not probable that payments would be used to offset the liability for future maintenance costs.

Restricted Cash

        Restricted cash primarily consists of deposits held to secure outstanding stand-by letters of credit currently provided by the Company. While the existing letters of credit mature within the next 12 months, management believes it is likely that the letters of credit will be renewed and has classified the restricted cash as a long-term asset on the consolidated balance sheets.

F-15

Intangible Assets

        The Company has identifiable intangible assets that consist of its contract with the U.S. Government to carry military passengers, its trade name, its codeshare agreement with Southwest and its operating certificate. The Company accounts for its intangible assets in accordance with FASB Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. Definite-lived intangible assets are amortized on a straight-line basis over the estimated lives of the related assets. Indefinite-lived assets are not amortized, but instead are reviewed for impairment annually or more frequently if events or circumstances indicate that the asset may be impaired. The Company recorded $5.3 million of amortization expense in 2006 and expects to record amortization expense of $5.9 million in 2007 and $5.8 million per year in 2008, 2009, 2010 and 2011.

        The following table presents information about our intangible assets at December 31, 2006:

		Asset Life	Gross Carrying Amount		Accumulated Amortization
			(Dollars in thousands)
Amortized intangible assets
	Military contract	10 yrs	$	52,488	$	4,377
	Southwest codeshare	7 yrs		3,856		459
	Tradename	1 year		578		482
			$	56,922	$	5,318
Unamortized intangible assets
	FAA Operating certificate		$	1,928

Revenue Recognition

        Revenues are recognized when air transportation or other services are provided. Customer flight deposits and unused passenger tickets sold are included in air traffic liability. Revenue from unused tickets is recognized upon the expiration of the ticket.

        In addition, the Company has a travel awards program, started by the Predecessor Company, that allows customers to earn points for travel on ATA. As points accumulate to certain levels, the passenger can redeem them for travel. The Company had a liability of $0.3 million at December 31, 2006, related to travel awards earned by the travel award customers but not yet redeemed. The Company accrues the estimated incremental cost of providing for free travel for awards earned under the program.

        The Company has a codeshare arrangement with Southwest. Under a codeshare arrangement, the codesharing air carriers have permission to book and sell tickets on each other's flights. The codeshare flights began on February 4, 2005. On December 14, 2005, the Bankruptcy Court approved an expanded and restated Codeshare Agreement ("Amended Codeshare Agreement"). Revenue from ATA flights sold by Southwest is also recognized when air transportation is provided.

Aircraft Lease Return Conditions

        The Company finances substantially all of its aircraft through leases accounted for as operating leases. Many of these leases require that the airframes and engines be in a specified maintenance condition upon their return to the lessor at the end of the lease. If these return conditions are not met by the Company, the leases generally require financial compensation to the lessor. When an operating lease is within five years of its initial termination date, the Company accrues ratably over that five years, if estimable, the total costs that will be incurred by the Company to render the aircraft in a suitable return condition per the contract.

F-16

Advertising

        The Company expenses advertising costs in the period incurred. Advertising expense was $2.3 million for the ten-month period ended December 31, 2006.

Share-Based Compensation

        The Company records stock-based compensation under the provisions of FASB Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment ("FAS 123R"). Among other items, FAS 123R requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards. The Company uses a Black-Scholes pricing model to estimate the fair value of the awards. The resulting cost is recognized as compensation expense over the period during which an employee is required to provide service in exchange for the award, usually the vesting period. See "Note 8—Stock Option Plans" for more information.

New Accounting Pronouncements

        In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"), which clarifies FASB Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. FIN 48 defines the threshold for recognizing tax benefits in the Company's financial statements and promotes consistency in recognizing and measuring the tax benefits. FIN 48 provides that tax benefits are to be recognized if the Company's tax return positions will "more likely than not" be sustained by a taxing authority. In addition, FIN 48 requires an annual disclosure in the Company's financial statements of the beginning and ending balances of unrecognized tax benefits. The Company has not yet determined the impact, if any, that adopting FIN 48 will have on the Company's results from operations or financial position. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company will adopt FIN 48 for fiscal year 2007 that begins January 1, 2007. The Company does not expect that the adoption of FIN 48 will have a significant impact on the company's financial position and results of operations.

        In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157"). FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007, with earlier application encouraged. Any amounts recognized upon adoption as a cumulative effect adjustment will be recorded to the opening balance of retained earnings in the year of adoption. The Company has not yet determined the impact of this Statement on its financial condition and results of operations.

F-17

3. Debt

        As of December 31, 2006, the Company's debt, including debt from affiliates, consisted of the following:

	December 31, 2006
	(in thousands)
Restructured ATSB loan, variable rate of LIBOR plus a margin, averaging 13.28% in 2006, payable in quarterly installments through September 2009	$	79,302
MatlinPatterson Exit Loan Financing, variable rate of LIBOR plus a margin, averaging 15.28% in 2006, payable in quarterly installments through October 2009		23,319
Capital lease obligations, rate of 13.3% per annum, payable monthly		34,333
Secured note payable to institutional lender, rate of 10.0% per annum, payable in monthly installments through November 2008		673
Secured note payable to institutional lender, rate of 10.0% per annum, payable in monthly installments through February 2009		751
City of Chicago construction financing agreement, rate averaging 6.4%, payable monthly through December 2030		6,677
Secured note payable, rate of 8.0% per annum, payable monthly through June 2009		1,607
	$	146,662
Less current maturities of long-term debt		11,149
	$	135,513

        As of the Effective Date, ATA entered into an amended and restated loan agreement with the ATSB Loan Lenders which restructured the terms and payment requirements for the unpaid balance of the allowed secured claim of the ATSB Loan Lenders ("Restructured ATSB Loan"). The principal amount of the Restructured ATSB Loan (being the unpaid balance of the allowed secured claim of the ATSB Loan Lenders) was $97.0 million. The Restructured ATSB Loan has a base interest rate of LIBOR, plus 8.0% per annum, payable quarterly in arrears. The Restructured ATSB Loan matures on September 30, 2009. The Restructured ATSB Loan is guaranteed by New ATA Holdings Inc and its subsidiaries. The Restructured ATSB Loan is collateralized by substantially all unencumbered assets of ATA and the guarantors (excluding trust accounts), including, but not limited to, cash and cash equivalents, receivables, spare parts and engines, owned and unencumbered aircraft, fuel, ground support equipment, ownership interest in subsidiaries and computer systems and software licenses.

        ATA is subject to certain financial covenants under the Restructured ATSB Loan. These financial covenants include a fixed charges ratio and leverage ratio to be measured each quarter beginning March 31, 2007 and a minimum cash balance to be measured each week of the agreement. The covenant calculation for both the fixed charges and leverage ratio utilizes 12 months of operating results in the calculation, with the exception of the March 31, 2007 measurement date, which includes nine months of operating results annualized. Due to potential covenant violations for March 31 and June 30, 2007, the Company obtained an amendment to the covenants for those measurement dates. The Company's current forecast indicates that the covenants will be met at all measurement dates in 2007 taking into consideration the amendment. However, if forecasted operations are not met, the Company could potentially violate a covenant. In the case of further violations, the Company would need to work with the ATSB to obtain further amendments or waivers to the covenants. If the

F-18

Company violates future covenants and is not successful in obtaining waivers or amendments, it would be required to obtain financing from other sources.

        As of the Effective Date, MatlinPatterson provided $24.2 million of exit term loan financing to ATA. The base interest rate is LIBOR, plus 10.0% per annum, payable quarterly. Principal payments must be made semi- annually over the term of the loan and the loan matures on October 10, 2009. Quarterly interest payments were made to a total of $3.1 million for the year. ATA is subject to certain financial covenants under the loan similar to the covenants under the Restructured ATSB Loan described above.

        As of the Effective Date, ATA entered into two 15-year capital leases for Boeing 757-200 aircraft. The base interest rate, payable monthly, is 13.3% per annum. As of December 31, 2006, the aircraft have a carrying amount of $31.9 million.

        ATA has outstanding two notes payable, each collateralized by one Lockheed L-1011-500 aircraft. The loans have a combined balance of $1.4 million and the related aircraft have a combined carrying amount of $0.6 million as of December 31, 2006.

        The Company has outstanding a note payable to the City of Chicago for funds borrowed to finance construction costs for a gate extension at Midway Airport. As of December 31, 2006, the loan has a balance of $6.7 million and is secured by a letter of credit issued for the account of Southwest. In addition, ATA has issued a back-up letter of credit to Southwest.

        ATA has a secured note payable, collateralized by two aircraft engines. The loan-related aircraft engines have a combined carrying value of $0.2 million as of December 31, 2006.

        As of December 31, 2006, aggregate annual principal maturities of debt and capital leases for the five-year period ending December 31, 2011 were $11.1 million in 2007, $41.2 million in 2008, $56.6 million in 2009, $1.4 million in 2010, $1.6 million in 2011 and $34.8 million thereafter.

4. Lease Commitments

        The Company leases aircraft and aircraft engines, ground facilities, including terminal space and maintenance facilities, and ground equipment. The majority of the Company's aircraft are classified as operating leases. Total rental expense for operating leases, both aircraft and other, charged to operations for the ten months ended December 31, 2006 was $71.4 million. As of December 31, 2006, the Company had two aircraft classified as capital leases included in property and equipment representing $33.8 million of cost and $1.9 million of related accumulated depreciation.

        At December 31, 2006, scheduled future minimum lease payments under capital leases (which are for aircraft) and operating leases, including estimated lease payments related to the Company's

F-19

expected acquisition of seven McDonnell Douglas DC-10-30 aircraft in 2007, having initial non-cancelable lease terms of more than one year were as follows:

			Operating Leases
	Capital Leases
			Aircraft		Non-aircraft		Total
	(in thousands)
2007	$	5,400	$	84,318	$	3,394	$	93,112
2008		5,400		89,457		3,293		98,150
2009		5,400		88,107		2,868		96,375
2010		5,400		87,146		2,391		94,937
2011		5,400		86,250		1,545		93,195
Thereafter		49,500		576,413		2,284		628,197
Total minimum lease payments	$	76,500	$	1,011,691	$	15,775	$	1,103,966
Less amount representing interest		42,167
Present value of minimum lease payments		34,333
Less current portion		880
Long-term portion	$	33,453

5. Income Taxes

        The income tax expense differed from the amount obtained by applying the statutory federal income tax rate to loss before income taxes as follows:

	December 31, 2006
	(in thousands)
Federal Income Tax Benefit at Statutory Rate	$	(12,762	)
State Income Tax Benefit, net of Federal		(778	)
Non-Deductible Expenses		1,618
Valuation Allowance		11,944
Other, net		(22	)
Income Tax Expense (credit)	$	—

        The Company has not recorded any tax benefit from its losses incurred during the ten-month period ended December 31, 2006. Net deferred tax assets have been fully reserved at December 31, 2006 due to the uncertainty of the ultimate realization of those assets. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in

F-20

the financial statements. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2006 are presented below:

		December 31, 2006
		(in thousands)
Deferred Tax Liabilities:
	Property & Equipment	$	(12,503	)
	Intangible		(10,831	)
	Deferred Tax Liabilities		(23,334	)
Deferred Tax Assets:
	Tax Benefit of NOL Carryforwards		8,436
	Capital/Operating Lease		12,841
	Aircraft Deposits		1,662
	Vacation Pay Accrual		3,952
	Deferred Rent Expense		1,235
	Prepaid Maintenance		1,273
	Workers' Compensation		4,431
	Allowance for Obsolescence		403
	FAS 123R		459
	Other Deductible Temporary Differences		586
Deferred Tax Assets			35,278
Valuation Allowance			(11,944	)
Net Deferred Tax Asset/(Liability)		$	—

        As of December 31, 2006, the Company had a $22.5 million federal net operating loss carryforward expiring starting in 2026.

6. Retirement Plan

        The Company has a defined contribution 401(k) savings plan which provides for participation by substantially all the Company's employees. In 2006, the Company elected to contribute an amount equal to 65.0% of the amount contributed by all employees to the 401(k) savings plan up to 6.0% of eligible compensation. Matching contributions expensed in the ten months ended December 31, 2006 were $3.4 million.

        The Company has a defined contribution plan for cockpit crewmember employees, the Cockpit Crewmember Money Purchase Plan, that is funded by the Company. During the bankruptcy proceedings, the cockpit crewmembers agreed to suspension of the Company's contributions to the plan through December 31, 2006, therefore no contributions were made to the plan in the ten months ended December 31, 2006. Effective January 1, 2007, the Company will reinstate contributions to the plan.

F-21

7. Earnings Per Share

        The following tables set forth the computation of basic and diluted earnings per share:

(in thousands, except per share data)	December 31, 2006
Net loss	$	(36,462	)
Weighted-average shares outstanding, basic		10,753
Weighted-average shares outstanding, diluted		10,753
Net loss per share, basic	$	(3.39	)
Net loss per share, diluted	$	(3.39	)

        There was no dilutive impact from the assumed exercise of stock options or warrants in the ten months ended December 31, 2006.

8. Stock Option Plans

        FAS123R requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award.

        The Company has share-based compensation plans for officers and key employees of the Company, including the Company's Board of Directors ("Management Plans"), and a stock option plan for cockpit crewmember employees ("ALPA Plan"). Options granted under both the Management Plans and the ALPA Plan were granted with an exercise price not less than the market price at the grant date. None of the Company's grants include performance-based or market-based vesting conditions. There were no Company stock options exercisable as of December 31, 2006.

        The Black-Scholes option pricing method was used to determine the fair value of the options. This method requires the Company to make several assumptions, including risk-free interest rate, stock price volatility and expected life.

        The risk-free interest rate is based on the U.S. Treasury yield curve in effect for the expected term of the option at the time of the grant.

        Stock price volatility assumptions were based upon historical volatilities of comparable airlines whose shares are traded using weekly stock price returns equivalent to the contractual term of the option. Due to its emergence from bankruptcy, historical volatility data for the Company was not considered in determining expected volatility.

        The expected life of the options was determined based upon a simplified assumption that the option will be exercised evenly from vesting to expiration under the transitional guidance of Staff Accounting Bulletin No. 107, Topic 14, Share-Based Payments.

        The weighted-average fair value of options granted in the ten months ended December 31, 2006 under the Management Plan was determined to be $3.15 based on a weighted-average risk-free interest rate of 4.71%, expected life of options of 5.81 years and an expected stock volatility of 55%.

        The dividend yield on New ATA Holdings common stock is assumed to be zero based on the Company's past policy of not awarding dividends and that it has no current plans to do so in the future. The Company anticipates no forfeiture of options due to minimal turnover being expected at the management level.

F-22

        The total intrinsic value was measured as the amount be which the fair value of the underlying stock exceeds the exercise price of a stock option on the exercise date.

        During the ten months ended December 31, 2006, $1.2 million of compensation expense was charged to operations. There was no corresponding tax benefit in 2006 related to this stock-based compensation, as the Company records a full valuation allowance against its deferred tax assets due to the uncertainty regarding the ultimate realization of those assets. As of December 31, 2006, the Company had $5.1 million of total unrecognized compensation costs related to share-based compensation arrangements. The Company expects to recognize this expense over a weighted-average period of 2.38 years.

Management Plan

        Options granted under the Management Plans vest and become fully exercisable over three or four years of continued employment, depending on the grant type, and have terms between seven and ten years. For grants under the Management Plans that are subject to graded vesting over a service period, the Company recognizes the expense on a straight-line basis over the requisite service period for the entire award. Certain options under the Management Plans provide for accelerated vesting if there is change in control (as defined in the plan).

        The table below summarizes the stock option activity pursuant to the Management Plans:

	Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at beginning of period	—		—
Granted	2,011,334	$	33.58
Exercised	—		—
Canceled	—		—
Outstanding at end of period	2,011,334	$	33.58	9.6	$	—

ALPA Plan

        All cockpit crewmembers employed by the Company as of September 15, 2005 were granted options with no continued employment requirement. Because there is no future employee service requirement associated with the options granted under the ALPA Plan, the Predecessor Company recognized all of the related compensation costs as of the Effective Date. Options granted under the ALPA Plan become fully exercisable over a three-year period and have a term of five years.

F-23

        The table below summarizes the stock option activity pursuant to the ALPA Plan:

	Options	Weighted- Average Exercise Price		Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at beginning of period	492,339	$	10.00
Granted	—		—
Exercised	—		—
Canceled	—		—
Outstanding at end of period	492,339	$	10.00	4.4	$	—

9. Segment Reporting

        The Company identifies its segments on the basis of similar products and services. ATA is a diversified passenger airline operating two principal businesses: a low cost airline providing scheduled service that leverages a code share agreement with Southwest Airlines, and a charter operator that focuses principally on transporting U.S. military personnel and their families to and from their overseas deployments. The scheduled service segment derives its revenues primarily from the sale of single-seat tickets to individuals on flights to predetermined destinations. The military charter segment derives its revenues primarily from the sale of all seats on an aircraft flight to either the U.S. Government or another customer. The U.S. Government or such other customer determines the destination of these flights.

        Upon emergence from Chapter 11, ATA reorganized its management structure, including designating a separate Senior Vice President of Scheduled Service operations and a Senior Vice President of Charter operations, in order to assign specific responsibility. This management change facilitated managing the two business segments separately. ATA also designated aircraft to each of these operating segments rather than continuing the practice of moving the aircraft freely between scheduled service routes and charter flights. Finally, to better manage each business segment individually, and to begin monitoring the profitability of each business segment, the Company developed a process to produce income statement information for each of the business segments on a monthly basis.

        Prior to April 1, 2006, the businesses of the Predecessor Company and the Company were managed as one segment. Separate internal reporting of expense information was not maintained to enable discrete financial information for the scheduled service and the military charter segments to be separately identifiable. Thus, the Predecessor Company, and during its first month of operations, the Company appropriately had one reportable segment under FASB Statement of Financial Accounting Standards No. 131, Disclosures About Segments of an Enterprise and Related Information ("FAS 131"). However, prior to April 1, 2006, both Predecessor and Successor companies historically could and did report revenue from the two different sources, scheduled service and military charter service. Because of the significant organizational and procedural changes made to the airline at the time of emergence from bankruptcy and acquisition by MatlinPatterson, the Company is now able to produce discrete financial information for both the scheduled service and military charter segments subsequent to April 1, 2006.

F-24

        The Company's revenues are derived principally from customers domiciled in the United States. The most significant component of the Company's property and equipment is aircraft and related improvements and parts. All aircraft are registered in the United States. The Company therefore considers all property and equipment to be domestic.

        The U.S. Government accounts for 42.3% of consolidated revenues for the ten months ended December 31, 2006, the only customer in excess of 10%.

        Selected available financial data as of and for the ten months ended December 31, 2006 follows. The other column represents revenue and expenses for March 2006 which cannot be discretely separated between the scheduled service and military charter segments:

	Nine Months Ended December 31, 2006 Scheduled Service			Nine Months Ended December 31, 2006 Military and Commercial Charter			March 2006			Consolidated
	(in thousands)
Operating revenue	$	311,325		$	262,952		$	62,785		$	637,062
Operating expenses		330,448			264,956			66,309			661,713
Operating income (loss)		(19,123	)		(2,004	)		(3,524	)		(24,651	)
Segment assets (at December 31, 2006)	$	181,409		$	188,957					$	370,366

10. Fleet and Related Equipment Impairment

        In November 2006, the Company executed an agreement to purchase seven McDonnell Douglas DC-10-30 aircraft ("DC-10 fleet") from a third party, along with associated engines and two spare airframes. These assets are a wide-body fleet replacement for the Company's aging and cost intensive Lockheed L-1011 aircraft ("L-1011"). The DC-10 fleet will go into service throughout 2007 and the Company expects to hold the L-1011 fleet as operational spares while transitioning to the DC-10 fleet. Past the fourth quarter of 2007, the Company has no revenue commitments for use of L-1011 time. In accordance with FASB Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("FAS 144"), the Company determined that the estimated future undiscounted cash flows expected to be generated by the L-1011 fleet were less than the current net book value of these aircraft and the related rotable parts and inventory. Therefore these assets were impaired under FAS 144. During the fourth quarter of 2006, the Company recorded an asset impairment charge of $13.5 million to the military and commercial charter segment to reduce the carrying amount of the L-1011 aircraft and related assets to their estimated fair market value.

11. Commitments and Contingencies

Secondary Obligation on Chicago Midway Airport Property Leases

        As of the Filing Date, ATA leased 15 gates and a hangar facility from the City of Chicago at Chicago Midway Airport under a lease agreement with a termination date of December 31, 2012. While in Chapter 11 bankruptcy, ATA assigned ten of the gates and the hangar facility to Southwest in exchange for cash and debt forgiveness. In addition, ATA returned four gates to the City of Chicago. ATA remains secondarily liable for the gates and hangar facility assigned to Southwest. This position

F-25

has been interpreted as a guaranty, which must be accounted for in accordance with FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45").

        In accordance with FIN 45, the Company estimates the maximum potential amount of future payments (undiscounted) that could be required under this guaranty to be approximately $14.7 million as of December 31, 2006. However, the Company has estimated the fair value of the guaranty as of December 31, 2006 to be $0 due to the remote likelihood that the Company would be required to perform under the obligation and the mitigating steps that could be taken to eliminate the liability if such a need arose. As a result, the Company has not recorded a liability on the balance sheet as of December 31, 2006.

New Aircraft

        In the fourth quarter of 2006, the Company signed a definitive purchase agreement with a third party in which the Company agreed to purchase seven McDonnell Douglas DC-10-30 aircraft, two McDonnell Douglas DC-10-30 airframes, two spare engines and certain other related property. The Company received a commitment from a lessor under which the Company will assign its purchase rights and lease back the aircraft and other equipment. In addition to the assignment, the Company and lessor agreed to share in the capital investment necessary to make the fleet operational. The lease agreement requires the Company to make payments aggregating approximately $38 million over approximately six years. As of December 31, 2006, the Company had funded $10.5 million in deposits under the purchase agreement. The Company expects these deposits to be returned as aircraft become operational throughout 2007.

Other

        In its aircraft financing agreements, the Company typically indemnifies the financing parties, trustees acting on their behalf and other related parties against liabilities that arise from the manufacture, design, ownership, financing, use, operation and maintenance of the aircraft and for tort liability, whether or not these liabilities arise out of or relate to the negligence of these indemnified parties, except for their gross negligence or willful misconduct. ATA expects that it would be covered by insurance (subject to deductibles) for most tort liabilities and related indemnities under these aircraft leases which were entered into after its Filing or which were assumed by it, pursuant to the Bankruptcy Code.

        Various claims, contractual disputes and lawsuits against the Company arise periodically involving complaints that are normal and reasonably foreseeable in light of the nature of the Company's business. The majority of these suits are covered by insurance. In the opinion of management, the resolution of these claims will not have a material adverse effect on the business, operating results or financial condition of the Company.

F-26

12. Selected Supplemental Quarterly Data (Unaudited)

	One Month Ended March 31, 2006			Three Months Ended June 30, 2006			Three Months Ended September 30, 2006			Three Months Ended December 31, 2006
	(In thousands)
Operating revenues	$	62,785		$	193,755		$	214,855		$	165,667
Operating expenses		66,309			194,972			210,597			189,835
Operating income (loss)		(3,524	)		(1,217	)		4,258			(24,168	)
Other expenses		(1,309	)		(3,804	)		(3,770	)		(2,928	)
Income (loss) before income taxes		(4,833	)		(5,021	)		488			(27,096	)
Net income (loss)	$	(4,833	)	$	(5,021	)	$	488		$	(27,096	)

13. Subsequent Events

        On January 16, 2007, ATA entered into a loan agreement with MatlinPatterson under which ATA borrowed $28.0 million. The loan matures in January 2008, at which time the full amount of the principal is due. The base interest rate is LIBOR, plus 10.0% per annum, payable on the loan maturity date. ATA is subject to certain financial covenants under the loan.

        On April 2, 2007, the Company changed its name from New ATA Holdings Inc. to Global Aero Logistics Inc.

F-27

GLOBAL AERO LOGISTICS INC. (F/K/A NEW ATA HOLDINGS INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

			September 30, 2007			December 31, 2006
			(unaudited)
ASSETS
Current assets
	Cash and cash equivalents		$	97,966		$	62,209
	Short-term investments			16,778			—
	Receivables, net of allowance for doubtful accounts of 2007—$2,207; 2006—$1,808			139,783			64,520
	Inventories, net			33,729			28,663
	Prepaid expenses and other current assets			87,389			31,047
		Total current assets		375,645			186,439
Property and equipment
	Flight equipment			142,699			77,187
	Facilities and ground equipment			23,339			21,737
				166,038			98,924
	Accumulated depreciation			(22,360	)		(8,977	)
		Net property and equipment		143,678			89,947
Goodwill and other intangible assets
	Goodwill			64,446			—
	Military contract intangibles, net of accumulated amortization of 2007—$11,526; 2006—$4,377			297,642			48,111
	Other intangible assets, net of accumulated amortization of 2007—$1,592; 2006—$941			9,900			5,421
				371,988			53,532
Restricted cash				26,130			27,696
Deposits and other assets				92,129			12,752
		Total assets	$	1,009,570		$	370,366

See accompanying Notes to Condensed Consolidated Financial Statements

F-28

			September 30, 2007			December 31, 2006
			(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
	Current maturities of long-term debt		$	2,427		$	8,530
	Current maturities of long-term debt from affiliates			—			2,619
	Accounts payable			41,599			4,984
	Air traffic liabilities			97,455			61,523
	Accrued compensation and benefits			52,240			31,500
	Accrued flight expenses			40,069			21,612
	Other accrued expenses and current liabilities			66,964			23,673
		Total current liabilities		300,754			154,441
Long-term debt, less current maturities				354,675			114,813
Long-term debt, less current maturities from affiliates				—			20,700
Warrants				31,657			—
Deferred tax liabilities				121,985			—
Other deferred liabilities				21,507			8,122
Commitments and contingencies
Shareholders' equity
	Preferred stock, 15,000,000 shares authorized; issued 2007—11,507,142			158,644			—
	Common stock, $.0001 par value; 50,000,000 shares authorized; issued 2007—10,712,549; 2006—10,710,150			1			1
	Warrants			1,434			1,434
	Additional paid-in capital			109,029			107,317
	Accumulated deficit			(90,388	)		(36,462	)
	Other comprehensive income			272			—
		Total shareholders' equity		178,992			72,290
		Total liabilities and shareholders' equity	$	1,009,570		$	370,366

See accompanying Notes to Condensed Consolidated Financial Statements

F-29

GLOBAL AERO LOGISTICS INC. (F/K/A NEW ATA HOLDINGS INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

			Three Months Ended September 30,												Predecessor Two Months Ended February 28, 2006
									Nine Months Ended September 30, 2007			Seven Months Ended September 30, 2006
			2007			2006
Operating revenues
	Charter		$	211,676		$	102,041		$	372,186		$	218,226		$	58,753
	Scheduled service			134,023			107,645			306,241			240,871			53,527
	Other			7,134			5,169			15,072			12,298			2,771
		Total operating revenues		352,833			214,855			693,499			471,395			115,051
Operating expenses
	Fuel and oil			114,649			68,532			227,929			148,989			37,086
	Salaries, wages, and benefits			65,181			44,566			153,885			109,375			36,066
	Aircraft rentals			40,686			20,786			82,146			48,659			16,181
	Flight cost			30,494			20,293			59,354			37,194			11,488
	Handling, landing and navigation fees			29,536			16,427			55,069			35,653			8,077
	Aircraft maintenance, materials and repairs			21,697			11,279			44,324			21,203			3,103
	Selling and marketing			19,213			12,800			38,187			27,050			7,624
	Depreciation and amortization			11,579			5,350			23,352			11,497			5,219
	Asset impairment and aircraft retirements			1,195			—			4,844			—			—
	Other expenses			16,731			10,564			40,653			32,258			10,197
		Total operating expenses		350,961			210,597			729,743			471,878			135,041
Operating income (loss)				1,872			4,258			(36,244	)		(483	)		(19,990	)
Other income (expense)
	Interest income			2,933			1,790			6,959			4,155			397
	Interest expense			(11,196	)		(5,541	)		(23,333	)		(13,091	)		(4,666	)
	Other, net			(992	)		(19	)		(820	)		53			(233	)
	Reorganization items, net			—			—			—			—			1,456,000
		Total other income (expense)		(9,255	)		(3,770	)		(17,194	)		(8,883	)		1,451,498
Income (loss) before income tax expense				(7,383	)		488			(53,438	)		(9,366	)		1,431,508
Income tax expense				488			—			488			—			—
Net income (loss)			$	(7,871	)	$	488		$	(53,926	)	$	(9,366	)	$	1,431,508
Preferred stock dividend				(3,435	)		—			(3,435	)		—			—
Income (loss) available to common shareholders			$	(11,306	)	$	488		$	(57,361	)	$	(9,366	)	$	1,431,508
Basic and diluted earnings per common share:
Weighted-Average Shares Outstanding (in thousands)				10,756			10,753			10,755			10,753
Income (loss) available to common shareholders per share			$	(1.05	)	$	0.05		$	(5.33	)	$	(0.87	)

See accompanying Notes to Condensed Consolidated Financial Statements

F-30

GLOBAL AERO LOGISTICS INC. (F/K/A NEW ATA HOLDINGS INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2007
(in thousands)
(unaudited)

	Preferred Stock		Common Stock		Warrants		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income		Total Shareholders' Equity
Balances at December 31, 2006	$	—	$	1	$	1,434	$	107,317		$	(36,462	)	$	—	$	72,290
Net loss		—		—		—		—			(53,926	)		—		(53,926	)
Other comprehensive income, net		—		—		—		—			—			272		272
Total comprehensive income		—		—		—		—			(53,926	)		272		(53,654	)
Issuance of warrants		—		—		—		(24	)		—			—		(24	)
Proceeds from issuance of preferred stock, net		158,644		—		—		—			—			—		158,644
Stock-based compensation		—		—		—		1,736			—			—		1,736
Balances at September 30, 2007	$	158,644	$	1	$	1,434	$	109,029		$	(90,388	)	$	272	$	178,992

See accompanying Notes to Condensed Consolidated Financial Statements

F-31

GLOBAL AERO LOGISTICS INC. (F/K/A NEW ATA HOLDINGS INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)
(unaudited)

		Nine Months Ended September 30, 2007			Seven Months Ended September 30, 2006			Predecessor Two Months Ended February 28, 2006
Cash flow from operating activities
Net loss before reorganization items		$	(53,926	)	$	(9,366	)	$	(24,492	)
Adjustments to reconcile net loss before reorganization items to net cash used in operating activities:
	Depreciation and amortization		23,352			11,497			5,219
	Asset impairment and aircraft retirements		4,844			—			—
	Stock compensation expense		1,712			625			—
	Non-cash interest		7,400			—			—
	Other		6,490			3,413			4,275
Changes in operating assets and liabilities, exclusive of acquisition
	Accounts receivables		(22,147	)		(2,533	)		7,242
	Prepaid expenses and other current assets		(2,530	)		(10,447	)		7,207
	Accounts payable, accrued expenses and other current liabilities		(6,865	)		(28,808	)		(7,442	)
	Liabilities subject to compromise		—			—			(16,396	)
	Air traffic liabilities		16,214			(2,486	)		4,810
Net cash used in operating activities			(25,456	)		(38,105	)		(19,577	)
Cash flows from reorganization activities
	Reorganization items		—			—			1,456,000
	Discharge of claims and liabilities		—			—			(1,304,653	)
	Valuation adjustments		—			—			(178,895	)
	Receivables		—			—			(48	)
	Prepaid expenses and other current assets		—			—			92
	Accrued expenses		—			—			6,822
	Liabilities subject to compromise		—			—			(9,570	)
	Other non-cash items		—			—			11,522
	Reduction to other assets		—			—			12,716
Net cash used in reorganization activities			—			—			(6,014	)
Cash flows from investing activities
	Capital expenditures		(28,335	)		(7,081	)		(8,447	)
	Additions to deposits and other assets		(1,029	)		(1,399	)		(2,462	)
	Proceeds from disposals of equipment and property		379			353			503
	Assets held for sale		630			19,506			—
	Net (purchases) and sales of short-term investments		(6,813	)		—			—
	Acquisition of World Air Holdings, Inc., net of cash acquired		(283,587	)		—			—
Net cash provided by (used in) investing activities			(318,755	)		11,379			(10,406	)
Cash flows from financing activities

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	Emergence financings, net of repayment of DIP financing		—			68,651			—
	Proceeds from long-term debt from affiliates		28,000			—			—
	Proceeds from long-term debt		340,000			—			—
	Proceeds from issuance of preferred stock		161,100			—			—
	Payment of costs related to issuance of preferred stock and debt		(17,564	)		—			—
	Payment on long-term debt		(80,856	)		(19,490	)		—
	Payments on long-term debt from affiliates		(54,261	)		—			—
	Increase (decrease) in other restricted cash		3,549			6,366			(6,777	)
Net cash provided by (used in) financing activities			379,968			55,527			(6,777	)
Net increase (decrease) in cash and cash equivalents			35,757			28,801			(42,774	)
Cash and cash equivalents at beginning of period			62,209			36,443			79,217
Cash and cash equivalents at end of period		$	97,966		$	65,244		$	36,443
Supplemental information:
Cash payments for:
	Interest paid	$	12,447		$	12,695		$	985
	Income taxes paid (refunded)	$	353		$	(303	)	$	1

See accompanying Notes to Condensed Consolidated Financial Statements

F-33

GLOBAL AERO LOGISTICS INC. (F/K/A NEW ATA HOLDINGS INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

Basis of Presentation

        The unaudited Condensed Consolidated Financial Statements of Global Aero Logistics Inc. ("Global Aero", "the Company" or "Successor Company"), formerly New ATA Holdings Inc., and its wholly-owned subsidiaries, ATA Airlines, Inc. ("ATA" or "Predecessor"), World Air Holdings, Inc. ("World Air Holdings"), World Airways, Inc. ("World Airways"), North American Airlines, Inc. ("North American"), and World Risk Solutions, Ltd. ("World Risk Solutions") included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The Company acquired World Air Holdings and its three wholly-owned subsidiaries, World Airways, North American and World Risk Solutions, on August 14, 2007.            World Airways Parts Company, LLC is a wholly-owned subsidiary of World Airways.

        Management believes that all adjustments necessary to present fairly the financial position of Global Aero as of September 30, 2007 and the results of operations for the respective three months and nine months ended September 30, 2007 have been included in the unaudited Condensed Consolidated Financial Statements for the interim periods presented. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the results of operations for the three months and nine months ended September 30, 2007 are not necessarily indicative of the results to be expected for the year ending December 31, 2007. All significant inter-company accounts and transactions have been eliminated in consolidation for all periods presented. For further information, refer to the consolidated financial statements and accompanying footnotes for the ten months ended December 31, 2006.

        The Company's predecessor emerged from Chapter 11 bankruptcy protection on February 28, 2006. Upon emergence, the Company adopted fresh-start reporting in accordance with American Institute of Certified Public Accountants ("AICPA") Statement of Position 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code ("SOP 90-7"). As a result, the financial statements presented for periods prior to March 1, 2006 are not comparable with the financial statements for periods on or after March 1, 2006.

2. World Air Holdings Acquisition

        On August 14, 2007, the Company acquired World Air Holdings, its wholly-owned subsidiaries World Airways, North American, and World Risk Solutions, for approximately $313.3 million in cash which was funded by the Term Loan (see "Note 6—Long-term Debt"). In addition, the Company incurred approximately $9.9 million for costs directly related to the acquisition, consisting primarily of financial advisory, legal and accounting fees which were capitalized as part of the purchase price.

        World Airways provides long-range passenger and cargo charter and wet-lease air transportation serving the U.S. Government, international freight and passenger airlines, tour operators, and customers requiring specialized aircraft services. North American provides passenger charter and wet-lease air transportation serving the U.S. Government, tour operators and other airlines. In addition,

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North American operates international scheduled passenger service in selected markets. World Risk Solutions is a corporation whose business operation is to underwrite certain risk mainly related to the Company's aircraft.

        The Company commenced the consolidation of World Air Holdings on August 15, 2007 and the acquisition was accounted for using the purchase method of accounting in accordance with Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 141, Business Combinations ("SFAS 141"). The following summarizes the total purchase price for World Air Holdings (in thousands):

Cash consideration	$	313,315
Direct acquisition costs		9,918
	$	323,233

        Under the purchase method of accounting, the total purchase price will be allocated to World Air Holdings' net tangible and intangible assets based upon their estimated fair value as of the date of the acquisition with any amount paid in excess of the fair value of the net assets recorded as goodwill. In accordance with SFAS 141, the preliminary allocation of the total purchase price will be adjusted within one year from the date of the acquisition when improved information of assets and liability valuations become available. Specifically, the Company is in the process of finalizing the fair value assigned to inventory, property and equipment, maintenance reserve deposits with lessors, lease contracts, military contract intangibles, other intangibles and other liabilities.

        Based upon the purchase price and review of the net assets acquired and liabilities assumed, the preliminary purchase price allocation is as follows (in thousands):

		Fair Value of Assets Acquired and Liabilities Assumed
Cash and cash equivalents		$	39,646
Other current assets			131,326
Property and equipment, net			39,696
Deposits and other assets			62,250
Intangible assets acquired:
	Military contracts		256,680
	Other intangibles		5,130
Goodwill			64,446
	Total assets acquired		599,174
Liabilities assumed:
	Current liabilities		144,889
	Long-term liabilities		131,052
Net assets acquired		$	323,233

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        The estimate of fair values and allocation of the purchase price is preliminary and subject to change pending the final valuation. Accordingly, we may revise, among other things, the carrying value of assets subject to depreciation and amortization and the related estimated useful economic lives.

        Goodwill of $64.4 million has been recorded on a preliminary basis and represents the excess of the purchase price over the fair value of the net assets acquired as summarized above. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS 142"), goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually or as circumstances indicate their value may no longer be recoverable.

        Supplemental unaudited pro forma information reflecting the acquisition of World Air Holdings as if it had occurred on January 1, 2006 is as follows (in thousands, except per share amounts):

	Three Months Ended September 30, 2007			Three Months Ended September 30, 2006
Total operating revenues	$	474,602		$	446,276
Net income (loss)	$	(22,098	)	$	10,091
Preferred stock dividend	$	(7,475	)	$	(6,444	)
Income (loss) available to common shareholders	$	(29,573	)	$	3,647
Weighted-average shares outstanding—basic and diluted		10,756			10,753
Income (loss) per share—basic and diluted	$	(2.75	)	$	0.34

	Nine Months Ended September 30, 2007			Nine Months Ended September 30, 2006
Total operating revenues	$	1,268,298		$	1,210,777
Net income (loss)	$	(92,116	)	$	(60,230	)
Preferred stock dividend	$	(22,425	)	$	(19,332	)
Income (loss) available to common shareholders	$	(114,541	)	$	(79,562	)
Weighted-average shares outstanding—basic and diluted		10,755			10,753
Income (loss) per share—basic and diluted	$	(10.65	)	$	(7.40	)

        The above pro forma results include the amortization of intangibles and additional interest expense to reflect the impact of the extinguishment of debt and issuance of new debt related to the purchase of World Air Holdings. In addition, the pro forma results reflect the Company's policy to capitalize and amortize heavy maintenance activities.

3. Short-term Investments

        Short-term investments consist primarily of auction rate securities with auction reset periods of less than 12 months, classified as available-for-sale-securities and stated at fair value.

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4. Intangible Assets

        The Company has identifiable intangible assets that consist of its contracts with the U.S. Government to carry military passengers, its tradenames, its codeshare agreement with Southwest, and its operating certificates. The Company accounts for its intangible assets in accordance with SFAS 142. Definite-lived intangible assets are amortized on a straight-line basis over the estimated lives of the related assets. Indefinite-lived assets are not amortized, but instead, are reviewed for impairment annually or more frequently if events or circumstances indicate that the asset may be impaired. The Company recorded $7.8 million of amortization expense year-to-date as of September 30, 2007 and expects to record amortization expense of $8.1 million in the fourth quarter of 2007, $32.2 million in 2008, and $31.5 million per year in 2009, 2010 and 2011 subject to completion of the allocation of the purchase price for World Air Holdings. (see "Note 2—World Air Holdings Acquisition").

        The following table presents information about the Company's intangible assets at September 30, 2007, which includes the preliminary allocation of the World Air Holdings' purchase price to intangibles (in thousands):

		Asset Lives	Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets
	Military contracts	10 years	$	309,168	$	11,526
	Southwest codeshare	7 years		3,856		872
	Tradenames	1 year		1,708		720
			$	314,732	$	13,118
Unamortized intangible assets
	FAA operating certificates		$	5,928	$	—

5. Deposits

        Under certain of its aircraft and engine leases, the Company is required to make periodic maintenance reserve payments to secure payment for certain future maintenance work such as engine and airframe overhauls. The Company records the payments as deposits on its consolidated balance sheet. As of September 30, 2007 and December 31, 2006, respectively, the Company had $50.8 million and $3.0 million of long-term maintenance reserve deposits recorded in long-term deposits and other assets on its balance sheet. In addition, as of September 30, 2007, the Company had $33.1 million of short-term maintenance reserve deposits included in prepaid expenses and other current assets.

        As of September 30, 2007 and December 31, 2006, respectively, the Company had aircraft and engine (flight equipment), building and miscellaneous long-term security deposits of $25.8 million and $7.8 million included in long-term deposits and other assets on its balance sheet.

6. Long-term Debt

        On August 14, 2007, the Company entered into a $340.0 million senior secured payment-in-kind ("PIK") term loan agreement with JPMorgan Chase Bank NA (the "Term Loan") in order to fund the

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acquisition of World Air Holdings. The Term Loan bears interest annually at LIBOR, plus a margin, payable-in-kind through August 14, 2009, and cash thereafter. The Term Loan has an automatic extension feature pursuant to which its final maturity is August 14, 2015. The lenders under the Term Loan may convert the loans into notes due in 2015 having terms substantially similar to the Term Loan. The Term Loan is secured by a significant portion of the Company's unencumbered assets. The lenders under the Term Loan received approximately 2.3 million warrants with an exercise price of $0.01 per share immediately exercisable. The Company has allocated $31.7 million as the total fair value of the warrants issued. The Company has recorded this amount as a discount on the Term Loan on its consolidated balance sheet as of September 30, 2007 (See "Note 11—Shareholders' Equity"). The discount will be accreted to interest expense over the stated term of the debt. The effective rate on the Term Loan, based upon the principal balance of $340.0 million, was 12.9%, excluding the amortization of debt issuance costs, for the three and nine months ended September 30, 2007.

        In addition, the Company issued approximately $161.1 million of Series A Preferred Convertible Stock (the "Series A preferred stock") to an affiliate of MatlinPatterson, the Company's majority shareholder, with an annual cumulative dividend rate of 16.0% payable in common stock upon conversion. The Series A preferred stock is convertible into common stock of the Company. Upon conversion of the Series A preferred stock to common stock (the "Conversion Shares"), MatlinPatterson is required to complete a rights offering to shareholders of the Company's common stock to purchase a pro rata share of the Conversion Shares at a price per share equal to the conversion price. (See "Note 11—Shareholders' Equity")

        Additionally on August 14, 2007, using funds from the Term Loan and Series A preferred stock, the Company repaid an $81.6 million loan, including accrued interest and a prepayment premium, which was partially guaranteed by the Air Transportation Stabilization Board ("ATSB"). Furthermore, the Company repaid its two loans from MatlinPatterson totaling $54.3 million, including accrued interest.

7. Lease Obligations

        The Company leases aircraft and aircraft engines, ground facilities, including terminal space and maintenance facilities, and ground equipment. The majority of the Company's aircraft are classified as operating leases. As of September 30, 2007, the Company had two aircraft classified as capital leases included in property and equipment ($33.8 million of cost and $3.6 million of related accumulated depreciation).

        In the fourth quarter of 2006, the Company signed a definitive purchase agreement with a third party in which the Company agreed to purchase seven McDonnell Douglas DC10-30 ("DC-10") aircraft, two McDonnell Douglas DC10-30 airframes, two spare engines, and certain other related property. The Company received a commitment from a lessor under which the Company assigned its purchase rights, and leased back the aircraft and other equipment. In addition to the assignment, the Company and lessor agreed to share in the capital investment necessary to make the fleet operational. The lease agreements require the Company to make payments aggregating approximately $38.0 million over approximately six years. As of September 30, 2007, one of these aircraft was in revenue service.

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        Future annual minimum lease payments, including the seven DC-10 aircraft, at September 30, 2007 for capital leases and operating leases that have initial or remaining base lease terms in excess of one year were as follows (in thousands):

		Capital Leases		Operating Leases
2007		$	1,350	$	57,819
2008			5,400		201,764
2009			5,400		188,144
2010			5,400		176,938
2011			5,400		155,650
Thereafter			49,500		702,959
	Total	$	72,450	$	1,483,274

8. Employee Benefit Plans

        ATA has a defined contribution 401(k) ("401(k) Plan") savings plan in which employees may elect to invest salary deferrals of up to $15,500 or 25% of their salary in selected investment funds. It is a tax-qualified retirement plan under Section 401(k) of the Code. ATA contributes matching funds to the 401(k) Plan equal to 65% of participants' voluntary deferrals up to 6% of eligible salary. ATA expensed for its contribution to the 401(k) Plan for the three months ended September 30, 2007 and 2006, approximately $1.0 million and $1.1 million, respectively. For the nine months ended September 30, 2007 and 2006, ATA expensed for its contribution to the 401(k) plan approximately $3.0 million and $3.4 million, respectively.

        ATA also sponsors a defined contribution plan for its cockpit crewmembers, the Cockpit Crewmember Money Purchase Plan ("CMPP") that is funded by ATA. During the bankruptcy proceedings, the cockpit members agreed to suspension of ATA's contributions to the plan through December 31, 2006, therefore no contributions were made to the CMPP in the seven months ended September 30, 2006. Effective January 1, 2007, ATA recommenced its contributions to the plan. ATA's expense for its contributions to the plan for the three and nine months ended September 30, 2007 was $0.3 million and $0.9 million, respectively.

        World Airways' Crewmembers Target Benefit Plan (the "Target Benefit Plan") is a defined contribution plan covering cockpit crewmembers with contributions based upon wages, as defined. It is a tax-qualified retirement plan under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"). Expense for the Target Benefit Plan totaled $0.5 million from August 15, 2007 through September 30, 2007.

        World Airways also sponsors a Crewmembers Deferred Income Plan (the "Deferred Income Plan"). It is a tax-qualified retirement plan under Section 401(k) of the Code. Under the Deferred Income Plan, cockpit crewmembers may elect to invest salary deferrals of up to $15,500 or 25% of their salary in selected investment funds. World Airways does not make any contributions to the Deferred Income Plan.

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        World Airways' flight attendants participate in a pension plan maintained by the International Brotherhood of Teamsters ("IBT"). This plan is a multi-employer plan subject to the funding and other provisions of the Pension Protection Act of 2006. Contributions made to the IBT on behalf of the flight attendants totaled $0.2 million from August 15, 2007 through September 30, 2007.

        Under World Air Holdings' and World Airways' 401(k) administrative Plan ("401(k) Administrative Plan"), employees may elect to invest salary deferrals of up to $15,500 or 25% of their salary in selected investment funds. It is a tax-qualified retirement plan under Section 401(k) of the Code. World Air Holdings' and World Airways' contributes matching funds to the 401(k) Administrative Plan equal to 50% of participants' voluntary deferrals up to 10% of salary. World Air Holdings' and World Airways' expensed, for its contribution to the 401(k) Administrative Plan, less than $0.1 million from August 15, 2007 through September 30, 2007.

        North American provides a tax qualified 401(k) employee savings plan for the benefit of substantially all employees. Under the plan, employees may contribute up to $15,500 of their salary. North American matches employees' contributions up to 100% of the first 3% of compensation plus 50% of the next 2% of compensation. North American also has the option to make additional profit-sharing contributions to the plan. Total contribution expense for matching of elective deferrals for the period from August 15, 2007 through September 30, 2007 was $0.1 million.

        World Airways has a profit sharing bonus plan (the "Profit Sharing Plan") for its cockpit crewmembers and flight attendants pursuant to agreements with the unions representing the two groups. It is not a tax-qualified plan under the Code. Distributions under the Profit Sharing Plan are equal to 20% of net earnings, as defined, subject to an annual limitation of 10% of the total annual aggregate compensation of World Airways employees participating in the Profit Sharing Plan in that year. The Company expensed $0.6 million for this plan during the period from August 15, 2007 through September 30, 2007.

        World Air Holdings, World Airways, and North American have a profit sharing bonus plan for management, administrative and operations personnel. The Company expensed $0.7 million for these plans from August 15, 2007 through September 30, 2007. World Airways' cockpit crewmembers and eligible dependents are covered under a post-retirement health care and life insurance benefits plan until age 65. A small group of administrative retirees are also covered under a post-retirement health care and life insurance benefits plan for life. World Airways accrues for the cost of post-retirement health and life insurance benefits in accordance with SFAS No. 106, Employers' Accounting for Post-retirement Benefits Other Than Pensions ("SFAS 106") and SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other Post-retirement Plans ("SFAS 158"). World Airways funds the benefit costs on a pay-as-you-go (cash) basis.

        The net periodic post-retirement benefit costs for the period August 15, 2007 through September 30, 2007 were $0.3 million.

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9. Income Tax Expense

        In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109" ("FIN 48"). The Company adopted FIN 48 effective January 1, 2007. FIN 48 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, the Company may recognize the tax benefit from uncertain tax positions only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement with the taxing authorities. FIN 48 also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

        As of September 30, 2007, the Company has recorded $2.5 million of unrecognized tax benefits in other accrued expenses and current liabilities on the consolidated balance sheet. Of this amount, $1.5 million would impact the effective tax rate if recognized. Upon adoption of FIN 48, there was no cumulative effective adjustment to the Company's retained earnings.

        The Company files income tax returns in the United States and various state and local jurisdictions. World Airways is presently under examination by the Internal Revenue Service ("IRS") for tax year ended December 31, 2004. North American is also under examination by the IRS for the income tax return filed for the year ended December 31, 2003 and the S-Corporation tax return filed for the year ended December 31, 2004.

        The Company does not anticipate any significant adjustment to unrecognized tax benefits which will impact income tax expense, due to the settlement of audits and the expiration of statutes of limitations in the next 12 months. However, actual results could differ from those currently anticipated.

        The Company's policy for recording interest and penalties with audits is to record such items as a component of income before taxes. Penalties are recorded as other expense and interest paid or received is recorded in interest expense or interest income, respectively, in the statement of operations. As of September 30, 2007, the Company has recorded $1.1 million of interest and penalties associated with uncertain tax positions.

        The Company did not record any federal income tax for the three and nine month periods ended September 30, 2007 due to its operating losses in those periods. The Company recorded $0.5 million of state income taxes in the three and nine month periods ended September 30, 2007.

10. Segment Reporting

        Beginning in the third quarter of 2007, the Company has four reportable segments: ATA Schedule Service, ATA Military Charter, World Airways and North American. The Company operates and manages these companies as distinct operating segments, and prepares separate financial statements for each that are reviewed by senior management at Global Aero, as well as the chief operating officer and other management at the operating company level.

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        Selected available financial data for the three and nine month periods ended September 30, 2007 is set forth below (in thousands). Comparative information is not presented for 2006 because the financial data cannot be discretely separated between scheduled service and military charter segments. World Airways and North American results have been included from August 15, 2007, the day following the acquisition, to September 30, 2007 (in thousands):

	Three Months Ended September 30, 2007
	ATA Scheduled Service			ATA Military Charter			World Airways		North American		World Air Holdings, World Risk Solutions, and Eliminations			Consolidated Total
Total operating revenues	$	126,907		$	87,148		$	89,050	$	50,204	$	(476	)	$	352,833
Total operating expenses	$	131,473		$	87,762		$	86,370	$	45,162	$	194		$	350,961
Operating income (loss)	$	(4,566	)	$	(614	)	$	2,680	$	5,042	$	(670	)	$	1,872

	Nine Months Ended September 30, 2007
	ATA Scheduled Service			ATA Military Charter		World Airways		North American		World Air Holdings, World Risk Solutions, and Eliminations			Consolidated Total
Total operating revenues	$	306,438		$	248,283	$	89,050	$	50,204	$	(476	)	$	693,499
Total operating expenses	$	357,308		$	240,456	$	86,370	$	45,162	$	447		$	729,743
Operating income (loss)	$	(50,870	)	$	7,827	$	2,680	$	5,042	$	(923	)	$	(36,244	)

        The Company's revenues are derived principally from customers domiciled in the United States. The most significant component of the Company's property and equipment is aircraft and related improvements and parts. All aircraft are registered in the United States. The Company therefore considers all property and equipment to be domestic.

        Information concerning customers for the three and nine month periods ended September 30, 2007 and 2006 in which their revenues comprise 10% or more of the Company's total operating revenues is presented in the following table (in millions):

	Three Months Ended September 30,
					Nine Months Ended September 30, 2007		Nine Months Ended September 30, 2006
ATA
	2007		2006
U.S. Air Force ("USAF") Air Mobility Command	$	68.1	$	91.8	$	210.0	$	257.1

World Airways	August 15 through September 30, 2007
U.S. Air Force ("USAF") Air Mobility Command	$	71.7

North American	August 15 through September 30, 2007
U.S. Air Force ("USAF") Air Mobility Command	$	34.8

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11. Shareholders' Equity

Common Stock

        At September 30, 2007, 10,712,549 shares of common stock were issued. Common stock issued at December 31, 2006 was 10,710,150 shares.

Preferred Stock

        On August 14, 2007, the Company issued and sold 11.5 million shares of Series A preferred stock to MatlinPatterson, at a price of $14.00 per share or $161.1 million in aggregate. The holders of the Series A preferred stock, MatlinPatterson, are entitled to cumulative dividends at an annual rate of 16.0% on the liquidation amount of the Series A preferred stock. The dividends will be deferred and remain unpaid and will accrete day-to-day beginning on the issuance date. The deferred and accreted amount of dividend shall be declared and paid by the Company upon a conversion of the Series A preferred stock into common stock or upon a liquidation event of the Company. The Company is required to pay the greater of $8.0 million or the deferred and accreted amount upon conversion or a liquidation event.

        The Series A preferred stock is convertible into shares of the Company's common stock at the lower of the purchase price, which estimated the fair value of the Company's common stock on the issuance date, or the fair value of the Company's common stock on the conversion date as determined by an Initial Public Offering ("IPO") or an independent valuation (the "Conversion Price"). A conversion of the Series A preferred stock into shares of the Company's common stock occurs in the event of one of the following: (i) majority of the holders of the outstanding Series A preferred stock consent to a conversion; (ii) the Company consummates a qualified IPO; or (iii) the Company requires conversion by unanimous approval of the independent board of directors and delivers a written notice to the holders. Upon conversion of the Conversion Shares to common stock, MatlinPatterson is required to complete a rights offering to common shareholders of the Company's common stock to purchase a pro rate share of the Conversion Shares at a price per share equal to the Conversion Price ("Rights Offering").

        The Company evaluated this instrument in accordance with SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity, SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and Emerging Issues Task Force ("EITF") Topic No. D-109, Determining the Nature of a Host Contract Related to a Hybrid Financial Instrument Issued in the Form of a Share under FASB Statement No. 133, and concluded that the instrument should be recorded as equity. Therefore, the Company has recorded the Series A preferred stock of $161.1 million, net of direct issuance costs, in the shareholders' equity section of its consolidated balance sheet as of September 30, 2007.

Warrants

        On August 14, 2007, the Company entered into the Term Loan with detachable warrants convertible into common stock of the Company. (See "Note 6—Long-term Debt") The Company executed a Warrant Agreement under which the lenders under the Term Loan received warrants to purchase 2,261,233 shares of common stock of the Company with an exercise price of $0.01 per share immediately exercisable. The Company has preliminarily valued the warrants at $31.7 million based on the estimated fair value of the Company's common stock of $14.00 per share as of August 14, 2007. In accordance with EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and

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Potentially Settled in, a Company's Own Stock. the Company has recorded the value of the warrants as a liability on its consolidated balance sheet as of September 30, 2007, primarily because the holders of the warrants have a preference over other common stock holders in the event of liquidation. The carrying value of the warrants will be adjusted for changes in market value with a corresponding adjustment to the Company's statement of operations.

12. Earnings (Loss) per Share

        Basic earnings (loss) per share are computed by dividing net earnings (loss) by the weighted average number of shares outstanding during the period. Diluted earnings (loss) per share include the effects of common equivalent shares outstanding during the period that are dilutive.

        The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share data):

	Three Months Ended September 30,
	2007			2006
Net earnings (loss) available to common shareholders	$	(11,305	)	$	488
Weighted average shares outstanding, basic and diluted		10,756			10,753
Net earnings (loss) per share, basic and diluted	$	(1.05	)	$	0.05

	Nine Months Ended September 30, 2007			Seven Months Ended September 30, 2006
Net earnings (loss) available to common shareholders	$	(57,361	)	$	(9,366	)
Weighted average shares outstanding, basic and diluted		10,755			10,753
Net earnings (loss) per share, basic and diluted	$	(5.33	)	$	(0.87	)

        Excluded from the diluted earnings per share calculation for the three and nine month periods ended September 30, 2007 is the impact of 2,709,262 million shares related to warrants, 2,659,523 million shares related to options, and 11,507,142 shares related to convertible preferred stock. These shares are excluded because the effect of including the shares would have been anti-dilutive.

        Comparative data is not shown for the Company's predecessor for the two months ended February 28, 2006 as those shares were canceled upon emergence from bankruptcy.

13. Commitments and Contingencies

Union Negotiations and Litigation:

        ATA's Cockpit Crewmembers:    The cockpit crewmembers, who account for approximately 24.4% of the total workforce at ATA are represented by the Airline Pilots Association ("ALPA"), and are subject to a collective bargaining agreement which will become amendable on October 1, 2008.

        ATA's Flight Attendants:    The ATA flight attendants, representing approximately 34.2% of ATA's employees are represented by the Association of Flight Attendants ("AFA"), and are subject to a collective bargaining agreement which will become amendable on October 31, 2008.

F-44

        ATA's Mechanics:    The ATA mechanics, representing approximately 4.4% of ATA's employees are represented by the Aircraft Mechanics Fraternal Association ("AMFA"), and are subject to a collective bargaining agreement which will become amendable on June 1, 2009.

        World Airways' Cockpit Crewmembers:    The cockpit crewmembers, who account for approximately 29.9% of the total workforce at World Airways are represented by the IBT, and are subject to a collective bargaining agreement which will become amendable on March 1, 2009.

        World Airways' Flight Attendants:    The World Airways' flight attendants, representing approximately 41.5% of World Airways employees, are subject to a collective bargaining agreement that became amendable August 31, 2006. In July 2007, the flight attendants represented by the IBT reached a tentative agreement for a new contract. On September 28, 2007, the flight attendants, with a vote of 71% in favor, ratified the substantive terms of the tentative agreement. The tentative agreement included a one time signing bonus of $0.3 million. The agreement will become amendable in 2012.

        North American's Cockpit Crewmembers:    The National Mediation Board ("NMB") certified the IBT to represent North American's cockpit crewmembers (approximately 21.1% of the total employees at North American) on January 16, 2004. North American and the IBT commenced negotiations for their first collective bargaining agreement on April 6, 2004 and have met on numerous occasions. In August 2007, the cockpit crewmembers represented by the IBT reached a tentative agreement for a new contract. On October 10, 2007, North American was informed by Local 747 of IBT that the tentative agreement, between North American and its pilots represented by the IBT, failed to achieve ratification by a narrow margin. The parties have resumed bargaining under the auspices of the NMB with the next scheduled bargaining session expected late in the first quarter 2008.

        North American's Flight Attendants:    On July 26, 2005, the NMB authorized a union election (the IBT) among North American's flight attendants. Flight attendants comprise approximately 43.5% of employees at North American. On August 31, 2005, a majority of flight attendants voted for IBT representation. Negotiations began in 2006 between North American and the IBT and are ongoing.

Litigation:

        On August 14, 2007, World Air Holdings and the former owner of North American Airlines ("the Seller"), entered into an agreement to amend the original Stock Purchase Agreement dated April 27, 2005. Under the terms of this amendment, the Seller will reimburse World Air Holdings $2.5 million of tax distributions previously paid under the original agreement. In addition, World Air Holdings receives the right to control the filing and any potential tax disputes relating to the tax returns filed prior to April 27, 2005. World Air Holdings provided the Seller with an irrevocable letter of credit up to $2.5 million to indemnify the Seller for any increases relating to certain individual taxes and costs associated with the tax returns filed prior to April 27, 2005 should those returns be adjusted by taxing authorities.

        In the ordinary course of business, the Company is party to various other legal proceedings and claims which management believes are incidental to the operations of our business. Management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company's financial condition, results of operations or liquidity.

F-45

14. Recently Issued Accounting Standards

        In June 2006, the FASB ratified the EITF consensus on EITF Issue No. 06-03, How Taxes Collected From Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement ("EITF 06-03"). The scope of EITF 06-03 includes any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer, and provides that a company may adopt a policy of presenting taxes either gross within revenue or on a net basis. For any such taxes that are reported on a gross basis, a company should disclose the amounts of those taxes for each period for which an income statement is presented if those amounts are significant. This statement is effective for financial reports for interim and annual reporting periods beginning after December 15, 2006. The Company adopted EITF 06-03 on January 1, 2007. Various taxes and fees on the sale of tickets to customers are collected by the Company as an agent and remitted to the respective taxing authority. These taxes and fees have been presented on a net basis in the accompanying consolidated statement of operations and recorded as a liability until remitted to the respective taxing authority.

        In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and earlier application is allowed under certain circumstances. Any amounts recognized upon adoption, as a cumulative effect adjustment will be recorded to the opening balance of retained earnings in the year of adoption. The Company has not yet determined the impact of SFAS 157 on its financial condition and results of operations.

        In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities ("SFAS 159"). SFAS 159 allows entities the option to measure eligible financial instruments at fair value as of specified dates. Such election, which may be applied on an instrument-by-instrument basis, is typically irrevocable once elected. SFAS 159 is effective for fiscal years beginning after November 15, 2007, and early application is allowed under certain circumstances. The Company will adopt SFAS 159 effective January 1, 2008. The Company has not yet determined the effect, if any, that the adoption of SFAS 159 will have on its financial position or results of operations.

15. Subsequent Events

        In the fourth quarter of 2007, MatlinPatterson purchased 1.8 million of the warrants to purchase common stock issued in connection with the Term Loan from JPMorgan and exercised the warrants for shares of the Company's common stock. (See "Note 11—Shareholders' Equity" for further information on the warrants)

        In addition, in the fourth quarter of 2007, MatlinPatterson initiated both the process of converting the Series A preferred stock into shares of the Company's common stock and the Rights Offering. The Company expects this transaction to be completed in the first quarter of 2008. (See "Note 11—Shareholders' Equity" for further information on the Series A preferred stock)

        On December 14, 2007 the Company entered into 10-year lease agreements for two Boeing 747-400 freighter aircraft. The aircraft are expected to be delivered in March and October 2008, respectively.

F-46

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders
ATA Holdings Corp.

        We have audited the accompanying consolidated balance sheets of ATA Holdings Corp. and Subsidiaries (Debtor and Debtors-in-Possession as of October 26, 2004) as of December 31, 2005 and 2004, and the related consolidated statements of operations, shareholders' deficit, and cash flows for the two month period ended February 28, 2006 and for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ATA Holdings Corp. and Subsidiaries (Debtor and Debtors-in-Possession as of October 26, 2004) at December 31, 2005 and 2004, and the consolidated results of their operations and their cash flows for the two month period ended February 28, 2006 and for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.

                                                                                        Ernst & Young LLP

Indianapolis, Indiana
March 16, 2007

F-47

ATA HOLDINGS CORP. AND SUBSIDIARIES
(Debtor and Debtor-in-Possession as of October 26, 2004)

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

		December 31, 2005			December 31, 2004
ASSETS
Current assets:
	Cash and cash equivalents	$	79,217		$	139,652
	Receivables, net of allowance for doubtful accounts 2005—$4,937 2004—$2,608		89,891			118,807
	Inventories, net		31,364			43,802
	Prepaid expenses and other		29,067			39,160
Total current assets			229,539			341,421
Property and equipment:
	Flight equipment		142,488			198,888
	Facilities and ground equipment		123,361			147,420
			265,849			346,308
Accumulated depreciation			(164,582	)		(163,549	)
			101,267			182,759
Restricted cash			27,348			32,355
Goodwill			2,411			8,488
Prepaid aircraft rent			154			52,031
Investments in BATA			4,808			6,930
Deposits and other assets			23,923			27,081
Total assets		$	389,450		$	651,065
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
	Short-term debt	$	54,600		$	41,000
	Accounts payable		5,558			7,563
	Air traffic liabilities		54,018			89,887
	Accrued compensation and benefits		38,708			51,312
	Accrued flight expenses		25,787			19,917
	Accrued expenses		64,392			50,802
Total current liabilities			243,063			260,481
Other deferred items			47,083			31,464
Liabilities subject to compromise			1,475,447			1,279,676
Commitments and contingencies
Shareholders' equity (deficit):
	Preferred stock, authorized 9,999,200 shares; none issued		—			—
	Common stock, without par value; authorized 30,000,000 shares; issued—13,535,727 2005 and 2004		66,013			66,013
	Treasury stock; 1,711,440 shares—2005; 1,711,440 shares—2004		(24,778	)		(24,778	)
	Additional paid-in capital		18,166			18,166
	Accumulated deficit		(1,435,544	)		(979,957	)
Total shareholders' deficit			(1,376,143	)		(920,556	)
Total liabilities and shareholders' deficit		$	389,450		$	651,065

The accompanying notes are an integral part of these consolidated financial statements.

F-48

ATA HOLDINGS CORP. AND SUBSIDIARIES
(Debtor and Debtor-in-Possession as of October 26, 2004)

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)

		Period from January 1 to February 28, 2006			Year Ended December 31,
					2005			2004			2003
Operating revenues:
	Scheduled service	$	53,527		$	635,232		$	1,099,944		$	1,085,420
	Charter		58,753			408,714			358,870			366,207
	Other		2,771			48,355			73,757			66,906
Total operating revenues			115,051			1,092,301			1,532,571			1,518,533
Operating expenses:
	Fuel and oil		37,086			322,094			368,273			276,057
	Salaries, wages and benefits		36,066			281,791			422,430			399,622
	Aircraft rentals		16,181			148,614			242,602			226,559
	Flight costs		11,488			82,243			100,327			105,055
	Handling, landing and navigation fees		8,077			89,453			119,963			113,781
	Selling and marketing		7,624			66,050			111,041			110,527
	Depreciation and amortization		5,219			36,270			52,013			56,729
	Aircraft maintenance, materials and repairs		3,103			44,801			74,992			45,741
	U.S. Government grants		—			—			—			(37,156	)
	Asset impairments and aircraft retirements		—			403			7,887			5,288	)
	Other		10,197			101,973			133,206			138,789
Total operating expenses			135,041			1,173,692			1,632,734			1,440,992
Operating income (loss)			(19,990	)		(81,391	)		(100,163	)		77,541
Other income (expense):
	Reorganization items, net		1,456,000			(369,632	)		(638,479	)		—
	Interest income		397			2,467			2,283			2,878
	Interest expense		(4,666	)		(6,235	)		(51,145	)		(56,324	)
	Loss on extinguishment of debt		—			—			(27,314	)		—
	Other		(233	)		(796	)		(911	)		(2,350	)
Other income (expense)			1,451,498			(374,196	)		(715,566	)		(55,796	)
Income (loss) before income taxes			1,431,508			(455,587	)		(815,729	)		21,745
Income taxes			—			—			—			1,311
Net income (loss)			1,431,508			(455,587	)		(815,729	)		20,434
Preferred stock dividends			—						(1,125	)		(4,642	)
Income (loss) available to common shareholders		$	1,431,508		$	(455,587	)	$	(816,854	)	$	15,792

The accompanying notes are an integral part of these consolidated financial statements.

F-49

ATA HOLDINGS CORP. AND SUBSIDIARIES
(Debtor and Debtor-in-Possession as of October 26, 2004)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
(Dollars in thousands)

	Common Stock			Treasury Stock			Additional Paid-in Capital			Accumulated Deficit			Total Shareholders' Deficit
Balance as of December 31, 2002	$	65,290		$	(24,778	)	$	18,374		$	(178,895	)	$	(120,009	)
Net income		—			—			—			20,434			20,434
Stock options exercised		421			—			(211	)		—			210
Accrued preferred stock dividends		—			—			—			(4,642	)		(4,642	)
Balance as of December 31, 2003	$	65,711		$	(24,778	)	$	18,163		$	(163,103	)	$	(104,007	)
Net loss		—			—			—			(815,729	)		(815,729	)
Stock options exercised		302			—			3			—			305
Preferred stock dividends		—			—			—			(1,125	)		(1,125	)
Balance as of December 31, 2004	$	66,013		$	(24,778	)	$	18,166		$	(979,957	)	$	(920,556	)
Net loss		—			—			—			(455,587	)		(455,587	)
Balance as of December 31, 2005	$	66,013		$	(24,778	)	$	18,166		$	(1,435,544	)	$	(1,376,143	)
Net loss from January 1 to February 28, 2006											(52,040	)		(52,040	)
Elimination of non-emerging subsidiaries											9,065			9,065
Discharge of claims and liabilities											1,304,653			1,304,653
Revaluation of assets and liabilities and elimination of common stock, treasury stock, and additional paid-in-capital		(66,013	)		24,778			(18,166	)		178,895			119,494
Elimination of accumulated deficit											(5,029	)		(5,029	)
Balance as of February 28, 2006	$	—		$	—		$	—		$	—		$	—

The accompanying notes are an integral part of these consolidated financial statements.

F-50

ATA HOLDINGS CORP. AND SUBSIDIARIES
(Debtor and Debtor-in-Possession as of October 26, 2004)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

		Period from January 1 to February 28, 2006			Year Ended December 31,
					2005			2004			2003
Operating activities:
Net income (Loss) before reorganization expenses		$	(24,492	)	$	(85,955	)	$	(177,250	)	$	20,434
Adjustments to reconcile net income (loss) before reorganization expenses to net cash provided by (used in) operating activities:
	Depreciation and amortization		5,219			36,270			52,013			56,729
	Loss on extinguishment of debt		—			—			27,314			—
	Asset impairments and aircraft retirements		—			403			7,887			5,288
	Other non-cash items		4,275			(1,136	)		23,697			31,686
Changes in operating assets and liabilities:
	Receivables		7,242			29,667			(62	)		(32,368	)
	Inventories		574			6,535			(5,322	)		38
	Prepaid expenses and other current assets		6,633			2,797			(8,348	)		17,808
	Accounts payable		(4,303	)		(2,005	)		5,811			1,639
	Air traffic liabilities		4,810			(35,869	)		(12,944	)		8,138
	Liabilities subject to compromise		(16,396	)		(19,027	)		(14,126	)		—
	Accrued expenses		(3,139	)		1,310			55,130			(15,613	)
	Other deferred items		—			—			20,000			—
	Net cash provided by (used in) operating activities		(19,577	)		(67,010	)		(26,200	)		93,779
Reorganization activities:
Reorganization expenses, net			1,456,000			(369,632	)		(638,479	)		—
Discharge of claims and liabilities			(1,304,653	)		—			—			—
Valuation adjustments			(178,895	)		—			—			—
Impairment losses, reported as reorganization items			—			29,496			44,499			—
Prepaid expenses and other current assets			92			16,723			(4,395	)		—
Liabilities subject to compromise			(9,570	)		206,363			507,311			—
Accrued expenses			6,822			3,551			6,710			—
Other non-cash items			11,522			27,639			17,459			—
Proceeds from Debtor-in-Possession financing			—			30,000			56,500			—
Payments on Debtor-in-Possession financing			—			—			(15,500	)		—
Proceeds from sales of property and equipment			—			8,800			34,000			—
Receivables			(48	)		(751	)		—			—
Noncurrent prepaid aircraft rent			—			66,120			58,089			—
Reductions to other assets			12,716			—			—			—
	Net cash provided by (used in) reorganization activities		(6,014	)		18,309			66,194			—
Investing activities:
Aircraft pre-delivery deposits			—			—			—			16,582
Capital expenditures			(8,447	)		(22,884	)		(26,660	)		(42,534	)
Noncurrent prepaid aircraft rent			—			1,587			33,968			(75,260	)
(Additions) reductions to other assets			(2,462	)		(1,052	)		(7,339	)		2,206
Proceeds from sales of property and equipment			503			3,618			562			312
	Net cash provided by (used in) investing activities		(10,406	)		(18,731	)		531			(98,694	)
Financing activities:
Preferred stock dividends			—			—			(9,987	)		—
Payments on short-term debt			—			—			—			(8,384	)
Proceeds from long-term debt			—			—			1,500			5,729
Payments on long-term debt and exchange offers			—			—			(64,313	)		(14,215	)
(Increase) decrease in other restricted cash			(6,777	)		6,997			10,978			(17,941	)
Proceeds from stock option exercises			—			—			305			210
	Net cash provided by (used in) financing activities		(6,777	)		6,997			(61,517	)		(34,601	)
Decrease in cash and cash equivalents			(42,774	)		(60,435	)		(20,992	)		(39,516	)
Cash and cash equivalents, beginning of period			79,217			139,652			160,644			200,160
Cash and cash equivalents, end of period		$	36,443		$	79,217		$	139,652		$	160,644

The accompanying notes are an integral part of these consolidated financial statements.

F-51

ATA HOLDINGS CORP. AND SUBSIDIARIES
(Debtor and Debtor-in-Possession as of October 26, 2004)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

		Period from January 1 to February 28, 2006		Year Ended December 31,
				2005			2004			2003
Supplemental disclosures:
Cash payments for:
	Interest	$	985	$	4,253		$	42,575		$	47,088
	Income taxes (refunds), net	$	1	$	(948	)	$	(6,502	)	$	(10,992	)
Financing and investing activities not affecting cash:
	Accrued capitalized interest	$	—	$	—		$	491		$	343
	Exchange of debtor-in-possession debt for leasehold interest	$	—	$	20,000		$	—		$	—
	Accrued preferred stock dividends	$	—	$	—		$	375		$	4,642

The accompanying notes are an integral part of these consolidated financial statements.

F-52

ATA HOLDINGS CORP. AND SUBSIDIARIES
(Debtor and Debtor-in-Possession as of October 26, 2004)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Chapter 11 Filing and Status

        Chapter 11 Reorganization.    On October 26, 2004 (the "Petition Date"), ATA Holdings Corp. ("Holdings" and collectively with its subsidiaries, the "Company") and seven of its subsidiaries including ATA Airlines, Inc. ("ATA"), C8 Airlines, Inc., formally known as Chicago Express Airlines, Inc. ("C8"), and Ambassadair Travel Club, Inc. ("Ambassadair" and, collectively with the other seven entities, the "Debtors") filed voluntary petitions for relief (the "Filing") under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Indiana (the "Bankruptcy Court"). During the term of the Chapter 11 cases, the Debtors continued to operate their respective businesses as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and applicable provisions of the Bankruptcy Code and applicable court orders. However, certain assets of C8, Ambassadair and Amber Travel, Inc. ("Amber") (collectively, the "Liquidating Debtors") were sold by the Liquidating Debtors in 2005, and each of the Liquidating Debtors ceased business operations.

        Holdings, ATA, American Trans Air ExecuJet, Inc. ("ExecuJet"), ATA Cargo, Inc. ("ATA Cargo"), and ATA Leisure Corp. ("Leisure") (collectively, the "Reorganizing Debtors") received an order approving the Amended Joint Chapter 11 Plan for the Reorganizing Debtors as immaterially modified (the "Plan") on January 31, 2006. The Plan became effective on February 28, 2006 (the "Effective Date"). Holdings is not reorganizing and, prior to the Effective Date, a new holding company was formed ("New ATA Holdings"). ATA, Execujet, ATA Cargo and Leisure, together with their new parent companies, New ATA Holdings Inc., New ATA Investment Inc. and New ATA Acquisition Inc., are referred to collectively as the "Reorganized Company." ATA Cargo and Leisure were merged into ATA prior to the Effective Date. In accordance with American Institute of Certified Public Accountants ("AICPA") Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code," ("SOP 90-7"), the Reorganized Company adopted fresh- start reporting as of the Effective Date. Among other items, SOP 90-7 requires a company to value its assets, liabilities and equity at fair value and the excess of the reorganization value over tangible assets and identifiable intangible assets, if any, will be reflected as goodwill on the balance sheet.

        The Plan was formulated based upon the substantive consolidation of the estates of Holdings, ATA Cargo, ExecuJet and Leisure into the estate of ATA (the "Consolidated Estates") for all purposes under the Plan, including voting, confirmation and distribution. The Plan divided claims and interests against the Consolidated Estates into classes according to their similarity. Claims and interests within a class are treated the same unless the holder of a particular claim or interest agreed to a less favorable treatment of its claim or interest. Among other things, the Plan provided for the full payment pursuant to the Bankruptcy Code of all allowed administrative and priority claims, and provided for the restructuring of the loan agreement with, and the allowed secured loan indebtedness claim of, the Air Transportation Stabilization Board ("ATSB") and other lenders (the ATSB and such other lenders collectively referred to as the "ATSB Loan Lenders"). Holders of general unsecured claims of $1.0 million or less ("Convenience Class Claims") will be paid a pro rata share, based on 1.0% recovery, up to a maximum total payout of $1.5 million. Holders of general unsecured claims over $1.0 million will recover an estimated 0.57% to 0.71% of their claim in shares and warrants of New ATA Holdings. On the Effective Date, unsecured creditors receiving shares owned approximately 7.0% of the Class A Common Stock of New ATA Holdings, prior to the issuance of shares under warrants and options. This percentage does not include shares of New ATA Holdings purchased by unsecured creditors pursuant to a rights offering that was a part of the Plan. Claim amounts can be resolved for up to 120 days after the Effective Date, unless otherwise extended by the Bankruptcy Court.

F-53

        All outstanding shares of Holdings were cancelled on the Effective Date under the Plan and pursuant to the Bankruptcy Code.

        The Chapter 11 cases of the Liquidating Debtors continue separately.

        MatlinPatterson Financing Commitment.    On November 10, 2005, the Company filed with the Bankruptcy Court a motion to approve a commitment letter with MatlinPatterson Global Opportunities Partners II, L.P. and/or MatlinPatterson Global Opportunities Partners (Cayman) II, L.P. (including affiliates, "MatlinPatterson" or "New Investor"), for debtor-in-possession financing ("DIP") of $30.0 million ("MatlinPatterson DIP") and the execution of an investment agreement (the "New Investor Bid"). Under the New Investor Bid, MatlinPatterson or funding designees would invest up to $70.0 million in equity in New ATA Holdings upon ATA's emergence from its Chapter 11 case. Under the New Investor Bid and the Plan, general unsecured creditors who qualified were provided an opportunity to purchase up to $25.0 million of the equity, subject to the New Investor purchase commitment, at the same price to be paid by the New Investor (the "Rights Offering"). The Rights Offering was fully subscribed. On December 16, 2005, the Bankruptcy Court approved the commitment letter and the $30.0 million MatlinPatterson DIP was closed and funded on December 28, 2005. A funding fee of $3.6 million was treated as a principal advance under the MatlinPatterson DIP. The MatlinPatterson DIP had a base interest rate of 10% per annum, payable on the maturity date which was the earliest of (i) March 31, 2006, (ii) an Event of Default and acceleration of Obligations as defined in the MatlinPatterson DIP, or (iii) the Effective Date of a reorganization plan for ATA.

        Upon the Effective Date, the MatlinPatterson DIP, including interest and the MatlinPatterson funding fee, of approximately $34.2 million was converted into Class A Common Stock of New ATA Holdings. In addition, pursuant to an Investment Agreement, MatlinPatterson purchased approximately $40.8 million in the Class A Common Stock of New ATA Holdings. As a result, MatlinPatterson held 69.75% of the issued and outstanding Class A Common Stock of New ATA Holdings as of the Effective Date. After giving effect to issuance of all the Class A Common Stock reserved for issuance under warrants and options, MatlinPatterson held 60.93% of the outstanding Class A Common Stock as of the Effective Date.

        MatlinPatterson also provided on the Effective Date $24.2 million of exit term loan financing to ATA. The base interest rate is LIBOR, plus 10.0% per annum, payable quarterly beginning March 31, 2006. Principal payments must be made semi-annually over the term of the loan beginning September 30, 2006, and the loan matures on October 10, 2009. ATA is subject to certain financial covenants under the loan.

        ATSB Loan.    On November 20, 2002, ATA obtained a secured term loan (the "ATSB Loan"), a significant portion of which was guaranteed by the ATSB. On April 19, 2005, the Bankruptcy Court approved a settlement agreement among the Debtors, the creditors' committee for the Debtors and the ATSB Loan Lenders (the "Settlement Agreement") under which the parties agreed that the ATSB Loan Lenders had an allowed, secured claim in respect of the ATSB Loan in the amount of $110.0 million and an allowed, general unsecured claim in respect of the remaining outstanding portion of the ATSB Loan of approximately $30.6 million. Under the Settlement Agreement, ATA paid the ATSB Loan Lenders adequate protection payments of $2.3 million per quarter, beginning in the second quarter of 2005 through the first quarter of 2006, and $4.5 million on January 2, 2006. In addition,

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ATA made a payment of $1.85 million in November 2005 using proceeds from the sale of certain assets. Collectively, these payments reduced the amount of the ATSB Loan Lenders' secured claim.

        As of the Effective Date, ATA entered into an amended and restated loan agreement with the ATSB Loan Lenders which restructured the terms and payment requirements for the unpaid balance of the allowed secured claim of the ATSB Loan Lenders ("Restructured ATSB Loan"). The principal amount of the Restructured ATSB Loan (being the unpaid balance of the allowed secured claim of the ATSB Loan Lenders) was $97.0 million, which included $2.5 million in respect to certain costs and fees which ATA agreed to pay. ATA is required to make semi-annual principal payments beginning September 30, 2006. The Restructured ATSB Loan has a base interest rate of LIBOR, plus 8.0% per annum, payable quarterly in arrears, with the first interest payment date to be March 31, 2006. The Restructured ATSB Loan matures on September 30, 2009. The Restructured ATSB Loan is guaranteed by all parent holding companies and their subsidiaries. The Restructured ATSB Loan is collateralized by substantially all unencumbered assets of ATA and the guarantors (excluding trust funds and trust accounts), including, but not limited to, cash and cash equivalents, receivables, spare parts and engines, aircraft, fuel, ground support equipment, ownership interest in subsidiaries and computer systems and software licenses. ATA is subject to certain financial covenants under the Restructured ATSB Loan.

Transactions with Southwest Airlines

        Codeshare Agreement.    On December 23, 2004, Southwest Airlines Co. ("Southwest") and ATA entered into the Southwest-ATA Codeshare Agreement (the "Codeshare Agreement") related to air transportation service to and from Chicago-Midway and other specified points. Under a codeshare arrangement, the codesharing air carriers have permission to book and sell tickets on each other's flights. The codeshare flights began on February 4, 2005. On December 14, 2005, the Bankruptcy Court approved an expanded and restated Codeshare Agreement ("Amended Codeshare Agreement"). The Amended Codeshare Agreement, which became effective on the Effective Date, has a seven-year term and provides for: (i) the sale by Southwest of ATA local flights through Southwest's distribution channels, including Southwest's website; (ii) integration of the frequent flyer programs of Southwest and ATA; and (iii) the grant of codeshare exclusivity from Southwest to ATA for certain markets for specified periods. ATA is the only air carrier with which Southwest presently has a codesharing agreement.

        Southwest DIP Financing Arrangement.    On December 23, 2004, ATA and Southwest entered into a Secured Debtor-in-Possession Credit and Security Agreement (the "DIP Facility") that provided up to $40.0 million in cash to ATA, plus a letter of credit in the approximate amount of $7.0 million to secure two pre-petition loans obtained by ATA from the City of Chicago for the construction of a jet bridge extension at Chicago Midway Airport (the "Chicago LOC"). ATA received $40.0 million under the DIP Facility on December 23, 2004. A closing fee of 2.5%, or $1.0 million, was treated as a principal advance under the DIP Facility.

        The base interest rate, paid monthly, on amounts borrowed under the DIP Facility was the greater of (a) 8.0% per annum and (b) the three-month LIBOR rate, plus 5.0% per annum. Southwest received a guaranty fee of $0.3 million for the amounts guaranteed but not drawn under the Chicago LOC. During the term of the DIP Facility, the Company was subject to certain financial covenants. ATA obtained amendments to, or waivers of, these financial covenants for certain months. The DIP

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Facility was guaranteed by Holdings and its subsidiaries. Southwest exchanged $20.0 million of the amounts owed to it under the DIP Facility on December 28, 2005, as part of an agreement under which ATA assigned certain gates at Chicago Midway Airport to Southwest (see "Asset Sale" below). The remaining $21.0 million of the principal amount outstanding under the DIP Facility was repaid on the Effective Date. As of the Effective Date, ATA provided a backup letter of credit to Southwest in the approximate amount of $7.0 million to secure reimbursement of any amounts which are paid to the City of Chicago under the Chicago LOC.

        Asset Sale.    On December 28, 2005, the Company and Southwest, with consent of the Department of Aviation for the City of Chicago, executed agreements by which the airlines assigned and exchanged leasehold interests in certain gates between the airlines and the City of Chicago at Chicago Midway Airport. Under these agreements, Southwest exchanged $20.0 million of the amounts owed to it under the DIP Facility for the assignment of leasehold interests to certain gates to Southwest by ATA. The $20.0 million, offset by the recorded costs of leasehold improvements related to the assigned leaseholds, is recorded as deferred gain on the Company's balance sheet at December 31, 2005, and is being amortized over the remaining eight-year lease term.

        On December 23, 2004, the Company and Southwest executed a substantial portion of the transactions contemplated by an Asset Acquisition Agreement (the "Asset Acquisition Agreement") by which ATA agreed to assign to Southwest ATA's leasehold interests in six specified gates and a hangar facility at Chicago Midway Airport and related assets for $40.0 million, subject to certain adjustments. The Asset Acquisition Agreement was entered into after the completion of an auction process supervised by the Bankruptcy Court. ATA received $34.0 million of proceeds from the assignment of its leasehold interests in six specified gates and related assets on December 23, 2004. ATA received $6.0 million of proceeds from the assignment of its leasehold interest in the hangar facility and related assets on March 28, 2005. Almost all of the $40.0 million in proceeds was recorded as deferred gain on the Company's balance sheet at December 31, 2004 and is being amortized over the remaining eight-year lease term.

2. Summary of Significant Accounting Policies

Description of Business

        Holdings, through its principal subsidiary, ATA, is a low cost airline providing scheduled service to more than 60 markets and charter service throughout the world to independent tour operators, specialty charter customers and the U.S. military. ATA has been operating for 33 years.

        The consolidated financial statements include the accounts of Holdings and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The Company operates principally in one business segment through ATA, its principal subsidiary, which accounts for approximately 97% of the Company's operating revenues. ATA is a U.S.-certificated air carrier providing domestic and international charter and scheduled passenger air services. As of December 31, 2005, the Company had approximately 3,800 full-time and part-time employees, approximately 2,200 of whom were represented under collective bargaining agreements.

        The Company's revenues are derived principally from the sale of scheduled service or charter air transportation to customers domiciled in the United States. The most significant component of the

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Company's property and equipment is aircraft and related improvements and parts. All aircraft are registered in the United States. The Company therefore considers all property and equipment to be domestic.

        The U.S. Government is the only customer that accounted for more than 10.0% of consolidated revenues. U.S. Government revenues accounted for 50.0%, 36.0%, 21.3% and 19.6% of consolidated revenues for the two -month period ended February 28, 2006, and the years ended December 31, 2005, 2004 and 2003, respectively.

Basis of Presentation

        The accompanying consolidated financial statements of the Company for the two-month period ended February 28, 2006 and the years ended December 31, 2005 and 2004, have been prepared in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code ("SOP 90-7") and on a going-concern basis, which contemplates continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business.

        SOP 90-7, which is applicable to companies in Chapter 11, generally does not require filers to change the manner in which their financial statements are prepared. However, it does require that the financial statements for periods subsequent to the Petition Date to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Generally, the Company's revenues, expenses (including professional fees), realized gains and losses, and provision for losses that can be directly associated with the reorganization and restructuring of the business must be reported separately as reorganization items in the consolidated statement of operations. The consolidated balance sheet must distinguish pre-petition liabilities subject to compromise from those pre-petition liabilities that are not subject to compromise and from post-petition liabilities. Liabilities that may be affected by the reorganization plan must be reported at the amounts expected to be allowed, even if they may be settled for different amounts. In addition, cash used by reorganization items must be disclosed separately in the consolidated statement of cash flows.

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Reorganization Items

        For the two-month period ended February 28, 2006 and the years ended December 31, 2005 and 2004, the Predecessor Company has recognized the following primarily non-cash reorganization (income) expense in the consolidated statements of operations:

				Year Ended December 31,
	Period from January 1 to February 28, 2006
				2005			2004
	(in thousands)
Discharge of claims	$	(1,304,653	)	$	—		$	—
Revaluation of Assets and Liabilities		(178,895	)		—			—
Aircraft and engine lease rejection charges		10,522			140,969			568,317
Other agreement and lease rejection charges		3,364			39,240			—
ALPA claim		—			128,850			—
Impairment of assets held for sale		—			10,799			—
Aircraft and related parts impairment charges		—			18,347			44,499
Professional fees		11,046			27,895			8,747
Interest income		(387	)		(2,532	)		(275	)
Goodwill impairment		—			4,576			6,399
Other		3,003			1,488			10,792
	$	(1,456,000	)	$	369,632		$	638,479

        The discharge of claims primarily relates to those unsecured claims arising during the bankruptcy process. In accordance with the Plan, the Company discharged its obligations to unsecured creditors in exchange for cash or shares of Class A Common Stock of New ATA Holdings. See "Note 1—Chapter 11 Filing and Status" for more information of the settlement of unsecured claims.

        The revaluation of assets and liabilities relates to the revaluing of the Company's assets at their estimated fair value and liabilities at their estimated fair value or present value of amounts to be paid.

        The aircraft and engine lease rejection charges are non-cash charges comprised of the Company's estimate of claims resulting from the rejection or return of the aircraft and engines as part of the bankruptcy process. They also include the write-off of assets and liabilities related to aircraft and engine leases that the Company has rejected and committed to return dates with the lessor. The other agreement and lease rejection charges are non-cash charges which are comprised of the Company's estimate of claims resulting from the rejection of non-aircraft agreements and leases.

        The ALPA claim included an unsecured pre-petition claim against ATA by the Air Line Pilots Association ("ALPA") for the benefit of its members in the total amount of $128.9 million, for which they received a pro-rata share of New ATA Holdings stock in accordance with the Plan. On September 28, 2005, the cockpit crewmembers voted to ratify a new collective bargaining agreement effective October 1, 2005, which included, among other things, wage and benefit concessions and the pre-petition claim. The Bankruptcy Court approved the claim on October 12, 2005.

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        The impairment of assets held for sale is a non-cash charge related to the discontinuance of C8 operations and the sale of certain related assets. For information on the aircraft and goodwill impairment, see "Note 9—Fleet and Related Equipment Impairment" and "Note 10—Goodwill."

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash Equivalents

        Cash equivalents are carried at cost, which approximates market, and are primarily comprised of money market funds and investments in U.S. Treasury repurchase agreements.

        Cash and cash equivalents consist of the following:

	December 31,
	2005		2004
	(in thousands)
Cash and money market funds	$	76,724	$	131,478
U.S. Treasury repurchase agreements		2,493		8,174
	$	79,217	$	139,652

Inventories

        Inventories consist primarily of expendable aircraft spare parts, fuel and other supplies. Aircraft parts inventories are stated at the average cost and are reduced by an allowance for obsolescence. The obsolescence allowance is provided by amortizing the cost of the aircraft parts inventory, net of an estimated residual value, over the related fleet's estimated useful service life. The obsolescence allowance at December 31, 2005 and 2004 was $23.7 million and $17.3 million, respectively. Inventories are charged to expense when consumed.

Investment in BATA Leasing, LLC

        The Company has a limited liability agreement with Boeing Capital Corporation—Equipment Leasing Corporation forming BATA Leasing LLC ("BATA"), a ⁵⁰/50 joint venture. The Company has identified BATA as a variable interest entity under Financial Accounting Standards Board ("FASB") Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN 46"), in which the Company has a variable interest. The Company has determined that it is not the primary beneficiary of BATA under FIN 46 and is not required to consolidate BATA. Because the Company does not control BATA, the Company's investment is accounted for under the equity method of accounting. BATA is remarketing the Company's fleet of Boeing 727-200 aircraft in cargo configurations. In exchange for supplying the aircraft, the Company has and expects to continue to receive both cash and its share of the income or

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loss, after satisfaction of certain loan obligations by BATA, of BATA. As of December 31, 2005, the Company had transferred 23 of its fleet of Boeing 727-200 aircraft to BATA.

Prepaid Aircraft Rent

        The Company's operating leases require periodic cash payments that vary in amount and frequency. The Company accounts for aircraft rentals expense in equal monthly amounts over the term of each operating lease because straight-line expense recognition is most representative of the time pattern from which benefit from use of the aircraft is derived.

Revenue Recognition

        Revenues are recognized when air transportation or other services are provided. Customer flight deposits and unused passenger tickets sold are included in air traffic liability. As is customary within the industry, the Company performs periodic evaluations of this estimated liability, and any resulting adjustments, which can be significant, are included in the results of operations for the periods in which the evaluations are completed.

        In addition, the Company has a travel awards program that allows customers to earn points for travel on ATA. As points accumulate to certain levels, the passenger can redeem them for travel. The Company had a liability of $0.3 million and $1.4 million at December 31, 2005 and 2004, respectively, related to travel awards earned by the travel award customers but not yet redeemed. The Company accrues the estimated incremental cost of providing for free travel for awards earned under the program.

Passenger Traffic Commissions

        Passenger traffic commissions are recognized as expense when the transportation is provided and the related revenue is recognized. The amount of passenger traffic commissions paid in advance and not yet recognized as expense is included in prepaid expenses and other current assets in the accompanying consolidated balance sheets.

Property and Equipment

        Property and equipment, including owned aircraft, are recorded at cost and are depreciated to residual values over their estimated useful service lives using the straight-line method. Leasehold improvements and rotable parts related to the Company's aircraft are depreciated over the period of benefit or the terms of the related leases, whichever is less. The Company's other property and equipment is generally depreciated over lives of three to seven years.

Aircraft Lease Return Conditions

        The Company finances substantially all of its of aircraft through leases accounted for as operating leases. Many of these leases require that the airframes and engines be in a specified maintenance condition upon their return to the lessor at the end of the lease. If these return conditions are not met by the Company, the leases generally require financial compensation to the lessor. When an operating lease is within five years of its initial termination date, the Company accrues ratably over that five years, if estimable, the total costs that will be incurred by the Company to render the aircraft in a suitable return condition per the contract.

F-60

ATA HOLDINGS CORP. AND SUBSIDIARIES
(Debtor and Debtor-in-Possession as of October 26, 2004)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Airframe and Engine Overhauls

        The Company has an engine manufacturers' maintenance agreement effective through February 2016 for engines that power the Boeing 737-800, which provides for the Company to pay a monthly fee per engine flight hour in exchange for major overhaul and maintenance of those engines. The Company expenses the cost per flight hour under this agreement as incurred. The cost of engine overhauls for remaining fleet types, and the cost of airframe overhauls for all fleet types, are capitalized when performed and amortized over estimated useful lives based upon usage, or to earlier fleet or aircraft retirement dates, for both owned and leased aircraft.

Restricted Cash

        Restricted cash primarily consists of deposits held to secure outstanding stand-by letters of credit currently provided by the Company. While the existing letters of credit mature within the next 12 months, management believes it is likely that the letters of credit will be renewed and has classified the restricted cash as a long-term asset on the consolidated balance sheets.

        The Company has an escrow arrangement that requires the Company to place advance receipts for certain charter flights into escrow until the flight operates. Once the flight occurs the Company is paid from the escrow account those advance deposits specific to that completed flight. As of December 31, 2005 and 2004, the Company had $1.8 million and $6.2 million, respectively, in advance charter receipts deposited in escrow, which was included in prepaid expenses and other current assets on the Company's balance sheet as of that date.

Goodwill

        The Company annually tests for impairment of goodwill in accordance with FASB Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("FAS 142). See "Note 10—Goodwill."

Advertising

        The Company expenses advertising costs in the period incurred. Advertising expense was $0.7 million, $10.1 million, $33.5 million and $37.9 million for the two-month period ended February 28, 2006, and the years ended December 31, 2005, 2004 and 2003, respectively.

Reclassifications

        Certain amounts in the 2004 and 2005 financial statements have been reclassified to conform to the current period presentation.

3. Liabilities Subject to Compromise

        Liabilities subject to compromise refers to liabilities that will be accounted for under the plan of reorganization, including claims incurred prior to the Petition Date. These amounts result from known or potential claims to be resolved through the Chapter 11 process and such claims remain subject to future adjustments. Adjustments may result from negotiations, actions of the Bankruptcy Court, rejection of executory contracts and unexpired leases, proofs of claims or other events. Such adjustments, as reflected in reorganization expense, have been material. See "Note 1—Chapter 11 Filing and Status" for more information on claims settlement.

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        At December 31, 2005 and 2004, the Company's liabilities subject to compromise consisted of the following:

	December 31,
	2005		2004
	(in thousands)
Aircraft-related accruals and deferred gains	$	747,336	$	640,788
Long-term debt, including accrued interest, net of unamortized issuance costs		436,020		456,334
Redeemable preferred stock		80,000		80,000
Accounts payable		31,038		32,136
ALPA Claim		128,850		—
Other accrued expenses and liabilities		52,203		70,418
	$	1,475,447	$	1,279,676

4. Debt

        As of December 31, 2005 and 2004, the Company's post-petition, short-term debt consisted of the following:

	December 31,
	2005		2004
	(in thousands)
MatlinPatterson DIP Financing, loan of $30 million and a loan fee of $3.6 million reported as short-term debt and with a fixed rate of 10% amortized over 63 days, up to February 28, 2006	$	33,600	$	—
Southwest DIP Financing with a rate of the greater of (a) 8.0% per annum and (b) the three-month LIBOR rate, plus 5.0% per annum		21,000		41,000
	$	54,600	$	41,000

        Southwest exchanged $20.0 million of the amounts owed to Southwest under the DIP Facility on December 28, 2005, as part of an agreement under which ATA assigned leasehold interests in certain gates at Chicago-Midway airport to Southwest.

        Please see "Note 1—Chapter 11 Filing and Status" for a full description of post-petition short-term debt.

5. Lease Commitments

        The Company leases aircraft and aircraft engines, ground facilities, including terminal space and maintenance facilities, and ground equipment. Certain terms of these leases were modified during the reorganization process and are reflected in the table below.

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        As of December 31, 2005, scheduled future minimum lease payments under operating leases having initial non-cancelable lease terms of more than one year were as follows:

	Flight Equipment		Facilities and Ground Equipment		Total
	(in thousands)
2006	$	87,307	$	6,703	$	94,010
2007		86,957		5,979		92,936
2008		87,376		4,803		92,179
2009		86,026		3,435		89,461
2010		85,065		2,619		87,684
Thereafter		699,981		3,156		703,137
	$	1,132,712	$	26,695	$	1,159,407

        The Company's aircraft operating leases require cash payments that vary in amount and frequency. The Company accounts for aircraft rentals expense in equal monthly amounts over the life of each operating lease because straight-line expense recognition is most representative of the time pattern from which benefit from use of the aircraft is derived. The amount of the cash payments in excess of the aircraft rent expense has created a prepaid aircraft rent amount on the Company's balance sheet. The portion of the prepaid aircraft rent schedule to be realized in the next twelve months is recorded as short-term prepaid expense while the remainder is recorded as long-term prepaid aircraft rent. Certain of the Company's aircraft operating leases require more significant cash payments later in the lease term resulting in an accrued liability for aircraft rents on the Company's balance sheet. As of December 31, 2005 and December 31, 2004, the portion of the liability that relates to leases that have not yet been accepted nor rejected has been recorded as a liability subject to compromise.

        The table below summarizes the prepaid and accrued aircraft rents for 2005 and 2004 that result from straight-line expense recognition as reported under the following captions on the Company's balance sheet.

	December 31,
	2005		2004
	(in thousands)
Assets:
Prepaid expenses and other current assets (short-term)	$	212	$	7,350
Prepaid aircraft rent (long-term)		154		52,031
Total prepaid aircraft rent	$	366	$	59,381
Liabilities:
Accrued expenses (short-term)	$	77	$	—
Liabilities subject to compromise		24,503		21,931
Total aircraft rent liabilities	$	24,580	$	21,931

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6. Income Taxes

        The provision for income tax expense consisted of the following:

				December 31,
		Period from January 1 to February 28, 2006
				2005		2004		2003
		(in thousands)
Federal:
	Current	$	—	$	—	$	—	$	418
	Deferred		—		—		—		—
		$	—	$	—	$	—	$	418
State:
	Current	$	—	$	—	$	—	$	893
	Deferred		—		—		—		—
			—		—		—		893
Income tax expense (credit)		$	—	$	—	$	—	$	1,311

        The income tax expense differed from the amount obtained by applying the statutory federal income tax rate to income (loss) before income taxes as follows:

				December 31,
	Period from January 1 to February 28, 2006
				2005			2004			2003
				(in thousands)
Federal income tax (credit) at statutory rate	$	501,028		$	(159,435	)	$	(285,590	)	$	7,611
State income tax (credit) net of federal benefit		19,428			(9,718	)		(18,197	)		580
Non-deductible expenses		(202,399	)		10,060			5,881			3,031
Valuation allowance		(318,970	)		159,099			297,857			(9,871	)
Other, net		913			(6	)		49			(40	)
Income tax expense (credit)	$	—		$	—		$	—		$	1,311

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        Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Deferred tax liability and asset components are as follows:

			December 31,
			2005			2004
			(in thousands)
Deferred tax liabilities:
	Property and equipment		$	(11,265	)	$	11,975
	Other taxable temporary differences			(522	)		—
		Deferred tax liabilities		(11,787	)		11,975
Deferred tax assets:
	Aircraft rejection charges			315,685			215,256
	Tax benefit of net operating loss carryforwards			127,762			81,397
	Deferred gain on sale of Chicago-Midway gates			15,673			12,607
	Deferred revenue			8,314			—
	Vacation pay accrual			5,036			7,343
	Deferred rent expense			4,745			7,327
	Alternative minimum tax and other tax credit carryforwards			1,628			1,628
	Other deductible temporary differences			22,455			16,849
		Deferred tax assets		501,298			342,407
Valuation allowance				(489,511	)		(330,432	)
		Net deferred tax asset	$	—		$	—

        Because of the cumulative losses incurred by the Company, the deferred tax assets have been fully reserved.

        As of December 31, 2005, the Company had a $341.0 million federal net operating loss carryforward expiring starting in 2022. As a result of the impact of the Plan, including the discharge of claims, the net operating loss carryforwards were eliminated.

7. Retirement Plan

        The Company has a defined contribution 401(k) savings plan which provides for participation by substantially all the Company's employees immediately upon hire. In 2006, the Company elected to contribute and amount equal to 65.0% of the amount contributed by all employees up to the first 6.0% of eligible compensation. In 2005, the Company elected to contribute an amount equal to 60.0% of the amount contributed by employees under a collective bargaining agreement to the 401(k) savings plan up to 6.0% of eligible compensation. In 2004 and 2003, the Company elected to contribute an amount equal to 60.0% of the amount contributed by all employees up to the first 6.0% of eligible compensation. Company matching contributions expensed in the first two months of 2006 and the full years of 2005, 2004 and 2003 were $0.8 million, $3.7 million, $7.3 million and $6.8 million, respectively.

F-65

ATA HOLDINGS CORP. AND SUBSIDIARIES
(Debtor and Debtor-in-Possession as of October 26, 2004)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

        The Company has a defined contribution plan for cockpit crewmember employees, the Cockpit Crewmember Money Purchase Plan, that is funded by the Company. The Company did not make contributions to the plan in the first two months of 2006. In the 2005 plan year, the Company contributed between 0.0% and 7.5% of each cockpit crewmember's eligible earnings, depending on years of service with the Company. The contribution expense for the plan in 2005 was $2.0 million. In February 2005, the Company entered into a letter agreement with its cockpit crewmember's in which, among other things, the cockpit crewmembers agreed to a 50% reduction in the Company's contributions to the plan between January 31, 2005 and May 31, 2005. For January 2005, the Company contributed between 4.5% and 7.5% and from February 2005 to September 2005, the Company contributed between 2.25% and 3.75%, respectively, to the plan. In June 2005, the cockpit crewmembers extended this letter agreement through September 30, 2005. On September 28, 2005, the cockpit crewmembers voted to ratify a new three-year collective bargaining agreement which became effective October 1, 2005, and amendable on September 30, 2008, in which, among other things, the cockpit crewmembers agreed to modifications to the Cockpit Crewmember Money Purchase Plan. The cockpit crewmembers agreed to the suspension of the Company's contributions to the plan effective October 1, 2005 through December 31, 2006. Effective January 1, 2007, the Company reinstated contributions of 2.0% to the defined contribution plan for cockpit crewmember employees.

        In the 2004 and 2003 plan years, the Company contributed between 4.5% and 7.5%, and 4.0% and 6.5%, respectively, to the Cockpit Crewmember Money Purchase Plan. The contribution expense for the plan in 2004 and 2003 was $7.3 million and $6.1 million, respectively.

8. Commitments and Contingencies

        In January 2002, a limited liability company which is a wholly-owned subsidiary of Holdings (the "Chicago LLC") entered into a long term lease of land from the City of Chicago (the "City"), which had been purchased by the City with proceeds of Chicago Midway Airport Revenue Bonds ("MARB's"). The Chicago LLC also entered into a redevelopment agreement with the City in January 2002 to develop the leased land. The City agreed to pay for the debt service on the MARB's from the incremental tax revenue expected to be generated from the land and its development. If the incremental tax revenue is insufficient to fund the MARB's debt service, the City has the right to require the Chicago LLC to provide those funds as additional rent under the lease. ATA was a guarantor of certain of the lease obligations of the Chicago LLC, which has not filed for bankruptcy protection, to the City of Chicago. The City filed an ATA Chapter 11 case claim against ATA, as guarantor, for $26.1 million representing the purported amount of rent owed through 2021. Section 502(b)(6) of the Bankruptcy Code limits damage claims against Debtor-guarantors of real estate lease obligations to the lower of (1) 15% of the total rents due from the date of bankruptcy filing by that guarantor through the end of the lease and (2) the rent reserved for the three years following the date of such filing. The Company calculates the lower amount to be the rent reserved for the three years following the date of ATA filing, which is $3.5 million. ATA has objected to the City's claim utilizing Section 502(b)(6) of the Bankruptcy Code and has recorded $3.5 million in Liabilities Subject to Compromise on its balance sheet as of December 31, 2005. The claim of the City of Chicago on the lease guaranty is a pre-petition, unsecured claim which was subject to the Plan.

        In ATA's aircraft financing agreements, the Company typically indemnifies the financing parties, trustees acting on their behalf and other related parties against liabilities that arise from the

F-66

manufacture, design, ownership, financing, use, operation and maintenance of the aircraft and for tort liability, whether or not these liabilities arise out of or relate to the negligence of these indemnified parties, except for their gross negligence or willful misconduct. ATA expects that it would be covered by insurance (subject to deductibles) for most tort liabilities and related indemnities under these aircraft leases which were entered into after its Filing or which were assumed by it, pursuant to the Bankruptcy Code.

        Various claims, contractual disputes and lawsuits against the Company arise periodically involving complaints which are normal and reasonably foreseeable in light of the nature of the Company's business. The majority of these suits are covered by insurance. In the opinion of management, the resolution of these claims will not have a material adverse effect on the business, operating results or financial condition of the Company.

9. Fleet and Related Equipment Impairment

        The Company follows FASB Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("FAS 144"), which superseded FASB Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of ("FAS 121").

        The Company began performing impairment reviews on its 727-200 fleet in 2000 and the fleet became impaired in 2001, subsequent to the terrorist attacks of September 11. The Company continues to monitor the current fair market value of these previously impaired assets. In 2005 the Company recorded an additional asset impairment charge of $0.4 million against its remaining net book value of Boeing 727-200 aircraft (recorded as an investment in the BATA joint venture) and related assets, as compared to recording a $7.9 million and a $5.3 million impairment charge in 2004 and 2003, respectively. The Company's current estimate of this fleet's fair market value was based on a discounted future cash flow analysis.

        The Company began performing impairment reviews on its L-1011-500 fleet and related parts and inventory in 2002 for impairment under FAS 144 assuming a common fleet retirement date of December 2010. In 2004, given the Company's financial position, cash constraints and related limitations imposed by the Chapter 11 filing initiated in the fourth quarter of 2004, the Company determined that it likely would not perform heavy checks on certain of the L-1011-500 airframes when they became due. The fourth quarter 2004 evaluation indicated that the aircraft were impaired and the Company recorded a related impairment charge of $44.5 million in the fourth quarter of 2004. The Company estimates this fleet's fair market value using discounted cash flow analysis. In accordance with SOP 90-7, because the 2004 impairment charge was directly related to the Company's reorganization under Chapter 11, the charge was recorded as a reorganization expense on the Company's statement of operations. The carrying amount of these assets is classified as assets held for use and appears in the property and equipment section of the accompanying consolidated balance sheets, as the Company is still flying these aircraft. The assets are being depreciated in accordance with the planned fleet retirement schedule of all aircraft being retired by 2008.

        In the first quarter of 2005, the Company announced that it would cease the operations of C8 and sell certain assets related to C8. In the first quarter of 2005, the Company recorded an impairment charge of $11.3 million against certain assets related to C8 and classified the estimated value of these

F-67

assets totaling $3.25 million as short-term assets held for sale on the consolidated balance sheet as of March 31, 2005. Subsequently, in June 2005, substantially all of C8 assets were sold for $1.25 million. The remaining $2.0 million of short-term assets held for sale related to C8, but owned by ATA, were sold in November 2005 for $2.35 million.

        The Company performed an impairment review of its repairable and rotable parts related to its Boeing 757-200, Boeing 757-300 and Boeing 737-800 fleets in the fourth quarter of 2005 based on impairment indicators under FAS 144. The review indicated that the parts were impaired and the Company recorded a related impairment charge of $16.2 million for rotables and $2.1 million for repairables in the fourth quarter of 2005. The Company used market data to estimate the fair market value of the parts. In accordance with SOP 90-7, because the impairment charge was directly related to the Company's reorganization under Chapter 11 and the return of certain aircraft to the lessors, the charge was recorded as a reorganization expense on the Company's statement of operations. The carrying amount of the repairable parts appears in the inventory section of the accompanying balance sheets and the carrying amount of the rotable parts appears in the property and equipment section of the accompanying balance sheets. The Company intends to sell a substantial portion of these parts to third-party vendors and to enter into maintenance service agreements wherein these parts are expected to be utilized. The Company also signed a maintenance services agreement with another vendor to perform heavy maintenance on certain aircraft in the first quarter of 2006.

10. Goodwill

        The Company accounts for its goodwill in accordance with FAS 142 and performs its annual goodwill impairment test in the fourth quarter of each year.

        In its 2004 annual goodwill impairment test, the Company determined that goodwill related to C8 and ATA Cargo was unimpaired, but that the estimated fair value of the Leisure brands outsourced to Mark Travel Corporation was lower than the carrying amount, resulting in an impairment loss of $6.4 million. The Company determined that the impairment was directly related to its reorganization efforts, including route and operating changes, and recorded the charge as a reorganization expense on its statement of operations.

        In the first quarter of 2005, the Company announced that it intended to sell or cease C8's operations. C8 ceased flights on March 28, 2005. The Company recorded an impairment loss of $1.5 million related to C8 goodwill in the first quarter of 2005. In its 2005 annual goodwill impairment test, the Company determined that the estimated fair value of ATA Cargo was lower than the carrying amount, resulting in an impairment loss of $4.5 million. The Company again determined that the impairment losses were directly related to its reorganization efforts and recorded the charges as reorganization expense on its statement of operations.

        The fair values of all of the Company's reporting units were estimated using discounted future cash flows since market quotes were not readily available.

11. Related Party Transactions

        J. George Mikelsons, the Company's former Chairman and Chief Executive Officer, is the sole owner of Betaco, Inc., a Delaware corporation ("Betaco"). Betaco owns two airplanes, a Cessna

F-68

Citation II and a Lear Jet, and two helicopters, a Bell 206 B Jet Ranger III and a Bell 206 L-3 LongRanger. Prior to the Filing, these airplanes and helicopters were leased to ExecuJet, a subsidiary of ATA Holdings Corp. As part of the bankruptcy process, ExecuJet rejected these leases with Betaco, and the Company recorded a $2.3 million damage claim related to the rejection. Subsequently, ExecuJet entered into a new lease for the Lear Jet with Betaco that requires a monthly payment of $19,807 for a term beginning December 16, 2005, and ending December 15, 2006. ExecuJet has the option to renew this lease for two additional one-year periods. The Company believes that the current terms of this lease with Betaco for this equipment are no less favorable to the Company than those that could be obtained from third parties.

        Since 1996, the Company and Mr. Mikelsons had an arrangement pursuant to which the Company provided certain domestic employees of Mr. Mikelsons with salary, health insurance and other non-cash benefits. As of December 31, 2005, Mr. Mikelsons owed $598,391 to the Company pursuant to that arrangement. On October 26, 2004, the Company and Mr. Mikelsons signed an agreement for the repayment of the debt which requires quarterly installments of $19,403 beginning January 26, 2005 through October 26, 2009 and bears interest at 3.6% per annum, with the remaining balance due and payable on October 26, 2009. On August 31, 2005, the Company and Mr. Mikelsons signed a Non-Competition and Confidentiality Agreement for the period of September 1, 2005 through August 31, 2008. In exchange, the Company will reduce Mr. Mikelsons debt by an aggregate amount of $400,000 at quarterly intervals beginning September 1, 2006, provided no breach has occurred. The Company recorded an allowance of $400,000 against the receivable from Mr. Mikelsons in the third quarter of 2005. Also on August 31, 2005, the Company and Mr. Mikelsons executed a Severance Agreement effective with his retirement on the same date. The severance included all unused vacation benefits, $650,000 less applicable taxes payable bi-weekly over one year, and inclusion of Mr. and Mrs. Mikelsons in the ATA group health insurance plans. The Company has a liability for $460,715 representing the remaining severance under the agreement as of December 31, 2005.

12. Selected Supplemental Quarterly Data (Unaudited)

Financial Statements and Supplementary Data

ATA Holdings Corp. And Subsidiaries
(Debtor and Debtor-in-Possession as of October 26, 2004)

2005 Quarterly Financial Summary
(Unaudited)

	3/31			6/30			9/30			12/31
	(in thousands)
Operating revenues	$	308,276		$	270,868		$	290,787		$	222,370
Operating expenses		351,024			285,447			289,362			247,859
Operating income (loss)		(42,748	)		(14,579	)		1,425			(25,489	)
Reorganization expenses(1)		(318,483	)		(39,342	)		(137,622	)		125,815
Other expenses		(1,450	)		(879	)		(1,174	)		(1,061	)
Income (loss) before income taxes		(362,681	)		(54,800	)		(137,371	)		99,265
Income (loss) available to common shareholders	$	(362,681	)	$	(54,800	)	$	(137,371	)	$	99,265

F-69

Financial Statements and Supplementary Data

ATA Holdings Corp. And Subsidiaries
(Debtor and Debtor-in-Possession as of October 26, 2004)

2004 Quarterly Financial Summary
(Unaudited)

	3/31			6/30			9/30			12/31
				(in thousands)
Operating revenues	$	387,333		$	390,774		$	401,219		$	353,245
Operating expenses		409,684			401,297			417,397			404,356
Operating loss		(22,351	)		(10,523	)		(16,178	)		(51,111	)
Reorganization expenses(1)		—			—			—			(638,479	)
Other expenses		(41,993	)		(15,139	)		(14,726	)		(5,229	)
Loss before income taxes		(64,344	)		(25,662	)		(30,904	)		(694,819	)
Preferred stock dividends		375			375			375			—
Loss available to common shareholders	$	(64,719	)	$	(26,037	)	$	(31,279	)	$	(694,819	)

(1)

The accompanying consolidated financial statements, for the periods ended February 28, 2006, December 31, 2005 and December 31, 2004, of the Company have been prepared in accordance with American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code ("SOP 90-7) and on a going-concern basis, which contemplates continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business. Reorganization expenses identify those costs not in the ordinary business and include, but are not limited to, aircraft and engine lease rejection charges, other non-aircraft agreement rejection charges, impairments and professional fees related to the Filing. See "Notes to Consolidated Financial Statements—Note 1—Chapter 11 Filing and Status" for more information.

F-70

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
World Air Holdings, Inc.:

        We have audited the accompanying consolidated balance sheets of World Air Holdings, Inc. and subsidiaries ("World Air Holdings") as of December 31, 2006 and 2005, and the related consolidated statements of operations, changes in stockholders' equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2006. These consolidated financial statements are the responsibility of the World Air Holdings management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of World Air Holdings as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of World Air Holdings' internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated July 3, 2007 expressed an unqualified opinion on management's assessment and an adverse opinion on the effectiveness of internal control over financial reporting.

        As discussed in Notes 1 and 8 to the consolidated financial statements, World Air Holdings adopted the provisions of Statement of Financial Accounting Standards No. 123R, Share-Based Payment effective January 1, 2006. Also, as discussed in Notes 1 and 11 to the consolidated financial statements, World Air Holdings adopted the recognition and disclosure provisions of Statement of Financial Accounting Standards No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans as of December 31, 2006.

                                                                                        KPMG LLP

Atlanta, Georgia
July 3, 2007

F-71

WORLD AIR HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

			December 31,
			2006		2005
			(in thousands)
ASSETS
Current assets
Cash and cash equivalents			$	31,198	$	46,202
	Restricted cash			1,087		6,262
	Short-term investments			—		827
	Trade accounts receivable, less allowance for doubtful accounts of $1,623 at December 31, 2006 and $1,643 at December 31, 2005			27,944		57,235
	Other receivables			16,112		21,564
	Prepaid expenses and other current assets			19,697		20,246
	Deferred tax assets			1,261		3,846
		Total current assets		97,299		156,182
Equipment and property
	Flight and other equipment			84,048		81,206
	Less: accumulated depreciation and amortization			48,613		47,480
	Net equipment and property			35,435		33,726
Goodwill and other intangible assets
	Goodwill			25,370		25,370
	Other intangible assets, net of accumulated amortization of $1,614 at December 31, 2006 and $740 at December 31, 2005			6,481		7,355
	Net goodwill and other intangible assets			31,851		32,725
Long-term deposits				28,481		28,298
Other assets and deferred charges, net of accumulated amortization of $185 at December 31, 2006 and $3,558 at December 31, 2005				5,684		9,715
		Total assets	$	198,750	$	260,646

			December 31,
			2006		2005
			(in thousands except share amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
	Current maturities of long-term debt		$	—	$	24,000
	Accounts payable and other accrued expenses			52,372		59,484
	Current portion of accrued rent			3,945		4,700
	Current portion of deferred rent			2,007		2,455
	Unearned revenue			18,163		16,512
	Accrued maintenance			14,504		9,739
	Accrued salaries, wages and profit sharing			15,814		25,576
	Accrued taxes			6,413		5,534
		Total current liabilities		113,218		148,000
Long-term debt, net of current maturities				—		—
Deferred gain from sale-leaseback transactions, net of accumulated amortization of $5,263 at December 31, 2006 and $4,857 at December 31, 2005				244		650
Accrued post-retirement benefits				7,804		6,995
Accrued and deferred rent, net of current portion				9,128		14,551
Deferred income taxes				1,225		3,612
Total liabilities				131,619		173,808
Stockholders' equity
	Preferred stock, $.001 par value (5,000,000 shares authorized; no shares issued or outstanding)			—		—
	Common stock, $.001 par value (100,000,000 shares authorized; 22,367,317 shares issued and outstanding at December 31, 2006; 25,002,645 shares issued and 23,921,402 shares outstanding at December 31, 2005)			22		25
	Additional paid-in capital			37,021		67,770
	Retained earnings			29,861		32,153
	Deferred stock-based compensation			—		(253	)
	Treasury stock, at cost (1,081,243 shares at December 31, 2005)			—		(12,857	)
	Other comprehensive income			227		—
		Total stockholders' equity		67,131		86,838
Commitments and contingencies (Note 14)				—		—
Total liabilities and stockholders' equity			$	198,750	$	260,646

See accompanying Notes to Consolidated Financial Statements

F-72

WORLD AIR HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

			Years Ended December 31,
			2006			2005			2004
			(in thousands except per share amounts)
Operating revenues
	Flight operations		$	824,098		$	783,939		$	501,698
	Other			1,558			3,199			2,202
		Total operating revenues		825,656			787,138			503,900
Operating expenses
	Flight			233,951			218,498			157,147
	Maintenance			147,241			113,769			76,004
	Aircraft costs			121,114			109,562			77,243
	Fuel			194,515			168,526			74,474
	Flight operations subcontracted to other carriers			3,759			2,928			1,812
	Commissions			38,050			36,265			23,352
	Depreciation and amortization			7,514			6,286			5,283
	Sales, general and administrative			80,292			72,588			48,302
	Legal expense—California matter			—			2,100			—
		Total operating expenses		826,436			730,522			463,617
Operating income/(loss)				(780	)		56,616			40,283
Other income (expense)
	Interest expense			(3,657	)		(4,467	)		(5,139	)
	Interest income			1,655			1,173			584
	Other, net			135			(1,721	)		(1,696	)
		Total other income (expense)		(1,867	)		(5,015	)		(6,251	)
Earnings/(loss) before income tax expense				(2,647	)		51,601			34,032
Income tax expense/(benefit)				(355	)		19,973			8,445
Net earnings/(loss)			$	(2,292	)	$	31,628		$	25,587
Basic earnings/(loss) per share
	Net earnings/(loss)		$	(0.10	)	$	1.40		$	1.95
	Weighted average shares outstanding			23,643			22,588			13,095
Diluted earnings/(loss) per share
	Net earnings/(loss)		$	(0.10	)	$	1.19		$	1.09
	Weighted average shares outstanding			23,643			26,824			24,591

See accompanying Notes to Consolidated Financial Statements

F-73

WORLD AIR HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY (DEFICIT) AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except share data)

	Common Stock			Additional Paid-In Capital			Retained Earnings/ (Deficit)			Deferred Stock-Based Compensation			Treasury Stock, at Cost			Accumulated Other Comprehensive Income		Total Stockholders' Equity/ (Deficit)
Balance at December 31, 2003	$	13		$	29,876		$	(25,062	)	$	—		$	(12,857	)	$	—	$	(8,030	)
Net earnings		—			—			25,587			—			—			—		25,587
Exercise of 1,583,088 stock options		2			1,505			—			—			—			—		1,507
Exercise of warrants for 1,021,994 shares		1			2,499			—			—			—			—		2,500
Tax benefit of stock option exercises		—			1,221			—			—			—			—		1,221
Amortization of warrants		—			185			—			—			—			—		185
Issuance of 2,322,500 shares upon debt conversion		2			7,426			—			—			—			—		7,428
Balance at December 31, 2004		18			42,712			525			—			(12,857	)		—		30,398
Net earnings		—			—			31,628			—			—			—		31,628
Exercise of 835,975 stock options		—			2,353			—			—			—			—		2,353
Exercise of warrants for 1,076,345 shares		1			2,499			—			—			—			—		2,500
Tax benefit of stock option exercises		—			1,465			—			—			—			—		1,465
Amortization of warrants		—			143			—			—			—			—		143
Issuance of 5,660,302 shares upon conversion of debt		6			18,119			—			—			—			—		18,125
Stock-based compensation—accelerated vesting		—			176			—			—			—			—		176
Award of deferred stock-based compensation		—			303			—			(303	)		—			—		—
Amortization of deferred stock-based compensation		—			—			—			50			—			—		50
Balance at December 31, 2005		25			67,770			32,153			(253	)		(12,857	)		—		86,838
Net loss		—			—			(2,292	)		—			—			—		(2,292	)
Cumulative effect adjustment resulting from the adoption of SFAS 158, net of tax of $125		—			—			—			—			—			227		227
Comprehensive loss																			(2,065	)
Exercise of 405,475 stock options		1			527			—			—			—			—		528
Tax benefit of stock option exercises		—			1,377			—			—			—			—		1,377
Amortization of warrants		—			135			—			—			—			—		135
Stock-based compensation		—			1,195			—			—			—			—		1,195
Reversal of award of deferred stock-based compensation		—			(303	)		—			303			—			—		—
Reversal of amortization of deferred stock-based compensation		—			—			—			(50	)		—			—		(50	)
Repurchase of 2,222,222 shares of common stock		(2	)		(20,825	)		—			—			—			—		(20,827	)
Retirement of 1,039,694 shares of treasury stock		(2	)		(12,855	)		—			—			12,857			—		—
Balance at December 31, 2006	$	22		$	37,021		$	29,861		$	—		$	—		$	227	$	67,131

See accompanying Notes to Consolidated Financial Statements

F-74

WORLD AIR HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

				Years Ended December 31,
				2006			2005			2004
				(in thousands)
Cash and cash equivalents at beginning of year				$	46,202		$	16,306		$	16,535
Cash flows from operating activities
Net earnings/(loss)					(2,292	)		31,628			25,587
Adjustments to reconcile net earnings to net cash provided by operating activities:
	Depreciation and amortization				7,514			6,286			5,283
	Amortization of deferred gain				(406	)		(588	)		(1,132	)
	Charges related to impairment of property and equipment				—			—			1,500
	Loss on disposals of equipment and property				1,055			1,331			987
	Tax benefit of stock option exercises				—			1,465			1,221
	Amortization of warrants and debt issuance costs				2,987			2,024			2,019
	Deferred income taxes				53			(463	)		(4,750	)
	Provision for doubtful accounts				335			1,622			13
	Stock-based compensation				1,195			—			—
	Loss on debt extinguishment				—			(88	)		—
	Other				282			676			(169	)
	Changes in operating assets and liabilities, exclusive of acquisitions:
		Accounts receivable			34,358			(15,187	)		(20,949	)
		Restricted cash			5,175			1,464			364
		Deposits, prepaid expenses and other assets			1,724			(18,825	)		(1,187	)
		Accounts payable, accrued expenses and other liabilities			(17,533	)		21,742			13,616
		Unearned revenue			1,651			768			2,747
			Net cash provided by operating activities		36,098			33,855			25,150
Cash flows from investing activities
Purchases of equipment and property					(8,924	)		(7,161	)		(2,034	)
Net (purchases) and sales of short term investments					827			32,823			(19,650	)
Proceeds from disposals of equipment and property					559			192			35
Acquisition of North American, less cash acquired					—			(26,953	)		—
			Net cash used in investing activities		(7,538	)		(1,099	)		(21,649	)
Cash flows from financing activities
Decrease in restricted cash due to repayment of debt					—			—			18,000
Repurchase of common stock					(20,827	)		—			—
Repayment of debt					(24,000	)		(6,000	)		(18,000	)
Proceeds from exercise of stock options					528			2,353			1,507
Proceeds from exercise of warrants					—			2,500			2,500
Excess tax benefit from employee stock-based compensation plan					1,227			—			—
Payment of debt issuance costs					(492	)		—			(541	)
Repayment of aircraft rent obligations					—			(1,713	)		(7,196	)
			Net cash used in financing activities		(43,564	)		(2,860	)		(3,730	)
Net increase (decrease) in cash and cash equivalents					(15,004	)		29,896			(229	)
Cash and cash equivalents at end of year				$	31,198		$	46,202		$	16,306
Supplemental information:
	Interest paid			$	447		$	2,820		$	3,121
	Income taxes paid			$	129		$	15,121		$	6,981
	Conversion of the Company's convertible senior subordinated debentures to common stock			$	—		$	18,125		$	7,428

See accompanying Notes to Consolidated Financial Statements

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WORLD AIR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Organization

        The Consolidated Financial Statements include the accounts of World Air Holdings, Inc. ("World Air Holdings" or the "Company"), and its wholly-owned subsidiaries, World Airways, Inc. ("World Airways"), North American Airlines, Inc. ("North American"), and World Risk Solutions, Ltd. ("World Risk Solutions"). World Airways Parts Company, LLC is a wholly-owned subsidiary of World Airways. The Company acquired North American, a privately held airline based in Jamaica, New York, on April 27, 2005. All significant inter-company accounts and transactions have been eliminated in consolidation.

        Effective January 10, 2005, World Airways was reorganized into a holding company structure, which was effected through a merger conducted pursuant to Section 251(g) of the General Corporation Law of the State of Delaware, which does not require stockholder approval. All of the outstanding shares of common stock of World Airways, par value $.001 per share, were converted on a share-for-share basis into shares of common stock of World Air Holdings, par value $.001 per share (the "common stock"), and all stockholders of World Airways became stockholders of World Air Holdings through a non-taxable transaction. Stock certificates representing shares of common stock of World Airways are deemed to represent shares of common stock of World Air Holdings until exchanged in the ordinary course as a result of transfers for stock certificates bearing the name of World Air Holdings. Airline operations account for 100% of World Air Holdings' operating revenues.

        World Airways was organized in March 1948 and is a U.S. certificated air carrier. Air transportation operations account for 100% of World Airways' operating revenue. World Airways provides long-range passenger and cargo charter and wet-lease air transportation, serving the U.S. Government, international freight and passenger airlines, tour operators, and customers requiring specialized aircraft services. (see Note 13).

        North American was organized in April 1989 and is a U.S. certificated air carrier. Air transportation accounts for 100% of North American's operating revenues. North American provides passenger charter and wet-lease air transportation serving the U.S. Government, tour operators, and other airlines. In addition, North American operates scheduled passenger service in select markets (see Note 13).

        World Risk Solutions, a Bermuda corporation, was formed in November 2004, with the objective of providing certain insurance cost savings, enhanced risk management programs, and better loss control practices to the Company.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include fixed asset useful lives, valuation allowances, (including but not limited to, those related to receivables, inventory, intangibles, and deferred taxes), income tax accounting, self-insured employee benefits, and legal liabilities.

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Cash, Cash Equivalents and Restricted Cash

        The Company considers all liquid investments purchased with an original or remaining maturity of 90 days or less to be cash equivalents. At December 31, 2006, current restricted cash of $1.1 million represented prepayments from customers for flights that are scheduled to be flown within 30 to 60 days of the balance sheet date (unearned revenue). At December 31, 2005, current restricted cash of $6.3 million consisted of amounts required for letters of credit that had to be secured by cash collateral, and prepayments from charter customers for flights to be flown. Long-term restricted cash at December 31, 2005, included approximately $0.8 million of funds held in escrow in the Dominican Republic for North American, which is reported on the Consolidated Balance Sheets in other assets and deferred charges, net.

Concentration of Credit Risk

        Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents. The Company places cash and cash equivalents with high-quality institutions. At times, such amounts are in excess of Federal Deposit Insurance Corporation ("FDIC") insurance limits. As of December 31, 2006 and 2005, such excess over FDIC insurance limits amounted to approximately $35.1 million and $58.7 million, respectively.

        Concentration of credit risk with respect to accounts receivable is limited due to the U.S. military business and the relatively small number of full service and ACMI customers the Company serves, which accounts for 78.7% of revenues.

Short-Term Investments

        Short-term investments consist of auction rate securities with auction reset periods of less than 12 months, classified as available-for-sale securities and stated at fair value.

Trade Accounts Receivable and Other Receivables

        Accounts receivable are due primarily from the U.S. Government, tour operators, major credit card processors, international passenger and cargo air carriers, and international freight forwarders. Other receivables include insurance claims, maintenance reserve receivables and other miscellaneous receivables. In the normal course of business, the Company reviews its accounts receivable and uses judgment to assess its ability to collect these receivables. Based on this assessment, an allowance for doubtful accounts is maintained for specifically identified accounts receivable deemed to be uncollectible.

Fair Value of Financial Instruments

        The following methods and assumptions were used to estimate the fair value of each class of financial instruments at December 31, 2006 and 2005.

•

Cash and cash equivalents; short-term investments; restricted cash; accounts receivable; accounts payable; and accrued expenses

        The Company maintains cash and cash equivalents and short-term investments with various high credit-quality financial institutions or in short-duration, high quality debt securities. The estimated fair value of cash and cash equivalents, short-term investments, restricted cash, accounts receivable, accounts payable, and accrued expenses approximate their carrying values.

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Long-Term Deposits

        At December 31, 2006, long-term deposits of $28.5 million consisted of aircraft and engine deposits of $27.6 million and building and miscellaneous deposits of $0.9 million. Long-term deposits of $28.3 million at December 31, 2005 consisted of aircraft and engine deposits of $27.2 million and building and miscellaneous deposits of $1.1 million.

Prepaid Expenses and Other Current Assets

        Prepaid expenses and other current assets include insurance premiums, rent and fuel that are paid in advance as well as short-term deposits.

        Additionally, prepaid expenses and other current assets include inventories consisting of expendable and recoverable aircraft spare parts. These items are stated at the lower of cost or market using the average cost method. Allowances for obsolescence are provided over the estimated useful life of the related aircraft and engines or the term of the related aircraft leases, whichever is shorter.

Equipment and Property

        Equipment and property are stated at cost. Provisions for depreciation and amortization of equipment and property are computed over estimated useful lives or the expected term of the lease, if shorter, by the straight-line method, with estimated salvage values of 0-10%. Estimated useful life of equipment and property are as follows:

Flight equipment, including aircraft	1-9 years
Other equipment and property	3-7 years

        Improvements to capital equipment, including those performed in response to Airworthiness Directives ("ADs") issued by the Federal Aviation Administration ("FAA"), are capitalized at cost. Modifications, including those in response to ADs, and routine maintenance and repairs are expensed as incurred.

        Leasehold improvements are stated at cost and amortized over the shorter of their estimated useful lives or the term of the lease.

Impairment of Long-Lived Assets

        The Company reviews its long-lived assets used in operations for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. To the extent that the future undiscounted net cash flows expected to be generated from an asset are less than the carrying amount of the asset, an impairment loss will be recognized based on the difference between the asset's carrying amount and its estimated fair market value. No impairment charges were recognized in 2006 or 2005. A $1.5 million asset impairment of DC-10 parts was recorded during 2004.

Goodwill and Intangible Assets

        The trademark, aircraft leases at market rates in excess of rental rates, Extended Range Two Engine Operations ("ETOPs") and goodwill (cost in excess of net assets acquired) relate to the acquisition of North American during 2005 (see Note 10). The Company accounted for the intangible assets of North American in accordance with Statement of Financial Accounting Standards No. 142 ("SFAS No. 142"), Goodwill and Other Intangible Assets. Pursuant to SFAS No. 142, goodwill and indefinite-lived intangibles, such as the trademark and ETOPs, are not amortized but are subject to

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annual impairment reviews. The Company performed an annual impairment test as of October 1, 2006 for goodwill and indefinite-lived intangibles. This test indicated that goodwill and indefinite-lived intangibles were not impaired. The trademark, valued at approximately $0.6 million, and ETOPs, valued at approximately $4.7 million, were acquired during 2005.

        The aircraft leases at net market rates in excess of rental rates of $2.8 million are being amortized on a straight-line basis over a weighted average of 31 months, which was the average remaining life of the aircraft leases at the date of the North American acquisition. The Company expensed $0.9 million and $0.7 million in 2006 and 2005, respectively. For the years ending December 31, 2007, 2008, and 2009, the annual amortization expense is estimated to be $0.6 million, $0.5 million, and $0.1 million, respectively.

Other Assets and Deferred Charges

        Debt issuance costs are amortized on a straight-line basis, which is not materially different from the results obtained using the effective interest method, over the period the related debt is expected to be outstanding.

        The fair market value of the warrants issued to the Air Transportation Stabilization Board ("ATSB") in connection with its loan guarantee was recorded as a long-term other asset and was amortized using the interest method (see Note 5). On March 30, 2006, the Company prepaid the remaining principal balance of $24.0 million under the ATSB Loan using cash reserves from operations. The Company had recorded the $24.0 million outstanding balance as a current liability as of December 31, 2005 in the accompanying Consolidated Balance Sheets due to covenant violations. As a result of this prepayment, during the first quarter of 2006, the Company expensed $2.3 million in unamortized debt issuance and warrant costs associated with the ATSB Loan.

        Additionally, in March 2006, World Airways and North American entered into a Loan and Security Agreement with Wachovia Bank, National Association ("Wachovia Loan"), for the issuance of loans and letters of credit up to $50.0 million subject to certain terms, conditions, and limitations. At December 31, 2006, the unamortized debt issuance cost associated with the Wachovia Loan is $0.3 million, which is being amortized over 1.3 years.

Revenue Recognition

        Military revenues are recognized as air transportation services are provided on a per leg basis. Charter revenues are initially recorded as unearned revenue at the time of sale and recognized as revenue when air transportation services are provided on a per leg basis. Passenger ticket sales for scheduled service are initially recorded as unearned revenue, and revenue derived from ticket sales is recognized in revenue on a per leg basis at the time the service is provided. Non-refundable tickets expire one year from the date the ticket is purchased. Tickets which expire unused are recognized as revenue upon expiration.

Aircraft Leases

        The majority of the Company's aircraft are leased from third parties. In order to determine the proper classification of its leased aircraft as either operating leases or capital leases, the Company must make certain estimates at the inception of the lease relating to the economic useful life the expected lease term, and the fair value of an asset, as well as select an appropriate discount rate to be used in discounting future lease payments. These estimates are utilized by management to determine whether the lease is classified as an operating lease or a capital lease. All of the Company's aircraft leases have

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been classified as operating leases, which results in rental payments being charged to expense over the terms of the related leases. The Company recognizes lease expense on a straight-line basis over the term of the lease. Additionally, operating leases are not reflected in our Consolidated Balance Sheet and accordingly, neither a lease asset nor an obligation for future lease payments is reflected in our Consolidated Balance Sheet. Deferred gains realized in connection with the sale-leaseback of aircraft and equipment are amortized over the periods of the respective leases.

Fuel Reconciliation Adjustments

        Military and charter contracts generally include a fixed rate per gallon for fuel usage with a provision to partially or fully adjust to the actual price per gallon paid. The contracted rate (per mile) and fuel prices (per gallon) are established by the military for a 12-month period running from October to September of the next year. The Company receives reimbursement from the military each month if the price of fuel paid by the Company to fuel vendors for military missions exceeds the fixed price; if the price of fuel paid by the Company to fuel vendors is less than the fixed price, the Company pays the difference to the military. A similar reconciliation is performed for certain charter contracts. The fuel reconciliation is recorded as an adjustment to revenues in the period when air transportation is provided.

Commission Expense

        The Company pays commissions for World Airways and North American based on percentages of military revenues and on scheduled passenger service for North American travel agencies.

Passenger Taxes and Charges

        Certain taxes and charges collected from passengers or customers, including but not limited to, excise taxes and passenger facility charges, remitted to taxing jurisdictions or agencies, are recorded on a net basis in the income statement.

Income Taxes

        The Company's effective tax rate is based on enacted statutory tax rates. Tax regulations require items to be included in the tax returns at different times than the items are reflected in the financial statements. As a result, the Company's effective tax rate reflected in the Consolidated Financial Statements is different than that reported in its income tax returns. Deferred tax assets generally represent items that can be used as a tax deduction or credit in the Company's tax returns in future years for which it has already recorded the tax benefit in the Consolidated Financial Statements. The Company provides a valuation allowance for deferred tax assets when it is more likely than not that some portion, or all of its deferred tax assets, will not be realized. In assessing the realizability of the deferred tax assets, management considers whether it is more likely than not that some portion, or all of the deferred tax assets, will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income (including reversals of deferred tax liabilities) during the periods in which those temporary difference will become deductible. Deferred tax liabilities generally represent tax expense recognized in the Consolidated Financial Statements for which payment has been deferred, or expense for which a deduction has already been taken on the Company's income tax returns but has not yet been recognized as an expense in the Consolidated Financial Statements.

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Earnings Per Share

        Basic earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding during the period. Diluted earnings per share includes the effects on net earnings and shares of common equivalent shares outstanding during the period.

		2006
		Earnings			Shares	Per Share Amount
		(Numerator)			(Denominator)
Basic and Diluted EPS
	Loss available to common stockholders	$	(2,292	)	23,643	$	(0.10	)

			2005
			Earnings			Shares	Per Share Amount
			(Numerator)			(Denominator)
Basic EPS
	Earnings available to common stockholders		$	31,628		22,588	$	1.40
Effect of dilutive securities
		Warrants		—		1,772
		Options		—		1,454
		Restricted shares		—		11
		8% convertible debentures		162		999
		Amortization of debt issuance cost		35		—
		Aircraft lease restructuring fees		(13	)	—
Diluted EPS
Earnings available to common stockholders plus assumed conversion			$	31,812		26,824	$	1.19

			2004
			Earnings			Shares	Per Share Amount
			(Numerator)			(Denominator)
Basic EPS
	Earnings available to common stockholders		$	25,587		13,095	$	1.95
Effect of dilutive securities
		Warrants		—		1,992
		Options		—		1,842
		8% convertible debentures		1,290		7,662
		Profit sharing		(90	)	—
		Amortization of debt issuance cost		183		—
		Aircraft lease restructuring fees		(273	)	—
Diluted EPS
Earnings available to common stockholders plus assumed conversion			$	26,697		24,591	$	1.09

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        Excluded from the diluted earnings per share calculation for the year ended December 31, 2006 are 1.7 million shares related to warrants and 0.8 million shares related to options. These shares are excluded because the effect of including the shares would have been anti-dilutive.

Aircraft Maintenance

        Airframe and engine maintenance costs are recognized using the expense as incurred method of accounting. Under this method, maintenance costs are recognized as expense when maintenance services are completed and as flight hours are flown for nonrefundable maintenance payments required by lease or service agreements. After qualifying maintenance is completed, the Company records a maintenance receivable from the lessors and is reimbursed for amounts paid from the funds held by the lessors.

Post-retirement Benefits Other Than Pensions

        World Airways' retired cockpit crewmembers and eligible dependents are covered under post-retirement health care and life insurance benefits to age 65. A small group of administrative retirees are also covered under a post-retirement health care and life insurance benefits plan for life. The Company accounts for the benefit costs in accordance with Statement of Financial Accounting Standards No. 106, Employers' Accounting for Post-retirement Benefits Other Than Pensions ("SFAS No. 106") and Statement of Financial Accounting Standards No. 158, Employers' Accounting for Defined Benefit Pension and Other Post-retirement Plans ("SFAS 158"). The Company funds the benefit costs on a pay-as-you-go (cash) basis. During 2005, World Airways recorded an adjustment of $1.6 million for post-retirement health care and life insurance benefits (see Note 11). The Company evaluated the impact of this adjustment to prior periods and determined that it was not material to any prior periods.

Accounting for Stock-Based Compensation

        Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 123I, Share-Based Payments ("SFAS 123R") which supersedes Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25") and revises guidance in SFAS No. 123, Accounting for Stock-Based Compensation ("SFAS 123"). This pronouncement requires companies to measure the cost of employee services received in exchange for an award of equity instruments (typically stock options) based on the grant-date fair value of the award. The fair value is estimated using option-pricing models. The resulting cost is recognized over the period during which an employee is required to provide service in exchange for the award, usually the vesting period. Additionally, SFAS 123R requires the cash flows resulting from the tax benefits in excess of the compensation expense recognized for those options (excess tax benefits) to be classified as financing cash flows. SFAS No. 123R applies to new share-based awards and to unvested stock options outstanding on the effective date and issuances under the Company's stock incentive plan. The Company utilizes the Black-Scholes option pricing model to estimate the fair value of its stock based awards and expects to continue using the same methodology in the future (See Note 8). The Company used the modified prospective method to adopt SFAS 123R and therefore did not restate its prior period results.

        Prior to the adoption of SFAS 123R, the Company accounted for stock-based compensation plans under the recognition and measurement principles of APB 25, and related interpretations.

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        The following table illustrates the effect on net earnings and earnings per share if the Company had applied the fair value recognition provisions of SFAS 123, to stock-based compensation (in thousands, except per share data):

			2005			2004
Net earnings, as reported			$	31,628		$	25,587
Deduct: Total stock-based compensation expense determined under fair value based method for all awards, net of related tax effects				(529	)		(810	)
	Pro forma net earnings		$	31,099		$	24,777
	Earnings per share
		Basic—as reported	$	1.40		$	1.95
		Basic—pro forma	$	1.38		$	1.89
		Diluted—as reported	$	1.19		$	1.09
		Diluted—pro forma	$	1.17		$	1.05

Recently Issued Accounting Standards

        In September 2006, the Securities and Exchange Commission (the "SEC") issued SAB 108. Due to diversity in practice among registrants, SAB 108 expresses SEC staff views regarding the process by which misstatements in financial statements are evaluated for purposes of determining whether financial statement restatement is necessary. SAB 108 is effective for fiscal years ending after November 15, 2006. The adoption of SAB 108 will not have a material impact on the Company's financial statements.

        In September 2006, the FASB issued FASB Staff Position AUG AIR-1 (the "FSP"), "Accounting for Planned Major Maintenance Activities" that eliminates the accrue-in-advance method as an acceptable method of accounting for planned major maintenance activities. The FSP is applicable to fiscal years beginning after December 15, 2006 and requires retrospective application to all financial statements presented. The Company does not believe the impact of the adoption of this FSP will have a material impact on its financial statements.

        In July 2006, the FASB, issued FASB Interpretation No. ("FIN") 48, "Accounting for Uncertainty in Income Taxes" which clarifies the accounting and disclosure requirements for uncertainty in tax positions, as defined. This interpretation is effective for fiscal years beginning after December 15, 2006. FIN 48 requires a two-step approach to evaluate tax positions and determine if they should be recognized in the financial statements. The two-step approach involves recognizing any tax positions that are "more likely that not" to occur and then measuring those positions to determine if they are recognizable in the financial statements. The Company will adopt FIN 48 effective January 1, 2007 and does not believe its adoption will result in a material cumulative-effect adjustment.

2. Segment Information

        The Company has two reportable segments: World Airways and North American. The Company operates and manages these companies as two distinct operating segments, and prepares separate financial statements for each that are reviewed by senior management at World Air Holdings, as well as

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the chief operating officer and other management at the operating company level. Financial and other information for the year ended December 31, 2006 and 2005 by reporting segment is set forth below (in thousands).

	Year Ended December 31, 2006
	World Airways		North American			World Air Holdings, World Risk Solutions, and Eliminations			Total
Total revenue	$	559,809	$	267,195		$	(1,348	)	$	825,656
Operating expense		557,211		271,144			(1,919	)		826,436
Operating income/(loss)		2,598		(3,949	)		571			(780	)
Total assets		115,040		76,572			7,138			198,750
Depreciation and amortization expense		6,072		1,425			17			7,514
Capital expenditures	$	6,629	$	2,165		$	130		$	8,924
Total block hours		56,102		27,475			—			83,577

	Year Ended December 31, 2005
	World Airways		North American		World Air Holdings, World Risk Solutions, and Eliminations			Total
Total revenue	$	623,719	$	163,333	$	86		$	787,138
Operating expense		570,059		162,201		(1,738	)		730,522
Operating income/(loss)		53,660		1,132		1,824			56,616
Total assets		176,165		78,274		6,207			260,646
Depreciation and amortization expense		5,181		1,105		—			6,286
Capital expenditures	$	6,579	$	577	$	5		$	7,161
Total block hours		58,515		17,175		—			75,690

*

Financial and statistical data include the results of North American from April 28, 2005 to December 31, 2005

        In 2004, the Company operated as a single segment. The Company acquired North American in 2005 and considered North American a separate segment.

3. Prepaid Expenses and Other Current Assets

        Prepaid expenses and other current assets consist of the following (in thousands):

		December 31,
		2006		2005
Prepaid insurance		$	3,141	$	3,980
Prepaid rent			4,343		7,259
Prepaid fuel			1,251		2,038
Prepaid taxes			5,033		2,736
Deposits			1,650		927
Inventories, net of obsolescence reserve of $1,966 at December 31, 2006 and $1,245 at December 31, 2005			2,328		1,175
Other			1,951		2,131
	Total	$	19,697	$	20,246

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4. Other Assets and Deferred Charges

        Other assets and deferred charges consist of the following (in thousands):

		December 31,
		2006			2005
Deferred rent		$	5,176		$	6,214
Fair market value of ATSB warrants			—			4,792
Debt issuance costs—Wachovia Loan			492			—
Debt issuance costs—term loan due in 2008			—			1,433
Restricted cash			—			830
Other			201			4
			5,869			13,273
Accumulated amortization			(185	)		(3,558	)
	Total	$	5,684		$	9,715

5. Long-term Debt

        The Company had no outstanding debt at December 31, 2006. The Company's long-term debt, including current maturities thereof, at December 31, 2005 was as follows (in thousands):

		2006		2005
ATSB Loan		$	—	$	24,000
Less: current maturities			—		24,000
	Total long-term debt, net of current maturities	$	—	$	—

        On December 30, 2003, the Company issued $25.5 million aggregate principal amount of the Debentures in exchange for $22.5 million aggregate principal amount of its then outstanding 8.0% Convertible Senior Subordinated Debentures due in 2004 (the "Old Debentures") and $3.0 million in cash. The Company called for redemption the remainder, or $18.0 million aggregate principal amount, of its Old Debentures and redeemed the Old Debentures on January 28, 2004. The Debentures were convertible, at any time, into the Company's common stock at a conversion price of $3.20 per share. The Debentures were redeemable by the Company at 100% of the principal amount on or after December 30, 2004 if the average closing price of the Company's common stock was equal to or greater than 200% of the conversion price for 20 of 30 consecutive trading days, and on or after December 30, 2005 if the average closing price of the Company's common stock was equal to or greater than 150% of the conversion price for 20 of 30 consecutive trading days. On or after December 30, 2006, the New Debentures were redeemable at any time at 100% of the principal amount regardless of the stock price. On February 22, 2005, World Air Holdings issued a notice of redemption of the Debentures, giving the holders until March 22, 2005 to exercise their conversion rights at a conversion price of $3.20 per share. The holders converted all of the outstanding Debentures by March 22, 2005.

        On December 30, 2003, the Company closed the $30.0 million ATSB Loan of which 90.0% ("Tranche A Loan") was guaranteed by the ATSB and 10.0% ("Tranche B Loan") was guaranteed by another third party. The Company's obligations under the loan agreement were secured by substantially

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all of the assets of the Company and its subsidiaries. At December 31, 2005, the blended rate on both Tranches approximated 4.5%. Also, at December 31, 2005, the Company's indebtedness of $24.0 million outstanding under its $30.0 million ATSB Loan was secured by substantially all of the Company's assets. The ATSB Loan contained restrictive covenants that imposed significant operating and financial restrictions on the Company requiring it to maintain a certain amount of unrestricted cash or cash equivalents and to comply with certain financial ratios as well as certain negative covenants.

        The Company recorded the $24.0 million outstanding balance as a current liability as of December 31, 2005 in the Consolidated Balance Sheets due to covenant violations. On March 30, 2006 the Company prepaid the remaining principal balance of $24.0 million under the ATSB Loan with working capital. As a result of this prepayment, during the first quarter of 2006, the Company expensed $2.3 million in unamortized debt issuance cost and unamortized warrant costs associated with the ATSB Loan.

        In August 2004, the ATSB exercised warrants to purchase 111,111 shares at $2.50 per share and, pursuant to the net exercise provisions of the warrants, received 21,994 shares of the Company's common stock. Additionally, in February 2005, the ATSB exercised warrants to purchase an additional 111,111 shares at $2.50 per share and, pursuant of the net exercise provisions of the warrants, received 76,345 shares of the Company's common stock.

        In March 2006, World Airways and North American entered a Loan and Security Agreement with Wachovia Bank, National Association ("Wachovia Loan"), for the issuance of loans and letters of credit up to $50.0 million subject to certain terms, conditions, and limitations. The facility matures in March 2008. Under the Wachovia Loan, the Company's borrowings bear interest at fluctuating rates. The applicable rate will be one of the following three options, as designated by the Company: (1) the bank's base lending rate, (2) the Federal Funds Rate, or (3) the Eurodollar or London Interbank Offered Rate ("LIBOR") plus an applicable percentage. The rates applicable to outstanding borrowings fluctuate based on many factors including, but not limited to, general economic conditions, and general interest rates, including the prime rate, and the supply of and demand for credit in the London interbank market. At December 31, 2006, the Company's borrowing base was approximately $29.0 million, of which $3.4 million was utilized for letters of credit issued under the facility. As a result, the available amount for borrowing was $25.6 million. The borrowing base fluctuates on a daily basis and is subject to a $50.0 million maximum and includes the sum of: (1) 85%–90% of eligible government receivables, (2) 70% of eligible unbilled government receivables, not to exceed $5.0 million, (3) 80% of eligible commercial receivables, (4) 75% of the value of eligible spare parts, not to exceed $15.0 million; less the face amount of issued and outstanding letters of credit and any applicable reserves. The Company had no borrowings outstanding at December 31, 2006.

        In October 2006, the Company completed a "modified Dutch Auction" tender offer ("Tender Offer") and purchased 2.22 million shares of its outstanding common stock (See Note 9). As a result of the Tender Offer, the Company modified the number of warrants and exercise price pursuant to the provisions of the ATSB warrant agreement. As a result, the ATSB held warrants to purchase 1,153,973 shares and 806,616 shares at $0.86 and $3.52 per share, respectively at December 31, 2006. (See Note 7). The Company borrowed $21.0 million under the Wachovia Loan agreement to fund the Tender Offer and related transaction costs to repurchase Company stock. (See Note 9). The amount borrowed bore interest at the monthly LIBOR and was subsequently repaid on November 15, 2006.

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6. Operating Leases

        The Company leases all but one of its operational aircraft fleet under operating lease agreements. At December 31, 2006, World Airways' operating fleet consisted of 17 aircraft, of which nine are passenger aircraft and eight are freighter aircraft, with base lease terms expiring at various dates through 2015. At December 31, 2006, North American's operating fleet consisted of nine aircraft, all of which are operated in passenger configurations, with remaining base lease terms expiring at various dates through 2014.

        In 2004, the Company reached an agreement with one of its MD-11 aircraft lessors to restructure certain leases. In exchange for reduced fixed monthly lease rates and a reduction in the lease terms, the Company agreed to an annual restructuring fee based on net earnings. Payments commenced in 2005 based on 2004 results, and continue through the lease terminations in 2011, which will be paid in 2012. Over the term of the agreement, the total obligation of the Company is limited to $24.2 million on a cumulative basis. In each year, the cash payment is limited to $1.6 million for 2005, $3.6 million per year for 2006 through and including 2011, and $1.0 million in 2012. Although cash disbursements are limited each year, due to the cumulative nature of the agreement, expense recognized may differ from the related cash payment to be disbursed in the following year. In 2005, the Company and the lessor agreed to a definitive methodology used to calculate the restructuring fee. As a result, the Company recognized no expense in 2006 due to the Company's net loss, $5.0 million and $4.5 million was recorded in expense for 2005 and 2004, respectively. The Company's related cash payments were $3.6 million and $1.6 million in 2006 and 2005, respectively.

        Rental expense, primarily relating to aircraft leases, totaled approximately $122.6 million, $112.2 million, and $77.2 million for the years ended December 31, 2006, 2005, and 2004, respectively. Certain of the Company's operating leases require rental payments that vary in amount from year to year. The Company accounts for the cost of these leases on a straight-line basis, thereby recognizing annual rent expense evenly over the lease term. The Company's Consolidated Balance Sheets reflect the cumulative-to-date difference between rent expense recognized and cash payments made within current and non-current deferred rent.

        The Company accounts for aircraft rent expense on the straight-line method over the life of the aircraft lease. Certain of the Company's operating leases were structured to require significant cash payments during the early terms of the lease. The Company records the cash payment in excess of aircraft rent as a deferred asset on the Company's consolidated balance sheet. The portion of the prepaid rent that is to be realized over the next twelve months is recorded to prepaid expenses and other current charges, while the remainder is recorded to other assets and deferred charges.

        Certain of the Company's operating leases require more significant cash payments later in the lease term resulting in an accrued liability for aircraft rents on the Company's consolidated balance sheet. The portion of the accrued liability scheduled to be paid in the next twelve months is recorded as accrued rent, while the remainder is recorded as accrued and deferred rent.

        Certain of the Company's aircraft leases also require the Company to pay certain amounts related to maintenance reserves for airframes, engines, auxiliary power units and landing gears based on flight hours and cycles. Certain return conditions also must be met prior to returning the aircraft to the lessor. The Company also pays maintenance fees to certain maintenance providers for auxiliary power units based on flight hours. The aggregate amount the Company paid and expensed in 2006, 2005, and 2004 for maintenance reserves for airframes, engines, auxiliary power units and landing gears and

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maintenance fees for auxiliary power units was $50.5 million, $45.3 million, and $29.8 million, respectively.

        Future annual minimum lease payments, excluding contingent rentals to maintenance reserve payments, at December 31, 2006 for operating leases that have initial or remaining base lease terms in excess of one year were as follows (in thousands):

2007		$	124,980
2008			112,659
2009			101,892
2010			92,558
2011			71,883
Thereafter			132,766
	Total	$	636,738

7. Capital Stock

        At December 31, 2006, 5,159,751 shares of common stock were reserved for under stock option incentive plans (3,060,162 shares), upon the exercise of warrants (1,960,589 shares), and under an employee salary exchange program (139,000 shares).

        In December 2003, the Company issued to the ATSB, as consideration for the federal loan guarantee, warrants to purchase an aggregate of 2,378,223 shares of common stock. These warrants were vested and fully exercisable at the date of grant. The fair value of these warrants on the date of grant using the Black Scholes option-pricing model was $4.8 million. The following table shows details of the warrants issued to the ATSB as well as the assumptions used in the Black Scholes option-pricing model:

Number of Shares	Exercise Price		Expiration Date	Risk Free Interest Rate		Expected Dividend Yield		Volatility		Expected Life
1,269,022	$	0.78	12/31/2008	3.23	%	0	%	50	%	5.0 yrs
111,111	$	2.50	8/23/2004	1.22	%	0	%	50	%	0.7 yrs
111,111	$	2.50	3/29/2005	0.96	%	0	%	50	%	1.2 yrs
886,979	$	3.20	12/31/2009	3.43	%	0	%	50	%	6.0 yrs

        In August 2004, the ATSB exercised warrants to purchase 111,111 shares at $2.50 per share and, pursuant to the net exercise provisions of the warrants, received 21,994 shares of the Company's common stock. Additionally, in February 2005, the ATSB exercised warrants to purchase an additional 111,111 shares at $2.50 per share and, pursuant to the net exercise provisions of the warrants, received 76,345 shares of the Company's common stock. In October 2006, the Company completed the Tender Offer and purchased 2.22 million shares of its outstanding common stock (See Note 9). As a result of the Tender Offer, the Company modified the number of warrants and exercise price pursuant to the provisions of the ATSB warrant agreement. Therefore, the ATSB held warrants to purchase 1,153,973 shares and 806,616 shares at $0.86 and $3.52 per share, respectively at December 31, 2006.

        The Company recorded the fair value of these warrants within other long-term assets, with a credit to additional paid-in capital. The Company recorded amortization of $1.5 million in 2005 and expensed the remaining $1.8 million in March 2006, when the debt was prepaid in full.

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        In 1999, pursuant to amendments to lease agreements for the Company's MD-11 aircraft, the Company granted warrants to each of two lessors to purchase up to 1,000,000 shares of common stock at an exercise price of $2.50 per share, with expiration dates of August 2004 and March 2005. The warrants were vested and fully exercisable at the date of grant. Warrants were exercised in August 2004 to purchase 1,000,000 shares, and the remaining warrants to purchase 1,000,000 shares were exercised in January 2005. The per share weighted-average fair value of the warrants was $0.90 on the date of grant using the Black Scholes option-pricing model with the following assumptions: risk free interest rate of 5.735%, expected dividend yield of 0.0%, expected volatility of 78%, and expected life of 5 years.

        In November 2006, the Company's Board of Directors passed a resolution to retire 1,039,694 shares of common stock held as treasury shares. The resolution also provided that these shares be restored to the status of authorized but unissued shares of common stock of the Company.

8. Stock based compensation

Stock Incentive Plans

        Under the World Air Holdings, Inc. Amended and Restated 1995 Stock Incentive Plan (the "1995 Plan"), members of the Company's Board of Directors, employees, and consultants to the Company or its affiliates are eligible to receive stock incentive awards. At December 31, 2006, the Company had reserved 3,030,162 shares of common stock for issuance under the 1995 Plan. Options expire at the earlier of the stated expiration, which shall not exceed ten years from the date of grant, or one year after the termination of a grantee's employment with the Company. The exercise price for options granted is the fair market value of the common stock on the date of grant. Outstanding options become vested and fully exercisable at various times through August 2013.

        During 2005, the Company issued 50,000 shares of restricted stock with vesting over a four year required service period, and recorded compensation expense over the same period. In February 2006, the employee to whom the stock was issued resigned and, accordingly, the restricted stock grant terminated and was cancelled effective on the date of termination. During the first quarter of 2006, the Company reversed $0.3 million of deferred stock-based compensation related to the forfeiture of this restricted stock grant.

        Under a Non-Employee Directors' Stock Option Plan (the "Directors' Plan"), non-affiliate directors are granted options to purchase 10,000 shares of common stock, upon election or appointment to the Board of Directors of the Company. Options granted under the Directors' Plan vest in 36 equal monthly installments following the award, as long as the individual remains a director of the Company. The Director's Plan provided that after December 31, 2005, no additional options could be granted from this plan.

Stock Options

        For stock option awards granted prior to January 1, 2006, but for which the vesting period is not complete, the Company adopted SFAS 123R using the "modified prospective method" of accounting permitted under SFAS 123R. Under this method, the Company accounts for such awards on a prospective basis, with expense being recognized in the consolidated statements of income beginning in the first quarter of 2006, using the grant-date fair values previously calculated in prior pro forma

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disclosures. The Company will recognize the related compensation cost not previously recognized in the pro forma disclosures over the remaining vesting periods.

        The fair value of stock options is determined at the grant date using a Black-Scholes option pricing model, which requires the Company to make several assumptions. The risk-free interest rate is based on the U.S. Treasury yield curve in effect for the expected term of the option at the time of grant. The dividend yield on the Company's common stock is assumed to be zero since the Company does not pay dividends and has no current plans to do so in the future. The market price volatility of the Company's common stock is based on the historical volatility of the common stock price over an approximate four year time period. The expected term of the options is based on historical experience of all option grants.

        During the third quarter of 2006, the Company granted options to purchase 333,400 shares under the 1995 Stock Incentive Plan. These stock options vest in 33¹/3% increments on the first three anniversary dates of the awards; thus, the Company will recognize compensation expense for these awards on a straight-line basis over each award's vesting period. During the second quarter of 2005, the Company granted options to purchase 10,000 shares under the Director's Plan that vest in 36 equal monthly installments from the day of grant.

        The per share weighted-average fair value of the options to purchase 333,400 shares granted during the third quarter of 2006 was $4.61 on the date of grant using the Black Scholes options-pricing model. The per share weighted-average fair value of the options to purchase 10,000 shares granted during the second quarter of 2005 was $4.29 on the date of grant using the Black-Scholes option-pricing model. The per share weighted-average fair value of the options to purchase 696,000 shares granted during 2004 was $2.54 on the date of grant using the Black Scholes option-pricing model with the following weighted-average assumptions:

	2006		2005		2004
Expected dividend yield	0	%	0	%	0	%
Risk-free interest rate	4.6	%	3.9	%	3.7	%
Expected term (in years)	4.0		4.2		4.8
Expected stock volatility	80.9	%	70.7	%	80.2	%

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        The table below summarizes stock option award activity pursuant to the Company's plans for the last three years:

		Number of Shares (in thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2003		3,694		$	1.58
	Granted	696			3.89
	Exercised	(1,583	)		0.95
	Forfeited	(174	)		2.04
Outstanding at December 31, 2004		2,633			2.53
	Granted	10			7.53
	Exercised	(836	)		2.82
	Forfeited	(79	)		6.19
Outstanding at December 31, 2005		1,728			2.25
	Granted	333			7.44
	Exercised	(405	)		1.30
	Forfeited	(32	)		2.59
Outstanding at December 31, 2006		1,624			3.55	4.5	$	10,296
Exercisable at December 31, 2006		1,108		$	2.31	3.7	$	7,205
Vested & Expected to Vest at December 31, 2006		1,454

        At December 31, 2006, the range of exercise prices per share and weighted-average remaining life of outstanding options was $0.91–$7.53 and 4.5 years, respectively.

        The following table summarizes stock options outstanding and exercisable at December 31, 2006 (in thousands, except per share amounts):

		Outstanding Options				Exercisable Options
Range of Exercise Price		Number of Options	Weighted Average Remaining Life in Years	Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
$0.56–1.25		510	2.3	$	0.91	510	$	0.91
1.26–2.50		38	1.1	$	1.57	38	$	1.57
2.51–3.75		671	5.2	$	3.46	516	$	3.42
3.76–5.00		6	5.1	$	4.06	—		—
5.01–6.25		56	5.5	$	6.15	39	$	6.15
6.25–7.50		334	6.6	$	7.44	—		—
7.50–8.75		10	8.3	$	7.53	5	$	7.53
	Total	1,625	4.5	$	3.55	1,108	$	2.31

        At December 31, 2006, 2005 and 2004, the number of shares issuable upon the exercise of vested options was 1,107,563, 1,170,426, and 1,444,464, respectively, and the weighted-average exercise prices per share of the options were $2.31, $1.82, and $1.89, respectively.

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        The total intrinsic value of options exercised for the year ended December 31, 2006, determined as of the date of exercise of options, was $3.1 million. The total intrinsic value of options exercised for the year ended December 31, 2005 and 2004, determined as of the date of exercise of options, was $5.0 million and $4.9 million, respectively. Cash received from option exercises during 2006, 2005, and 2004 totaled $0.5 million, $2.4 million and $1.5 million, respectively.

        The Company recorded $0.4 million of stock-based compensation expense related to non-vested stock options to sales, general and administrative expense for the year ended December 31, 2006. The excess tax benefit realized, for the tax deduction from option exercises under the Company plan was $1.4 million for 2006, which generated cash flows from excess tax benefits, under the long-haul method, of $1.2 million.

        At December 31, 2006, there was $1.3 million of total unrecognized compensation expense related to non-vested stock options granted under the Company's stock incentive plans. That cost is expected to be recognized over a weighted-average period of 2.5 years.

Restricted Stock Awards

        During the third quarter of 2006, the Company granted 196,800 shares of restricted common stock to non-employee members of the Board, executive officers, officers, and certain other management employees of the Company. The restricted shares were granted pursuant to the 1995 Plan. The fair value at the date of grant of these shares was $1.7 million. Compensation expense for these awards will be recognized on a straight-line basis over the weighted-average requisite service period of 4.1 years.

        The Company recorded $0.2 million of stock-based compensation expense to sales, general and administrative expense for the year ended December 31, 2006 associated with these restricted stock awards. At December 31, 2006, there was approximately $1.5 million of total unrecognized compensation expense related to non-vested restricted stock granted under the Company's stock incentive plan, which is expected to be recognized over a weighted-average vesting period of 4.1 years.

Stock Option Awards Review

        During 2006, under the direction of the Audit Committee of the Board of Directors, the Company voluntarily initiated a review of all stock option awards from the date of the Company's initial public offering of its common stock in 1995 through December 31, 2006. In order to ensure independence and objectivity, the Company also retained a law firm that is independent of the Company to perform a review of all prior stock option awards as an independent investigation. The independent counsel engaged to perform that review has submitted its report to the Audit Committee, which accepted the report and deemed the review concluded. Based on its own review and the review of independent counsel, the Company concluded that, although no backdating or other intentional misconduct was found, the Company had not properly accounted for certain options awarded in each of the years 1997 through 2003.

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        The impact of such adjustments, consisting of previously unrecognized compensation expense, for each of such years and in the aggregate is as follows:

	1997			1998			1999			2000			2001			2002			2003			Total
	(in thousands)
Stock Compensation Expense	$	79		$	(20	)	$	—		$	103		$	256		$	79		$	73		$	570
Tax effect		—			—			—			—			—			—			(15	)		(15	)
Total, net of tax	$	79		$	(20	)	$	—		$	103		$	256		$	79		$	58		$	555
Income/(loss) before taxes	$	12,230		$	(10,905	)	$	(13,653	)	$	(3,159	)	$	(26,037	)	$	2,041		$	19,123
Percent of income before taxes		0.6	%		0.2	%		0.0	%		3.3	%		1.0	%		3.9	%		0.4	%

        The review of quantitative and qualitative factors led the Company to conclude that this cumulative adjustment of $0.6 million be recorded to sales, general, and administrative expense in its consolidated financial statements for the quarter ended September 30, 2006 and that it was not material to the full year of 2006 or any prior periods impacted. Historically, the Company used the roll-over method to determine materiality and since SAB 108 was not adopted until December 31, 2006, the Company continued to evaluate materiality under one method, not the dual method.

9. Tender Offer

        On September 5, 2006, the Company's Board of Directors authorized a "modified Dutch Auction" tender offer whereby the terms permitted the Company to repurchase up to 2.22 million shares of its common stock at a price per share not greater than $9.50 and not less than $9.00.

        In October 2006, the Company completed the Tender Offer and purchased 2.22 million shares of its outstanding common stock at a price per share of $9.20 totaling approximately $20.8 million, which was funded through borrowings under the Wachovia Loan. The shares purchased represented approximately 9.1% of the Company's outstanding common stock at October 12, 2006.

10. North American Acquisition

        On April 27, 2005, the Company acquired North American, a privately-held airline based in Jamaica, New York, for approximately $34.8 million in cash, which was funded from internally generated funds. In addition, there was a $0.6 million subsequent reduction in the purchase price based on terms of the purchase agreement.

        The Company commenced the consolidation of North American on April 28, 2005 and the acquisition was accounted for using the purchase method of accounting in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations. The following summarizes the total purchase price for North American (in thousands):

Cash consideration	$	34,750
Direct acquisition costs		1,408
Adjustment to distribution made to Seller to cover tax payments as provided in Stock Purchase Agreement		(565	)
	$	35,593

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        The purchase price allocation for the acquisition has been finalized with the exception of certain tax uncertainties related to amounts due from the seller.

        Under the purchase method of accounting, the total purchase price was allocated to North American's net tangible and intangible assets based upon their estimated fair value as of the date of the acquisition with any amount paid in excess of the fair value of the net assets recorded as goodwill. Based upon the purchase price and value of the net assets acquired and liabilities assumed, the purchase price allocation is as follows (in thousands):

		Fair Value of Net Assets Acquired
Cash and cash equivalents		$	8,640
Restricted cash			2,372
Other current assets			16,239
Equipment and property, net			1,498
Long-term deposits and other assets			4,446
Intangible assets acquired:
	ETOPs * program added value		4,680
	Aircraft leases at market rates in excess of rental rates		2,840
	Trademark		575
Goodwill			25,370
	Total assets acquired		66,660
Liabilities assumed:
	Accounts payable and accrued liabilities		(29,155	)
	Deferred tax liabilities		(1,912	)
Net assets acquired		$	35,593

        Goodwill of $25.4 million has been recorded and represents the excess of the purchase price over the fair value of the tangible and other intangible assets acquired less the fair value of the liabilities assumed. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually or more frequently if circumstances indicate their value may no longer be recoverable. The Company performed an annual impairment test as of October 1, 2006 for goodwill and indefinite-lived intangibles. This test indicated that goodwill and indefinite-lived intangibles were not impaired as of December 31, 2006. The goodwill is not deductible for tax purposes.

        Unaudited pro forma information for the Company reflecting the acquisition of North American as if it had occurred on January 1, 2005 and 2004 is as follows (in thousands, except per share amounts):

		2005		2004
Total operating revenues		$	863,098	$	709,396
Net earnings		$	34,222	$	24,131
	Basic earnings per share	$	1.52	$	1.84
	Weighted average shares outstanding		22,588		13,095
	Fully diluted earnings per share	$	1.28	$	1.03
	Weighted average shares outstanding		26,824		24,591

        The above pro forma results include adjustments for the amortization of intangibles, adjustments to depreciation to reflect the new basis and depreciable lives for equipment and property, and

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decreased interest income/additional interest expense to reflect the impact of the cash payments related to the purchase of North American. These results are not indicative of what actual results would have been or will be in the future.

11. Employee Benefit Plans

        World Airways' Crewmembers Target Benefit Plan (the "Target Benefit Plan") is a defined contribution plan covering cockpit crewmembers with contributions based upon wages, as defined. It is a tax-qualified retirement plan under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"). Expense for the Target Benefit Plan totaled $3.0 million, $2.8 million, and $2.7 million for the years ended December 31, 2006, 2005, and 2004, respectively.

        World Airways also sponsors a Crewmembers Deferred Income Plan (the "Deferred Income Plan"). It is a tax-qualified retirement plan under Section 401(k) of the Code. Under the Deferred Income Plan, cockpit crewmembers may elect to invest salary deferrals of up to $15,000 or 25% of their salary in selected investment funds. The Company does not make any contributions to the Deferred Income Plan.

        World Airways' flight attendants participate in a pension plan maintained by the International Brotherhood of Teamsters ("IBT"). This plan is a multi-employer plan subject to the funding and other provisions of the Pension Protection Act of 2006. Contributions made to the IBT on behalf of the flight attendants totaled $1.3 million, $1.3 million, and $1.0 million for the years ended December 31, 2006, 2005, and 2004 respectively.

        Under World Air Holdings' and World Airways' 401(k) Administrative Plan ("401(k) Plan"), employees may elect to invest salary deferrals of up to $15,000 or 25% of their salary in selected investment funds. It is a tax-qualified retirement plan under Section 401(k) of the Code. The Company contributes matching funds to the 401(k) Plan equal to 50% of participants' voluntary deferrals up to 10% of salary. The Company expensed, for its contribution to the 401(k) Plan, approximately $0.7 million, $0.6 million, and $0.3 million during the years ended December 31, 2006, 2005, and 2004, respectively.

        World Airways has a profit sharing bonus plan (the "Profit Sharing Plan") for its cockpit crewmembers and flight attendants pursuant to agreements with the unions representing the two groups. It is not a tax-qualified plan under the Code. Distributions under the Profit Sharing Plan are equal to 20% of net earnings, as defined, subject to an annual limitation of 10% of the total annual aggregate compensation of World Airways employees participating in the Profit Sharing Plan in that year. Due to net losses for the year ended December 31, 2006, the Company recorded no profit sharing expense during 2006. The Company expensed $4.8 million and $4.8 million for this plan during the years ended December 31, 2005, and 2004, respectively.

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        World Air Holdings and World Airways have a profit sharing bonus plan for management, administrative and operations personnel. Due to net losses for the year ended December 31, 2006, the Company recorded no profit sharing expense during 2006. The Company expensed $4.7 million, and $4.2 million for these plans during the years ended December 31, 2005 and 2004, respectively.

        World Airways' cockpit crewmembers and eligible dependents are covered under a post-retirement health care and life insurance benefits plan until age 65. A small group of administrative retirees are also covered under a post-retirement health care and life insurance benefits plan for life. The Company accrues for the cost of post-retirement health and life insurance benefits in accordance with SFAS No. 106 but funds the benefit costs on a pay-as-you-go (cash) basis.

        In December 2006, the Company adopted the recognition and disclosure provisions of SFAS 158. SFAS 158 requires the Company to recognize in its statement of financial position an asset for a defined benefit pension or post-retirement plan's overfunded status or a liability for a plan's underfunded status, and to recognize changes in that funded status through other comprehensive income/(loss) in the year in which the changes occur. SFAS 158 will not change the amount of net periodic benefit expense recognized in the Company's results of operations.

        World Airways uses a December 31st measurement date for the post-retirement health care and life insurance benefits plan. During 2005, the Company's accumulated benefit obligation assumptions were modified for the following:

•

The retirement eligibility provision was adjusted to reflect that World Airways cockpit employees have the option to retire at the age of 55 with at least five years of service in addition to the previously reflected age 60 provision.



•

A flat $50,000 life insurance benefit was added effective February 1, 2005 for cockpit retirees who die prior to age 65.

        A summary of the net periodic post-retirement benefit costs is as follows (in thousands):

	2006		2005		2004
Service cost	$	1,053	$	768	$	378
Interest cost on accumulated post-retirement benefit obligation		540		445		243
Amortization of prior service cost		11		10		—
Net amortized loss		156		272		13
Adjustment for revised retirement eligibility		—		1,599		—
Net periodic post-retirement benefit cost	$	1,760	$	3,094	$	634

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        The reconciliation of the accumulated post-retirement benefit obligation is as follows (in thousands):

		2006			2005
Accumulated post-retirement benefit obligation, beginning of year		$	9,537		$	4,849
	Service cost		1,053			768
	Interest cost		540			445
	Benefits paid		(245	)		(180	)
	Adjustment for revised retirement eligibility		—			1,599
	Actuarial (gain)/loss		(2,397	)		1,956
	Plan amendments		(331	)		100
Accumulated post-retirement benefit obligation, end of year		$	8,157		$	9,537

        The reconciliation of the accrued post-retirement benefits as of year-end is as follows (in thousands):

	2006			2005
Unfunded status	$	8,157		$	9,537
Unrecognized prior service cost		252			(89	)
Unrecognized net gain/(loss)		100			(2,453	)
Accumulated other comprehensive income		(352	)		—
Accrued post-retirement benefits included in liabilities on accompanying balance sheets	$	8,157		$	6,995

        The assumed discount rate used to measure the accumulated post-retirement benefit obligation for 2006 and 2005 was 5.75% and 5.25%, respectively. The medical cost trend rate in 2006 was 10.75%, trending down to an ultimate rate in 2015 and beyond of 5.0%. A one percentage point increase in the assumed health care cost trend rates for each future year would have increased the aggregate of the service and interest cost components of 2006 net periodic post-retirement benefit cost by $226,000 and would have increased the accumulated post-retirement benefit obligation as of December 31, 2006 by $914,000. A one percentage point decrease in the assumed health care cost trend rates for each future year would have decreased the aggregate of the service and interest cost components of 2006 net periodic post-retirement benefit cost by $193,000 and would have decreased the accumulated post-retirement benefit obligation as of December 31, 2006 by $815,000.

        World Airways used the following actuarial assumptions to determine its net periodic benefit cost for the years ended December 31, 2006 and 2005, as measured at December 31, 2006, and its benefit obligations at December 31, 2006 and 2005:

Assumption	Used for Net Periodic Post-Retirement Benefit Cost for 2006	Used for Benefit Obligations as of December 31, 2006
Discount rate	5.25%	5.75%
Salary increase*	not applicable	not applicable
Long-term rate of return*	not applicable	not applicable

F-97

Assumption	Used for Net Periodic Post-Retirement Benefit Cost for 2005	Used for Benefit Obligations as of December 31, 2005
Discount rate	5.25%	5.25%
Salary increase*	not applicable	not applicable
Long-term rate of return*	not applicable	not applicable

*

The salary increase assumption is not applicable because the benefits are not related to compensation. The long-term rate of return assumption is not applicable because the plan is funded on a pay-as-you-go basis.

        The Company expects to contribute the following amounts to the post-retirement health care benefit plan in each of the next five fiscal years, and in the aggregate for the five fiscal years thereafter. Benefit payments, which reflect expected future service, are based on assumptions about future events. Actual benefit payments may vary significantly from the estimates listed below (in thousands):

2007	$	353
2008		398
2009		475
2010		535
2011		577
2012 through 2016		3,800
Total	$	6,138

        North American provides a tax qualified 401(k) employee savings plan for the benefit of substantially all employees. Under the plan, employees may contribute up to $15,000 of their salary. North American matches employees' contributions up to 100% of the first 3% of compensation plus 50% of the next 2% of compensation. North American also has the option to make additional profit-sharing contributions to the plan. Total contribution expense for matching of elective deferrals for the year ended December 31, 2006 was $0.6 million.

        In August 2005, North American implemented a profit sharing plan for its employees. It is not a tax-qualified plan under the Code. The plan provided for payment based on certain earnings targets for the year ended December 31, 2006 and 2005. Due to net losses for the year ended December 31, 2006, North American recorded no profit sharing expense during 2006. North American expensed $1.0 million for this plan during the year ended December 31, 2005.

F-98

12. Income Taxes

        The components of income tax expense (benefit) for the years ended December 31 are as follows (in thousands):

		2006			2005			2004
Current:
	Federal	$	173		$	18,959		$	12,422
	State		(953	)		1,477			773
Foreign			372			—			—
Deferred:
	Federal		73			(317	)		(4,450	)
	State		(20	)		(146	)		(300	)
Foreign			—			—			—
		$	(355	)	$	19,973		$	8,445

        Income tax expense differed from the amounts computed by applying the U.S. federal statutory income tax rate of 35% to pre-tax income as a result of the following (in thousands):

		2006			2005			2004
Expected Federal income tax expense/(benefit) at the statutory rate of 35%		$	(926	)	$	18,061		$	11,911
State and local taxes (net of federal benefit)			(52	)		879			307
Decrease in deferred tax asset valuation allowance			—			(31	)		(5,075	)
Other:
	Meals and entertainment		893			1,086			975
	Other		(270	)		(22	)		327
Income tax expense/(benefit)		$	(355	)	$	19,973		$	8,445

F-99

        The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31 were as follows (in thousands):

			2006			2005
Deferred tax assets:
	Net operating loss carry-forward		$	1,720		$	1,753
	Recognition of sale/leaseback gains			233			386
	Accrued post-retirement benefit obligation			2,794			2,553
	Profit sharing and compensated absences			2,072			5,441
	Deferred rent			2,314			2,117
	Allowance for doubtful accounts receivable			589			604
	Alternative minimum tax credit carry-forward			2,789			2,789
	Legal expense			174			1,067
	Other			1,438			1,193
	Gross deferred tax assets			14,123			17,903
		Less: valuation allowance		(3,717	)		(3,717	)
	Net deferred tax assets		$	10,406		$	14,186
	Deferred tax liabilities:
		Prepaid expenses		2,042			2,389
		Equipment and property		5,743			8,550
		Recoverable parts		141			233
		Intangibles		2,444			2,780
Net deferred tax asset/(liability)			$	36		$	234

        In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowance at December 31, 2006. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

        The availability of Net Operating Loss ("NOL") carry-forwards and Alternative Minimum Tax ("AMT") credit carry-forwards to reduce the Company's future federal income tax liability is subject to limitations under Section 382 of the Code. Generally, these limitations restrict the availability of NOL carry-forwards upon certain changes in stock ownership by five percent stockholders which, in aggregate, exceed 50 percentage points in value in a three-year period ("Ownership Change"). The Company experienced an Ownership Change in July 2000 primarily due to vesting of restricted shares under the Company's Employee Salary Exchange Program and the liquidation of WorldCorp, Inc.

F-100

        As of December 31, 2006 the Company has $46.7 million NOL carry-forwards that are limited by Internal Revenue Code ("IRC") Section 382. Due to this limitation, only $4.8 million of the NOL carry-forwards will be available for possible utilization for federal income tax purposes. This amount is computed based upon the $343,000 annual limitation resulting from the 2000 Ownership Change. Subsequent ownership changes, if any, could impose additional limitations on the Company's NOL carry-forwards. The Company's total NOL carry-forwards will begin to expire in 2007. The application of the Code in this area is subject to interpretation by the Internal Revenue Service ("IRS"). The NOL carry-forwards are subject to examination by the IRS and, thus, are subject to adjustment or disallowance resulting from any such IRS examination.

        World Airways is presently under examination by the IRS for the income tax return filed for the year ended December 31, 2004. North American is also under examination by the IRS for the S-Corporation income tax returns filed for the years ended December 31, 2003 and 2004. Currently, there are no adjustments proposed by the IRS and the impact of this examination is not determinable.

13. Major Customers and Products

        Information concerning customers for years in which their revenues comprise 10% or more of the Company's total operating revenues is presented in the following table (in millions):

	Year Ended December 31,
World Airways
	2006		2005		2004
U.S. Air Force ("USAF") Air Mobility Command	$	398.7	$	477.6	$	390.7

	Year Ended December 31,
North American
	2006		2005*
U.S. Air Force ("USAF") Air Mobility Command	$	159.4	$	103.6

*

Financial data include the results of North American from April 28, 2005 to December 31, 2005.

        Information concerning the Company's revenues comprising 10% or more of total operating revenues is presented in the following table (in millions):

	Year Ended December 31,
World Airways
	2006		2005		2004
Passenger Charter Operations	$	445.8	$	520.8	$	432.6
Cargo Charter Operations	$	112.3	$	99.9	$	69.1

F-101

	Year Ended December 31,
North American
	2006		2005*
Passenger Charter Operations	$	204.8	$	131.0
Passenger Scheduled Service		61.0	$	31.8

*

Financial data include the results of North American from April 28, 2005 to December 31, 2005.

14. Commitments and Contingencies

Union Negotiations and Litigation:

        World Airways' Cockpit Crewmembers:    The cockpit crewmembers, who account for approximately 29.9% of the total workforce at World Airways and are represented by the International Brotherhood of Teamsters ("IBT"), are subject to a collective bargaining agreement which will become amendable on March 1, 2009.

        World Airways' Flight Attendants:    The World Airways' flight attendants, representing approximately 41.9% of World Airways employees, are subject to a collective bargaining agreement that became amendable August 31, 2006. Negotiations began in mid-August 2006 with the IBT and are ongoing.

        North American's Cockpit Crewmembers:    The National Mediation Board ("NMB") certified the IBT to represent North American's cockpit crewmembers (approximately 24.6% of the total employees at North American) on January 16, 2004. North American and the IBT commenced negotiations for their first collective bargaining agreement on April 6, 2004 and have met on numerous occasions. Although representatives from North American and the IBT continue to negotiate the terms of a comprehensive final agreement under the auspices of the NMB, no collective bargaining agreement has yet been reached.

        North American's Flight Attendants:    On July 26, 2005, the NMB authorized a union election (the IBT) among North American's flight attendants. Flight attendants comprise approximately 37.4% of employees at North American. On August 31, 2005, a majority of flight attendants voted for IBT representation. Negotiations began in 2006 between North American and the IBT and are ongoing.

Other Litigation:

        On January 9, 2004, Whitebox Convertible Arbitrage Partners, L.P. and Pandora Select Partners, L.P. filed a complaint alleging breach of contract by World Airways in connection with its exchange in December 2003 of $22,545,000 aggregate amount of 8.0% Convertible Senior Subordinated Debentures due in 2004 (the "Old Debentures") for a like amount of the newly-issued Debentures. In August 2006, World Airways and the plaintiff agreed to settle this matter with a full release, in exchange for approximately $0.4 million cash consideration. The settlement was accrued during the six month period ended June 30, 2006 and was subsequently paid in September 2006.

F-102

        For competitive and economic reasons, effective as of January 2005, North American unilaterally reduced cockpit crewmember wages and other benefits in addition to modifying certain work rules. The IBT thereafter filed suit against North American. The United States District Court for the Northern District of California ruled in North American's favor; the IBT appealed and the decision of the Ninth Circuit is pending. North American will continue to vigorously defend itself; however the Company cannot give any assurance that this litigation will not have a material adverse effect on its financial condition, results of operations, or liquidity.

        North American, along with certain unrelated entities, is a defendant in litigation brought in the Dominican Republic for, among other things, breach of contract. Consequently, approximately $0.9 million of North American's funds were embargoed and were not controlled by North American until August 2006, when the court in the Dominican Republic lifted the embargo and the funds were returned to North American in October 2006. North American believes that the litigation is without merit, and intends to vigorously contest the claims. Management believes that the ultimate outcome of these proceedings to which the Company is currently a party will not have a material adverse effect on the Company's financial condition, results of operations or liquidity.

        North American was a defendant in a legal action pending in California brought by a former pilot for various causes of action, including wrongful termination. In May 2006, North American and the plaintiff agreed to settle this matter with a full release, in exchange for $2.3 million cash consideration. The settlement was accrued at December 31, 2005 and was paid in May 2006.

        In the ordinary course of business, the Company is party to various other legal proceedings and claims which we believe are incidental to the operations of our business. Management believes that the ultimate outcome of these proceedings to which the Company is currently a party will not have a material adverse effect on the Company's financial condition, results of operations or liquidity.

15. Valuation and Qualifying Accounts (in thousands)

	Balance at Beginning of Year		Additions Charged (Credited) to Expense			Amounts Charged to Allowance			Balance at End of Year
2006
Allowance for accounts receivable	$	1,643	$	335		$	(355	)	$	1,623
Deferred tax valuation allowance	$	3,717	$	—		$	—		$	3,717
2005
Allowance for accounts receivable	$	209	$	1,622		$	(188	)	$	1,643
Deferred tax valuation allowance	$	3,748	$	(31	)	$	—		$	3,717
2004
Allowance for accounts receivable	$	196	$	2,659		$	(2,646	)	$	209
Deferred tax valuation allowance	$	8,823	$	(5,075	)	$	—		$	3,748

F-103

16. Quarterly Results (unaudited)

        The results of the Company's quarterly operations (unaudited) for 2006 and 2005 are as follows (in thousands except share data):

	Quarter Ended
	Mar 31		Jun 30			Sep 30		Dec 31
2006
Operating revenues	$	216,253	$	176,657		$	231,421	$	201,325
Operating income/(loss)		9,446		(12,948	)		6,792		(4,070	)
Net earnings/(loss)		3,542		(7,479	)		5,425		(3,780	)
Basic earnings/(loss) per common share	$	0.15	$	(0.31	)	$	0.22	$	(0.17	)
Diluted earnings/(loss) per common share	$	0.13	$	(0.31	)	$	0.20	$	(0.17	)

	Quarter Ended
	Mar 31		Jun 30		Sep 30		Dec 31
2005
Operating revenues	$	159,549	$	171,882	$	217,180	$	238,527
Operating income		17,178		10,789		10,235		18,414
Net earnings		9,898		5,506		5,470		10,754
Basic earnings per common share	$	0.52	$	0.23	$	0.23	$	0.45
Diluted earnings per common share	$	0.38	$	0.21	$	0.20	$	0.40

17. Subsequent Events

        On April 5, 2007, the Company announced that it has entered into an agreement to be acquired by Global Aero Logistics Inc. for $315.0 million in an all-cash transaction. Under the terms of the agreement, World Air Holdings shareholders will receive $12.50 in cash for each share of the Company's common stock owned.

        Delta Air Lines, Inc. ("Delta") filed for bankruptcy in 2005. World Airways filed a claim against Delta for certain maintenance and lease payments the Company had made to Delta under maintenance service and equipment lease agreements. In May 2007, World Airways reached a settlement agreement with Delta whereby the Company will have an allowed general unsecured claim in Delta's bankruptcy case in the amount of $5.5 million. This agreement has no impact on the consolidated financial statements for the year ended December 31, 2006.

F-104

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
World Air Holdings, Inc.:

        We have audited management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting, that World Air Holdings, Inc. (the "Company") did not maintain effective internal control over financial reporting as of December 31, 2006, because of the effect of material weaknesses identified in management's assessment, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        A material weakness is a control deficiency, or combination of control 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. The following material weaknesses have been identified and included in management's assessment:

1.

The Company's control environment did not sufficiently promote effective internal control over financial reporting throughout the organization. Specifically, the following deficiencies in the control environment existed as of December 31, 2006:

a.

The Company lacked formal policies and procedures to clearly communicate management's and employees' roles and responsibilities in the Company's internal control over financial reporting.

F-105

b.

The Company lacked formal written accounting policies and procedures for the initiation and processing of transactions and for formal account reconciliations and related management review.

2.

The Company's information and communication controls did not sufficiently promote effective internal control over financial reporting throughout the organization. Specifically, the Company did not have formal policies and procedures in place to ensure that potential accounting or disclosure matters relevant to financial reporting were communicated to the Company's accounting and finance personnel by others within the Company in an appropriate form or timeframe to enable accurate financial reporting.

        Each of the material weaknesses described above contributed to the material weaknesses discussed in the following items 3 through 5.

3.

The Company did not maintain effective policies and procedures regarding the accounting for income taxes, including taxes payable, deferred income tax assets and liabilities and the related income tax provision. Specifically, the Company's policies and procedures did not provide for the effective internal preparation and review of complex tax calculations, the review of the tax provision, or the preparation of sufficient documentation of the Company's income tax accounting. These deficiencies resulted in material errors in the Company's income tax provision in the preliminary 2006 consolidated financial statements.

4.

The Company did not maintain effective policies and procedures related to its accounting for accrued liabilities. Specifically, the Company did not effectively perform and document procedures to evaluate the reasonableness of assumptions used to estimate liabilities associated with maintenance, flight costs, legal and other expense accruals. Further, existing procedures were not subject to adequate supervisory review. This deficiency resulted in material errors in maintenance, flight costs, legal and other expense accruals within the preliminary 2006 consolidated financial statements.

5.

The Company did not have effective controls over the financial reporting close process. Specifically, the Company did not have a sufficient number of accounting professionals with requisite technical and financial reporting knowledge to ensure the proper selection of accounting policies and the correct application of generally accepted accounting principles in the consolidated financial statements, and to ensure that accurate and reliable financial statements were prepared and reviewed on a timely basis. Also, the Company lacked effective policies and procedures to identify and record correctly the accounting implications of complex and non-routine transactions and to provide for sufficient review of financial information and related presentation and disclosures. These deficiencies resulted in material errors in the preliminary 2006 consolidated financial statements.

        Each of the aforementioned material weaknesses results in more than a remote likelihood that a material misstatement in the Company's annual or interim consolidated financial statements would not be prevented or detected.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of World Air Holdings, Inc. and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations, changes in stockholders' equity (deficit) and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2006. The aforementioned material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2006 consolidated financial statements, and this report does not affect our report dated July 3, 2007, which expressed an unqualified opinion on those consolidated financial statements.

F-106

        In our opinion, management's assessment that the Company did not maintain effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, because of the effect of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG LLP

Atlanta, Georgia

July 3, 2007

F-107

Management's Report on Internal Control Over Financial Reporting

        World Air Holdings, Inc.'s ("World Air Holdings" or "the Company") management, under the supervision of the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes policies and procedures that:

          (i)  pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

         (ii)  provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

        (iii)  provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with existing policies or procedures may deteriorate.

        Under the supervision of the Chief Executive Officer and the Chief Financial Officer, the Company's management conducted an assessment of the Company's internal control over financial reporting as of December 31, 2006, based on the framework and criteria established in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this assessment, management has concluded that internal control over financial reporting was not effective as of December 31, 2006 as a result of the material weaknesses described below.

        A material weakness is a control deficiency, or combination of control 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. In connection with management's assessment of the Company's internal control over financial reporting referred to above, management has identified the following material weaknesses in the Company's internal control over financial reporting as of December 31, 2006:

1.

The Company's control environment did not sufficiently promote effective internal control over financial reporting throughout the organization. Specifically, the following deficiencies in the control environment existed as of December 31, 2006:

a.

The Company lacked formal policies and procedures to clearly communicate management's and employees' roles and responsibilities in the Company's internal control over financial reporting.

b.

The Company lacked formal written accounting policies and procedures for the initiation and processing of transactions and for formal account reconciliations and related management review.

F-108

2.

The Company's information and communication controls did not sufficiently promote effective internal control over financial reporting throughout the organization. Specifically, the Company did not have formal policies and procedures in place to ensure that potential accounting or disclosure matters relevant to financial reporting were communicated to the Company's accounting and finance personnel by others within the Company in an appropriate form or timeframe to enable accurate financial reporting.

        Each of the material weaknesses described above contributed to the material weaknesses discussed in the following items 3 through 5.

3.

The Company did not maintain effective policies and procedures regarding the accounting for income taxes, including taxes payable, deferred income tax assets and liabilities and the related income tax provision. Specifically, the Company's policies and procedures did not provide for the effective internal preparation and review of complex tax calculations, the review of the tax provision, or the preparation of sufficient documentation of the Company's income tax accounting. These deficiencies resulted in material errors in the Company's income tax provision in the preliminary 2006 consolidated financial statements.

4.

The Company did not maintain effective policies and procedures related to its accounting for accrued liabilities. Specifically, the Company did not effectively perform and document procedures to evaluate the reasonableness of assumptions used to estimate liabilities associated with maintenance, flight costs, legal and other expense accruals. Further, existing procedures were not subject to adequate supervisory review. This deficiency resulted in material errors in maintenance, flight costs, legal and other expense accruals within the preliminary 2006 consolidated financial statements.

5.

The Company did not have effective controls over the financial reporting close process. Specifically, the Company did not have a sufficient number of accounting professionals with requisite technical and financial reporting knowledge to ensure the proper selection of accounting policies and the correct application of generally accepted accounting principles in the consolidated financial statements, and to ensure that accurate and reliable financial statements were prepared and reviewed on a timely basis. Also, the Company lacked effective policies and procedures to identify and record correctly the accounting implications of complex and non-routine transactions and to provide for sufficient review of financial information and related presentation and disclosures. These deficiencies resulted in material errors in the preliminary 2006 consolidated financial statements.

        Each of the aforementioned material weaknesses results in more than a remote likelihood that a material misstatement in the Company's annual or interim consolidated financial statements would not be prevented or detected.

        Management's assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2006 has been audited by KPMG LLP, an independent registered public accounting firm.

F-109

WORLD AIR HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)
(unaudited)

		June 30, 2007		December 31, 2006
ASSETS
Current assets
	Cash and cash equivalents	$	28,480	$	31,198
	Restricted cash		1,980		1,087
	Short-term investments		10,175		—
	Trade accounts receivable, less sales allowance and allowance for doubtful accounts of $2,036 at June 30, 2007 and $1,623 at December 31, 2006		44,906		27,944
	Other receivables		9,087		16,112
	Prepaid expenses and other current assets		20,889		19,697
	Deferred income taxes		4,005		1,261
Total current assets			119,522		97,299
Equipment and property
	Flight and other equipment		90,133		84,048
	Less: accumulated depreciation and amortization		51,036		48,613
Net equipment and property			39,097		35,435
Goodwill and other intangible assets
	Goodwill		25,370		25,370
	Other intangible assets, net of accumulated amortization of $1,908 at June 30, 2007 and $1,614 at December 31, 2006		6,187		6,481
Net goodwill and other intangible assets			31,557		31,851
Long-term deposits			28,580		28,481
Other assets and deferred charges, net of accumulated amortization of $308 at June 30, 2007 and $185 at December 31, 2006			7,083		5,684
Total assets		$	225,839	$	198,750

See accompanying Notes to Condensed Consolidated Financial Statements

F-110

WORLD AIR HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)
(unaudited)

		June 30, 2007		December 31, 2006
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
	Accounts payable	$	61,511	$	52,372
	Current portion of accrued rent		4,949		3,945
	Current portion of deferred rent		1,618		2,007
	Unearned revenue		22,133		18,163
	Accrued maintenance		8,340		14,504
	Accrued salaries, wages and profit sharing		19,911		15,814
	Accrued taxes		16,369		6,413
Total current liabilities			134,831		113,218
Deferred gain from sale-leaseback transactions, net of accumulated amortization of $5,466 at June 30, 2007 and $5,263 at December 31, 2006			106		244
Accrued post-retirement benefits			8,330		7,804
Accrued and deferred rent, net of current portion			9,197		9,128
Deferred income taxes			—		1,225
Other liabilities			89		—
Total liabilities			152,553		131,619
Stockholders' equity
	Preferred stock, $.001 par value (5,000,000 shares authorized; no shares issued or outstanding)		—		—
	Common stock, $.001 par value (100,000,000 shares authorized; 22,593,017 shares issued and outstanding at June 30, 2007; 22,367,317 shares issued and outstanding at December 31, 2006)		23		22
	Additional paid-in capital		38,766		37,021
	Retained earnings		34,280		29,861
	Other comprehensive income		217		227
Total stockholders' equity			73,286		67,131
Commitments and contingencies			—		—
Total liabilities and stockholders' equity		$	225,839	$	198,750

See accompanying Notes to Condensed Consolidated Financial Statements

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WORLD AIR HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)
(unaudited)

		Three Months Ended June 30,						Six Months Ended June 30,
		2007			2006			2007			2006
Operating revenues
	Flight operations	$	229,703		$	176,300		$	452,180		$	392,167
	Other		329			357			703			743
Total operating revenues			230,032			176,657			452,883			392,910
Operating expenses
	Flight		68,920			53,955			137,023			115,370
	Maintenance		31,470			36,441			65,045			66,875
	Aircraft costs		33,017			30,689			64,781			59,950
	Fuel		57,037			39,970			108,743			89,299
	Flight operations subcontracted to other carriers		(12	)		5			238			2,111
	Commissions		11,916			7,387			23,703			18,352
	Depreciation and amortization		1,836			1,639			3,688			3,310
	Sales, general and administrative		19,666			19,519			42,650			41,145
Total operating expenses			223,850			189,605			445,871			396,412
Operating income (loss)			6,182			(12,948	)		7,012			(3,502	)
Other income (expense)
	Interest expense		(26	)		—			(27	)		(3,573	)
	Interest income		455			428			800			767
	Other, net		(32	)		(200	)		(110	)		(314	)
Total other income (expense)			397			228			663			(3,120	)
Earnings (loss) before income tax expense			6,579			(12,720	)		7,675			(6,622	)
Income tax expense (benefit)			2,678			(5,241	)		3,256			(2,685	)
Net earnings (loss)		$	3,901		$	(7,479	)	$	4,419		$	(3,937	)
Basic earnings per share
Net earnings (loss)		$	0.17		$	(0.31	)	$	0.20		$	(0.16	)
Weighted average shares outstanding			22,568			24,034			22,541			23,986
Diluted earnings per share
Net earnings (loss)		$	0.16		$	(0.31	)		0.18		$	(0.16	)
Weighted average shares outstanding			25,143			24,034		$	25,038			23,986

See accompanying Notes to Condensed Consolidated Financial Statements

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WORLD AIR HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME

SIX MONTHS ENDED JUNE 30, 2007

(in thousands, except share amounts)
(unaudited)

	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income			Total Stockholders' Equity
Balances at December 31, 2006	$	22	$	37,021	$	29,861	$	227		$	67,131
Net income		—		—		4,419		—			4,419
Other comprehensive income, net		—		—		—		(10	)		(10	)
Comprehensive income											4,409
Exercise of 250,900 stock options		1		321		—		—			322
Excess tax benefit of stock option exercises		—		827		—		—			827
Amortization of warrants		—		68		—		—			68
Stock-based compensation		—		529		—		—			529
Balances at June 30, 2007	$	23	$	38,766	$	34,280	$	217		$	73,286

See accompanying Notes to Condensed Consolidated Financial Statements

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WORLD AIR HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2007 and 2006
(in thousands)
(unaudited)

		2007			2006
Cash and cash equivalents at beginning of year		$	31,198		$	46,202
Cash flow from operating activities
Net earnings (loss)			4,419			(3,937	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
	Depreciation and amortization		3,688			3,310
	Deferred gain recognition		(203	)		(203	)
	Loss on disposals of equipment and property		519			251
	Amortization of warrants and debt issuance costs		191			2,781
	Deferred income taxes		(3,724	)		2,181
	Provision for doubtful accounts and sales allowance		568			552
	Stock-based compensation		529			183
	Other		(10	)		59
Changes in operating assets and liabilities, exclusive of acquisitions:
	Trade and other receivables		(10,505	)		35,765
	Restricted cash		(893	)		(5,780	)
	Deposits, prepaid expenses and other assets		(2,963	)		(4,637	)
	Accounts payable, accrued expenses and other liabilities		18,404			(26,754	)
	Unearned revenue		3,970			11,195
Net cash provided by operating activities			13,990			14,966
Cash flows from investing activities
	Purchases of equipment and property		(7,641	)		(4,657	)
	Net sales (purchases) of short term investments		(10,175	)		(17,718	)
	Proceeds from disposals of equipment and property		54			289
Net cash used in investing activities			(17,762	)		(22,086	)
Cash flows from financing activities
	Repayment of debt		—			(24,000	)
	Proceeds from exercise of stock options		322			385
	Excess tax benefit from employees stock-based compensation plan		732			918
	Debt issuance cost		—			(367	)
Net cash provided by (used in) financing activities			1,054			(23,064	)
Net decrease in cash and cash equivalents			(2,718	)		(30,184	)
Cash and cash equivalents at end of period		$	28,480		$	16,018
Supplemental information:
Interest paid		$	—		$	363
Income taxes paid		$	4,498		$	88

See accompanying Notes to Condensed Consolidated Financial Statements

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WORLD AIR HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

Basis of Presentation

        The unaudited Condensed Consolidated Financial Statements include the accounts of World Air Holdings, Inc. ("World Air Holdings" or the "Company"), and its wholly-owned subsidiaries, World Airways, Inc. ("World Airways"), North American Airlines, Inc. ("North American"), and World Risk Solutions, Ltd. ("World Risk Solutions"). World Airways Parts Company LLC is a wholly-owned subsidiary of World Airways. All significant inter-company accounts and transactions have been eliminated in consolidation for all periods presented.

        Management believes that all adjustments necessary to present fairly the financial position of World Air Holdings, Inc. as of June 30, 2007 and the results of operations for the respective three-months and six-months ended June 30, 2007 have been included in the unaudited Condensed Consolidated Financial Statements for the interim periods presented. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the results of operations for the three-months and six-months ended June 30, 2007 are not necessarily indicative of the results to be expected for the year ending December 31, 2007.

        The Consolidated Balance Sheet for December 31, 2006 is from the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2006 (the "2006 Form 10-K"). These interim period Consolidated Financial Statements and accompanying footnotes should be read in conjunction with the Consolidated Financial Statements contained in the 2006 Form 10-K.

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2. Segment Reporting

        The Company has two operating segments, World Airways and North American. Financial and other information for the three-months and six-months ended June 30, 2007 and 2006 by reporting segment is set forth below (in thousands).

	Three Months Ended June 30, 2007
	World Airways		North American		World Air Holdings, World Risk Solutions, and Eliminations			Total
Total operating revenues	$	144,495	$	85,545	$	(8	)	$	230,032
Total operating expenses	$	139,124	$	85,123	$	(397	)	$	223,850
Operating income	$	5,371	$	422	$	389		$	6,182
Total assets	$	133,692	$	82,101	$	10,046		$	225,839

	Three Months Ended June 30, 2006
	World Airways			North American			World Air Holdings, World Risk Solutions, and Eliminations			Total
Total operating revenues	$	115,605		$	61,192		$	(140	)	$	176,657
Total operating expenses	$	126,614		$	63,426		$	(435	)	$	189,605
Operating income (loss)	$	(11,009	)	$	(2,234	)	$	295		$	(12,948	)
Total assets	$	136,996		$	76,809		$	5,199		$	219,004

	Six Months Ended June 30, 2007
	World Airways		North American			World Air Holdings, World Risk Solutions, and Eliminations			Total
Total operating revenues	$	283,302	$	170,372		$	(791	)	$	452,883
Total operating expenses	$	274,722	$	171,926		$	(777	)	$	445,871
Operating income (loss)	$	8,580	$	(1,554	)	$	(14	)	$	7,012
Total assets	$	133,692	$	82,101		$	10,046		$	225,839

	Six Months Ended June 30, 2006
	World Airways			North American			World Air Holdings, World Risk Solutions, and Eliminations			Total
Total operating revenues	$	273,987		$	119,290		$	(367	)	$	392,910
Total operating expenses	$	275,247		$	121,212		$	(47	)	$	396,412
Operating loss	$	(1,260	)	$	(1,922	)	$	(320	)	$	(3,502	)
Total assets	$	136,996		$	76,809		$	5,199		$	219,004

3. Long-Term Deposits

        Long-term deposits of $28.6 million at June 30, 2007 consisted of aircraft and engine (flight equipment) deposits of $28.0 million and building and miscellaneous deposits of $0.6 million. At December 31, 2006, long-term deposits of $28.5 million consisted of aircraft and engine deposits of $27.6 million and building and miscellaneous deposits of $0.9 million.

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4. Earnings (Loss) per Share

        Basic earnings (loss) per share are computed by dividing net earnings (loss) by the weighted average number of shares outstanding during the period. Diluted earnings (loss) per share include the effects of common equivalent shares outstanding during the period that are dilutive.

        The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share data):

	Three Months Ended June 30, 2007
	Earnings (Numerator)		Shares (Denominator)	Per Share Amount
Basic EPS
Earnings available to common stockholders	$	3,901	22,568	$	0.17
Effect of dilutive securities
Warrants		—	1,880
Options		—	630
Restricted stock		—	65
Diluted EPS
Earnings available to common shareholders plus assumed conversion	$	3,901	25,143	$	0.16

	Three Months Ended June 30, 2006
	Earnings (Numerator)			Shares (Denominator)	Per Share Amount
Basic and Diluted EPS
Loss available to common stockholders	$	(7,479	)	24,034	$	(0.31	)

	Six Months Ended June 30, 2007
	Earnings (Numerator)		Shares (Denominator)	Per Share Amount
Basic EPS
Earnings available to common stockholders	$	4,419	22,541	$	0.20
Effect of dilutive securities
Warrants		—	1,848
Options		—	595
Restricted stock		—	54
Diluted EPS
Earnings available to common shareholders plus assumed conversion	$	4,419	25,038	$	0.18

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	Six Months Ended June 30, 2006
	Earnings (Numerator)			Shares (Denominator)	Per Share Amount
Basic and Diluted EPS
Loss available to common stockholders	$	(3,937	)	23,986	$	(0.16	)

        Excluded from the diluted earnings per share calculation for the three- and six-month periods ended June 30, 2006 are 1.7 million shares related to warrants. Also excluded are approximately 0.8 million shares and 0.9 million shares related to options for the three-months and six-months ended June 30, 2006, respectively. These shares are excluded because the effect of including the shares would have been anti-dilutive.

5. Long-term Debt

        On March 30, 2006 the Company prepaid the remaining principal balance of $24.0 million outstanding under the $30.0 million term loan (the "ATSB Loan"), which was 90% guaranteed by the Air Transportation Stabilization Board (the "ATSB") and 10% guaranteed by a third party, with working capital. As a result of this prepayment, the Company expensed an additional $2.3 million in unamortized debt issuance and warrant costs associated with the ATSB Loan during the first quarter of 2006.

        Additionally, in March 2006, World Airways and North American entered into a Loan and Security Agreement with Wachovia Bank, National Association ("Wachovia Loan"), for the issuance of loans and letters of credit up to $50.0 million subject to certain terms, conditions, and limitations. The Company has obtained the necessary waivers through August 17, 2007 relating to the violations of certain negative covenant provisions. The Company had no borrowings outstanding at June 30, 2007 or December 31, 2006. As part of the acquisition of the Company by Global Aero Logistics Inc. ("Global Aero Logistics"), on August 14, 2007 the Wachovia Loan agreement was terminated (See Note 12).

6. Lease Obligations

        During the second quarter of 2007, the Company signed a letter of intent to lease two Boeing 747-400 ("B747") Special Freighter aircraft. Deliveries are planned during 2008, at the discretion of the lessor. The term of the leases are 120 months each from the respective delivery dates. Future minimum lease payments for these aircraft leases, excluding maintenance reserves, are $10.4 million, $19.2 million, $19.2 million, $19.2 million and $124.0 million for the years 2008, 2009, 2010, 2011, and thereafter, respectively. These aircraft leases require the Company to pay certain maintenance reserves for airframes, engines, landing gear and auxiliary power units of approximately $1.2 million per year plus additional amounts based on flight hours and cycles. Certain return conditions also must be met prior to returning the aircraft to the lessor.

7. Accounting for Stock-Based Compensation

        At June 30, 2007, the Company had one stock-based compensation plan. The 1995 Stock Incentive Plan (the "1995 Plan") was amended in May 2004 to allow for various forms of equity awards including restricted stock.

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        Effective January 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123I, Share-Based Payments ("SFAS 123R"), using the modified-prospective transition method. Under the modified-prospective transition method, compensation cost recognized during the three-months and six-months ended June 30, 2007 and 2006 includes compensation cost for all share-based awards granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123R.

Stock Options

        The table below summarizes stock option award activity pursuant to the Company's plans for the six-months ended June 30, 2007:

	Number of Shares (in thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2006	1,624		$	3.55
Granted	—			—
Exercised	(251	)	$	1.28
Forfeited	(4	)	$	7.44
Outstanding at June 30, 2007	1,369		$	3.96	4.6	$	11,019
Exercisable at June 30, 2007	1,020		$	2.78	4.1	$	9,402

        The total intrinsic value of options exercised for the six-month period ended June 30, 2007, determined as of the date of exercise of options, was $2.1 million. The total intrinsic value of options exercised for the six-month period ended June 30, 2006, determined as of the date of exercise of options, was $2.2 million. Cash received from option exercises during the six-month periods ended June 30, 2007 and 2006, totaled $0.3 million and $0.4 million, respectively.

        The Company recorded $0.3 million and $0.2 million of stock-based compensation expense related to non-vested stock options to sales, general and administrative expense for the six-month period ended June 30, 2007 and 2006, respectively. The excess tax benefit realized for the tax deduction from option exercises under the Company plan was $0.8 million and $0.8 million for the six-month periods ended 2007 and 2006, which generated cash flows from excess tax benefits, under the long-haul method, of $0.7 million and $1.0 million, respectively.

        At June 30, 2007, there was approximately $1.0 million of total unrecognized compensation expense related to non-vested stock options granted under the Company's stock incentive plans, which was expected to be recognized over a weighted-average vesting period of 2.2 years. On August 14, 2007, the Company executed the final agreement with Global Aero Logistics the parent company of ATA Airlines, Inc., completing Global Aero Logistics' acquisition of World Air Holdings, Inc. As a result of this acquisition, all non-vested stock options granted under the 1995 Plan became fully vested and exercisable. Therefore, in August 2007, the Company recorded approximately $1.0 million of stock-based compensation expense related to the accelerated vesting of these stock options to sales, general and administrative expense.

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Restricted Stock Awards

        The Company recorded $0.3 million of stock-based compensation expense related to non-vested restricted stock awards to sales, general and administrative expense for the six-month period ended June 30, 2007. At June 30, 2007, there was approximately $1.2 million of total unrecognized compensation expense related to non-vested restricted stock granted under the Company's stock incentive plan, which was expected to be recognized over a weighted-average vesting period of 3.8 years. On August 14, 2007 the Company executed the final agreement with Global Aero Logistics the parent company of ATA Airlines, Inc., completing Global Aero Logistics' acquisition of World Air Holdings, Inc. As a result of this acquisition, all non-vested restricted stock awards granted under the 1995 Plan became fully vested. Therefore, in August 2007 the Company recorded approximately $1.2 million of stock-based compensation expense related to the accelerated vesting of these restricted stock awards to sales, general and administrative expense. The Company had no stock-based compensation expense related to non-vested restricted stock awards for the six-month period ended June 30, 2006.

8. Post-Retirement Health Care Benefits Plan

        World Airways' cockpit crewmembers and eligible dependents are covered by a post-retirement health care and life insurance benefits plan until age 65. A small group of administrative retirees are also covered under a post-retirement health care and life insurance benefits plan for life.

        A summary of the net periodic post-retirement benefit costs for the three and six month periods ended June 30 is as follows (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2007			2006		2007			2006
Service cost	$	192		$	334	$	384		$	526
Interest cost		113			159		226			270
Amortization of prior service cost		(4	)		3		(8	)		6
Net amortized loss		—			59		—			78
Net periodic post-retirement benefit cost	$	301		$	555	$	602		$	880

        The Company anticipates that it will contribute approximately $0.2 million to fund its health care obligations in 2007. As of June 30, 2007, less than $0.1 million of contributions have been made.

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9. Major Customers and Products

        Information concerning customers for the three and six month periods ended June 30, 2007 and 2006 in which their revenues comprise 10% or more of the Company's total operating revenues is presented in the following table (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
World Airways
	2007		2006		2007		2006
U.S. Air Force ("USAF") Air Mobility Command	$	107.7	$	74.5	$	206.4	$	199.5

	Three Months Ended June 30,				Six Months Ended June 30,
North American
	2007		2006		2007		2006
U.S. Air Force ("USAF") Air Mobility Command	$	61.8	$	39.1	$	124.6	$	77.1

        Information concerning the classification of the Company's revenues comprising 10% or more of total operating revenues for the three-and six-month periods ended June 30, 2007 and 2006 is presented in the following table (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
World Airways
	2007		2006		2007		2006
Passenger Charter Operations	$	115.2	$	86.6	$	223.4	$	217.4
Cargo Charter Operations		29.0		28.5		59.2		55.6

	Three Months Ended June 30,				Six Months Ended June 30,
North American
	2007		2006		2007		2006
Passenger Charter Operations	$	68.6	$	50.7	$	137.8	$	99.4
Passenger Schedule Service		17.5		10.3		32.6		19.5

10. Commitments and Contingencies

Union Negotiations and Litigation:

        World Airways' Cockpit Crewmembers:    The cockpit crewmembers, who account for approximately 29.8% of the total workforce at World Airways and are represented by the International Brotherhood of Teamsters ("IBT"), are subject to a collective bargaining agreement which will become amendable on March 1, 2009.

        World Airways' Flight Attendants:    The World Airways' flight attendants, representing approximately 41.7% of World Airways employees, are subject to a collective bargaining agreement that became amendable August 31, 2006. In July 2007, the flight attendants represented by the IBT reached a tentative agreement for a new contract. On September 28, 2007, the flight attendants, with a vote of 71% in favor, ratified the substantive terms of the tentative agreement. The tentative agreement

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included a one time signing bonus of $0.3 million, which the Company will record to expense in the third quarter of 2007. The agreement will become amendable in 2012.

        North American's Cockpit Crewmembers:    The National Mediation Board ("NMB") certified the IBT to represent North American's cockpit crewmembers (approximately 21.9% of the total employees at North American) on January 16, 2004. North American and the IBT commenced negotiations for their first collective bargaining agreement on April 6, 2004 and have met on numerous occasions. In August 2007, the cockpit crewmembers represented by the IBT reached a tentative agreement for a new contract.

        North American's Flight Attendants:    On July 26, 2005, the NMB authorized a union election (the IBT) among North American's flight attendants. Flight attendants comprise approximately 43.5% of employees at North American. On August 31, 2005, a majority of flight attendants voted for IBT representation. Negotiations began in 2006 between North American and the IBT and are ongoing.

Other Litigation:

        In March 2007, the Company entered into a settlement agreement with Virgin Atlantic Airways, Ltd. for damages sustained to a North American aircraft in 2004 that the Company had previously recorded a receivable of approximately $0.2 million. The Company received a total of approximately $1.0 million for the damages to the aircraft and recorded the settlement of adjusting expenses for the costs incurred for the damages of approximately $0.2 million to maintenance expense, $0.2 million to flight costs and $0.4 million to sales, general and administrative expense during the quarter ended March 31, 2007.

        In August 2007, an arbitrator issued a binding opinion on a matter between World Airways and the IBT allowing pilots who reach the mandatory retirement age of 60 years to displace second officers. World Airways recorded a liability of approximately $0.6 million, net of tax, as an estimate of the award for back pay and other benefits payable to the captains represented in the IBT action.

        In the ordinary course of business, the Company is party to various other legal proceedings and claims which we believe are incidental to the operations of our business. Management believes that the ultimate outcome of these proceedings to which the Company is currently a party will not have a material adverse effect on the Company's financial condition, results of operations or liquidity.

11. Income Tax Expense

        In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109" ("FIN 48"). The Company adopted FIN 48 effective January 1, 2007. FIN 48 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, the Company may recognize the tax benefit from uncertain tax positions only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement with the taxing authorities. FIN 48 also provided guidance

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on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

        Upon adoption of FIN 48, there was no cumulative catch-up adjustment to the Company's retained earnings. At January 1, 2007 and June 30, 2007, the total amount of gross unrecognized tax benefits was $3.2 million and $3.5 million, respectively. At June 30, 2007, this amount relates to $1.5 million of federal income taxes and $2.0 million of state and foreign taxes. The impact on the Company's effective tax rate as a result of the $3.5 million of unrecognized tax benefits would be approximately $1.3 million. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income tax expense. As of January 1, 2007 and June 30, 2007, the liability for gross unrecognized tax benefits included approximately $0.7 million and $1.0 million, respectively, of interest and penalties.

        The Company files income tax returns in the United States and various state and local jurisdictions. World Airways is presently under examination by the Internal Revenue Service ("IRS") for tax year ended December 31, 2004. North American is also under examination by the IRS for the income tax return filed for the year ended December 31, 2003 and the S-Corporation tax return filed for the year ended December 31, 2004.

        The Company does not anticipate any significant adjustment to unrecognized tax benefits which will impact income tax expense, due to the settlement of audits and the expiration of statutes of limitations in the next 12 months. However, actual results could differ from those currently anticipated.

        During the six-month period ended June 30, 2007, additional reserves for tax uncertainties totaling less than $0.1 million and additional interest totaling approximately $0.2 million were provided by the Company. As of June 30, 2007, the Company has recorded approximately $3.5 million of unrecognized tax benefits in other liabilities on the consolidated balance sheet.

        The effective income tax rate for the Company was 42.4% for the six-months ended June 30, 2007 compared to 40.5% in the same period of 2006. The increase in the effective rate is due to the impact of certain non-deductible items that do not fluctuate with the level of income, such as meal and entertainment expenses and penalties.

12. Subsequent Events

        On April 5, 2007, the Company announced that it has entered into an agreement to be acquired by Global Aero Logistics. On July 18, 2007 at a special meeting of the shareholders, the merger agreement, as amended, was approved by a majority vote. On August 14, 2007, the Company executed the final agreement with Global Aero Logistics the parent company of ATA Airlines, Inc., completing Global Aero Logistics' acquisition of World Air Holdings, Inc. Global Aero Logistics acquired World Air in a cash merger with a price per share of $12.50 and a total transaction value of approximately $315.0 million.

        On August 14, 2007, the Company and the former owner of North American Airlines ("the Seller"), entered into an agreement to amend the original Stock Purchase Agreement dated April 27, 2005. Under the terms of this amendment, the Seller will reimburse the company $2.5 million of tax distributions previously paid under the original agreement. In addition, the Company receives the right

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to control the filing and any potential tax disputes relating to the tax returns filed prior to April 27, 2005. The Company will provide the Seller with an irrevocable letter of credit up to $2.5 million to indemnify the Seller for any increases relating to certain individual taxes and costs associated with the tax returns filed prior to April 27, 2005 should those returns be adjusted by taxing authorities.

13. Recently Issued Accounting Standards

        In June 2006, the FASB ratified the Emerging Issues Task Force ("EITF") consensus on EITF Issue No. 06-03 "How Taxes Collected From Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement ("EITF 06-03"). The scope of EITF 06-03 includes any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer, and provides that a company may adopt a policy of presenting taxes either gross within revenue or on a net basis. For any such taxes that are reported on a gross basis, a company should disclose the amounts of those taxes for each period for which an income statement is presented if those amounts are significant. This statement is effective for financial reports for interim and annual reporting periods beginning after December 15, 2006. The Company adopted EITF 06-03 on January 1, 2007. Various taxes and fees on the sale of tickets to customers are collected by the Company as an agent and remitted to the respective taxing authority. These taxes and fees have been presented on a net basis in the accompanying consolidated statement of income and recorded as a liability until remitted to the respective taxing authority.

        In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159). SFAS 159 allows entities the option to measure eligible financial instruments at fair value as of specified dates. Such election, which may be applied on an instrument by instrument basis, is typically irrevocable once elected. SFAS 159 is effective for fiscal years beginning after November 15, 2007, and early application is allowed under certain circumstances. The Company will adopt SFAS 159 effective January 1, 2008. The Company has not yet determined the effect, if any, that the adoption of SFAS 159 will have on its financial position or results of operations.

        In September 2007, the American Institute of Certified Public Accountants ("AICPA") issued "Proposed AICPA Audit and Accounting Guide, Airlines" which has been developed by the AICPA Airline Guide Task Force to assist management in reporting entities in their preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") and to assist auditors and reporting on such financial statements.

F-124

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.    Other Expenses of Issuance and Distribution.

        The following table sets forth all expenses (subject to future contingencies) payable by us in connection with the issuance and distribution of our securities being registered hereby. All amounts are estimated except the SEC registration fee:

Expenses	Amount
SEC registration fee	$	1535
Printing and engraving expenses
Legal fees and expenses
Blue Sky fees and expenses
Subscription agent fees and expenses
Accounting fees and expenses
Miscellaneous expenses
TOTAL	$

Item 14.    Indemnification of Directors and Officers.

        Section 145(a) of the General Corporation Law of the State of Delaware (the "DGCL") provides in relevant part that a corporation may indemnify any officer or director who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another entity, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful.

        Section 145(b) of the DGCL provides in relevant part that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

        Our Certificate of Incorporation limits the liability of directors to the fullest extent permitted by Delaware law, and our By-laws provide for the indemnification of our directors and officers to the maximum extent permitted by Delaware law.

        Section 145(g) of the DGCL provides that a corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability

II-1

asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section.

        Global maintains a global Directors' and Officers' liability insurance policy that provides coverage to its directors and officers.

Item 15.    Recent Sales of Unregistered Securities.

        Global issued 11,507,142 shares of Series A preferred convertible stock to MatlinPatterson for an aggregate purchase price of $161.1 million, or $14.00 per share, on August 14, 2007. The Series A preferred stock has an annual cumulative dividend rate of 16.0% payable in common stock upon conversion but in no event will such dividend be equal to a value less than $8.0 million. JPMorgan and Jefferies also, respectively, received 1,808,986 and 452,247 immediately exercisable Warrants to purchase Global's common stock at an exercise price of $0.01 per share.

        On October 23, 2007, MatlinPatterson purchased the Warrants held by JPMorgan and on that date, MatlinPatterson exercised these Warrants, resulting in MatlinPatterson owning 1,808,986 shares of Global's common stock, in addition to the 7,500,000 shares of common stock that MatlinPatterson owned prior to this exercise. The Warrants acquired by Jefferies continue to be owned by Jefferies and remain unexercised.

Item 16.    Exhibits and Financial Statement Schedules.

(a) Exhibits

Exhibit Number	Exhibit Description
2.1	Agreement and Plan of Merger, dated as of April 5, 2007, between Global Aero Logistics Inc., Hugo Acquisition Corp., and World Air Holdings, Inc.
2.2	Amendment No. 1, dated as of June 30, 2007, to the Agreement and Plan of Merger, dated as of April 5, 2007, between Global Aero Logistics Inc., Hugo Acquisition Corp., and World Air Holdings, Inc.
2.3	Certificate of Merger, as filed with the Secretary of State of the State of Delaware on August 14, 2007.
2.4	Agreement and Plan of Merger, dated as of January 10, 2005, by and among World Airways Inc., World Air Holdings, Inc., and World Merger Subsidiary, Inc.
2.5	First Amended Joint Chapter 11 Plan of Reorganization for the Reorganizing Debtors.
2.6	Reorganizing Debtors' First Immaterial Modification and Clerical Correction to the First Amended Joint Chapter 11 Plan of Reorganization for the Reorganizing Debtors.
2.7	Order Confirming the First Amended Joint Chapter 11 Plan of Reorganization for the Reorganizing Debtors.
3.1	Amended and Restated Certificate of Incorporation of New ATA Holdings Inc. (n/k/a Global Aero Logistics Inc.).
3.2	Amended and Restated By-Laws of New ATA Holdings Inc. (n/k/a/ Global Aero Logistics Inc.).
3.3	Certificate of Amendment of the Amended and Restated Certificate of Incorporation of New ATA Holdings Inc., changing its name to Global Aero Logistics Inc., dated as of April 2, 2007.
3.4	Certificate of Correction of the Amended and Restated Certificate of Incorporation of Global Aero Logistics Inc., dated September 17, 2007.

II-2

3.5	Certificate of Designations for Series A Convertible Cumulative Preferred Stock of Global Aero Logistics Inc., dated as of August 14, 2007.
5.1	Opinion of Cravath, Swaine & Moore LLP.
10.1	Stock Option Plan for Management Employees of New ATA Holdings, Inc.
10.2	Global Aero Logistics Inc. 2006 Long Term Incentive Plan.
10.3	Amendment to the Global Aero Logistics Inc. 2006 Long Term Incentive Plan dated as of August 14, 2007.
10.4	Form of Annual Incentive Plan Letter.*
10.5	Employment Agreement between John Denison and New ATA Holdings Inc.*
10.6	Employment Agreement between Subodh Karnik and Global Aero Logistics Inc. dated as of October 22, 2007.*
10.7	Employment Agreement between Douglas Yakola and Global Aero Logistics Inc. dated as of September 15, 2007.*
10.8	Employment Agreement between Gary Ellmer and ATA Airlines Inc. dated as of August 27, 2007.*
10.9	Employment Agreement between Josef Loew and Global Aero Logistics Inc. dated as of August 27, 2007.*
10.10	Employment Agreement between William Garrett and Global Aero Logistics Inc. dated as of October 22, 2007.*
10.11	Severance Agreement between ATA Holdings Corp. and J. George Mikelsons dated August 31, 2005.
10.12	Non-Competition and Confidentiality Agreement between ATA Holdings Corp. and J. George Mikelsons dated August 31, 2005.
10.13	Term Loan Agreement dated as of August 14, 2007, among New ATA Acquisition Inc., Jefferies Finance LLC and JPMorgan Chase Bank, N.A.
10.14	First Amendment and Waiver dated as of December 10, 2007 to the Term Loan Agreement, dated as of August 14, 2007, among New ATA Acquisition Inc., the several lenders from time to time parties thereto, Jefferies Finance LLC and JPMorgan Chase Bank, N.A.
10.15	Guarantee and Collateral Agreement dated as of August 14, 2007, made by Global Aero Logistics Inc., New ATA Investment Inc., New ATA Acquisition Inc. and various Guarantors in favor of JPMorgan Chase Bank, N.A.
10.16	Mortgage and Security Agreement dated as of August 14, 2007, between ATA Airlines, Inc., and JPMorgan Chase Bank, N.A.
10.17	Mortgage and Security Agreement Supplement No. 1 dated as of August 14, 2007, of ATA Airlines, Inc.
10.18	Mortgage and Security Agreement dated as of August 14, 2007, between World Airways, Inc., and JPMorgan Chase Bank, N.A.
10.19	Mortgage and Security Agreement Supplement No. 1 dated as of August 14, 2007, of World Airways, Inc.
10.20	Southwest ATA Amended and Restated Codeshare Agreement dated as of December 9, 2005 by and between Southwest Airlines Co. and ATA Airlines Inc.*
10.21	Bridge and Purchase Agreement by and among Global Aero Logistics Inc. and MatlinPatterson ATA Holdings LLC, dated as of August 14, 2007.

II-3

10.22	Warrant Agreement dated as of August 14, 2007, between Global Aero Logistics Inc. and JPMorgan Chase Bank, N.A.
21.1	List of subsidiaries of Global Aero Logistics Inc.
23.1	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.^
23.2	Consent of KPMG LLP, Independent Registered Public Accounting Firm.
23.3	Consent of Cravath, Swaine & Moore LLP (included in the opinion filed as Exhibit 5.1).
24.1	Power of Attorney (contained in the signature page).
99.1	Form of Subscription Agent Agreement.*
99.2	Form of Letter to Shareholders.*

*

To be filed by amendment

^

Previously filed.

(b)  Financial Statement Schedules.

        The financial statement schedules are omitted because they are inapplicable or the requested information is shown in the consolidated statements of Global and World Air Holdings or related notes thereto.

Item 17.    Undertakings

        The undersigned registrant hereby undertakes:

        Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-4

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized on January 9, 2008.

GLOBAL AERO LOGISTICS INC.
By:	/s/  SUBODH KARNIK Name: Subodh Karnik Title: Director, President and Chief Executive Officer

POWER OF ATTORNEY

        We, the undersigned directors and officers of Global Aero Logistics Inc., do hereby constitute and appoint Subodh Karnik and Mark M. McMillin, or any of them, our true and lawful attorneys and agents, with full power of substitution, to do any and all acts and things in our name and on our behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said registrant to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments and any related registration statement pursuant to Rule 462(b) under the Securities Act of 1933, as amended) hereto and we do hereby ratify and confirm that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the 9th day of January, 2008.

Signature	Title
/s/  SUBODH KARNIK Subodh Karnik	(Director, President and Chief Executive Officer)
/s/  WILLIAM GARRETT William Garrett	(Principal Financial and Accounting Officer)
/s/  JOHN DENISON John Denison	(Chairman of the Board of Directors)
/s/  DUANE H. CASSIDY Gen. Duane H. Cassidy	(Director)

II-5

/s/  MARC CHODOCK Marc Chodock	(Director)
/s/  DAVID MATLIN David Matlin	(Director)
/s/  PETER SCHOELS Peter Schoels	(Director)
/s/  LAWRENCE M. TEITELBAUM Lawrence M. Teitelbaum	(Director)
/s/  RANDY J. MARTINEZ Randy J. Martinez	(Director)

II-6

EXHIBIT INDEX

Exhibit Number	Exhibit Description
2.1	Agreement and Plan of Merger, dated as of April 5, 2007, between Global Aero Logistics Inc., Hugo Acquisition Corp., and World Air Holdings, Inc.
2.2	Amendment No. 1, dated as of June 30, 2007, to the Agreement and Plan of Merger, dated as of April 5, 2007, between Global Aero Logistics Inc., Hugo Acquisition Corp., and World Air Holdings, Inc.
2.3	Certificate of Merger, as filed with the Secretary of State of the State of Delaware on August 14, 2007.
2.4	Agreement and Plan of Merger, dated as of January 10, 2005, by and among World Airways Inc., World Air Holdings, Inc., and World Merger Subsidiary, Inc.
2.5	First Amended Joint Chapter 11 Plan of Reorganization for the Reorganizing Debtors.
2.6	Reorganizing Debtors' First Immaterial Modification and Clerical Correction to the First Amended Joint Chapter 11 Plan of Reorganization for the Reorganizing Debtors.
2.7	Order Confirming the First Amended Joint Chapter 11 Plan of Reorganization for the Reorganizing Debtors.
3.1	Amended and Restated Certificate of Incorporation of New ATA Holdings Inc. (n/k/a Global Aero Logistics Inc.).
3.2	Amended and Restated By-Laws of New ATA Holdings Inc. (n/k/a Global Aero Logistics Inc.).
3.3	Certificate of Amendment of the Amended and Restated Certificate of Incorporation of New ATA Holdings Inc., changing its name to Global Aero Logistics Inc., dated as of April 2, 2007.
3.4	Certificate of Correction of the Amended and Restated Certificate of Incorporation of Global Aero Logistics Inc., dated September 17, 2007.
3.5	Certificate of Designations for Series A Convertible Cumulative Preferred Stock of Global Aero Logistics Inc., dated as of August 14, 2007.
5.1	Opinion of Cravath, Swaine & Moore LLP.
10.1	Stock Option Plan for Management Employees of New ATA Holdings, Inc.
10.2	Global Aero Logistics Inc. 2006 Long Term Incentive Plan.
10.3	Amendment to the Global Aero Logistics Inc. 2006 Long Term Incentive Plan dated as of August 14, 2007.
10.4	Form of Annual Incentive Plan Letter.*
10.5	Employment Agreement between John Denison and New ATA Holdings Inc.*
10.6	Employment Agreement between Subodh Karnik and Global Aero Logistics Inc. dated as of October 22, 2007.*
10.7	Employment Agreement between Douglas Yakola and Global Aero Logistics Inc. dated as of September 15, 2007.*
10.8	Employment Agreement between Gary Ellmer and ATA Airlines Inc. dated as of August 27, 2007.*
10.9	Employment Agreement between Josef Loew and Global Aero Logistics Inc. dated as of August 27, 2007.*

II-7

10.10	Employment Agreement between William Garrett and Global Aero Logistics Inc. dated as of October 22, 2007.*
10.11	Severance Agreement between ATA Holdings Corp. and J. George Mikelsons dated August 31, 2005.
10.12	Non-Competition and Confidentiality Agreement between ATA Holdings Corp. and J. George Mikelsons dated August 31, 2005.
10.13	Term Loan Agreement dated as of August 14, 2007, between New ATA Acquisition Inc., Jefferies Finance LLC and JPMorgan Chase Bank, N.A.
10.14	First Amendment and Waiver dated as of December 10, 2007 to the Term Loan Agreement dated as of August 14, 2007, among New ATA Acquisition Inc., the several lenders from time to time parties thereto, Jefferies Finance LLC and JPMorgan Chase Bank, N.A.
10.15	Guarantee and Collateral Agreement dated as of August 14, 2007, made by Global Aero Logistics Inc., New ATA Investment Inc., New ATA Acquisition Inc. and various Guarantors in favor of JPMorgan Chase Bank, N.A.
10.16	Mortgage and Security Agreement dated as of August 14, 2007, between ATA Airlines, Inc., and JPMorgan Chase Bank, N.A.
10.17	Mortgage and Security Agreement Supplement No. 1 dated as of August 14, 2007, of ATA Airlines, Inc.
10.18	Mortgage and Security Agreement dated as of August 14, 2007, between World Airways, Inc., and JPMorgan Chase Bank, N.A.
10.19	Mortgage and Security Agreement Supplement No. 1 dated as of August 14, 2007, of World Airways, Inc.
10.20	Southwest ATA Amended and Restated Codeshare Agreement dated as of December 9, 2005 by and between Southwest Airlines Co. and ATA Airlines Inc.*
10.21	Bridge and Purchase Agreement by and among Global Aero Logistics Inc. and MatlinPatterson ATA Holdings LLC, dated as of August 14, 2007.
10.22	Warrant Agreement dated as of August 14, 2007, between Global Aero Logistics Inc. and JPMorgan Chase Bank, N.A.
21.1	List of subsidiaries of Global Aero Logistics Inc.
23.1	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.^
23.2	Consent of KPMG LLP, Independent Registered Public Accounting Firm.
23.3	Consent of Cravath, Swaine & Moore LLP (included in the opinion filed as Exhibit 5.1).
24.1	Power of Attorney (contained in the signature page).
99.1	Form of Subscription Agent Agreement.*
99.2	Form of Letter to Shareholders.*

*

To be filed by amendment

^

Previously filed.

II-8

QuickLinks

CALCULATION OF REGISTRATION FEE
TABLE OF CONTENTS
PROSPECTUS SUMMARY
(dollars in billions)
Summary of the Rights Offering
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL AND OPERATING DATA OF GLOBAL
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL AND OPERATING DATA OF WORLD AIR HOLDINGS
SUMMARY UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS INFORMATION
RISK FACTORS
FORWARD-LOOKING STATEMENTS
INDUSTRY AND MARKET DATA
USE OF PROCEEDS
DIVIDEND POLICY
DILUTION
CAPITALIZATION
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
Unaudited Pro Forma Combined Statement of Operations for the Year Ended December 31, 2006 (dollars in thousands, except share and per share amounts)
Unaudited pro forma combined statement of operations for the nine months ended September 30, 2007 (dollars in thousands, except share and per share amounts)
SELECTED CONSOLIDATED HISTORICAL FINANCIAL AND OPERATING DATA OF GLOBAL
SELECTED CONSOLIDATED HISTORICAL FINANCIAL AND OPERATING DATA OF WORLD AIR HOLDINGS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF GLOBAL
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF WORLD AIR HOLDINGS
BUSINESS
(dollars in billions)
MANAGEMENT
SECURITY OWNERSHIP
CERTAIN RELATIONSHIPS
DESCRIPTION OF CERTAIN INDEBTEDNESS
THE RIGHTS OFFERING
PLAN OF DISTRIBUTION
DESCRIPTION OF CAPITAL STOCK
SHARES ELIGIBLE FOR FUTURE SALE
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
GLOBAL AERO LOGISTICS INC. (f/k/a NEW ATA HOLDINGS INC.) AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollars in thousands)
GLOBAL AERO LOGISTICS INC. (f/k/a NEW ATA HOLDINGS INC.) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data)
GLOBAL AERO LOGISTICS INC. (f/k/a NEW ATA HOLDINGS INC.) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Dollars in thousands)
GLOBAL AERO LOGISTICS INC. (f/k/a NEW ATA HOLDINGS INC.) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
GLOBAL AERO LOGISTICS INC. (F/K/A NEW ATA HOLDINGS INC.) AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fresh-Start Adjustments
GLOBAL AERO LOGISTICS INC. (F/K/A NEW ATA HOLDINGS INC.) AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)
GLOBAL AERO LOGISTICS INC. (F/K/A NEW ATA HOLDINGS INC.) AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME NINE MONTHS ENDED SEPTEMBER 30, 2007 (in thousands) (unaudited)
GLOBAL AERO LOGISTICS INC. (F/K/A NEW ATA HOLDINGS INC.) AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
GLOBAL AERO LOGISTICS INC. (F/K/A NEW ATA HOLDINGS INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Report of Independent Registered Public Accounting Firm
ATA HOLDINGS CORP. AND SUBSIDIARIES (Debtor and Debtor-in-Possession as of October 26, 2004) CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
ATA HOLDINGS CORP. AND SUBSIDIARIES (Debtor and Debtor-in-Possession as of October 26, 2004) CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands)
ATA HOLDINGS CORP. AND SUBSIDIARIES (Debtor and Debtor-in-Possession as of October 26, 2004) CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT (Dollars in thousands)
ATA HOLDINGS CORP. AND SUBSIDIARIES (Debtor and Debtor-in-Possession as of October 26, 2004) CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
ATA HOLDINGS CORP. AND SUBSIDIARIES (Debtor and Debtor-in-Possession as of October 26, 2004) CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
ATA HOLDINGS CORP. AND SUBSIDIARIES (Debtor and Debtor-in-Possession as of October 26, 2004) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ATA HOLDINGS CORP. AND SUBSIDIARIES (Debtor and Debtor-in-Possession as of October 26, 2004) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ATA HOLDINGS CORP. AND SUBSIDIARIES (Debtor and Debtor-in-Possession as of October 26, 2004) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Statements and Supplementary Data ATA Holdings Corp. And Subsidiaries (Debtor and Debtor-in-Possession as of October 26, 2004) 2005 Quarterly Financial Summary (Unaudited)
Financial Statements and Supplementary Data ATA Holdings Corp. And Subsidiaries (Debtor and Debtor-in-Possession as of October 26, 2004) 2004 Quarterly Financial Summary (Unaudited)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
WORLD AIR HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS
WORLD AIR HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
WORLD AIR HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) AND COMPREHENSIVE INCOME (LOSS) (in thousands, except share data)
WORLD AIR HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
WORLD AIR HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Management's Report on Internal Control Over Financial Reporting
WORLD AIR HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited)
WORLD AIR HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited)
WORLD AIR HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)
WORLD AIR HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME SIX MONTHS ENDED JUNE 30, 2007 (in thousands, except share amounts) (unaudited)
WORLD AIR HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2007 and 2006 (in thousands) (unaudited)
WORLD AIR HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Stock Options
Restricted Stock Awards
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
SIGNATURES
POWER OF ATTORNEY
EXHIBIT INDEX

EX-2.1

Exhibit 2.1

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

between

GLOBAL AERO LOGISTICS INC.

(“Parent”)

HUGO ACQUISITION CORP.

(“Purchaser”)

and

WORLD AIR HOLDINGS, INC.

(the “Company”)

dated

April 5, 2007

TABLE OF CONTENTS

			Page
ARTICLE I	DEFINITIONS		1
Section 1.1		Certain Definitions	1
Section 1.2		Terms Defined Elsewhere	7
ARTICLE II	THE MERGER		9
Section 2.1		The Merger	9
Section 2.2		Closing; Effective Time	9
Section 2.3		Effects of the Merger	9
Section 2.4		Certificate of Incorporation; Bylaws	10
Section 2.5		Directors and Officers of Surviving Corporation	10
Section 2.6		Subsequent Actions	10
ARTICLE III	CONVERSION OF SECURITIES		10
Section 3.1		Conversion of Capital Stock	10
Section 3.2		Exchange of Certificates; Payment of Option Consideration and Warrant Consideration	11
Section 3.3		Dissenting Shares	13
Section 3.4		Treatment of Options and Restricted Stock	13
Section 3.5		Treatment of Warrants	14
ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF THE COMPANY		15
Section 4.1		Organization and Qualification; Subsidiaries	15
Section 4.2		Capitalization	16
Section 4.3		Authorization; Validity of Agreement; Company Action	17
Section 4.4		Board Approvals	18
Section 4.5		Consents and Approvals; No Violations	18
Section 4.6		Company SEC Documents and Financial Statements	19
Section 4.7		Internal Controls; Sarbanes-Oxley Act	20
Section 4.8		Absence of Certain Changes	21
Section 4.9		No Undisclosed Liabilities	22
Section 4.10		Litigation	22
Section 4.11		Employee Benefit Plans; ERISA	22
Section 4.12		Taxes	26
Section 4.13		Contracts	28
Section 4.14		Title to Properties; Encumbrances	30
Section 4.15		Intellectual Property	31
Section 4.16		Labor Matters	31
Section 4.17		Compliance with Laws; Permits	32
Section 4.18		Information in the Proxy Statement	34
Section 4.19		Opinion of Financial Advisor	34
Section 4.20		Insurance	34
Section 4.21		Environmental Laws and Regulations	34
Section 4.22		Brokers; Expenses	34
Section 4.23		Takeover Statutes	35
Section 4.24		Aircraft	35
Section 4.25		U.S. Citizen; Air Carrier	36
Section 4.26		Affiliate Transactions	36
Section 4.27		AMC Agreements; Reliability and Violations Thresholds	36

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ARTICLE V	REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER		37
Section 5.1		Organization	37
Section 5.2		Authorization; Validity of Agreement; Necessary Action	37
Section 5.3		Consents and Approvals; No Violations	37
Section 5.4		Litigation	38
Section 5.5		Information in the Proxy Statement	38
Section 5.6		Ownership of Company Capital Stock	38
Section 5.7		Available Funds	38
Section 5.8		U.S. Citizen	39
ARTICLE VI	CONDUCT OF BUSINESS PENDING THE MERGER		39
Section 6.1		Interim Operations of the Company	39
Section 6.2		No Solicitation; Unsolicited Proposals	43
Section 6.3		Board Recommendation	45
Section 6.4		Aircraft Leases	46
ARTICLE VII	ADDITIONAL AGREEMENTS		46
Section 7.1		Notification of Certain Matters	46
Section 7.2		Access; Confidentiality	46
Section 7.3		Consents and Approvals	47
Section 7.4		Publicity	49
Section 7.5		Directors’ and Officers’ Insurance and Indemnification	49
Section 7.6		State Takeover Laws	51
Section 7.7		Certain Tax Matters	51
Section 7.8		Section 16	52
Section 7.9		Obligations of Parent	52
Section 7.10		Employee Benefits Matters	52
Section 7.11		Termination of 401(k) Plan	53
Section 7.12		Financing	53
Section 7.13		Proxy Statement	55
Section 7.14		Company Collective Bargaining Agreement Notices	56
ARTICLE VIII	CONDITIONS		56
Section 8.1		Conditions to Each Party’s Obligations to Effect the Merger	56
Section 8.2		Conditions to Obligations of Parent and Purchaser	56
Section 8.3		Conditions to Obligations of the Company	57
ARTICLE IX	TERMINATION		57
Section 9.1		Termination	57
Section 9.2		Effect of Termination	59
ARTICLE X	MISCELLANEOUS		61
Section 10.1		Amendment and Modification; Waiver	61
Section 10.2		Non-survival of Representations and Warranties	62
Section 10.3		Expenses	62
Section 10.4		Notices	62
Section 10.5		Interpretation	63
Section 10.6		Counterparts	63
Section 10.7		Entire Agreement; No Third-Party Beneficiaries	63
Section 10.8		Severability	64
Section 10.9		Governing Law; Jurisdiction	64
Section 10.10		Waiver of Jury Trial	65
Section 10.11		Assignment	65

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Section 10.12 Enforcement; Remedies 65

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this “Agreement”), dated April 5, 2007, between Global Aero Logistics Inc., a Delaware corporation (“Parent”), Hugo Acquisition Corp., a Delaware corporation and an indirect wholly-owned subsidiary of Parent (“Purchaser”), and World Air Holdings, Inc., a Delaware corporation (the “Company”).

WHEREAS, the Board of Directors of each of Parent, Purchaser and the Company has approved, and deems it advisable and in the best interests of their respective stockholders to consummate the acquisition of the Company by Parent upon the terms and subject to the conditions set forth herein;

WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, Purchaser will be merged with and into the Company with the Company as the surviving corporation (the “Merger,” and together with the other transactions contemplated by this Agreement, the “Transactions”), in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), whereby each issued and outstanding share of the Common Stock, $.001 par value per share, of the Company (each a “Share” or the “Shares”) not owned directly or indirectly by Parent, Purchaser or the Company will be converted into the right to receive the Merger Consideration;

WHEREAS, the Board of Directors of the Company (the “Company Board of Directors”) has unanimously, on the terms and subject to the conditions set forth herein, (i) determined that the Transactions contemplated by this Agreement are in the best interests of its stockholders, (ii) approved and declared advisable this Agreement and the Transactions contemplated hereby, including the Merger, and (iii) determined to recommend that the Company’s stockholders adopt this Agreement;

WHEREAS, the Boards of Directors of Parent and Purchaser have, on the terms and subject to the conditions set forth herein, unanimously declared advisable this Agreement and the Transactions contemplated hereby, including the Merger; and

WHEREAS, Parent, Purchaser and the Company desire to (i) make certain representations and warranties in connection with the Merger, (ii) make certain covenants and agreements in connection with the Merger, and (iii) prescribe various conditions to the Merger.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties to this Agreement agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Certain Definitions. For the purposes of this Agreement, the term:

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“Acquisition Proposal” means any inquiry, offer, proposal or indication of interest, whether or not in writing, as the case may be, by any Person that relates, directly or indirectly, to an Acquisition Transaction.

“Acquisition Transaction” means any transaction or series of transactions (other than the Transactions) involving (i) any merger, consolidation, recapitalization, liquidation or other direct or indirect business combination involving the Company pursuant to which the stockholders of the Company immediately preceding such transaction would hold less than eighty-five percent (85%) of the equity or voting securities of the surviving or resulting entity of such transaction, (ii) the issuance by the Company or any Company Subsidiaries, directly or indirectly, or the acquisition by any Person or “group” (as defined under Section 13(d) of the Exchange Act), directly or indirectly, of shares of any class of capital stock or other equity securities of (A) the Company representing more than fifteen percent (15%) or more (by ownership or voting power) of the outstanding shares of any class of capital stock of the Company or (B) any Company Subsidiary or Subsidiaries whose assets constitute fifteen percent (15%) or more of the assets of the Company and the Company Subsidiaries, taken as a whole, (iii) any tender or exchange offer that if consummated would result in any Person or “group” (as defined in our under Section 13(d) of the Exchange Act) beneficially owning shares of any class of capital stock or other equity securities of the Company representing more than fifteen percent (15%) or more (by ownership or voting power) of the outstanding shares of any class of capital stock of the Company, (iv) any acquisition, license, lease, purchase or other disposition of assets that constitute more than fifteen percent (15%) of the assets of the Company and its Subsidiaries, taken as a whole, other than the sale of equipment in the ordinary course of business or consistent with past practice, or (v) any combination of the foregoing.

“business day” means any day, other than Saturday, Sunday or a United States federal holiday, and shall consist of the time period from 12:01 a.m. through 12:00 midnight New York City time.

“Company Executive Officer” means each of the Chief Executive Officer, the President, the Chief Financial Officer, the Chief Information Officer, the Chief Marketing Officer and the General Counsel of the Company and the Chief Operating Officer of each of World Airways, Inc. and North American Airlines, Inc.

“Company Material Adverse Effect” means any change, effect, event, occurrence, development, circumstance, condition or worsening thereof (an “Effect”) that, individually or when taken together with all other Effects that exist at the date of determination, (A) has or is reasonably likely to have a material adverse effect on the properties, assets, liabilities, condition (financial or otherwise), business or results of operations of the Company and the Company Subsidiaries, taken as a whole or (B) prevents or materially delays the Company from performing its obligations under this Agreement in any material respect or materially delays consummating the Transactions or would reasonably be expected to have such effect; provided, however, that no Effects resulting from, relating to or arising out of the following shall be deemed to be or constitute a Company Material Adverse Effect, and no Effects resulting from, relating to or arising out of the following shall be taken into account when determining whether a Company Material Adverse Effect has occurred or is reasonably likely to exist: (i) conditions (or

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changes therein) in any industry or industries in which the Company operates (other than any such conditions (or changes therein) resulting from, relating to or arising out of acts of terrorism, which shall not be excluded and may be taken into account) to the extent that such conditions do not have a materially disproportionate effect on the Company and the Company Subsidiaries, taken as a whole, (ii) general economic conditions (or changes therein) in the United States, in any country in which the Company or any of the Company Subsidiaries conducts business or in the global economy as a whole (other than any such general economic conditions (or changes therein) resulting from, relating to or arising out of acts of terrorism, which shall not be excluded and may be taken into account) to the extent that such conditions do not have a materially disproportionate effect on the Company and the Company Subsidiaries, taken as a whole, (iii) any generally applicable change in Law or GAAP or interpretation of any of the foregoing to the extent that such conditions do not have a materially disproportionate effect on the Company and the Company Subsidiaries, taken as a whole, (iv) Effects primarily related to the announcement of the execution of this Agreement or the pendency of the Merger, (v) compliance with the terms of, or the taking of any action required by, this Agreement, or the failure to take any action prohibited by this Agreement and (vi) any actions taken, or failure to take action, to which Parent or Purchaser has expressly consented or requested.

“Company Property” means any real property and improvements, now or heretofore, owned, leased or operated by the Company or any of the Company Subsidiaries.

“Company Stock Plans” mean collectively the World Air Holdings, Inc. Amended and Restated 1995 Stock Incentive Plan and the World Airways, Inc. Non-Employee’s Stock Option Plan, each as amended to date.

“Company Subsidiary” means each Person which is a Subsidiary of the Company.

“Environment” means soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, natural or artificial drainage systems, and wetlands), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, biota, and any other environmental medium or natural resource.

“Environmental Claims” means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, Liens, notices of noncompliance or violation, investigations or proceedings under any Environmental Law or any Environmental Permit, including, without limitation, (A) any and all Environmental Claims by Governmental Entities against the Company for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (B) any and all Environmental Claims by any third party against the Company seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials of the Company or arising from alleged injury to the environment or as a result of exposure to Hazardous Materials.

“Environmental Law” means any federal, state or local statute, law, rule, regulation, ordinance, code or rule of common law and any judicial or administrative interpretation thereof binding on the Company or its operations or Company Property as of the

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date hereof and the Closing Date, including any judicial or administrative order, consent decree or judgment, relating to the Environment, Hazardous Materials or exposure of any Person to Hazardous Materials including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C.  sec. 9601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.  sec. 6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. sec.  1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. sec. 2601 et seq.; the Clean Air Act, 42 U.S.C. sec. 7401 et seq.; Oil Pollution Act of 1990, 33 U.S.C. sec. 2701 et seq.; the Safe Drinking Water Act, 42 U.S.C. sec. 300f et seq.; and the Hazardous Materials Transportation Act, 49 U.S.C. sec. 1801 et seq.; the Occupational Safety and Health Act of 1970, 29 U.S.C. sec. 651 et seq.

“Environmental Permit” means any Company Permit required by or pursuant to any applicable Environmental Law.

“ERISA Affiliate” means any trade or business, whether or not incorporated, that together with the Company would be deemed a single employer for purposes of Section 4001 of ERISA or Sections 414(b), (c), (m), (n) or (o) of the Code.

“Hazardous Materials” means (A) any petroleum or petroleum products, radioactive materials, asbestos, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; and (B) any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “extremely hazardous substances,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” or terms of similar import, under any applicable Environmental Law.

“Intellectual Property” means any or all of the following: (i) inventions (whether patentable or not), invention disclosures, industrial designs, improvements, trade secrets, proprietary information, know how, technology, technical data and customer lists, and all documentation relating to any of the foregoing; (ii) business, technical and know-how information, non-public information, and confidential information, including databases and data collections; (iii) works of authorship (including computer programs, source code, object code, whether embodied in software, firmware or otherwise), architecture, documentation, files, records, schematics, verilog files, netlists, emulation and simulation reports, test vectors and hardware development tools; (iv) URLs and domain names; and (v) any similar or equivalent property of any of the foregoing (as applicable).

“Intellectual Property Rights” means any or all of the following and all worldwide common law and statutory rights in, arising out of, or associated therewith: (i) patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof (“Patents”); (ii) copyrights, copyrights registrations and applications therefor, and all other rights corresponding thereto throughout the world including moral and economic rights of authors and inventors, however denominated (“Copyrights”); (iii) industrial designs and any registrations and applications therefor; (iv) trade names, logos, common law trademarks and service marks, trademark and service mark registrations and applications therefor (“Trademarks”); (v) trade secrets (including, those trade secrets defined in the Uniform Trade Secrets Act and under corresponding foreign statutory and

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common law), business, technical and know-how information, non-public information, and confidential information and rights to limit the use or disclosure thereof by any Person; including databases and data collections and all rights therein (“Trade Secrets”); and (vi) any similar or equivalent rights to any of the foregoing (as applicable).

“knowledge” or “Knowledge” will be deemed to be the actual knowledge of any executive officer of Parent or Purchaser or any Company Executive Officer, as the case may be, as of the date of this Agreement (or, with respect to a certificate delivered pursuant to this Agreement, as of the date of delivery of such certificate) after conducting reasonable inquiry of those other officers or employees of Parent and Purchaser or the Company and the Company Subsidiaries, as the case may be, who would reasonably be expected to have knowledge of the specific matters at issue.

“Lien” means any lien, pledge, hypothecation, mortgage, security interest, encumbrance, claim, infringement, interference, option, right of first refusal, preemptive right, community property interest or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).

“Owned Company IP” means all Intellectual Property and Intellectual Property Rights that are owned or purported to be owned by the Company or any of the Company Subsidiaries and material to the conduct of the business of the Company or the Company Subsidiaries.

“Person” means a natural person, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Entity or other entity or organization.

“Release” means disposing, discharging, injecting, spilling, leaking, leaching, migrating, dumping, emitting, escaping, pouring, releasing, injecting, emptying or seeping into or through the Environment.

“Required Governmental Approvals” means filings, notices, permits, authorizations, consents and approvals as may be required from, with or to (a) the FAA, (b) the DOT, (c) the FCC, (d) the DOD (including consents not to (i) terminate any DOD contracts pursuant to their terms or (ii) terminate or modify participation by the Company or the Company Subsidiaries in their existing teaming arrangements, in each case as a result of or in connection with the Transactions), (e) the DHS, (f) the TSA or (g) the ATSB.

“Subsidiary” means with respect to any Person, any corporation, limited liability company, partnership or other organization, whether incorporated or unincorporated, of which (i) at least a majority of the outstanding shares of capital stock of, or other equity interests, having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries or (ii) such Person or any other Subsidiary of

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such Person is a general partner (excluding any such partnership where such Person or any Subsidiary of such Person does not have a majority of the voting interest in such partnership).

“Superior Proposal” means any bona fide written Acquisition Proposal received by the Company after the date hereof, that is not subject to any financing condition or contingency (provided, that for the purposes of this definition, (A) the applicable percentages in clause (i) of the definition of Acquisition Transaction shall be ten percent (10%) as opposed to eighty-five percent (85%), and (B) the applicable percentages in clauses (ii), (iii) and (iv) of the definition of Acquisition Transaction shall be ninety percent (90%) as opposed to fifteen percent (15%)), which the Company Board of Directors determines in good faith, After Consultation, taking into account, among other things, all legal, financial, regulatory, timing (including the likelihood of prompt completion) and other aspects of the Acquisition Proposal and the Third Party making the Acquisition Proposal and any adjustment to the terms and conditions of this Agreement proposed by Parent in response to such Acquisition Proposal would, if consummated in accordance with its terms, be more favorable to the holders of Shares (in their capacity as such) than the Transactions, including the Merger (after taking into account any adjustment to the terms and conditions of this Agreement proposed by Parent in response to such Acquisition Proposal).

“Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever imposed by a Governmental Entity, including any interest, penalty, or addition thereto, whether disputed or not.

“Tax Claim” means any audit, investigation, litigation or other proceeding conducted by or with any Governmental Entity with respect to Taxes.

“Tax Return” means any return, report, certificate, form or similar statement or document or other communication required or permitted to be supplied to, or filed with, a Governmental Entity in connection with the determination, assessment or collection of any Tax or the administration of any laws relating to any Tax.

“Third Party Acquisition Event” means the consummation of an Acquisition Transaction or series of related Acquisition Transactions; provided, that the consummation of such Acquisition Transaction or Acquisition Transactions results in the acquisition by any Third Party of (i) a majority of the outstanding Shares or (ii) a majority (by number of shares or voting power) of the outstanding capital stock of the Company or (iii) a majority of the assets (including the capital stock or assets of any Subsidiary) of the Company and the Company Subsidiaries, taken as a whole.

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Section 1.2 Terms Defined Elsewhere. The following terms are defined elsewhere in this Agreement, as indicated below:

“ADs”	Section 4.17(a)
“After Consultation”	Section 6.2(b)
“Agreement”	Introduction
“AIP”	Section 4.11(l)
“Alternative Financing”	Section 7.12(a)
“Applicable Period of Coverage”	Section 7.10(a)
“Appraisal Rights”	Section 3.3(a)
“ATSB”	Section 4.17(a)
“Balance Sheet Date”	Section 4.8(a)
“Bank Facility”	Section 4.14
“Benefit Plans”	Section 4.11(a)
“Certificate of Merger”	Section 2.2
“Certificate” or “Certificates”	Section 3.2(b)
“Closing”	Section 2.2
“Closing Date”	Section 2.2
“Code”	Section 3.2(g)
“Common Stock”	Section 4.2(a)
“Company”	Introduction
“Company Aircraft”	Section 4.24(a)
“Company Board of Directors”	Recitals
“Company Change in Recommendation”	Section 6.3(c)
“Company Collective Bargaining Agreement”	Section 4.16(a)
“Company Disclosure Schedule”	Article IV
“Company Financial Advisor”	Section 4.19
“Company Material Contract”	Section 4.13(b)
“Company Options”	Section 3.4(a)
“Company Permits”	Section 4.17(b)
“Company Recommendation”	Section 6.3(b)
“Company SEC Documents”	Section 4.6(a)
“Company Stockholder Approval”	Section 4.3(b)
“Company Termination Fee”	Section 9.2(b)
“Confidentiality Agreement”	Section 6.2(b)
“Covered Persons”	Section 7.5(a)
“D&O Insurance”	Section 7.5(d)
“DGCL”	Recitals
“DHS”	Section 4.17(a)
“DOD”	Section 4.17(a)
“Dissenting Shares”	Section 3.3(a)
“DOT”	Section 4.17(a)
“Effective Time”	Section 2.2
“Equity Interests”	Section 4.2(a)
“Exchange Act”	Section 4.5

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“Expense Reimbursement”	Section 9.2(d)
“FAA”	Section 4.17(a)
“FARs”	Section 4.17(a)
“FCC”	Section 4.17(a)
“Financial Statements”	Section 4.6(a)
“Financing”	Section 5.7
“Financing Commitment”	Section 5.7
“Future Company SEC Documents”	Section 4.6(c)
“401(k) Plan”	Section 7.11
“GAAP”	Section 4.6(a)
“Governmental Entity”	Section 4.5
“HSR Act”	Section 4.5
“Indemnification Agreements”	Section 7.5(a)
“JPMorgan”	Section 5.7
“Laws”	Section 4.17(a)
“Merger”	Recitals
“Merger Consideration”	Section 3.1(c)
“Multiemployer Plan”	4.11(c)
“Notice of Recommendation Change”	Section 6.3(d)
“Option Consideration”	Section 3.4(a)
“Parent”	Introduction
“Parent Assignee”	Section 10.11
“Paying Agent”	Section 3.2(a)
“Pension Plan”	Section 4.11(d)
“Permitted Liens”	Section 4.14
“Preferred Stock”	Section 4.2(a)
“Primary Executives”	Section 4.11(h)
“Proxy Statement”	Section 4.18
“Purchaser”	Introduction
“Purchaser Common Stock”	Section 3.1
“Representatives”	Section 6.2(a)
“Required Financial Statements”	Section 7.13(b)
“Restricted Stock”	Section 3.4(b)
“Retention Program”	Section 4.11(k)
“Sarbanes-Oxley Act”	Section 4.6(a)
“SEC”	Section 4.1(a)
“Securities Act”	Section 4.6(a)
“Severance Policy”	Section 4.11(k)
“Share” or “Shares”	Recitals
“Significant Subsidiary” or “Significant Subsidiaries”	Section 4.1(b)
“Special Meeting”	Section 6.3(a)
“Specified Person”	Section 9.2(b)
“Surviving Corporation”	Section 2.1(a)
“Third Party”	Section 6.2(a)

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“Transactions”	Recitals
“TSA”	Section 4.17(a)
“Voting Debt”	Section 4.2(a)
“Warrant” or “Warrants”	Section 3.5
“Warrant Consideration”	Section 3.5

ARTICLE II

THE MERGER

Section 2.1The Merger. Upon the terms and subject to the conditions of this Agreement and in accordance with the DGCL, at the Effective Time, Purchaser shall be merged with and into the Company.  As a result of the Merger, the separate corporate existence of Purchaser will cease and the Company will continue as the surviving corporation of the Merger under the DGCL (the “Surviving Corporation”).

Section 2.2Closing; Effective Time. Subject to the provisions of this Agreement, the closing of the Merger (the “Closing”) will take place at 10:00 a.m., New York time, as soon as practicable, but in no event later than the fifth Business Day after the satisfaction or (to the extent permitted by law) waiver of the conditions set forth in Article VIII (excluding conditions that, by their terms, cannot be satisfied until the Closing, but the Closing shall be subject to the satisfaction or (to the extent permitted by law) waiver of those conditions), at the offices of Cravath, Swaine & Moore LLP, Worldwide Plaza, 825 Eighth Avenue, New York, New York 10019 (or the Closing may take place at such other place or at such other date as Parent and the Company may mutually agree in writing); provided, however, that notwithstanding the satisfaction or waiver of the conditions set forth in Article VIII, the parties will not be required to effect the Closing until the earlier to occur of (a) a date specified by Parent on at least five (5) Business Days’ notice to the Company, and (b) the sixtieth (60th) day after delivery of the Required Financial Statements that satisfy the condition specified in Section 8.2(a) if a business day, or if not a business day, then on the next succeeding business day.  The date on which the Closing actually occurs is hereinafter referred to as the “Closing Date”.  Prior to the Closing, Parent shall prepare and on the Closing Date the Surviving Corporation shall cause the Merger to be consummated by filing an appropriate certificate of merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the relevant provisions of the DGCL (the date and time of the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, or such later time as is specified in the Certificate of Merger and as is agreed to by the parties, being the “Effective Time”) and the parties shall make all other filings or recordings required under the DGCL in connection with the Merger.

Section 2.3Effects of the Merger. The Merger shall have the effects set forth in Section 259 of the DGCL. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the property, rights, privileges, immunities, powers and franchises of the Company and Purchaser shall vest in the Surviving Corporation and all debts, liabilities and duties of the Company and Purchaser shall become the debts, liabilities and duties of the Surviving Corporation.

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Section 2.4Certificate of Incorporation; Bylaws. At the Effective Time, (a) the certificate of incorporation of the Surviving Corporation shall be amended to read in its entirety as the certificate of incorporation of Purchaser read immediately prior to the Effective Time, except that the name of the Surviving Corporation shall be “World Air Holdings, Inc.” and (b) the bylaws of the Surviving Corporation shall be amended so as to read in their entirety as the bylaws of Purchaser as in effect immediately prior to the Effective Time, until thereafter amended in accordance with applicable Law, except the references to Purchaser’s name shall be replaced by references to “World Air Holdings, Inc.”.

Section 2.5Directors and Officers of Surviving Corporation. The directors of Purchaser and the officers of the Company (other than those who Purchaser determines shall not remain as officers of the Surviving Corporation), in each case, as of the Effective Time shall, from and after the Effective Time, be the directors and officers, respectively, of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the certificate of incorporation or bylaws of the Surviving Corporation.

Section 2.6Subsequent Actions. If at any time after the Effective Time the Surviving Corporation shall determine, in its sole discretion, or shall be advised, that any deeds, bills of sale, instruments of conveyance, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either of the Company or Purchaser acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, then the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of either the Company or Purchaser, all such deeds, bills of sale, instruments of conveyance, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title or interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.

ARTICLE III

CONVERSION OF SECURITIES

Section 3.1 Conversion of Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of the holders of any securities of the Company or common stock, par value $0.01 per share, of Purchaser (the “Purchaser Common Stock”):

(a)Purchaser Common Stock. Each issued and outstanding share of Purchaser Common Stock shall be converted into and become one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

(b)Cancellation of Treasury Stock and Parent-Owned Stock. All Shares that are owned by the Company and any Shares owned by Parent, Purchaser or any of their respective subsidiaries shall be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.

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(c)Conversion of Common Stock. Each issued and outstanding Share (other than Shares to be cancelled in accordance with Section 3.1(b) and other than Dissenting Shares) shall be converted into the right to receive an amount (subject to any applicable withholding Tax specified in Section 3.2(g)) equal to $12.50 in cash, without interest (the “Merger Consideration”). From and after the Effective Time, all such Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of a certificate representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon the surrender of such certificate in accordance with Section 3.2, without interest thereon.

(d)Adjustment to Merger Consideration. The Merger Consideration shall be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Common Stock), cash dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Common Stock occurring on or after the date hereof and prior to the Effective Time.

Section 3.2 Exchange of Certificates; Payment of Option Consideration and Warrant Consideration.

(a)Paying Agent. Purchaser shall designate a bank or trust company to act as the payment agent in connection with the Merger (the “Paying Agent”).  Prior to the Effective Time, Parent or Purchaser shall deposit, or cause to be deposited, with the Paying Agent the aggregate Merger Consideration, Option Consideration and Warrant Consideration.  Such funds shall be invested by the Paying Agent as directed by Parent, in its sole discretion, pending payment thereof by the Paying Agent to the holders of the Shares, Company Options and Warrants. Earnings from such investments shall be the sole and exclusive property of Parent, and no part of such earnings shall accrue to the benefit of holders of Shares, Company Options or Warrants.

(b)Exchange Procedures for Shares. Promptly after the Effective Time, the Paying Agent shall mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding Shares (each a “Certificate” and collectively the “Certificates”) and whose Shares were converted pursuant to Section 3.1 into the right to receive the Merger Consideration (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent and shall be in such form and have such other provisions as Parent may reasonably specify) and (ii) instructions for effecting the surrender of the Certificates in exchange for payment of the Merger Consideration.  Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly represented by such Certificate and the Certificate so surrendered shall forthwith be cancelled. If payment of the Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition precedent of payment that (x) the Certificate so surrendered shall be properly endorsed or shall be

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otherwise in proper form for transfer and (y) the Person requesting such payment shall have paid any transfer and other similar taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not required to be paid.  Until surrendered as contemplated by this Section 3.2, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration in cash as contemplated by this Section 3.2, without interest thereon.

(c)Transfer Books; No Further Ownership Rights in Shares. At the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares on the records of the Company.  From and after the Effective Time, the holders of Certificates outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares except as otherwise provided for herein or by applicable Law. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article III.

(d)Payment to Holders of Company Options. On or prior to the business day immediately preceding the Closing Date, the Company shall deliver a statement to Purchaser that sets forth the name of, and payment instructions for, each holder of outstanding Company Options entitled to payment therefor pursuant to Section 3.4(a), and promptly after the Effective Time, the Surviving Corporation shall cause the Paying Agent to pay each such holder of Company Options the amount such holder is entitled to receive pursuant to Section 3.4(a).

(e)Payment to Holders of Warrants. On or prior to the business day immediately preceding the Closing Date, the Company shall deliver a statement to Purchaser that sets forth the name of, and payment instructions for, each holder of outstanding Warrants that has exercised any such Warrant and executed a Warrant Supplement in accordance with the terms of such Warrant and thereby become entitled to payment therefor pursuant to Section 3.5, and promptly after the Effective Time, the Surviving Corporation shall cause the Paying Agent to pay each such holder of exercised Warrants the amount such holder is entitled to receive pursuant to Section 3.5.

(f)Termination of Fund; No Liability. At any time following one year after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) made available to the Paying Agent and not disbursed (or for which disbursement is pending subject only to the Paying Agent’s routine administrative procedures) to holders of Certificates, and thereafter such holders shall be entitled to look only to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the Merger Consideration payable upon due surrender of their Certificates, without any interest thereon.  Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Certificate for Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

(g)Withholding Rights. Parent, Purchaser, the Surviving Corporation and the Paying Agent, as the case may be, shall be entitled to deduct and withhold from the relevant

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Merger Consideration, Option Consideration and Warrant Consideration otherwise payable pursuant to this Agreement to any holder of Shares, Company Options and Warrants such amounts that Parent, Purchaser, the Surviving Corporation or the Paying Agent is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “Code”), the rules and regulations promulgated thereunder or any provision of applicable state, local or foreign law.  To the extent that amounts are so withheld by Parent, Purchaser, the Surviving Corporation or the Paying Agent, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Shares, Company Options or Warrants in respect of which such deduction and withholding was made by Parent, Purchaser, the Surviving Corporation or the Paying Agent.

(h)Lost, Stolen or Destroyed Certificates. In the event that any Certificates shall have been lost, stolen or destroyed, the Paying Agent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, the Merger Consideration payable in respect thereof pursuant to Section 3.1 hereof; provided, however, that Parent may, in its discretion and as a condition precedent to the payment of such Merger Consideration, require the owners of such lost, stolen or destroyed Certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Parent, the Surviving Corporation or the Paying Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.

Section 3.3 Dissenting Shares.

(a)Notwithstanding anything in this Agreement to the contrary, Shares outstanding immediately prior to the Effective Time and held by a holder who is entitled to demand and properly demands appraisal of such Shares (“Dissenting Shares”) pursuant to, and who complies in all respects with, Section 262 of the DGCL (the “Appraisal Rights”) shall be entitled to payment of the fair value of such Dissenting Shares in accordance with the Appraisal Rights; provided, however, that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to dissent under the Appraisal Rights, then the right of such holder to be paid the fair value of such holder’s Dissenting Shares shall cease and such Dissenting Shares shall be deemed to have been converted as of the Effective Time into, and to have become exchangeable solely for the right to receive the Merger Consideration.

(b)The Company shall serve prompt notice to Purchaser of any demands received by the Company for dissenter’s rights of any Shares, and Purchaser shall have the right to participate in all negotiations and proceedings with respect to such demands.  Prior to the Effective Time, the Company shall not, without the prior written consent of Purchaser, make any payment with respect to, or settle or compromise or offer to settle or compromise, any such demand, or agree to do any of the foregoing.

Section 3.4 Treatment of Options and Restricted Stock.

(a)The Company shall take all actions (including obtaining any required consents) necessary to provide that, immediately prior to the Effective Time, each outstanding option to purchase Shares granted under the Company Stock Plans (each a “Company Option” and collectively the “Company Options”), whether or not then exercisable or vested, shall

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become fully exercisable and vested.  At the Effective Time each Company Option that is outstanding immediately prior to the Effective Time shall be deemed exercised and automatically converted into the right to receive an amount in cash equal to the product obtained by multiplying (x) the aggregate number of Shares for which such Company Option was exercisable immediately prior to the Effective Time and (y) the excess, if any, of the Merger Consideration less the per Share exercise price of such Company Option (the “Option Consideration”) after which it shall be cancelled and extinguished.

(b)The Company shall take all actions necessary to provide that, immediately prior to the Effective Time, each unvested Share subject to restrictions and forfeiture granted pursuant to the Company Stock Plans (“Restricted Stock”) shall become fully vested and subject to the provisions of this Agreement related to issued and outstanding Shares.

(c)All amounts payable pursuant to this Section 3.4 (including with respect to Restricted Stock) shall be subject to any required withholdings of taxes and shall be paid without interest.

Section 3.5 Treatment of Warrants. At the Effective Time, each warrant to purchase Shares (each a “Warrant” and collectively the “Warrants”) that is issued and outstanding immediately prior to the Effective Time and not terminated pursuant to its terms shall be assumed by Parent and converted into the right to receive cash equal to the product obtained by multiplying (x) the aggregate number of Shares for which such Warrant was exercisable immediately prior to the Effective Time and (y) the excess, if any, of the Merger Consideration less the per Share exercise price of such Warrant (the “Warrant Consideration”).  The Company shall take all necessary actions, including obtaining any required consents from holders of outstanding Warrants necessary to effect such assumption pursuant to the terms of the applicable Warrant. The Company shall prepare and use reasonable best efforts to obtain the agreement of each holder of Warrants that such holder conditionally exercises such Warrant contingent upon the consummation of the Merger, such that each such holder shall have the right to vote the Shares for which such Warrant has been conditionally exercised at the meeting of the Company’s stockholders to be held for the Company Stockholder Approval and that, if the Merger is not consummated, such Warrant shall be deemed to have never been exercised.  Any payments made pursuant to this Section 3.5 shall be net of all applicable withholding taxes that Parent, Purchaser, the Surviving Corporation and the Paying Agent, as the case may be, shall be required to deduct and withhold from the Warrant Consideration under the Code, the rules and regulations promulgated thereunder or any provision of applicable state, local or foreign law.  To the extent that amounts are so withheld by Parent, Purchaser, the Surviving Corporation or the Paying Agent, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Warrants in respect of which such deduction and withholding was made by Parent, Purchaser, the Surviving Corporation or the Paying Agent.

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ARTICLE IV

REPRESENTATIONS AND

WARRANTIES OF THE COMPANY

Except as set forth in the Company’s disclosure schedule delivered to Parent immediately prior to the execution of this Agreement (the “Company Disclosure Schedule”), the Company represents and warrants to Parent and Purchaser as set forth below. Each disclosure set forth in the Company Disclosure Schedule is identified by reference to, or has been grouped under a heading referring to, a specific section of this Agreement and disclosure made pursuant to any section thereof shall be deemed to be disclosed on each of the other sections of the Company Disclosure Schedule to the extent the applicability of the disclosure to such other section is reasonably apparent from the disclosure made.  The fact that any item of information is disclosed on the Company Disclosure Schedule shall not be construed to mean that such information is required to be disclosed by this Agreement.  Such information and the dollar thresholds set forth herein shall not be used as a basis for interpreting the terms “material” or “Company Material Adverse Effect” or other similar terms in this Agreement.

Section 4.1 Organization and Qualification; Subsidiaries.

(a)The Company and each of the Company Subsidiaries is a corporation or other legal entity duly organized, validly existing and in good standing (with respect to jurisdictions which recognize such concept) under the laws of the jurisdiction in which it is organized and has the requisite corporate or other power, as the case may be, and authority to conduct its business as now being conducted, except for those jurisdictions where the failure to be so organized, existing or in good standing would not or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  The Company and each of the Company Subsidiaries is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions which recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except for those jurisdictions where the failure to be so qualified or licensed or to be in good standing would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  The Company has delivered to or made available to Parent and Purchaser prior to the execution of this Agreement true and complete copies of any amendments to its certificate of incorporation or bylaws not filed as of the date hereof with the Securities and Exchange Commission (the “SEC”).  The Company is in compliance with the terms of its certificate of incorporation or bylaws.

(b)Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, includes all the Company Subsidiaries that, as of the date of this Agreement, are “Significant Subsidiaries” (as defined in Rule 1-02 of Regulation S-X of the SEC). All outstanding shares of capital stock of, or other Equity Interests in, each such Significant Subsidiary have been validly issued and are fully paid and nonassessable and are owned directly or indirectly by the Company, free and clear of any Liens, other than Permitted Liens and such Liens as would not and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  Other than the Company Subsidiaries, the Company does not directly or indirectly beneficially own any Equity Interests in any other

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Person except for non-controlling investments made in the ordinary course of business in entities which are not individually or in the aggregate material to the Company and the Company Subsidiaries as a whole.

Section 4.2 Capitalization.

(a)The authorized capital stock of the Company consists of (i) 100,000,000 shares of common stock, par value $.001 per share (the “Common Stock”) and (ii) 5,000,000 shares of preferred stock, par value $.001 per share (the “Preferred Stock”).  As of the close of business on April 4, 2007, (A) 22,551,217 shares of Common Stock (excluding treasury shares) were issued and outstanding, (B) no shares of Preferred Stock were issued and outstanding, (C) no shares of Common Stock were issued and held in the treasury of the Company or otherwise owned by the Company, (D) 1,960,589 shares of Common Stock were issuable (and such number was reserved for issuance) upon exercise of Warrants, (E) 4,974,351 shares of Common Stock were reserved for issuance pursuant to the Company Stock Plans of which 1,630,700 shares of Common Stock were subject to outstanding Company Options and Restricted Stock and (G) 1,960,589 shares of Common Stock were subject to outstanding Warrants. All of the outstanding shares of the Company’s capital stock are, and all Shares which may be issued pursuant to the exercise of outstanding Company Options and Warrants will be, when issued in accordance with the terms thereof, duly authorized, validly issued, fully paid and non-assessable. Except for issuances of Shares pursuant to Company Options described in the first sentence of Section 4.2(b) and Warrants described in Section 4.2(c), since March 30, 2007, the Company has not issued any shares of Common Stock or designated or issued any shares of Preferred Stock. There are no bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) (“Voting Debt”) of the Company or any Company Subsidiary issued and outstanding.  Except for the Company Options described in the first sentence of Section 4.2(b) and the Warrants described in Section 4.2(c), there are no outstanding or authorized (x) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company, options, warrants, calls, pre-emptive rights, subscriptions or other rights, agreements, arrangements or commitments of any kind, including any stockholder rights plan or other similar rights that are linked to the value of the Common Stock of the Company or that are otherwise related to the issued or unissued capital stock of the Company or any Company Subsidiary, obligating the Company or any Company Subsidiary to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity or voting interest in, the Company or any Company Subsidiary or securities convertible into or exchangeable for such shares or equity or voting interests, or obligating the Company or any Company Subsidiary to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment (collectively, “Equity Interests”) or (y) obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any Shares or any capital stock of, or other Equity Interests in, the Company or any Company Subsidiary or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in the Company or any Company Subsidiary.  No Company Subsidiary owns any Shares.

(b)As of the close of business on April 4, 2007, the Company had outstanding Company Options to purchase 1,435,400 shares of Common Stock and 195,300 shares of

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Restricted Stock granted under Company Stock Plans.  All of such Company Options and Restricted Stock have been granted to employees and directors of the Company and the Company Subsidiaries in the ordinary course of business pursuant to the Company Stock Plans in each case in accordance with their terms.  Section 4.2(b) of the Company Disclosure Schedule sets forth a listing of all outstanding Company Options and shares of Restricted Stock as of the close of business on April 4, 2007 and (i) the date of their grant and the portion of which that is vested as of the close of business on April 4, 2007 and if applicable, the exercise price therefor, and (ii) the date upon which each Company Option would normally be expected to expire absent termination of employment or other acceleration.  No Company Option is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.

(c)As of the close of business on April 4, 2007, the Company had outstanding Warrants to purchase 1,153,973 shares of Common Stock at an exercise price of $0.86 per share and Warrants to purchase 806,616 shares of Common Stock at an exercise price of $3.52 per share. Section 4.2(c) of the Company Disclosure Schedule sets forth a listing of all outstanding Warrants as of the close of business on April 4, 2007, their date of grant, their expiration date and the exercise price therefore.

(d)There are no voting trusts or other agreements to which the Company or any Company Subsidiary is a party with respect to the voting of the Company’s Common Stock or any capital stock of, or other equity interest of the Company or any of the Company Subsidiaries. Except as provided in the Warrants described in Section 4.2(c), neither the Company nor any Company Subsidiary has granted any preemptive rights, anti-dilutive rights or rights of first refusal or similar rights.

Section 4.3 Authorization; Validity of Agreement; Company Action.

(a)The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance by the Company of this Agreement, and the consummation by it of the Transactions, have been duly and validly authorized by the Company Board of Directors and, no other corporate action on the part of the Company is necessary to authorize the execution and delivery by the Company of this Agreement and the consummation by it of the Transactions, subject, in the case of the Merger, to receipt of the Company Stockholder Approval described in Section 4.3(b), and the filing of the Certificate of Merger as required under the DGCL. This Agreement has been duly executed and delivered by the Company and, assuming due and valid authorization, execution and delivery hereof by Parent and Purchaser, is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors’ rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

(b)The only consent or vote of holders of any class or series of capital stock of the Company necessary under the DGCL to adopt this Agreement is the affirmative vote at a stockholders meeting of the holders of a majority of the Shares entitled to vote thereon (the

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“Company Stockholder Approval”). The written consent or affirmative vote of the holders of Shares, or any of them, is not necessary to consummate any Transaction other than the Merger.

Section 4.4 Board Approvals. The Company Board of Directors, has by resolutions duly adopted at a meeting duly called and held, unanimously (i) determined that this Agreement, the Merger and other Transactions are advisable, fair to, and in the best interests of the stockholders of the Company, (ii) duly and validly approved and taken all corporate action required to be taken by the Company Board of Directors to authorize the consummation of the Transactions, (iii) approved this Agreement and the Transactions (including the Merger), which approval, to the extent applicable, constituted approval under the provisions of Section 203 of the DGCL as a result of which this Agreement and the Transactions, including the Merger, are not and will not be subject to the restrictions on “business combinations” under, the provision of Section 203 of the DGCL; and (iv) recommended that the stockholders of the Company adopt this Agreement.  No further corporate action is required by the Company Board of Directors, pursuant to the DGCL or otherwise, in order for the Company to approve this Agreement or the Transactions, including Merger, subject, in the case of the Merger, to the receipt of the Company Stockholder Approval.

Section 4.5 Consents and Approvals; No Violations. None of the execution, delivery or performance of this Agreement by the Company, the consummation by the Company of the Merger or any other Transaction or compliance by the Company with any of the provisions of this Agreement will (i) conflict with or result in any breach of any provision of the Company Governing Documents or the organizational documents of any Company Subsidiary, (ii) require any filing by the Company or any Company Subsidiary, or the permit, authorization, consent or approval of, any court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency, foreign, federal, state, local or supernational entity (a “Governmental Entity”) (except for (A) compliance with any applicable requirements of the Exchange Act, (B) any filings as may be required under the DGCL in connection with the Merger, including the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, and the filing of appropriate documents with the relevant authorities of other states in which the Company or any of the Company Subsidiaries is qualified to do business, (C) filings, notices, permits, authorizations, consents and approvals as may be required under (1) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and (2) the Required Governmental Approvals, and (D) filings required under the Exchange Act of 1934, as amended (the “Exchange Act”)), (iii) result in a modification, violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right, including, but not limited to, any right of termination, amendment, cancellation or acceleration) under, any of the terms, conditions or provisions of any Company Material Contract, (iv) conflict with or violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company, any Company Subsidiary or any of their respective properties or assets or (v) result in the creation of any Lien; except in the case of clauses (ii) or (iv) where any such conflict or failure to make such filings or to obtain such permits, authorizations, consents or approvals have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or have a material adverse effect on the ability of the Company to consummate the Merger and the other Transactions on a timely basis.

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Section 4.6 Company SEC Documents and Financial Statements.

(a)Except as disclosed in Section 4.6(a) of the Company Disclosure Schedule, the Company and each of the Company Subsidiaries has filed or furnished (as applicable) with the SEC all forms, reports, schedules, statements and other documents required by it to be filed or furnished (as applicable) since and including January 1, 2005, under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”) (together with all certifications required pursuant to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”)) (such documents and any other documents filed by the Company and each Company Subsidiary with the SEC, as amended since the time of their filing but prior to the date hereof, collectively, the “Company SEC Documents”).  As of their respective filing dates (or as of the date of filing an amendment thereto, to the extent any filing was amended) the Company SEC Documents (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading and (ii) complied in all material respects with the applicable requirements of the Exchange Act or the Securities Act, as the case may be, the Sarbanes-Oxley Act and the applicable rules and regulations of the SEC thereunder (except as set forth and described in Section 4.6(a) of the Company Disclosure Schedule, certain forms, reports, schedules, statements or other documents that were not filed in a timely manner).  No Company Subsidiary is currently required to file or furnish any report, schedule, form, statement or other document with, or make any other filing with, or furnish any other material to, the SEC, nor has any Company Subsidiary been subject to any such reporting requirements since January 1, 2004. All of the audited consolidated financial statements and unaudited consolidated interim financial statements of the Company and its consolidated Subsidiaries included in the Company SEC Documents (collectively, the “Financial Statements”), (A) have been prepared from, are in accordance with, and accurately reflect the books and records of the Company and its consolidated Subsidiaries in all material respects, (B) have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of interim financial statements, for normal and recurring year-end adjustments) and (C) fairly present in all material respects the consolidated financial position and the consolidated results of operations and cash flows of the Company and its consolidated Subsidiaries, in each case, as of the times and for the periods referred to therein.

(b)Without limiting the generality of Section 4.6(a), (i) KPMG LLP has not resigned or been dismissed as independent public accountant of the Company as a result of or in connection with any disagreement with the Company on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, (ii) no executive officer of the Company has failed in any respect to make, without qualification, the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any form, report or schedule filed by the Company with the SEC since the enactment of the Sarbanes-Oxley Act and to the Company’s knowledge there is no reason to believe that any such executive officer will not be able to give such certifications, without qualification, when next due, (iii) no enforcement action has been initiated or, to the knowledge of the Company, threatened against the Company by the SEC relating to disclosures contained in any Company SEC Document and (iv) there are not any pending, open or unresolved investigations by, or on

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behalf of, the Company Board of Directors (or any committee thereof) or any Governmental Entity relating to any possible (A) accounting irregularities, inaccuracies or restatements, (B) violations of Federal or state securities Laws or (C) violations of any other Laws (including state corporate Laws), in each case including any “backdating” of Company Options.

(c)As of their respective filing dates, Future Company SEC Documents (i) do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading and (ii) comply in all material respects with the applicable requirements of the Exchange Act or the Securities Act, as the case may be, the Sarbanes-Oxley Act and the applicable rules and regulations of the SEC thereunder, except that certain of the Future Company SEC Documents may not be timely filed.  All of the audited consolidated financial statements and unaudited consolidated interim financial statements of the Company and its consolidated Subsidiaries included in the Future Company SEC Documents, (A) will be prepared from, are in accordance with, and accurately reflect the books and records of the Company and its consolidated Subsidiaries in all material respects, (B) will be prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of interim financial statements, for normal and recurring year-end adjustments) and (C) will fairly present in all material respects the consolidated financial position and the consolidated results of operations and cash flows of the Company and its consolidated Subsidiaries, in each case as of the times and for the periods referred to therein. “Future Company SEC Documents” means all forms, reports, schedules, statements and other documents filed with or furnished to the SEC after the date of this Agreement.

Section 4.7 Internal Controls; Sarbanes-Oxley Act.

(a)The Company and the Company Subsidiaries have designed and maintained a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting.  Neither the Company’s auditor, nor its chief executive officer or chief financial officer has failed in any respect to make, without qualification, the certifications and attestations required under Section 404 of the Sarbanes-Oxley Act and to the knowledge of the Company, there is no reason to believe that its auditors and its chief executive officer and chief financial officer will not be able to give such certifications and attestations when next due. The Company (i) has designed and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and (ii) has disclosed to the Company’s auditors and the audit committee of the Company Board of Directors (and included summaries of such disclosures in Section 4.7 of the Company Disclosure Schedule) (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial

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information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. The Company is in compliance in all material respects with all effective provisions of the Sarbanes-Oxley Act.

(b)Neither the Company nor any of the Company Subsidiaries nor, to the Company’s knowledge, any director, officer, auditor, accountant or representative of the Company or any of the Company Subsidiaries has received or otherwise had or obtained knowledge of any substantive complaint, allegation, assertion or claim, whether written or oral, that the Company or any of the Company Subsidiaries has engaged in questionable accounting or auditing practices. No current or former attorney representing the Company or any of the Company Subsidiaries has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the current Company Board of Directors or any committee thereof or to any current director or executive officer of the Company.

(c)To the Company’s knowledge, no employee of the Company or any of the Company Subsidiaries has provided or is providing information to any law enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any applicable legal requirements of the type described in Section 806 of the Sarbanes-Oxley Act by the Company or any of the Company Subsidiaries.  Neither the Company nor any of the Company Subsidiaries nor, to the knowledge of the Company, any director, officer, employee, contractor, subcontractor or agent of the Company or any such Subsidiary has discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against an employee of the Company or any of the Company Subsidiaries in the terms and conditions of employment because of any lawful act of such employee described in Section 806 of the Sarbanes-Oxley Act.

(d)The Company is and has been since January 1, 2004 in compliance in all material respects with the provisions of the Sarbanes-Oxley Act applicable to it.

Section 4.8 Absence of Certain Changes.

(a)Except as contemplated by this Agreement or in the Company SEC Documents filed prior to the date hereof, since September 30, 2006 (the “Balance Sheet Date”), each of the Company and each Company Subsidiary has conducted its respective business in the ordinary course of business consistent with past practice.

(b)Since the Balance Sheet Date, no fact(s), change(s), event(s), development(s) or circumstances have occurred, arisen, come into existence or become known, which have had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(c)Except as set forth in Section 4.8(c) of the Company Disclosure Schedule, since the Balance Sheet Date, neither the Company nor any Company Subsidiary has taken any action that would be prohibited under Section 6.1 of this Agreement.

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Section 4.9 No Undisclosed Liabilities. Except (a) as reflected or otherwise reserved against on the Financial Statements, (b) for liabilities and obligations incurred since June 30, 2006 in the ordinary course of business, (c) for liabilities and obligations incurred under this Agreement or in connection with the Transactions and (d) for liabilities and obligations incurred under any Company Material Contract other than liabilities or obligations due to material breaches thereunder which have been disclosed in Section 4.9 of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary has incurred any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, which are required by GAAP to be recognized or disclosed on a consolidated balance sheet of the Company or any Company Subsidiary or in the notes thereto.

Section 4.10 Litigation. Except as set forth in Section 4.10 of the Company Disclosure Schedule, as of the date hereof, there is no material claim, action, suit, arbitration, investigation, alternative dispute resolution action or any other judicial or administrative proceeding, in law or equity (collectively, a “Legal Proceeding”), pending against (or, to the Company’s knowledge, threatened against or naming as a party thereto), the Company or any Company Subsidiary or to the Company’s knowledge, any executive officer or director of the Company or any Company Subsidiary (in their capacity as such). None of the Company or any Company Subsidiary nor any of their respective properties is subject to any outstanding order, writ, injunction, decree or arbitration ruling or judgment of a Governmental Entity which has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or prevent or materially delay the consummation of the Merger or any of the other Transactions.

Section 4.11 Employee Benefit Plans; ERISA.

(a)Section 4.11(a) of the Company Disclosure Schedule sets forth a correct and complete list of all material employee benefit plans, programs, agreements or arrangements, including employment, pension, retirement, profit sharing, deferred compensation, stock option, change in control, retention, equity or equity-based compensation, stock purchase, employee stock ownership, severance pay, vacation, bonus or other incentive plans, all medical, vision, dental or other health plans, all life insurance plans, and all other employee benefit plans or fringe benefit plans, including “employee benefit plans” as that term is defined in Section 3(3) of ERISA, in each case, whether oral or written, funded or unfunded, or insured or self-insured, maintained by the Company or any Company Subsidiary, or to which the Company or any Company Subsidiary contributes or is obligated to contribute thereunder, or with respect to which the Company or any Company Subsidiary has or may have any liability (contingent or otherwise), in each case, for or to any current or former employees, directors or officers of the Company or any Company Subsidiary and/or their dependents (collectively, the “Benefit Plans”). For purposes of this Agreement, the term “plan,” when used with respect to foreign plans, shall mean a “scheme” or other employee benefit program or arrangement in accordance with specific country usage.

(b)All Benefit Plans that are intended to be subject to Code Section 401(a) and any trust agreement that is intended to be tax exempt under Code Section 501(a) have been determined by the Internal Revenue Service to be qualified under Code Section 401(a) and exempt from taxation under Code Section 501(a) or have been established under one or more

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prototype plans or arrangements for which the IRS has issued to the prototype sponsor favorable determination letter(s) having similar effect and upon which the Company may rely and, to the knowledge of the Company, nothing has occurred that would adversely affect the qualification of any such plan. Except as has not had and would not reasonably be expected to directly or indirectly result in, individually or in the aggregate, a material liability to the Company: (i) each Benefit Plan and any related trust subject to ERISA complies in all material respects with and has been administered in substantial compliance with, (A) the provisions of ERISA, (B) all provisions of the Code, (C) all other applicable Laws, and (D) its terms and the terms of any collective bargaining or collective labor agreements; (ii) neither the Company nor any Company Subsidiary has received any written notice from any Governmental Entity questioning or challenging such compliance; (iii) there are no unresolved claims or disputes under the terms of, or in connection with, the Benefit Plans other than claims for benefits which are payable in the ordinary course; (iv) there has not been any non-exempt “prohibited transaction” (within the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any Benefit Plan; (v) no litigation has been commenced with respect to any Benefit Plan and, to the knowledge of the Company, no such litigation is threatened (other than routine claims for benefits in the normal course); (vi) there are no governmental audits or investigations pending or, to the knowledge of the Company, threatened in connection with any Benefit Plan; and (vii) to the knowledge of the Company, there are not any facts that could give rise to any liability in the event of any governmental audit or investigation.

(c)Except as set forth in Section 4.11(c) of the Company Disclosure Schedule, neither the Company nor any ERISA Affiliate (i) has an “obligation to contribute” (as defined in ERISA Section 4212) to a Benefit Plan that is a “multiemployer plan” (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)) (a “Multiemployer Plan”); (ii) sponsors, maintains or contributes to any plan, program or arrangement that provides for post-retirement or other post-employment welfare benefits (other than health care continuation coverage as required by applicable Law) or (iii) has not at any time incurred, and would not be likely to incur, any “withdrawal liability” (within the meaning of ERISA Section 4201) as the result of a “complete withdrawal” or “partial withdrawal” (as defined in ERISA Section 4203 and 4205, respectively) from any multiemployer plan with respect to which the Company or any ERISA Affiliate has or had an obligation to contribute. Section 4.11(c)(iv) of the Company Disclosure Schedule sets forth the funded status of each Multiemployer Plan based upon information most recently provided to the Company by such plan and the number of employees covered by such plan as of a recent date.

(d)Except for Multiemployer Plans disclosed in Section 4.11(c) of the Company Disclosure Schedule, neither the Company nor any ERISA Affiliate has ever maintained, established, sponsored, participated in, or contributed to, any defined benefit plan (as defined in ERISA Section 3(35)), whether or not subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code (a “Pension Plan”).  In the case of any Pension Plan that is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code, that is not a Multiemployer Plan and that is maintained or sponsored by the Company or an ERISA Affiliate or as to which the Company or any ERISA Affiliate has any obligation to contribute or liability: (i) such Pension Plan has not been completely or partially terminated or been the subject of a material “reportable event” within the meaning of

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Section 4043 of ERISA; (ii) no proceeding by the Pension Benefit Guaranty Corporation (“PBGC”) to terminate such Pension Plan is pending or to the knowledge of the Company threatened; (iii) all minimum funding contributions (including required quarterly installments) required under Section 412 of the Code and Section 302(c) of ERISA for all plan years have been paid when due, and there is no waiver of the minimum funding standards in effect; (iv) no liens have been imposed under Section 412(n) of the Code or Section 302(f) of ERISA; (v) neither the Company nor any of its employees or officers have incurred any liability to the PBGC or otherwise under Title IV of ERISA or the Code; and (vi) Section 4.11(d) of the Company Disclosure Schedule sets forth the funded status thereof based on the most recent actuarial valuation. In the case of any Pension Plan that provides payments or benefits primarily to employees outside of the United States and that is a maintained or sponsored by the Company or an ERISA Affiliate or as to which the Company or any ERISA Affiliate has any obligation to contribute or has any liability, other than any governmental plan, scheme or arrangement to which the Company or any ERISA Affiliate is liable only for contributions with respect to its employees, Section 4.11(d) of the Company Disclosure Schedule sets forth the funded status thereof based on the most recent actuarial valuation.

(e)Except as has not had and would not reasonably be expected to directly or indirectly result in, individually or in the aggregate, any penalties or a material liability to the Company, all reports, returns and similar documents with respect to all Benefit Plans required to be filed by the Company or any Company Subsidiary with any Governmental Entity or distributed to any Benefit Plan participant have been duly and timely filed or distributed.

(f)Section 4.11(f) of the Company Disclosure Schedule discloses each Benefit Plan that is an employee welfare benefit plan which is (i) unfunded or self-insured or (ii) funded through a “welfare benefit fund”, as such term is defined in Code Section 419(e) or other funding mechanism.  Except as has not had and would not reasonably be expected to directly or indirectly result in, individually or in the aggregate, a material liability to the Company, each such employee welfare benefit plan may be amended or terminated (including with respect to benefits provided to retirees and other former employees) without liability (other than benefits then payable under such plan without regard to such amendment or termination) to the Company or any Company Subsidiary at any time.  Each of the Company and the Company Subsidiaries complies in all material respects with the applicable requirements of Section 4980B(f) of the Code and any similar state statute with respect to each Benefit Plan that is a group health plan within the meaning of Section 5000(b)(1) of the Code or such state statute.

(g)Except as may be required by applicable Law, or as contemplated under this Agreement, neither the Company nor any Company Subsidiary has any plan or commitment to create any additional Benefit Plans, or to amend or modify any existing Benefit Plan in such a manner as to materially increase the cost of such Benefit Plan to the Company or any Company Subsidiary.

(h)Section 4.11(h) of the Company Disclosure Schedule discloses: (i) each material payment (including any bonus, severance, unemployment compensation, deferred compensation, forgiveness of indebtedness or golden parachute payment) becoming due to any current or former employee of the Company or the Company Subsidiaries under any Benefit Plan

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because of this Agreement (or the consummation of the Transactions); (ii) any increase in any material respect of any benefit otherwise payable under any Benefit Plan; (iii) any acceleration in any material respect of the time of payment or vesting of any such benefits under any Benefit Plan; or (iv) any material obligation to fund any trust or other arrangement with respect to compensation or benefits under a Benefit Plan in each case caused or triggered by the execution and delivery of this Agreement or the consummation of the Merger or the other Transactions.  No payment or benefit which has been, will or may be made by the Company or any Company Subsidiary with respect to any current or former employee of the Company or the Company Subsidiaries in connection with the execution and delivery of this Agreement or the consummation of the Transactions would fail to be deductible under Section 162(m) of the Code. Except with respect to the individuals set forth in Section 4.11(h) of the Company Disclosure Schedule (the “Primary Executives”), neither this Agreement (or the consummation of the Transactions), alone or together with any other event, nor any other agreement, plan, arrangement or other contract between the Company or any Company Subsidiary and an employee or other service provider that, considered individually or considered collectively with any other such agreements, plans, arrangements or other contracts, could reasonably be expected to, give rise directly or indirectly to the payment of any amount that would be characterized as an “excess parachute payment” within the meaning of Section 280G(b)(1) of the Code.  Section 4.11(h) of the Company Disclosure Schedule sets forth the “base amount” (as such term is defined in Section 280G(b)(3) of the Code) for each Primary Executive, calculated as of the date of this Agreement.

(i)Correct and complete copies have been delivered or made available to Parent by the Company of all material Benefit Plans (including all amendments and attachments thereto); written summaries of any material Benefit Plan not in writing, all related trust documents; all insurance contracts or other funding arrangements to the degree applicable; the most recent annual information filings (Form 5500) and related schedules and annual financial reports for those Benefit Plans (where required); the most recent determination letter from the Internal Revenue Service (where required); all material written agreements and contracts relating to each Benefit Plan, including administrative service agreements and group insurance contracts; and the most recent summary plan descriptions for the Benefit Plans (where required) and in respect of Benefit Plans, the most recent actuarial valuation and any subsequent valuation or funding advice (where required, including draft valuations).

(j)Neither the Company nor any Company Subsidiary has entered into any contract, agreement, arrangement or understanding with any officer or director of the Company or any Company Subsidiary in connection with or in contemplation of the Transactions, except as contemplated by this Agreement or the Transactions.

(k)To the knowledge of the Company, no payment pursuant to any Benefit Plans or other arrangement between the Company or a Company Subsidiary and any “service provider” (as such term is defined in Section 409A of the Code and the United States Treasury Regulations and IRS guidance thereunder), including, without limitation, the grant, vesting or exercise of any stock option, would subject any Person to a tax pursuant to Section 409A of the Code, whether pursuant to the consummation of the Merger, any other Transactions or otherwise.

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(l)The Company has provided Parent and Purchaser with a list of individuals who have been granted awards, or to whom the Company intends to grant awards, under the Company Key Employee Retention Program, substantially in the form provided to Parent and Purchaser on or prior to the date hereof (the “Retention Program”).  The maximum dollar amount that may be awarded under the Retention Program in the aggregate is $2,000,000.  No employee covered by an employment agreement or a Company Collective Bargaining Agreement will be eligible for severance payments or benefits under the Company Corporate/Administrative Employees’ Severance Policy, substantially in the form provided to Parent and Purchaser on or prior to the date hereof (the “Severance Policy”).  Nothing in the Severance Policy would require Parent or its subsidiaries to continue the Severance Policy after June 30, 2008.  The Company has provided Parent and Purchaser with the definitions of “good reason” and “cause” that will apply under the Retention Program and the Severance Policy.  Set forth in Section 4.11(l)(iii) of the Company Disclosure Schedule are the threshold, target and maximum amounts payable, in the aggregate and per individual, under each of the World Air Holdings, Inc. Annual Incentive Plan, the North American Airlines Annual Incentive Plan and the World Airways, Inc. Annual Incentive Plan (collectively, the “AIP”).  Payments under the AIP are not required to be paid out, pro rata or otherwise, as a result of the Merger or the other Transactions (alone or in combination with any other event). Nothing in the AIP will prevent Parent or Purchaser from modifying Company performance targets under the AIP in a manner Parent or Purchaser determines to be equitable to reflect the Merger and the other Transactions.

Section 4.12 Taxes.

(a)The Company and each Company Subsidiary has timely filed with the appropriate Governmental Entity all material Tax Returns required to be filed by them.  All such Tax Returns are complete and accurate in all material respects.  All material Taxes due and owing by any of the Company and each Company Subsidiary on or before the date hereof (whether or not shown on any Tax Returns) have been paid, or both are being contested in good faith and have been reserved for in accordance with GAAP on the Financial Statements.  None of the Company or any Company Subsidiary currently is the beneficiary of any extension of time within which to file any material Tax Return.

(b)The unpaid Taxes of the Company and each Company Subsidiary did not, as of the dates of the Financial Statements, exceed the reserve for Tax liability set forth on the face of the balance sheets contained in such Financial Statements.  Since the date of the most recent Financial Statements, neither the Company nor any of the Company Subsidiaries has incurred any liability for Taxes outside the ordinary course of business or otherwise inconsistent with past practice.

(c)No deficiencies for material Taxes with respect to any of the Company and the Company Subsidiaries have been claimed or proposed in writing or assessed by any Tax authority. Except as set forth in Section 4.12(c) of the Company Disclosure Schedule, there are no pending or threatened audits, assessments or other actions for or relating to any material liability in respect of Taxes of any of the Company or any of the Company Subsidiaries, and there are no matters under discussion with any Tax authority with respect to Taxes that are likely to result in an additional material liability for Taxes with respect to any of the Company or any

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Company Subsidiaries. The Company has delivered or made available to Parent complete and accurate copies of all income Tax Returns and other material Tax Returns of each of the Company and the Company Subsidiaries and their predecessors for the years ended December 31, 2004 and December 31, 2005, and complete and accurate copies of all examination reports and statements of deficiencies assessed against or agreed to by any of the Company and the Company Subsidiaries or any predecessors since January 1, 2004, with respect to Taxes of any type. Neither the Company nor any of the Company Subsidiaries nor any predecessor has waived any statute of limitations in respect of material Taxes, agreed to any extension of time with respect to a material Tax assessment or deficiency, or made a request in writing for any such extension or waiver.

(d)There are no Liens for Taxes upon the assets of any of the Company and the Company Subsidiaries (other than with respect to Liens for Taxes (i) not yet due and payable or (ii) being contested in good faith and for which adequate reserves have been established in accordance with GAAP on the Financial Statements).

(e)None of the Company nor any of the Company Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

(f)The Company and each Company Subsidiary has withheld and paid all material Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

(g)Neither the Company nor any of the Company Subsidiaries has any liability for the Taxes of any other Person (other than the Company and any of the Company Subsidiaries) under Treasury Regulation Section 1.1502–6 (or any similar provision of state, local, or foreign law), as a transferee, by contract, or otherwise.  None of the Company or any of the Company Subsidiaries has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which is the Company).

(h)Except as set forth in Section 4.12(h) of the Company Disclosure Schedule, there are no Tax sharing agreements or similar arrangements (including indemnity arrangements) with respect to or involving any of the Company and the Company Subsidiaries (except for the allocation of Taxes set forth in leases, contracts and commercial agreements entered into in the ordinary course of business), and, after the Closing Date, none of the Company nor any of the Company Subsidiaries shall be bound by any such Tax sharing agreements or similar arrangements or have any liability thereunder for amounts due in respect of periods prior to the Closing Date.

(i)Neither the Company nor any of the Company Subsidiaries has constituted a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock to which Section 355 of the Code (or so much of Section 356 of the Code as relates to Section 355 of the Code) applies.

(j)Neither the Company nor any of the Company Subsidiaries (i) has agreed, or is required, to make any adjustment under Section 481(a) of the Code for any period after the

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Closing Date by reason of a change in accounting method or otherwise; or (ii) is a shareholder of a “passive foreign investment company” within the meaning of Section 1297 of the Code.

(k)None of the Company nor any of the Company Subsidiaries has entered into any transaction identified as a “reportable transaction” for purposes of Section 6111 of the Code or Treasury Regulation Section 1.6011-4(b)(1), or analogous provisions of any state or local Tax law.

Section 4.13 Contracts.

(a)Except for this Agreement and as filed as exhibits to the Company SEC Documents filed prior to the date hereof or listed in Section 4.13(a) of the Company Disclosure Schedule, there is no agreement to which the Company or a Company Subsidiary is a party (i) under which any of the benefits to any party will be increased, or the vesting of the benefits to any party will be accelerated, by the occurrence of any of the Transactions, (ii) which, as of the date hereof, (A) is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC), or (B) would prohibit or materially delay the consummation of the Merger or any of the other Transactions or (iii) except as listed in Section 4.13(a) of the Company Disclosure Schedule, is a contract of the following type:

(A)an aircraft or airport lease or a lease of real property, including any such lease (1) containing any “change of control” or similar provision in the event of, or with respect to, consummation of the Merger or the other Transactions or the execution, delivery or effectiveness of this Agreement or (2) prohibiting or imposing any restrictions on assignment of all or any portion of such lease;

(B)any agreement for the purchase of materials, supplies, goods, services, equipment or other assets (other than pursuant to purchase orders made in the ordinary course of business consistent with past practice) with an expected cumulative nondiscounted cash impact on the Company of $5,000,000 or more;

(C)any capacity purchase, alliance or similar agreement with another airline or other entity relating to the flying and operation of the Company’s Aircraft for the benefit of such other airline or entity that will not be terminated on or prior to the Effective Time;

(D)any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any director, officer or employee of the Company, including any agreement that (i) grants any severance or termination pay to any director, officer or employee of the Company, (ii) increases compensation, bonus or other benefits payable under any employment, severance or retirement or termination pay policies of the Company or (iii) establishes any new Benefit Plan or modifies any existing Benefit Plan;

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(E)an agreement pursuant to which the Company or any of the Company Subsidiaries has agreed not to compete with any Person in any area or to engage in any activity or business, or pursuant to which any benefit or right is required to be given or lost, or any penalty or detriment is incurred, as a result of so competing or engaging;

(F)an agreement to which the Company or any of the Company Subsidiaries is a party providing for exclusivity or any similar requirement or pursuant to which the Company or any of the Company Subsidiaries is restricted in any way, or which after the Effective Time could restrict Parent or the Surviving Corporation in any way, with respect to the operation of their businesses, or pursuant to which any benefit or right is required to be given or lost, or any penalty or detriment is incurred, as a result of noncompliance with any such exclusive or restrictive requirements or which requires the Company or any of the Company Subsidiaries to refrain from granting license or franchise rights to any other Person;

(G)an agreement under which the Company or any of the Company Subsidiaries has incurred any indebtedness, other than such agreements of the Company or any of the Company Subsidiaries pursuant to which the aggregate principal amount of indebtedness incurred for all such agreements is less than $100,000;

(H)an agreement to which the Company or any of the Company Subsidiaries is a party for any joint venture (whether in partnership, limited liability company or other organizational form) or material alliance or similar arrangement;

(I)an agreement to which the Company or any of the Company Subsidiaries is a party with any Governmental Entity; or

(J)any other agreement that is material to the business of the Company and the Company Subsidiaries.

(b)Each agreement of the type described above in Section 4.13(a), and each Company Collective Bargaining Agreement is referred to herein as a “Company Material Contract”. Each Company Material Contract is valid and binding on the Company and each Company Subsidiary party thereto and, to the Company’s knowledge, each other party thereto, as applicable, and in full force and effect (except that (x) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors’ rights generally and (y) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought), and the Company and each Company Subsidiary has performed in all material respects all obligations required to be performed by it

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under each Company Material Contract and, to the Company’s knowledge, each other party to each Company Material Contract has performed in all material respects all obligations required to be performed by it under such Company Material Contract, except as would not or would not reasonably be expected to (1) prevent or materially delay the consummation of the Merger or any of the other Transactions or (2) result in, individually or in the aggregate, a Company Material Adverse Effect. None of the Company or any Company Subsidiary knows of, or has received notice of, any violation or default under (or any condition which with the passage of time or the giving of notice would cause such a violation of or default under) any Company Material Contract except for violations or defaults that would not or would not reasonably be expected to (1) prevent or materially delay consummation of the Merger or (2) result in, individually or in the aggregate, a Company Material Adverse Effect.

(c)Except as set forth in Section 4.13(c) of the Company Disclosure Schedule, the Company has delivered or made available to Parent or provided to Parent for review, prior to the execution of this Agreement, true and complete copies of all of the Company Material Contracts required to be disclosed in Section 4.13(a) of the Company Disclosure Schedule which are not filed as exhibits to the Company SEC Documents and the Company Material Contracts required to be disclosed in Section 4.13(a) of the Company Disclosure Schedule or filed as exhibits to the Company SEC Documents are true and complete copies of such contracts.

Section 4.14 Title to Properties; Encumbrances. The Company and each of the Company Subsidiaries has good title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets except where the failure to have such good title has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; in each case subject to no Liens, except for (a)Liens reflected in a consolidated balance sheet (or the notes thereto) as of the Balance Sheet Date, (b) Liens consisting of zoning or planning restrictions, easements, permits, restrictions under any Environmental Permit and other restrictions or limitations on the use of real property or irregularities in title thereto, which do not materially impair the value of such properties or the use of such property by the Company or any of the Company Subsidiaries in the operation of its respective business, (c) Liens for current Taxes, assessments or governmental charges or levies on property not yet due and payable and Liens for Taxes that are being contested in good faith by appropriate proceedings and for which an adequate reserve has been provided on the appropriate financial statements, (d) Liens securing the Credit Agreement dated as of March 30, 2006, among World Airways, Inc. and North American Airlines, Inc., as borrowers, the Company and World Airways Parts Company, LLC, as guarantors, and Wachovia Bank, National Association, as agent and lender (the “Bank Facility”), and (e) Liens which would not and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect (the foregoing Liens (a)-(d), “Permitted Liens”).  The Company and each of the Company Subsidiaries, as applicable, is the lessee and is in compliance with the terms of all leases to which they are a party in respect of all tangible properties reflected in the Financial Statements or that are material to the business on a consolidated basis, except for such noncompliance as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  All such leases are in full force and effect, and the Company

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and each of the Company Subsidiaries enjoys peaceful and undisturbed possession under all such leases.

Section 4.15 Intellectual Property.

(a)The Company and the Company Subsidiaries own or otherwise have all Intellectual Property Rights needed to conduct the business of the Company and the Company Subsidiaries as conducted prior to the Closing Date.

(b)None of the Company or any of the Company Subsidiaries or any of its or their current products or services or other operation of the Company’s or the Company’s Subsidiaries’ business has infringed upon or otherwise violated, or is infringing upon or otherwise violating, in any respect the Intellectual Property Rights of any third party.  No Person or any of such Person’s products or services or other operation of such Person’s business is infringing upon or otherwise violating any Owned Company IP in any material respect.

(c)No action, claim or proceeding alleging infringement, misappropriation, or other violation of any Intellectual Property Right of another Person is pending or, to the knowledge of the Company, has been threatened against Company or the Company Subsidiaries.  Neither the Company nor any of the Company Subsidiaries has received any notice or other communication relating to any actual, alleged, or suspected infringement, misappropriation, or violation of any Intellectual Property Right of another Person by Company or any Company Subsidiary.

Section 4.16 Labor Matters.

(a)Section 4.16(a) of the Company Disclosure Schedule contains a complete and accurate list of each collective bargaining or other labor union or foreign work council contract (including amendments thereto) applicable to Persons employed by the Company or any of the Company Subsidiaries to which the Company or any of the Company Subsidiaries is a party (each a “Company Collective Bargaining Agreement”).  The Company has made available to Parent a true and complete copy of each such Company Collective Bargaining Agreement.  Except as set forth in Section 4.16(a) of the Company Disclosure Schedule, (i) no Company Collective Bargaining Agreement is being negotiated by the Company or any of the Company Subsidiaries or will be subject to negotiation prior to the Effective Time, (ii) there is no strike, labor dispute, slowdown, lockout or work stoppage against the Company or any of the Company Subsidiaries pending or, to the knowledge of the Company, threatened with respect to any employee of the Company or any Company Subsidiary, (iii) to the knowledge of the Company, none of the Company or any Company Subsidiary has committed any material unfair labor practice in connection with the operation of the respective businesses of the Company and the Company Subsidiaries, (iv) no labor union, labor organization or group of employees of the Company or any of the Company Subsidiaries has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened in writing to be brought or filed with any labor relations tribunal or authority, (v) to the Company’s knowledge, there are no labor union organizing activities pending or threatened with respect to any employees of the Company or any of the Company Subsidiaries, (vi) there are no arbitrations, written grievances or written

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complaints outstanding or, to the Company’s knowledge, threatened against the Company or any of the Company Subsidiaries under any Company Collective Bargaining Agreement, except for such matters as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, (vii) neither the Company nor any of the Company Subsidiaries is in receipt of written notice of any material statutory disputes or unfair labor practice charges and (viii) there is no complaint for violation of the Railway Labor Act, 45 U.S.C. § 8, as amended, against the Company or any Company Subsidiary pending before any Governmental Entity.

(b)The Company and the Company Subsidiaries have complied with the provisions of all Company Collective Bargaining Agreements and all applicable Laws, rules and regulations with respect to employment, employment practices, and terms, conditions and classification of employment (including applicable Laws, rules and regulations regarding wage and hour requirements, immigration status, discrimination in employment, employee health and safety, and the Workers’ Adjustment and Retraining Notification Act), except for such noncompliance as has not had and would not reasonably be expected to directly or indirectly result in, individually or in the aggregate a material liability to the Company.

Section 4.17 Compliance with Laws; Permits.

(a)The Company and each Company Subsidiary have complied and are in compliance with all laws, rules and regulations, ordinances, judgments, decrees, orders, writs and injunctions of all federal, state, local and foreign governments and agencies thereof (collectively “Laws”), which affect the business, properties or assets of the Company and each Company Subsidiary, any applicable operating certificates, common carrier obligations, airworthiness directives (“ADs”), Federal Aviation Regulations (“FARs”) or any other rules, regulations, directives or policies of the Federal Aviation Administration (the “FAA”), the Department of Transportation (the “DOT”), the Federal Communications Commission (the “FCC”), the Department of Defense (the “DOD”), the Department of Homeland Security (the “DHS”), the Federal Transportation Safety Administration (the “TSA”), the Air Transportation Stabilization Board (“ATSB”) or any other Governmental Entity, except for instances of possible noncompliance that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  No notice, charge or assertion has been received by the Company or any Company Subsidiary or threatened against the Company or any Company Subsidiary alleging any violation of any of the foregoing, except for instances of possible noncompliance that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  All licenses, authorizations, consents, permits, and approvals required under such Laws are in full force and effect except where the failure to be in full force and effect have not had and would not reasonably be expected to have a Company Material Adverse Effect.  No material investigation or review or civil penalty claims by the FAA, the TSA, any customs agency or any other Governmental Entity with respect to the Company or any of the Company Subsidiaries is pending or, to the Company’s knowledge, threatened, nor has the FAA, the TSA, any customs agency or any other Governmental Entity indicated an intention to conduct the same.

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(b)The Company and each Company Subsidiary is in possession of all authorizations, licenses, permits, Environmental Permits, certificates, approvals and clearances of any Governmental Entity necessary for the Company and each Company Subsidiary to own, lease and operate its properties or to carry on their respective businesses substantially in the manner described in the Company SEC Documents filed prior to the date hereof and substantially as it is being conducted as of the date hereof (the “Company Permits”), and all such Company Permits are valid, and in full force and effect, except where the failure to have, or the suspension or cancellation of, or failure to be valid or in full force and effect of, any of the Company Permits would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.  There is not pending or, to the Company’s knowledge, 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 Company Subsidiaries relating to any of the Company Permits, except for any of the foregoing that have not resulted in and would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect.  The actions of the applicable Governmental Entities granting all Company Permits have not been reversed, stayed, enjoined, annulled or suspended, and there is not pending or, to the Company’s knowledge, threatened, any 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 Company Permit, except, for any of the foregoing that have not resulted in and would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect. Since the Balance Sheet Date, neither the Company nor any Company Subsidiary has failed to comply with or pass any inspection performed by the FAA, the DOD, the DOT or any other Governmental Entity where such failure to comply or pass any such inspection has adversely affected or would reasonably be expected to adversely affect the eligibility of the Company or any Company Subsidiary to undertake any aircraft missions.

(c)None of the Company or any of the Company Subsidiaries, nor to the knowledge of the Company, any of their respective directors, officers, agents, employees or representatives (in each case acting in their capacities as such) has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) directly or indirectly paid or delivered any fee, commission or other sum of money or item of property, however characterized, to any finder, agent or other party acting on behalf of or under the auspices of a governmental official or Governmental Entity, in the United States or any other country, that was illegal under any applicable Law, (iii) made any payment to any customer or supplier, or to any officer, director, partner, employee or agent of any such customer or supplier, for the unlawful sharing of fees to any such customer or supplier or any such officer, director, partner, employee or agent for the unlawful rebating of charges, (iv) engaged in any other unlawful reciprocal practice, or made any other unlawful payment or given any other unlawful consideration to any such customer or supplier or any such officer, director, partner, employee or agent, or (v) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, except, in the case of clauses (i) through (v) above, for such payments, violations, conduct or other practices that have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

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Section 4.18 Information in the Proxy Statement. The proxy statement (the “Proxy Statement”) (and any amendment thereof or supplement thereto), at the date mailed to the Company’s stockholders and at the time of any meeting of Company stockholders to be held in connection with the Merger or at the date of any amendment thereof or supplements thereto, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by the Company with respect to statements made therein based on information supplied by Parent or Purchaser expressly for inclusion in the Proxy Statement.  The Proxy Statement will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder.

Section 4.19 Opinion of Financial Advisor. The Company has received the written opinion of Friedman, Billings, Ramsey & Co., Inc. (the “Company Financial Advisor”) dated April 4, 2007, to the effect that, as of such date, the Merger Consideration to be received by the holders of the Shares pursuant to this Agreement is fair to such stockholders from a financial point of view, and such opinion has not been modified or withdrawn.

Section 4.20 Insurance. The Company maintains insurance coverage with insurers, or maintains self-insurance practices, in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in businesses similar to that of the Company and the Company Subsidiaries.  All such policies are in full force and effect, all premiums due and payable have been paid, and no written notice of cancellation or termination or possible cancellation or termination has been received with respect to any such policy.  Neither the Company nor any Company Subsidiary is in material breach or default, and neither the Company nor any Company Subsidiary has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or material modification of any such insurance policies.  Neither this Agreement nor the consummation of the Transactions will cause the revocation, cancellation or termination of any such insurance policy.

Section 4.21 Environmental Laws and Regulations. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, (i) Hazardous Materials have not been generated, used, treated or stored on, transported to or from or disposed of on, any Company Property, except in the ordinary course of the Company’s business and in accordance with applicable Environmental Laws and Environmental Permits, (ii) no Release of any Hazardous Material on any Company Property has occurred; (iii) the Company and each of the Company Subsidiaries are in compliance with all applicable Environmental Laws and the requirements of any Environmental Permits, and

(iv)there are no past, pending or, to the Company’s knowledge, threatened Environmental Claims against the Company or any of the Company Subsidiaries or any Company Property.

Section 4.22 Brokers; Expenses.

(a)Except for the Company Financial Advisor, no broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other

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similar fee or commission in connection with the Merger based upon arrangements made by or on behalf of Company.

(b)True and correct copies of all agreements between the Company and the Company Financial Advisor concerning this Agreement and the Transactions, including, without limitation, any fee arrangements, have been made available to Parent, except to the extent such agreements have been redacted with respect to pricing incentive thresholds.

Section 4.23 Takeover Statutes. The Company Board of Directors and the Company have taken all action necessary to render inapplicable to the Transactions each and every state takeover statute or similar statute or regulation that applies to the Company with respect to this Agreement, the Merger or any other Transaction, including the restrictions on “business combinations” set forth in Section 203 of the DGCL.

Section 4.24 Aircraft.

(a)Section 4.24(a) of the Company Disclosure Schedule sets forth a true and complete list of all aircraft owned or leased by the Company or any Company Subsidiaries as of the date hereof (the “Company Aircraft”), including a description of the type and aircraft number of each such Company Aircraft and the date the Company placed such Company Aircraft in service or proposes to place such Company Aircraft in service.  All Company Aircraft owned or leased by the Company or any Company Subsidiaries are in airworthy condition and are being maintained according to applicable FAA regulatory standards and the FAA-approved maintenance program of the Company and the Company Subsidiaries.  The Company and the Company Subsidiaries 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 Company Subsidiaries, and the Company and the Company Subsidiaries are in compliance with such maintenance schedules in all material respects 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.

(b)Section 4.24(b) of the Company Disclosure Schedule sets forth a true and complete list, as of the date hereof, containing all contracts (other than existing aircraft leases) pursuant to which the Company or any of the Company Subsidiaries may purchase or lease aircraft, including the manufacturer and model of all aircraft subject to each such contract.  The Company has delivered or made available to Purchaser true and complete copies of all such contracts listed on Section 4.24(b) of the Company Disclosure Schedule, including all amendments thereto.

(c)Each Company Aircraft has a validly issued, current individual aircraft FAA Certificate of Airworthiness with respect to such Company Aircraft which satisfies all requirements for the effectiveness of such FAA Certificate of Airworthiness.

(d)Each Company Aircraft’s structure, systems and components are functioning in accordance with its intended use as set forth in FAA-approved documentation,

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including any applicable manuals, technical standard orders or parts manufacturing approval certificates.

(e)All deferred maintenance items and temporary repairs with respect to each such Company Aircraft have been or will be made materially in accordance with FAA, manufacturer’s and the Company’s maintenance programs.

(f)Each Company Aircraft is properly registered on the FAA aircraft registry.

(g)Neither the Company nor any Company Subsidiary is a party to any interchange or pooling agreements with respect to the Company Aircraft.

(h)No Company Aircraft is subleased to or otherwise in the possession of another air carrier or another Person other than the Company or any of the Company Subsidiaries, to operate such Company Aircraft in air transportation or otherwise.

Section 4.25 U.S. Citizen; Air Carrier. The Company’s two primary operating subsidiaries, World Airways, Inc. and North American Airlines, Inc., are each (i) a “citizen of the United States” as defined in the Federal Aviation Act (49 U.S.C § 40102(15)), (ii) an “air carrier” within the meaning of the Federal Aviation Act (49 U.S.C. § 40102(2)) and (iii) holding a certificate of public convenience and necessity issued by the DOT and (iv) operating under an Air Carrier Certificate issued pursuant to the Federal Aviation Act (49 U.S.C. §§ 41101-41112).

Section 4.26 Affiliate Transactions. No affiliate of the Company or the Company Subsidiaries is, or is an affiliate of a Person that is, a party to any agreement with or binding upon the Company or the Company Subsidiaries or any of their respective properties or assets or has any material interest in any material property owned by the Company or the Company Subsidiaries or has engaged in any material transaction with any of the foregoing within the last twelve months preceding the date of this Agreement.

Section 4.27 AMC Agreements; Reliability and Violations Thresholds.

(a)The Company, through its wholly owned subsidiaries, World Airways, Inc. and North American Airlines, Inc., are designated Civil Reserve Air Fleet (“CRAF”) participants.  The Company and the applicable Company Subsidiaries have complied in all material respects with (i) the requirements of the United States Air Force’s Air Mobility Command (“AMC”) agreements (the “AMC Agreements”) and (ii) the Alliance team (“Alliance Team”) teaming arrangements and agreements (the “Alliance Agreements”).  Neither the Company nor any of the Company Subsidiaries has received any notice from the DOD or any other applicable Governmental Entity of any proposed termination of their respective CRAF participant designations or of any proposed termination of any of the AMC Agreements pursuant to which the Company and the Company Subsidiaries currently provide air transport services to the AMC.

(b)Since the Balance Sheet Date, neither the Company nor any Company Subsidiary knows of, or has received notice of, any violation of (or condition which with the passage of time or the giving of notice would cause such a violation of) any “Reliability and

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Violations threshold” established by the AMC that has resulted in or would reasonably be expected to result in the Company or any Company Subsidiary obtaining “last use” status.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

OF PARENT AND PURCHASER

Parent and Purchaser represent and warrant to the Company as follows:

Section 5.1 Organization. Each of Parent and Purchaser is a corporation or other legal entity duly organized, validly existing and in good standing (with respect to jurisdictions which recognize such concept) under the laws of the jurisdiction in which it is organized and has the requisite corporate or other power, as the case may be, and authority to conduct its business as now being conducted, except, for those jurisdictions where the failure to be so organized, existing or in good standing, individually or in the aggregate, would not and would reasonably be expected to impair in any material respect the ability of each of Parent and Purchaser, as the case may be, to perform its obligations under this Agreement or prevent or materially delay the consummation of the Transactions.

Section 5.2 Authorization; Validity of Agreement; Necessary Action. Each of Parent and Purchaser has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the Transactions.  The execution, delivery and performance by Parent and Purchaser of this Agreement and the consummation of the Transactions have been duly authorized by all necessary corporate action on the part of Parent and Purchaser.  This Agreement has been duly executed and delivered by Parent and Purchaser and, assuming due and valid authorization, execution and delivery hereof by the Company, is the valid and binding obligation of each of Parent and Purchaser enforceable against each of them in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors’ rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

Section 5.3 Consents and Approvals; No Violations. None of the execution, delivery or performance of this Agreement by the Parent and Purchaser, the consummation by the Parent and Purchaser of the Transactions or compliance by the Parent or Purchaser with any of the provisions of this Agreement will (i) violate or conflict with or result in any breach of any provision of the organizational documents of Parent or Purchaser, (ii) require any filing by the Parent or Purchaser with, or the permit, authorization, consent or approval of, any Governmental Entity (except for (A) compliance with any applicable requirements of the Exchange Act, (B) any filings as may be required under the DGCL in connection with the Merger, including the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (C) filings, notices, permits, authorizations, consents and approvals as may be required under (1) the HSR Act, and (2) Required Governmental Approvals, and (D) the filing with the SEC of the Proxy Statement, or (iii) conflict with or violate any order, writ, injunction, decree, statute, rule or regulation applicable to Parent or Purchaser, any of their Subsidiaries, or any of their

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properties or assets, except in the case of clause (i) or (ii) such violations, breaches or defaults which would not or would not reasonably be expected to, individually or in the aggregate, impair in any material respect the ability of each Parent or Purchaser to perform its obligations under this Agreement, as the case may be, or prevent the consummation of the Transactions on a timely basis.

Section 5.4 Litigation. As of the date hereof, there is no claim, action, suit, arbitration, alternative dispute resolution action or any other judicial or administrative proceeding pending against (or, to the knowledge of Parent, threatened against or naming as a party thereto) Parent or any of its Subsidiaries, nor, to the knowledge of Parent, is there any investigation pending or threatened against Parent or any of its Subsidiaries, and none of Parent, any of its Subsidiaries, or any of their respective properties is subject to any outstanding order, writ, injunction or decree, in each case, which would, individually or in the aggregate, impair in any material respect the ability of each of Parent and Purchaser to perform its obligations under this Agreement, as the case may be, or prevent the consummation of any of the Transactions.

Section 5.5 Information in the Proxy Statement. None of the information supplied by Parent or Purchaser in writing expressly for inclusion or incorporation by reference in the Proxy Statement (or any amendment thereof or supplement thereto) will, at the date mailed to stockholders or at the time of the meeting of stockholders to be held in connection with the Merger, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading.

Section 5.6 Ownership of Company Capital Stock. Neither Parent nor Purchaser is, nor at any time during the last three (3) years has it been, an “interested stockholder” of the Company as defined in Section 203 of the DGCL (other than as contemplated by this Agreement).

Section 5.7 Available Funds. The financing of the Merger contemplated hereby (the “Financing”) will consist of debt financing provided by J.P. Morgan Securities Inc. and JPMorgan Chase Bank, N.A. (together, “JPMorgan”) and other available financing sources.  Parent has delivered to the Company a true and complete copy of the fully executed commitment letter addressed to Parent and Purchaser pursuant to which JPMorgan has committed to provide certain of the Financing (such agreements, as modified pursuant to Section 7.12, the “Financing Commitment”).  As of the date of this Agreement, the Financing Commitment is in full force and effect and is a legal, valid and binding obligation of JPMorgan, and the Financing Commitment thereunder has not been withdrawn or terminated.  The Financing Commitment has not been amended, supplemented or otherwise modified in any respect, except, in each case, as permitted by Section 7.12. No event has occurred that, with or without notice, lapse of time or both, would constitute a default or breach on the part of Parent or Purchaser under any term of the Financing Commitment.  Assuming the satisfaction of the conditions set forth in Article VIII, (i) neither Parent nor Purchaser has any reason to believe that it will not be able to satisfy on a timely basis any term or condition of closing to be satisfied by it or its affiliates set forth in the Financing Commitment and (ii) neither Parent nor Purchaser has any reason to believe, as of the date of this Agreement, that any portion of the Financing to be made thereunder will otherwise not be

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available to Parent or Purchaser or the Surviving Corporation on a timely basis to fund the Merger upon the terms contemplated by this Agreement and the Financing Commitment.  Assuming the satisfaction of the conditions set forth in Article VIII, the Financing, when funded in accordance with the Financing Commitment and any other commitments from available financing sources, will provide the Purchaser and the Surviving Corporation, as applicable, with funds sufficient to satisfy all of their obligations under this Agreement, including the payment of the Merger Consideration and all associated costs and expenses.

Section 5.8 U.S. Citizen. Each of Parent and Purchaser and any parent company or controlling shareholder of Parent and Purchaser is a “citizen of the United States” as defined in the Federal Aviation Act (49 U.S.C. § 20101(15)).

ARTICLE VI

CONDUCT OF BUSINESS PENDING THE MERGER

Section 6.1 Interim Operations of the Company. Except as set forth in Section 6.1 of the Company Disclosure Schedule, as required pursuant to this Agreement or as agreed in writing by Parent, from the date hereof until the earlier of (A) the valid termination of this Agreement in accordance with Article IX hereto and (B) the Effective Time, the Company shall, and shall cause the Company Subsidiaries to, (i) conduct their businesses in all material respects in the ordinary course consistent with past practice, (ii) use commercially reasonable efforts to preserve intact their present business organizations, (iii) use commercially reasonable efforts to maintain satisfactory relations with and keep available the services of their current officers and other key employees, (iv) maintain in effect all material foreign, federal, state and local licenses, approvals and authorizations, including all material licenses and permits that are required for the Company or any Company Subsidiary to carry on its business, (v) use commercially reasonable efforts to preserve existing relationships and goodwill with Governmental Entities, customers, lenders, suppliers, distributors, lessors, employees, business associates, alliance team members and joint venture partners and others having business relationships with the Company and the Company Subsidiaries and (vi) refrain from knowingly taking or permitting any Company Subsidiary to take any action the result of which would or would reasonably be expected to result in any of the closing conditions set forth in Article VIII hereof not being satisfied.  Without limiting the generality of the foregoing, except as set forth in Section 6.1 of the Company Disclosure Schedule, as required pursuant to this Agreement or as agreed in writing by Parent, from the date hereof until the earlier of (x) the valid termination of this Agreement in accordance with Article IX hereto and (y) the Effective Date, the Company shall not, nor shall it permit any Company Subsidiary to:

(a)amend the Company Governing Documents or equivalent documents of any Company Subsidiary or amend the terms of any outstanding security of the Company or any Company Subsidiary;

(b)split, combine, subdivide or reclassify any shares of capital stock of the Company or any Company Subsidiary, other than any such transaction by a Company Subsidiary that remains a Company Subsidiary after consummation of such transaction, in the ordinary course of business consistent with past practice;

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(c)declare, set aside or pay any dividend or other distribution payable in cash, stock or property (or any combination thereof) with respect to the Company’s capital stock;

(d)redeem, purchase or otherwise acquire, or offer to redeem, purchase or otherwise acquire, any Equity Interests, except (i) for the acceptance of previously owned Shares in payment of all or a portion of the exercise price delivered by one or more optionees in the course of exercising all or portions of any Company Options, and (ii) for the withholding of otherwise deliverable Shares in the course of effecting one or more optionees’ tax withholding elections pursuant to the exercise of all or portions of any Company Options;

(e)issue, sell, pledge, deliver, transfer, dispose of or encumber any shares of, or securities convertible into or exchangeable for, or grant any Company Options, Restricted Stock or Warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class, or grant to any Person any right the value of which is based on the value of Shares or other capital stock, other than (i) the issuance of Shares reserved for issuance on the date hereof pursuant to the exercise of the Company Options disclosed in Section 4.2(b) of the Company Disclosure Schedule and outstanding on the date hereof or (ii) the issuance of shares of capital stock of the Company upon the exercise of Warrants;

(f)acquire (i) any Person (whether pursuant to merger, stock or asset purchase or otherwise) in one transaction or any series of related transactions or (ii) any equity interests in any Person or any business or division of any Person or any assets of any Person (or business or division thereof);

(g)transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any assets or properties of the Company or any of the Company Subsidiaries having an aggregate value of more than $2,000,000;

(h)(i) incur or assume any long-term or short-term indebtedness except (A) short-term indebtedness made in the ordinary course of business consistent with past practice not to exceed $1,000,000 in the aggregate or (B) additional indebtedness under existing debt facilities or like replacement debt facilities for short-term working capital purposes not to exceed $5,000,000 outstanding at any time; (ii) issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any Company Subsidiaries, (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, other than with respect to Company Subsidiaries in the ordinary course of business consistent with past practice or (iv) make any loans, advances or capital contributions to, or investments in, any other Person, other than loans, advances or capital contributions to, or investments in, wholly owned Company Subsidiaries made in the ordinary course of business consistent with past practice;

(i)other than as required by applicable Law or the terms of this Agreement or any agreement existing on the date hereof make any change in, or accelerate the vesting of, the compensation or benefits payable or to become payable to, or grant any severance or termination pay to, any of its officers, directors, employees, agents or consultants or enter into or amend any employment, consulting, severance, retention, change in control, termination pay, collective bargaining or other agreement or any equity based compensation, pension, deferred

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compensation, welfare benefits or other employee benefit plan or arrangement, or make any loans to any of its officers, directors, employees, affiliates or agents or consultants make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons pursuant to a Benefit Plan or otherwise take any action to fund or in any other way secure the payment of compensation or benefits under any Benefit Plan, take any action to accelerate the time of payment or vesting of any compensation or benefits under any Benefit Plan or make any material determination under any Benefit Plan, with respect to such determination, that is inconsistent with the ordinary course of business or past practice or that would result in a material liability to the Company; other than (i) by permitting the acceleration of any Company Options or Restricted Stock pursuant to the terms of agreements in existence on the date hereof which provide for such acceleration or (ii) as otherwise provided in Section 3.4 of this Agreement or Section 6.1 of the Company Disclosure Schedule;

(j)announce, implement or effect any material reduction in labor force, lay off, early retirement program, severance program or other program or effort concerning the termination of employment of employees of the Company or any Company Subsidiary other than routine employee terminations;

(k)incur any capital expenditures or any obligations or liabilities in respect thereof, in excess of the aggregate of those contemplated in the capital expenditures budgets for the Company and the Company Subsidiaries previously made available to Parent and summarized in Section 6.1(k) of the Company Disclosure Schedule; provided that in respect of capital expenditures for which budgeted amounts are contemplated in the capital expenditures budgets to exceed $500,000, neither the Company nor the Company Subsidiaries shall incur capital expenditures or any obligations or liabilities in respect thereof in excess of such budgeted amounts without the prior written consent of Parent;

(l)enter into any agreement or arrangement that limits or otherwise restricts the Company, any Company Subsidiary, or upon completion of the Transactions, Parent or its Subsidiaries or any successor thereto from engaging or competing in any line of business or in any location;

(m)except as disclosed in Section 6.1(m) of the Company Disclosure Schedule, amend, modify, extend or terminate any Company Material Contract, including any Company Collective Bargaining Agreement, or otherwise waive, release or assign any rights, claims or benefits thereunder, or enter into any contract that, if existing on the date hereof, would be deemed to be a Company Material Contract, including any such contract that would be deemed to be a Company Collective Bargaining Agreement; provided, however, this Agreement shall not prohibit the Company or any of the Company Subsidiaries from entering into aircraft leases after the date hereof with the prior agreement of Parent (it being understood that Parent has or will agree to the entering into of the letters of intent with respect to such aircraft leases as are referred to in Section 6.1(m) of the Company Disclosure Schedule);

(n)settle, pay or discharge any claims, litigation, investigation or arbitration, in each case made or pending against the Company, any of the Company Subsidiaries or any of their officers and directors in their capacities as such, other than the settlement, payment or

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discharge of claims, litigation, investigations or arbitrations in the ordinary course of business consistent with past practice;

(o)fail to maintain insurance at levels comparable to current levels or in a manner consistent with past practice or otherwise permit any material insurance policy naming it as a beneficiary or a loss payee to be cancelled or terminated without reasonable prior notice to Purchaser;

(p)change any of the accounting methods used by it, except for such changes required by GAAP or Regulation S-X promulgated under the Exchange Act, as concurred in by its independent registered public accountants;

(q)revalue any of its material assets, including writing down the value of inventory or writing down notes or accounts receivable, other than as may be required by GAAP or applicable Law;

(r)make or change any material Tax election, change an annual accounting period, adopt or change any accounting method, file any amended Tax Returns, enter into any closing agreement with respect to material Taxes, settle or consent to any material Tax Claim, take any affirmative action to surrender any right to claim a refund of Taxes, or consent to any extension or waiver of the limitation period applicable to any Tax Claim;

(s)adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company (other than the Merger);

(t)take any action which would, directly or indirectly, restrict or impair the ability of Purchaser to vote, or otherwise to exercise the rights and receive the benefits of a stockholder with respect to, securities of the Company or any Company Subsidiary acquired or controlled or to be acquired or controlled by Parent or Purchaser;

(u)except as required by applicable Law, convene any regular or special meeting (or any adjournment or postponement thereof) of the stockholders of the Company other than the Special Meeting;

(v)fail to continue, in respect of all Company Aircraft, all material maintenance programs consistent with past practice (except as required or permitted by applicable Law), including using reasonable best efforts to keep all such Company Aircraft in such condition as may be necessary to enable the airworthiness certification of such Company Aircraft under the FAA to be maintained in good standing at all times;

(w)decrease or defer in any material respect the level of training provided to the employees of the Company or any of the Company Subsidiaries or the level of cost expended in connection therewith prior to the date hereof;

(x)fail to keep in effect any governmental route authority used by the Company or any Company Subsidiary as of the date of this Agreement, provided that the

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restrictions set forth in this Section 6.1(x) shall not apply to any such failure if such failure occurs in the ordinary course of business consistent with past practice;

(y)make any material changes to any flight routes flown by the Company or any Company Subsidiary as of the date hereof; and

(z)enter into any written agreement, contract, commitment or arrangement to do any of the foregoing, or otherwise authorize in writing or take any action in furtherance of any of the foregoing.

Section 6.2 No Solicitation; Unsolicited Proposals.

(a)From the date of this Agreement until the Effective Time or, if earlier, the valid termination of this Agreement in accordance with its terms, the Company shall not, shall cause all of the Company Subsidiaries and the Company’s and such Company Subsidiaries’ respective officers and directors not to, and shall not authorize or permit its non-officer employees, investment bankers, attorneys, accountants, consultants or other agents or representatives (collectively, “Representatives”) to, directly or indirectly, (i) solicit, initiate, knowingly encourage or facilitate (including by way of furnishing non-public information), any inquiries or the making or submission of, or any inquiry, offer, proposal or indication of interest that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal, (ii) participate or engage in any discussions or negotiations with, or disclose or provide any non-public information or data relating to the Company or any Company Subsidiary or afford access to the properties, assets, books or records or employees of the Company or any Company Subsidiary to, any Person, or “group” (as defined under Section 13(d) of the Exchange Act ) other than Parent and its Subsidiaries and Representatives (any such Person or “group” and its Representatives (excluding the Company’s and Parent’s Representatives in their capacity as such), a “Third Party”) relating to an Acquisition Proposal, (iii) facilitate any effort or attempt to make or implement an Acquisition Proposal, (iv) accept, approve, endorse or recommend an Acquisition Proposal, or (v) enter into any agreement, arrangement, undertaking, contract, commitment or understanding (including any agreement in principle or letter of intent or understanding) with respect to or contemplating an Acquisition Proposal or enter into any agreement, arrangement, undertaking, contract, commitment or understanding requiring the Company to abandon, terminate or fail to consummate the Transactions.  The Company shall, and shall cause the Company Subsidiaries and the Company’s and such Company Subsidiaries’ respective Representatives to, immediately cease and terminate any existing solicitation, encouragement, activity, discussion or negotiation with any Third Party heretofore conducted by the Company, the Company Subsidiaries or their respective Representatives with respect to an Acquisition Proposal or Acquisition Transaction.

(b)Notwithstanding the restrictions set forth in Section 6.2(a), if, at any time prior to the Effective Time, (i) the Company receives an unsolicited bona fide written Acquisition Proposal from a Third Party and under circumstances in which the Company, the Company Subsidiaries and their Representatives have complied with the Company’s obligations under Section 6.2(a) and (ii) the Company Board of Directors determines in good faith (after consultation with its financial advisor and outside legal counsel and receipt of a supporting written opinion of such financial advisor or outside legal counsel) (such consultation with a

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financial advisor and outside legal counsel and receipt of a supporting written opinion from such financial advisor or outside legal counsel, “After Consultation”) that (A) such Acquisition Proposal is, or is reasonably likely to lead to, a Superior Proposal and (B) the failure to take any such action would be a breach of its fiduciary duties to the Company’s stockholders under applicable Law, the Company may, subject to its giving Parent at least forty-eight 48 hours prior written notice (which notice shall contain the identity of such Third Party, a copy of the written Acquisition Proposal, a description of any other material terms pertinent thereto and a statement to the effect that the Company Board of Directors has made the determination required by this Section 6.2(b) and the Company intends to furnish non-public information to, or enter into discussions or negotiations with, such Third Party), (x) furnish information with respect to the Company and Company Subsidiaries to such Third Party pursuant to a customary confidentiality agreement no less restrictive than the confidentiality agreement between MatlinPatterson Global Advisors LLC and the Company dated January 9, 2007 (the “Confidentiality Agreement”) and provided that the Company promptly provides to Parent any non-public information that is provided to such Third Party and not previously provided to Parent, and (y) participate in discussions or negotiations with such Third Party regarding such Acquisition Proposal (including by requesting that such Third Party amend the terms of such Acquisition Proposal so that it may be a Superior Proposal).

(c)In addition to any prior notice obligations contained in Section 6.2(b), the Company shall as promptly as practicable (and in any event within twenty-four (24) hours) notify Parent of any Acquisition Proposal that the Company receives or of any request for information or inquiry that the Company receives which relates to or would reasonably be expected to lead to an Acquisition Proposal, which notification shall include, (i) the applicable written Acquisition Proposal, request or inquiry (or, if oral, the material terms and conditions of such Acquisition Proposal, request or inquiry), and (ii) the identity of the Person making such Acquisition Proposal, request or inquiry.  The Company shall keep Parent informed on a reasonably current basis (but in any event within twenty-four (24) hours) of the status and material terms and conditions (including all amendments or proposed amendments) of any such Acquisition Proposal, request or inquiry.  The Company shall provide Parent with at least forty eight (48) hours prior notice of a meeting of the Company Board of Directors (or such lesser notice as is provided to the members of the Company Board of Directors) at which the Company Board of Directors is reasonably expected to consider an Acquisition Proposal.

(d)Nothing contained in this Agreement shall prohibit the Company from (i)issuing a “stop-look-and listen communication” pursuant to Rule 14d-9(f) or taking and disclosing to its stockholders a position as required by Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act or (ii) otherwise disclosing any information to its stockholders that the Company Board of Directors determines in good faith (after consultation with its outside legal counsel) it is required to disclose in order to not breach its fiduciary duties to the Company’s stockholders under applicable Law, subject to compliance with the requirements of Sections 6.2(a), (b), and (c) and Section 6.3; provided that (x) any disclosure that is limited to describing the existence and terms of an Acquisition Proposal shall not be deemed to result in a Company Recommendation Change so long as the Company Board of Directors expressly reaffirms in such disclosure its recommendation regarding the Merger and (y) the Company shall provide Parent with no less than one business day notice of and a reasonable opportunity to

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review and comment on such disclosure prior to any such disclosure being disseminated and shall give good faith consideration to any comments made by Parent with respect to such disclosure.

Section 6.3 Board Recommendation.

(a)As promptly as possible after resolving comments, if any, of the SEC with respect to the Proxy Statement, the Company Board, in accordance with the Bylaws of the Company and applicable Law, shall duly call, give notice of, convene and hold a special meeting of its stockholders (the “Special Meeting”) solely for the purpose of adopting this Agreement.

(b)Subject to the terms of Section 6.3(c) hereof, the Company Board of Directors shall (i) recommend that the holders of the Shares adopt this Agreement in accordance with the applicable provisions of DGCL (the “Company Recommendation”), and (ii) include the Company Recommendation in the Proxy Statement.

(c)Subject to Section 6.3(d), neither the Company Board of Directors nor any committee thereof shall withdraw, qualify, modify, change or amend in any manner adverse to Parent or Purchaser the Company Recommendation, the approval by the Company Board of Directors of this Agreement and the Transactions, including the Merger (a “Company Change in Recommendation”).

(d)Notwithstanding anything to the contrary set forth in this Agreement, the Company Board of Directors may effect a Company Change in Recommendation at any time prior to the Effective Time, if (i) the Company Board of Directors has received an Acquisition Proposal (that has not been withdrawn) that constitutes a Superior Proposal and such Acquisition Proposal shall not have resulted from a breach or violation of the terms of Section 6.2(a), (ii) the Company Board of Directors determines in good faith (After Consultation and after considering in good faith any counter-offer or proposal made by Parent during the five (5) business day period contemplated by clause (iv) below), that the failure to effect a Company Change in Recommendation in light of such Superior Proposal would be a breach of its fiduciary duties to the Company’s stockholders under applicable Law, (iii) at least five (5) business days prior to such Company Change in Recommendation, the Company shall have provided to Parent a written notice (a “Notice of Recommendation Change”) of its intention to make such Company Change in Recommendation (which notice shall not be deemed to be, in and of itself, a Company Change in Recommendation), specifying the material terms and conditions of such Superior Proposal, including a copy of such Superior Proposal and identifying the Person making such Superior Proposal (it being understood and agreed that any amendment to the financial terms or any other material terms of such Superior Proposal shall require the delivery of a new Notice of Recommendation Change and a new five (5) business day period), (iv) during the five (5) business day period following Parent’s receipt of a Notice of Recommendation Change, the Company shall have given Parent the opportunity to meet with the Company and its Representatives, and at Parent’s request, shall have negotiated in good faith regarding the terms of possible revisions to the terms of this Agreement, and (v) Parent shall not, within five (5) business days of Parent’s receipt of a Notice of Recommendation Change have made an offer that the Company Board of Directors determines in good faith, After Consultation, to be at least as favorable to the Company’s stockholders as such Superior Proposal.

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(e)Notwithstanding anything to the contrary in this Section 6.3, the Company shall not be entitled to enter into any agreement (other than a confidentiality agreement as contemplated by Section 6.2(c)), including a letter of intent, with respect to a Superior Proposal unless this Agreement has been or concurrently is validly terminated by its terms pursuant to Section 9.1 and Parent has received, by wire transfer of immediately available funds, any amounts due to Parent pursuant to Section 9.2(b).

Section 6.4 Aircraft Leases. The Company shall and shall cause the Company Subsidiaries to consult and coordinate with Parent and Purchaser with respect to the finalization of any documentation relating to the aircraft leases as are described in the proviso contained in Section 6.1(m).

ARTICLE VII

ADDITIONAL AGREEMENTS

Section 7.1 Notification of Certain Matters. The Company shall give prompt notice to Parent and Purchaser and Parent and Purchaser shall give prompt notice to the Company, of (a) the occurrence or non-occurrence of any event whose occurrence or non-occurrence, as the case may be, would be likely to cause either (i) any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date hereof to the Effective Time or (ii) any condition or requirement set forth in Article VIII to be unsatisfied at the Effective Time and (b) any material failure of the Company, Purchaser or Parent, as the case may be, or any officer, director, employee or agent thereof, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 7.1 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice or the representations or warranties of the parties, or the conditions to the obligations of the parties hereto.

Section 7.2 Access; Confidentiality.

(a)From the date of this Agreement until the Effective Time, the Company shall, and shall cause the Company Subsidiaries to, (i) upon reasonable prior notice, give Parent and Purchaser, their officers and a reasonable number of their employees and their authorized representatives, reasonable access during normal business hours to the Company Material Contracts, contracts, books, records, analysis, projections, plans, systems, personnel, commitments, offices and other facilities and properties of the Company and the Company Subsidiaries, (ii) furnish Parent and Purchaser on a timely basis with such financial and operating data and other information with respect to the business, properties and Company Material Contracts of the Company and the Company Subsidiaries as Parent and Purchaser may from time to time reasonably request and use its reasonable best efforts to make available at all reasonable times during normal business hours to the officers, employees, accountants, counsel, financing sources and other representatives of Parent and Purchaser the appropriate individuals (including management personnel, attorneys, accountants and other professionals) for discussion of the Company’s business, properties, prospects and personnel as Parent or Purchaser may reasonably request and (iii) use its and their reasonable best efforts to coordinate with Parent and Purchaser

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all communications with or to employees regarding the Transactions contemplated by this Agreement and related matters.

(b)The terms of the Confidentiality Agreement shall apply to any information provided to Parent or Purchaser pursuant to Section 7.2(a).

(c)Notwithstanding anything to the contrary set forth herein, the Company shall not be required to provide access to, or to disclose information, where such access or disclosure would jeopardize the attorney-client privilege of the Company or the Company Subsidiaries or contravene any Law or contract entered into prior to the date of this Agreement.

Section 7.3 Consents and Approvals.

(a)Each of the Company, Parent and Purchaser shall use its reasonable best efforts to (i) take, or cause to be taken, all appropriate action, and do, or cause to be done, all things necessary, proper or advisable under any applicable Law or otherwise to consummate and make effective the Transactions as promptly as practicable, (ii) obtain from any Governmental Entities any consents, licenses, permits, waivers, clearances approvals, authorizations or orders required to be obtained or made by Parent, Purchaser or the Company or any of their respective Subsidiaries, or avoid any action or proceeding by any Governmental Entity (including, without limitation, those in connection with the HSR Act and any Required Governmental Approvals), in connection with the authorization, execution and delivery of this Agreement and the consummation of the Transactions, (iii) make or cause to be made the applications or filings required to be made by Parent, Purchaser or the Company or any of their respective Subsidiaries under or with respect to the HSR Act, any Required Governmental Approvals or any other applicable Laws in connection with the authorization, execution and delivery of this Agreement and the consummation of the Transactions, and pay any fees due in connection with such applications or filings, as promptly as is reasonably practicable, (iv) comply at the earliest practicable date with any request under or with respect to the HSR Act, any Required Governmental Approvals and any such other applicable Laws for additional information, documents or other materials received by Parent or the Company or any of their respective Subsidiaries from the Federal Trade Commission or the Department of Justice or any other Governmental Entity in connection with such applications or filings or the Transactions and (v) coordinate and cooperate with, and give due consideration to all reasonable additions, deletions or changes suggested by the other party in connection with, making (A) any filing under or with respect to the HSR Act, any other Required Governmental Approvals or any such other applicable Laws and (B) any filings, conferences or other submissions related to resolving any investigation or other inquiry by any such Governmental Entity.  Each of the Company and Parent shall, and shall cause their respective affiliates to, furnish to the other party all information necessary for any such application or other filing to be made in connection with the Transactions. Each of the Company and Parent shall promptly inform the other of any material communication with, and any proposed understanding, undertaking or agreement with, any Governmental Entity regarding any such application or filing.  If a party hereto intends to independently participate in any meeting with any Governmental Entity in respect of any such filings, investigation or other inquiry, then such party shall give the other party reasonable prior notice of such meeting and invite Representatives of the other party to participate in the meeting

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with the Governmental Entity unless prohibited by such Governmental Entity.  The parties shall coordinate and cooperate with one another in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party in connection with all meetings, actions and proceedings under or relating to any such application or filing.

(b)The Company and Parent shall give (or shall cause their respective Subsidiaries to give) any notices to third parties, and use, and cause their respective Subsidiaries to use, reasonable best efforts to obtain any third party consents (i) necessary, proper or advisable to consummate the Transactions, (ii) required to be disclosed in the Company Disclosure Schedule or (iii) required to prevent a Company Material Adverse Effect from occurring prior to the Effective Time; provided, however, that the Company and Parent shall coordinate and cooperate in determining whether any actions, notices, consents, approvals or waivers are required to be given or obtained, or should be given or obtained, from parties to any Company Material Contract in connection with consummation of the Transactions and seeking any such actions, notices, consents, approvals or waivers.  In the event that either party shall fail to obtain any third party consent described in the first sentence of this Section 7.3(b), such party shall use its reasonable best efforts, and shall take any such actions reasonably requested by the other party hereto, to mitigate any adverse effect upon the Company and Parent, their respective Subsidiaries, and their respective businesses resulting, or which could reasonably be expected to result after the Effective Time, from the failure to obtain such consent.  Notwithstanding the foregoing, neither Parent nor Purchaser shall be required to, and neither the Company nor any Company Subsidiary will without the written consent of Parent, make any payment to any third party or agree to any limitation on the conduct of its business, in order to obtain any such consent.

(c)From the date of this Agreement until the Effective Time, each of Parent and the Company shall promptly notify the other in writing of any pending or, to the knowledge of Purchaser or the Company (as the case may be), threatened action, suit, arbitration or other proceeding or investigation by any Governmental Entity or any other Person (i) challenging or seeking material damages in connection with the Transactions or (ii) seeking to restrain or prohibit the consummation of the Transactions or otherwise limit in any material respect the right of Parent or Purchaser or any of their respective affiliates to own or operate all or any portion of the businesses or assets of the Company or any Company Subsidiary.  The Company shall give Parent the opportunity to consult with the Company regarding the defense or settlement of any such stockholder litigation and shall consider Parent’s views with respect to such stockholder litigation and prior to the termination of the Agreement under Section 9.1 hereof shall not settle any such stockholder litigation without the prior written consent of Parent which will not be unreasonably withheld or delayed. Notwithstanding the foregoing, the Company shall not be required to provide any notice or information to Parent the provision of which the Company in good faith determines may adversely affect the Company’s or any other person’s attorney client or other privilege with respect to such information.

(d)If any administrative or judicial action or proceeding is instituted (or threatened to be instituted) by a Governmental Entity challenging the Transactions as violative of any applicable Law, each of the Company and Parent shall, and shall cause their respective

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affiliates to, cooperate and use their reasonable best efforts to contest and resist, except insofar as the Company and Parent may otherwise agree, any such action or proceeding, including any action or proceeding that seeks a temporary restraining order or preliminary injunction that would prohibit, prevent or restrict consummation of the Transactions.

(e)Notwithstanding anything set forth in this Agreement, nothing contained in this Agreement shall give Parent or Purchaser, directly or indirectly, the right to control or direct the operations of the Company prior to the Effective Date.  Prior to the Effective Date, the Company shall exercise, consistent with the terms and conditions of this Agreement, control and supervision over the business operations of the Company.

(f)Notwithstanding anything set forth in Section 7.3 and any other provision hereof, in connection with the receipt of any Required Governmental Approvals or clearance under the HSR Act, neither Parent nor the Company shall be required to sell, hold separate or otherwise dispose of or conduct their business in a specified manner, or agree to sell, hold separate or otherwise dispose of or conduct their business in a specified manner, or permit the sale, holding separate or other disposition of, any assets of Parent, the Company or their respective Subsidiaries or the conduct of their business in a specified manner.

(g)Parent shall sign a written consent in lieu of a meeting of the stockholders of Purchaser, in favor of the adoption of this Agreement in accordance with applicable Law.

Section 7.4 Publicity. Other than as contemplated in Section 7.13, so long as this Agreement is in effect, neither the Company nor Parent, nor any of their respective controlled affiliates, shall issue or cause the publication of any press release or other announcement with respect to the Merger, the Financing or this Agreement without the prior consent of the other party, unless such party determines, after consultation with outside counsel, that it is required by applicable Law or by any listing agreement with or the listing rules of a national securities exchange or trading market to issue or cause the publication of any press release or other announcement with respect to the Merger, the Financing or this Agreement, in which event such party shall endeavor, on a basis reasonable under the circumstances, to provide a meaningful opportunity to the other parties to review and comment upon such press release or other announcement and shall give due consideration to all reasonable additions, deletions or changes suggested thereto; provided, however, that the party seeking to issue or cause the publication of any press release or other announcement with respect to the Merger, the Financing or this Agreement shall not be required to provide any such review or comment to the other party in connection with any disclosure contemplated by Section 6.2 or Section 6.3.

Section 7.5 Directors’ and Officers’ Insurance and Indemnification.

(a)For a period of six (6) years after the Effective Time, Parent and the Surviving Corporation shall honor and fulfill, and the Surviving Corporation shall assume in all respects the obligations of the Company and the Company Subsidiaries to the fullest extent permissible by the Company or such Company Subsidiary under applicable provisions of the DGCL (i) under the Company’s certificate of incorporation and bylaws (and the equivalent organizational documents of all such Company Subsidiaries) in effect on the date hereof (true and correct copies of which previously have been made available to Parent) and (ii) under any

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indemnification or other similar agreements (the “Indemnification Agreements”) in effect on the date hereof (true and correct copies of which have been made available to Parent) between the Company or any of the Company Subsidiaries and the current and former directors, officers and other employees of the Company or any Company Subsidiary (the “Covered Persons”) arising out of or relating to actions or omissions in their capacity as directors, officers or employees occurring at or prior to the Effective Time, including in connection with the approval of this Agreement and the Transactions and the indemnification obligations of the Company and the Company Subsidiaries shall hereby survive the consummation of the Transactions and shall not be amended, repealed or otherwise modified in any manner that would adversely affect any right thereunder of any Covered Persons, and Parent and the Surviving Corporation hereby agree that their foregoing indemnification obligations to the Covered Persons extend to and include (subject to applicable Law) any and all claims asserted by any person (including Parent and Surviving Corporation) based on or relating to this Agreement and the Transactions; provided, however, that in the event any claim or claims are asserted or made within such six-year period, all rights to indemnification in respect of any such claim or claims shall continue until disposition of any and all such claims.

(b)The Surviving Corporation shall advance expenses (including reasonable legal fees and expenses) incurred in the defense of any claim, action, suit, proceeding or investigation with respect to any matters subject to indemnification pursuant to Section 7.5(a) pursuant to the procedures set forth, and to the extent provided in the Company’s certificate of incorporation, the Company’s bylaws or the Indemnification Agreements as in effect on the date hereof; provided, however, that any Person to whom expenses are advanced undertakes, to the extent required by the Company’s certificate of incorporation, the Company’s bylaws, the Indemnification Agreements or the DGCL, to repay such advanced expenses if it is ultimately determined that such Person is not entitled to indemnification.

(c)For a period of six (6) years after the Effective Time, the certificate of incorporation and bylaws of the Surviving Corporation shall contain provisions no less favorable with respect to indemnification, advancement of expenses and exculpation of Covered Persons for periods prior to and including the Effective Time than are currently set forth in the Company’s certificate of incorporation and bylaws.  The Indemnification Agreements with Covered Persons in existence on the date of this Agreement that survive the Merger shall continue in full force and effect in accordance with their terms.

(d)The Surviving Corporation shall maintain and extend all existing officers’ and directors’ liability insurance (“D&O Insurance”) for a period of not less than six (6) years after the Effective Time with respect to claims arising in whole or in part from actions, omissions, facts or events that actually or allegedly occurred on or before the Effective Date, including in connection with the approval of this Agreement and the Transactions; provided, however, that Parent may substitute therefor policies of substantially equivalent coverage and amounts containing terms no less favorable to the Covered Persons than the existing D&O Insurance; provided further, that if the existing D&O Insurance expires or is terminated or cancelled during such period through no fault of Parent or the Surviving Corporation, the Surviving Corporation shall obtain substantially similar D&O Insurance; and provided further, however, that neither Parent nor the Surviving Corporation shall be required to pay on an annual

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basis any amount in excess of 150% of the annual cost of the Company’s current D&O Insurance to maintain or replace such policy, it being understood and agreed that Parent and the Surviving Corporation shall nevertheless be obligated to provide such coverage as may be obtained for such amount.  In lieu of the foregoing, the Company may, with the prior written consent of Parent and Purchaser, obtain prepaid policies prior to the Effective Time, which policies may provide the Covered Persons with D&O Insurance coverage of equivalent amount and on no more favorable terms than that provided by the Company’s current D&O Insurance for an aggregate period of at least six (6) years with respect to claims arising from actions, omissions, facts or events that occurred on or before the Effective Time, including in connection with the approval of this Agreement and the Transactions.  If such prepaid policies have been obtained prior to the Effective Time, Parent and the Surviving Corporation shall be relieved of all further obligations under this Section 7.5(d); provided, that Parent and the Surviving Corporation shall maintain such policies in full force and effect, and continue to honor its obligations thereunder.  Parent and the Surviving Corporation shall, upon written request, furnish a copy of the policies to the individual insureds under the policies and copies of any notice of claim or potential claim given under the policies. In the event that Parent or the Surviving Corporation cancel or receive from an insurer a notice of cancellation of any of the policies, the Parent or the Surviving Corporation shall in all events provide the individual insureds under the policy notice of such cancellation at least thirty (30) days in advance of its effective date, or as soon as reasonably practicable if such cancellation notice provides for cancellation earlier than thirty (30) days.

(e)In the event the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then and in each such case, proper provision shall be made so that such continuing or surviving corporation or entity or transferee of such assets, as the case may be, shall assume all of the applicable obligations set forth in this Section 7.5.

(f)The Covered Persons (and their successors and heirs) are intended third party beneficiaries of this Section 7.5, and this Section 7.5 shall not be amended in a manner that is adverse to the Covered Persons (including their successors and heirs) or terminated without the consent of the Covered Persons (including their successors and heirs) affected thereby.

Section 7.6 State Takeover Laws. If any “control share acquisition”, “fair price” or other anti-takeover laws or regulations enacted under state or federal laws becomes or is deemed to become applicable to the Company, the Merger, or any other Transaction, then the Company Board of Directors shall take all action necessary to render any such statute inapplicable to the foregoing.

Section 7.7 Certain Tax Matters. During the period from the date hereof to the Effective Time, the Company shall and shall cause each of the Company Subsidiaries to: (i) timely file all material Tax Returns required to be filed by the Company or such Company Subsidiary, as the case may be, and prepare such Tax Returns in all material respects in a manner consistent with past practice, (ii) timely pay all material Taxes due and payable by the Company and such Company Subsidiary, respectively, except for such Taxes contested in good faith and for which an adequate reserve has been established in accordance with GAAP on the appropriate

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financial statements and (iii) promptly notify Parent of any federal or state income or franchise, or other material Tax, suit claim, action, investigation, proceeding or audit pending against or with respect to the Company or any Company Subsidiary in respect of any Tax matters (or any significant developments with respect to ongoing Tax matters), including without limitation material Tax liabilities and material refund claims.  The Company shall deliver to Parent at the Closing a certificate, in form and substance satisfactory to Parent, duly executed and acknowledged, certifying that an ownership interest in the Company is not a “U.S. real property interest” for purposes of Section 897 of the Code.

Section 7.8 Section 16. The Company Board of Directors shall, to the extent necessary, take appropriate action, prior to or as of the Effective Time, to approve, for purposes of Section 16(b) of the Exchange Act, the deemed disposition and cancellation of the vested Company Options in the Merger.  Provided that the Company shall first provide to Parent the names of its stockholders and the number of shares of Common Stock or Company Options which may be subject to Section 16(b) of the Exchange Act and any other information reasonably requested by Parent and relating to the same, the Board of Directors of Parent, or an authorized committee thereof, shall, prior to the Effective Time, take appropriate action to approve, for purposes of Section 16(b) of the Exchange Act, the issuance of the Merger Consideration to holders of Company Options in accordance with Section 3.5.

Section 7.9 Obligations of Parent. Parent shall take all action necessary to cause Purchaser and the Surviving Corporation to perform their respective obligations under this Agreement and to consummate the Transactions, including the Merger, upon the terms and subject to the conditions set forth in this Agreement.

Section 7.10 Employee Benefits Matters.

(a)Except as provided in the last sentence of this Section 7.10(a) and subject to any obligations under any plan or arrangement that has been the subject of the collective bargaining process, Parent and the Surviving Corporation shall have no obligation to continue after the Effective Time any plan or arrangement in effect immediately before the Effective Time (except as otherwise required by applicable Law, including without limitation ERISA and the Code) for current or former employees, officers or directors of the Company or any Company Subsidiary, and shall have the discretion to continue or terminate any of such programs, or to merge any of them into plans or arrangements in effect for other employees of Parent or the Surviving Corporation.  To the extent legally permitted, employees of the Company or any Company Subsidiary shall receive credit for purposes of eligibility to participate and vesting under any employee pension benefit plan, program or arrangement established or maintained by the Surviving Corporation or any of its Subsidiaries and for the purpose of eligibility and determining the amount of any benefit with respect to any employee welfare benefit plan, program or arrangement established or maintained by the Surviving Corporation for service accrued or deemed accrued prior to the Effective Time with the Company or any Company Subsidiary; provided, however, that such crediting of service shall not operate to duplicate any benefit or the funding of any such benefit.  If, during the annual period of coverage (the “Applicable Period of Coverage”) in which falls the Closing Date, the Surviving Corporation shall terminate any “group health plan,” within the meaning of Code Section 4980B(g)(2), in

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which one or more of the Company’s or a Company Subsidiary’s employees participated immediately prior to the Closing Date, the Surviving Corporation shall cause any successor group health plan to apply any waiting or pre-existing condition limitations period only to the extent its duration is not in excess of the corresponding waiting or pre-existing condition limitations period applied under such predecessor plan and to give credit for any such employee’s participation in the predecessor plan prior to the Closing Date for covered expenses paid by any each such employee under a predecessor plan during the Applicable Period of Coverage towards satisfaction of any annual deductible limitation, co-payment and/or out-of pocket maximum applied under such successor group health plan.  Parent shall also cause the Surviving Corporation to perform the Company’s obligations under the change in control and other agreements referred to in Section 7.10(a) of the Company Disclosure Schedule between the Company and certain of its officers and employees unless any such officer or employee agrees otherwise.

(b)From the date of this Agreement until the Effective Time, the Company shall (i) promptly notify Parent and Purchaser of any pending or, to the knowledge of the Company threatened, strike, slowdown, lock-out or work stoppage against the Company or any of the Company Subsidiaries and (ii) take all actions reasonable to prevent any such strike, slowdown, lock-out or work stoppage, including pursuing court-related or supervised mitigation and taking other such actions as are reasonable and advisable in furtherance thereof with respect to any such strike, slowdown, lock-out or work stoppage that shall occur.

Section 7.11 Termination of 401(k) Plan. Unless Parent directs the Company otherwise in writing no later than five (5) business days prior to the Effective Time, the Company Board of Directors shall adopt, or shall cause the appropriate Company Subsidiary Board of Directors to adopt, resolutions terminating, effective at least two (2) days prior to the Effective Time, any Benefit Plan which is intended to meet the requirements of section 401(k) of the Code (each such Benefit Plan, a “401(k) Plan”).  At the Closing, the Company shall provide Parent with (i) executed resolutions of the Company Board of Directors authorizing such termination and (ii) an executed copy of any necessary amendment to each such 401(k) Plan in a form reasonably satisfactory to Parent that is intended to assure compliance with all applicable requirements of the Code and the regulations thereunder; provided, however, that the Company or Company Subsidiary shall not terminate any such 401(k) Plan to the extent such termination would breach its obligations under any collective bargaining agreement.  At the Closing, the Company shall provide Parent with (i) executed resolutions of the Board of Directors authorizing such termination and (ii) an executed copy of any necessary amendment to each such 401(k) Plan in a form reasonably satisfactory to Parent that is intended to assure compliance with all applicable requirements of the Code and the regulations thereunder.

Section 7.12 Financing.

(a)Each of Parent and Purchaser shall use, and shall cause their affiliates to use, reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to arrange the Financing on the terms and conditions described in the Financing Commitment, including using reasonable best efforts (i) to negotiate and enter into the definitive agreements with respect thereto on the terms and

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conditions contained in the Financing Commitment (or on other terms acceptable to JPMorgan, provided such terms do not contain any conditions to funding the Merger that are not set forth in the Financing Commitment and would otherwise reasonably be expected to impair or delay the consummation of the Financing), (ii) to satisfy on a timely basis all other conditions applicable to Parent or Purchaser, as the case may be, set forth therein that are within the control of any of Parent or Purchaser and (iii) to consummate the Financing contemplated by the Financing Commitment to fund the Merger, in each case upon the terms contemplated by this Agreement (including by taking enforcement action to cause such lender or any other persons providing such Financing to fund such Financing). In the event that any portion of the Financing becomes unavailable on the terms and conditions set forth in the Financing Commitment, without limiting the rights of Parent and Purchaser under Sections 8.2(a) and 9.1(a)(iii), Parent shall promptly notify the Company, and Parent and Purchaser shall use their reasonable best efforts to obtain, as promptly as practicable following the occurrence of such event, any such portion from alternative sources (“Alternative Financing”) on terms that will still enable Purchaser to consummate the Transactions and that are not less favorable in the aggregate (as determined by Parent and Purchaser in their reasonable judgment) to them and the Company than those contained in the Financing Commitment.  Each of Parent and Purchaser shall refrain from taking, directly or indirectly, any action that would or would reasonably be expected to result in a failure of any of the conditions contained in the Financing Commitment or in any definitive agreement related to the Financing.  Neither Parent nor Purchaser shall agree to or permit any amendment, supplement or other modification of, or waive any of their respective rights under, any Financing Commitment or the definitive agreements relating to the Financing that would reasonably be expected to impair or delay the consummation of the Financing.  Parent and Purchaser shall keep the Company reasonably informed of the status of their efforts to obtain the Financing.

(b)The Company shall provide, shall cause the Company Subsidiaries to provide and shall use its reasonable best efforts to cause its and their Representatives to provide, such reasonable cooperation in connection with the arrangement of the Financing as may be reasonably requested by Parent and Purchaser, including (i) participation in meetings, drafting sessions, presentations, road shows and due diligence, (ii) using reasonable best efforts to furnish Parent and Purchaser and the financing sources with financial and other pertinent information regarding the Company as may be reasonably requested by Parent and Purchaser to consummate the Financing, including, without limitation, all financial statements and financial data of the type required by Regulation S-X and Regulation S-K under the Securities Act and of the type and form customarily included in private placements pursuant to Rule 144A promulgated under the Securities Act, including, without limitation, (A) unaudited financial statements of the Company and its consolidated Subsidiaries as of and for the three and nine months ended September 30, 2006, (B) audited financial statements of the Company and its consolidated Subsidiaries as of and for the year ended December 31, 2006, together with the report of KPMG LLP, independent public accountants thereon, (C) unaudited financial statements of the Company and its consolidated Subsidiaries for the three months ended March 31, 2007 and for any subsequent interim period as may be reasonably requested by the financing sources and (D) all other financial statements for completed or pending acquisitions that may be required under Regulation S-X (collectively, the “Required Financial Statements”), (iii) assisting Parent and Purchaser in the preparation of (A) an offering document and other informational and marketing materials and documents for any portion of the Financing and (B) materials for rating agency

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presentations, (iv) reasonably cooperating with the marketing efforts of Parent and Purchaser and the financing sources for any portion of the Financing, (v) reasonably facilitating the pledging of collateral and execution and delivery of definitive financing documents and customary deliverables and (vi) using reasonable best efforts to obtain accountants’ comfort letters, accountants’ consent letters, legal opinions, surveys and title insurance as reasonably requested by Parent and Purchaser; provided that none of the Company or any of the Company Subsidiaries shall be required to pay any commitment or other fee or incur any other liability in connection with the Financing prior to the Effective Time; and provided further that such requested cooperation does not unreasonably interfere with the ongoing operations of the Company and the Company Subsidiaries.  Parent and Purchaser shall, promptly upon request by the Company, reimburse the Company for all reasonable out-of-pocket costs incurred by the Company or any of the Company Subsidiaries in connection with such cooperation.  Parent and Purchaser shall, on a joint and several basis, indemnify and hold harmless the Company and the Company Subsidiaries from and against any and all losses or damages suffered or incurred by them in connection with the arrangement of the Financing and any information utilized in connection therewith.

(c)Promptly upon the Company’s delivery to Parent or Purchaser of any Required Financial Statements, the Company shall file with the SEC on Form 10-K or Form 10-Q, as applicable, such audited financial statements or unaudited interim financial statements, as the case may be, of the Company and its consolidated Subsidiaries to the extent such Required Financial Statements have not been previously so filed.

Section 7.13 Proxy Statement.

(a)As soon as practicable following the date of this Agreement, the Company shall prepare and file with the SEC (subject to the prior review and approval of Parent, which approval shall not be unreasonably withheld) the Proxy Statement.  The Company and Parent shall cooperate with each other in the preparation of the Proxy Statement.  Without limiting the generality of the foregoing, prior to filing or mailing the Proxy Statement (or, in each case, any amendment or supplement thereto) or responding to any comments of the SEC or its staff with respect thereto, the Company shall provide Parent reasonable opportunity to review and comment on such document or response and shall include in such document or response comments reasonably proposed by Parent.

(b)If, at any time prior to the Effective Time, any information relating to the Company, Parent or Purchaser or any of their respective Affiliates should be discovered by the Company, Parent or Purchaser which should be set forth in an amendment or supplement to the Proxy Statement so that the Proxy Statement shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party that discovers such information shall promptly notify the other parties and, to the extent required by applicable Law, the Company shall disseminate an appropriate amendment thereof or supplement thereto describing such information to the Company’s stockholders.

(c)The Company and Parent shall use their reasonable best efforts, after consultation with the other party, to resolve all SEC comments with respect to the Proxy

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Statement as promptly as practicable after receipt thereof.  Each of the Company and Parent shall as soon as reasonably practicable notify the other party of the receipt of any comments from or other correspondence with the SEC staff with respect to the Proxy Statement and any request by the SEC for any amendment to the Proxy Statement or for additional information (and promptly deliver a copy of such comments, correspondence or request to the other party).  The Company shall cause the Proxy Statement to be mailed to its stockholders as promptly as practicable.

Section 7.14 Company Collective Bargaining Agreement Notices. On or within three days following the date hereof, the Company or the Company Subsidiaries, as applicable, shall provide any notices required under the Company Collective Bargaining Agreements as a result of the execution of this Agreement.

ARTICLE VIII

CONDITIONS

Section 8.1 Conditions to Each Party’s Obligations to Effect the Merger. The respective obligations of each party to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions, any and all of which may be waived in whole or in part by Parent, Purchaser and the Company, as the case may be, to the extent permitted by applicable Law:

(a)The Company shall have obtained the Company Stockholder Approval.

(b)No statute, rule or regulation shall have been enacted or promulgated by any Governmental Entity which prohibits the consummation of the Merger, and there shall be no order or injunction of a court of competent jurisdiction in effect preventing the consummation of the Merger.

(c)Any applicable waiting period under the HSR Act related to the Transactions shall have expired or been terminated.

Section 8.2 Conditions to Obligations of Parent and Purchaser. The obligations of Parent and Purchaser to effect the Merger shall be further subject to the satisfaction or waiver by Parent at or prior to the Closing, of each of the following conditions:

(a)Parent and Purchaser shall have received and be reasonably satisfied with the Required Financial Statements;

(b)the representations and warranties of the Company contained in this Agreement (disregarding all qualifications and exceptions contained therein regarding materiality or a Company Material Adverse Effect or any similar standard or qualification), shall be true, complete and correct as of the date of this Agreement and as of the Closing Date as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event such representation or warranty shall be true, complete and correct as of such specific date), except where the failure of any such representation or warranty to be so true, complete and correct would not have a Company Material Adverse Effect;

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(c)the Company and the Company Subsidiaries shall have performed in all material respects each of the obligations, and complied in all material respects with each of the agreements and covenants, required to be performed by or complied with by them under this Agreement at or prior to the Closing Date;

(d)the Required Governmental Approvals shall have been made or obtained; and

(e)Parent shall have received a certificate of an executive officer of the Company, certifying that the conditions set forth in Sections 8.2(b) and (c) have been satisfied.

Section 8.3 Conditions to Obligations of the Company. The obligations of the Company to consummate the transactions contemplated under this Agreement shall be further subject to the satisfaction or waiver by the Company at or prior to the Closing of the following conditions:

(a)the representations and warranties of Parent and Purchaser contained in this Agreement (disregarding all qualifications and exceptions contained therein regarding materiality or any similar standard or qualification), shall be true, complete and correct as of the date of this Agreement and as of the Closing Date as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event such representation or warranty shall be true, complete and correct as of such specific date), except where the failure of such representations and warranties to be so true, complete and correct would not prevent, materially delay or materially impede the ability of Parent or Purchaser to consummate the transactions contemplated by this Agreement;

(b)each of Parent and Purchaser shall have performed in all material respects the obligations, and complied in all material respects with the agreements and covenants, required to be performed by or complied with by it under this Agreement at or prior to the Closing Date; and

(c)the Company shall have received a certificate of an executive officer of Parent, certifying that the conditions set forth in Sections 8.3(a) and (b) have been satisfied.

ARTICLE IX

TERMINATION

Section 9.1 Termination. Notwithstanding receipt of the Company Stockholder approval, this Agreement may be terminated and the Transactions may be abandoned at any time before the earlier of the Effective Time:

(a)by Parent if:

(i)there has been a breach by the Company of any representation, warranty, covenant or agreement set forth in this Agreement (without giving effect to any references to any Company Material Adverse Effect or materiality qualifications and other qualifications based upon the concept of materiality or similar phrases contained

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therein and without giving effect to any modifications or updates to the Company Disclosure Schedule), which breach shall result in any condition or requirement set forth in clauses (b) and (c) of Section 8.2 not being satisfied and in each case such breach is not reasonably capable of being cured or such condition is not reasonably capable of being satisfied within thirty (30) days after the receipt of notice thereof from Parent, it being understood and agreed that this Agreement may not be terminated pursuant to this Section 9.1(a)(i) during such 30-day period or following such 30-day period if such breach is cured during such 30-day period; provided that Parent shall not have the right to terminate this Agreement pursuant to this Section 9.1(a)(i) if Parent or Purchaser is then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement;

(ii)(1) the Company Board of Directors or any committee thereof shall have effected a Company Change in Recommendation (whether or not in compliance with Section 6.3), (2) the Company shall have violated or breached (or be deemed pursuant to the terms thereof, to have violated or breached) in any material respect the provisions of Sections 6.2 and as a result thereof, the Company shall have received an Acquisition Proposal, (3) the Company Board of Directors or any committee thereof shall have approved or recommended (or proposed publicly to approve or recommend) any Acquisition Proposal (whether or not a Superior Proposal), (4) if, after a tender offer or exchange offer that, if successful, would result in any Person or “group” (as defined in our under Section 13(d) of the Exchange Act ) becoming a beneficial owner of twenty percent (20%) or more of the outstanding Shares is commenced (other than by Parent or Purchaser), the Company Board of Directors shall have failed to recommend that the Company’s stockholders not tender their Shares in such tender or exchange offer, (5) the Company or any Company Subsidiary shall have entered into any agreement (other than a confidentiality agreement as contemplated by Section 6.2(b)) with respect to any Acquisition Proposal, (6) the Company Board of Directors shall have failed to reconfirm the Company Recommendations or its approval of this Agreement, the Merger or any other Transaction promptly, and in any event within five (5) business days following Parent’s request to do so or (7) the Company Board of Directors or any committee thereof shall have resolved to take any action described in the preceding clauses (1) through (6);

(iii)the Company has not satisfied the condition set forth in Section 8.2(a) on or before June 30, 2007; or

(b) by the Company if:

(i)there has been a breach by Parent or Purchaser of any representation, warranty, covenant or agreement set forth in this Agreement (without giving effect to any references to any material adverse effect or materiality qualifications and other qualifications based upon the concept of materiality or similar phrases contained therein), which breach shall result in any condition or requirement set forth in clauses (a) or (b) of Section 8.3 not being satisfied (and in each case such breach is not reasonably capable of being cured or such condition is not reasonably capable of being

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satisfied within thirty (30) days after the receipt of notice thereof from the Company, it being understood and agreed that this Agreement may not be terminated pursuant to this Section 9.1(b)(i) during such 30-day period or following such 30-day period if such breach is cured during such 30-day period; provided that the Company shall not have the right to terminate this Agreement pursuant to this Section 9.1(b)(i) if the Company is then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement;

(ii)the Company simultaneously with such termination of this Agreement enters into a definitive agreement with respect to a Superior Proposal, provided that (1) the Company received such Superior Proposal other than as a result of a breach of or violation of the terms of Section 6.2 hereof, (2) the Company has not breached or violated the terms of Section 6.2 or 6.3 hereof in connection with such Superior Proposal (or any Acquisition Proposal that was a precursor thereto), (3) subject to the terms of this Agreement, the Company Board of Directors has effected a Company Change in Recommendation in response to such Superior Proposal pursuant to and in compliance with Section 6.3(c) and authorized the Company to enter into such definitive agreement for such Superior Proposal (which authorization may be subject to termination of this Agreement) and (4) immediately prior to the termination of this Agreement, the Company pays to Parent the Termination Fee payable pursuant to Section 9.2(b) hereof; or

(iii)all the conditions required to be satisfied pursuant to Article VIII have been satisfied and if by the date required by Section 2.2, none of Parent Purchaser or the Surviving Corporation has received the proceeds of the Financing or otherwise made funds available to consummate the Merger.

(c)This Agreement may be terminated by either the Company or Parent and the Transactions may be abandoned at any time before the Effective Time, whether before or after receipt of the Company Stockholder Approval:

(i)by mutual written consent of Parent and the Company duly authorized by the Company Board of Directors and the Parent Board of Directors, or authorized committee thereof;

(ii)if a court of competent jurisdiction or other Governmental Entity shall have issued a final, non-appealable order, decree or ruling in each case permanently restraining, enjoining or otherwise prohibiting the Transactions; or

(iii)the Merger shall not have been consummated on or before October 2, 2007.

Section 9.2 Effect of Termination.

(a)In the event of the termination of this Agreement as provided in Section 9.1, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall

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forthwith become null and void and there shall be no liability on the part of Parent, the Purchaser or the Company, except (i) as set forth in Section 4.23, Section 7.2(b), Section 7.4, this Section 9.2 and Sections 10.3 through 10.12 and (ii) nothing herein shall relieve any party from liability for any willful or intentional material breach of this Agreement.

(b)Termination Fees.

(i)If Parent terminates this Agreement pursuant to Section 9.1(a)(ii), then the Company shall pay to Parent promptly, but in no event later than one (1) business day after the date of such termination, a termination fee of $9,450,000 in cash (the “Company Termination Fee”).

(ii)If the Company terminates this Agreement pursuant to Section 9.1(b)(ii), prior to and as a condition to the effectiveness of such termination, the Company shall pay to Parent the Company Termination Fee.

(iii)If (A) Parent or the Company shall have terminated this Agreement pursuant to Section 9.1(c)(iii), and (B) following the execution and delivery of this Agreement and prior to the termination of this Agreement an Acquisition Proposal (whether or not a continuation or renewal of, or otherwise relating to, an Acquisition Proposal that was publicly announced or became publicly known prior to the execution and delivery of this Agreement) shall have been publicly announced or shall have become publicly known and not publicly withdrawn, and (C) concurrently with, or within twelve (12) months following such termination, a definitive agreement is entered into relating to a Third Party Acquisition Event or a Third Party Acquisition Event is otherwise consummated, then the Company shall pay to Parent promptly, but in no event later than the date of signing such definitive agreement or consummation of such Third Party Acquisition Event, as the case may be, the Company Termination Fee.

(iv)If (A) Parent shall have terminated this Agreement pursuant to Section 9.1(a)(i) as a result of a breach of a covenant or agreement of the Company under this Agreement or an intentional breach of a representation or warranty of the Company under this Agreement, and (B) following the execution and delivery of this Agreement and prior to the breach forming the basis for such termination, an Acquisition Proposal (whether or not a continuation or renewal of, or otherwise relating to, an Acquisition Proposal that was known to the Company prior to the execution and delivery of this Agreement) is known to the Company, and (C) concurrently with, or within twelve (12) months following such termination, a definitive agreement is entered into relating to a Third Party Acquisition Event or a Third Party Acquisition Event is otherwise consummated, then the Company shall pay to Parent promptly, but in no event later than the date of signing such definitive agreement or consummation of such Third Party Acquisition Event, as the case may be, the Company Termination Fee.

(v)Notwithstanding anything to the contrary in this Agreement, if the Company shall have terminated this Agreement pursuant to Section 9.1(b)(iii), the Company’s receipt of payment of a termination fee of $9,450,000 (the “Parent Termination Fee”), shall be the sole and exclusive remedy of the Company and the

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Company Subsidiaries against Parent or Purchaser or any of their respective former, current or future directors, officers, employees, agents, affiliates, stockholders, assignees or representatives of any of the foregoing (each a “Specified Person”) for any loss or damage suffered as a result of the termination of this Agreement and the failure of the Merger to be consummated, and upon payment of the Parent Termination Fee in accordance with this Section 9.2(b)(v), none of Parent or Purchaser or any of their respective Specified Persons shall have any further liability or obligation relating to or arising out of this Agreement or the Transactions.

(c)The Termination Fee shall be paid by wire transfer of immediately available funds to an account designated in writing by Parent.  For the avoidance of doubt, in no event shall the Company be obligated to pay a Termination Fee on more than one occasion.  Except to the extent required by applicable Law, the Company shall not withhold any withholding taxes on any payment under this Section 9.2.

(d)If Parent terminates this Agreement pursuant to Section 9.1(a)(iii), the Company shall reimburse Parent and Purchaser for their and their subsidiaries’ and affiliates’ reasonable out-of-pocket expenses actually incurred pursuant to this Agreement and with respect to the Financing, up to a maximum of $2,000,000 (the “Expense Reimbursement”).

(e)The Company acknowledges that the agreements contained in this Section 9.2 are an integral part of the Transactions contemplated by this Agreement and that without such provisions, Parent would not have entered into this Agreement.  If the Company fails to pay the Termination Fee or the Expense Reimbursement and Parent or Purchaser commences a suit which results in a judgment against the Company for the Termination Fee or the Expense Reimbursement, the Company shall pay Parent and Purchaser their costs and expenses (including reasonable attorney’s fees and disbursements) in connection with such suit, together with interest on the amounts set forth in Section 9.2(b) or Section 9.2(d), as the case may be, at the prime rate of Citibank N.A.  in effect on the date such payment was required to be made.

ARTICLE X

MISCELLANEOUS

Section 10.1 Amendment and Modification; Waiver.

(a)Subject to applicable Law and except as otherwise provided in this Agreement, this Agreement may be amended, modified and supplemented in any and all respects prior to the Effective Date, whether before or after any vote of stockholders of the Company contemplated hereby, by written agreement of the parties hereto (by action taken by their respective Boards of Directors); provided, however, that after receipt of the Company Stockholder Approval, no amendment shall be made which by law requires further approval by such stockholders without obtaining such further approval.  This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.

(b)At any time and from time to time prior to the Effective Time, any party or parties hereto may, to the extent legally allowed and except as otherwise set forth herein,

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(i) extend the time for the performance of any of the obligations or other acts of the other party or parties hereto, as applicable, (ii) waive any inaccuracies in the representations and warranties made to such party or parties hereto contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions for the benefit of such party or parties hereto contained herein. Any agreement on the part of a party or parties hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party or parties, as applicable.  Any delay in exercising any right under this Agreement shall not constitute a waiver of such right.

Section 10.2 Non-survival of Representations and Warranties. None of the representations and warranties in this Agreement or in any schedule, instrument or other document delivered pursuant to this Agreement shall survive the Effective Time.  This Section 10.2 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time.

Section 10.3 Expenses. Except as expressly set forth in Section 9.2(b) or Section 9.2(d), all fees, costs and expenses incurred in connection with this Agreement and the Merger shall be paid by the party incurring such fees, costs and expenses; provided, however, that Parent and the Company shall share equally the filing fees paid by Parent or the Company in connection with filing, permits, authorizations, consents and approvals as may be required under the HSR Act and the Required Governmental Approvals.

Section 10.4 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally (notice deemed given upon receipt), telecopied (notice deemed given upon confirmation of receipt) or sent by a nationally recognized overnight courier service, such as Federal Express (notice deemed given upon receipt of proof of delivery), to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

If to the Company:

World Air Holdings, Inc.

HLH Building

101 World Drive
Peachtree City, Georgia 30269

Attention: Mark M. McMillin, Esq.

Facsimile: 770-632-8048

With a copy to:

Powell Goldstein LLP

One Atlantic Center, 14^th Floor

1201 W.  Peachtree Street, N.W.

Atlanta, Georgia 30309

Attention: G. William Speer, Esq.

Thomas R.  McNeill, Esq.

Facsimile: 404-572-6999

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If to Parent or Purchaser:

ATA Airlines, Inc.

7337 West Washington Street

Indianapolis, Indiana 46231

Attention: Brian T.  Hunt, Esq.

Facsimile: 317-282-7091

With a copy to

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, New York 10019

Attention: Ronald Cami, Esq.

Facsimile: 212-474-3700

Section 10.5 Interpretation. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated.  Whenever the words “include”, “includes” or “including” are used in this Agreement they shall be deemed to be followed by the words “without limitation.” As used in this Agreement, the term “affiliates” shall have the meaning set forth in Rule 12b-2 of the Exchange Act.  All references to this Agreement shall be deemed to include references to the “plan of merger” contained herein (as such term is used in the DGCL).  The table of contents and headings set forth in this Agreement are for convenience of reference purposes only and shall not affect or be deemed to affect in any way the meaning or interpretation of this Agreement or any term or provision hereof.  When reference is made herein to a Person, such reference shall be deemed to include all direct and indirect Subsidiaries of such Person unless otherwise indicated or the context otherwise requires.  Unless otherwise indicated, all references herein to the Subsidiaries of a Person shall be deemed to include all direct and indirect Subsidiaries of such Person unless otherwise indicated or the context otherwise requires. The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

Section 10.6 Counterparts. This Agreement may be executed manually or by facsimile by the parties hereto, in any number of counterparts, each of which shall be considered one and the same agreement and shall become effective when a counterpart hereof shall have been signed by each of the parties and delivered to the other parties.

Section 10.7 Entire Agreement; No Third-Party Beneficiaries. This Agreement (including the Company Disclosure Schedule) and the Confidentiality Agreement:

(a)constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements (except that the Confidentiality Agreement shall be amended so that until the termination of this Agreement in accordance with Section 9.1 hereof, Parent and Purchaser shall be permitted to take the action

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contemplated by this Agreement, including the making of any proposals as contemplated by Section 6.3) and understandings, both written and oral, among the parties or any of them with respect to the subject matter hereof and thereof, and

(b)except as provided in Sections 3.2(b), 3.2(d), 3.2(e) and 7.5(f), are not intended to confer upon any Person other than the parties hereto any rights or remedies hereunder.

Section 10.8 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Merger is not affected in any manner adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the Merger is fulfilled to the extent possible.

Section 10.9 Governing Law; Jurisdiction.

(a)This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to conflicts of laws principles that would result in the application of the law of any other state.

(b)Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Delaware Court of Chancery, or, if no such state court has proper jurisdiction, the Federal court of the United States of America, sitting in Delaware, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the agreements delivered in connection herewith or the Transactions contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto, and each of the parties hereby irrevocably and unconditionally (i) agrees not to commence any such action or proceeding except in such courts, (ii) agrees that any claim in respect of any such action or proceeding may be heard and determined in such Delaware Court of Chancery court or, if no such state court has proper jurisdiction, the in such Federal court,(iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action or proceeding in any such Delaware Court of Chancery or Federal court, and (iv) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such Delaware Court of Chancery or Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.4.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.  Each party hereto agrees not to commence any legal proceedings relating to or arising out of this Agreement or the Transactions in any jurisdiction or courts other than as provided herein.

64

Section 10.10 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS, INCLUDING THE MERGER, CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.10.

Section 10.11 Assignment. This Agreement shall not be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties, except that (a) Purchaser may assign, in its sole discretion and without the consent of any other party, any or all of its rights, interests and obligations hereunder to (i) Parent, (ii) to Parent and one or more direct or indirect wholly-owned Subsidiaries of Parent or (iii) to one or more direct or indirect wholly-owned Subsidiaries of Parent and (b) Parent may assign, in its sole discretion and without the consent of any other party, any or all of its rights, interests and obligations hereunder to an affiliate (the “Parent Assignee”); provided that Parent shall remain subject to performance of its obligations hereunder in the event that such Parent Assignee fails to perform any such obligation; and provided further that upon and following any such assignment to a Parent Assignee, such Parent Assignee shall be deemed to be “Parent” for all purposes under this Agreement and all capital stock of Purchaser shall be transferred from Parent to such Parent Assignee. Subject to the preceding sentence, but without relieving any party hereto of any obligation hereunder, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.  Notwithstanding anything to the contrary contained herein, Parent, Purchaser and their affiliates shall have the right to collaterally assign in whole or in part this Agreement and any ancillary agreements or documents related to the Transactions and any of their respective rights thereunder as security to one or more lenders or purchasers of debt securities who, in each case, are being granted a collateral interest in this Agreement or any ancillary agreements or documents related to the Transactions.

Section 10.12 Enforcement; Remedies. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms.  It is accordingly agreed that the parties hereto shall be entitled seek an injunction or injunctions to prevent breaches of this Agreement and to specifically enforce the terms hereof, this being in addition to any other remedy to which they are entitled at law or in equity.  Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.

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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above.

GLOBAL AERO LOGISTICS INC.
By:	/s/ SUBODH KARNIK
	Name:  Subodh Karnik
	Title:  President and Chief Executive Officer
HUGO ACQUISITION CORP.
By:	/s/ SUBODH KARNIK
	Name:  Subodh Karnik
	Title:  President
WORLD AIR HOLDINGS, INC.
By:	/s/ RANDY J. MARTINEZ
	Name:  Randy J. Martinez
	Title:  Chief Executive Officer

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EX-2.2

Exhibit 2.2

EXECUTION VERSION

AMENDMENT NO. 1, dated as of June 30, 2007 (the “Amendment”), to the Agreement and Plan of Merger, dated as of April 5, 2007 (as amended, supplemented or otherwise modified and in effect from time to time, the “Agreement”), between Global Aero Logistics Inc., a Delaware corporation (“Parent”), Hugo Acquisition Corp., a Delaware corporation and an indirect wholly-owned subsidiary of Parent (“Purchaser”), and World Air Holdings, Inc., a Delaware corporation (the “Company”).

WHEREAS, the parties hereto have previously entered into the Agreement; and

WHEREAS, the parties hereto wish to amend the Agreement in the manner specified below.

NOW THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1.  Definitions.  Unless otherwise defined in this Amendment, all defined terms used in this Amendment, including the recitals hereto, shall have the meanings ascribed to such terms in the Agreement.

SECTION 2.  Amendments to Agreement.

Section 2.2 of the Agreement is hereby amended by replacing the text “the sixtieth (60th) day” with the text “the forty-fifth (45th) day”.

Section 8.2 of the Agreement is hereby amended by adding the following paragraph (f) to the end thereof:

“(f)          Parent shall have received the financing proceeds under the Financing on the terms and conditions set forth in the Financing Commitment or if such Financing Commitment expires or is otherwise terminated, upon terms and conditions which are substantially equivalent thereto, and to the extent that any of the terms and conditions are not as so set forth or substantially equivalent, on terms and conditions reasonably satisfactory to Purchaser.”

Section 9.1(a)(iii) of the Agreement is hereby deleted in its entirety and replaced with the following text:

“(iii) the Company has not delivered to Parent its Annual Report on Form 10-K for the fiscal year ended December 31, 2006, as filed with the SEC, by July 6, 2007 and its Quarterly Report on Form 10-Q for the period ended March 31, 2007, as filed with the SEC, by August 3, 2007; or”

SECTION 3.  Counterparts.  This Amendment may be executed in two or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

SECTION 4.  Agreement in Full Force and Effect.  Except as expressly amended hereby, the Agreement will continue in full force and effect in accordance with the provisions thereof as in existence on the date hereof.  After the date of the effectiveness hereof, any reference to the Agreement will mean the Agreement as amended by this Amendment.

SECTION 5.  Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF THE LAW OF ANY OTHER STATE.

SECTION 6.  Headings.  The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.

[Remainder of this page intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto have each caused this Amendment to be duly executed by their respective officers as of the day and year first set forth above.

GLOBAL AERO LOGISTICS INC.
By:	/s/ Subodh Karnik
Name: Subodh Karnik
Title:   President and Chief Executive Officer
HUGO ACQUISITION CORP.
By:	/s/ Subodh Karnik
Name: Subodh Karnik
Title:   President
WORLD AIR HOLDINGS, INC.
By:	/s/ Randy J. Martinez
Name: Randy J. Martinez
Title:   Chief Executive Officer

EX-2.3

Exhibit 2.3

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF MERGER, WHICH MERGES:

“HUGO ACQUISITION CORP.”, A DELAWARE CORPORATION,

WITH AND INTO “WORLD AIR HOLDINGS, INC.” UNDER THE NAME OF “WORLD AIR HOLDINGS, INC.”, A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE FOURTEENTH DAY OF AUGUST, A.D. 2007, AT 4:45 O’CLOCK P.M.

A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS.

			/s/ Harriet Smith Windsor
			Harriet Smith Windsor, Secretary of State
3905087    8100m		Authentication:   5925912
070921312		DATE:   08-14-07

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State of Delaware

Secretary of State

Division of Corporations

Delivered 04:45 PM 08/14/2007

FILED 04:45 PM 08/14/2007

SRV 070921312 - 3905087 FILE

CERTIFICATE OF MERGER

MERGING

HUGO ACQUISITION CORP.

WITH AND INTO

WORLD AIR HOLDINGS, INC.

Pursuant to Section 251 of the General Corporation Law of the State of Delaware (the “DGCL”), World Air Holdings, Inc., a Delaware corporation (the “Corporation”), hereby certifies as follows:

FIRST: The name and state of incorporation of each of the constituent corporations to the merger (the “Constituent Corporations”) are as follows:

Name	State of Incorporation
Hugo Acquisition Corp.	Delaware
World Air Holdings, Inc.	Delaware

SECOND: The Agreement and Plan of Merger dated as of April 5,2007 (the “Merger Agreement”), among Global Aero Logistics Inc., the parent corporation of Hugo Acquisition Corp., and each of the Constituent Corporations, has been approved, adopted, certified, executed and acknowledged by each of the Constituent Corporations in accordance with Section 251 of the DGCL.

THIRD: The name of the surviving corporation (the “SurvivingCorporation”) shall be World Air Holdings, Inc.

FOURTH: The Amended and Restated Certificate of Incorporation of the Corporation, as in effect immediately prior to the Effective Time (as defined below), shall be amended at the Effective Time as set forth in Exhibit A attached hereto, and, as

so amended, such Amended and Restated Certificate of Incorporation shall be the Amended and Restated Certificate of Incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable law.

FIFTH: The executed Merger Agreement is on file at the office of theSurviving Corporation, located at 101World Drive, Peachtree City, GA 30269.

SIXTH: A copy of the Merger Agreement will be furnished by the Surviving Corporation, on request and without cost, to any stockholder of either Constituent Corporation.

SEVENTH: This Certificate of Merger, and the merger provided for herein, shall become effective at 4:01 P.M. Eastern Standard Time on the date this Certificate of Merger is filed with the Secretary of State of the State of Delaware (the “Effective Time”).

This Certificate of Merger has been executed on this 14 day of August, 2007.

WORLD AIR HOLDINGS, INC.,
	by:	/s/ Brian T. Hunt
		Name: Brian T. Hunt
		Title:   Secretary

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EXHIBIT A

TO THE CERTIFICATE OF MERGER

Amended and Restated Certificate of Incorporation

of World Air Holdings, Inc,

FIRST: The name of the corporation (hereinafter called the “Corporation”) is World Air Holdings, Inc.

SECOND: The address, including street, number, city, and county, of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle; and the name of the registered agent of the Corporation in the State of Delaware at such address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

FOURTH: The aggregate number of shares which the Corporation shall have authority to issue is 1,000 shares of Common Stock, par value $0.01 per share.

FIFTH: In furtherance and not in limitation of the powers conferred upon it by law, the Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal the Bylaws of the Corporation.

SIXTH: To the fullest extent permitted by the General Corporation Law of the State of Delaware as it now exists and as it may hereafter be amended, no director or officer of the Corporation, shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director or officer; provided, however, that nothing contained in this Article SIXTH shall eliminate or limit the liability of a director or officer (i) for any breach of the director’s or officer’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii)pursuant to Section 174 of the General Corporation Law of the State of Delaware or (iv) for any transaction from which the director or officer derived an improper personal benefit. No amendment to or repeal of this Article SIXTH shall apply to or have any effect on the liability or alleged liability of any director or officer of the Corporation for or with respect toany acts or omissions of such director or officer occurring prior to such amendment or repeal.

SEVENTH: At no time shall more than twenty-five percent (25%) of the voting interest of the Corporation be owned or controlled by persons who are not “Citizens of the United States” (as such term is defined in Section 101 of the Federal Aviation Act of 1958, as amended, (Title 49 United State Code), or as the same may be from time to time amended)) (“Non-Citizens”). In the event that Non-Citizens shall own (beneficially or of record) or have voting control over any shares of Common Stock of

the Corporation, the voting rights of such persons shall be subject to automatic suspension to the extent required to ensure that the Corporation is in compliance with applicable provisions of law and regulations relating to ownership or control of a U.S. carrier. The By-laws shall contain provisions to implement this Article SEVENTH, including without limitation, provisions restricting or prohibiting transfer of shares of voting stock to Non-Citizens and provisions restricting or removing voting rights as to shares of voting stock owned or controlled by Non-Citizens. Any determination as to ownership, control or citizenship made by the Board of Directors shall be conclusive and binding as between the Corporation and any stockholder for purposes of this Article SEVENTH.

EIGHTH: The Corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said Section from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said Section. Such indemnification shall be mandatory and not discretionary.  The indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any By-laws, agreement vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Any repeal or modification of this Article EIGHTH shall not adversely affect any right to indemnification of any persons existing at the time of such repeal or modification with respect to any matter occurring prior to such repeal or modification.

The Corporation shall to the fullest extent permitted by the General Corporation Law of the State of Delaware advance all costs and expenses (including without limitation, attorneys’ fees and expenses) incurred by any director or officer within 15days of the presentation of same to the Corporation, with respect to any one or more actions, suits or proceedings, whether civil, criminal, administrative or investigative, so long as the Corporation receives from the director or officer an unsecured undertaking to repay such expenses if it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation under the General Corporation Law of the State of Delaware. Such obligation to advance costs and expenses shall be mandatory, and not discretionary, and shall include, without limitation, costs and expenses incurred in asserting affirmative defenses, counterclaims and cross claims. Such undertaking to repay may, if first requested in writing by the applicable director or officer, be on behalf of (rather than by) such director or officer, provided that in such case the Corporation shall have the right to approve the party making such undertaking.

NINTH: Unless and except to the extent that the By-laws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot.

EX-2.4

Exhibit 2.4

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

WORLD AIRWAYS, INC.,

WORLD AIR HOLDINGS, INC.

AND

WORLD MERGER SUBSIDIARY, INC.

Dated as of January 10, 2005

TABLE OF CONTENTS

		Page
ARTICLE I THE MERGER		3
SECTION 1.1	THE MERGER	3
SECTION 1.2	EFFECTIVE TIME	3
SECTION 1.3	EFFECTS OF THE MERGER	3
SECTION 1.4	CHARTER AND BYLAWS; DIRECTORS AND OFFICERS	3
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES		4
SECTION 2.1	CONVERSION OF COMPANY STOCK	4
SECTION 2.2	WARRANTS	4
SECTION 2.3	CONVERSION OF CAPITAL STOCK OF MERGER SUB	4
SECTION 2.4	CANCELLATION OF HOLDINGS COMMON STOCK	5
SECTION 2.5	COMPANY STOCKHOLDERS	5
SECTION 2.6	NO SURRENDER OF CERTIFICATES	5
ARTICLE III ADDITIONAL COVENANTS AND AGREEMENTS		5
SECTION 3.1	INDENTURE	5
SECTION 3.2	ASSUMPTION OF EQUITY INCENTIVE PLANS	5
SECTION 3.3	OTHER EMPLOYEE BENEFIT PLANS	6
SECTION 3.4	FURTHER ASSURANCES	6
ARTICLE IV CONDITIONS TO THE MERGER		6
SECTION 4.1	CONDITIONS PRECEDENT	6
ARTICLE V TERMINATION AND AMENDMENT		6
SECTION 5.1	TERMINATION	6
SECTION 5.2	AMENDMENT	7
ARTICLE VI MISCELLANEOUS PROVISIONS		7
SECTION 6.1	GOVERNING LAW	7
SECTION 6.2	INTERPRETATION	7
SECTION 6.3	COUNTERPARTS	7
SECTION 6.4	ENTIRE AGREEMENT	7

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of January 10, 2005, is made and entered into by and among World Airways, Inc., a Delaware corporation (the “Company”), World Air Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (“Holdings”), and World Merger Subsidiary, Inc., a Delaware corporation and a wholly-owned subsidiary of Holdings (“Merger Sub”).

W I T N E S S E T H:

WHEREAS, as of the date hereof, the Company’s authorized capital stock consists of (i) 100,000,000 shares of common stock, par value $.001 per share (the “Company Common Stock”), of which [          ] shares are issued and outstanding, and (ii) 5,000,000 shares of

preferred stock, par value $.001 per share, of which no shares are issued and outstanding;

WHEREAS, as of the date hereof, Holdings’ authorized capital stock consists of (i) 100,000,000 shares of common stock, par value $.001 per share (the “Holdings Common Stock”), of which 10,000 shares are issued and outstanding and owned by the Company, and (ii) 5,000,000 shares of preferred stock, par value $.001 per share, of which no shares are issued and outstanding;

WHEREAS, as of the date hereof, Merger Sub’s authorized capital stock consists of 100,000 shares of common stock, par value $.001 per share (the “Merger Sub Common Stock”), of which 10,000 shares are issued and outstanding and owned by Holdings;

WHEREAS, the Company desires to create a new holding company structure by merging Merger Sub with and into the Company with the Company continuing as the surviving corporation of such merger, with each outstanding share of Company Common Stock being converted in such merger into one share of Holdings Common Stock in accordance with the terms of this Agreement (the “Merger”);

WHEREAS, the designations, rights and preferences, and the qualifications, limitations and restrictions thereof, of the Holdings Common Stock are the same as those of the Company Common Stock;

WHEREAS, the Amended and Restated Certificate of Incorporation of Holdings (the “Holdings Charter”) and the Bylaws of Holdings (the “Holdings Bylaws”) immediately after the Effective Time (as hereinafter defined) will contain provisions identical to the Restated Certificate of Incorporation of the Company, as amended (the “Company Charter”), and the Amended and Restated Bylaws of the Company (the “Company Bylaws”), respectively, as in effect immediately before the Effective Time (other than, in the case of the Holdings Charter, with respect to provisions that may be omitted in accordance with Section 251(g) of the General Corporation Law of the State of Delaware (the “DGCL”));

WHEREAS, the directors of the Company immediately prior to the Merger  will be the directors of Holdings as of the Effective Time;

WHEREAS, Holdings and Merger Sub are newly formed corporations organized for the purpose of creating the holding company structure contemplated by this Agreement;

WHEREAS, the Company, Holdings and Merger Sub intend for the Merger to be a tax-free reorganization under Section 351 and 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and for this Agreement to qualify as a plan of reorganization under Treasury Regulation Section 1.368-1;

WHEREAS, the Merger is being effected pursuant to the provisions of Section 251(g) of the DGCL; and

WHEREAS, the Board of Directors of each of the Company, Holdings and Merger Sub, has approved this Agreement and the Merger.

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NOW, THEREFORE, in consideration of the foregoing premises and the covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the Company, Holdings and Merger Sub hereby agree as follows:

ARTICLE I
THE MERGER

Section 1.1The Merger.  Upon the terms and subject to the conditions hereof, and in accordance with the DGCL, Merger Sub shall be merged with and into the Company at the Effective Time (as defined in Section 1.2 below).  At the Effective Time, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation (the “Surviving Corporation”) and shall become a wholly-owned subsidiary of Holdings.  The Merger shall be effected in accordance with, and pursuant to, the terms of Section 251(g) of the DGCL.

Section 1.2Effective Time.The Merger shall become effective when a certificate of merger (the “Certificate of Merger”), executed in accordance with the relevant provisions of the DGCL, is duly filed with the Secretary of State of the State of Delaware, or at such other time as is specified in the Certificate of Merger (the time the Merger becomes effective is referred to in this Agreement as the “Effective Time”).  The Certificate of Merger shall be so filed by the Company on the date of the Closing (as defined in Section 3.5 below) or such other time as the Company and Merger Sub shall mutually agree.

Section 1.3Effects of the Merger.The Merger shall have the effects set forth in Section 259 of the DGCL.

Section 1.4Charter and Bylaws; Directors and Officers.

(a)From and after the Effective Time, the Company Charter, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation (the “Surviving Corporation Charter”) until thereafter amended as provided therein or by the DGCL, except as follows:

(i)The text of Article IV of the Surviving Corporation Charter shall be amended to read in its entirety as follows:

“The aggregate number of shares of capital stock which the Corporation shall have authority to issue is 10,000 shares of Common Stock, par value $.001 per share.  The holders of the Common Stock shall have the right to one vote for each share of Common Stock held, and shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation, and shall be entitled to vote upon such matters and in such manner as may be provided by law on all matters submitted to a vote at any meeting of stockholders.  The holders of the Common Stock shall be entitled to receive, when and as declared by the Board of Directors, out of any funds of the Corporation legally available therefor, such dividends as may be declared from time to time by the Board of Directors.”

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(ii)A new Article XI shall be added to the Surviving Corporation Charter which shall read in its entirety as follows:

“Any act or transaction by or involving the Corporation, other than the election or removal of directors of the Corporation, that requires for its adoption under the Delaware General Corporation Law or this Amended and Restated Certificate of Incorporation the approval of the stockholders of the Corporation shall, pursuant to and in accordance with Section 251(g) of the Delaware General Corporation Law, require, in addition, the approval of the stockholders of World Air Holdings, Inc., a Delaware corporation, or any successor thereto by merger, by the same vote that is required by the Delaware General Corporation Law or this Amended and Restated Certificate of Incorporation.”

(b)From and after the Effective Time, the Company Bylaws, as in effect immediately prior to the Effective Time, shall constitute the Bylaws of the Surviving Corporation until thereafter amended as provided therein or by the DGCL.

(c)The directors of the Company immediately prior to the Effective Time shall be the directors of the Surviving Corporation at the Effective Time, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

(d)The officers of the Company immediately prior to at the Effective Time of the Merger shall be the officers of the Surviving Corporation at the Effective Time, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

Section 2.1Conversion of Company Stock.  As of the Effective Time, (a) each share of Company Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into one duly issued, fully paid and nonassessable share of Holdings Common Stock, and (b) each share of Company Common Stock issued and held in treasury by the Company shall be converted into one issued share of Holdings Common Stock and shall be held in treasury by Holdings.

Section 2.2Warrants.Each warrant to purchase shares of Company Common Stock issued and outstanding immediately prior to the Effective Time (each a “Company Warrant”) shall be converted into and thereafter represent one warrant to purchase the same number of shares of Holdings Common Stock (each a “Holdings Warrant”), on the same terms and conditions, and at the same exercise price per share, as those contained in the Company Warrant.

Section 2.3Conversion of Capital Stock of Merger Sub.Each share of Merger Sub Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into and thereafter represent one duly issued, fully paid and nonassessable share of common stock, par value $.001 per share, of the Surviving Corporation.

4

Section 2.4Cancellation of Holdings Common Stock.Each share of Holdings Common Stock issued and outstanding immediately prior to the Merger shall automatically be cancelled and retired and shall cease to exist and no consideration shall be paid therefor.

Section 2.5Company Stockholders.From and after the Effective Time, holders of certificates that formerly represented shares of Company Common Stock shall cease to have any rights as stockholders of the Company, except as provided by law; provided, however, that such holders shall have the rights set forth in Section 2.6 of this Agreement.

Section 2.6No Surrender of Certificates.Until thereafter surrendered for transfer or exchange in the ordinary course, each outstanding stock certificate that, immediately prior to the Effective Time, represented shares of Company Common Stock shall be deemed and treated for all corporate purposes to represent the ownership of the number of shares of Holdings Common Stock into which such shares of Company Common Stock were converted pursuant to the provisions of Section 2.1 of this Agreement.

ARTICLE III
ADDITIONAL COVENANTS AND AGREEMENTS

Section 3.1Indenture.As of the Effective Time, the Company, Holdings and the Trustee (as defined below) shall execute and deliver a supplemental indenture with respect to the Indenture dated as of December 30, 2003 (the “Indenture”), by and between the Company and Wachovia Bank, National Association, as trustee (the “Trustee”), governing the Company’s 8.0% Senior Subordinated Convertible Debentures due 2009 (the “Debentures”), pursuant to which Holdings shall become obligated under the Indenture and the Debentures.  The Company shall remain obligated under the Indenture and the Debentures.

Section 3.2Assumption of Equity Incentive Plans.

(a)As of the Effective Time, Holdings shall assume and agree to perform all obligations of the Company pursuant to the Company’s Amended and Restated 1995 Stock Incentive Plan and the Non-Employee Directors’ Stock Option Plan (collectively, the “Equity Incentive Plans”).  As of the Effective Time, each option to purchase shares of Company Common Stock which has been granted and is then outstanding and unexercised under any Equity Incentive Plan (each a “Company Option”) shall be converted into an option to purchase the same number of shares of Holdings Common Stock at the same exercise price per share, for the same period and subject to the same terms and conditions applicable to the relevant Company Option (each a “Holdings Option” and collectively, the “Holdings Options”).

(b)As of the Effective Time, a number of authorized but unissued or treasury shares of Holdings Common Stock equal to the number of shares of authorized but unissued or treasury shares of Company Common Stock reserved for issuance under the Equity Incentive Plans immediately prior to the Effective Time shall become reserved for issuance under the  Equity Incentive Plans without any further action on the part of Holdings or the Board of Directors of Holdings.

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Section 3.3Other Employee Benefit Plans.  As of the Effective Date, Holdings shall adopt and assume all of the rights and obligations of the Company as the primary sponsor and/or plan administrator of each of the employee pension and welfare plans currently maintained by the Company as the officers of Holdings and the Company may mutually determine is necessary or desirable and, in addition thereto or in lieu thereof, to the extent the officers of the Company and Holdings mutually determine is necessary or desirable, Holdings shall become an adopting affiliate of one or more such employee pension and welfare benefit plans for the benefit of its eligible directors, executive officers and/or employees and the Company shall consent to any and each such adoption.

Section 3.4Further Assurances.  If, at any time after the Effective Time, Holdings or the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments or assurances or any other acts or things are necessary, desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of the Company and Merger Sub, or (b) otherwise to carry out the purposes and intent of this Agreement, each party hereto and their respective officers and directors or their designees shall be authorized to execute and deliver, in the name and on behalf of such party, all such deeds, bills of sale, assignments and assurances and to do, in the name and on behalf of such party, all such other acts and things as may be necessary, desirable or proper to vest, perfect or confirm the Surviving Corporation’s right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of the Company and Merger Sub and otherwise to carry out the purposes and intent of this Agreement.  In addition, the parties agree to take all steps necessary to ensure that all the conditions required to effect the Merger in accordance with, and pursuant to, the terms of Section 251(g) of the DGCL are satisfied.

ARTICLE IV
CONDITIONS TO THE MERGER

Section 4.1Conditions Precedent. The obligations of the parties to this Agreement to consummate the Merger and the transactions contemplated by this Agreement shall be subject to fulfillment or waiver by the parties hereto of each of the following conditions:

(a)No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits or makes illegal the consummation of the Merger or the transactions contemplated hereby; and

(b)The Company, as sole stockholder of Holdings, and Holdings, as sole stockholder of Merger Sub shall have approved this Agreement and the Merger.

ARTICLE V
TERMINATION AND AMENDMENT

Section 5.1Termination.This Agreement may be terminated and the Merger contemplated hereby may be abandoned at any time prior to the Effective Time by action of the Board of Directors of the Company, Holdings or Merger Sub if it is determined that for any

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reason the completion of the transactions provided for herein would be inadvisable or not in the best interest of such corporation or its stockholders or stockholders.  In the event of such termination and abandonment, this Agreement shall become void, and neither the Company, Holdings or Merger Sub nor their respective stockholders, directors or officers shall have any liability with respect to such termination and abandonment.

Section 5.2Amendment.This Agreement may be supplemented, amended or modified by the mutual consent of the Boards of Directors of each of the parties to this Agreement.

ARTICLE VI
MISCELLANEOUS PROVISIONS

Section 6.1Governing Law.This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws.

Section 6.2Interpretation.When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. 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. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

Section 6.3Counterparts.This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original but all of which shall constitute one and the same agreement.

Section 6.4Entire Agreement.  This Agreement constitutes the entire agreement of the parties hereto and supersedes all other prior or contemporaneous agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof.

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

::ODMA\PCDOCS\ATL\806322\5

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IN WITNESS WHEREOF, the Company, Holdings and Merger Sub have caused this Agreement to be signed by their respective officers thereunto duly authorized all as of the date first written above.

THE COMPANY:
WORLD AIRWAYS, INC.
By:	/s/ RANDY J. MARTINEZ
	Name:				Randy J. Martinez
	Title:			President and Chief Executive Officer
HOLDINGS:
WORLD AIR HOLDINGS, INC.
By:	/s/ RANDY J. MARTINEZ
	Name:				Randy J. Martinez
	Title:		President and Chief Executive Officer
MERGER SUB:
WORLD MERGER SUBSIDIARY, INC.
By:	/s/ RANDY J. MARTINEZ
	Name:				Randy J. Martinez
	Title:	President and Chief Executive Officer

EX-2.5

Exhibit 2.5

IN THE UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

In re:	)	Chapter 11
	)
ATA Holdings Corp., et al.,)	)	Case No. 04-19866
	)	(Jointly Administered)
Debtors.	)

FIRST AMENDED JOINT CHAPTER 11 PLAN

FOR REORGANIZING DEBTORS(1)

James M. Carr (#3128-49)
Terry E. Hall (#22041-49)
Stephen A. Claffey (#3233-98)
Jeffrey C. Nelson (#25173-49)
Baker & Daniels LLP
300 North Meridian Street, Suite 2700
Indianapolis, Indiana  46204
Telephone:  (317) 237-0300
Facsimile:  (317) 237-1000

Jerald I. Ancel
Michael O’Neil
Jeffrey J. Graham

Sommer Barnard Attorneys, PC
One Indiana Square, Suite 3500
Indianapolis, Indiana 46204
Telephone: 317-713-3500
Facsimile: 317-713-3699

Wendy W. Ponader (#14633-49)
Ponader & Associates, LLP
5241 North Meridian Street
Indianapolis, Indiana 46208
Telephone: (317) 496-3072
Facsimile: (317) 257-5776

Attorneys for Reorganizing Debtors

Dated:  December 14, 2005

(1) The Reorganizing Debtors are: ATA Holdings Corp. (04-19866), ATA Airlines, Inc. (04-19868), ATA Leisure Corp. (04-19870), ATA Cargo, Inc. (04-19873), and American Trans Air Execujet, Inc. (04-19872).

TABLE OF CONTENTS

		PAGE
TABLE OF CONTENTS		i
LIST OF EXHIBITS		iii
INTRODUCTION		1
ARTICLE I	DEFINITIONS, RULES OF INTERPRETATION, AND COMPUTATION OF TIME	2
A.	Scope of Definitions	2
B.	Definitions	2
C.	Rules of Interpretation	26
D.	Computation of Time	26
E.	References to Monetary Figures	27
F.	Exhibits	27
ARTICLE II	UNCLASSIFIED CLAIMS	27
ARTICLE III	CLASSIFICATION OF CLAIMS AND INTERESTS	28
ARTICLE IV	TREATMENT OF CLAIMS AND INTERESTS	29
ARTICLE V	ACCEPTANCE OR REJECTION OF THE PLAN; EFFECT OF REJECTION BY ONE OR MORE IMPAIRED CLASSES OF CLAIMS OR INTERESTS	32
ARTICLE VI	MEANS FOR IMPLEMENTATION OF THE PLAN	33
ARTICLE VII	THE RIGHTS OFFERING	39
ARTICLE VIII	UNEXPIRED LEASES AND EXECUTORY CONTRACTS	43
ARTICLE IX	PROVISIONS GOVERNING DISTRIBUTIONS	46
ARTICLE X	ALLOWANCE AND PAYMENT OF CERTAIN ADMINISTRATIVE CLAIMS	51

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ARTICLE XI	EFFECT OF THE PLAN ON CLAIMS AND INTERESTS	53
ARTICLE XII	CONDITIONS PRECEDENT	57
ARTICLE XIII	RETENTION OF JURISDICTION	58
ARTICLE XIV	MISCELLANEOUS PROVISIONS	60

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LIST OF EXHIBITS

Exhibit A	Investment Agreement
Exhibit B	Amended and Restated ATSB Loan Agreement
Exhibit C	New Investor Exit Facility Secured Note
Exhibit D	New Investor Exit Facility Security Agreement
Exhibit E	New Fleet Note A
Exhibit F	New Fleet Note B
Exhibit G	Nonexclusive Schedule of Rejected Executory Contracts and Unexpired Leases
Exhibit H	Exclusive Schedule of Assumed Executory Contracts and Unexpired Leases
Exhibit I	Nonexclusive List of Retained Actions and Nonexclusive List of Avoidance Actions
Exhibit J	ALPA Stock Option Plan
Exhibit K	Management Stock Option Plan
Exhibit L	Subscription Forms
Exhibit M	Rights Offering Claim Amount List
Exhibit N	Articles of Incorporation and Bylaws
Exhibit O	Accredited Investor Certification
Exhibit P	Certificate of U.S. Citizenship
Exhibit Q	Warrant Agreement
Exhibit R	Minority Shareholder Protection Term Sheet

iii

INTRODUCTION

ATA Holdings Corp., ATA Airlines, Inc., ATA Leisure Corp., ATA Cargo, Inc., and American Trans Air Execujet, Inc. (collectively, the “Reorganizing Debtors”), debtors and debtors-in-possession in these jointly administered chapter 11 cases jointly propose the following chapter 11 plan (the “Plan”) for the resolution of the outstanding creditor claims against and equity interests in the Reorganizing Debtors.  Capitalized terms used herein shall have the meanings ascribed to such terms in Article I.B. hereof.  The Reorganizing Debtors are proponents of the Plan as the term “proponent(s)”is used in section 1129 of the Bankruptcy Code.  MatlinPatterson Global Advisers LLC, a Delaware limited liability company (“MatlinPatterson”), is, on behalf of the New Investor (as defined herein), also a co-proponent of the Plan as the term “proponent” is used in Section 1129 of the Bankruptcy Code.

The Plan contemplates the reorganization of the Reorganizing Debtors pursuant to section 1121(a) of the Bankruptcy Code.  The assets of the other Debtors (the “Liquidating Debtors”)(2) in these administratively consolidated chapter 11 cases will be or have been sold or otherwise liquidated and the distribution of the liquidation proceeds will be made to post-Petition Date (and perhaps pre-Petition Date) creditors pursuant to one or more additional chapter 11 plans, through a conversion of one or more of the chapter 11 cases for the Liquidating Debtors to one or more cases under chapter 7 of the Bankruptcy Code, or by a process approved by the Bankruptcy Court.

The Plan contemplates the substantive consolidation of the Estates of the Reorganizing Debtors for all purposes related to the Plan, including, without limitation, for purposes of voting, confirmation, and distribution.  Unless substantive consolidation has been approved by an order of the Bankruptcy Court, the Plan shall serve as a motion by the Reorganizing Debtors seeking entry of an order by the Bankruptcy Court substantively consolidating the Estates of the Reorganizing Debtors and the Confirmation Order authorizing substantive consolidation shall constitute an order of the Bankruptcy Court approving the substantive consolidation of the Reorganizing Debtors.  In the event that the Bankruptcy Court substantively consolidates none or some but not all of the Reorganizing Debtors, the Plan Proponents reserve the right to amend the Plan and proceed with confirmation without substantive consolidation or with partial substantive consolidation as allowed by the Bankruptcy Court.

Subject to certain restrictions and requirements set forth in section 1127 of the Bankruptcy Code and Fed. R. Bankr. P. 3019, the Plan Proponents expressly reserve their rights to alter, amend, modify, revoke or withdraw this Plan, one or more times, prior to the Plan’s substantial consummation.

(2) The Liquidating Debtors are: Ambassadair Travel Club, Inc., Amber Travel, Inc., and C8 Airlines, Inc. f/k/a Chicago Express Airlines, Inc.

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ALL HOLDERS OF CLAIMS ARE ENCOURAGED TO READ THE PLAN AND THE DISCLOSURE STATEMENT IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN.

ARTICLE I

DEFINITIONS, RULES OF

INTERPRETATION, AND COMPUTATION OF TIME

A.            Scope of Definitions

For purposes of this Plan, except as expressly provided or unless the context otherwise requires, all capitalized terms not otherwise defined shall have the meanings ascribed to them in Article I.B of this Plan.  Any term used in this Plan that is not defined herein, but is defined in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning ascribed to that term in the Bankruptcy Code or the Bankruptcy Rules.

B.            Definitions

1.1           “Accredited Investor Certification” means the certification substantially in the form attached hereto as Exhibit O certifying that the holder of a General Unsecured Claim is an accredited investor as that term is defined in Rule 501 (a) of Regulation D promulgated under the Securities Act with respect to the Rights Offering New Shares.

1.2           “Additional Warrants” means warrants issued as of the Effective Date by the New Holding Company pursuant to the Warrant Agreement to the holders of Allowed Class 6 Claims if, but only if, all of the Rights Offering New Shares are subscribed for by the Subscription Expiration Date and purchased by the Effective Date by Qualified Holders, which warrants shall allow such holders of Allowed Class 6 Claims to purchase their Pro Rata share of Additional Warrants Shares for the Per Share Value at any time prior to the fifth anniversary of the Effective Date.

1.3           “Additional Warrants Shares” means the 228,586 New Shares issuable upon exercise of the Additional Warrants, subject to adjustment as set forth therein.

1.4           “Administrative Claim” means a Claim for payment of an administrative expense of a kind specified in section 503(b) of the Bankruptcy Code and entitled to priority pursuant to sections 507(a)(1), 507 (b) or 1114 (e)(2) of the Bankruptcy Code, including, but not limited to, (a) the actual, necessary costs and expenses, incurred on or after the Petition Date, of preserving the Estates and operating the businesses of the Reorganizing Debtors, including wages, salaries or commissions for services rendered after the commencement of the Chapter 11 Cases (including such Claims by the Liquidating Debtors against the Reorganizing Debtors), (b) the ATSB Super-Priority Claim, any Southwest DIP Facility Claim or New DIP Facility Claim, (c) Professional Claims, (d) all fees and charges assessed against the Estates under Chapter 123 of Title 28, United States Code, (e) the Indenture Trustee Fees and Expenses, and (f) all Allowed

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Claims that are entitled to be treated as Administrative Claims pursuant to a Final Order of the Bankruptcy Court under section 546(c)(2)(A) of the Bankruptcy Code.

1.5           “Administrative Claims Bar Date” means the deadline for filing proofs or requests for allowance and payment of Administrative Claims, which shall be forty-five (45) days after the Effective Date, unless otherwise ordered by the Bankruptcy Court and except with respect to Professional Claims which shall be subject to the provisions of Article 10.2 hereof.

1.6           “AFA” means the Association of Flight Attendants, International.

1.7           “Affiliate Debtors” means all of the Reorganizing Debtors, other than Holdings.

1.8           “Affiliates” has the meaning given such term by section 101(2) of the Bankruptcy Code.

1.9           “Aircraft Equipment” means an aircraft, aircraft engine, propeller, appliance or spare part  (and includes all records and documents  relating to such equipment that are required, under the terms of the security agreement, lease, or conditional sale contract, to be surrendered or returned in connection with the surrender or return of such equipment) that is leased to, subject to a security interest granted by or conditionally sold to, one of the Reorganizing Debtors.

1.10         “Allowed Claim” or “Allowed Interest” means a Claim or any portion thereof, or an Interest or any portion thereof, (a) that has been allowed by a Final Order of the Bankruptcy Court (or such other court or forum as the Reorganizing Debtors and the holder of such Claim or Interest agree may adjudicate such Claim or Interest and objections thereto), or (b) as to which, on or by the Effective Date, (i) no proof of claim or interest has been filed with the Bankruptcy Court and (ii) the liquidated and noncontingent amount of which is Scheduled, other than a Claim or Interest that is Scheduled at zero, in an unknown amount, or as disputed, or (c) for which a proof of claim or interest in a liquidated amount has been timely filed with the Bankruptcy Court pursuant to the Bankruptcy Code, any Final Order of the Bankruptcy Court or other applicable bankruptcy law, and as to which either (i) no objection to its allowance has been filed by the Claims Objection Deadline, the Bankruptcy Code or by any order of the Bankruptcy Court or (ii) any objection to its allowance has been settled or withdrawn, or has been denied by a Final Order, or (d) that is expressly allowed in a liquidated amount in the Plan, or (e) that has been settled.  For purposes of voting to accept or reject the Plan pursuant to Article 5.1, and subject to the Multiple Claims Rule set forth in Article 1.146, Allowed Claim or Allowed Interest include a Claim or Interest (t) listed in a liquidated, noncontingent, and undisputed amount on the Schedules and for which a timely proof of claim or interest has not been filed as of the Voting Deadline, (u) that has been estimated pursuant to Bankruptcy Rule 3018(a) and the Solicitation Procedures Order, or (v) a timely proof of claim or proof of interest has been filed and no objection remains pending as of the Confirmation Hearing.

1.11         “Allowed Class . . . Claim” or “Allowed Class . . . Interest” means an Allowed Claim or an Allowed Interest in the specified Class.

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1.12         “ALPA” means the Air Line Pilots Association, International.

1.13         “ALPA Claim” means the Allowed Class 6 Claim held by ALPA against ATA for the benefit of its members in the amount of $128,850,000.  The ALPA Claim was allowed pursuant to the 1113 Compromise.

1.14         “ALPA Option Shares” means the New Shares issuable pursuant to the ALPA Stock Option Plan.

1.15         “ALPA Stock Option Plan” means the Non-Qualified ALPA Stock Option Plan, substantially in the form of Exhibit J.  The ALPA Stock Option Plan is proposed by Plan Proponents pursuant to the order of the Bankruptcy Court dated October 12, 2005 approving the 1113 Compromise.  The ALPA Stock Option Plan will be established as of the Effective Date and options granted thereunder and the ALPA Option Shares issuable thereunder will be issued in satisfaction of and to obviate a Claim by ALPA.

1.16         “Amended and Restated ATSB Loan Agreement” means the amended and restated ATSB Loan Agreement (substantially in the form attached as Exhibit B to this Plan) to be entered into by and among the Reorganized Companies and the ATSB Lender Parties to govern the New ATSB Loan Obligations as of the Effective Date.

1.17         “Amended and Restated ATSB Loan Documents” means (a) the Amended and Restated ATSB Loan Agreement, (b) the ATSB Secured Note, (c) the Amended and Restated ATSB Security Documents, and (d) such other documents to be executed by one or more of the parties to the Amended and Restated ATSB Loan Agreement, as provided in the Amended and Restated ATSB Loan Agreement.

1.18         “Amended and Restated ATSB Security Documents” means the security documents, as further described in the Amended and Restated ATSB Loan Documents, that amends and restates the ATSB Mortgage and Security Agreement.

1.19         “Articles of Incorporation and Bylaws” means the Articles of Incorporation and Bylaws of the New Holding Company, substantially in the form of Exhibit N.

1.20         “ATA” means ATA Airlines, Inc., an Indiana corporation, debtor-in-possession in Case No. 04-19868 pending in the Bankruptcy Court.

1.21         “ATSB” means the Air Transportation Stabilization Board created pursuant to the Air Transportation Safety and Stabilization Act, P.L. 107-42 (2001) (the “Act”) and the regulations issued by the Office of Management and Budget under the Act, 14 C.F.R. Part 1300, Aviation Disaster Relief – Air Carrier Guarantee Loan Program.

1.22         “ATSB Agent” means Citibank, N.A. in its capacity as Agent (as defined in the ATSB Loan Agreement) under the ATSB Loan Agreement.

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1.23         “ATSB Lender Parties” means Govco Incorporated, as Primary Tranche A Lender, Citibank, N.A. as Alternate Tranche A Lender, Tranche B Lender, Collateral Agent and Agent, Citicorp North America, Inc., as Govco Administrative Agent, and the ATSB, in each case, as set forth in more detail in the ATSB Loan Agreement.

1.24         “ATSB Lenders” means the lenders from time to time (and as of the time relevant to the use of the definition herein) under the ATSB Loan Agreement and the Amended and Restated ATSB Loan Agreement.

1.25         “ATSB Lenders Settlement Agreement” means the ATSB Lenders Settlement Agreement approved by an order of the Bankruptcy Court entered April 20, 2005.

1.26         “ATSB Loan Agreement” means the $168 million Loan Agreement, dated November 20, 2002, among ATA, as Borrower, Holdings, as Parent, Govco Incorporated, as Primary Tranche A Lender, Citibank, N.A., as Alternate Tranche A Lender, Citicorp North America, Inc., as Govco Administrative Agent, Citibank, N.A., as Tranche B Lender, BearingPoint, Inc. (formerly KPMG Consulting, Inc.), as Loan Administrator, Citibank, N.A., as Collateral Agent, Citibank, N.A., as Agent and the ATSB, governing the ATSB Loan Obligations (as defined in the Cash Collateral Order).

1.27         “ATSB Mortgage and Security Agreement” means that certain Mortgage and Security Agreement, dated as of November 20, 2002, made by ATA Airlines, Inc. (f/k/a American Trans Air, Inc.) in favor of Citibank, N.A., as Collateral Agent.

1.28         “ATSB Secured Claim” means the Allowed Class 1 Claim of the ATSB Lenders arising under the ATSB Loan Agreement and allowed as a secured claim under Bankruptcy Code § 506 against ATA pursuant to the April 20, 2005 order of the Bankruptcy Court approving the ATSB Lenders Settlement Agreement after application of the Quarterly Payments and the Section 9(m) Payment (each as defined in the ATSB Lenders Settlement Agreement).

1.29         “ATSB Secured Claim Term Sheet” means the term sheet attached as Exhibit 5 to the Disclosure Statement.

1.30         “ATSB Secured Note” means the Note (as defined in paragraph 2.b. of the ATSB Lenders Settlement Agreement) in the principal amount of the ATSB Secured Claim.

1.31         “ATSB Super-Priority Claim” means the super-priority administrative expense claim of the ATSB Lenders as provided in Section 9(e) of the Cash Collateral Order.

1.32         “ATSB Unsecured Claims” means (i) the Deficiency Claim (as defined in the ATSB Lenders Settlement Agreement) which is an Allowed Class 6 Claim held by the ATSB Lenders against ATA in the amount of $30,564,059.75, and (ii) the Legal Expense Reimbursement (as defined in the ATSB Lenders Settlement Agreement), to the extent they are not provided to be paid by the Amended and Restated ATSB Loan Agreement, which are

5

Allowed Claims  pursuant to the April 20, 2005 order of the Bankruptcy Court approving the ATSB Lenders Settlement Agreement.

1.33         “Avoidance Claims” means Causes of Action against Persons arising under any of sections 502, 510, 541, 542, 543, 544, 545, 547, 548 through 551 and 553 of the Bankruptcy Code, or under similar or related state or federal statutes and common law, including fraudulent transfer laws, whether or not litigation has been commenced as of the Confirmation Date to prosecute such Avoidance Claims.

1.34         “Ballot” means each of the ballot forms that are distributed with the Disclosure Statement to holders of Claims who are included in Classes that are Impaired under the Plan and entitled to vote to accept or reject the Plan, and shall include the form letters of direction regarding voting with respect to the 1996/1997 EETC Aircraft Rejection Claim and 2000-1 EETC Aircraft Rejection Claim.

1.35         “Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended and codified in title 11 of the United States Code, 11 U.S.C. §§ 101-1330, as in effect on October 26, 2004.

1.36         “Bankruptcy Court” means the United States Bankruptcy Court for the Southern District of Indiana.

1.37         “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure and the Official Bankruptcy Forms, as amended, the Federal Rules of Civil Procedure, as amended, as applicable to the Chapter 11 Cases or proceedings therein, and the Local Rules of the Bankruptcy Court, as applicable to the Chapter 11 Cases or proceedings therein, as the case may be.

1.38         “Bar Date Orders” means collectively the orders entered by the Bankruptcy Court on December 21, 2004, and October 21, 2005 establishing the Bar Dates.

1.39         “Bar Dates” means the deadlines set by the Bankruptcy Court under the Bar Date Orders for filing proofs of claim or interest in the Chapter 11 Cases.

1.40         “Basic Subscription Rights” has the meaning ascribed to it in Article 7.1 herein.

1.41         “Benefit Plans” has the meaning ascribed to it in Article 6.4 hereof.

1.42         “Business Day” means any day, excluding Saturdays, Sundays and “legal holidays” (as defined in Bankruptcy Rule 9006(a)), on which commercial banks are generally open for business in Indianapolis, Indiana.

1.43         “Cargo” means ATA Cargo, Inc., a California corporation, debtor in possession in Case No. 04-19873 pending in the Bankruptcy Court.

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1.44         “Cash” means legal tender of the United States of America and equivalents thereof.

1.45         “Cash Collateral Order” means the Second Interim and Final Order Authorizing Debtors’ use of Cash Collateral and Use, Sale and Lease of Other Pre-Petition Collateral, approved by order of the Bankruptcy Court entered December 10, 2004, as it may be amended, modified, supplemented and extended from time to time.

1.46         “Causes of Action” means any and all actions, proceedings, causes of action, suits, accounts, controversies, agreements, promises, rights to legal remedies, rights to equitable remedies, rights to payment and claims, rights of offset, whether known, unknown, reduced to judgment, not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured and whether asserted or assertable directly or derivatively, in law, equity or otherwise, including Avoidance Claims unless otherwise waived or released by the Reorganizing Debtors or Reorganized Companies.

1.47         “Certificate of U.S. Citizenship” means the certificate substantially in the form attached hereto as Exhibit P certifying that the holder of a General Unsecured Claim is a U.S. Citizen.

1.48         “Chapter 11 Cases” means the chapter 11 cases of the Reorganizing Debtors pending in the Bankruptcy Court and being jointly administered under Case No. 04-19866, and the phrase “Chapter 11 Case” when used with reference to a particular Reorganizing Debtor shall mean the particular case under chapter 11 of the Bankruptcy Code commenced by such Reorganizing Debtor in the Bankruptcy Court.

1.49         “Chicago Release Carve Out” means any Cause(s) of Action that the Reorganizing Debtors and/or Reorganized Companies may have or might assert against the City of Chicago (a) that are described as obligations that the City of Chicago owes to ATA in the Amended Term Sheet (the “Amended Midway Term Sheet”) attached as Exhibit 1 to the Order Approving (A) Amended Midway Gate Restructuring Term Sheet And Settlement Agreement To Resolve Objections Thereto, (B) Amended And Restated Codeshare Agreement and (C) Southwest Amendments dated December 12, 2005 (including without limitation the 2003 Overpayment); (b) any obligation of the City of Chicago to ATA or Reorganized ATA under the ATA Midway Lease (as defined in the Amended Midway Term Sheet) or any other lease, contract or agreement assumed by Reorganized ATA or entered into by ATA from and after the Petition Date; (c) any amount owing by the City of Chicago to ATA and assertable as a setoff or basis for recoupment against Claims of the City of Chicago; and (d) any refund or other payment owing to ATA or Reorganized ATA arising from or related to (a), (b) or (c) above.

1.50         “City Loans” means the loans from the City of Chicago to ATA secured by a letter of credit issued by Southwest as part of the Southwest DIP Facility.

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1.51         “Claim” means a claim against one of the Reorganizing Debtors (or all or some of them), whether or not asserted, as defined in section 101(5) of the Bankruptcy Code.

1.52         “Claims Agent” means The BMC Group, Inc. which maintains an office at The BMC Group, 1330 E. Franklin Avenue, El Segundo, California  90245, and on the Internet at www.bmccorp.net.

1.53         “Claims Aggregation Rule” means, after application of the Multiple Claims Rule set forth in Article 1.146, if a Person and such Person’s Affiliates hold more than one General Unsecured Claim, the dollar amount of all such General Unsecured Claims shall be aggregated and treated as the dollar amount of each Claim of such Person and such Person’s Affiliates for purposes of determining whether any General Unsecured Claims of such Person or such Person’s Affiliates is an Unsecured Convenience Class Claim or is eligible for treatment as an Unsecured Convenience Class Claim.

1.54         “Claims Objection Deadline” means that day which is 120 days after the Effective Date (unless such day is not a Business Day, in which case such deadline shall be the next Business Day thereafter), as the same may be from time to time extended by the Bankruptcy Court, without further notice to parties-in-interest.

1.55         “Class” means a class of Claims or Interests designated pursuant to Sections 1122 and 1123(a)(1) of the Bankruptcy Code and described in Article III of the Plan.

1.56         “Confirmation Date” means the date of entry on the Bankruptcy Court’s docket of the Confirmation Order.

1.57         “Confirmation Hearing” means the hearing before the Bankruptcy Court held to consider  confirmation of the Plan and related matters under section 1128 of the Bankruptcy Code, as such hearing may be adjourned or continued from time to time.

1.58         “Confirmation Order” means the order entered by the Bankruptcy Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code.

1.59         “Convenience Distribution” means the lesser of (a) one percent (1%) of each Allowed Class 7 Claim or (b) a Pro Rata share with all Allowed Class 7 Claims of $1.5 million.

1.60         “Creditors’ Committee” means the Official Committee of Unsecured Creditors appointed pursuant to section 1102(a) of the Bankruptcy Code in the Chapter 11 Cases.

1.61         “Cure” means the distribution within the period of time provided in Article 8.3 of the Plan or an order of the Bankruptcy Court of Cash, or such other property as may be agreed upon by the parties or ordered by the Bankruptcy Court, with respect to the assumption (or assumption and assignment) of an executory contract or unexpired lease, pursuant to section 365(b) of the Bankruptcy Code, in an amount equal to all unpaid monetary obligations, without interest, or such other amount as may be agreed upon by the parties, under such executory

8

contract or unexpired lease, to the extent such obligations are enforceable under the Bankruptcy Code and applicable non-bankruptcy law.

1.62         “DIP New Shares” means the New Shares to be issued in discharge of the New DIP Facility Claim which shall be that number of New Shares, not to exceed 7.5 million New Shares, equal to the whole number quotient of (a) the amount of the New DIP Facility Claim as of the Effective Date divided by (b) the Per Share Value.

1.63         “Disallowed Claim” or “Disallowed Interest” means a Claim or any portion thereof, or an Interest or any portion thereof, that (a) has been disallowed by a Final Order, (b) is Scheduled at zero or as contingent, disputed or unliquidated and as to which a Bar Date applies but no proof of claim or interest has been timely filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order of the Bankruptcy Court or otherwise deemed timely filed under applicable law, or (c) is not Scheduled and as to which a Bar Date applies but no proof of claim or interest has been timely filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order of the Bankruptcy Court or otherwise deemed timely filed under applicable law.

1.64         “Disbursing Agent” means Reorganized ATA or any Person designated by the Plan Proponents, in their sole discretion, to serve as a disbursing agent under Article 9.3 of the Plan.  With respect to the Old Holdings Unsecured Notes, the Disbursing Agent shall be the Servicer, but the Servicer shall not be responsible for any actions to be taken or matters under or related to Article 7 of the Plan.

1.65         “Disclosure Statement” means the written disclosure statement that relates to this Plan, as approved by the Bankruptcy Court pursuant to section 1125 of the Bankruptcy Code and Bankruptcy Rule 3017, as such disclosure statement may be amended, modified or supplemented from time to time.

1.66         “Disputed Claim” or “Disputed Interest” means a Claim or any portion thereof, or an Interest or any portion thereof, that is neither an Allowed Claim nor a Disallowed Claim, nor an Allowed Interest or a Disallowed Interest, as the case may be, and includes, without limitation, Claims or Interests that (a) have not been Scheduled by the Debtors or have been Scheduled at zero, or have been Scheduled as unknown, contingent, unliquidated or disputed, whether or not such Claims or Interests are the subject of a proof of claim or proof of interest in the Bankruptcy Court, (b) are the subject of a proof of claim or interest that differs in nature, amount or priority from the Schedules, or (c) are the subject of an objection filed with the Bankruptcy Court, which has not been withdrawn or overruled by a Final Order of the Bankruptcy Court.

1.67         “Disputed Claim Amount” means (a) if a liquidated amount is set forth in the Proof of Claim relating to a Disputed Claim, (i) the liquidated amount set forth in the Proof of Claim relating to the Disputed Claim; (ii) an amount agreed to by the Reorganizing Debtors and the holder of such Disputed Claim; or (iii) if a request for estimation is filed by the Reorganizing

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Debtors or the Disbursing Agent, the amount at which such Claim is estimated by the Bankruptcy Court; (b) if no liquidated amount is set forth in the Proof of Claim relating to a Disputed Claim, (i) an amount agreed to in writing by the Reorganizing Debtors and the holder of such Disputed Claim, (ii) the amount estimated by the Bankruptcy Court with respect to such Disputed Claim or (iii) zero, if neither of (i) or (ii) applies; or (c) if the Claim was listed on the Schedules as unliquidated, contingent or disputed and no Proof of Claim was filed, or deemed to have been filed, by the applicable Bar Date and the Claim has not been resolved by written agreement of the parties or an order of the Bankruptcy Court, zero.

1.68         “Distribution Date” means the date, selected by the Reorganized Companies occurring as soon as practicable after the Effective Date, upon which distributions to holders of Allowed Claims entitled to receive distributions under the Plan shall commence.

1.69         “Distribution Record Date(s)” means the date(s), beginning with the date ten (10) Business Days before the Effective Date as of which date the identities of holders of Claims will be established for purposes of distributions under the Plan on the Periodic Distribution Dates.

1.70         “Distribution Reserve” has the meaning ascribed to it in Article 9.8 b. herein.

1.71         “Effective Date” means the first Business Day on which all conditions to the consummation of the Plan set forth in Article 12.2 hereof have been either satisfied or waived pursuant to Article 12.3 hereof as determined by the Plan Proponents.

1.72         “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.73         “Estate(s)” means the bankruptcy estate(s) of the Reorganizing Debtor(s) created pursuant to section 541 of the Bankruptcy Code.

1.74         “Exchange” has the meaning ascribed to it in Article 6.1 b.

1.75         “Exchange Act” means the Securities Exchange Act of 1934 as now in effect or hereafter amended.

1.76         “Execujet” means American Trans Air Execujet, Inc., an Indiana corporation, debtor-in-possession in Case No.04-19872 pending in the Bankruptcy Court.

1.77         “Exhibit” means an exhibit annexed or to be annexed to this Plan Exhibits A, L, M, O, P and R (the “Pre-Annexed Exhibits”) are annexed hereto.

1.78         “Exhibit Filing Date” means the date on which  Exhibits to the Plan, other than the Pre-Annexed Exhibits, shall be filed with the Bankruptcy Court, which date shall be no fewer than ten days prior to the Voting Deadline, unless a later date is approved by the Bankruptcy Court.

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1.79         “Face Amount” means, (a) when used in reference to a Disputed or Disallowed Claim, the full stated liquidated amount claimed by the holder of a Claim in any proof of claim timely filed with the Bankruptcy Court or otherwise deemed timely filed by any Final Order of the Bankruptcy Court or other applicable bankruptcy law, and (b) when used in reference to an Allowed Claim, the allowed amount of such Claim.

1.80         “Final Order” means an order or judgment, the operation or effect of which has not been stayed, reversed or amended, and as to which order or judgment (or any revision, modification or amendment thereof), the time to appeal or seek review or rehearing or move for a new trial has expired, and as to which no appeal or petition for review, reargument, rehearing or proceeding for a new trial was timely filed or, if timely filed, remains pending.

1.81         “Fleet” means Fleet National Bank, as successor-in-interest to Summit Bank.

1.82         “Fleet Secured Claim A” means the Allowed Class 2 Claim held by Fleet, or its assignee or successor in interest, as successor in interest to Summit Bank, arising from or under that certain $11.5 million variable rate five-year note dated February 17, 2000, issued by Holdings, as successor in interest to American Trans Air, Inc. and allowed pursuant to the Fleet Stipulation as a secured Claim under Bankruptcy Code § 506 against ATA and secured by a lien against that certain Lockheed L-1011-500 aircraft with the tail number N163AT.

1.83         “Fleet Secured Claim B” means the Allowed Class 3 Claim held by Fleet, or its assignee or successor in interest, as successor in interest to Summit Bank, arising from or under that certain $11.5 million variable rate five-year note dated September 22, 2000, issued by Holdings, as successor in interest to American Trans Air, Inc. and allowed pursuant to the Fleet Stipulation as a secured claim under Bankruptcy Code § 506 against ATA and secured by a lien against that certain Lockheed L-1011-500 aircraft with the tail number N162AT.

1.84         “Fleet Stipulation” means the Second And Final Stipulation Regarding (A) Payments To Fleet National Bank For Debtors’ Use Of Aircraft Bearing Tail Numbers N162AT And N163AT And (B) Fixing Unsecured Claims filed with the Court and approved by an order entered October 6, 2005.

1.85         “Fleet Unsecured Deficiency Claim” means the Allowed Class 6 Claim in the amount of $5,000,000 allowed as a General Unsecured Claim against ATA pursuant to the Fleet Stipulation.

1.86         “General Unsecured Claim” means a Claim against any, some, or all of the Reorganizing Debtors that is not an Administrative Claim, a New DIP Facility Claim, a Southwest DIP Facility Claim, a Priority Tax Claim, an ATSB Secured Claim, a Fleet Secured Claim A, a Fleet Secured Claim B, an Insured Claim, an Other Secured Claim, an Intercompany Claim, or an Other Priority Claim.

1.87         “Holdings” means ATA Holdings Corp., an Indiana corporation, debtor-in-possession in Case No. 04-19866 pending in the Bankruptcy Court.

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1.88         “IAMAW” means the International Association of Machinists and Aerospace Workers.

1.89         “Impaired” refers to any Claim or Interest that is impaired within the meaning of section 1124 of the Bankruptcy Code.

1.90         “Indemnification Rights” means any obligations or rights of one or more of the Reorganizing Debtors or Reorganized Companies to indemnify, reimburse, advance or contribute to the losses, liabilities or expenses of an Indemnitee pursuant to any Reorganizing Debtors’ or Reorganized Companies’ articles of incorporation, bylaws, or policy of providing employee indemnification, or other applicable law or specific agreement in respect of any claims, demands, suits, causes of action or proceedings against an Indemnitee based upon any act or omission related to an Indemnitee’s service with, for or on behalf of the Reorganizing Debtors or Reorganized Companies.

1.91         “Indemnitee” means all present and former directors, officers, employees, agents or representatives of the Reorganizing Debtors or Reorganized Companies who are entitled to assert Indemnification Rights.

1.92         “Indenture Trustee” means Wells Fargo Bank Northwest, N.A. or its successor as the indenture trustee for the Old Holdings Unsecured Notes.

1.93         “Indenture Trustee Fees and Expenses” means the reasonable professional fees and reasonable expenses incurred by the Indenture Trustee in connection with these Chapter 11 Cases, including the Indenture Trustee’s service on the Creditors’ Committee, in an amount not to exceed $300,000.

1.94         “Initially Unsubscribed Rights Offering New Shares” has the meaning ascribed to it in Article 7.1 herein.

1.95         “Insured Claim” means any Claim to the extent such Claim arises prior to the Petition  Date from an incident or occurrence that is covered under any of the Reorganizing Debtors’ insurance policies, but solely to the extent such Claim is covered by such insurance policies.

1.96         “Intercompany Claim” means a Claim by a Reorganizing Debtor against another Reorganizing Debtor.

1.97         “Interest” means, with respect to each Reorganizing Debtor, the rights and interests of the holder of any equity security, including options or warrants to purchase equity securities, stock appreciation rights or other rights to purchase or deliver in exchange for equity securities, including preferred stock, options or warrants to purchase or otherwise acquire the same and any Claims arising out of the purchase and sale of any such securities.

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1.98         “Investment Agreement” means that certain Investment and Purchase Agreement to be entered into by and among the New Investor and the Reorganizing Debtors (substantially in the form attached as Exhibit A to this Plan), as the same may be amended, modified or supplemented from time to time.

1.99         “Issued New Shares” means the 10,752,688 New Shares to be issued as of the Effective Date by New Holding Company pursuant to this Plan, comprised of the DIP New Shares, New Investor New Shares, Unsecured Creditors New Shares, and Rights Offering New Shares.

1.100       “Jefferies” means Jefferies & Company, Inc.

1.101       “Lazard” means Lazard Freres & Co. LLC.

1.102       “Leisure” means ATA Leisure Corp., an Indiana corporation, debtor-in-possession in Case No. 04-19870 pending in the Bankruptcy Court.

1.103       “Lien” means a charge against or interest in property to secure payment of a debt or performance of an obligation.

1.104       “Management Incentive Shares” means the New Shares issuable pursuant to the Management Stock Option Plan.

1.105       “Management Stock Option Plan” means the Management Stock Option Plan, substantially in the form of Exhibit K.

1.106       “MatlinPatterson Bid” means the Commitment Letter and attached term sheet executed on November 28, 2005 pursuant to the Court’s order dated November 29, 2005 (Docket No. 3288).

1.107       “Merger” means the merger of Leisure and Cargo into ATA immediately prior to the Effective Date.

1.108       “Minority Shareholder Protection Term Sheet” shall mean the term sheet attached as Exhibit R hereto.

1.109       “New ATA Holdings” means a newly-incorporated, wholly owned subsidiary of New Parent Company organized under the laws of the State of Indiana which will acquire as of the Effective Date and after the Merger all of the common stock of ATA.

1.110       “New ATSB Loan Obligations” means the obligations to be undertaken by the Reorganized Companies under the Amended and Restated ATSB Loan Documents, including the obligation to pay secured debt in the original principal amount of the ATSB Secured Claim reduced by the amount of all cash payments made or to be made on or before the Effective Date that reduced the amount of such ATSB Secured Claim, including all Quarterly Payments and the

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Section 9(m) Payment and excluding payments to Lazard for the benefit of the ATSB Lenders, all as defined in the ATSB Lenders Settlement Agreement.

1.111       “New DIP Credit Agreement” means the Secured Superpriority Debtor-In-Possession Credit Agreement, entered into as of [December     , 2005,] among ATA, as borrower, each of the other Reorganizing Debtors, as guarantors, and the New DIP Lender, which was executed by the Reorganizing Debtors in connection with the New DIP Facility, as such agreement may be amended from time to time in accordance with terms thereof.

1.112       “New DIP Facility” means the debtor-in-possession superpriority secured financing facility provided to the Reorganizing Debtors by the New DIP Lender pursuant to the New DIP Credit Agreement as authorized by the Bankruptcy Court pursuant to the New DIP Facility Order.

1.113       “New DIP Facility Claim” means all Administrative Claims of the New DIP Lender arising under or pursuant to the New DIP Facility including, without limitation, principal and interest on the New DIP Facility, plus all fees and expenses (including professional fees and expenses) arising under the New DIP Facility.

1.114       “New DIP Facility Order” means the final order that was issued by the Bankruptcy Court from the bench on December 12, 2005 and entered by the Bankruptcy Court on December 14, 2005, authorizing and approving the New DIP Facility and the agreements related thereto.

1.115       “New DIP Lender(s)” means MatlinPatterson Global Opportunities Partners II, L.P. and/or MatlinPatterson Global Opportunities Partners (Cayman) II, L.P. (and/or one or more funding vehicles they may form and capitalize with one or more related or unrelated co-investors) as the lender(s) under the New DIP Credit Agreement.

1.116       “New Equity Proceeds” means the cash received by New Holding Company with respect to the sale and issuance of the New Shares under this Plan, including New Shares issued pursuant to the Investment Agreement and the Rights Offering.

1.117       “New Fleet Note A” and “New Fleet Note B” mean the two non-recourse promissory notes issued by ATA in respect of Fleet Secured Claim A and Fleet Secured Claim B, respectively, each in the principal amount of $1,000,000, with each respective note secured by the collateral and having the terms described in the Fleet Stipulation and substantially in the form attached as Exhibits E and F respectively.

1.118       “New Holding Company” means a newly-incorporated corporation organized under the laws of the State of Indiana or Delaware that will be, as of the Effective Date, the ultimate parent of the other Reorganized Companies.

1.119       “New Investor” means MatlinPatterson Global Opportunities Partners II, L.P. and/or MatlinPatterson Global Opportunities Partners (Cayman) II, L.P. (and/or one or more

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funding vehicles they may form and capitalize with one or more related or unrelated co-investors).

1.120       “New Investor Equity” means an amount equal to the Per Share Value multiplied by the New Investor New Shares issued to the New Investor.

1.121       “New Investor Exit Facility” means the exit facility committed to by the New Investor which commitment is set forth in the Investment Agreement, and described in the Exit Facility Term Sheet attached as an exhibit to the Investment Agreement to be used to satisfy the Southwest DIP Facility Claim as of the Effective Date.

1.122       “New Investor Exit Facility Security Agreement” means the security agreement to be executed by the Reorganized Companies as of the Effective Date to secure obligations under the New Investor Exit Facility Secured Note.  The New Investor Exit Facility Security Agreement will grant a security interest to the New Investor in all New Investor Collateral (as defined in the New Investor Exit Facility Security Agreement).  The New Investor Exit Facility Security Agreement will be substantially in the form attached as Exhibit D.

1.123       “New Investor Exit Facility Secured Note” means a promissory note to be made by Reorganized ATA payable to New Investor and guaranteed by the other Reorganized Companies in the principal amount of $20,000,000.  The New Investor Exit Facility Secured Note will contain all material terms and conditions described in the Exit Facility Term Sheet attached as an exhibit to the Investment Agreement.  The New Investor Exit Facility Secured Note will be substantially in the form attached as Exhibit C.

1.124       “New Investor Exit Facility Term Sheet” means the term sheet attached as Exhibit 6 to the Disclosure Statement, and attached as an exhibit to the Investment Agreement.

1.125       “New Investor New Shares” means the New Shares to be issued to the New Investor pursuant to this Plan and the Investment Agreement.  The number of New Investor New Shares shall equal (a) 7,500,000 New Shares minus (b) the number of DIP New Shares issued to the New Investor, plus (c) any Rights Offering New Shares purchased by the New Investor pursuant to Article 7.6 of the Plan.

1.126       “New Parent Company” means a newly-incorporated corporation organized under the laws of the State of Indiana that will be a wholly owned subsidiary of New Holding Company and that will own one hundred percent (100%) of New ATA Holdings.

1.127       “New Shares” means the shares of common stock of New Holding Company.

1.128       “Old Holdings Common Stock” means shares of common stock of Holdings that were authorized, issued and outstanding prior to the Effective Date, and all options, warrants or rights, contractual or otherwise, if any, to acquire any such common stock.

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1.129       “Old Holdings Common Stock Interests” means (a) the legal, equitable, contractual and other rights (whether fixed or contingent, matured or unmatured, disputed or undisputed) of any Person with respect to Old Holdings Common Stock or any other equity securities of Holdings other than the Old Holdings Preferred Stock, (b) Subordinated Securities Claims with respect to the Old Holdings Common Stock and (c) the legal, equitable, contractual and other rights, whether fixed or contingent, matured or unmatured, disputed or undisputed, of any Person to purchase, sell, subscribe to, or otherwise acquire or receive (directly or indirectly) Old Holdings Common Stock.

1.130       “Old Holdings Preferred Stock” means, collectively, the Series A Preferred Stock, the Series B Preferred Stock and all options, warrants or rights, contractual or otherwise, if any, to acquire any such preferred stock.

1.131       “Old Holdings Preferred Stock Interests” means (a) the legal, equitable contractual and other rights (whether fixed or contingent, matured or unmatured, disputed or undisputed) of any Person with respect to Old Holdings Preferred Stock, (b) Subordinated Securities Claims with respect to the Old Holdings Preferred Stock, and (c) the legal, equitable, contractual and other rights (whether fixed or contingent, matured or unmatured, disputed or undisputed) of any Person to purchase, sell, subscribe to, or otherwise acquire or receive (directly or indirectly) Old Holdings Preferred Stock.

1.132       “Old Holdings Unsecured Notes” means, collectively, the outstanding 2005 Senior Unsecured Notes, the 2009 Senior Unsecured Notes and the 2010 Senior Unsecured Notes.

1.133       “Ordinary Course Professional Order” means the Bankruptcy Court’s Amended Order Pursuant to 11 U.S.C. §§ 105(a), 327(e) and 331 Authorizing Retention of Professionals Utilized by the Debtors in the Ordinary Course of Business (Docket No. 714).

1.134       “Original Warrants” means warrants issued as of the Effective Date by New Holding Company pursuant to the Warrant Agreement to the holders of Allowed Class 6 Claims allowing such holders to purchase their Pro Rata share of Original Warrants Shares for the Per Share Value at any time prior to the fifth anniversary of the Effective Date.

1.135       “Original Warrants Shares” means the 219,443 New Shares issuable upon exercise of the Original Warrants, subject to adjustment as set forth therein.

1.136       “Other Priority Claim” means a Claim entitled to priority pursuant to section 507(a) of the Bankruptcy Code other than a Priority Tax Claim or an Administrative Claim.

1.137       “Other Secured Claim” means any Secured Claim other than the ATSB Secured Claim, Fleet Secured Claim A or Fleet Secured Claim B.

1.138       “Per Share Value” means $10.00 which shall be the value of each New Share for purposes of this Plan.

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1.139       “Periodic Distribution Dates” means (a) the Distribution Date, as to the first distribution made by the Reorganized Companies, and (b) thereafter, (i) the first Business Day occurring ninety (90) days after the Distribution Date and (ii) subsequently, the first Business Day occurring ninety (90) days after the immediately preceding Periodic Distribution Date.

1.140       “Person” means an individual, corporation, partnership, joint venture, association, joint stock company, limited liability company, limited liability partnership, trust, estate, unincorporated organization, governmental unit (as defined in section 101(27) of the Bankruptcy Code), or other entity.

1.141       “Petition Date” means October 26, 2004, the date on which the Reorganizing Debtors filed their petitions for relief in the Bankruptcy Court commencing the Chapter 11 Cases.

1.142       “Plan” means this joint chapter 11 plan for the resolution of outstanding Claims and Interests in the Chapter 11 Cases, as herein proposed by the Plan Proponents, including all Exhibits, supplements, amendments, appendices and schedules hereto, either in their present form or as the same may be later filed or further altered, amended or modified from time to time in accordance with the Bankruptcy Code and Bankruptcy Rules.

1.143       “Plan Proponents” means, collectively, the Reorganizing Debtors before the Effective Date, the Reorganized Companies after the Effective Date, and MatlinPatterson.

1.144       “Post-Confirmation Committee” has the meaning ascribed to it in Article 14.3(b) hereof.

1.145       “Priority Tax Claim” means a Claim entitled to priority pursuant to section 507(a)(8) of the Bankruptcy Code.

1.146       “Pro Rata” means, from time to time, unless the Plan specifically provides otherwise, with respect to Classes 6 and 7, the proportion that the Face Amount of a General Unsecured Claim bears to the aggregate Face Amount of all General Unsecured Claims (including Disputed Claims, but excluding Disallowed Claims) in the same Class asserted against any, some, or all of the Reorganizing Debtors or their Estates.  For purposes of determining the Pro Rata share of Convenience Class Distribution, New Shares, Original Warrants, Additional Warrants, distributable to a claimant under Article 4.6 or for participating in the Rights Offering or for voting with respect to multiple Claims that would otherwise be Allowed Claims (“Multiple Claims”) that are asserted against more than one Reorganizing Debtor arising out of the same primary obligation, facts or circumstances (including any circumstance involving one or more guarantees or co-obligations by one or more Reorganizing Debtors of an obligation of another Reorganizing Debtor) only one of such Multiple Claims shall be allowed as a single Allowed Class 6 or Class 7 Claim in the amount of the unsecured claim otherwise allowable against ATA, if ATA is an obligor with respect to one of such Multiple Claims.  If ATA is not an obligor with respect to one of such Multiple Claims, then for purposes

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of calculating a Pro Rata distribution in Class 6 or Class 7, only one of such Multiple Claims shall be allowed as an Allowed Class 6 or Class 7 Claim in the largest amount of any of such Multiple Claims otherwise allowable.  As examples and for purposes of clarifying the foregoing (a) only the ATSB Unsecured Claim, not any Claim held by the ATSB Lenders against any other Reorganizing Debtor who guaranteed or is co-obligated with respect to such ATSB Unsecured Claim, and (b) only the General Unsecured Claims against ATA of the holders of Old Holdings Unsecured Notes, not any Claims by such holders against any other Reorganizing Debtor who guaranteed or is otherwise co-obligated with respect to such Claims against ATA, shall be allowed as Allowed Class 6 or Class 7 Claims for purposes of determining the Pro Rata share of New Shares or the Pro Rata share of $1.5 million maximum Convenience Class Distribution, if applicable, to be distributed with respect to such Claimants’ Allowed Class 6 or Class 7 Claims.  This treatment of “multiple claims” in this Article 1.146 shall be known as the “Multiple Claims Rule”.

1.147“Pro Rata Share of Rights Offering New Shares” means with respect to the Basic Subscription Rights of each Qualified Holder the ratio (expressed as a percentage) of such holder’s Rights Participation Claim Amount, as determined as of the Subscription Expiration Date, to $1.1 billion.

1.148“Professional” means those Persons retained in the Chapter 11 Cases by separate Bankruptcy Court orders pursuant to sections 327 and 1103 of the Bankruptcy Code or otherwise; provided, however, that Professional does not include those Persons retained pursuant to the Ordinary Course Professional Order.

1.149“Professional Claim” means an Administrative Claim of a Professional for compensation for services rendered or reimbursement of costs, expenses or other charges and disbursements incurred, relating to services rendered or expenses incurred after the Petition Date and prior to and including the Effective Date.

1.150“Professional Fee Orders” means the orders entered by the Bankruptcy Court on December 10, 2004, authorizing the interim payment of Professional Claims.

1.151“Qualified Holder(s)” means a Person(s) who (i) holds an Allowed Class 6 Claim or (ii) is listed on Exhibit M in the amount there listed or (iii) obtains an order pursuant to Article 1.163b. and (iv) who qualifies as of the Subscription Commencement Date as an “accredited investor” as that term is defined in Rule 501 (a) of Regulation D promulgated under the Securities Act and (v) who is a U.S. citizen.  Notwithstanding any other restriction (including without limitation Article 7.5) on transferability of a Subscription Right or other provision of this Plan “Qualified Holder(s)” includes one or more Persons, who meet the requirements of (iv) and (v) in the prior sentence, to whom the ATSB, the ATSB Lender Parties, the 1996-1997 EETC Aircraft Creditors (including by and through the indenture trustee for such creditors) and/or the 2000-1 EETC Aircraft Creditors (including by and through the indenture trustee for such creditors) has or have assigned its or their Subscription Rights as a holder or holders of the ATSB Unsecured Claims, 1996-1997 EETC Aircraft Rejection Claim, and/or 2000-1 EETC

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Aircraft Rejection Claims (and the Rights Participation Claim Amounts shown on Exhibit M with respect to such Claims or as otherwise ordered by the Bankruptcy Court) by written assignment provided to the Reorganizing Debtors no later than five Business Days prior to the Subscription Expiration Date.  The right to assign Subscription Rights described in the foregoing sentence for the Persons listed in the foregoing sentence (the “Participation Rights Transfer Parties”) is hereby affirmed.

1.152“Reinstated” or “Reinstatement” means (a) leaving unaltered the legal, equitable and contractual rights to which a Claim entitles the holder of the Claim so as to leave such Claim Unimpaired in accordance with section 1124 of the Bankruptcy Code, or (b) notwithstanding any contractual provision or applicable law that entitles the holder of a Claim to demand or receive accelerated payment of such Claim after the occurrence of a default (i) curing any such default that occurred before or after the Petition Date, other than a default of a kind specified in section 365(b)(2) of the Bankruptcy Code; (ii) reinstating the maturity of such Claim as such maturity existed before such default; (iii) compensating the holder of a Claim for any damages incurred as a result of any reasonable reliance by such holder of a Claim on such contractual provision or such applicable law; and (iv) not otherwise altering the legal, equitable or contractual rights to which such Claim entitles the holder of the Claim; provided, however, that any contractual right that does not pertain to the payment when due of principal and interest on the obligation on which such Claim is based, including, but not limited to, financial covenant ratios, negative pledge covenants, covenants or restrictions on merger or consolidation, “going dark” provisions, and affirmative covenants regarding corporate existence prohibiting certain transactions or actions contemplated by the Plan, or conditioning such transactions or actions on certain factors, shall not be required to be cured or reinstated in order to accomplish Reinstatement.

1.153“Release Obligor” has the meaning ascribed to it in Article 11.5 hereof.

1.154“Released Parties” means, collectively, (i) all officers of each of the Reorganizing Debtors, all members of the boards of directors of each of the Reorganizing Debtors, and all employees of each of the Reorganizing Debtors, in each case, who are or were serving in such capacities from and after the date of the commencement of the Confirmation Hearing and solely with respect to actions taken or omissions by such Persons in one or more of such capacities with one or more of the Reorganizing Debtors or other facts or circumstances that might otherwise impose liability upon them arising from their serving in such capacities, (ii) the Creditors’ Committee and all members of the Creditors’ Committee in such capacity, (iii) MatlinPatterson, (iv) the New DIP Lender in its capacity as such, (v) Southwest, (vi) the New Investor, (vii) the Reorganizing Debtors, (viii) the 1996-1997 EETC Aircraft Creditors, (ix) the ATSB Lender Parties (solely in such capacity) and BearingPoint, Inc. (formerly KPMG Consulting, Inc.) as Loan Administrator under the ATSB Loan Agreement, (x) the Indenture Trustee, (xi) the City of Chicago (except with respect to the Chicago Release Carve Out), (xii) Wilmington Trust Company, in its capacity as loan trustee, subordination agent, pass through trustee or similar capacity under the Aircraft Equipment finance arrangements concerning the 2000-1 EETC Aircraft and 1996-1997 Aircraft (except with respect to the Wilmington Release Carve Out) and (xiii) except as noted in parentheticals with respect to each of the above-named Persons, such

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Person’s affiliates, principals, employees, agents, officers (but not with respect to Reorganizing Debtors beyond those described in (i)), directors (but not with respect to Reorganizing Debtors beyond those described in (i)), professionals, financial advisors, attorneys and other professionals, in their capacities as such.

1.155“Reorganized . . .” means the applicable Reorganizing Debtor from and after the Effective Date.

1.156“Reorganized Company” or “Reorganized Companies” means individually each of ATA (as it exists after the Merger of Leisure and Cargo into ATA), Execujet, New Holding Company, New Parent Company and New ATA Holdings and, collectively, all of ATA, Execujet, New Holding Company, New Parent Company and New ATA Holdings from and after the Effective Date.

1.157“Restructuring Term Sheet” means the Term Sheet as defined in the 1996-1997 EETC Approval Order.

1.158“Retained Actions” means all Causes of Action which any Reorganizing Debtor may hold against any Person (other than Released Parties), including, without limitation, (a) any Causes of Action brought prior to the Confirmation Date, (b) any Causes of Action against any Persons for failure to pay for products or services provided or rendered by the Reorganizing Debtors, (c) any Causes of Action relating to strict enforcement of the Reorganizing Debtors’ intellectual property rights, including patents, copyrights and trademarks, and (d) any Causes of Action seeking the recovery of the Reorganizing Debtors’, the Reorganized Companies’, or Reorganized Holdings’ accounts receivable or other receivables or rights to payment created or arising in the ordinary course of the Reorganizing Debtors’, the Reorganized Companies’ or Reorganized Holdings’ businesses. A nonexclusive list of Retained Actions is attached hereto as Exhibit I.

1.159“Rights Offering Claim Amount List” means the Claim Amounts listed on Exhibit M with respect to the claimants’ Rights Participation Claim Amount for purposes of Article VII of the Plan.  Such claimants will be allowed to participate in the amounts listed on Exhibit M or such higher amounts as otherwise ordered by the Bankruptcy Court notwithstanding any subsequent allowance, disallowance, reclassification, or modification of the amount of such claimants’ Allowed Claims.

1.160“Rights Offering” means the offering of Subscription  Rights to Qualified Holders to subscribe for Rights Offering New Shares, as described in Article VII.

1.161“Rights Offering Consideration” means an amount equal to the Per Share Value multiplied by the number of Rights Offering New Shares issued to Qualified Holders in respect of Subscription Rights.

1.162“Rights Offering New Shares” means the 2,500,000 New Shares issued pursuant to the Rights Offering.

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1.163“Rights Participation Claim Amount” means:

a.if an Allowed Class 6 Claim, the amount of such Allowed Class 6 Claim;

b.if a Claim is on the Rights Offering Claim Amount List, the amount, if any, of such Claim set forth thereon in the column entitled “Rights Offering Claim Amount”, unless the holder of such Claim has obtained an order of the Bankruptcy Court on motion or by stipulation at least five (5) days prior to the Subscription Expiration Date, otherwise determining the amount of the Claim for purposes of the Rights Offering; and

c.other than in the circumstances described in (a) or (b) above, the Rights Participation Claim Amount shall be zero.

Notwithstanding anything contained herein to the contrary, under no circumstances shall any holder of a General Unsecured Claim that was not timely filed or deemed timely filed have any Rights Participation Claim Amount, unless such General Unsecured Claim is otherwise an Allowed Claim pursuant to the terms of this Plan.

1.164“Scheduled” means, with respect to any Claim or Interest, the status, priority and amount, if any, of such Claim or Interest as set forth in the Schedules.

1.165“Schedules” means the schedules of assets and liabilities and the statements of financial affairs filed in the Chapter 11 Cases by the Reorganizing Debtors, as such schedules or statements have been or may be further modified, amended or supplemented from time to time in accordance with Bankruptcy Rule 1009 or orders of the Bankruptcy Court.

1.166“Secured Claim” means a Claim that is secured by a security interest in or a Lien on property in which a Reorganizing Debtor’s Estate has an interest or that is subject to setoff under section 553 of the Bankruptcy Code, to the extent of the value, as of the Effective Date or such other date as is established by the Bankruptcy Court, of such Claim holder’s interest in the applicable Estate’s interest in such property or to the extent of the amount subject to setoff, as applicable, as determined by a Final Order of the Bankruptcy Court pursuant to section 506(a) (and if applicable section 1129(b))of the Bankruptcy Code, or in the case of setoff, pursuant to section 553 of the Bankruptcy Code, or as otherwise agreed upon in writing by the Reorganizing Debtors and the holder of the Claim.

1.167“Securities Act” means the Securities Act of 1933, 15 U.S.C. §§ 77c-77aa, as now in effect or hereafter amended.

1.168“Security” shall have the meaning ascribed to it in section 101(49) of the Bankruptcy Code.

1.169“Servicer” has the meaning ascribed to it in Article 6.10 hereof.

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1.170“Solicitation Procedures Order” means the order of the Bankruptcy Court, approved on December 14, 2005 that sets forth the procedures for the solicitation of votes to accept or reject the Plan.

1.171“Southwest” means Southwest Airlines Co., a Texas corporation.

1.172“Southwest Bid” means the December 15, 2004 “Bid Proposal to Purchase Assets from, Provide a DIP Facility and Exit Facility to, and Codeshare with, ATA Holdings Corp.” agreed to and accepted by Holdings as of December 22, 2004 and approved by an order of the Bankruptcy Court dated December 22, 2004, as amended and modified from time to time.

1.173“Southwest Codeshare Agreement” means the Southwest ATA Codeshare Agreement made as of December 22, 2004 by and between Southwest and ATA as amended and restated by the Amended and Restated Southwest Codeshare Agreement dated as of December [6], 2005 or as thereafter amended or modified from time to time.

1.174“Southwest DIP Credit Agreement” means that certain Secured Debtor-in-Possession Credit and Security Agreement, as amended from time to time, entered into as of December 22, 2004 between Debtors and Southwest.

1.175“Southwest DIP Facility” means the debtor-in-possession secured financing facility provided to the Debtors by Southwest pursuant to the Southwest DIP Credit Agreement as authorized by the Bankruptcy Court pursuant to the Southwest DIP Facility Order.

1.176“Southwest DIP Facility Claim” means all Secured and Administrative Claims of Southwest arising under or pursuant to the Southwest DIP Facility including, without limitation, principal and interest on the Southwest DIP Facility, plus all fees and expenses (including professional fees and expenses) arising under the Southwest DIP Facility, as it may have been reduced or otherwise satisfied.

1.177“Southwest DIP Facility Order” means, collectively, the interim order that was approved by the Bankruptcy Court from the bench on December 21, 2004 and entered by the Bankruptcy Court on December 21, 2004, and the final order that was approved by the Bankruptcy Court from the bench on January 10, 2005 and entered by the Bankruptcy Court on January 10, 2005, authorizing and approving the Southwest DIP Facility and the agreements related thereto.

1.178“Subordinated Securities Claim” means a Claim subject to subordination under section 510(b) of the Bankruptcy Code, and any Claim for or that arises from the rescission of a purchase, sale, issuance or offer of a Security of Holdings, or for damages arising from the purchase or sale of such a Security, or for reimbursement, indemnification, or contribution allowed under section 502 of the Bankruptcy Code on account of such Claim.

1.179“Subscription Commencement Date” means December 21, 2005, subject to the Reorganizing Debtors’ right to delay the Subscription Commencement Date upon the consent of

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the Plan Proponents and the Creditors’ Committee, provided, however, that the Subscription Commencement Date shall be not less than twenty (20) days prior to the Subscription Expiration Date.

1.180“Subscription Documents” shall have the meaning ascribed to it in Article 7.4 hereof.

1.181“Subscription Expiration Date” means January 23, 2006, subject to the Reorganizing Debtors’ right to extend the Subscription Expiration Date upon the consent of the Plan Proponents and Creditors’ Committee, and which shall be the final date by which a Qualified Holder may elect to subscribe to Rights Offering New Shares in the Rights Offering.

1.182“Subscription Form” means the form to be used by a Qualified Holder of Subscription Rights to exercise such Subscription Rights, in substantially the form attached as Exhibit L.

1.183“Subscription Purchase Price” means, with respect to any Qualified Holder, the amount equal to the Per Share Value multiplied by the number of shares of Rights Offering New Shares for which such Qualified Holder subscribes pursuant to Article VII.

1.184“Subscription Rights” means the non-transferable, non-certificated rights, which include both the Basic Subscription Rights and the Supplemental Subscription Rights, offered to Qualified Holders to subscribe, for the Rights Offering New Shares pursuant to the Rights Offering at the Per Share Value.  Upon exercise and payment, a holder of each Subscription Right will receive the number of Rights Offering New Shares to which such holder is entitled under the Rights Offering.

1.185“Subsidiary Common Stock” means, with respect to each Subsidiary Debtor, shares of common stock of such Subsidiary Debtor that were authorized, issued and outstanding prior to the Effective Date.

1.186“Subsidiary Debtor(s)” means ATA, Leisure, Execujet, and Cargo.

1.187“Subsidiary Interests” means the Old Subsidiary Common Stock.

1.188“Supplemental Subscription Rights” has the meaning ascribed to it in Article 7.1 herein.

1.189“TWU” means the Transport Workers Union.

1.190“Unimpaired” refers to any Claim or Interest which is not Impaired.

1.191“Unsecured Convenience Class Claim” means (a) a General Unsecured Claim that is equal to or less than $1,000,000 (after application of the Claims Aggregation Rule), or (b) a General  Unsecured Claim (after application of the Claims Aggregation Rule) in an amount more

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than $1,000,000 but not more than $2,000,000 which the holder thereof, pursuant to such holder’s Ballot or such other election accepted by the Reorganizing Debtors, elects to reduce to the amount of $1,000,000 and to be treated as an Unsecured Convenience Class  Claim, provided, however, that an Unsecured Convenience Class Claim does not include the ALPA Claim, or the 1996-1997 EETC Aircraft Rejection Claim, or the Claims of holders under the 2000-1 EETC Aircraft Financing.

1.192“Unsecured Creditors New Shares” means the 752,688 New Shares to be issued to the holders of Allowed Class 6 Claims pursuant to this Plan without regard to the Rights Offering, the Original Warrants and the Additional Warrants.

1.193“Voting Deadline” means 4:00 p.m. on January 20, 2006 (Eastern Standard time).

1.194“Voting Record Date” means December 12, 2005 the record date for voting on the Plan as established by the Solicitation Procedures Order.

1.195“Warrant Agent” means the warrant agent set forth in the Warrant Agreement.

1.196“Warrant Agreement” means the Warrant Agreement which will be entered into between the Warrant Agent and New Holding Company substantially on the terms set forth in the Warrant Term Sheet.

1.197“Warrant Term Sheet” means the term sheet attached as Exhibit Q, pursuant to which the Original Warrants and the Additional Warrants are issuable.

1.198“Wilmington Release Carve Out” means (a) any Claim that the Reorganizing Debtors and/or Reorganized Companies may have or might assert as a set off or recoupment against the 2000-1 EETC Aircraft Rejection Claim or 1996-1997 EETC Aircraft Rejection Claim or (b) any obligation of the 1996-1997 EETC Aircraft Creditors under the Restructuring Term Sheet (or any lease or document executed pursuant thereto) or related documents.

1.199“503 Deadline” shall have the meaning ascribed to it in Article 10.3 hereof.

1.200“1113 Compromise” means the compromise between ATA and ALPA regarding the Motion To Reject Collective Bargaining Agreement Pursuant To 11 U.S.C. § 1113 approved by the order of the Bankruptcy Court dated October 12, 2005.

1.201“1996-1997 EETC Aircraft” means the five Boeing 757-200ER aircraft described in Exhibit 1 to the 1996-1997 EETC Approval Order.

1.202“1996-1997 EETC Aircraft Creditors” means the Aircraft Creditors as defined in the 1996-1997 EETC Approval Order.

1.203“1996-1997 EETC Aircraft Rejection Claim” means the claim of the 1996-1997 EETC Aircraft Creditors on account of the rejection of the leases for the 1996-1997 EETC

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Aircraft.  Participation in the Rights Offering will be permitted with respect to the 1996-1997 EETC Aircraft Rejection Claim in the amounts set forth on Exhibit M.

1.204“1996-1997 EETC Approval Order” means the Order Authorizing and Approving Entry into a Restructuring Term Sheet, Amendment to Adequate Protection Stipulation (1996 and 1997 (EETCS), and Related Relief entered on March 21, 2005, and any subsequent orders approving any amendments or supplements to the relief granted, the underlying Restructuring Term Sheet and/or the Adequate Protection Stipulation.

1.205“2000-1 EETC Aircraft” means the seven Boeing 757-200ER aircraft (including engines) described with the following aircraft registration nos.: N515AT, N523AT, N524AT, N525AT, N526AT, N527AT, and N528AT.

1.206“2000-1 EETC Aircraft Creditors” means Wilmington Trust Company, not in its individual capacity except as expressly provided in the documents relating to the aircraft financing arrangements, but solely as Loan Trustee under each Trust Indenture and Mortgage included in the 2000-1 EETC Documents, Subordination Agent under each of the Intercreditor Agreements included in the 2000-1 EETC Documents, and Trustee under each of the Pass Through Trust Agreements included in the 2000-1 EETC Documents.

1.207“2000-1 EETC Aircraft Rejection Claim” means the claim of the 2000-1 EETC Aircraft Creditors on account of the rejection of the leases for the 2000-1 EETC Aircraft. Participation in the Rights Offering will be permitted with respect to the 2000-1 EETC Aircraft Rejection Claim in the amounts set forth on Exhibit M.

“2005 Senior Unsecured Notes” means the 9 5/8% Senior Notes of Holdings due in December 2005 issued and outstanding under the Indenture, dated as of December 11, 1998, by and among Amtran, Inc. (n/k/a ATA Holdings Corp.), as issuer, American Trans Air, Inc. (n/k/a ATA Airlines, Inc.), Ambassadair Travel Club, Inc., ATA Vacations, Inc. (n/k/a ATA Leisure Corp.), Amber Travel, Inc., American Trans Air Training Corporation, American Trans Air Execujet, Inc. and Amber Air Freight Corporation (n/k/a ATA Cargo, Inc.), as guarantors, and First Security Bank, N.A., as trustee, as supplemented.

1.208“2009 Senior Unsecured Notes” means those certain Senior Notes of Holdings due 2009 issued and outstanding under the Indenture, dated as of January 30, 2004, among ATA Holdings Corp. (f/k/a Amtran, Inc.), as issuer, ATA Airlines, Inc. (f/k/a American Trans Air, Inc.), Ambassadair Travel Club, Inc., ATA Leisure Corp. (f/k/a ATA Vacations, Inc.), Amber Travel, Inc., American Trans Air Training Corporation, American Trans Air Execujet, Inc., ATA Cargo, Inc. (f/k/a Amber Air Freight Corporation), and Chicago Express Airlines, Inc., as guarantors and Wells Fargo Bank Northwest, National Association, as trustee.

1.209“2010 Senior Unsecured Notes” means those certain Senior Notes of Holdings due 2010 issued and outstanding under the Indenture, dated as of January 30, 2004, among ATA Holdings Corp. (f/k/a Amtran, Inc.), as issuer, ATA Airlines, Inc. (f/k/a American Trans Air,

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Inc.), Ambassadair Travel Club, Inc., ATA Leisure Corp. (f/k/a ATA Vacations, Inc.), Amber Travel, Inc., American Trans Air Training Corporation, American Trans Air Execujet, Inc., ATA Cargo, Inc. (f/k/a Amber Air Freight Corporation), and Chicago Express Airlines, Inc., as guarantors, and Wells Fargo Bank Northwest, National Association, as trustee.

C.Rules of Interpretation

For purposes of this Plan, unless otherwise provided herein:  (a) whenever from the context it is appropriate, each term, whether stated in the singular or the plural, will include both the singular and the plural; (b) each pronoun stated in the masculine, feminine or neuter includes the masculine, feminine and neuter; (c) unless otherwise provided in this Plan, any reference in this Plan to a contract, instrument, release or other agreement or document being in a particular form or on particular terms and conditions means that such document will be substantially in such form or substantially on such terms and conditions; (d) any reference in this Plan to an existing document or schedule filed or to be filed means such document or schedule, as it may have been or may be amended, modified or supplemented pursuant to this Plan; (e) any reference to a Person as a holder of a Claim or Interest includes that Person’s successors and assigns; (f) all references in this Plan to Articles and Exhibits are references to Articles and Exhibits of or to this Plan; (g) the words “herein,” “hereof,” “hereunder” and “hereto” unless limited by further reference refer to this Plan in its entirety rather than to a particular portion of this Plan; (h) captions and headings to Articles are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of this Plan; (i) subject to the provisions of any contract, articles of incorporation, by-laws, instrument, release or other agreement or document entered into in connection with this Plan, the rights and obligations arising under this Plan shall be governed by, and construed and enforced in accordance with, federal law, including the Bankruptcy Code and Bankruptcy Rules; and (j) the rules of construction set forth in section 102 of the Bankruptcy Code will apply.

This Plan is the product of extensive discussions and negotiations between and among, inter alia, the Plan Proponents, the Creditors’ Committee, Southwest, the New DIP Lender, ATSB Lenders, the New Investor and certain other creditors and constituencies.  Each of the foregoing was represented by counsel who either (a) participated in the formulation and documentation of, or (b) was afforded the opportunity to review and provide comments on, the Plan, and the documents ancillary thereto.  Accordingly, the general rule of contract construction known as “contra preferentem” shall not apply to the construction or interpretation of any provision of this Plan, the Disclosure Statement, or any contract, instrument, release, indenture, exhibit, or other agreement or document generated in connection herewith.

D.Computation of Time

In computing any period of time prescribed or allowed by the Plan, unless otherwise expressly provided, the provisions of Bankruptcy Rule 9006(a) shall apply.  A period described as a number of “days” (as opposed to “Business Days”) means calendar days.

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E.References to Monetary Figures

All references in the Plan to monetary figures shall refer to United States of America currency, unless otherwise expressly provided.

F.Exhibits

All Exhibits are incorporated into and are a part of the Plan as if set forth in full herein and, to the extent not annexed hereto, such Exhibits shall be filed with the Bankruptcy Court on or before the Exhibit Filing Date.  After the Exhibit Filing Date, copies of Exhibits can be obtained upon written request to The BMC Group, Inc. (“BMC”), claims and voting agent to the Reorganizing Debtors or by downloading such exhibits from BMC’s website (www.bmccorp.net/ata) or the Court’s website (www.insb.uscourts.gov).  To the extent any Exhibit is inconsistent with the terms of the Plan, unless otherwise ordered by the Bankruptcy Court, the non-Exhibit portion of the Plan shall control.

ARTICLE II

UNCLASSIFIED CLAIMS

2.1Administrative Claims.  Except as expressly provided in Articles 2.2 through 2.3 below, Administrative Claims shall be paid in full in Cash as soon as practicable after the Effective Date of the Plan.  Subject to the provisions of Article X of this Plan, on the first Periodic Distribution Date occurring after the later of (a) the date an Administrative Claim becomes an Allowed Administrative Claim or (b) the date an Administrative Claim becomes payable pursuant to any agreement between the Reorganizing Debtors or the Reorganized Companies and the holder of such Administrative Claim, each holder of an Allowed Administrative Claim in the Chapter 11 Cases shall receive, in full satisfaction, settlement, release, and discharge of and in exchange for such Administrative Claim, (i) Cash equal to the unpaid portion of such Allowed Administrative Claim or (ii) such other treatment as to which one or more of the Plan Proponents and the holder of such Claim shall have agreed upon in writing; provided, however, that Allowed Administrative Claims with respect to liabilities incurred by the Reorganizing Debtors in the ordinary course of business during the Chapter 11 Cases shall be paid in the ordinary course of business by the Reorganizing Debtors or the Reorganized Companies in accordance with the terms and conditions of any agreements relating thereto.

2.2Southwest DIP Facility Claim.  On the Effective Date, Southwest, as the holder of the Southwest DIP Facility Claim shall receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Southwest DIP Facility Claim Cash equal to the unpaid balance of such Allowed Southwest DIP Facility Claim.

2.3New DIP Facility Claims.  As of the Effective Date, the remaining obligations of the Debtors under the New DIP Facility shall be satisfied in full by issuance of the DIP New

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Shares pursuant to Article 6.1 b.vi.  Upon compliance with the foregoing, all liens and security interests granted to secure the New DIP Facility Claim shall be satisfied, cancelled and shall be of no further force or effect.

2.4Priority Tax Claims.  At the sole option of the Plan Proponents, each holder of an Allowed Priority Tax Claim shall be entitled to receive on account of such Priority Tax Claim, in full satisfaction, settlement, release, and discharge of and in exchange for such Priority Tax Claim, (a) equal Cash payments made on the last Business Day of every three-month period following the Effective Date, over a period not exceeding six years after the assessment of the tax on which such Claim is based, totaling the principal amount of such Claim plus simple interest on any outstanding balance from the Effective Date calculated at the interest rate available on ninety (90) day United States Treasuries on the Effective Date, (b) such other treatment agreed to by the holder of an Allowed Priority Tax Claim and the Plan Proponents, provided such treatment is on more favorable terms to the Plan Proponents than the treatment set forth in clause (a) hereof, or (c) payment in full in Cash.

ARTICLE III

CLASSIFICATION OF CLAIMS AND INTERESTS

3.1Introduction.

a.Pursuant to section 1122 of the Bankruptcy Code, set forth below is a designation of classes of Claims against and Interests in the Reorganizing Debtors.  A Claim or Interest is placed in a particular Class for purposes of voting on the Plan and of receiving distributions pursuant to the Plan only to the extent that such Claim or Interest is an Allowed Claim or an Allowed Interest in that Class and such Claim or Interest has not been paid, released or otherwise satisfied prior to the Effective Date.  In accordance with section 1123(a)(1) of the Bankruptcy Code, Claims of the kinds specified in sections 507(a)(1) and 507(a)(8) of the Bankruptcy Code have not been classified, and their treatment is set forth in Article II above.

b.The classification of Claims and Interests for purposes of the distributions to be made under the Plan shall be governed solely by the terms of the Plan.  The classifications set forth on the Ballots tendered to or returned by holders of Claims and Interests in connection with voting on the Plan: (a) are set forth on the Ballots solely for purposes of voting to accept or reject the Plan; (b) do not necessarily represent, and in no event shall be deemed to modify or otherwise affect, the actual classification of such Claims under the Plan for distribution purposes; (c) may not be relied upon by any holder of a Claim or Interest as representing the actual classification of such Claims or Interests under the Plan for distribution purposes; and (d) shall not be binding on the Reorganizing Debtors or the Reorganized Companies.

3.2Classification of Claims Against and Interests in the Reorganizing Debtors.

a.Class 1:  ATSB Secured and ATSB Super-Priority Claim

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Class 1 consists of the ATSB Secured Claim and ATSB Super-Priority Claim.

b.Class 2:  Fleet Secured Claim A

Class 2 consists of the Fleet Secured Claim A.

c.Class 3: Fleet Secured Claim B

Class 3 consists of the Fleet Secured Claim B.

d.Class 4:  Other Secured Claims

Class 4 consists of subclasses, if any, for each of the Other Secured Claims against any of the Reorganizing Debtors, if any.  Each subclass is deemed to be a separate Class for all purposes under the Bankruptcy Code.

e.Class 5: Other Priority Claims

Class 5 consists of all Other Priority Claims, if any, against any, some or all of the Reorganizing Debtors.

f.Class 6:  General Unsecured Claims

Class 6 consists of all General Unsecured Claims.

g.Class 7:  Unsecured Convenience Class Claims

Class 7 consists of all Unsecured Convenience Class Claims.

h.Class 8:  Old Holdings Preferred Stock Interests

Class 8 consists of all Old Holdings Preferred Stock Interests.

i.Class 9:  Old Holdings Common Stock Interests

Class 9 consists of all Old Holdings Common Stock Interests.

ARTICLE IV

TREATMENT OF CLAIMS AND INTERESTS

4.1Class 1 - - ATSB Secured Claim and ATSB Super-Priority Claim.  ATA shall (i) on or before the earlier of (a) December 31, 2005 and (b) the Effective Date pay in Cash, in full, to the ATSB Agent for the benefit of the ATSB Lenders the Section 9(m) Payment (as defined in the ATSB Lenders Settlement Agreement) in the amount of $4,500,000 and (ii) on the Effective

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Date pay in Cash, in full, to the ATSB Agent any outstanding unpaid Quarterly Payments (as defined in the ATSB Lenders Settlement Agreement), or the pro rata portion thereof, and together with the other Reorganized Companies execute and deliver to the ATSB Agent for the benefit of the ATSB Lenders the Amended and Restated ATSB Loan Documents in full satisfaction, settlement, release and discharge of and in exchange for the ATSB Secured Claim and ATSB Super-Priority Claim.  The Amended and Restated ATSB Loan Documents shall govern the terms and conditions of the New ATSB Loan Obligations, and shall contain such terms and conditions as are mutually agreeable to the ATSB Lenders and Reorganized ATA.  In addition, this Plan expressly incorporates the terms and conditions of the ATSB Lenders Settlement Agreement, and no provision of this Plan is intended to be, or shall be deemed to be, inconsistent with the ATSB Lenders Settlement Agreement.  On the Effective Date, the ATSB Secured Claim will be satisfied by the execution and delivery of the Amended and Restated ATSB Loan Documents.  The New ATSB Loan Obligations will include interest payable at a non-default rate of three month LIBOR plus (a) 8% per annum with a 1% prepayment penalty or (b) 9% per annum but without prepayment penalty for prepayment during the six months from and after the Effective Date.  The Amended and Restated ATSB Loan Agreement will provide for amortization of the principal obligations and will include other terms as provided under the ATSB Secured Claim Term Sheet which is attached as Exhibit 5 to this Disclosure Statement.

4.2Class 2 - - Fleet Secured Claim A.  As soon as practicable after the Effective Date, at the election of the Plan Proponents, in full satisfaction, settlement, release and discharge of and in exchange for such Fleet Secured Claim A, holders of the Allowed Fleet Secured Claim A shall receive or retain the New Fleet Note A secured by the security interest provided for under the Fleet Stipulation.

4.3Class 3 - - Fleet Secured Claim B.  As soon as practicable after the Effective Date, at the election of the Plan Proponents, in full satisfaction, settlement, release and discharge of and in exchange for such Fleet Secured Claim B, holders of the Allowed Fleet Secured Claim B shall receive or retain the New Fleet Note B secured by the security interest provided for under the Fleet Stipulation.

4.4Class 4 - - Other Secured Claims.  As soon as practicable after the Effective Date, at the election of the Reorganizing Debtors, either (a) the Allowed Other Secured Claim shall be Reinstated or (b) the holder of an Allowed Other Secured Claim shall receive, in full satisfaction, settlement, release and discharge of and in exchange for such Other Secured Claim, either (1) the property of the Estates that constitutes collateral for such Allowed Other Secured Claim; or (2) such other treatment as to which the Reorganizing Debtors or the Reorganized Companies and the holder of such Allowed Other Secured Claim have agreed upon in writing.  The Reorganizing Debtors’ or the Reorganized Companies’ failure to object to such Other Secured Claims in their Chapter 11 Cases shall be without prejudice to the Reorganized Companies’ right to contest or otherwise defend against such Claims in the Bankruptcy Court or other appropriate non-bankruptcy forum (at the option of the Reorganized Companies) when and if such Claims are sought to be enforced by the holder of an Other Secured Claim.  However, Other Secured Claims timely filed by the United States shall be deemed allowed unless the Reorganizing Debtors or

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Reorganized Companies object thereto.  If no objections are filed to such an Other Secured Claim filed by the United States by the Claims Objection Deadline, any such Other Secured Claim is allowed and no final order allowing such Claim is needed.

4.5Class 5 - - Other Priority Claims.  Other Priority Claims against the Reorganizing Debtors shall be Unimpaired under the Plan.  Except as otherwise provided in and subject to Article 9.8 below, on the first Periodic Distribution Date occurring after the later of (i) the date an Other Priority Claim becomes an Allowed Other Priority Claim or (ii) the date an Other Priority Claim becomes payable pursuant to any agreement between the Reorganizing Debtors or Reorganized Companies and the holder of such other Priority Claim, the Disbursing Agent shall deliver to the holder of an Allowed Other Priority Claim, in full satisfaction, settlement, release, and discharge of and in exchange for such Other Priority Claim, (a) Cash equal to the amount of such Allowed Other Priority Claim or (b) such other treatment as to which the Reorganizing Debtors or Reorganized Companies and the holder of such Claim shall have agreed in writing.

4.6Class 6 - - General Unsecured Claims.  Except as otherwise provided in the Plan and subject to Articles 6.10 and 9.3 below, on the first Periodic Distribution Date occurring after the date a General Unsecured Claim becomes an Allowed Class 6 Claim, the Disbursing Agent shall distribute to the holder of such Allowed Class 6 Claim, in full satisfaction, settlement, release, and discharge of and in exchange for such General Unsecured Claim, a Pro Rata share of (i) the Unsecured Creditors New Shares, (ii) the Original Warrants and, (iii) if issuable, the Additional Warrants to be issued pursuant to this Plan.

4.7Class 7 - - General Unsecured Claims-Convenience Class.  Except as otherwise provided in Article 9.8 below, on the first Periodic Distribution Date occurring after the date an Unsecured Convenience Class Claim becomes an Allowed Unsecured  Convenience Class Claim, the Disbursing Agent shall deliver to the holder of such Allowed Unsecured Convenience Class Claim, in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Unsecured Convenience Class Claim, a Convenience Distribution.

4.8Class 8 - - Old Holdings Preferred Stock Interests.  Holders of Old Holdings Preferred Stock Interests shall not receive or retain any property under the Plan on account of such Interests.  On the Effective Date, all of the Old Holdings Preferred Stock Interests shall be deemed cancelled and extinguished.

4.9Class 9 - - Old Holdings Common Stock Interests.  Holders of Old Holdings Common Stock Interests shall not receive or retain any property under the Plan on account of such Interests.  On the Effective Date, all of the Old Holdings Common Stock Interests shall be deemed cancelled and extinguished.

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ARTICLE V

ACCEPTANCE OR REJECTION OF THE PLAN;
EFFECT OF REJECTION BY ONE OR MORE
IMPAIRED CLASSES OF CLAIMS OR INTERESTS

5.1Impaired Classes of Claims and Interests Entitled to Vote.  Except as otherwise provided in Articles 5.3 and 5.4 of the Plan, holders of Allowed Claims or Interests in each Impaired Class of Claims or Interests are entitled to vote as a class to accept or reject the Plan.

5.2Acceptance by an Impaired Class.  Pursuant to section 1126(c) of the Bankruptcy Code and except as provided in section 1126(e) of the Bankruptcy Code, an Impaired Class of Claims has accepted the Plan if the holders of at least two-thirds (2/3) in dollar amount and more than one-half (1/2) in number of the Allowed Claims of such Class actually voting on the Plan have voted to accept the Plan.

5.3Presumed Acceptances by Unimpaired Classes.  Claims in Class 5 and Reinstated Claims, if any, in any Class 4 subclass are Unimpaired by the Plan.  Pursuant to section 1126(f) of the Bankruptcy Code and/or the Solicitation Procedures Order, holders of Claims in Class 5 and holders of Claims in Class 4 that are Reinstated are conclusively presumed to have accepted the Plan, and the votes of such holders of such Other Secured Claims will not be solicited.

5.4Classes Deemed to Reject Plan.  Holders of Interests in Classes 8 and 9 are not entitled to receive or retain any property under the Plan. Pursuant to section 1126(g) of the Bankruptcy Code, holders of Class 8 and Class 9 Interests are deemed to reject the Plan and the votes of holders of such Interests will not be solicited.

5.5Election to Class 7 Unsecured Convenience Class Claims.  Election by the holder of a General Unsecured Claim held in an amount more than $1,000,000 but not more than $2,000,000 (after applying the Claims Aggregation Rule, see Article 1.53) to be treated under the Plan as Class 7 Unsecured Convenience Class Claim is deemed an acceptance of the Plan.

5.6Summary of Classes Voting on the Plan.  As a result of the provisions of Articles 5.3 and 5.4 of this Plan, and except as provided in Article 5.5 and the first sentence of Article 5.3, the votes of holders of Claims in Classes 1, 2, 3, 4, 6, and 7 will be solicited with respect to this Plan.

5.7Presumed Acceptances by Classes Entitled to Vote with No Voting Holders. Should no Holder of an Allowed Claim, from a Class of Claims entitled to vote, vote to accept or reject the Plan, such Class will be deemed to accept the Plan.

5.8Confirmation Pursuant to Section 1129(b) of the Bankruptcy Code.  To the extent that any Impaired Class entitled to vote rejects the Plan or is deemed to have rejected the Plan, the Plan Proponents will request confirmation of the Plan, as it may be modified from time to time, under section 1129(b) of the Bankruptcy Code.

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ARTICLE VI

MEANS FOR IMPLEMENTATION OF THE PLAN

6.1New Holding Company Formation and Exchange.

a.On or prior to the Effective Date, the Plan Proponents shall cause the following transactions to occur in the following order:

New Holding Company will be incorporated.

New Holding Company will cause New Parent Company to be incorporated as a wholly owned subsidiary of New Holding Company.

New Parent Company will cause New ATA Holdings to be incorporated as a wholly owned subsidiary of New Parent Company.

b.On the Effective Date and immediately following the satisfaction, discharge and release of Claims as provided in Section 11.2 the following transactions will occur in the following order:

(i)New Holding Company will issue the New Investor New Shares to the New Investor in exchange for the New Investor Equity.

(ii)New Holding Company will contribute the Rights Offering New Shares subscribed to by Qualified Holders, the Unsecured Creditors New Shares, the Original Warrants, the Additional Warrants (if issuable), the DIP New Shares and the New Investor Equity to the New Parent Company.

(iii)          New Parent Company will contribute the Rights Offering New Shares subscribed to by Qualified Holders, the Unsecured Creditors New Shares, the Original Warrants, the Additional Warrants (if issuable), the DIP New Shares and the New Investor Equity to New ATA Holdings.

(iv)New ATA Holdings will transfer the Unsecured Creditors New Shares, the Original Warrants, Additional Warrants (if issuable) and Cash in an amount sufficient to satisfy the Convenience Distribution, to Holdings in exchange for 100% of the outstanding shares of common stock of ATA and Execujet held by Holdings (the “Exchange”). Without further action by Holdings, (A) the Unsecured Creditors New Shares, the Original Warrants, and the Additional Warrants (if issuable) shall be distributed to the holders of Allowed Class 6 Claims and (B) the Convenience Distribution shall be made to the holders of Allowed Class 7 Claims, in each case in accordance with this Plan.

(v)New ATA Holdings will contribute to ATA (A) the DIP New Shares, and (B) the New Investor Equity less the Convenience Distribution.

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(vi)ATA will deliver the DIP New Shares to the New DIP Lender in discharge of the New DIP Facility Claim.

(vii)New ATA Holdings will transfer Rights Offering New Shares to Qualified Holders exercising their Subscription Rights in exchange for the Subscription Purchase Price in accordance with the Rights Offering described in Article VII of this Plan.

c.On or before the Distribution Date, New Holding Company will issue certificates for, or make appropriate book entries in its stock transfer records to evidence ownership of, the Unsecured Creditors New Shares as instructed by Holdings.

d.After the Effective Date, Holdings and New ATA Holdings shall make an election pursuant to section 338(h)(10) of the Internal Revenue Code of 1986 and under any applicable similar provisions of state or local law with respect to the Exchange, to treat the Exchange as a sale of ATA’s and Execujet’s assets.

e.Thereafter, (i) Reorganized Holdings shall file a Form 15 with the Securities and Exchange Commission to deregister its equity securities under the Exchange Act, and (ii) Reorganized Holdings shall be dissolved pursuant to the Indiana Business Corporation Law, and any assets of Holdings available for distribution after the payment of all then existing creditors, other than those assets which the New Investor determines to reject, shall be transferred to New ATA Holdings.  New Holding Company will not be a successor to Reorganized Holdings (including without limitation a successor registrant under the Exchange Act) and accordingly will not have any successor liability with respect to Reorganized Holdings’ acts or omissions (including without limitation any filings made or required to be made by it under the Exchange Act).

6.2Continued Corporate Existence.  Each of Reorganized Holdings (until its dissolution pursuant to Section 6.1(e) above) and the Reorganized Companies will continue to exist after the Effective Date each as a separate corporate entity, with all the powers of a corporation under the applicable laws of Indiana or Delaware and pursuant to their respective articles of incorporation and bylaws in effect prior to the Effective Date, except to the extent such articles of incorporation and bylaws are amended pursuant to the terms of such documents.

6.3Directors and Officers of the Reorganized Companies and Holdings.

a.Except as otherwise provided by written notice filed by the Plan Proponents with the Bankruptcy Court on a date that is not less than seven (7) Business Days prior to the Voting Deadline, the senior officers of New Holding Company and ATA as of the Effective Date will be those Persons currently serving as the senior officers of Holdings and ATA respectively.

b.On the Effective Date, the term of the current members of the board of directors of each of the Reorganizing Debtors will expire. The initial board of directors of the New Holding Company shall consist of seven (7) members.  The New Investor will have the

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right to appoint five (5) of such members, the Creditors’ Committee may appoint one (1) member, who must be acceptable to the New Investor and after consultation with those Qualified Holders who have subscribed for a majority of the Rights Offering New Shares, and the seventh member shall be the Chief Executive Officer of ATA.  Subsequent boards of directors of New Holding Company will consist of the Chief Executive Officer of ATA and six (6) members appointed by the New Investor, subject to the terms of the Minority Shareholder Protection Term Sheet.  The initial board of directors of each of the other Reorganized Companies will consist of such directors selected as provided in the Investment Agreement.  The Plan Proponents will file with the Bankruptcy Court written notice of the identities of the proposed directors for the Reorganized Companies not less than one (1) Business Day prior to the Confirmation Hearing.

c.On the Effective Date, the articles of incorporation of Holdings shall be amended to reduce the size of its board of directors to one director and Brian Hunt, Holdings’ Vice President, General Counsel and Secretary, is hereby designated as the sole director of Holdings from and after the Effective Date.

6.4Employment, Retirement, Indemnification and Other Agreements and Incentive Compensation Programs.  Subject to (i) Article 8.4, 8.7, and 8.8 hereof and (ii) where applicable, approval before the Effective Date by ALPA, AFA, TWU and IAMAW, each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) and other benefit arrangements not subject to ERISA (together, “Benefit Plans”) sponsored by the Reorganizing Debtors shall remain in place, terminate as of the Effective Date, or terminate as of such date not later than 180 days after the Effective Date, as determined by ATA with respect to each such Benefit Plan.  Thereafter, each director, officer and employee then employed by the Reorganized Companies shall participate in those Benefit Plans sponsored by the Reorganized Companies and available to directors, officers and employees of ATA and Holdings.

6.5Articles of Incorporation.  The articles of incorporation of the Reorganized Companies (other than New Holding Company) will be amended as may be required in order that they are consistent with the provisions of the Investment Agreement, the Plan and the Bankruptcy Code and will be reasonably satisfactory to the New Investor, the ATSB Lender Parties and the Creditors’ Committee.

6.6Corporate Action.  Each of the matters provided for under the Plan involving the corporate structure of the Reorganized Debtors or corporate action to be taken by or required of the Reorganizing Debtors will, as of the Effective Date, be deemed to have occurred and be effective as provided herein, and will be authorized, approved and, to the extent taken prior to the Effective Date, ratified in all respects without any requirement of further action by stockholders, creditors, or directors of the Reorganizing Debtors.

6.7Management Stock Option Plan and ALPA Stock Option Plan.  On the Effective Date, the Management Stock Option Plan and ALPA Stock Option Plan shall become effective.  The Management Incentive Shares and ALPA Option Shares shall be reserved for issuance under the Management Stock Option Plan and ALPA Stock Option Plan.  The solicitation of votes on

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the Plan shall be deemed to be a solicitation for approval of the Management Stock Option Plan and ALPA Stock Option Plan by Persons who will be entitled to receive and hold New Shares as of the Effective Date.

6.8Preservation of Causes of Action.  In accordance with section 1123(b)(3) of the Bankruptcy Code and except as otherwise provided in this Plan, the Reorganized Debtors will retain and may (but are not required to) enforce all Retained Actions and all other similar claims arising under applicable state laws, including, without limitation, fraudulent transfer claims, if any, and all other Causes of Action of a trustee and debtor-in-possession under the Bankruptcy Code.  The Reorganizing Debtors or the Reorganized Companies will determine whether to bring, settle, release, compromise, or enforce such rights (or decline to do any of the foregoing), and will not be required to seek further approval of the Bankruptcy Court for such action.  The Reorganized Companies or any successors may pursue such litigation claims in accordance with the best interests of the Reorganized Companies or any successors holding such rights of action. A nonexclusive list of the Retained Actions will be filed as Exhibit I hereto on or before the Exhibit Filing Date.

6.9Other Assumed Obligations.  Except as otherwise limited or proscribed in this Plan, all obligations imposed on the Reorganizing Debtors by an order of the Bankruptcy Court approving any agreements or stipulations entered into during the Chapter 11 Cases that are not fully performed by the Effective Date or have not been rejected or terminated or have not expired by their own terms and are not subject to an unperformed condition precedent that can only occur within the Chapter 11 cases will be assumed obligations of the applicable Reorganized Company to the extent such obligations have not been performed, rejected, or terminated by the Reorganizing Debtors.  Without limiting the foregoing, Reorganized ATA agrees that it will be obligated with respect to the Restructuring Term Sheet, the 1996-1997 EETC Approval Order and to fully pay the City Loans in accordance with their original contractual terms as provided in the Amended Midway Term Sheet.  Notwithstanding the preceding sentence or anything in this Plan to the contrary, that certain Severance Agreement dated August 31, 2005 and that certain Non-competition and Confidentiality Agreement dated August 31, 2005, both of which were executed by and among J. George Mikelsons, the Reorganizing Debtors, Ambassadair Travel Club, Inc., Amber Travel Inc., American Trans Air Execujet, Inc. and C8 Airlines, Inc. as authorized by the Bankruptcy Court in the Chapter 11 Cases, are hereby incorporated by reference into this Plan and will be assumed obligations of the Reorganized Companies as of the Effective Date.

6.10Cancellation of Existing Equity Securities and Agreements.  On the Effective Date, except as otherwise specifically provided for in the Plan or the Confirmation Order (a) the Old Holdings Common Stock, Old Holdings Preferred Stock, the Old Holdings Unsecured Notes and any other note, bond, indenture, pass through trust agreement, pass through trust certificate, equipment trust certificate guarantee, or other instrument or document directly or indirectly evidencing or creating any indebtedness or obligation of or ownership interest in the Reorganizing Debtors, except such notes, other instruments or documents evidencing indebtedness or obligations of the Reorganizing Debtors that are Reinstated under the Plan, will

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be cancelled solely as to the Reorganizing Debtors, and the Reorganizing Debtors shall not have any continuing obligations thereunder, and (b) the obligations of, Claims against, and/or Interests in the Reorganizing Debtors under, relating, or pertaining to any agreements, indentures, certificates of designation, bylaws, or certificate or articles of incorporation or similar documents governing the Old Holdings Common Stock, Old Holdings Preferred Stock, the Old Holdings Unsecured Notes and any other note, bond, indenture, or other instrument or document evidencing or creating any indebtedness or obligation of the Reorganizing Debtors, except such agreements or notes or other instruments evidencing indebtedness or obligations of the Reorganizing Debtors that are Reinstated under the Plan, as the case may be, will be released and discharged; provided, that any such agreement that governs the rights of the holder of a Claim will continue in effect solely for purposes of (i) allowing an indenture trustee, an agent or a servicer (each hereinafter referred to as a “Servicer”) to make the distributions to be made on account of such Claims under the Plan as provided in Article IX of the Plan, (ii) permitting such Servicer to maintain any rights or liens it may have against property other than the Reorganized Companies’ property for fees, costs, and expenses under such Indenture or other agreement, and (iii) governing the rights and obligations of non-Reorganizing Debtor parties to such agreements, vis-à-vis each other and (iv) preserving any claims by or on behalf of bondholders, indenture trustee, loan trustee, subordination agents, pass through trustees or similarly situated parties against any Person (other than the Reorganizing Debtors or Reorganized Companies) that arise under or are related to such agreements; provided, further, that the preceding proviso will not affect the discharge of Claims against or Interests in the Reorganizing Debtors under the Bankruptcy Code, the Confirmation Order, or this Plan, or result in any expense or liability to the Reorganized Companies.  The Reorganized Companies will not have any obligations to any Servicer (or to any Disbursing Agent replacing such Servicer) for any fees, costs, or expenses except as expressly provided in Article 9.5 hereof.

6.11Exclusivity Period.  The Plan Proponents will retain the exclusive right to amend or modify the Plan, subject to the prior written approval of Southwest, the ATSB Lender Parties and the Creditors’ Committee (not to be unreasonably denied), in accordance with the terms hereof, and to solicit acceptances of any amendments to or modifications of the Plan, through and until the Effective Date.

6.12Substantive Consolidation.  The Plan is premised upon the substantive consolidation of the Estates of Holdings, Leisure, Cargo, and Execujet into the Estate of ATA for purposes only of voting, confirmation and distribution.  The Plan does not provide for the substantive consolidation of the Estates for any other purpose, nor (as of the Effective Date) does the Plan provide for the merger of any Reorganizing Debtor entity into another or the transfer or commingling of any asset of any Reorganizing Debtor.  Substantive consolidation of the other Estates into the ATA Estate shall not (other than for the purposes set forth in the first sentence of this Article 6.12) (a) affect the legal and corporate structures of the Reorganized Debtors or affect or modify in any way the ownership of any asset of any particular Reorganizing Debtor, (b) cause any Reorganizing Debtor to be liable for any Claim or Unimpaired Claim under the Plan for which it otherwise is not liable and the liability of any Reorganizing Debtor for such Claim shall not be affected by such substantive consolidation, (c) affect Intercompany Claims, or

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(d) affect Subsidiary Interests.  On the Effective Date, (x) the Intercompany Claims shall be Reinstated or discharged, at the option of the Reorganized Companies, (y) except as otherwise expressly provided for in this Plan, the Interests in the Subsidiary Debtors shall remain outstanding and (z) no distributions shall be made on account of Intercompany Claims or Interests.

6.13Effectuating Documents; Further Transactions.  Each of (a) the Chairman and Chief Executive Officer, (b) the Chief Financial Officer, (c) the Chief Restructuring Officer, and (d) the Senior Vice President, General Counsel and Corporate Secretary of each of the Reorganizing Debtors, or their respective designees, will be authorized to execute, deliver, file, or record such contracts, instruments, releases, indentures, and other agreements or documents, and take such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan.  The secretary or assistant secretary of each of the Reorganizing Debtors will be authorized to certify or attest to any of the foregoing actions.

6.14Exemption From Certain Transfer Taxes and Recording Fees.  Pursuant to section 1146(c) of the Bankruptcy Code, any transfers from a Reorganizing Debtor to a Reorganized Debtor or to any other Person or entity pursuant to the Plan or pursuant to any agreement regarding the transfer of title to or ownership of any of the Reorganizing Debtors’ aircraft, in the United States will not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, Federal Aviation Administration filing or recording fee or other similar tax or governmental assessment, and the Confirmation Order will direct the appropriate state or local governmental officials or agents to forego the collection of any such tax or governmental assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment.

6.15Section 1145 Exemption.  Pursuant to section 1145 of the Bankruptcy Code and applicable non-bankruptcy laws, the New Shares issued pursuant to the Plan, the Subscription Rights, the Original Warrants, the Original Warrants Shares, the Additional Warrants (if issuable), the Additional Warrants Shares (if issuable), the options granted under the ALPA Stock Option Plan, the ALPA Option Shares, the options granted under the Management Stock Option Plan, the Management Incentive Shares issued pursuant to this Plan, to the extent applicable, the New Leases, the Pass Through Certificates, the Restructuring Participation Agreements (each as defined in the Restructuring Term Sheet), and all other documents, instruments and agreements entered into in connection with the transactions contemplated by the Restructuring Term Sheet are exempt from, among other things, registration under the Securities Act and any offering, issuance and distribution of any securities contemplated under or by the Plan and any state or local law requiring registration prior to the offering, distribution or sale of securities.

6.16Management and Key Employee Contracts.  The Reorganized Companies will enter into employment agreements with members of senior management or other “key

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employees” satisfactory to the New Investor to satisfy the conditions of the Investment Agreement.

6.17         Minority Shareholder Protection.  The Bylaws of New Holding Company (or alternatively a Shareholders Agreement among the New Investor and certain persons who hold Allowed Class 6 Claims) will include the provisions set forth in the Minority Shareholder Protection Term Sheet.  Such provisions will be applicable to any person (“Participation Rights Transferee”) to whom any of the Participation Rights Transfer Parties (as defined in Article 1.151) transfer Subscription Rights in accordance with Article 1.151 with respect to Rights Offering New Shares acquired by any such Participation Rights Transferee by participation in the Rights Offering.

ARTICLE VII

THE RIGHTS OFFERING

7.1Issuance of Subscription Rights.  Each Qualified Holder shall have a Subscription Right entitling such Qualified Holder to subscribe for its Pro Rata Share of Rights Offering New Shares to be offered by New ATA Holdings (the “Basic Subscription Rights”).  If the Rights Offering New Shares have not been fully subscribed for through the exercise of Basic Subscription Rights (the “Initially Unsubscribed Rights Offering New Shares”), then Qualified Holders will be entitled to subscribe for all or part of the Initially Unsubscribed Rights Offering New Shares (the “Supplemental Subscription Rights”).  To exercise Supplemental Subscription Rights, a Qualified Holder will be required to indicate on the Subscription Form the aggregate dollar amount (specified as a whole number and in increments of $500,000) of any Initially Unsubscribed Rights Offering New Shares such Qualified Holder is committed to purchase based on the Per Share Value.  Any such commitment shall be irrevocable and may not be for less than $500,000 or more than $25,000,000.  An aggregate of 2,500,000 New Shares will be eligible for purchase in the Rights Offering. Qualified Holders have the right, but not the obligation, to participate in the Rights Offering as provided herein.  If, after the Voting Record Date but at least five (5) Business Days prior to the Subscription Expiration Date, a Qualified Holder is permitted to participate in the Rights Offering as a result of a Bankruptcy Court order estimating such Claim for the purpose of determining such holder’s Rights Participation Claim Amount, such Qualified Holder shall be permitted to participate in the Rights Offering to the same extent as a holder of a Rights Participation Claim Amount as of the Voting Record Date.

7.2Subscription Period.  The Rights Offering shall commence on the Subscription Commencement Date and shall expire on the Subscription Expiration Date.  Each Qualified Holder intending to participate in the Rights Offering must affirmatively elect to exercise Subscription Right(s) on or prior to the Subscription Expiration Date.  After the Subscription Expiration Date, unexercised Subscription Rights shall be treated as acquired by the New Investor and any exercise of such Subscription Rights by any entity other than the New Investor shall be null and void and neither the Reorganizing Debtors nor New ATA Holdings shall be obligated to honor any such purported exercise received by the Disbursing Agent after the

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Subscription Expiration Date, regardless of when the documents relating to such exercise were sent.

7.3Subscription Purchase Price.  To purchase Rights Offering New Shares, a Qualified Holder shall pay in Cash the Subscription Purchase Price.

7.4Exercise of Subscription Rights.  In order to exercise the Subscription Rights, each Qualified Holder must: (a) return a duly completed (i) Subscription Form, (ii) Accredited Investor Certification, and (iii) Certificate of U.S. Citizenship (collectively, the “Subscription Documents”) to the Disbursing Agent so that such documents are actually received by the Disbursing Agent on or before the Subscription Expiration Date; and (b) pay to the Disbursing Agent (for the account of New ATA Holdings) on or before the Subscription Expiration Date, such Qualified Holder’s Subscription Purchase Price (for both the Basic Subscription Rights and Supplemental Subscription Rights subscribed for) in accordance with the wire instructions set forth on the Subscription Form or by bank or cashier’s check delivered to the Disbursing Agent.  If, on or prior to the Subscription Expiration Date, the Disbursing Agent for any reason does not receive from a given Qualified Holder of Subscription Rights both the duly completed Subscription Documents and funds in an amount equal to such holder’s Subscription Purchase Price, such holder shall be deemed to have relinquished and waived its right to participate in the Rights Offering.  The payments made in accordance with the Rights Offering shall be deposited and held by the Disbursing Agent in a trust account, or similarly segregated account or accounts which shall be separate and apart from the Disbursing Agent’s general operating funds and any other funds subject to any Lien or any cash collateral arrangements and which segregated account or accounts will be maintained for the purpose of holding the money for administration of the Rights Offering until the Effective Date, or such other later date, at the option of the Reorganized Companies, but not later than twenty (20) days after the Effective Date.  The Disbursing Agent shall not use such funds for any other purpose prior to such date and shall not encumber or permit such funds to be encumbered with any Lien or similar encumbrance.  Notwithstanding the foregoing, in order for a Qualified Holder that is held in the name of a bank, broker or other nominee to participate in the Rights Offering, such Qualified Holder must provide its instruction to its bank, broker, or other nominee or to its agent.  The bank, broker, or other nominee or its agent, in turn, must then convey the instruction on a master subscription form, and arrange for the proper payment of the Subscription Purchase Price either through the Depository Trust Company (“DTC”) or, if DTC is unable to act as intermediary for subscription instructions and payments, by following the instructions outlined in the Subscription Documents.

Each Qualified Holder may exercise all or any portion of such Qualified Holder’s Subscription Rights pursuant to the Subscription Form but the exercise of any Subscription Rights shall be irrevocable.  In order to facilitate the exercise of the Subscription Rights, on the Subscription Commencement Date, the Reorganizing Debtors will mail the Subscription Documents to each holder of an Allowed Class 6 Claim as of the Voting Record Date together with appropriate instructions for the proper completion, due execution and timely delivery of the Subscription Documents, as well as instructions for the payment of the Subscription Purchase Price for the Subscription Rights sought to be acquired by such holder.  As promptly as

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practicable (and, in any event, not later than ten (10) Business Days) following the Subscription Expiration Date, the Reorganizing Debtors will deliver to each Qualified Holder that has sought to exercise its Subscription Rights a written statement specifying the portion of the Subscription Rights that was validly and effectively acquired by such holder giving effect to this Article VII hereof.  The Reorganizing Debtors, with the consent of the Creditors’ Committee, may adopt such additional detailed procedures consistent with the provisions of this Article VII to more efficiently administer the exercise of the Subscription Rights.

7.5Transfer Restrictions; Permitted Transfers; Revocation.  The Subscription Rights are not transferable except that the ATSB, ATSB Lender Parties, 2000-1 EETC Aircraft Creditors and 1996/1997 EETC Aircraft Creditors (as holder of the 1996/1997 EETC Aircraft Rejection Claim or 2000-1 Aircraft Rejection Claim) may sell, transfer, assign or distribute the Subscription Rights subject to the provisions of Article 1.151.  Any such transfer or attempted transfer other than an assignment by the ATSB, ATSB Lender Parties, the holders of the 1996-1997 EETC Aircraft Rejection Claim, or the holders of 2000-1 EETC Aircraft Rejection Claim (see Article 1.151) shall be null and void and neither the Reorganizing Debtors nor New ATA Holdings shall treat any purported transferee as the holder of any Subscription Rights.  Once a Qualified Holder has properly exercised its Subscription Right, such exercise will not be permitted to be revoked.  Notwithstanding anything herein to the contrary, provided such assignee, transferee or distributee is a Participation Rights Transferee (see Article 6.17), at the direction or instruction of the Controlling Party (as defined in and in accordance with the governing documents with respect to Aircraft Equipment financing arrangements concerning the 1996-1997 Aircraft and 2000-1 Aircraft), the indenture trustees, pass-through trustees, loan trustees and subordination agents thereunder are permitted to sell, transfer, assign and/or otherwise distribute, or direct the sale, transfer, assignment or other distribution of, the Subscription Rights in accordance with the governing Aircraft Equipment financing documents including transferring, assigning or distributing, or directing the transfer, assignment or distributing, to the Beneficial Holders of the certificates of the pass-through trusts on a pro rata basis in such tranch of certificates entitled, in accordance with the underlying financing documents, to such distribution; provided, however, such Controlling Party provides direction to Wilmington Trust Company, in its capacities as loan trustee and/or subordination agent, in accordance with the underlying Aircraft Equipment financing documents on or before the Fifteenth (15^th) day before the Subscription Expiration Date.  Wilmington Trust Company, in its capacity as applicable Aircraft Creditor, is authorized and empowered to perform and otherwise sell, assign, transfer or distribute Subscription Rights of the 1996-1997 EETC Aircraft Creditors and 2000-1 EETC Aircraft Creditors in accordance with this Plan.  Notwithstanding any other provision in the Plan, the rights of Qualified Holders (including permitted Participation Rights Transferees) shall not be reduced, altered or limited by any subsequent modification, disallowance or reclassification of the applicable Class 6 Claim and the Rights Offering Claim Amount shall be fixed for purposes of the Rights Offering only except as otherwise provided herein and without prejudice to the rights of any party as to the allowance or amount of the 1996/1997 Aircraft Rejection Claim or 2000-1 Aircraft Rejection Claim.

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7.6Backstop Purchaser.  Any Rights Offering New Shares not subscribed for pursuant to the Rights Offering shall be purchased on the Effective Date by the New Investor pursuant to the Investment Agreement at the same price provided in the Rights Offering.

7.7Recalculation of Pro Rata Share as of the Subscription Expiration Date.  The Pro Rata Share of Rights Offering New Shares shall be recalculated on the Subscription Expiration Date to account for any allowances or disallowances, as applicable, of Allowed Class 6 Claims and each properly exercising Qualified Holder under the Rights Offering shall only be entitled to purchase the amount so calculated on such date pursuant to its Basic Subscription Rights and any amounts paid by such holders in excess of the amount authorized to be purchased shall be refunded, without interest, as soon as reasonably practicable after the Effective Date.

7.8Distribution of the Rights Offering New Shares.  On, or as soon as reasonably practicable after, the Effective Date, the Disbursing Agent shall distribute the Rights Offering New Shares purchased by each Qualified Holder that has properly exercised its Subscription Rights to such holder.

7.9           Subsequent Adjustments.  If, as a result of subsequent allowances of Allowed Class 6 Claims for purposes of participating in the Rights Offering or otherwise, or, if as a result of the exercise of Supplemental Subscription Rights described in Article 7.1, more than all of the Rights Offering New Shares have been subscribed for, then the amount of New Shares subscribed for by all properly exercising Qualified Holders shall be reduced to the number of Rights Offering New Shares.  In the event any such reduction is required, such reduction shall be applied first against the Rights Offering New Shares subscribed for in connection with Supplemental Subscription Rights and then, to the extent necessary, against the Rights Offering New Shares subscribed for in connection with Basic Subscription Rights.  Rights Offering New Shares otherwise issuable to properly exercising Qualified Holders in connection with Supplemental Subscription Rights will be reduced on a pro rata basis based upon the dollar amounts of Initially Unsubscribed Rights Offering New Shares that each Qualified Holder participating in the Supplemental Subscription Rights committed to purchase to the aggregate dollar amount of Initially Unsubscribed Rights Offering New Shares that all such Qualified Holders committed to purchase.  Rights Offering New Shares otherwise issuable to properly exercising Qualified Holders in connection with Basic Subscription Rights will be reduced on a pro rata basis based upon the number of Rights Offering New Shares properly subscribed for by such Qualified Holder.  The difference between the price actually paid by an exercising Qualified Holder and the amount of the Subscription Purchase Price with respect to the Rights Offering New Shares that such Qualified Holder is entitled to acquire after giving effect to the foregoing cut backs, if any, shall be refunded, without interest, as soon as reasonably practicable after the Effective Date.

7.10No Interest.  In the event all or any portion of the Subscription Purchase Price is repaid to the entity making such payment, no interest shall be paid thereon.

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7.11Validity of Exercise of Subscription Rights.  All questions concerning the timeliness, validity, form and eligibility of any exercise of Subscription Rights shall be determined by the Plan Proponents in consultation with the Creditors’ Committee, whose good faith determinations shall be final and binding.  The Plan Proponents, in their discretion reasonably exercised in good faith in consultation with the Creditors’ Committee, may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such times as they may determine, or reject the purported exercise of any Subscription Rights.  Subscription Documents shall be deemed not to have been received or accepted until all irregularities have been waived or cured within such time as the Plan Proponents determine in their discretion reasonably exercised in good faith.  The Plan Proponents in consultation with the Creditors’ Committee will use commercially reasonable efforts to give notice to any Qualified Holder of any defect or irregularity in connection with any purported exercise of Subscription Rights by such Qualified Holder and, with the consent of the New Investor and the Creditors’ Committee, may permit such defect or irregularity to be cured within such time as they may determine in good faith to be appropriate; provided, however, that neither the Plan Proponents nor the Disbursing Agent shall incur any liability for failure to give such notification.

ARTICLE VIII

UNEXPIRED LEASES AND EXECUTORY CONTRACTS

8.1Assumed Contracts And Leases.  Except as otherwise provided in the Plan, or in any contract, instrument, release, indenture or other agreement or document entered into in connection with the Plan, each executory contract and unexpired lease listed on Exhibit H shall be deemed automatically assumed and the proposed Cure established in accordance with the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code as of the Confirmation Date unless such executory contract or unexpired lease (i) shall have been previously assumed or rejected by the Reorganizing Debtors by order of the Bankruptcy Court, (ii) shall have previously expired or terminated pursuant to its own terms, or (iii) is the subject of a motion to reject pending on or before the Confirmation Date.  The counterparty to any executory contract or unexpired lease listed on Exhibit H who contests the cure listed on Exhibit H must file and serve an objection to such cure no later than the Plan Objection Deadline or be barred from contesting such cure.  Notwithstanding the foregoing or any other provision of this Plan, if the amount and the timing for payment of Cure with respect to an unexpired lease or executory contract is not agreed on or before five (5) Business Days before the Confirmation Date by agreement between the Reorganizing Debtors and the counterparty to such unexpired lease or executory contract or an order of the Bankruptcy Court in an amount and manner that is satisfactory to the Plan Proponents, the Plan Proponents reserve the right to reject any such unexpired lease or executory contract by a motion filed with the Bankruptcy Court on or before the Confirmation Date or by amending Exhibit H and/or Exhibit G to the Plan on or before the Confirmation Date.  Except as limited above, entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of such assumptions pursuant to sections 365 and 1123 of the Bankruptcy Code.  Each executory contract and unexpired lease assumed pursuant to this Article 8.1 shall vest in and be fully enforceable by the applicable Reorganized Company in

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accordance with its terms, except as modified by the provisions of this Plan, any order of the Bankruptcy Court authorizing or providing for its assumption, or applicable federal law, or by agreement between the Reorganizing Debtor and the counterparty.

8.21996-1997 EETC Transactions and Survival and Continued Effect for 1996-1997 EETC Documents.  Notwithstanding any other provision of this Plan to the contrary, ATA/Reorganized ATA shall be entitled to retain the use of the 1996-1997 Aircraft in accordance with the terms of the Restructuring Term Sheet, as it may have been amended by agreement and originally as approved by the 1996-1997 Approval Order.  On the Effective Date, (i) each of the Original Leases (as defined in the Restructuring Term Sheet) shall be rejected, (ii) the Original Leases shall be deemed terminated by such rejection, (iii) the 1996-1997 EETC Aircraft shall be deemed constructively returned to the 1996-1997 EETC Aircraft Creditors, and (iv) the applicable indenture trustees will, subject to the fulfillment of all conditions precedent as the same may have been amended contained in the Restructuring Term Sheet,  including, without limitation, the payment of all fees and expenses provided therein, direct the existing lessors or their newly formed special purpose entities to concurrently therewith enter into new leases of the 1996-1997 EETC Aircraft and related transaction documents with Reorganized ATA.  Such new leases and related transaction documents will comply in all respects with the terms contained in the Restructuring Term Sheet.  New ATA Holdings will guarantee the obligations of Reorganized ATA arising from such new leases.  Notwithstanding any other provision of this Plan, the Confirmation Order or Plan Exhibit to the contrary (other than with respect to the Reorganizing Debtors’ obligations under the Original Leases which will be governed by the Plan and Confirmation Order), nothing in the Plan, the Confirmation Order or any of the Plan Exhibits (including any provision that purports to be preemptory, discharging or supervening) other than the Restructuring Term Sheet and the 1996-1997 EETC Approval Order shall in any way operate to, or have the effect of, or be deemed impairing, effecting, modifying or releasing in any respect the legal, equitable, or contractual rights of the 1996-1997 EETC Aircraft Creditors (including the beneficial holders of certificates issues thereunder and indenture trustees for such certificate holders) under the 1996-1997 EETC documents (other than the Original Leases) and any documents ancillary thereto, including the terms of any and all intercreditor and subordination agreements, or provisions of any of them governing the relationships of the respective Indenture Trustees, the Note Trustees, the Subordination Agent, and their respective beneficial holders, including those provisions relating to distributions, the rights of the Indenture Trustees, the Subordination Agents and the Note Trustees to certain payments and (to the extent applicable) indemnity from the applicable holders, and liens on property to be distributed to any holders to secure the payment of the fees and expenses of the Indenture Trustees, the Subordination Agents and the Note Trustees shall not be affected by confirmation of the Plan.  The 1996-1997 EETC documents (other than the Original Leases), subject only to the terms of the Restructuring Term Sheet, shall remain in full force and effect and shall be fully binding, valid and enforceable between and among the parties and beneficiaries thereto.  To the extent that the Plan, Confirmation Order or any Plan Exhibit is inconsistent with the 1996-1997 EETC documents (other than the Original Leases) and any documents ancillary thereto including the Restructuring Term Sheet, the 1996-1997 EETC documents (other than the Original Leases), the 1996-1997 EETC Approval Order and Restructuring Term Sheet shall be controlling so that the Plan and the

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effectiveness thereof will not affect the rights of the parties under the 1996-1997 EETC documents (other than the Original Leases), the 1996-1997 EETC Approval Order, and Restructuring Term Sheet (other than with respect to the Reorganizing Debtors’ obligations under the Original Leases which will be governed by the Plan and Confirmation Order).”

Upon the Effective Date (and the full execution of the New Leases, as defined in the Restructuring Term Sheet), the 1996/1997 EETC Aircraft Rejection Claim shall be allowed as a Class 6 Allowed Claim for all purposes in the amounts specified in the Restructuring Term Sheet.

8.3Payments Related To Assumption Of Contracts And Leases.  The provisions (if any) of each executory contract and unexpired lease to be assumed under the Plan which are or may be in default shall be satisfied solely by the Cure listed on Exhibit H.  In the event of a dispute regarding (a) the nature or amount of any Cure, (b) the ability of any Reorganized Debtor or any assignee to provide “adequate assurance of future performance” (within the meaning of section 365 of the Bankruptcy Code) under the contract or lease to be assumed, or (c) any other matter pertaining to assumption and the Plan Proponents have not withdrawn the proposed assumption prior to the Confirmation Date, Cure shall occur as soon as practicable following the entry of a Final Order resolving the dispute and approving the assumption or assumption and assignment, as the case may be.

8.4Rejected Contracts And Leases.  Except with respect to executory contracts and unexpired leases that (i) are listed on Exhibit H, (ii) have previously been assumed or rejected, (iii) shall have previously expired or terminated pursuant to their own terms on or before the Confirmation Date, (iv)  are the subject of a motion to assume or reject filed on or before the Confirmation Date, or (v) are the subject of a notice of assumption or rejection served, pursuant to order of the Bankruptcy Court, on or before the Confirmation Date, all executory contracts and unexpired leases listed on Exhibit G shall be deemed automatically rejected as of the Confirmation Date or such earlier date as the Reorganizing Debtors may have unequivocally terminated their performance under such lease or contract; provided, however, that neither the exclusion nor inclusion of a contract or lease by the Reorganizing Debtors on Exhibit G or Exhibit H hereto, nor anything contained herein, shall constitute an admission by the Reorganizing Debtors that any such lease or contract is an unexpired lease or executory contract or that any Reorganizing Debtor, or its respective Affiliates, has any liability thereunder.  The Confirmation Order shall constitute an order of the Bankruptcy Court approving the assumptions and rejections contemplated herein (including the rejections pursuant to Section 8.2 hereof), pursuant to sections 365 and 1123 of the Bankruptcy Code.  The Reorganizing Debtors reserve the right to (a) file a motion on or before the Confirmation Date to assume or reject any executory contract or unexpired lease and (b) modify or supplement Exhibit G or Exhibit H hereto at any time prior to the Confirmation Date, including, without limitation, the right to add any executory contract or unexpired lease to, or delete any executory contract or unexpired lease from Exhibit G or Exhibit H hereto.

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8.5Rejection Damages Bar Date.  If the rejection by a Reorganizing Debtor, pursuant to the Plan or otherwise, of an executory contract or unexpired lease results in a Claim, then such Claim shall be forever barred and shall not be enforceable against either the Reorganizing Debtors or the Reorganized Debtors or the properties of any of such parties unless a proof of claim is filed with the Claims Agent and served upon counsel to the Reorganizing Debtors and the Creditors’ Committee or the Post-Confirmation Committee, as applicable, within thirty (30) days after service of the earlier of (a) notice of the Confirmation Order, or (b) other notice that the executory contract or unexpired lease has been rejected.  This provision does not apply to the 1996-1997 EETC Aircraft Rejection Claim which shall be allowed by the Confirmation Order without any further action by its holders or to any claim agreed to under an 1110(b) Stipulation approved by order of the Bankruptcy Court.

8.6Contracts and Leases Not Listed on Exhibits G or H.  Except as otherwise provided in the Plan, or in any contract, instrument, release, indenture or other agreement or document entered into in connection with the Plan, any executory contract or unexpired lease not listed on either Exhibit G or Exhibit H shall be deemed automatically rejected in accordance with the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code as of the Confirmation Date unless such executory contract or unexpired lease (i) shall have been previously assumed or rejected by the Reorganizing Debtors by order of the Bankruptcy Court, (ii) shall have previously expired or terminated pursuant to its own terms, (iii) is the subject of a motion to assume or reject pending on or before the Confirmation Date, or (iv) is the subject of an 1110(b) Stipulation approved by order of the Bankruptcy Court allowing for later rejection.

8.7Amended ALPA Agreement.  Pursuant to the 1113 Compromise, Reorganized ATA shall assume the ALPA Agreement as amended pursuant to the 1113 Compromise as of the Effective Date.  Upon the assumption of the Amended ALPA Agreement, the grievance claims asserted in claim No. 1023 filed by ALPA are reinstated subject to all defenses and only to the extent that such claims have merit.

8.8Other Collective Bargaining Contracts.  Except to the extent ATA has filed a motion to reject the collective bargaining agreement pursuant to Bankruptcy Code § 1113 on or before the Voting Deadline, ATA shall assume the collective bargaining agreements (as they may have been amended or modified) with AFA, IAM and TWU.

8.9Southwest Codeshare Agreement.  Reorganized ATA shall assume the Southwest Codeshare Agreement as of the Effective Date.

ARTICLE IX

PROVISIONS GOVERNING DISTRIBUTIONS

9.1Time of Distributions.  Except as otherwise provided for herein or ordered by the Bankruptcy Court, distributions under the Plan shall be made on a Periodic Distribution Date.

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9.2No Interest on Claims.  Unless otherwise specifically provided for in the Plan, 11 U.S.C. § 506 (b), the Confirmation Order, the New DIP Credit Agreement, a Bankruptcy Court order or a postpetition agreement in writing between the Reorganizing Debtors and a holder of a Claim, postpetition interest shall not accrue or be paid on Claims, and no holder of a Claim shall be entitled to interest accruing on or after the Petition Date on any Claim or right.  Additionally, and without limiting the foregoing, interest shall not accrue or be paid on any Disputed Claim in respect of the period from the Effective Date to the date a final distribution is made when and if such Disputed Claim becomes an Allowed Claim.  Provided, however, that nothing in this Article 9.2 shall constitute a waiver by an agency or entity of the United States to assert the right to receive postpetition interest with respect to any Administrative Claims.

9.3Disbursing Agent.  The Disbursing Agent shall make all distributions required under this Plan except with respect to a holder of a Claim whose distribution is governed by an agreement and is administered by a Servicer, which distributions shall be deposited with the appropriate Servicer, who shall deliver such distributions to the holders of Claims in accordance with the provisions of this Plan and the terms of the governing agreement; provided, however, that if any such Servicer is unable to make such distributions, the Disbursing Agent, with the cooperation of such Servicer, shall make such distributions.

9.4Cancellation of Securities or Instruments As to Reorganized Debtors.  As of the Effective Date, each instrument evidencing a Claim (a “Certificate”) shall be cancelled solely with respect to the Reorganized Debtors and such cancellation shall not alter the obligations or rights of any non-Reorganizing Debtor third parties vis-à-vis one another to such instruments; provided, however, that this Article 9.4 shall not apply to any Claims Reinstated pursuant to the terms of the Plan.

9.5Services of Indenture Trustees, Agents and Servicers.  The services, with respect to consummation of the Plan, of Servicers under the relevant agreements that govern the rights of holders of Claims shall be as set forth in this Plan, and the Reorganized Companies shall reimburse any Servicer (including the Indenture Trustee) for reasonable and necessary services performed by it (including reasonable attorneys’ fees) as contemplated by, and in accordance with this Plan, without the need for the filing of an application with, or approval by, the Bankruptcy Court.  The payments shall be made in full in Cash on the Effective Date.

9.6Claims Administration Responsibility.

a.The Reorganizing Debtors and Reorganized Debtors will retain responsibility for administering, disputing, objecting to, compromising, or otherwise resolving all Claims against and Interests in the Reorganizing Debtors.

b.Unless otherwise extended by the Bankruptcy Court, any objections to Claims shall be served and filed on or before the Claims Objection Deadline.  Notwithstanding any authority to the contrary, an objection to a Claim shall be deemed properly served on the holder of a Claim if the Reorganizing Debtors or the Reorganized Debtors effect service in any

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of the following manners:  (i) in accordance with Federal Rule of Civil Procedure 4, as modified and made applicable by Bankruptcy Rule 7004; (ii) to the extent counsel for the holder of a Claim is unknown, by first class mail, postage prepaid, on the signatory on the proof of claim or interest or other representative identified on the proof of claim or any attachment thereto; or (iii) by first class mail, postage prepaid, on any counsel that has appeared on behalf of the holder of a Claim in the Chapter 11 Cases.

c.Any Claim determined and liquidated pursuant to (i) an order of the Bankruptcy Court, or (ii) applicable non-bankruptcy law (which determination has not been stayed, reversed or amended and as to which determination (or any revision, modification or amendment thereof) the time to appeal or seek review or rehearing has expired and as to which no appeal or petition for review or rehearing was filed or, if filed, remains pending) shall be deemed, to the extent applicable, an Allowed Claim in such liquidated amount and satisfied in accordance with the Plan (provided that, to the extent a Claim is an Allowed Insured Claim, such Allowed Claim shall be paid from the insurance proceeds available to satisfy such liquidated amount).  Nothing contained in this Article 9.6 shall constitute or be deemed a waiver of any claim, right, or Cause of Action that the Reorganizing Debtors or the Reorganized Debtors may have against any Person in connection with or arising out of any Claim or Claims, including, without limitation, any rights under section 157(b) of title 28 of the United States Code.

9.7Delivery of Distributions.  Distributions to holders of Allowed Claims shall be made by the Disbursing Agent or the appropriate Servicer (a) at the addresses set forth on the proofs of claim filed by such holders of Claims (or at the last known addresses of such holders of Claims if no proof of claim is filed or if the Reorganizing Debtors have been notified in writing of a change of address), (b) at the addresses set forth in any written notices of a change of address delivered to the Disbursing Agent after the date of any related proof of claim, (c) at the addresses reflected in the Schedules if no proof of claim has been filed and the Disbursing Agent has not received a written notice of a change of address, or (d) in the case of a holder of a Claim whose Claim is governed by an agreement and administered by a Servicer, at the addresses contained in the official records of such Servicer.  If any distribution to a holder of a Claim is returned as undeliverable, no further distributions to such holder of a Claim shall be made unless and until the Disbursing Agent or the appropriate Servicer is notified of the then-current address of such holder of a Claim, at which time all missed distributions shall be made to such holder of a Claim without interest.  Amounts in respect of undeliverable distributions shall be returned to the Reorganized Debtors until such distributions are claimed.  All funds or other undeliverable distributions returned to the Reorganized Debtors and not claimed within six (6) months of return shall be distributed to the other creditors of the Class of which the creditor to whom the distribution was originally made is a member in accordance with the provisions of the Plan applicable to distributions to that Class.  If, at the conclusion of distributions to a particular Class under the Plan and after consultation with the Post-Confirmation Committee (solely with respect to General Unsecured Claims), the Reorganized Debtors reasonably determine that any remaining distributions allocated for such class are immaterial and would thus be too impractical to distribute or would be of no benefit to its respective distributees, any such remaining distributions will revert to the Reorganized Debtors.  Upon such reversion, the Claim of any

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Claim holder or its successor with respect to such property shall be discharged and forever barred notwithstanding any federal or state escheat laws to the contrary.

9.8Procedures for Treating and Resolving Disputed and Contingent Claims.

a.No Distributions Pending Allowance.  No payments or distributions will be made with respect to all or any portion of a Disputed Claim unless and until all objections to such Disputed Claim have been settled or withdrawn or have been determined by a Final Order, and the Disputed Claim has become an Allowed Claim.  Distribution with respect to Allowed Claims of each individual agency or entity of the United States shall be made in accordance with the terms of the Plan as soon as all of the Claims of that individual agency or entity are resolved.

b.Distribution Reserve.  Prior to making any distributions to holders of General Unsecured Claims, the Disbursing Agent shall establish an appropriate Distribution Reserve for Disputed General Unsecured Claims (“Distribution Reserve”) to withhold from any such distributions 100% of distributions to which holders of Disputed General Unsecured Claims would be entitled under the Plan as of such date if such Disputed General Unsecured Claims were Allowed Claims in their Disputed Claim Amount.  Notwithstanding the foregoing, the Disbursing Agent shall have the right to request estimation of any Disputed General Unsecured Claim and authority from the Bankruptcy Court to withhold less than 100% of the Disputed Claim Amount of any Disputed General Unsecured Claims from distributions to holders of Allowed General Unsecured Claims.  The holder of a Disputed General Unsecured Claim shall not be entitled to receive or recover any amount in excess of the amount provided in the Distribution Reserve to pay such Claim.  The Disbursing Agent shall also establish appropriate reserves for Disputed Claims in other Classes, as it determines are necessary and appropriate.

c.Distributions After Allowance.  On each Periodic Distribution Date, the Disbursing Agent will make distributions from the Distribution Reserve (a) on account of any Disputed General Unsecured Claim that has become an Allowed General Unsecured Claim during the time period since the immediately-preceding Periodic Distribution Date and (b) on account of previously Allowed General Unsecured Claims, of property that would have been distributed to the holders of such Claims on the dates distributions were previously made to holders of Allowed General Unsecured Claims had the Disputed General Unsecured Claims that have become Allowed General Unsecured Claims been Allowed on such dates.  Such distributions will be made pursuant to the provisions of the Plan governing Class 6, or such other Classes as may be applicable.

9.9Withholding and Reporting Requirements.  In connection with the Plan and all instruments issued in connection therewith and distributions thereunder, the Reorganizing Debtors and Reorganized Debtors shall comply with all withholding and reporting requirements imposed by any federal, state, local, or foreign taxing authority, and all distributions hereunder shall be subject to any such withholding and reporting requirements.  The Reorganizing Debtors and Reorganized Debtors shall be authorized to take any and all actions that may be necessary or appropriate to comply with such withholding and reporting requirements.  Notwithstanding any

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other provision of the Plan, (i) each holder of an Allowed Claim or Allowed Interest that is to receive a distribution under the Plan shall have sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed by any governmental unit, including income, withholding and other tax obligations, on account of such distribution, and (ii) no distribution shall be made to or on behalf of such holder pursuant to the Plan unless and until such holder has made arrangements satisfactory to the Reorganized Debtors for the payment and satisfaction of such tax obligations or has, to the Reorganized Debtors’ satisfaction, established an exemption therefrom.  Any distribution to be distributed pursuant to the Plan shall, pending implementation of such arrangements, be treated as undeliverable pursuant to Article 9.7 hereof, except that any distribution made shall not be deemed a waiver of the requirement.

9.10Fractional Securities; Fractional Dollars and De Minimis Distributions.  Any other provision of the Plan notwithstanding, payments of fractions of shares of any equity securities to be distributed under the Plan will not be made and shall be rounded (up or down) to the nearest whole number, with fractions equal to or less than ½ being rounded down.  Any other provision of this Plan notwithstanding, neither the Reorganized Debtors nor the Disbursing Agent or Servicer shall be required to make distributions or payments of fractions of dollars. Whenever any payment of a fraction of a dollar under this Plan would otherwise be called for, the actual payment shall reflect a rounding of such fraction to the nearest whole dollar (up or down), with half dollars or less being rounded down.

Neither the Disbursing Agent nor any Servicer shall have an obligation to make a distribution on account of an Allowed Claim from the New Shares or otherwise if the amount to be distributed to the specific holder of an Allowed Claim on the particular Periodic Distribution Date has an economic value less than $25.00.

9.11Surrender of Canceled Instruments or Securities.

a.As a condition precedent to receiving any distribution pursuant to the Plan on account of an Allowed Claim evidenced by Old Holdings Unsecured Notes, other notes, instruments, securities or other documentation canceled with respect to the Reorganizing Debtors pursuant to Article 9.4, the holder of such Claim must tender, as specified in this Article 9.11, the applicable notes, instruments, securities or other documentation that evidence such Claim to the Disbursing Agent, or with respect to indebtedness that is governed by an agreement and administered by a Servicer, the respective agreement with the Servicer together with any letter of transmittal required by such Disbursing Agent.  Except as provided in Article 9.11.b. below, all such notes, instruments, securities or other documentation will be marked as canceled solely with respect to the Reorganizing Debtors and will be held by the Disbursing Agent.  Pending such surrender, any distributions pursuant to the Plan on account of such Claim will be treated as an undeliverable distribution pursuant to Article 9.7.

b.             Except as provided in Article 9.11.c. for lost, stolen, mutilated or destroyed Old Holdings Unsecured Notes, each holder of an Old Holdings Unsecured Note must tender the applicable Old Holdings Unsecured Notes to the Disbursing Agent in accordance with

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a letter of transmittal to be provided to such holders by the Disbursing Agent as promptly as practicable following the Effective Date.  The letter of transmittal will include, among other provisions, customary provisions with respect to the authority of the holder of the applicable Old Holdings Unsecured Notes to act and the authenticity of any signatures required thereon.  The Disbursing Agent will hold the Old Holdings Unsecured Notes until (a) the effective date of a chapter 11 plan confirmed for the Liquidating Debtors has occurred, (b) the bankruptcy cases of all Liquidating Debtors are dismissed or otherwise terminated and (c) any nondebtor obligors or guarantors have been dissolved or made final distribution to their creditors, at which time the disbursing Agent will mark the Old Holdings Unsecured Notes as fully canceled and transfer the Old Holdings Unsecured Notes to the Reorganized Companies.  The foregoing shall not apply to the Indenture Trustee, who shall, instead, abide by the procedures and deadlines, established in the relevant indenture with respect to such surrender.

c.             Any holder of a Claim based upon an Old Holdings Unsecured Note with respect to which the underlying Old Holdings Unsecured Note has been lost, stolen, mutilated or destroyed must, in lieu of surrendering such Old Holdings Unsecured Note, deliver to the Disbursing Agent: (a) evidence satisfactory to the Disbursing Agent of the loss, theft, mutilation or destruction and (b) such security or indemnity as may be required by the Disbursing Agent to hold the Disbursing Agent and the Reorganizing Debtors and Reorganized Debtors, as applicable, harmless from any damages, liabilities or costs incurred in treating such individual as a holder of an Old Holdings Unsecured Note.  Upon compliance with this Article 9.11.c. by a holder of a Claim based upon an Old Holdings Unsecured Note, such holder will, for all purposes under the Plan, be deemed to have surrendered the applicable Old Holdings Unsecured Note.  The foregoing shall not apply to the Indenture Trustee, who shall, instead, abide by the procedures and deadlines, established in the relevant indenture with respect to such surrender.

d.Any holder of a claim based upon an Old Holdings Unsecured Note that fails to surrender or be deemed to have surrendered the applicable Old Holdings Unsecured Notes to the Disbursing Agent or to the Indenture Trustee within two years after the Effective Date will have its right to distributions pursuant to the Plan on account of such Old Holdings Unsecured Note deemed satisfied and will be forever barred from asserting any such Claim against the Reorganized Companies or their respective property.  In such case, any New Shares held for distribution on account of such claim based upon an Old Holdings Unsecured Note will be treated as undeliverable pursuant to the provisions set forth in Article 9.7.

ARTICLE X

ALLOWANCE AND PAYMENT OF CERTAIN ADMINISTRATIVE CLAIMS

10.1Professional Claims.

a.Final Fee Applications.  All final requests for payment of Professional Claims must be filed no later than sixty (60) days after the Effective Date.  After notice and a hearing in accordance with the procedures established by the Bankruptcy Code and prior orders

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of the Bankruptcy Court, the allowed amounts of such Professional Claims shall be determined by the Bankruptcy Court.

b.Payment of Interim Amounts.  Subject to the terms of the Professional Fee Order, on the Effective Date, the Reorganizing Debtors or Reorganized Debtors shall pay all amounts owing to Professionals for all outstanding amounts payable relating to prior periods through the Effective Date.  In order to receive payment on the Effective Date for unbilled fees and expenses incurred through such date, the Professionals shall estimate fees and expenses due for periods that have not been billed as of the Effective Date and shall deliver such estimate to the Reorganizing Debtors, counsel for the Reorganizing Debtors, and the Creditors’ Committee no later than 5 Business Days prior to the Effective Date.  Within forty-five (45) days after the Effective Date, a Professional receiving payment for the estimated period shall submit a detailed invoice covering such period in the manner and providing the detail as set forth in the Professional Fee Order.  Should the estimated payment received by any Professional exceed the actual fees and expenses for such period, this excess amount will be credited against amounts retained by the Reorganizing Debtors as a holdback on payments of Professional Claims  for such Professional pursuant to the Professional Fee Order or, if such amount is insufficient, disgorged by such Professional.

c.Upon the Effective Date, any requirement that Professionals comply with sections 327 through 331 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date will terminate, and the Reorganized Companies will employ and pay Professionals in the ordinary course of business.

10.2Substantial Contribution Compensation and Expenses Bar Date.  Any Person (other than the Indenture Trustee with respect to the Indenture Trustee’s Fees and Expenses) who requests compensation or expense reimbursement for making a substantial contribution in the Chapter 11 Cases pursuant to sections 503(b)(3), (4), and (5) of the Bankruptcy Code must file an application with the clerk of the Bankruptcy Court, on or before the Administrative Claim Bar Date, and serve such application on counsel for the Reorganized Debtors, the Creditors’ Committee and the ATSB and as otherwise required by the Bankruptcy Court and the Bankruptcy Code on or before the Administrative Claim Bar Date, or be forever barred from seeking such compensation or expense reimbursement.

10.3Other Administrative Claims.  All other requests for payment of an Administrative Claim (other than as set forth in Articles 10.2 and 10.3 of this Plan and subject to the final sentence of this Article 10.3) must be filed with the Claims Agent and served on counsel for the Reorganizing Debtors, and the Post-Confirmation Committee on or before the Administrative Claim Bar Date.  Any request for payment of an Administrative Claim pursuant to this Article 10.3 that is not timely filed and served shall be disallowed automatically without the need for any objection from the Reorganizing Debtors or the Reorganized Companies.  The Reorganized Companies may settle an Administrative Claim without further Bankruptcy Court approval.  Unless the Reorganizing Debtors or the Reorganized Companies object to an Administrative Claim by the Claims Objection Deadline, such Administrative Claim shall be

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deemed allowed in the amount requested.  In the event that the Reorganizing Debtors or the Reorganized Companies object to an Administrative Claim, the Bankruptcy Court shall determine the allowed amount of such Administrative Claim.  Notwithstanding the foregoing, no request for payment of an Administrative Claim need be filed with respect to an Administrative Claim which is (i) for goods or services (including wages, salaries, commissions, and trade payables) paid or payable by the Reorganizing Debtors in the ordinary course of business, (ii) governmental fees, including without limitation, security and inspection fees paid or payable by the Reorganized Debtors in the ordinary course of business, or (iii) previously has been allowed by Final Order of the Bankruptcy Court, including, without limitation, the ATSB Super-Priority Claim except that if such Administrative Claim was unliquidated at the time it became an Allowed Administrative Claim, a notice shall be filed listing the amount of the administrative claim.  Provided, however, that nothing in this Article 10.3 shall constitute a waiver by the United States of any right it may have to assert that any statute or regulation precludes judicial review of the validity or amount of any Administrative Claim filed or asserted by the United States.  Notwithstanding the foregoing, the Reorganized Companies may and shall pay the Indenture Trustee’s Fees and Expenses upon submission by the Indenture Trustee to the Reorganized Companies of invoices and without the need for the filing by the Indenture Trustee of any other request for payment.

ARTICLE XI

EFFECT OF THE PLAN ON CLAIMS AND INTERESTS

11.1Revesting of Assets.  Except as otherwise explicitly provided in this Plan, on the Effective Date all property comprising the Estates (excluding property that has been abandoned pursuant to an order of the Bankruptcy Court) shall revest in each of the Reorganizing Debtors that owned such property or interest in property as of the Effective Date, free and clear of all Claims, Liens, charges, encumbrances, rights and Interests of creditors and equity security holders (other than as expressly provided herein).  As of the Effective Date, the Reorganized Companies may operate their business and use, acquire, and dispose of property and settle and compromise Claims or Interests without supervision of the Bankruptcy Court, free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, other than those restrictions expressly imposed by the Plan and Confirmation Order.

11.2Discharge of the Reorganizing Debtors.  Pursuant to section 1141(d) of the Bankruptcy Code, except as otherwise specifically provided in this Plan or in the Confirmation Order, the distributions and rights that are provided in this Plan shall be in complete satisfaction, discharge, and release, effective as of the Confirmation Date (but subject to the occurrence of the Effective Date), of Claims, whether known or unknown, against, liabilities of, liens on, obligations of, rights against, and Interests in the Reorganizing Debtors or any of their assets or properties, regardless of whether any property shall have been distributed or retained pursuant to the Plan on account of such Claims, rights, and Interests, including, but not limited to, demands and liabilities that arose before the Confirmation Date, any liability (including withdrawal liability) to the extent such Claims relate to services performed by employees of the Debtors

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prior to the Petition Date and that arise from a termination of employment or a termination of any employee or retiree benefit program regardless of whether such termination occurred prior to or after the Confirmation Date, and all debts of the kind specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, in each case whether or not (a) a proof of claim or interest based upon such debt, right, or Interest is filed or deemed filed under section 501 of the Bankruptcy Code, (b) a Claim or Interest based upon such debt, right, or Interest is allowed under section 502 of the Bankruptcy Code, or (c) the holder of such a Claim, right, or Interest accepted the Plan.  The Confirmation Order shall be a judicial determination of the discharge of all liabilities of and Interests in the Reorganizing Debtors, subject to the Effective Date occurring.  Solely with respect to the United States (which term shall include for the purposes of this Plan, all agencies and entities of the United States), the discharge provisions set forth in this Article 11.2 shall not operate to expand the Reorganizing Debtors’ discharge rights beyond those established by the Bankruptcy Code.  The discharge provisions set forth in this Article 11.2 are not intended and shall not be construed, to bar the United States from pursuing any police or regulatory action against the Reorganizing Debtors or Reorganized Debtors.

11.3Compromises and Settlements.  In accordance with Article 9.6 of this Plan, pursuant to Bankruptcy Rule 9019(a), without further order of the Bankruptcy Court, the Reorganizing Debtors may compromise and settle various (a) Claims against them and (b) Causes of Action that they have against other Persons.  The Reorganizing Debtors expressly reserve the right to compromise and settle Claims against them and claims that they may have against other Persons up to and including the Effective Date.  After the Effective Date, such right shall pass to the Reorganized Debtors as contemplated in Article 11.1 of this Plan.

11.Releases by Reorganizing Debtors.

a.Pursuant to section 1123(b)(3) of the Bankruptcy Code, effective as of the Effective Date, each Reorganizing Debtor, in its individual capacity and as a debtor-in-possession, for and on behalf of its Estate, shall release and discharge and be deemed to have released and discharged all Released Parties for and from any and all Causes of Action existing as of the Effective Date in any manner arising from, based on or relating to, in whole or in part, the Reorganizing Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between any Reorganizing Debtor and any Released Party, the restructuring of Claims and Interests prior to or in the Chapter 11 Cases, or any act, omission, occurrence or event in any manner related to any such Claims, Interests, restructuring or the Chapter 11 Cases.  Notwithstanding the foregoing, nothing in this Plan releases or shall be deemed to release any of the Reorganizing Debtors, the ATSB Lender Parties, the New Investor, Southwest, the ATSB Lenders or their respective Affiliates from their obligations under the Plan, the Investment Agreement, the Southwest Codeshare Agreement, the Southwest Bid, the Amended and Restated ATSB Loan Documents, the ATSB Lenders Settlement Agreement or the transactions contemplated thereby, to release Southwest from any other contracts between Reorganizing Debtors and Southwest, or to release the City of Chicago with respect to the Chicago Release Carve Out.

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b.No provision of this Plan or of the Confirmation Order, including, without limitation, any release or exculpation provision, shall modify, release or otherwise limit the liability of any Person not specifically released hereunder, including, without limitation, any Person that is a co-obligor or joint tortfeasor of a Released Party or that otherwise is liable under theories of vicarious or other derivative liability.

c.The Reorganized Debtors and any newly-formed entities that will be continuing the Reorganizing Debtors’ businesses after the Effective Date shall be bound, to the same extent the Reorganizing Debtors are bound, by all of the releases set forth above.

11.5Releases by Holders of Claims and Interests.  On the Effective Date each Person that votes to accept the Plan, to the fullest extent permissible under applicable law, in consideration for the obligations of the Reorganizing Debtors and the Reorganized Debtors under the Plan and other contracts, instruments, releases, agreements or documents to be delivered in connection with the Plan (each a “Release Obligor”), shall have conclusively, absolutely, unconditionally, irrevocably and forever, released and discharged each Released Party from any Cause of Action existing as of the Effective Date arising from, based on or relating to, in whole or in part, the subject matter of, or the transaction or event giving rise to, the Claim or Interest of such Release Obligor, and any act, omission, occurrence or event in any manner related to such subject matter, transaction or obligation; provided, however, that this Article 11.5 shall not release any Released Party from any Cause of Action existing as of the Effective Date, based on (i) the Internal Revenue Code or other domestic state, city or municipal tax code, (ii) the environmental laws of the United States or any domestic state, city or municipality, or (iii) any criminal laws of the United States or any domestic state, city or municipality.  Nothing set forth in this Plan or the Confirmation Order shall be construed to preclude the United States from pursuing any cause of action against any of the Released Parties based upon any civil laws of the United States.  Nothing in this Section 11.5 is intended to permit the United States to assert any claim against any of the Reorganizing Debtors, or Reorganized Debtors for the payment of money for acts or omissions occurring prior to the Confirmation Date.  A vote by any governmental agency or entity in favor of the Plan does not constitute acceptance of the Plan by any other government agency or entity or by the United States as a whole.

11.6Setoffs.  The Reorganizing Debtors may, but shall not be required to, set off against any Claim (except for the 1996-1997 EETC Aircraft Rejection Claim), and the payments or other distributions to be made pursuant to the Plan in respect of such Claim, claims of any nature whatsoever that the Reorganizing Debtors may have against the holder of such Claim; but neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by the Reorganizing Debtors or the Reorganized Debtors of any such claim that the Reorganizing Debtors or the Reorganized Debtors may have against the holder of such Claim.

11.7         Satisfaction of Subordination Rights.  All Claims against the Reorganizing Debtors and all rights and claims between or among the holders of Claims relating in any manner whatsoever to distributions on account of Claims against the Reorganizing Debtors, based upon any subordination rights, whether asserted or unasserted, legal or equitable, shall be deemed

55

satisfied by the distributions under the Plan to the holders of Claims having such subordination rights, and such subordination rights shall be deemed waived, released, discharged, and terminated as of the Effective Date.  Distributions to the various Classes of Claims hereunder shall not be subject to levy, garnishment, attachment, or like legal process by the holder of any Claim by reason of any subordination rights or otherwise, so that each holder of a Claim shall have and receive the benefit of the distributions in the manner set forth in the Plan.

11.8Exculpation and Limitation of Liability.  Except as otherwise specifically provided in this Plan (including Article 11.5), the Reorganizing Debtors, the Reorganized Debtors, the Creditors’ Committee, the members of the Creditors’ Committee in their capacities as such, the New DIP Lenders, Southwest, the New Investor, the ATSB Lender Parties (solely in such capacity) and BearingPoint, Inc. (formerly KPMG Consulting, Inc.), as Loan Administrator under the ATSB Loan Agreement, the Indenture Trustee and Wilmington Trust Company, in its capacity as loan trustee, subordination agent, pass through trustee or similar capacity under the Aircraft Equipment financing arrangements concerning the 2000-1 EETC Aircraft and 1996-1997 EETC Aircraft (except with respect to the Wilmington Release Carve Out) and any of such parties’ respective present or former members, officers, directors, employees, advisors, attorneys, representatives, financial advisors (including Jefferies), investment bankers, or agents and any of such parties’ successors and assigns, shall not have or incur, and are hereby released from, any claim, obligation, Cause of Action, or liability to one another or to any holder of a Claim or an Interest, or any other party-in-interest, or any of their respective agents, employees, representatives, financial advisors, attorneys or Affiliates, or any of their successors or assigns, for any act or omission in connection with, relating to, or arising out of the Reorganizing Debtors’ Chapter 11 Cases, negotiation and filing of the Plan, filing the Chapter 11 Cases, the pursuit of confirmation of the Plan, the consummation of the Plan, the administration of the Plan or the property to be distributed under the Plan, except for their willful misconduct, and in all respects shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities under the Plan.  Notwithstanding the foregoing, nothing in this Plan releases or shall be deemed to release any of the Reorganizing Debtors, the Reorganized Debtors, the ATSB, the New Investor, Southwest, the ATSB Lender Parties or their respective Affiliates from their obligations under the Plan, the Investment Agreement, the Southwest Codeshare Agreement, the Southwest Bid, the Amended and Restated ATSB Loan Documents, the ATSB Lenders Settlement Agreement or the transactions contemplated thereby or to release Southwest from any other contracts between Reorganizing Debtors and Southwest.

11.9Indemnification Obligations.  Except as specifically provided in this Plan, in satisfaction and compromise of the Indemnitees’ Indemnification Rights, all Indemnification Rights, except (i) those based upon any act or omission arising out of or relating to any Indemnitee’s service with, for, or on behalf of the Reorganizing Debtors on or after the Petition Date, and (ii) those held by Persons who served during the Chapter 11 Cases as the Reorganizing Debtors’ respective officers, directors, or employees and/or serve in such capacities (or similar capacities) after the Effective Date, shall be released and discharged on and as of the Effective Date; provided that the Indemnification Rights excepted in subparts (i) and (ii) shall remain in

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full force and effect on and after the Effective Date and shall not be modified, reduced, discharged, or otherwise affected in any way by the Chapter 11 Cases.

11.10Injunction.  The satisfaction, release, and discharge pursuant to this Article XI shall act as an injunction against any Person commencing or continuing any action, employment of process, or act to collect, offset, or recover any Claim or Cause of Action satisfied, released, or discharged under this Plan to the fullest extent authorized or provided by the Bankruptcy Code, including, without limitation, to the extent provided for or authorized by sections 524 and 1141 thereof.  Notwithstanding the foregoing, nothing in this Plan shall enjoin or otherwise impair any right of setoff and/or recoupment that the United States may otherwise have or be construed to preclude the United States from pursuing any regulatory or police action against any Reorganizing Debtor or Reorganized Debtor.

ARTICLE XII

CONDITIONS PRECEDENT

12.1Conditions to Confirmation.  The following are conditions precedent to confirmation of the Plan that may be satisfied or waived in accordance with Article 12.3 of the Plan:

a.The Bankruptcy Court shall have approved a disclosure statement with respect to the Plan in form and substance acceptable to the Plan Proponents, the New Investor, Southwest, ATSB, and the Creditors’ Committee.

b.The Confirmation Order shall be in form and substance reasonably acceptable to the Plan Proponents, the New Investor, Southwest, ATSB, and the Creditors’ Committee.

12.2Conditions to Consummation.  The Effective Date shall occur on or prior to February 28, 2006, unless such date is extended by the Plan Proponents, the New Investor, Southwest, the Creditors’ Committee, and the ATSB.  The following are conditions precedent to the occurrence of the Effective Date, each of which may be satisfied or waived in accordance with Article 12.3 of the Plan:

a.The Bankruptcy Court shall have entered one or more orders (which may include the Confirmation Order) authorizing the assumption or rejection of unexpired leases and executory contracts (as the case may be) by the Reorganizing Debtors as contemplated by Article 8.1 hereof.

b.The Reorganizing Debtors and the New Investor shall have executed the Investment Agreement, which shall remain in full force and effect.

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c.All conditions precedent to the closing of the Investment Agreement shall have been satisfied or waived in accordance with the terms thereof and the closing of the Investment Agreement shall have occurred.

d.The Confirmation Order shall have been entered by the Bankruptcy Court and shall remain unstayed.

e.The Confirmation Date shall have occurred.

f.All documents effectuating the transactions contemplated by the Restructuring Term Sheet shall have been executed and delivered by all parties thereto, and all conditions precedent to the effectiveness of each such document shall have been satisfied or waived in accordance with the terms thereof.

g.All other actions, documents, consents and agreements necessary to implement the Plan shall have been effected, obtained and/or executed.

h.All conditions precedent to the closing of the Amended and Restated ATSB Loan Documents shall have been satisfied or waived in accordance with the terms thereof.

12.3Waiver of Conditions to Confirmation or Consummation.  The conditions set forth in Articles 12.1, and 12.2 of the Plan may be waived by the Plan Proponents, such waiver to be acceptable to the New Investor in its sole and absolute discretion, and with the consent of Southwest, ATSB and the Creditors’ Committee, not to be unreasonably withheld, without any notice to other parties-in-interest or the Bankruptcy Court and without a hearing.  The failure of the Plan Proponents in their sole discretion to exercise any of the foregoing rights shall not be deemed a waiver of any other rights, and each such right shall be deemed an ongoing right, which may be asserted at any time.

ARTICLE XIII

RETENTION OF JURISDICTION

13.1Pursuant to sections 105(a) and 1142 of the Bankruptcy Code, the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of, and related to, the Chapter 11 Cases and the Plan, including, among others, the following matters:

a.to hear and determine pending motions for (i) the assumption or rejection or (ii) the assumption and assignment of executory contracts or unexpired leases to which the Reorganizing Debtors are a party or with respect to which the Reorganizing Debtors may be liable, and to hear and determine the allowance of Claims resulting therefrom including the amount of Cure, if any, required to be paid;

b.to adjudicate any and all adversary proceedings, applications, and contested matters that may be commenced or maintained pursuant to the Chapter 11 Cases or the

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Plan, proceedings to adjudicate the allowance of Disputed Claims and Disputed Interests, and all controversies and issues arising from or relating to any of the foregoing;

c.to adjudicate any and all disputes arising from or relating to the distribution or retention of the New Shares, or other consideration under the Plan;

d.to ensure that distributions to holders of Allowed Claims and holders of Allowed Interests are accomplished as provided herein;

e.to hear and determine any and all objections to the allowance of Claims and Interests and the estimation of Claims, both before and after the Confirmation Date, including any objections to the classification of any Claim or Interest, and to allow or disallow any Claim or Interest, in whole or in part;

f.to enter and implement such orders as may be appropriate if the Confirmation Order is for any reason stayed, revoked, modified, or vacated;

g.to issue orders in aid of execution, implementation, or consummation of the Plan;

h.to consider any modifications of the Plan, to cure any defect or omission, or to reconcile any inconsistency in any order of the Bankruptcy Court, including, without limitation, the Confirmation Order;

i.to hear and determine all applications for compensation and reimbursement of Professional Claims under the Plan or under sections 330, 331, 503(b), 1103, and 1129(a)(4) of the Bankruptcy Code;

j.to determine requests for the payment of Claims entitled to priority under section 507(a)(1) of the Bankruptcy Code, including compensation of and reimbursement of expenses of parties entitled thereto;

k.to hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of the Plan, or the Confirmation Order, including disputes arising under agreements, documents, or instruments executed in connection with this Plan;

l.to hear and determine all suits or adversary proceedings to recover assets of the Reorganizing Debtors and property of their Estates, wherever located;

m.to hear and determine matters concerning state, local, and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;

n.to hear any other matter not inconsistent with the Bankruptcy Code;

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o.to hear and determine all disputes involving the existence, nature, or scope of the Reorganizing Debtors’ discharge, including any dispute relating to any liability arising out of the termination of employment or the termination of any employee or retiree benefit program, regardless of whether such termination occurred prior to or after the Effective Date;

p.to enter a final decree closing the Chapter 11 Cases; and

q.to enforce all orders previously entered by the Bankruptcy Court.

Unless otherwise specifically provided herein or in a prior order of the Bankruptcy Court, the Bankruptcy Court shall have exclusive jurisdiction to hear and determine disputes concerning Claims, Interests and Retained Actions.  Notwithstanding the foregoing, the Reorganizing Debtors and any party may agree in writing that the jurisdiction of the Bankruptcy Court, as delineated in Article XII, shall not be exclusive, but concurrent with other courts of competent jurisdiction.  Provided, however, that nothing herein shall constitute a waiver by the United States of any right it may have to assert that the Bankruptcy Court lacks jurisdiction over any matter set forth in Article XIII.

ARTICLE XIV

MISCELLANEOUS PROVISIONS

14.1Binding Effect.  The Plan shall be binding upon and inure to the benefit of the Reorganizing Debtors, the Reorganized Debtors, the New Investor, Southwest, the ATSB Lender Parties, all present and former holders of Claims and Interests, other parties-in-interest and their respective heirs, successors, and assigns.

14.2Modification and Amendments.  The Plan Proponents, with the consent of Southwest, the Creditors’ Committee and the ATSB (not to be unreasonably withheld), may alter, amend, or modify the Plan or any Exhibits thereto under section 1127(a) of the Bankruptcy Code at any time prior to the Confirmation Hearing.  After the Confirmation Date and prior to substantial consummation of the Plan as defined in section 1101(2) of the Bankruptcy Code, the Plan Proponents may, under section 1127(b) of the Bankruptcy Code, with the consent of Southwest, the Creditors’ Committee and the ATSB  (not to be unreasonably withheld), institute proceedings in the Bankruptcy Court to remedy any defect or omission or reconcile any inconsistencies in the Plan, the Disclosure Statement, or the Confirmation Order, and such matters as may be necessary to carry out the purposes and effects of the Plan.

14.3Committees.

a.Dissolution of Creditors’ Committee.  Effective on the Effective Date, the Creditors’ Committee and any other committee appointed in the Chapter 11 Cases shall dissolve automatically as official committees appointed in the Chapter 11 Cases (but shall except to the extent provided by some other order of the Bankruptcy Court remain intact in the chapter 11 cases of the Liquidating Debtors), whereupon its members, professionals, and agents shall be

60

released from any further duties and responsibilities in the Chapter 11 Cases and under the Bankruptcy Code, except with respect to applications for Professional Claims or reimbursement of expenses incurred as a member of the Creditors’ Committee and any motions or other actions seeking enforcement or implementation of the provisions of this Plan or the Confirmation Order or appeals therefrom.

b.Post-Confirmation Committee.  On the Effective Date, there shall be formed a Post-Confirmation Committee (the “Post-Confirmation Committee”) with its duties limited to:  overseeing the General Unsecured Claims reconciliation and settlement process conducted by or on behalf of the Reorganized Companies; formulating with the Reorganized Companies appropriate procedures for the settlement of General Unsecured Claims; overseeing the distributions to the holders of General Unsecured Claims under the Plan; to appear before and be heard by the Bankruptcy Court and other courts of competent jurisdiction in connection with the above limited duties; and such other matters as may be agreed upon between the Plan Proponents and the Post-Confirmation Committee or specified in this Plan.  The Post-Confirmation Committee shall consist of not less than three (3) nor more than five (5) members to be appointed by the Creditors’ Committee and may adopt by-laws governing its conduct.  For so long as the General Unsecured Claims reconciliation process shall continue, the Reorganized Companies shall make regular reports to the Post-Confirmation Committee as and when the Reorganized Companies and the Post-Confirmation Committee may reasonably agree upon.  The Post-Confirmation Committee may employ, without further order of the Court, professionals to assist it in carrying out its duties as limited above, including any professionals retained in these Reorganization Cases, and the Reorganized Companies shall pay the reasonable costs and expenses of the Post-Confirmation Committee, including reasonable professional fees, in the ordinary course without further order of the Court, which are not anticipated to exceed $50,000.

14.4Amendment, Revocation, Withdrawal, or Non-Consummation.

a.Right to Revoke or Withdraw.  The Plan Proponents reserve the right to amend, revoke or withdraw the Plan at any time prior to the Effective Date.

b.Effect of Withdrawal, Revocation, or Non-Consummation.  If the Plan Proponents revoke or withdraw the Plan prior to the Effective Date, or if the Confirmation Date or the Effective Date does not occur, then the Plan, any settlement, or compromise embodied in the Plan (including the fixing or limiting to an amount certain any Claim or Interest or Class of Claims or Interests), the assumption or rejection of executory contracts or unexpired leases effected by the Plan, and any document or agreement executed pursuant to the Plan shall be null and void.  In such event, nothing contained herein, and no acts taken in preparation for consummation of the Plan, shall be deemed to constitute a waiver or release of any Claims by or against or Interests in the Reorganizing Debtors or any other Person, to prejudice in any manner the rights of the Reorganizing Debtors or any Person in any further proceedings involving the Reorganizing Debtors, or to constitute an admission of any sort by the Debtors or any other Person.

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Notices. Any notice required or permitted to be provided to the Reorganizing Debtors, the Reorganizing Companies, the New Investor, Southwest, the Creditors’ Committee or the ATSB under the Plan shall be in writing and served by (a) certified mail, return receipt requested, (b) hand delivery, or (c) overnight delivery service, to be addressed as follows:

If to the Reorganizing Debtors or the Reorganized Debtors:

ATA Holdings Corp.

7337 Washington Street

Indianapolis, IN 46231

Attention: General Counsel

with a copy to:

Baker & Daniels LLP

300 North Meridian Street, Suite 2700

Indianapolis, Indiana 46204

Attention: James M. Carr, Esq.

If to the Creditors’ Committee:

John Hancock Funds

101 Huntington Avenue

Boston, Massachusetts 02199-7603

Attention: Arthur Calavritinos

Flying Food Group, LLC

212 North Sangamon Street - Suite 1-A

Chicago, Illinois 60601

Attention: David Cotton

with a copy to:

Akin Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, New York 10022

Attention: Lisa Beckerman

If to the New Investor, New DIP Lender, or MatlinPatterson:

MatlinPatterson Global Advisers LLC

520 Madison Avenue, 35th Floor

New York, New York 10022

Attention: David Matlin

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and

MatlinPatterson Global Advisers LLC

520 Madison Avenue, 35th Floor

New York, New York 10022

Attention: Michael Watzky

with a copy to:

Sidley Austin Brown and Wood LLP

787 Seventh Avenue

New York, New York 10019

Attention: Duncan N. Darrow

Gilles Sion

and

Sidley Austin Brown and Wood LLP

One South Dearborn Street

Chicago, Illinois 60603

Attention: Shalom L. Kohn

If to Southwest

Southwest Airlines Co.

P.O. Box 36611

2702 Love Field Drive

Dallas, Texas 75235

Attention: Laura Wright

with a copy to:

Bell, Boyd & Lloyd LLC

70 W. Madison St., 3100

Chicago, IL 60602

Attention: David F. Heroy

If to the ATSB:

Air Transportation Stabilization Board

1120 Vermont Avenue, N.W.

Washington, D.C. 20020

Attention: Mark R. Dayton, executive Director

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with a copy to:

United States Department of Justice

Commercial Litigation Branch

Civil Division

P.O. Box 875, Ben Franklin Station

Washington, D.C. 20044

For Overnight Delivery:

1100 L Street, NW

Room 10006

Washington, DC 20005

Fax:    (202) 307-0494

               (202) 514-9163

Attn:     Andrea Horowitz Handel

     Matthew J. Troy

andrea.handel@usdoj.gov

matthew.troy@usdoj.gov

and

Curtis, Mallet-Prevost, Colt & Mosle LLP

101 Park Avenue

New York, NY 10178-0061

Fax: (212) 697-1559

Attn: Steven J. Reisman

         Andrew M. Thau

sreisman@cm-p.com

athau@cm-p.com

14.5Allocation of Plan Distributions Between Principal and Interest.  To the extent that any Allowed Claim entitled to a distribution under the Plan is composed of indebtedness and accrued but unpaid interest thereon, such distribution shall, to the extent permitted by applicable law, be allocated for United States federal income tax purposes to the principal amount of the Claim first and then, to the extent the consideration exceeds the principal amount of the Claim, to the portion of the Claim representing accrued but unpaid interest.

14.6Term of Injunctions or Stays.  Unless otherwise provided herein or in the Confirmation Order, all injunctions or stays provided for in the Chapter 11 Cases under sections 105 or 362 of the Bankruptcy Code or otherwise, and extant on the Confirmation Date, shall remain in full force and effect until the Effective Date; provided, however, that any injunctions or stays related to any interest in property that has not revested with the Reorganizing Debtors as of the Effective Date shall remain in full force and effect beyond the Effective Date until such

64

time as such property revests in the Reorganizing Debtors in accordance with Article 11.1 of the Plan.

14.7Governing Law.  Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules) or unless otherwise specifically stated, the laws of the State of Indiana shall govern the construction and implementation of the Plan, any agreements, documents, and instruments executed in connection with the Plan (except as otherwise set forth in those agreements, in which case the governing law of such agreement shall control).  Corporate governance matters shall be governed by the laws of the state of incorporation of the applicable Reorganizing Debtor or Reorganized Company.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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Dated: Indianapolis, Indiana
	December 14, 2005
		ATA HOLDINGS CORP.
		ATA AIRLINES, INC.,
		ATA LEISURE CORP.,
		ATA CARGO, INC., and
		EXECUJET
		DEBTORS AND DEBTORS-IN-POSSESSION AS
		PROPONENTS
		By:	/s/ John G. Denison
					John G. Denison
					Chairman and Chief Executive Officer
					ATA Holdings Corp.
					And authorized signatory for
						each of the other Reorganizing Debtors
		MATLINPATTERSON GLOBAL ADVISERS, LLC,
		AS CO-PROPONENT ON BEHALF OF THE NEW
		INVESTOR
		By:	/s/ David Matlin
				Chief Executive Officer

James M. Carr

Terry E. Hall

Stephen A. Claffey

Jeffrey C. Nelson

BAKER & DANIELS LLP

300 North Meridian Street

Suite 2700

Indianapolis, Indiana 46204

(317) 237-1190

Jerald I. Ancel

Michael O’Neil

Jeffrey J. Graham

SOMMER BARNARD ATTORNEYS, PC

1 Indiana Square, Suite 3500

Indianapolis, IN 46204

Telephone: 317-713-3500

Facsimile: 317-713-3699

Wendy W. Ponader (#14633-49)

PONADER & ASSOCIATES, LLP

5241 North Meridian Street

Indianapolis, Indiana 46208

Telephone: (317) 496-3072

Facsimile: (317) 257-5776

ATTORNEYS FOR: ATA HOLDINGS CORP., ATA AIRLINES, INC., ATA LEISURE CORP., ATA CARGO, INC. AS REORGANIZING DEBTORS

EX-2.6

Exhibit 2.6

IN THE UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

In re:	)	Chapter 11
	)
ATA Holdings Corp., et al.,(1)	)	Case No. 04-19866
	)	(Jointly Administered)
Debtors.	)

REORGANIZING DEBTORS’ FIRST IMMATERIAL MODIFICATION AND
CLERICAL CORRECTION TO THE FIRST AMENDED JOINT CHAPTER 11 PLAN
OF REORGANIZATION FOR THE  REORGANIZING DEBTORS

ATA Holdings Corp. (“Holdings”), ATA Airlines, Inc. (“ATA”), ATA Leisure Corp. (“Leisure”) and ATA Cargo, Inc. (“Cargo”) and American Trans Air Execujet, Inc. (“Execujet”, together with Holdings, ATA, Leisure, and Cargo, the “Reorganizing Debtors”), by counsel, submit their first immaterial modification (“Immaterial Modification”) and clerical correction to the First Amended Joint Chapter 11 Plan Of Reorganization For The Reorganizing Debtors (the “Plan”).

The Immaterial Modification seeks to modify section 1.78 of the Plan.  Currently section 1.78 of the Plan reads as follows:

1.78 “Exhibit Filing Date” means the date on which Exhibits to the Plan, other than the Pre-Annexed Exhibits, shall be filed with the Bankruptcy Court, which date shall be no fewer than ten days prior to the voting Deadline, unless a later date is approved by the Bankruptcy Court.

Under this Immaterial Modification, section 1.78 of the Plan will read:

1.78 “Exhibit Filing Date” means the date on which Exhibits to the Plan, other than the Pre-Annexed Exhibits and Exhibits B, C, and D, shall be filed with the Bankruptcy Court, which date shall be no fewer than ten days prior to the voting Deadline, unless a later date is approved by the Bankruptcy Court.  Final term

(1) The Debtors are the following entities: ATA Holdings Corp. (04-19866), ATA Airlines, Inc. (04-19868), Ambassadair Travel Club, Inc. (04-19869), ATA Leisure Corp. (04-19870), Amber Travel, Inc. (04-19871), American Trans Air Execujet, Inc. (04-19872), ATA Cargo, Inc. (04-19873), and C8 Airlines, Inc. f/k/a Chicago Express Airlines, Inc. (04-19874).

1

sheets setting forth the material economic terms to be incorporated into Exhibits B, C, and D shall be filed on or before January 10, 2006, and Exhibits B, C, and D shall be filed on or before Tuesday January 17, 2006.

The Reorganizing Debtors respectfully request that the Court adopt this Immaterial Modification to the Plan.  The changes to the Plan as contemplated by this Immaterial Modification does not affect the ability of the Reorganizing Debtors to perform under the Plan, nor prevent creditors eligible to vote on the Plan from making an informed decision to accept or reject the Plan 

The clerical correction requested would correct Article 6.9 of the Plan as follows:

Other Assumed Obligations.  Except as otherwise limited or proscribed in this Plan, all obligations imposed on the Reorganizing Debtors by an order of the Bankruptcy Court approving any agreements or stipulations entered into during the Chapter 11 Cases that are not fully performed by the Effective Date or have not been rejected or terminated or have not expired by their own terms and are not subject to an unperformed condition precedent that can only occur within the Chapter 11 cases will be assumed obligations of the applicable Reorganized Company to the extent such obligations have not been performed, rejected, or terminated by the Reorganizing Debtors.  Without limiting the foregoing, Reorganized ATA agrees that it will be obligated with respect to the Restructuring Term Sheet, the 1996-1997 EETC Approval Order and to fully pay the City Loans in accordance with their original contractual terms as provided in the Amended Midway Term Sheet.  Notwithstanding anything in this Plan to the contrary, that certain Severance Agreement dated August 31, 2005 and that certain Non-competition and Confidentiality Agreement dated August 31, 2005, both of which were executed by and among J. George Mikelsons, the Reorganizing Debtors, Ambassadair Travel Club, Inc., Amber Travel Inc., American Trans Air Execujet, Inc. and C8 Airlines, Inc. as authorized by the Bankruptcy Court in the Chapter 11 Cases, are hereby incorporated by reference into this Plan and will be assumed obligations of the Reorganized Companies as of the Effective Date.

2

Striking the above phrase was a correction that in error was omitted from the final version of the Plan.  The correction does not change the intended meaning of the Article, and the Reorganizing Debtors request that the Court adopt this clerical correction.

WHEREFORE, the Reorganizing Debtors request that the Court allow the adoption of this Immaterial Modification and clerical correction as set forth herein into proposed Plan and for all other relief proper in the premises.

	Respectfully submitted,
	BAKER & DANIELS LLP
	By:	/s/ Terry E. Hall
James M. Carr (#3128-49)	Attorneys for the Debtors and Debtors-in-Possession
Terry E. Hall (#22041-49)
Stephen A. Claffey (#3233-98)
Jeffrey C. Nelson (#25173-49)
300 North Meridian Street, Suite 2700
Indianapolis, Indiana 46204
Telephone: (317) 237-0300
Facsimile: (317) 237-1000
jim.carr@bakerd.com
terry.hall@bakerd.com
steve.claffey@bakerd.com
jeffrey.nelson@bakerd.com
Wendy W. Ponader (#14633-49)
Ponader & Associates, LLP
5241 North Meridian Street
Indianapolis, Indiana 46208
Telephone: (317) 496-3072
Facsimile: (317) 257-5776
wponader@ponaderlaw.com

3

CERTIFICATE OF SERVICE

The undersigned hereby certifies that the foregoing was served this 6^th day of January, 2006, by electronic mail on the Core Group, the 2002 List and the Appearance List.

/s/ Terry E. Hall

4

EX-2.7

Exhibit 2.7

	SO ORDERED: December 14, 2005.
	/s/ Basil H. Lorch III
	Basil H. Lorch III United States Bankruptcy Judge

IN THE UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

In re:	)	Chapter 11
	)
ATA Holdings Corp., et al.,(1)	)	Case No. 04-19866
	)	(Jointly Administered)
Debtors.	)

ORDER APPROVING THE DISCLOSURE STATEMENT

This matter is before the Court to consider the adequacy of the Disclosure Statement With Respect to First Amended Joint Chapter 11 Plan for Reorganizing Debtors (the “Initial Disclosure Statement”) filed by the Reorganizing Debtors(2) and the Joint Chapter 11 Plan

(1)	The Debtors are the following entities: ATA Holdings Corp. (04-19866), ATA Airlines, Inc. (04-19868), Ambassadair Travel Club, Inc. (04-19869), ATA Leisure Corp. (04-19870), Amber Travel, Inc. (04-19871), American Trans Air Execujet, Inc. (04-19872), ATA Cargo, Inc. (04-19873), and C8 Airlines, Inc. f/k/a Chicago Express Airlines, Inc. (04-19874).
(2)	The Reorganizing Debtors are ATA Holdings Corp., ATA Airlines, Inc., ATA Leisure Corp., ATA Cargo, Inc.,      and American Trans Air Execujet, Inc.

of Reorganizing Debtors (the “Initial Plan”) (docket #3005) on September 30, 2005.  On November 23, 2005, Reorganizing Debtors filed an amended version of the Disclosure Statement with an amended version of the Plan that was further amended and filed for notice in blacklined form on December 10, 2005 (docket #3006).  A further refined proposed Disclosure Statement With Respect to the First Amended Plan For Reorganizing Debtors (the “Disclosure Statement”) as well as blacklines to the last versions filed were filed on December 12, 2005 (Docket Nos. 3375, 3376).  A hearing to consider approval of the Disclosure Statement was conducted on proper notice on December 12, 2005 (the “Hearing”).  The following objections (the “Objections”) to the approval of the Disclosure Statement were filed with the Court:

a.             Limited Objection Of Wilmington Trust Company, As Loan Trustee And Subordination Agent For The 1996-1 Series Of ATA EETC’s To The Disclosure Statement For Debtors’ Plan Of Reorganization (docket #3143);

b.             Limited Objection Of Wilmington Trust Company, As Loan Trustee And Subordination Agent For The 1997-1 Series Of ATA EETC’s To The Disclosure Statement For Debtors’ Plan Of Reorganization (docket #3144);

c.             Objection Of NatTel, LLC To The Disclosure Statement Of The Reorganizing Debtors (docket #3152);

d.             Objection Of Massachusetts Port Authority To Disclosure Statement For Joint Chapter 11 Plan Of Reorganizing Debtors (docket #3156);

e.             Limited Objection Of Ad Hoc Committee Of Certificateholders Of Class A ATAH 1996-1 and 1997-1 EETCS To Debtors’ Disclosure Statement With Respect To Joint Chapter 11 Plan Of Reorganizing Debtors (docket #3161);

f.              First Amended Objection Of NatTel, LLC To The Disclosure Statement Of The Reorganizing Debtors (docket #3303); and

g.             Objection Of Wilmington Trust Company, As Trustee And Subordination Agent With Regard To The 1996-1 And 1997-1 Series Of ATA EETCS, To The [Proposed] First Amended Disclosure Statement With Respect To First Amended Joint Chapter 11 Plan For Reorganizing

Debtors (docket #3312).

The Objections were resolved or were reported to be resolved pending agreement on the inclusion of certain language and other modifications.

The Court, after notice and considering the final version of the Disclosure Statement (a copy of which is attached hereto as Exhibit A), the Objections, and the representations and argument of counsel at the Hearing, and being otherwise advised,

THE COURT HEREBY FINDS AND DETERMINES THAT:(3)

A.            Proper and adequate notice of the Hearing and the deadline for filing objections to the Disclosure Statement was given.

B.            The Initial Disclosure Statement and the Initial Plan were properly filed and served on or about September 30, 2005, and all further filings of amended forms of the Disclosure Statement and Plan provided proper and sufficient notice of proposed changes and such service constitutes proper and adequate service and notice.

C.            At the Hearing, the Court heard reports from the parties who filed the Objections that the parties believed that they would be able to reach agreement with the Reorganizing Debtors on proposed language changes and that no substantive issues were believed to remain.  On the basis of those representations, the Court finds the Objections resolved by agreement or are withdrawn as moot.

D.            The Disclosure Statement in the form attached hereto as Exhibit A contains “adequate information” within the meaning of Section 1125(a) of the Bankruptcy Code.

(3) Findings of fact shall be construed as conclusions of law, and conclusions of law shall be construed as findings of fact as and when appropriate.

IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED THAT:

1.             Pursuant to Section 1125 of the Bankruptcy Code and Bankruptcy Rule 3017(b), the Disclosure Statement, in the form attached hereto as Exhibit A, is approved in all respects.  The Plan Proponents are authorized to solicit votes with respect to the Plan and take actions regarding the solicitation of participation in the Rights Offering and issuance of New Shares, warrants and other securities to be issued pursuant to the Plan using a Disclosure Statement substantially in the form attached hereto

2.             All Persons who solicit acceptance of the Plan using the Disclosure Statement will comply with the requirements of Section 1125 of the Bankruptcy Code and be entitled to the full protection of Section 1125(c) of the Bankruptcy Code.

3.             All Objections to the Disclosure Statement, other than those withdrawn on the record at or before the Hearing or resolved by the revisions to the Disclosure Statement, are overruled.

4.             The Plan Proponents may proceed to solicit votes on the Plan under and subject to the deadlines and procedures approved by the Scheduling Order entered by this Court on December 14, 2005.

5.             This Order evidences the Court’s oral ruling from the Bench on December 12, 2005, approving the Disclosure Statement as amended.

###

Requested by:

James M. Carr (#3128-49)

Terry E. Hall (#22041-49)

Stephen A. Claffey (#3233-98)

Jeffrey C. Nelson (#25173-49)

Baker & Daniels

300 North Meridian Street, Suite 2700

Indianapolis, Indiana  46204

Telephone:  (317) 237-0300

Facsimile:  (317) 237-1000

Distribution:

Core Group

2002 List

Appearance List

Parties who filed Objections to Disclosure Statement

EX-3.1

Exhibit 3.1

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED ARE TRUE AND CORRECT COPIES OF ALL DOCUMENTS FILED FROM AND INCLUDING THE RESTATED CERTIFICATE OR A MERGER WITH A RESTATED CERTIFICATE ATTACHED OF “NEW ATA HOLDINGS INC.” AS RECEIVED AND FILED IN THIS OFFICE.

THE FOLLOWING DOCUMENTS HAVE BEEN CERTIFIED:

RESTATED CERTIFICATE, FILED THE TWENTY- SEVENTH DAY OF FEBRUARY, A.D. 2006, AT 1:25 O’CLOCK P.M.

		/s/ Harriet Smith Windsor
		Harriet Smith Windsor, Secretary of State
4100653   8100X		AUTHENTICATION:	5022270
060824965		DATE:	09-06-06

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State of Delaware

Secretary of State

Division of Corporations

Delivered 01:24 PM 02/27/2006

FILED 01:25 PM 02/27/2006

SRV 060186640 – 4100653 FILE

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

NEW ATA HOLDINGS INC.

The undersigned, the duly qualified and authorized Secretary of New ATA Holdings Inc., a Delaware corporation incorporated on January 26, 2006, does hereby certify that the Certificate of  Incorporation of the Corporation filed on January 26, 2006 was amended pursuant to Sections 241 and 245 of the General Corporation Law of the State of Delaware by a Certificate of Amendment filed with the Secretary of State of the State of Delaware on February 27, 2006, and that the Corporation had not received any payment for any of its stock as of the date of such filing. The undersigned further certifies that the following is the true and correct Amended and Restated Certificate of Incorporation of the Corporation:

First: The name of the corporation (which is hereinafter referred to as the “Corporation”) is New ATA Holdings Inc.,

Second: The address of the Corporation’s registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle. The name of the Corporation’s registered agent at such address is The Corporation Trust Company.

Third: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware (the “Act”).

Fourth: A, The total number of shares of all classes of capital stock which the Corporation shall have the authority to issue is 50,000,000 par value of $0.0001 (1/100 of 1 cent) per share. 12,308,480 shares of the authorized and unissued common stock of the Corporation are hereby designated “Class A Common Stock,” with such rights, preferences, powers, privileges and restrictions, qualifications and limitations as stated in the By-laws of the Corporation.

B.            The Board of Directors is authorized, subject to any limitations prescribed by law or the By-Laws of the Corporation, to provide for the issuance of the shares of Common Stock in series, and by filing a certificate pursuant to the Act (such certificate being hereinafter referred to as a “Common Stock Designation”), to establish from time the number of shares to be included in each such series, and to fix the designation, powers, preferences, and rights of the shares of each such series and any qualifications, limitations, or restrictions thereof. The Board of Directors is empowered, subject to any limitations prescribed by law or the By-Laws of the Corporation, without further stockholder approval, to issue shares of Preferred Stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting or other powers or rights of the holders of the Common Stock. The Corporation is prohibited from issuing non-voting equity securities to the extent required by section 1123(a)(6) of the Bankruptcy Code.

C.            In the exercise of voting privileges, each holder of shares of the Class A Common Stock of the Corporation shall be entitled to one (1) vote for each share held in his name on the books of the Corporation. In all elections of directors of the Corporation, cumulative voting is expressly prohibited.

FIFTH: The name and mailing address of the incorporator are L. Gilles Sion, Sidley Austin LLP, 787 Seventh Avenue, New York, NY 10019.

SIXTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to alter or repeal the By-laws of the Corporation, or adopt any new By-Laws of the Corporation, subject to any specific limitation on such power contained in any By-laws adopted by the stockholders; provided, however, that, until such time as may be specified in the By-laws of the Corporation, and subject to such limitations as may be set forth in the By-laws, in no event shall the stockholders be entitled to alter or repeal the By-Laws of the Corporation, or adopt any new By-Laws of the Corporation in a manner that would materially and adversely affect the rights of the holders of the Class A Common Stock of the Corporation, unless any such alteration, repeal or adoption shall have been approved by the Board of Directors of the Corporation pursuant to the By-laws. Elections of directors need not be by written ballot unless the By-laws of the Corporation so provide.

SEVENTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. If the General Corporation Law of Delaware is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of Delaware, as so amended. Any repeal or modification of this Article Seventh by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

EIGHTH: Each person who is or was a director or officer of the Corporation, and each person who serves or served at the request of the Corporation as a director or officer of another enterprise, shall be indemnified by the Corporation in accordance with, and to the fullest extent authorized by, the General Corporation Law of Delaware as it may be in effect from time to time.

NINTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon the stockholders herein are granted subject to this reservation; provided however, that, until such time as may be specified in the By-laws of the Corporation, and subject to such limitations as may be set forth in the By-laws, the stockholders shall not be entitled to amend, alter, change or repeal any provision contained in Article Sixth of this Certificate of Incorporation in a manner that would materially and adversely affect the rights of the holders of the Class A Common Stock of the Corporation, unless any such

2

amendment, alteration, change or repeal shall have been approved by the Board of Directors of the Corporation pursuant to the By-laws.

TENTH: The Corporation elects not to be governed by 8 Del.C. §203 (the Delaware Takeover Statute), as now in effect or hereafter amended, or any successor statute thereto.

ELEVENTH: Limitations on Ownership and Control by Non-U.S. Citizens.

A.            Definitions. For purposes of this Article Eleventh, the following definitions shall apply:

“Act” shall mean Title 49 of the United States Code, as amended, or as the same may be from time to time amended, supplemented, and/or superseded.

“Citizen of the United States” shall have the meaning set forth in Section 40102(a)(15) of the Act (or any successor or replacement provision thereto) and administrative interpretations issued by the Department of Transportation, its predecessors and successors, from time to time.

“Foreign Stock Record” shall have the meaning set forth in Article Eleventh (C).

“Non-U.S. Citizen” shall mean any person or entity who is not a “Citizen of the United States”.

“Own or Control.” or “Owned or Controlled” shall mean ownership of record, beneficial ownership, or the power to direct by agreement, agency or in any other manner, the voting of Stock. Any determination by the Board of Directors as to whether Stock is Owned or Controlled by a Non-U.S. Citizen shall be final.

“Permitted Percentage” shall mean 25% of the voting power of the Stock, or such other amount as permitted by Section 40102 of the Act (or any successor or replacement thereto) to be Owned or Controlled by Non-U.S. Citizens.

“Stock” shall mean the outstanding capital stock of the Corporation entitled to vote; provided, however, that for the purpose of determining the voting power of Stock that shall at any time constitute the Permitted Percentage, the voting power of Stock outstanding shall not be adjusted downward solely because shares of Stock may not be entitled to vote by reason of any provision of this Article Eleventh.

B.            Non-U.S. Citizen Ownership. It is the policy of the Corporation that, consistent with the requirements of the Act, Non-U.S. Citizens shall not Own or Control more than the Permitted Percentage and, if Non-U.S. Citizens nonetheless at any time Own or Control more than the Permitted Percentage, the voting rights of the Stock Owned or Controlled by Non-U.S. Citizens in excess of the Permitted Percentage shall be automatically suspended in accordance with Article Eleventh (C) and (D).

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C.            Foreign Stock Record.  The Corporation or any transfer agent designated by it shall maintain a separate stock record (the “Foreign Stock Record”) in which shall be registered shares of Stock known to the Corporation to be Owned or Controlled by Non-U.S. Citizens. Without Limiting the provisions of sub-section E below, each shareholder of the Corporation and any proposed transferee thereof shall certify, if required to do so pursuant to one or more forms which may be established for this purpose from time to time by the Corporation or its transfer agent, whether it is a Citizen of the United States or a Non-U.S. Citizen, and the Corporation or its transfer agent shall register in the Corporation’s Foreign Stock Record any such shares known to it to be held by a Non-U.S. Citizen. The Foreign Stock Record shall include (a) the name and citizenship of each such Non-U.S. Citizen and (b) the date of registration and number of such shares Owned or Controlled by each Such Non-U.S. Citizen. The Corporation may refuse to register the issuance or transfer of shares on its books if such issuance or transfer would result to shares in excess of the Permitted Percentage being entered on the Foreign Stock Record.

D.            Suspension of Voting Rights.  If at any time the number of shares of Stock known to the Corporation to be Owned or Controlled by Non-U.S. Citizens exceeds the Permitted Percentage, the voting rights of shares Owned or Controlled by Non-U.S. Citizens in excess of the Permitted Percentage at the time of any vote or action of the shareholders of the Corporation shall, without further action by the Corporation, be suspended. Such suspension of voting rights shall (i) be applied to shares in reverse chronological order, based upon the date of registration of such shares in the stock transfer records of the Corporation, and (ii) automatically terminate upon the earlier of the (1) transfer of such shares to a person or entity who is a Citizen of the United States, or (2) transfer of other shares Owned or Controlled by Non-U.S. Citizens to persons or entities who are citizens of the United States in a Sufficient amount to permit the Permitted Percentage not to be exceeded.

E.             Certification.

The Corporation may by notice in writing (which may be included in the form of proxy or ballot distributed to shareholders in connection with the annual meeting or any special meeting of the shareholders of the Corporation, or otherwise) require a person or entity that Owns or Controls Stock to certify in such manner as the Corporation shall deem appropriate (including by way of execution of any form of proxy or ballot of such person) that, to the knowledge of such person or entity, such person or entity is a Citizen of the United States.

For Purposes of applying the provisions of this Article Eleventh with respect to any Stock, in the event of the failure of any person to provide the certificate or other information to which the Corporation is entitled pursuant to this Article Eleventh, the Corporation may, if it so elects, presume that the Stock in question is Owned or Controlled by Non-U.S.Citizens.

F.Board of Directors and Officers of the Corporation.

The President and Chairman of the Board must at all times be Citizens of the United States. At least two-thirds of the Board of Directors and other officers must be Citizens of the United States.

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THE UNDERSIGNED, being the duly qualified Secretary of the Corporation, has executed this Certificate on February 27, 2006.

/s/ Brian T. Hunt

Brian T. Hunt, Securetary

5

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED
BY-LAWS OF

NEW ATA HOLDINGS INC.

TABLE OF CONTENTS

	Page
ARTICLE I  Stockholders Meetings	1
Section 1.1.  Annual Meetings	1
Section 1.2.  Special Meetings	2
Section 1.3.  Notice of Meetings	2
Section 1.4.  Adjournments	2
Section 1.5.  Quorum	3
Section 1.6.  Conduct; Remote Communication	3
Section 1.7.  Voting	3
Section 1.8.  Proxies	5
Section 1.9.  Voting Procedures and Inspectors of Elections	5
Section 1.10.  Fixing Date of Determination of Stockholders of Record	6
Section 1.11.  List of Stockholders Entitled to Vote	7
Section 1.12.  Action By Consent of Stockholders	8
ARTICLE II  Board of Directors	9
Section 2.1.  Number	9
Section 2.2.  Qualification	9
Section 2.3.  Election; Resignation; Vacancies	9
Section 2.4.  Regular Meetings	10
Section 2.5.  Special Meetings	10
Section 2.6.  Organization	10
Section 2.7.  Quorum; Vote Required for Action	10
Section 2.8.  Committees	12
Section 2.9.  Telephonic Meetings	12
Section 2.10.  Informal Action by Directors	12
Section 2.11.  Committee Rules	12
Section 2.12.  Reliance upon Records	13
Section 2.13.  Interested Directors	13
Section 2.14.  Compensation	13
ARTICLE III	13
Section 3.1.  Executive Officers; Election; Qualification; Term of Office	13
Section 3.2.  Resignation; Removal; Vacancies	14
Section 3.3.  Powers and Duties of Executive Officers	14
Section 3.4.  Chief Executive Officer	14
Section 3.5.  Secretary	14
ARTICLE IV  Stock Certificates, Transfers and Redemption	15
Section 4.1.  Certificate	15
Section 4.2.  Lost, Stolen or Destroyed Certificates; Issuance of New Certificates	15

Section 4.3.  Transfers of Stock	15
Section 4.4.  Stockholders of Record	16
Section 4.5.  Redemption of Stock	16
ARTICLE V  Notices	16
Section 5.1.  Manner of Notice	16
Section 5.2.  Dispensation with Notice	17
Section 5.3.  Waiver of Notice	17
ARTICLE VI  Indemnification	17
Section 6.1.  Right to Indemnification	17
Section 6.2.  Prepayment of Expenses	18
Section 6.3.  Claims	18
Section 6.4.  Non-Exclusivity of Rights	18
Section 6.5.  Other Indemnification	18
Section 6.6.  Amendment or Repeal	19
ARTICLE VII  Stockholders Rights	19
Section 7.1.  Transactions with Interested Parties	19
Section 7.2.  Preemptive Right	19
Section 7.3.  Co-Sale	20
Section 7.4.  Delivery of Financial Statements	21
ARTICLE VIII  Registration Rights	23
Section 8.1.  Piggy-back	23
Section 8.2.  Certain Exempt Transactions	23
Section 8.3.  Cutbacks	23
Section 8.4.  Registration Procedures	23
Section 8.5.  Holders’ Obligations	25
Section 8.6.  Expenses of Registration	25
Section 8.7.  Holdback; Indemnification	26
ARTICLE IX  General	26
Section 9.1.  Fiscal Year	26
Section 9.2.  Seal	26
Section 9.3.  Form of Records	26
Section 9.4.  Amendment of By-laws	26
ARTICLE X  DEFINITIONS	27
Section 10.1.  Definitions	27

BY-LAWS
OF

NEW ATA HOLDINGS INC.

ALL CAPITALIZED TERMS USED HEREIN SHALL HAVE THE MEANING SET FORTH
IN ARTICLE X

ARTICLE I

Stockholders Meetings

Section 1.1.Annual Meetings.

(a)An annual meeting of stockholders shall be held for the election of directors and the transaction of such other business as may properly be brought before the meeting in accordance with these By-laws at such date, time and place, if any, as may be fixed by resolution of the Board of Directors of the Corporation from time to time.  The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but shall be held solely by means of remote communication, subject to such guidelines and procedures as the Board of Directors may adopt, as permitted by applicable law.

(b)Only such business shall be conducted at an annual meeting of stockholders as shall have been properly brought before the meeting.  For business to be properly brought before the meeting, it must be: (i) authorized by the Board of Directors and specified in the notice, or a supplemental notice, of the meeting, (ii) otherwise brought before the meeting by or at the direction of the Board of Directors or the chairman of the meeting, or (iii) otherwise properly brought before the meeting by a stockholder.  For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given written notice thereof to the Secretary of the Corporation, delivered or mailed to and received at the principal executive offices of the Corporation not less than 90 days nor more than 135 days prior to the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is called for a date that is not within 30 days from the anniversary date of the preceding year’s annual meeting date, written notice by a stockholder in order to be timely must be received not later than the close of business on the forty-fifth day following the day on which the first public disclosure of the date of the annual meeting was made.  Delivery shall be by hand or by certified or registered mail, return receipt requested.  In no event shall the public disclosure of an adjournment of an annual meeting commence a new time period for the giving of stockholder’s notice as described above.  A stockholder’s notice to the Secretary shall set forth as to each item of business the stockholder proposes to bring before the meeting: (1) a description of such item and the reasons for conducting such business at the meeting, (2) the name and address, as they appear on the

Corporation’s records, of the stockholder proposing such business, (3) a representation that the stockholder is a holder of record of shares of stock of the Corporation entitled to vote with respect to such business and intends to appear in person or by proxy at the meeting to move the consideration of such business, (4) the class and number of shares of stock of the Corporation which are beneficially owned by the stockholder (for purposes of the regulations under Sections 13 and 14 of the Securities Exchange Act of 1934, as amended), and (5) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business.  No business shall be conducted at any annual meeting except in accordance with the procedures set forth in this paragraph (b).  The chairman of the meeting at which any business is proposed by a stockholder shall, if the facts warrant, determine and declare to the meeting that such business was not properly brought before the meeting in accordance with the provisions of this paragraph (b), and, in such event, the business not properly before the meeting shall not be transacted.

Section 1.2.Special Meetings.  Special meetings of stockholders for any purpose or purposes may be called at any time only by the Chairman of the Board, if any, or pursuant to a resolution approved by a majority of the whole Board of Directors or by a committee of the Board of Directors authorized to call such meetings and by no other person.  The Board of Directors may, in its sole discretion, determine that the special meeting shall not be held at any place, but shall be held solely by means of remote communication, subject to such guidelines and procedures as the Board of Directors may adopt, as permitted by applicable law.

Section 1.3.Notice of Meetings.  A written notice of each annual or special meeting of stockholders shall be given stating the place, if any, date and time of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called.  Unless otherwise provided by law, the Certificate of Incorporation or these By-laws, such notice of meeting shall be given not less than ten nor more than 60 days before the date of the meeting to each stockholder of record entitled to vote at such meeting, personally, by mail or, to the extent and in the manner permitted by applicable law, electronically.  If mailed, such notice shall be deemed to be given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation.

Section 1.4.Adjournments.  Any annual or special meeting of stockholders may be adjourned from time to time to reconvene at the same or some other place, if any, and notice need not be given of any such adjourned meeting if the date, time and place, if any, thereof and the means of remote communication, if any, by which stockholders and proxyholders may be deemed present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken.  At the adjourned meeting any business may be transacted which might have been transacted at the original meeting.  If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting in accordance with Section 1.3.

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Section 1.5.Quorum.  Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, the presence in person or by proxy of the holders of stock having a majority of the votes which could be cast by the holders of all outstanding stock entitled to vote at the meeting shall constitute a quorum at each meeting of stockholders.  In the absence of a quorum, the stockholders so present may, by the affirmative vote of the holders of stock having a majority of the votes which could be cast by all such holders, adjourn the meeting from time to time in the manner provided in Section 1.4 of these By-laws until a quorum is present.  If a quorum is present when a meeting is convened, the subsequent withdrawal of stockholders, even though less than a quorum remains, shall not affect the ability of the remaining stockholders lawfully to transact business.

Section 1.6.Conduct; Remote Communication.  (a)  Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or if there is none or in his or her absence, by the President, or in his or her absence, by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting.  The Secretary shall act as secretary of the meeting, but in his or her absence the chairman of the meeting may appoint any person to act as secretary of the meeting.

(b)If authorized by the Board of Directors in accordance with these By-laws and applicable law, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication, (1) participate in a meeting of stockholders and (2) be deemed present in person and vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (i) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

Section 1.7.Voting.

(a)Except as otherwise provided by the Certificate of Incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power on the matter in question.

(b)Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors of election unless so required by Section 1.9 of these By-laws or so determined by the holders of stock having a majority of the votes which could be cast by the holders of all outstanding stock entitled to vote which are present in person or by proxy at such meeting.  Unless otherwise provided in the Certificate of Incorporation, directors shall be elected by a plurality of the votes cast in the election of directors.  Each other question shall, unless otherwise provided by law, the Certificate of Incorporation or these By-laws, be decided by the

3

vote of the holders of stock having a majority of the votes which could be cast by the holders of all stock entitled to vote on such question which are present in person or by proxy at the meeting.

(c)Stock of the Corporation standing in the name of another corporation and entitled to vote may be voted by such officer, agent or proxy as the By-laws or other internal regulations of such other corporation may prescribe or, in the absence of such provision, as the board of directors or comparable body of such other corporation may determine.

(d)Stock of the Corporation standing in the name of a deceased person, a minor, an incompetent or a debtor in a case under Title 11, United States Code, and entitled to vote may be voted by an administrator, executor, guardian, conservator, debtor-in-possession or trustee, as the case may be, either in person or by proxy, without transfer of such shares into the name of the official or other person so voting.

(e)A stockholder whose voting stock of the Corporation is pledged shall be entitled to vote such stock unless on the transfer records of the Corporation the pledgor has expressly empowered the pledgee to vote such shares, in which case only the pledgee, or such pledgee’s proxy, may represent such shares and vote thereon.

(f)If voting stock is held of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or if two or more persons have the same fiduciary relationship respecting the same shares,  unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect:  (i) if only one votes, such act binds all; (ii) if more than one vote, the act of the majority so voting binds all; and (iii) if more than one votes, but the vote is evenly split on any particular matter each faction may vote such stock proportionally, or any person voting the shares, or a beneficiary, if any, may apply to the Court of Chancery of the State of Delaware or such other court as may have jurisdiction to appoint an additional person to act with the persons so voting the stock, which shall then be voted as determined by a majority of such persons and the person appointed by the Court.  If the instrument so filed shows that any such tenancy is held in unequal interests, a majority or even split for the purpose of this subsection shall be a majority or even split in interest.

(g)Stock of the Corporation belonging to the Corporation, or to another corporation a majority of the shares entitled to vote in the election of directors of which are held by the Corporation, shall not be voted at any meeting of stockholders and shall not be counted in the total number of outstanding shares for the purpose of determining whether a quorum is present.  Nothing in this Section 1.7 shall limit the right of the Corporation to vote shares of stock of the Corporation held by it in a fiduciary capacity.

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Section 1.8.Proxies.

(a)Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy filed with the Secretary before or at the time of the meeting.  No such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period.  A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.  A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing with the Secretary an instrument in writing revoking the proxy or another duly executed proxy bearing a later date.

(b)A stockholder may authorize another person or persons to act for such stockholder as proxy (i) by executing a writing authorizing such person or persons to act as such, which execution may be accomplished by such stockholder or such stockholder’s authorized officer, director, partner, employee or agent (or, if the stock is held in a trust or estate, by a trustee, executor or administrator thereof) signing such writing or causing his or her signature to be affixed to such writing by any reasonable means, including, but not limited to, facsimile signature, or (ii) by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission (a “Transmission”) to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such Transmission; provided that any such Transmission must either set forth or be submitted with information from which it can be determined that such Transmission was authorized by such stockholder.

(c)Any inspector or inspectors appointed pursuant to Section 1.9 of these By-laws shall examine Transmissions to determine if they are valid.  If no inspector or inspectors are so appointed, the Secretary or such other person or persons as shall be appointed from time to time by the Board of Directors shall examine Transmissions to determine if they are valid.  If it is determined that a Transmission is valid, the person or persons making that determination shall specify the information upon which such person or persons relied.  Any copy, facsimile telecommunication or other reliable reproduction of such a writing or Transmission may be substituted or used in lieu of the original writing or Transmission for any and all purposes for which the original writing or Transmission could be used; provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or Transmission.

Section 1.9.Voting Procedures and Inspectors of Elections.

(a)If the Corporation has a class of voting stock that is (i) listed on a national securities exchange, (ii) authorized for quotation on an interdealer quotation system of a registered national securities association or (iii) held of record by more than 2,000 stockholders, the Board of Directors shall, in advance of any meeting of stockholders, appoint one or more inspectors (individually an “Inspector,” and collectively the “Inspectors”) to act at such meeting and make a written report thereof.  The Board of Directors may designate one or more persons as alternate Inspectors to replace any Inspector who shall fail to act.  If no Inspector or alternate is

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able to act at such meeting, the chairman of the meeting shall appoint one or more other persons to act as Inspectors.  Each Inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of Inspector with strict impartiality and according to the best of his or her ability.

(b)The Inspectors shall (i) ascertain the number of shares of stock of the Corporation outstanding and the voting power of each, (ii) determine the number of shares of stock of the Corporation present in person or by proxy at such meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period of time a record of the disposition of any challenges made to any determination by the Inspectors and (v) certify their determination of the number of such shares present in person or by proxy at such meeting and their count of all votes and ballots.  The Inspectors may appoint or retain other persons or entities to assist them in the performance of their duties.

(c)The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at such meeting.  No ballots, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the Inspectors after the closing of the polls unless the Court of Chancery of the State of Delaware upon application by any stockholder shall determine otherwise.

(d)In determining the validity and counting of proxies and ballots, the Inspectors shall be limited to an examination of the proxies, any envelopes submitted with such proxies, any information referred to in paragraphs (b) and (c) of Section 1.8 of these By-laws, ballots and the regular books and records of the Corporation, except that the Inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by a stockholder of record to cast or more votes than such stockholder holds of record.  If the Inspectors consider other reliable information for the limited purpose permitted herein, the Inspectors, at the time they make their certification pursuant to paragraph (b) of this Section 1.9, shall specify the precise information considered by them, including the person or persons from whom such information was obtained, when and the means by which such information was obtained and the basis for the Inspectors’ belief that such information is accurate and reliable.

Section 1.10.Fixing Date of Determination of Stockholders of Record.

(a)In order that the Corporation may determine the stockholders entitled (i) to notice of or to vote at any meeting of stockholders or any adjournment thereof, (ii) to receive payment of any dividend or other distribution or allotment of any rights, (iii) to exercise any rights in respect of any change, conversion or exchange of stock, (iv) to express consent to corporate action in writing without a meeting, or (v) to take, receive or participate in any other action, the Board of Directors may fix a record date, which shall not be earlier than the date upon which the resolution fixing the record date is adopted by the Board of Directors and which (1) in the case of a determination of stockholders entitled to notice of or to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, be not more than 60 nor less than ten days before the date of such meeting; (2) in the case of a determination of

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stockholders entitled to express consent to corporate action in writing without a meeting, shall be not more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action, shall be not more than 60 days before such action.

(b)If no record date is fixed, (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (ii) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action of the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, or, if prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (ii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

(c)A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, but the Board of Directors may fix a new record date for the adjourned meeting.

Section 1.11.List of Stockholders Entitled to Vote.  The Secretary shall prepare, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address and the number of shares registered in the name of each stockholder.  Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation.  In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation.  If the meeting is to be held at a place, the list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present.  If the meeting is to be held solely by means of remote communication, the list shall be open to the examination of any stockholder during the whole time thereof on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.  The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

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Section 1.12.Action By Consent of Stockholders.

(a)Unless the power of stockholders to act by consent without a meeting is restricted or eliminated by the Certificate of Incorporation, any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on such action were present and voted.

(b)Every written consent shall bear the date of signature of each stockholder (or his, her or its proxy) signing such consent.  Prompt notice of the taking of corporate action without a meeting of stockholders by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of persons to authorize or take the action were delivered to the Corporation in the manner required by this Section 1.12.  All such written consents shall be delivered to the Corporation at its registered office in the State of Delaware, at its principal place of business or to the Secretary.  Delivery made to the Corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested.

(c)A telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of these By-laws, provided that any such telegram, cablegram or other electronic transmission sets forth or is delivered with information from which the Corporation can determine (A) that the telegram, cablegram or other electronic transmission was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (B) the date on which such stockholder or proxyholder or authorized person or persons transmitted such telegram, cablegram or electronic transmission.  Any consent by means of telegram, cablegram or electronic transmission shall be deemed to have been signed on the date on which it was transmitted.  No consent given by telegram, cablegram or other electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, at its principal place of business or to the Secretary.  Delivery made to the Corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested.  Notwithstanding the foregoing limitations on delivery, consents given by telegram, cablegram or other electronic transmission may be otherwise delivered to the principal place of business of the Corporation or to the Secretary if, to the extent and in the manner provided by resolution of the Board of Directors of the Corporation.

(d)No written consent shall be effective to authorize or take the corporate action referred to therein unless, within 60 days of the earliest dated written consent delivered to the Corporation in the manner required by this Section 1.12, written consents signed by a sufficient number of persons to authorize or take such action are delivered to the Corporation at

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its registered office in the State of Delaware, at its principal place of business or to the Secretary.  All such written consents shall be filed with the minutes of proceedings of the stockholders, and actions authorized or taken under such written consents shall have the same force and effect as those authorized or taken pursuant to a vote of the stockholders at an annual or special meeting.

ARTICLE II

Board of Directors

Section 2.1.Number.  The Board of Directors shall consist of seven (7) directors.

Section 2.2.Qualification.  At least two-thirds of the members of the Board of Directors shall be citizens of the United States under the laws of the United States of America, as defined in Title 49 US Code, section 40102(a)(15), in accordance with applicable precedents of the U.S. Department of Transportation.  A person that is not a U.S. citizen may not be a candidate for Director of the Corporation if such person’s election, together with the incumbent Directors that are not candidates for election as Directors at the same time, would cause less than two-thirds of the Corporation’s Directors to be U.S. citizens.  If, as a result of the election of Directors in any given year, less than two-thirds of the duly elected Directors will be U.S. citizens, the incumbent Directors, together with the Directors who were elected in the election who are U.S. citizens, shall have the absolute authority to deny such person that is not a U.S. citizen, his office as Director of the Corporation.

Section 2.3.Election; Resignation; Vacancies.

(a)Unless the Certificate of Incorporation or an amendment to these By-laws adopted by the stockholders provides for a Board of Directors divided into two or three classes, at each annual meeting of stockholders the stockholders shall elect directors each of whom shall hold office until the next annual meeting of stockholders and the election and qualification of his or her successor, or until his or her earlier death, resignation or removal.  If the Board of Directors is divided into classes, at each annual meeting at which the term of office of a class of directors expires, the stockholders shall elect directors of such class each to hold office until the annual meeting at which the terms of office of such class of directors expire and the election and qualification of his or her successor, or until his or her earlier death, resignation or removal.

(b)Any director may resign at any time by giving written notice to the Chairman of the Board, if any, the President or the Secretary.  Unless otherwise stated in a notice of resignation, it shall take effect when received by the officer to whom it is directed, without any need for its acceptance.

(c)Any newly created directorship or any vacancy occurring in the Board of Directors for any reason may be filled by a majority of the remaining directors (excluding any director elected by any class or series of preferred stock), although less than a quorum, or by a plurality of the votes cast in the election of directors at a meeting of stockholders.  Each director elected to replace a former director shall hold office until the expiration of the term of office of

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the director whom he or she has replaced and the election and qualification of his or her successor, or until his or her earlier death, resignation or removal.  A director elected to fill a newly created directorship shall serve until the next annual meeting of stockholders and the election and qualification of his or her successor, or until his or her earlier death, resignation or removal.

Section 2.4.Regular Meetings.  Unless otherwise determined by the Board of Directors, a regular annual meeting of the Board of Directors shall be held, without call or notice, immediately after and, if the annual meeting of stockholders is held at a place, at the same place as the annual meeting of stockholders, for the purpose of organizing the Board of Directors, electing officers and transacting any other business that may properly come before such meeting.  If the stockholders shall elect the directors by written consent of stockholders as permitted by Section 1.12 of these By-laws, a special meeting of the Board of Directors shall be called as soon as practicable after such election for the purposes described in the preceding sentence.  Additional regular meetings of the Board of Directors may be held without call or notice at such times as shall be fixed by resolution of the Board of Directors.

Section 2.5.Special Meetings.  Special meetings of the Board of Directors may be called by the Chairman of the Board, if any, the President, the Secretary or by any member of the Board of Directors.  Notice of a special meeting of the Board of Directors shall be given by the person or persons calling the meeting at least twenty-four hours before the special meeting.  The purpose or purposes of a special meeting need not be stated in the call or notice.

Section 2.6.Organization.  Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or if there is none or in his or her absence, by the President, or in his or her absence, by a chairman chosen at the meeting.  The Secretary shall act as secretary of the meeting, but in his or her absence the chairman of the meeting may appoint any person to act as secretary of the meeting.  Except as provided in Section 2.7, a majority of the directors present at a meeting, whether or not they constitute a quorum, may adjourn such meeting to any other date, time or place without notice other than announcement at the meeting.

Section 2.7.Quorum; Vote Required for Action.

(a)At all meetings of the Board of Directors a majority of the whole Board of Directors shall constitute a quorum for the transaction of business, except as otherwise provided in these By-laws.  A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of enough directors to leave less than a quorum.  Unless the Certificate of Incorporation or these By-laws otherwise provide, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors; provided, however, that until the occurrence of a Termination Event, the vote of all of the members of the Board of Directors shall be required for the following actions by the Corporation (each, a “Major Action”); provided, however, if in a meeting duly called to transact a Major Action, not all members of the Board of Directors  are present, then unless the directors who are not present have waived, in writing, their attendance at such meeting, the directors present shall adjourn the meeting (the “Major Action Adjourned Meeting”) to any other date, time or place, and at such Major Action Adjourned Meeting, if a quorum is present and the

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requirement of Section 2.7(b) have been complied with, the Board of Directors may transact such Major Action by a majority vote of the whole Board of Directors:

(i)selling any of the assets of the Corporation (or  permitting any of its controlled subsidiaries to sell any of their assets) to any Qualified Stockholder or Related Party, or (ii) paying any management fees to any Qualified Stockholder or Related Party, or (iii) reimbursing any professionals retained by a Qualified Stockholder or Related Party.  Nothing herein will limit (i) the payment of principal, interest or fees by the Corporation to a Qualified Stockholder or Related Party under any loan made to the Corporation by such Qualified Stockholder or Related Party, and (ii) the ability of a shareholder to effect a short-form merger pursuant to 8 Del. C. §253;

(ii)issuance of capital stock, rights, options or warrants to purchase capital stock, or other securities convertible into or exchangeable for capital stock of the Corporation (except securities issued in connection with the exercise of the Warrants or securities issued under the ALPA Stock Option Plan, the Management Stock Option Plan or any other stock option plan approved by the vote of all members of the Board of Directors of the Corporation), other than for fair value of the shares (which shall be cash, tangible assets or the assets of a bona fide business enterprise) pursuant to valuation procedures adopted in good faith by the Board of Directors of the Corporation, and if such issuance is of ten percent (10%) or more of the Corporation’s issued and outstanding shares and if so requested by any member of the Board of Directors, based on a written valuation by an independent investment bank of national standing; (ii) redeem any of the Corporation’s equity or debt securities, by whomever held, if such redemption were to impair its ability or the ability of its direct or indirect subsidiaries to borrow additional funds or would cause the Corporation or any such direct or indirect subsidiary to become insolvent or unable to satisfy its obligations in the ordinary course; or (iii) redeem any equity securities of the Corporation unless all equity securities of the same class are redeemed proportionately and on the same terms; or

(iii)altering or repealing these By-laws or the Certificate of Incorporation, adopting  new By-laws or amend the Certificate of Incorporation, each in a manner which would materially and adversely affect the rights of the Class A Stockholders of the Corporation.

(b)The date, time or place of any Major Action Adjourned Meeting shall be set forth in a written notice delivered to each of the members of the Board of Directors and each of the members of the Steering Committee not less than ten Business Days prior to the date of any such Major Action Adjourned Meeting.  Any such notice shall be in writing and shall be personally served, delivered by a nationally recognized overnight delivery service with charges prepaid, or transmitted by hand delivery or facsimile, addressed to such address or facsimile number as each such person who shall be entitled to notice hereunder shall have specified most recently by written notice to the Corporation, but may be, alternatively, by

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electronic transmission.  Any such notice with regard to a Major Action Adjourned Meeting shall be deemed given on the date of service or transmission if personally served or transmitted by facsimile (with electronic confirmation of receipt); provided, that if delivered or transmitted on a day other than a Business Day or after normal business hours, such notice shall be deemed given on the next Business Day.  Notice otherwise sent as provided herein shall be deemed given on the next Business Day following timely deposit of such notice with an overnight delivery service.  Rejection or refusal to accept any such notice, or the inability to deliver any such notice because of changed address or facsimile number, of which no written notice was given to the Corporation, shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver.

Section 2.8.Committees.  The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more directors of the Corporation.  The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.  In the absence or disqualification of a member of the committee, the member or members present at any meeting and not disqualified from voting, whether or not a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member.  Any such committee, to the extent permitted by law and provided in these By-laws or in the resolution of the Board of Directors designating such committee, or an amendment to such resolution, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; except that no such committee shall take any Major Action without the consent of the Board of Directors pursuant to Section 2.7 hereof.

Section 2.9.Telephonic Meetings.  Directors, or any committee of directors designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 2.9 shall constitute presence in person at such meeting.

Section 2.10.Informal Action by Directors.  Unless otherwise restricted by the Certificate of Incorporation or these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or such committee, as the case may be, consent thereto in writing (which may be in counterparts) or by electronic transmission, and the written consent or consents or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or such committee.  Such filing shall be made in paper form if the minutes of the Corporation are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 2.11.Committee Rules.  Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may make, alter and repeal rules for the conduct of its business.  In the absence of such rules each committee shall conduct its

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business in the same manner as the Board of Directors conducts its business pursuant to this Article II of these By-laws.

Section 2.12.Reliance upon Records.  Every director, and every member of any committee of the Board of Directors, shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors, or by any other person as to matters the director or member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation, including, but not limited to, such records, information, opinions, reports or statements as to the value and amount of the assets, liabilities and/or net profits of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid, or with which the Corporation’s capital stock might properly be purchased or redeemed.

Section 2.13.Interested Directors.  A director who is directly or indirectly a party to a contract or transaction with the Corporation, or is a director or officer of or has a financial interest in any other corporation, partnership, association or other organization which is a party to a contract or transaction with the Corporation, may be counted in determining whether a quorum is present at any meeting of the Board of Directors or a committee thereof at which such contract or transaction is considered or authorized, and such director may participate in such meeting and vote on such authorization to the extent permitted by applicable law, including Section 144 of the General Corporation Law of the State of Delaware.

Section 2.14.Compensation.  Unless otherwise restricted by the Certificate of Incorporation, the Board of Directors shall have the authority to fix the compensation of directors.  The directors shall be paid their reasonable expenses, if any, of attendance at each meeting of the Board of Directors or a committee thereof and may be paid a fixed sum for attendance at each such meeting and an annual retainer or salary for services as a director or committee member.  No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE III

Officers

Section 3.1.Executive Officers; Election; Qualification; Term of Office.  The Board of Directors shall elect a President and may, if it so determines, elect a Chairman of the Board from among its members.  The Board of Directors shall also elect a Secretary and may elect one or more Vice Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers.  Any number of offices may be held by the same person.  Each officer shall hold office until the first meeting of the Board of Directors after the annual meeting of stockholders next succeeding his or her election, and until his or her successor is elected and

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qualified or until his or her earlier death, resignation or removal.  The Chief Executive Officer, the President and at least two-thirds of the persons designated as executive officers shall at all times be citizens of the United States.

Section 3.2.Resignation; Removal; Vacancies.  Any officer may resign at any time by giving written notice to the Chairman of the Board, if any, the President or the Secretary.  Unless otherwise stated in a notice of resignation, it shall take effect when received by the officer to whom it is directed, without any need for its acceptance.  The Board of Directors may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation.  A vacancy occurring in any office of the Corporation may be filled for the unexpired portion of the term thereof by the Board of Directors at any regular or special meeting.

Section 3.3.Powers and Duties of Executive Officers.  The officers of the Corporation shall have such powers and duties in the management of the Corporation as may be prescribed by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors.  The Board of Directors may require any officer, agent or employee to give security for the faithful performance of his or her duties.

Section 3.4.Chief Executive Officer.  The Chief Executive Officer of the Corporation shall in general supervise and control all of the business affairs of the Corporation, subject to the direction of the Board of Directors.  The Chief Executive Officer may execute, in the name and on behalf of the Corporation, any deeds, mortgages, bonds, contracts or other instruments which the Board of Directors or a committee thereof has authorized to be executed, except in cases where the execution shall have been expressly delegated by the Board of Directors or a committee thereof to some other officer or agent of the Corporation.

Section 3.5.Secretary.  In addition to such other duties, if any, as may be assigned to the Secretary by the Board of Directors, the Chairman of the Board, if any, or the President, the Secretary shall (i) keep the minutes of proceedings of the stockholders, the Board of Directors and any committee of the Board of Directors in one or more books provided for that purpose; (ii) see that all notices are duly given in accordance with the provisions of these By-laws or as required by law; (iii) be the custodian of the records and seal of the Corporation; (iv) affix or cause to be affixed the seal of the Corporation or a facsimile thereof, and attest the seal by his or her signature, to all certificates for shares of stock of the Corporation and to all other documents the execution of which under seal is authorized by the Board of Directors; and (v) unless such duties have been delegated by the Board of Directors to a transfer agent of the Corporation, keep or cause to be kept a register of the name and address of each stockholder, as the same shall be furnished to the Secretary by such stockholder, and have general charge of the stock transfer records of the Corporation.

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ARTICLE IV

Stock Certificates, Transfers and Redemption

Section 4.1.Certificate.

(a)Every holder of stock shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman of the Board, if any, or the President or a Vice President, and by the Secretary or an Assistant Secretary, of the Corporation, certifying the number of shares owned by such stockholder in the Corporation.  Any or all of the signatures on the certificate may be facsimile, stamp or other imprint.  In case any officer, transfer agent, or registrar who has signed or whose facsimile, stamp or other imprint signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such officer, transfer agent, or registrar continued to be such at the date of issue.

(b)Each certificate evidencing shares of Common Stock shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN LIMITATIONS ON OWNERSHIP AND CONTROL BY, AND TRANSFER TO, NON-U.S. CITIZENS SET FORTH IN THE CERTIFICATE OF INCORPORATION AND THE BY-LAWS OF THE CORPORATION, AS AMENDED FROM TIME TO TIME.”

Section 4.2.Lost, Stolen or Destroyed Certificates; Issuance of New Certificates.  The Corporation may issue a new certificate for stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such stockholder’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.

Section 4.3.Transfers of Stock.  Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for stock of the Corporation duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer or, if the relevant stock certificate is claimed to have been lost, stolen or destroyed, upon compliance with the provisions of Section 4.2 of these By-laws, and upon payment of applicable taxes with respect to such transfer, and in compliance with any restrictions on transfer applicable to such stock certificate or the shares represented thereby of which the Corporation shall have notice and subject to such rules and regulations as the Board of Directors may from time to time deem advisable concerning the transfer and registration of stock certificates, the Corporation shall issue a new certificate or certificates for such stock to the person entitled thereto, cancel the old certificate and record the transaction upon its books.  Transfers of stock shall be made only on the books of the Corporation by the registered holder thereof or by such holder’s attorney or successor duly authorized as evidenced by documents filed with the Secretary or transfer agent of the Corporation.  Whenever any transfer of stock shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of transfer if, when the certificate or certificates representing such stock are presented to the Corporation for transfer, both the transferor and transferee request the Corporation to do so.

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Section 4.4.Stockholders of Record.  The Corporation shall be entitled to treat the holder of record of any stock of the Corporation as the holder thereof and shall not be bound to recognize any equitable or other claim to or interest in such stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by the laws of the State of Delaware.

Section 4.5.Redemption of Stock.  The Corporation shall not redeem any of its stock except in compliance with the provisions of Section 2.7(a)(ii) of these By-Laws.

ARTICLE V

Notices

Section 5.1.Manner of Notice.  (a)  Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, whenever notice is required to be given to any stockholder, director or member of any committee of the Board of Directors, such notice may be given by (i) personal delivery, (ii) depositing it, in a sealed envelope, in the United States mails, first class, postage prepaid, addressed, (iii) delivering to a company for overnight or second day mail or delivery, (iv) delivering it to a telegraph company, charges prepaid, for transmission, or by transmitting it via telecopier, or (v) any other reliable means permitted by applicable law (including, subject to Section 5.1(b), electronic transmission) to such stockholder, director or member, either at the address of such stockholder, director or member as it appears on the records of the Corporation or, in the case of such a director or member, at his or her business address; and such notice shall be deemed to be given at the time when it is thus personally delivered, deposited, delivered or transmitted, as the case may be.  Such requirement for notice shall also be deemed satisfied, except in the case of stockholder meetings, if actual notice is received orally or by other writing by the person entitled thereto as far in advance of the event with respect to which notice is being given as the minimum notice period required by law or these By-laws.

(b)Without limiting the foregoing, any notice to stockholders given by the Corporation pursuant to these By-laws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given.  Any such consent shall be revocable by the stockholder by written notice to the Corporation and shall also be deemed revoked if (1) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent and (2) such inability becomes known to the Secretary of the Corporation, the transfer agent or other person responsible for the giving of notice; provided, however, that the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.  Notice given by a form of electronic transmission in accordance with these By-laws shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network, together with separate notice to the stockholder of such specific posting, upon the later of such posting and the giving of such separate notice; and (iv) if by another form of electronic transmission, when directed to the stockholder.

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Section 5.2.Dispensation with Notice.

(a)Whenever notice is required to be given by law, the Certificate of Incorporation or these By-laws to any stockholder to whom (i) notice of two consecutive annual meetings of stockholders, and all notices of meetings of stockholders or of the taking of action by stockholders by written consent without a meeting to such stockholder during the period between such two consecutive annual meetings, or (ii) all, and at least two, payments (if sent by first class mail) of dividends or interest on securities of the Corporation during a 12-month period, have been mailed addressed to such stockholder at the address of such stockholder as shown on the records of the Corporation and have been returned undeliverable, the giving of such notice to such stockholder shall not be required.  Any action or meeting which shall be taken or held without notice to such stockholder shall have the same force and effect as if such notice had been duly given.  If any such stockholder shall deliver to the Corporation a written notice setting forth the then current address of such stockholder, the requirement that notice be given to such stockholder shall be reinstated.

(b)Whenever notice is required to be given by law, the Certificate of Incorporation or these By-laws to any person with whom communication is unlawful, the giving of such notice to such person shall not be required, and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person.  Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given.

Section 5.3.Waiver of Notice.  Any written waiver of notice, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice.  Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors, or members of a committee or directors need be specified in any written waiver of notice.

ARTICLE VI

Indemnification

Section 6.1.Right to Indemnification.

(a)The Corporation shall indemnify and hold harmless, to the fullest extent permitted by law as in effect on the date of adoption of these By-laws or as it may thereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another

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corporation, partnership, joint venture or other enterprise, against any and all liability and loss (including judgments, fines, penalties and amounts paid in settlement) suffered or incurred and expenses reasonably incurred by such person; provided that any standard of conduct applicable to whether a director or officer may be indemnified shall be equally applicable to an employee or agent under this Article VI.  The Corporation shall not be required to indemnify a person in connection with a proceeding initiated by such person, including a counterclaim or crossclaim, unless the proceeding was authorized by the Board of Directors.

(b)For purposes of this Article VI:  (i) any reference to “other enterprise” shall include all plans, programs, policies, agreements, contracts and payroll practices and related trusts for the benefit of or relating to employees of the Corporation and its related entities (“employee benefit plans”); (ii) any reference to “fines”, “penalties”, “liability” and “expenses” shall include any excise taxes, penalties, claims, liabilities and reasonable expenses (including reasonable legal fees and related expenses) assessed against or incurred by a person with respect to any employee benefit plan; (iii) any reference to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation or trustee or administrator of any employee benefit plan which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, beneficiaries, fiduciaries, administrators and service providers; (iv) any reference to serving at the request of the Corporation as a director, officer, employee or agent of a partnership or trust shall include service as a partner or trustee; and (v) a person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” for purposes of this Article VI.

Section 6.2.Prepayment of Expenses.  The Corporation shall pay or reimburse the reasonable expenses incurred in defending any proceeding in advance of its final disposition if the Corporation has received an undertaking by the person receiving such payment or reimbursement to repay all amounts advanced if it should be ultimately determined that he or she is not entitled to be indemnified under this Article VI or otherwise.

Section 6.3.Claims.  If a claim for indemnification or payment of expenses under this Article VI is not paid in full within 60 days after a written claim therefor has been received by the Corporation, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim.  In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

Section 6.4.Non-Exclusivity of Rights.  The rights conferred on any person by this Article VI shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these By-laws, agreement, vote of stockholders or disinterested directors or otherwise.

Section 6.5.Other Indemnification.  The Corporation’s obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee,

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partner or agent of another corporation, partnership, joint venture or other enterprise shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture or other enterprise.

Section 6.6.Amendment or Repeal.  Any repeal or modification of the foregoing provisions of this Article VI shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.

ARTICLE VII

Stockholders Rights

Section 7.1.Transactions with Interested Parties.  Subject to Sections 2.7(a)(i) and 2.7(a)(ii), no contract or transaction between the Corporation and one or more of the directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of the directors or officers are directors or officers, or have a financial interest (a “Related Party”) shall be void or voidable solely for this reason, or solely because such director or officer is present at or participates in the meeting of the Board of Directors or a committee of the Board of Directors which authorizes the contract or transaction or solely because his, her or their votes are counted for such purpose, if (1) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (2) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee of the Board of Directors, or the stockholders.

Section 7.2.Preemptive Rights.  Prior to the occurrence of a Termination Event, each Class A Stockholder (an “Offeree”) shall have a right to purchase, on the basis of each such Stockholder’s pro-rata portion of all outstanding shares of the Corporation on an as-if-converted basis, all (or any part) of New Securities (as defined below) that the Corporation may, from time to time, propose to sell and issue.  The Offeree’s pro rata share shall be the ratio of the number of shares of the Corporation’s Common Stock then held by the Class A Stockholders as of the date of the Rights Notice (as defined in paragraph (a)), to the sum of the total number of outstanding shares of Common Stock as of such date. This preemptive right shall be subject to the following provisions:

(a)If the Corporation proposes to issue New Securities, it shall give the Offerees written notice (the “Rights Notice”) of its intention, describing the New Securities, the price, the general terms upon which the Corporation proposes to issue them, and the number of shares that the Offeree has the right to purchase under this Section 7.2.  Each Offeree shall have twenty (20) days from delivery of the Rights Notice to agree to purchase  all or any part of its

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pro-rata share of such New Securities for the price and upon the general terms specified in the Rights Notice, by giving written notice to the Corporation setting forth the quantity of New Securities to be purchased.

(b)If the Offerees fail to exercise in full the preemptive right within the period specified in paragraph (a), the Corporation shall be entitled, within one hundred eighty (180) days after delivery of the Rights Notice, to sell the unsold New Securities at a price and upon general terms no more favorable to the purchasers thereof than specified in the Rights Notice.  If the Corporation shall not have sold the New Securities within said one hundred eighty (180) day period the Corporation shall not thereafter issue or sell any such New Securities without first offering such securities to the Offerees in the manner provided above.

(c)For the purpose of these By-laws, the term “New Securities” shall mean any shares of common or preferred stock of any kind of the Corporation, whether now or hereafter authorized, and rights, options, or warrants to purchase said shares of common or preferred stock, and securities of any type whatsoever that are, or may become, convertible into or exchangeable for said shares of common or preferred stock; provided, however, that “New Securities” shall not include (i) securities issuable upon conversion of the ALPA Options or the Management Options, or securities issuable upon the exercise of the Warrants, or shares of Class A Common Stock issued pursuant to the Plan, and such other Common Stock or options to acquire Common Stock issued to employees, directors or consultants pursuant to an incentive stock option plan to be adopted by the Corporation’s Board of Directors, provided that, to the extent Section 2.7(a)(ii) of these By-Laws is applicable to the issuance of such securities under any such incentive stock option plan, such issuance shall have been approved by the Board of Directors pursuant to Section 2.7 hereof, (ii) securities issued at fair value in connection with any business acquisition, including acquisition of another corporation, business entity or line of business of another business entity by merger, consolidation, purchase of assets, or other reorganization, provided that, to the extent Section 2.7(a)(ii) of these By-Laws is applicable to the issuance of such securities, such issuance shall have been approved by the Board of Directors pursuant to Section 2.7 hereof, (iii) securities offered to the public in an initial public offering (“IPO”), (iv) shares of the Corporation issued in connection with any stock split, stock dividend, recapitalization, reclassification or similar event, or (v) shares or securities exempt from the definition “New Securities” by a resolution adopted by a unanimous vote of the Board of Directors.

Section 7.3.Co-Sale.

(a)Prior to a Termination Event, should any Qualified Class A Stockholder (the “Selling Shareholder”) propose to engage in a Qualified Sale (as defined below), each of the other Class A Stockholders (the “Co-Sale Offerees”) shall have the right to participate in such Qualified Sale, in accordance with this Section 7.3, pursuant to the specified terms and conditions of such Qualified Sale.  Following an agreement on a Qualified Sale, the Selling Shareholder shall notify the Co-Sale Offerees and the Corporation in writing of the name and address of the proposed purchaser (the “Proposed Purchaser”) and the terms and conditions of such Qualified Sale (the “Co-Sale Notice”).  Each Co-Sale Offeree shall be entitled, upon written notice to the Selling Shareholder and the Corporation within twenty (20) days after receipt of the

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Co-Sale Notice, to sell to the Proposed Purchaser up to that number of the shares of the Common Stock of the Corporation owned by such Co-Sale Offeree (the “Equity Shares”) determined by multiplying the total number of shares Common Stock to be sold in the Qualified Sale (the “Offered Shares”) by a fraction the numerator of which is the number of shares of Common Stock owned by such Co-Sale Offeree and the denominator of which is the total number of shares of Common Stock owned by all of the Co-Sale Offerees and the Selling Shareholder.  To the extent one or more of the Co-Sale Offerees exercise such right in accordance with the terms and conditions set forth below, the number of shares that the Selling Shareholder may sell pursuant to such Qualified Sale shall be correspondingly reduced.  A “Qualified Sale” shall mean either of the following occurring in one or a series of transactions: (i) a sale of shares of the Corporation in which the Proposed Purchaser acquires shares representing 20% or more of the then-outstanding shares of the Corporation, or (ii) a sale of less than 20% of the then-outstanding shares of the Corporation if such sale confers on the Proposed Purchaser the power to appoint a majority of the members of the Board of Directors.

(b)Any transfer of Common Stock attempted to be made to a Proposed Purchaser as part of a Qualified Sale in violation of this Section 7.3 will be null and void.

(c)Each certificate evidencing shares of Common Stock issued to a Qualified Class A Stockholder and each certificate issued to a Qualified Class A Stockholder in exchange therefor shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN OBLIGATIONS (INCLUDING CERTAIN CO-SALE OBLIGATIONS IN CONNECTION WITH A QUALIFIED SALE) SET FORTH IN THE BY-LAWS OF THE CORPORATION.  A COPY OF SUCH BY-LAWS SHALL BE FURNISHED WITHOUT CHARGE BY THE CORPORATION TO THE HOLDER HEREOF UPON WRITTEN REQUEST.  ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN VIOLATION OF SUCH OBLIGATIONS WILL BE NULL AND VOID.”

Section 7.4.Delivery of Financial Statements.

(a)Until the earlier of the date on which the Corporation shall close and consummate an IPO or the date on which the Corporation shall file a registration statement with the Securities and Exchange Commission (the “SEC”) in accordance with the requirements of Section 12(g)(1) of the Securities Exchange Act of 1934, as amended (the “FS Termination Date”), the Corporation shall deliver to each Class A Stockholder holding three percent (3%) or more of the Corporation’s issued and outstanding shares and to each other stockholder upon written request to the Corporation, as soon as available, and in any event within sixty (60) days after the end of each of the first three (3) quarters of each fiscal year, unaudited interim consolidated balance sheets of the Corporation and its subsidiaries as at the end of such quarter and the related consolidated statements of income, cash flow, stockholders equity and changes in financial position of the Corporation and its subsidiaries as at the end of and for such quarter, setting forth in each case in comparative form the corresponding figures for and as at the end of the corresponding quarter of the preceding fiscal year, all in reasonable detail and certified by a

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principal financial officer of the Corporation, as prepared in accordance with generally accepted accounting principles (“GAAP”) consistently applied (subject to year end adjustments and the absence of footnotes), and fairly presenting the consolidated financial position and results of operations of the Corporation and its subsidiaries for such periods; and

(b)until the FS Termination Date, the Corporation shall deliver to each Class A Stockholder, within ninety (90) days after the end of each fiscal year of the Corporation, consolidated balance sheets of the Corporation and its subsidiaries as at the end of such year and the related consolidated statements of income, stockholders’ equity and changes in financial position of the Corporation and its subsidiaries for such fiscal year, setting forth in each case in comparative form the consolidated figures for the previous fiscal year, all in reasonable detail and accompanied by a report thereon of independent public accountants of recognized national standing selected by the Corporation, which report shall state that such consolidated financial statements present fairly the financial position of the Corporation and its subsidiaries as at the dates indicated and the results of their operations and changes in their financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise specified in such report) and that the audit by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards.

(c)Notwithstanding anything else in this Section 7.4 to the contrary, the Corporation may cease providing the information set forth in this Section 7.4 during the period starting with the date sixty (60) days before the Corporation’s good-faith estimate of the date of filing of a registration statement; provided that the Corporation’s covenants under this Section 7.4 shall be reinstated at such time as the Corporation is no longer actively employing its commercially reasonable efforts to cause such registration statement to become effective.

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ARTICLE VIII

Registration Rights

Section 8.1.Piggy-back.  If at any time the Corporation proposes to register any equity securities held by a Qualified Class A Stockholder under the Securities Act in connection with the public offering solely for cash on Form S-1, S-2 or S-3 (or any replacement or successor forms), the Corporation shall promptly give each such holder of Registrable Securities written notice of such registration.  Upon the written request of each such holder given within 20 days following the date of such notice, but subject to Section 8.7 hereof, the Corporation shall cause to be included in such registration statement and use its best efforts to be registered under the Securities Act all the Registrable Securities that each such holder shall have requested to be registered; provided, however, that such right of inclusion shall not apply to any registration statement covering an underwritten offering of convertible debt securities only.  The Corporation shall have the absolute right to withdraw or cease to prepare or file any registration statement for any offering referred to in this Article VIII without any obligation or liability to any holder.  Each holder of Registrable Securities shall be entitled to have its Registrable Securities included in one registration that shall be declared effective by the SEC pursuant to this Article VIII.

Section 8.2.Certain Exempt Transactions.  Unless otherwise provided herein, the Corporation will not be obligated to effect any registration of Registrable Securities under this Article VIII as a result of the registration of any of its securities in connection with mergers, acquisitions, exchange offers, dividend reinvestment and share purchase plans offered solely to current holders of Common Stock, rights offerings or option or other employee benefit plans.

Section 8.3.Cutbacks.  If the Underwriters’ Representative or Agent shall advise the Corporation in writing (with a copy to each Selling Holder) that, in its opinion, the amount of Registrable Securities requested to be included in such registration would materially adversely affect such offering, or the timing thereof, then the Corporation will include in such registration, to the extent of the amount and class which the Corporation is so advised in writing by the Underwriters’ Representative or Agent can be sold without such material adverse effect in such offering:  first, all securities proposed to be sold by the Corporation for its own account; second, the Registrable Securities requested to be included in such registration by the Qualified Class A Stockholder and the Selling Holders of Registrable Securities pursuant to this Article VIII, pro rata based on the estimated gross proceeds from the sale thereof; and third all other securities requested to be included in such registration.

Section 8.4.Registration Procedures.  Whenever required under Article VIII to effect the registration of any Registrable Securities, the Corporation shall:

(a)Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use the Corporation’s commercially reasonable efforts to cause such registration statement to become effective as soon as reasonably practicable thereafter; provided, however, that before filing a registration statement or prospectus or any amendments or supplements thereto, including documents incorporated by reference after the initial filing of the registration statement and prior to effectiveness thereof, the Corporation shall furnish to one firm

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of counsel for all persons (other than Corporation) selling securities pursuant to such registration statement, copies of all such documents in the form substantially as proposed to be filed with the SEC prior to filing for review and comment by such counsel.

(b)Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act and rules thereunder with respect to the disposition of all securities covered by such registration statement.  If the registration is for an underwritten offering, the Corporation shall amend the registration statement or supplement the prospectus whenever required by the terms of the underwriting agreement entered into pursuant to Section 8.4(b).  Pending such amendment or supplement each such Holder shall cease making offers or Transfers of Registrable Securities pursuant to the prior prospectus.  In the event that any Registrable Securities included in a registration statement subject to, or required by, this Section 8.4 remain unsold at the end of the period during which the Corporation is obligated to use its best efforts to maintain the effectiveness of such registration statement, the Corporation may file a post-effective amendment to the registration statement for the purpose of removing such Securities from registered status.

(c)Furnish to each Selling Holder of Registrable Securities, without charge, such numbers of copies of the registration statement, any pre-effective or post-effective amendment thereto, the prospectus, including each preliminary prospectus and any amendments or supplements thereto, in each case in conformity with the requirements of the Securities Act and the rules thereunder, and such other related documents as any such Selling Holder may reasonably request in order to facilitate the disposition of Registrable Securities owned by such Selling Holder.

(d)Promptly notify each Selling Holder of any stop order issued or threatened to be issued by the SEC in connection therewith and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered.

(e)Make available for inspection by any Selling Holder, any underwriter participating in such offering and the representatives of such Selling Holder and Underwriter (but not more than one firm of counsel to such Selling Holders), all financial and other information as shall be reasonably requested by them, and provide the Selling Holder, any underwriter participating in such offering and the representatives of such Selling Holder and Underwriter the reasonable opportunity to discuss the business affairs of the Corporation with its principal executives and independent public accountants who have certified the audited financial statements included in such registration statement, in each case all as necessary to enable them to exercise their due diligence responsibility under the Securities Act; provided, however, that information that the Corporation determines, in good faith, to be confidential and which the Corporation advises such Person in writing, is confidential shall not be disclosed unless such Person signs a confidentiality agreement reasonably satisfactory to the Corporation or the related Selling Holder of Registrable Securities agrees to be responsible for such Person’s breach of confidentiality on terms reasonably satisfactory to the Corporation.

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(f)Provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration statement.

(g)Use the Corporation’s commercially reasonable efforts to cause the Registrable Securities covered by such registration statement (i) if the Common Stock is then listed on a securities exchange or included for quotation in a recognized trading market, to continue to be so listed or included for a reasonable period of time after the offering, and (ii) to be registered with or approved by such other United States or state governmental agencies or authorities as may be necessary by virtue of the business and operations of the Corporation to enable the Selling Holders of Registrable Securities to consummate the disposition of such Registrable Securities.

(h)Use the Corporation’s commercially reasonable efforts to provide a CUSIP number for the Registrable Securities prior to the effective date of the first registration statement including Registrable Securities.

(i)Take such other actions as are reasonably required in order to expedite or facilitate the disposition of Registrable Securities included in each such registration.

Section 8.5.Holders’ Obligations.  It shall be a condition precedent to the obligations of the Corporation to take any action pursuant to these By-laws with respect to the Registrable Securities of any Selling Holder of Registrable Securities that such Selling Holder shall:

(a)Furnish to the Corporation such information regarding such Selling Holder, the number of the Registrable Securities owned by it, and the intended method of disposition of such securities as shall be reasonably required to effect the registration of such Selling Holder’s Registrable Securities, and to cooperate with the Corporation in preparing such registration;

(b)Agree to sell their Registrable Securities to the underwriters at the same price and on substantially the same terms and conditions as the Corporation or the other Persons on whose behalf the registration statement was being filed have agreed to sell their securities, and to execute the underwriting agreement agreed to by the Corporation and the Qualified Class A Stockholder.

Section 8.6.Expenses of Registration.  The Corporation shall bear and pay all expenses incurred in connection with any registration, filing, or qualification of Registrable Securities incurred in connection with any registration pursuant to Article VIII for each Selling Holder, including all registration, filing and National Association of Securities Dealers, Inc. fees, all fees and expenses of complying with securities laws, all word processing, duplicating and printing expenses, messenger and delivery expenses, the fees and disbursements of counsel for the Corporation, and of the Corporation’s independent public accountants, including the expenses of “cold comfort” letters required by or incident to such performance and compliance, and the reasonable fees and disbursements of one firm of counsel for all Selling Holders in such registration statement, which firm of counsel shall be chosen by the largest Selling Holder and

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will be reasonably satisfactory to the other Selling Holders (the “Registration Expenses”), but excluding underwriting discounts and commissions relating to Registrable Securities (which shall be paid on a pro rata basis by the Selling Holders of Registrable Securities).

Section 8.7.Holdback; Indemnification.

(a)Each Holder entitled, pursuant to this Article VIII, to have Registrable Securities included in a registration statement prepared pursuant to this Article VIII, if so requested by the Underwriters’ Representative or Agent in connection with an offering of any securities covered by a registration statement filed by Corporation, whether or not Holder’s securities are included therein, shall, as a condition to the Corporation’s registration obligation under this Article VIII: (i) agree not to effect any public sale or distribution of shares of Common Stock or any securities convertible into or exchangeable or exercisable for shares of Common Stock, including a sale pursuant to Rule 144 under the Securities Act (except as part of such underwritten or agented registration), during the 15-day period prior to, and during the 90-day period beginning on, the date such registration statement is declared effective under the Securities Act by the SEC, provided that such Holder is timely notified of such effective date in writing by the Corporation or such Underwriters’ Representative or Agent; and (ii) agree to permit the Corporation to impose stop-transfer instructions with respect to the Registrable Securities of each such Holder until the end of such period.

(b)Each Selling Holder and the Corporation shall enter into such mutual indemnification and contribution covenants as are customary in registration rights agreements.

ARTICLE IX

General

Section 9.1.Fiscal Year.  The fiscal year of the Corporation shall be determined by resolution of the Board of Directors.  Absent any contrary resolution, the fiscal year shall end on December 31 of each year.

Section 9.2.Seal.  The corporate seal shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Directors.

Section 9.3.Form of Records.  Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs, electronic format or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time.  The Corporation shall so convert any records so kept upon the request of any person entitled to inspect the same.

Section 9.4.Amendment of By-laws.  Except as provided in Section 2.7(a)(iii), these By-laws may be altered or repealed, and new By-laws made, by the majority vote of the

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whole Board of Directors, but the stockholders, subject to such restrictions as shall be set forth in the Corporation’s Certificate of Incorporation, may make additional By-laws and may alter and repeal any By-laws whether adopted by them or otherwise by the affirmative vote of the holders of at least a majority of the outstanding voting power of the Corporation’s capital stock entitled to vote thereon, voting together as a single class.

ARTICLE X

DEFINITIONS

Section 10.1.Definitions.  For purposes of these By-laws:

(a)“Affiliate” means, as to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person.  The term “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise;

(b)“Agent” means the principal placement agent on an agented placement of Registrable Securities;

(c)“ALPA Option Shares” has the meaning set forth in the Plan;

(d)“ALPA Option Plan” has the meaning set forth in the Plan;

(e)“Business Day” means any day, other than a Saturday or Sunday, on which national banking institutions in New York, New York are open.

(f)“Certificate of Incorporation” means the Certificate of Incorporation of the Corporation.

(g)“Class A Common Stock” shall have the meaning set forth in the Certificate of Incorporation of the Corporation, as may be amended from time to time.

(h)“Class A Stockholder” means a holder of the Corporation’s Class A Common Stock or any direct or indirect transferee thereof;

(i)“Common Stock” means (i) the common stock, par value $.01 per share, of the Corporation, and (ii) shares of capital stock of the Corporation issued by the Corporation in respect of or in exchange for shares of such common stock in connection with any stock dividend or distribution, stock split-up, recapitalization, recombination or exchange by the Corporation generally of shares of such common stock;

(j)“Creditors Committee” has the meaning set forth in the Plan.

(k) “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved

27

and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process;

(l)“FS Termination Date” has the meaning set forth in Section 7.4(a);

(m)“Management Incentive Shares” has the meaning set forth in the Plan;

(n)“Management Stock Option Plan” has the meaning set forth in the Plan;

(o)“Plan” means the First Amended Joint Chapter 11 Plan for Reorganizing Debtors, dated December 14, 2005, filed in the United States Bankruptcy Court, Southern District of Indiana, Indianapolis Division, by ATA Holdings Corp. and certain of its subsidiaries;

(p)“Qualified Class A Stockholder” means a Class A Stockholder which holds at least 25% of the voting stock of the Corporation;

(q) “Qualified Stockholder” means a stockholder which holds at least 25% of the voting stock of the Corporation;

(r)“Registrable Securities” means:  (i) the Common Stock owned (or issuable upon the conversion or exercise of any Warrant) on the date of determination by any Class A Stockholder and any Qualified Class A Stockholder, (ii) any shares of Common Stock or other securities issued as (or issuable upon the conversion or exercise of any Warrant) a dividend or other distribution with respect to, or in exchange by the Corporation generally for, or in replacement by the Corporation generally of, such shares; and (iii) any securities issued in exchange for such shares in any merger or reorganization of the Corporation; provided, however, that Registrable Securities shall not include any securities which have theretofore been registered and sold pursuant to the Securities Act or which have been sold to the public pursuant to Rule 144 or any similar rule promulgated by the SEC pursuant to the Securities Act, and, provided further, the Corporation shall have no obligation under Article VIII to register any Registrable Securities if the Corporation shall deliver to the holders thereof requesting such registration an opinion of counsel reasonably satisfactory to such holders and their counsel to the effect that the proposed sale or disposition of all of the Registrable Securities for which registration was requested does not require registration under the Securities Act for a sale or disposition in a single public sale, and offers to remove any and all legends restricting transfer from the certificates evidencing such Registrable Securities;

(s)“Related Party” has the meaning set forth in Section 7.1;

(t)“Securities Act” means the Securities Act of 1933, as amended;

(u)“Selling Holders” means, with respect to a specified registration pursuant to Article VIII, holders whose Registrable Securities are included in such registration;

(v)Termination Event” means the earlier to occur of (i) a Qualified IPO, and (ii) the date on which no Class A Stockholder or Affiliate thereof collectively hold a majority of the voting equity securities, or have the power to elect a majority of the Board of Directors, of

28

the Corporation.  A “Qualified IPO” means the Corporation’s initial underwritten public offering of its shares pursuant to an effective registration statement under the Securities Act, or equivalent law of another jurisdiction, following which the Shares of the Corporation have a Market Value of at least $75,000,000 (excluding any shares held directly or indirectly by Matlin Patterson ATA Holdings LLC or any Affiliate or successor thereof).  “Market Value” of the shares of the Corporation on a given date shall be the closing price on such date on the stock exchange on which such shares are primarily listed, as reported by The Wall Street Journal (Northeast edition) or any other authoritative source available to the public selected by the Corporation multiplied by the number of outstanding shares of the Corporation;

(w)“Underwriters’ Representative” means the managing underwriter, or, in the case of a co-managed underwriting, the managing underwriter designated as the Underwriters’ Representative by the co-managers;

(x)“Warrants” has the meaning set forth in the Warrant Agreement; and

(y)“Warrant Agreement” has the meaning set forth in the Plan.

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EXHIBIT C

Amended Steering Committee Letter

MATLINPATTERSON ATA HOLDINGS LLC

520 Madison Avenue, 35^th Floor

New York, New York 10022

	February 28, 2006
The Official Committee of Unsecured Creditors appointed pursuant to section 1102(a) of the Bankruptcy Code in the Chapter 11 Cases

Dear Messrs. Cotton and Calavritinos:

Re: New ATA Holdings Inc.

We refer to the First Amended Joint Chapter 11 Plan for Reorganizing Debtors, dated December 14, 2005, filed in the United States Bankruptcy Court, Southern District of Indiana, Indianapolis Division, by ATA Holdings Corp. and certain of its subsidiaries (the “Plan”). All capitalized terms used but not defined herein shall have the meaning set forth in the Plan.

1.                     The Creditors Committee hereby confirms that on or immediately prior to the Effective Date, it will establish a post-Effective Date Steering Committee (the “Steering Committee”). The Steering Committee will be composed of not less than three U.S. Creditor Shareholders of New ATA Holdings Inc. (the “New Holding Company” under the Plan) from among the five largest U.S. Creditor Shareholders of New ATA Holdings Inc. (the “Corporation”) from time to time. On or immediately prior to the Effective Date, the Steering Committee shall notify the Corporation in writing of its composition and provide, with respect to each of its members, a Certificate of U.S. Citizenship, and thereafter provide such information and Certificate of U.S. Citizenship with respect to any new member no later than ten business days following any change in its composition; provided, however, that the failure to so notify the Corporation will not relieve MPAH (as herewith defined) of the obligations set forth in Section 2 hereof, except to the extent that MPAH has been prejudiced materially by such failure (failure to provide a Certificate of U.S. Citizenship by any new member of the Steering Committee will be considered a material prejudice to MPAH). The term ‘U.S. Creditor Shareholder” means a holder of New Shares which (i) received such New Shares on account of its Allowed Class 6 Claims or any direct or indirect transferee thereof, and (ii) is a U.S. Person.   The term “U.S. Person” means (i) in the case of a natural person, a citizen of the United States, and (ii) in the case of an entity, an entity organized under the laws of the United States or a state thereof which has certified in writing (such certification being referred to as a “Certificate of U.S. Citizenship”) to the Corporation that not more than 5% of its outstanding voting shares or capital interests are directly or indirectly held by non-U.S. citizens.

2.                     Matlin Patterson ATA Holdings LLC (“MPAH”, which is the “New Investor” under the Plan) hereby confirms, for the benefit of the U.S. Creditor Shareholders, that until the occurrence of a Termination Event (as such term is defined in the By-Laws of the Corporation), MPAH will vote its shares in the Corporation to re-elect, annually, the director designated by the Creditors Committee to the initial Board of Directors of the Corporation (the “Board”). If, during or following the initial term or any subsequent term of such director or any successor (the “Committee Director”), MPAH wishes to dismiss the Committee Director or does

not wish to have the Committee Director re-elected to the Board, or if the Committee Director resigns or is no longer able to serve on the Board, the Steering Committee will designate a successor to such Committee Director (who must be reasonably acceptable to MPAH).

The rights conferred on the Steering Committee pursuant to this letter shall not be transferable or assignable and shall lapse and be of no further force or effect upon any attempted transfer or assignment thereof.

If prior to a Termination Event, MPAH should engage in a Qualified Sale (as defined in the By-Laws), as a condition to such Qualified Sale, MPAH will procure from the purchaser that it assumes in writing the obligations of MPAH set forth in Section 2 hereof with respect to the shares acquired by such purchaser from MPAH.

To the extent not governed by the Bankruptcy Code, this Letter Agreement shall be governed by, and interpreted in accordance with, the laws of the State of Delaware applicable to contracts made and to be performed in that State without reference to its conflict of laws rules. The parties hereto agree that the appropriate and exclusive forum for any disputes arising out of this Agreement shall be (i) on or prior to the Effective Date, the Bankruptcy Court, or (ii) after the Effective Date, the U.S. District Court for the Southern District of New York, and the parties hereto irrevocably consent to the exclusive jurisdiction of such courts, and agree to comply with all requirements necessary to give such courts jurisdiction.

Please indicate your agreement to the foregoing by executing and returning to us (by fax, email or overnight courier) a copy of this letter.

Very truly yours,
MATLIN PATTERSON ATA HOLDINGS LLC
By:	/s/ Michael J. Watzky
	Name:	Michael J. Watzky
	Title:	President

ACKNOWLEDGED AND AGREED TO

BY THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS

APPOINTED PURSUANT TO SECTION 1102(A) OF THE BANKRUPTCY CODE IN THE

CHAPTER 11 CASES:

By: Flying Food Group, LLC,
	Co-Chair
	By:	/s/ David Cotton
		David Cotton
		Authorized Representative

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By: John Hancock Funds,
	Co-Chair
	By:	/s/ Arthur Calavritinos
		Arthur Calavritinos
		Authorized Representative

ACKNOWLEDGED AND AGREED TO BY

NEW ATA HOLDINGS INC.:

By:	/s/ John Denison
	Name:	John Denison
	Title:	President

3

EX-3.3

Exhibit 3.3

State of Delaware
Secretary of State
Division of Corporations
Delivered 04:51 PM 04/02/2007
FILED 04:51 PM 04/02/2007
SRV 070390236 - 4100653 FILE

CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
NEW ATA HOLDINGS INC.

                New ATA Holdings Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (hereinafter referred to as the “Corporation”), DOES HEREBY CERTIFY as follows:

                FIRST: That the Board of Directors of the Corporation, by unanimous written consent of its members, filed with the minutes of the Board, duly adopted the following resolution setting forth an amendment to the Corporation’s Amended and Restated Certificate of Incorporation, declaring such amendment to be advisable and in the best interests of the Corporation:

RESOLVED, THAT THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION, AS FILED WITH THE SECRETARY OF STATE OF THE STATE OF DELAWARE, BE AMENDED BY CHANGING THE FIRST ARTICLE THEREOF SO THAT, AS AMENDED SAID ARTICLE SHALL BE AND READ AS FOLLOWS:

FIRST: The name of the corporation (which is hereinafter referred to as the “Corporation”) is Global Aero Logistics Inc.

                SECOND: That in lieu of a meeting and vote of shareholders, a majority of shareholders have provided written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware.

                THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of the General Corporation Law of the State of Delaware.

                IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by Brian Hunt, as an authorized person, this 2nd day of April, 2007.

By:	/s/ Brian T. Hunt
	Name: Brian Hunt
	Title: Secretary

EX-3.4

Exhibit 3.4

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF CORRECTION OF “GLOBAL AERO LOGISTICS INC.”, FILED IN THIS OFFICE ON THE SEVENTEENTH DAY OF SEPTEMBER, A.D. 2007, AT 10:09 O’CLOCK P.M.

A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS.

		/s/ Harriet Smith Windsor
		Harriet Smith Windsor, Secretary of State
4100653 8100		AUTHENTICATION:	6005943
071024259		DATE:	09-18-07

1

State of Delaware

Secretary of State

Division of Corporations

Delivered 10:54 PM 09/17/2007

FILED 10:09 PM 09/17/2007

SRV 071024259 – 4100653 FILE

STATE OF DELAWARE

CERTIFICATE OF CORRECTION

Global Aero Logistics Inc., a Corporation organized and existing under the laws of the State of Delaware (the “Corporation”).

DOES HEREBY CERTIFY:

1.The name of the Corporation is Global Aero Logistics Inc.

2.That the Amended and Restated Certificate of Incorporation of the Corporation was filed by the Secretary of State of Delaware on February 27, 2006 (the “Certificate”) and that the Certificate requires correction as permitted by Section 103(f) of the General Corporation Law of the State of Delaware.

3.The inaccuracy or defect of the Certificate is:

Article Fourth of the Certificate does not specify the amount of capital stock of the Corporation which is authorized to be issued as preferred stock.

4.Article Fourth of the Certificate is corrected to read as follows:

FOURTH: A. The total number of shares of all classes of capital stock which the Corporation shall have the authority to issue is 50,000,000, consisting of 35,000,000 shares of common stock with a par value of $0.0001 and 15,000,000 shares of preferred stock with a par value of $0.0001. 12,308,480 shares of the authorized and unissued common stock of the Corporation are hereby designated “Class A Common Stock” with such rights, preferences, powers, privileges and restrictions, qualifications and limitations as stated in the By laws of the Corporation.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Correction to be executed this 17 day of September, 2007.

by:	/s/ Brian T. Hunt
	Name:	Brian T. Hunt
	Title:	Secretary

EX-3.5

I,   HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE  CERTIFICATE OF DESIGNATION OF “GLOBAL AERO  LOGISTICS INC.”, FILED IN THIS OFFICE ON THE FOURTEENTH DAY OF AUGUST, A.D. 2007, AT 10:34 O’CLOCK A.M.

A  FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS.

			/s/ Harriet Smith Windsor
		Harriet Smith Windsor, Secretaryof State
4100653 8100		AUTHENTICATION:		5924145
070918409		DATE:		08-14-07

1

State of Delaware

Secretary of State

Division of Corporations

Delivered 10:52 AM 08/14/2007

FILED 10:34 AM 08/14/2007

SRV 070918409 – 4100653 FILE

GLOBAL AERO LOGISTICS INC.
________________________________

CERTIFICATE OF DESIGNATIONS
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
_________________________________

SERIES A CONVERTIBLE CUMULATIVE PREFERRED STOCK

(Par Value $0.0001)
_________________________________

Global Aero Logistics Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), HEREBY CERTIFIES that the following resolution (this “Certificate of Designation”), on advice and recommendation of the special committee of independent directors, was duly adopted by the board of directors of the Corporation (the “Board of Directors”) pursuant to the authority conferred upon it by the provisions of the Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”), at a meeting of the Board duly held August 13, 2007.

RESOLVED that the issuance of a series of preferred stock, $0.0001 par value, of the Corporation is hereby authorized, and the number, designation, powers, preferences and relative, participating optional and other rights, and qualifications, limitations and restrictions thereof, in addition to those set forth in the Amended and Restated Certificate of Incorporation of the Corporation, are hereby fixed as follows:

SERIES A CONVERTIBLE CUMULATIVE PREFERRED STOCK

A.            Designation.

11,507,142 shares of preferred stock, $0.0001 par value, of the Corporation (the “Preferred Stock”) are hereby constituted as a series of Preferred Stock designated as Series A Convertible Cumulative Preferred Stock (hereinafter called “Series A Preferred Stock”).  The number of shares of Series A Preferred Stock may not be increased but may be decreased by a resolution duly adopted by the Board of Directors (or a duly authorized committee thereof), but not below the number of shares of Series A Preferred Stock then outstanding.

Shares of Series A Preferred Stock shall be issued to MatlinPatterson ATA Holdings LLC (the “Investor”) in connection with, and on the Closing Date under (the “Effective Date”), that certain Bridge and Purchase Agreement, dated as of August 14, 2007, by and between the Corporation and the Investor (the “Bridge Agreement”), in exchange for a price of $14.00 per share (the “Purchase Price”) upon the terms and subject to the conditions set forth in the Certificate of Incorporation and the Bridge Agreement.

B.            Dividend Provisions.

1.             The holders of shares of Series A Preferred Stock shall be entitled to receive dividends, out of any assets legally available therefor, prior and in preference to any declaration or payment of any dividend (other than dividends payable in Class A Common Stock of the Corporation (“Common Stock”) or other securities or rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock of the Corporation) on the Common Stock, at the annual rate of 16% of the Liquidation Preference (as defined below) until conversion or liquidation, as applicable, as adjusted for stock splits, stock dividends, reclassifications or the like.  Such dividends shall be deferred and shall accrete and remain unpaid from the Effective Date, and shall accrete from day to day.  Such dividends shall be cumulative so that if such dividends in respect of any previous or current annual dividend period, at the annual rate specified above, shall not have been paid when due in accordance with the terms set forth herein, the deficiency shall first be fully paid before any dividend or other distribution shall be paid on or declared and set apart for the Common Stock.  The full deferred and accreted amount of such dividends shall be declared by the Corporation upon a conversion of the Series A Preferred Stock into Common Stock or upon a Liquidation Transaction (as defined below) and either (x) in the event of a Conversion, unpaid dividends shall be added to the Liquidation Preference as described below or (y) in the event of a Liquidation Transaction, be payable in cash, but only to the extent assets are legally available therefor and any amounts for which assets are not legally available shall be paid promptly as assets become legally available therefor; any partial payment(s) will be made pro rata among the holders of such shares of Series A Preferred Stock (based on the percentage of Series A Preferred Stock held by each holder as of the time immediately prior to the consummation of such Conversion or Liquidation Transaction).

Without limiting the foregoing, in the event of a conversion of the Series A Preferred Stock into Common Stock, if and to the extent that the accrued and unpaid dividends as of such conversion is an amount less than $8,000,000, then the amount of accrued and unpaid dividends to be added to the Liquidation Preference shall be $8,000,000.

Unless full dividends on the Series A Preferred Stock for all prior dividend periods from the Effective Date shall have been paid or declared and a sum sufficient for the payment thereof set apart: (A) no dividend whatsoever (other than a dividend payable solely in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock or other securities) shall be paid or declared, and (B) no distribution (other than a distribution of Common Stock or other securities or rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock or other securities) shall be made, on any Common Stock.

C.            Liquidation.

1.             Preference.  In the event of any liquidation, dissolution or winding up of the Corporation (each a “Liquidation Transaction”), either voluntary or involuntary, the holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of all other series of Preferred Stock that are junior to the Series A Preferred Stock with respect to rights upon liquidation and

2

Common Stock by reason of their ownership thereof, an amount per share equal to the Purchase Price (as adjusted for stock splits, stock dividends, reclassifications and the like) for each share of Series A Preferred Stock then held by them, plus accrued and unpaid dividends (the “Liquidation Preference”).  If, upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series A Preferred Stock shall be insufficient to permit the payment to such holders of the full Liquidation Preference, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock in proportion to the Liquidation Preference each such holder is otherwise entitled to receive.

2.             Remaining Assets.  Upon the distribution of the Liquidation Preference to the holders of Series A Preferred Stock, the remaining assets in the Corporation shall be distributed ratably among the holders of any shares of outstanding stock of the Corporation ranking junior to the Series A Preferred Stock with respect to rights upon liquidation.

3.             Sale of the Corporation.  Upon a merger, consolidation, sale of all or substantially all of the assets, reorganization or similar business combination of the Corporation immediately following which the holders of Common Stock immediately prior to the consummation of such transaction fail to own at least 50% of the common stock of the successor or surviving corporation (a “Sale of the Corporation”), holders of the Series A Preferred Stock shall be entitled to receive the consideration such Series A Preferred Stock would have received had such shares been converted to Common Stock and a fully subscribed Conversion Rights Offering had been consummated immediately prior to the Sale of the Company (the “Sale Consideration”).  For purposes herein, a Sale of the Corporation shall be considered a Liquidation Transaction.

D.            Conversion.  The Series A Preferred Stock shall be converted into Common Stock at the then applicable Conversion Price (as defined below):

1.             Events of Conversion.   Each share of Series A Preferred Stock shall be convertible into Common Stock of the Corporation (a “Conversion”) in the event that (i) holders of at least a majority of the outstanding Series A Preferred Stock consent to such Conversion (an “Optional Conversion”), (ii) the Corporation consummates a Qualified IPO (as defined below) (an “IPO Conversion) or (iii) the Corporation, upon action taken by the unanimous approval of the independent directors of the Board of Directors, delivers a written notice (a “Required Conversion Notice”) to the holders of the Series A Preferred Stock requiring such Conversion (a “Required Conversion”).  Any Conversion shall trigger the consummation of a Conversion Rights Offering (as defined in Section E below). In the event of and as of the effectiveness of any such Conversion, and in accordance with Section D.7 below, each share of Series A Preferred Stock outstanding shall be converted into such number of fully paid and nonassessable shares of Common Stock (the “Conversion Shares”) as is determined by dividing (i) the then-current Liquidation Preference by (ii) the Conversion Price (as defined below) in effect on the effective date of the Conversion.

2.             Conversion Price.  The conversion price for the Conversion Shares shall be the Purchase Price, as adjusted pursuant to Section F below (the “Conversion Price”); provided, however, that (i) in the event of an IPO Conversion, the Conversion Price shall be the lower of the then-current Conversion Price or 90% of the price per share of the Common Stock offered in

3

the Qualified IPO; and (ii) in the event of any Optional Conversion or Required Conversion, and prior to the consummation of such Conversion, the holders of at least a majority of the outstanding Series A Preferred may elect to have the Corporation conduct a Valuation (as defined below) by providing the Corporation with written notice of such election and, if so elected, the Conversion Price shall be the lower of the then-current Conversion Price and a price mutually agreed upon by the Corporation and the Investor, which shall be based principally on the Valuation; provided further, that, in the event of a Required Conversion, if and to the extent that the Corporation and the Investor do not mutually agree on a fair market value price prior to the Required Conversion Deadline (as defined below), then such Conversion Price shall be the lower of the then-current Conversion Price and the price determined by the investment banking firm conducting the Valuation and the Conversion shall be effective no later than the Required Conversion Date.  In addition, any Conversion of the Series A Preferred Stock shall be subject to the provisions described in Section E below.

3.             Valuation.  The term “Valuation” means an independent valuation of the Corporation conducted by a nationally recognized investment banking firm mutually agreed upon by the Corporation and the Investor.

4.             Optional Conversion.  An Optional Conversion shall be effective upon the date designated by holders of a majority of the outstanding Series A Preferred Stock in a written notice to the Corporation to effect such Optional Conversion (an “Optional Conversion Notice”), and subject to the following sentence, each share of Series A Preferred Stock shall automatically be converted into such number of Conversion Shares based upon the applicable Conversion Price and in accordance with the procedures described in Section D.7 below.  In the event of an Optional Conversion, the holders of Series A Preferred Stock shall not be deemed to have converted (i.e. shall not be effective) until a Conversion Rights Offering Registration Statement (as defined below) is effective in accordance with Section E.1.(c) below.

5.             IPO Conversion.  Unless otherwise agreed by the Corporation and the Investor, each share of Series A Preferred Stock shall automatically be converted into Conversion Shares, based upon the applicable Conversion Price and in accordance with the procedures set forth in Section D.7 below, upon the closing of a firm commitment and underwritten public offering pursuant to an effective registration statement under the Securities Act, on a nationally recognized securities exchange (other than a registration relating solely to a transaction under Rule 145 under the Securities Act or to an employee benefit plan of the Corporation) covering the offer and sale of Common Stock for the account of the Corporation to the public pursuant to which the aggregate gross proceeds received by the Corporation equals or exceeds $75,000,000 (a “Qualified IPO”).  In the event of a Qualified IPO, the holders of Series A Preferred Stock entitled to receive Conversion Shares shall not be deemed to have converted such Series A Preferred Stock until immediately prior to the consummation of the Qualified IPO.

6.             Required Conversion.  Subject to clauses (w), (x), (y) and (z) of this Section D.6, after the date of a Required Conversion Notice a Required Conversion shall be effective upon the effectiveness of the Conversion Rights Registration Statement (as defined in Section E.1(c)), at which time each share of Series A Preferred Stock shall automatically convert to Conversion Shares in accordance with the procedures set forth in Section D.7; provided, however, that (w) if a Required Conversion Notice is delivered at any time after one-year following the Effective

4

Date, then holders of a majority of the outstanding Series A Preferred Stock may, by delivery of written notice to the Corporation within five days of the date of the Required Conversion Notice, elect to require that the Corporation postpone a Required Conversion to a date no later than three months after the date of the Required Conversion Notice (the “Required Conversion Deadline”), (x) any Required Conversion may be delayed by the Investor for so long as necessary to conduct the Valuation and agree to any resultant change in the Conversion Price; provided, further, however, that, in the event of a delay by the Investor pursuant to this clause (x), if and to the extent that the Corporation and the Investor do not mutually agree on a fair market value price prior to the Required Conversion Deadline, then (A) such price shall be the lower of the then-current Conversion Price and the price determined by the investment banking firm conducting the Valuation and (B) the Required Conversion shall occur no later than the Required Conversion Deadline, (y) a Required Conversion may not be effected and shall not be effective until a Conversion Rights Offering Registration Statement (as defined below) is effective in accordance with Section E.1.(c) below, and (z) the Corporation may postpone a Required Conversion at any time upon written notice to the holders of the outstanding Series A Preferred Stock for customary blackout events, including any issues with the Corporation’s financial statements or internal controls, for the period during which any blackout event exists.

7.             Mechanics of Conversion.

(a)           Conversion Procedures for Shares.  Following the receipt by the Corporation of an Optional Conversion Notice or the delivery by the Corporation of notice of an IPO Conversion or a Required Conversion Notice (each such notice a “Conversion Notice” and collectively referred to as the “Conversion Notices”), subject in each case to Section E below, the Corporation shall mail to each holder of record (on a record date set by the Board of Directors at least 10 business days prior to the effectiveness of a Conversion Rights Offering Registration Statement) of a certificate or certificates which represented outstanding shares of Series A Preferred Stock (each a “Certificate” and collectively the “Certificates”), and whose shares of Series A Preferred Stock shall be automatically converted on the date so designated in the Optional Conversion Notice, upon the closing of a Qualified IPO or on the date set forth in such Required Conversion Notice (but in no event may such date be prior to the date upon which the Conversion Rights Offering Registration Statement becomes effective) into the right to receive the applicable number of Conversion Shares as set forth herein: (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Corporation (or other agent of the Corporation as shall be set forth in the letter of transmittal, the “Corporate Agent”) and shall be in form and substance reasonably satisfactory to the Investor) and (ii) instructions for effecting the surrender of the Certificates in exchange for a certificate or certificates representing Conversion Shares.  Upon surrender of a Certificate to the Corporate Agent, together with a duly executed letter of transmittal, the holder of such Certificate shall be entitled to receive, in exchange therefor, subject to Section E below, the Conversion Shares into which such shares of Series A Preferred Stock represented by such Certificate or Certificates so surrendered are convertible, which Certificate or Certificates shall forthwith be cancelled.  If Conversion Shares are to be registered in the name of a Person other than the Person in whose name a surrendered Certificate is registered, it shall be a condition precedent to such Conversion that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer.  Until surrendered as contemplated by this Section D.7.(a), each Certificate shall be deemed at any time

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after the effective time of a Conversion as set forth in Section D.4, Section D.5 or Section D.6, as applicable (the “Effective Time”) to represent only the right to receive Conversion Shares as contemplated by this Section D.7.(a) and subject to Section E.  For purposes of this Certificate of Designation, the term “Person” shall be construed broadly and mean any individual, corporation, association, partnership (limited or general), limited liability company, joint venture, joint stock company, association, trust, estate, unincorporated organization or government or any agency or political subdivision, or other entity or organization.

(b)           Transfer Books; No Further Ownership Rights in Shares.  At the Effective Time, the stock transfer books of the Corporation shall be closed and thereafter there shall be no further registration of transfers of shares of Series A Preferred Stock on the records of the Corporation.  From and after the Effective Time, the holders of Certificates outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares of Series A Preferred Stock except as otherwise provided for herein or by applicable law.  If, after the Effective Time, Certificates are presented to the Corporation for any reason, they shall be cancelled and exchanged as provided for in this Section D.7.

8.             No Fractional Shares.  No fractional shares of Common Stock shall be issued upon the Conversion of any share or shares of the Series A Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded down to the nearest whole share. The number of shares of Common Stock issuable upon such Conversion shall be determined on the basis of the total number of shares of Series A Preferred Stock to be converted into Common Stock and the number of shares of Common Stock issuable upon such aggregate Conversion. If the Conversion would result in any fractional share, the Corporation shall, in lieu of issuing any such fractional share, pay the holder thereof an amount in cash equal to the fair market value of such fractional share on the date of Conversion, as determined in good faith by the Board of Directors.

9.             Reservation of Common Stock Issuable upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the Conversion of the shares of the Series A Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the Conversion of all outstanding shares of such Series A Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the Conversion of all then-outstanding shares of such Series A Preferred Stock, in addition to such other remedies as shall be available to the holder of such Series A Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Certificate of Designation.

E.             Conversion Rights Offering.  In the event of any Conversion of the Series A Preferred Stock, each holder of Series A Preferred Stock shall be required to offer (the “Conversion Rights Offering”) to each then-record holder (on a record date set by the Board of Directors as set forth in Section E.1.(g) below) of Common Stock (including any transferee of such holder but excluding any then-current record holders of Series A Preferred Stock and their controlled or

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controlling affiliates) (each a “Special Conversion Offeree”) the right to purchase up to such Special Conversion Offeree’s pro rata share (based upon, as of the record date, the number of shares of Common Stock owned by such Special Conversion Offeree relative to the number of shares of Common Stock owned by all Special Conversion Offerees, the “Special Offeree Basic Percentage”) of the Special Conversion Shares (as defined below) at a price per share in cash equal to the Conversion Price.  In addition, in the event of any Conversion of the Series A Preferred Stock, each holder of Series A Preferred Stock shall be required to offer to each Special Conversion Offeree that elects to purchase its entire Special Offeree Basic Percentage in the Conversion Rights Offering the right to purchase such Special Offeree’s pro rata share (based upon, as of the record date, the number of shares of Common Stock owned by such Special Conversion Offeree relative to the number of shares of Common Stock owned by (i) all Special Conversion Offerees that have elected to purchase their entire Special Offeree Basic Percentage plus (ii) the holders of Series A Preferred Stock, the “Special Offeree Oversubscription Percentage”) of a number of Special Conversion Shares that are not purchased by other Special Conversion Offerees in respect of their Special Offeree Basic Percentages, multiplied by the aggregate Pro Rata Percentage of all Special Conversion Offerees (the “Special Offeree Oversubscription Shares”).  Notwithstanding the foregoing, the number of Special Conversion Shares (as calculated pursuant to Section E.1(i) below) may be increased to such amount specified by holders of a majority of Series A Preferred Sock pursuant to delivery of written notice thereof to the Company at or prior to the commencement of the Conversion Rights Offering; provided however, that such number of increased Special Conversion Shares shall not exceed the lesser of (i) the number of shares subscribed for by the Special Conversion Offerees in the Conversion Rights Offering, as so increased or (ii) fifty percent (50%) of the Conversion Shares; provided further, that, notwithstanding the foregoing limitation in (i) or (ii), the number of shares offered to Special Conversion Offerees in the Conversion Rights Offering may never be less than the Special Conversion Shares (as calculated pursuant to Section E.1(i) below).

1.             Mechanics of Conversion Rights Offering.

(a)           Special Conversion Shares.

(i)            Immediately upon a Conversion, each holder of record of Series A Preferred Stock (each a “Surrendering Holder,” and collectively, the “Surrendering Holders”) shall surrender for Conversion to Common Stock its Certificate or Certificates representing shares of Series A Preferred Stock in accordance with Section D.7 above.  Upon such surrender of its Certificates, the Corporation shall, promptly after the consummation of the Conversion Rights Offering, issue to each such Surrendering Holder, such number of shares of Common Stock equal to such Surrendering Holder’s pro rata share (based upon the percentage of Series A Preferred Stock held by such Surrendering Holder as of the time immediately prior to the Conversion (its “Series A Percentage”)) of the Conversion Shares, less such Surrendering Holder’s pro rata share (based on its Series A Percentage) of Special Conversion Shares purchased in the Conversion Rights Offering; provided that, the Corporation shall retain for the sale in the Conversion Rights Offering, as set forth below, each Surrendering Holder’s pro rata share (based upon each such Surrendering Holder’s Series A Percentage) of Special Conversion Shares and shall retain all other Conversion Shares until the consummation of the Conversion Rights Offering.  “Special Conversion Shares” means a number of shares of Common Stock equal to the quotient obtained by dividing (i) the aggregate Purchase Price of the then

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outstanding shares of Series A Preferred Stock by (ii) the Conversion Price in effect on the effective date of such Conversion and then multiplying such quotient by the aggregate Pro Rata Percentage of all Special Conversion Offerees.

(ii)           If any Surrendering Holder fails to execute and deliver such documents reasonably required by the Corporation to effect a Conversion, including, without limitation, its Certificate or Certificates representing Series A Preferred Stock, and such Conversion Rights Offering is subsequently consummated (a “Defaulting Surrendering Holder”), (w) the Corporation may issue Special Conversion Shares properly subscribed and paid for by Special Conversion Offerees and receive the consideration paid by the Special Conversion Offerees for such Special Conversion Shares that would otherwise be paid to the Defaulting Surrendering Holder and the Defaulting Surrendering Holder shall be deemed to have appointed any member of the Board of Directors as such Defaulting Surrendering Holder’s agent to transfer the proper portion of its Conversion Shares to the subscribing Special Conversion Offerees and to receive the consideration in trust for such Defaulting Surrendering Holder; (x) the receipt by the Corporation of the consideration for the Special Conversion Shares owned by such Defaulting Surrendering Holder shall be a valid transfer of such Conversion Shares from the Defaulting Surrendering Holder to the purchasing Special Conversion Offerees and after their names have been entered into the records of the Corporation in purported exercise of the power, the validity of the proceedings shall not be questioned by any Person; (y) the Defaulting Surrendering Holder shall be bound to deliver to the Corporation its Certificate or Certificates representing its shares of Series A Preferred Stock and on such delivery shall be entitled to receive the consideration therefor without interest; and (z) the Defaulting Surrendering Holder shall be liable to and reimburse the Corporation for any and all reasonable fees and expenses (including reasonable attorney’s fees and disbursements) incurred by the Corporation in connection with or arising from the Corporation’s enforcement of the provisions of this Section E.1.(a)(ii) or the defense of the Corporation from any action, suit or proceeding, directly or indirectly, initiated by or on the behalf of any such Defaulting Surrendering Holder in connection with or arising from the Corporation’s enforcement of the provisions of this Section E.1.(a)(ii).

(b)           Conversion Rights Offering Documents.

(i)            Upon delivery of a Conversion Notice, the Corporation shall prepare an offering memorandum, subscription documents, and all other documents necessary to be distributed to Special Conversion Offerees in order to consummate the Conversion Rights Offering (collectively, the “Conversion Rights Offering Documents”) and a Conversion Rights Offering Registration Statement (as defined below) and to promptly mail such Conversion Rights Offering Documents to Special Conversion Offerees with the Conversion Rights Offering Notice (as defined in Section E.1.(g) below).  The Conversion Rights Offering Documents shall be in customary form.  The Corporation shall provide to the Investor and the members of the special committee of the Board of Directors of the Corporation established on February 27, 2007, or, if such committee no longer exists, another special committee of the Corporation consisting solely of independent and disinterested directors (the “Special Committee”), copies of the Conversion Rights Offering Documents, and all modifications thereto, prior to the distribution of such Conversion Rights Offering Documents to Special Conversion Offerees and shall consult with the Investor and the Special Committee in connection therewith, and such Conversion Rights Offering Documents shall be in form and substance reasonably satisfactory to the Investor and

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the Special Committee.  The Conversion Rights Offering Documents shall not contain any untrue statement of a material fact, and shall not omit to state a material fact necessary to make the statements contained therein, under the circumstances under which such statements were made, not misleading.  If, subsequent to the distribution of the Conversion Rights Offering Documents to Special Conversion Offerees, the Corporation or the Investor become aware of any untrue statement or omission of material fact in the Conversion Rights Offering Documents, the Corporation or the Investor shall immediately inform the other.  The Corporation shall thereafter promptly prepare and distribute to all Special Conversion Offerees a supplement to the Conversion Rights Offering Documents (the “Conversion Rights Offering Supplement”).  Such Conversion Rights Offering Supplement shall clarify and correct any untrue statement or omission.  Any Conversion Rights Offering Supplement must be reasonably satisfactory in form and substance to the Investor and the Special Committee.

(ii)           The Corporation shall use reasonable commercial efforts to engage a Corporate Agent reasonably satisfactory to the Investor, as the agent for the Conversion Rights Offering and to have such Corporate Agent act as escrow agent for the Conversion Rights Offering.

(iii)          Election to Subscribe for Special Conversion Shares.  Any Special Conversion Offeree that elects to subscribe for its Special Offeree Basic Percentage of Special Conversion Shares shall fill out a Conversion Rights Offering subscription form and, in the event of an election to subscribe for its Special Offeree Oversubscription Percentage in accordance with Section E above, an oversubscription form, in each case in accordance with the instructions set forth in the Conversion Rights Offering Documents and send such forms back to the Corporation within the Conversion Rights Offering Period (as such term is defined in Section E.1.(g)).  At the closing of the Conversion Rights Offering, the Corporation shall issue to each Special Conversion Offeree the number of Special Conversion Shares so subscribed for by such Special Conversion Offeree.  Any Special Conversion Shares not so subscribed for (in respect of Special Offeree Basic Percentages and Special Offeree Oversubscription Percentages) within the Conversion Rights Offering Period shall be released to each holder of Series A Preferred Stock on a pro rata basis (based on the of Series A Percentage).

(iv)          The Corporation shall provide the Investor with a list of the Special Conversion Offerees no later than three (3) Business Days(1) prior to the date on which the Corporation intends to commence the distribution of the Conversion Rights Offering Documents.

(c)           Registration Statement.

(i)            In accordance with and subject to Article VIII of the By-Laws of the Corporation (the “By-Laws”), the Corporation shall prepare and file with the Securities and Exchange Commission (the “SEC”) a registration statement (the “Conversion Rights Offering Registration Statement”) with the respect to the sale of the Special Conversion Shares in accordance with the Conversion Rights Offering on Form S-1 or S-3, as appropriate, or any similar or successor to such forms under the Securities Act or the Securities Exchange Act of

(1)           For purposes of this Certificate of Designations, the term “Business Day” means any other day than a Saturday, Sunday or any other day on which banks in the City of New York are required or permitted to be closed.

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1934, as amended (the “Exchange Act”), which Conversion Rights Offering Registration Statement shall include the Surrendering Holders as the selling stockholders in the Conversion Rights Offering (the “Selling Stockholders”) and shall otherwise describe the Corporation, the Conversion Rights Offering, the Selling Stockholders and other matters required by the SEC or deemed desirable by the Selling Stockholders or the Corporation.  The parties shall use best efforts to have such statement declared effective as promptly as practicable and, in any event, within 45 days after receipt or delivery of a Conversion Notice (the “Effectiveness Deadline”), subject to any postponement of a Required Conversion permitted hereunder, and, in such case, no later than 10 days after the Required Conversion Deadline, and otherwise subject to the terms and conditions described in this Section E.1.(c).

(ii)           The holders of a majority of the Special Conversion Shares shall select counsel to the Selling Stockholders in connection with the Conversion Rights Offering Registration Statement.  The Selling Stockholders shall complete and execute all questionnaires, powers of attorney, indemnities and other documents reasonably requested by the Corporation in connection with the Conversion Rights Offering Registration Statement; provided that no such Selling Stockholder shall be required to make any representations or warranties in connection with any Conversion Rights Offering Registration Statement other than representations and warranties as to (i) such Selling Stockholder’s ownership of his, her or its Special Conversion Shares to be transferred free and clear of all liens, claims, and encumbrances, (ii) such Selling Stockholder’s power and authority to effect such transfer, and (iii) such matters pertaining to compliance with securities laws as may be reasonably requested; provided further that, any obligation of such Selling Stockholder to indemnify any Person, including pursuant to Section E.1.(f) shall be several, not joint and several, among such Selling Stockholders selling Special Conversion Shares, and such liability shall be limited to the net amount received by such Selling Stockholder from the sale of his, her or its Special Conversion Shares pursuant to such Conversion Rights Offering Registration Statement, and the relative liability of each such holder shall be in proportion to such net amounts.

(d)           Selling Stockholders’ Obligations.  It shall be a condition precedent to the obligations of the Corporation to take any action pursuant to this Certificate of Designation with respect to the Conversion Rights Offering Documents and Conversion Rights Offering Registration Statement that Selling Stockholders shall furnish to the Corporation such information regarding such Selling Stockholder, the number of the Special Conversion Shares owned by it, and the intended method of disposition of such securities as shall be reasonably requested to effect the registration of such Selling Stockholder’s Special Conversion Shares, and to cooperate with the Corporation in preparing such registration.

(e)           Lockup.  Each Surrendering Holder of Special Conversion Shares required, pursuant to this Certificate of Designation, to have such securities included in a Conversion Rights Offering Registration Statement prepared pursuant to Section E.1(c), whether or not such Surrendering Holder’s securities are included therein, as a condition to the Corporation’s registration obligation under Section E.1(c):  (i) agrees not to effect any sale or distribution of shares of Common Stock or any securities convertible into or exchangeable or exercisable for shares of Common Stock (other than a transfer of the Series A Preferred to an Affiliate (as such term in defined in the Bridge Agreement) of such Surrendering Holder), including a sale pursuant to Rule 144 under the Securities Act (except for resales of the Special

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Conversion Shares pursuant to the Conversion Rights Offering Registration Statement), during the 15-day period prior to, and during the 30-day period beginning on, the date such Conversion Rights Offering Registration Statement is declared effective under the Securities Act by the SEC, provided that such Surrendering Holder is timely notified of such effective date in writing by the Corporation; and (ii) agree to permit the Corporation to impose stop-transfer instructions with respect to the Special Conversion Shares of each such Surrendering Holder until the end of such period.

(f)            Indemnification.

(i)            The Corporation agrees to indemnify and hold harmless, to the fullest extent permitted by applicable law, each Selling Stockholder, and each of its employees, advisors, agents, representatives, partners, members, officers, and directors, each other Person who participates as an underwriter, broker or dealer in any offering or sale of securities and each other Person who controls such seller or any such participating Person (within the meaning of the Securities Act or the Exchange Act) and any agent or investment advisor thereof (collectively, the “Covered Persons”) against, and reimburse, (i) any and all losses, claims, damages, liabilities and expenses, joint or several (including reasonable attorneys’ fees and disbursements), based upon, arising out of, related to or resulting from any untrue or alleged untrue statement of a material fact contained in the Conversion Rights Offering Registration Statement, any prospectus, or preliminary prospectus included therein or any amendment or supplement thereto, or any document incorporated by reference therein, or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, (ii) any and all losses, claims, damages, liabilities and expenses whatsoever (including reasonable attorney’s fees), as incurred, to the extent of the aggregate amount paid in settlement of any litigation or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon, arising out of, related to or resulting from any such untrue statement or omission or alleged untrue statement or omission, and (iii) any and all costs and expenses (including reasonable attorney’s fees and disbursements) as may be reasonably incurred in investigating, preparing, or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon, arising out of, related to or resulting from any such untrue statement or omission or alleged untrue statement or omission to the extent that any such expense or cost is not paid under clauses (i) or (ii) above; except insofar as any such statements or omissions are made in reliance upon and in strict conformity with written information furnished to the Corporation by such Selling Stockholder or any Covered Person specifically for inclusion in such Conversion Rights Offering Registration Statement, prospectus, preliminary prospectus, amendment or supplement thereto, or document incorporated by reference therein;

(ii)           In connection with the Conversion Rights Offering Registration Statement, each Selling Stockholder shall furnish to the Corporation such written information and affidavits as the Corporation reasonably requests for use in connection with the Conversion Rights Offering Registration Statement or any prospectus, or preliminary prospectus included therein or any amendment or supplement thereto or any document incorporated by reference therein and, to the fullest extent permitted by applicable law, each such Selling Stockholder shall indemnify and hold harmless the Corporation and each of its employees, advisors, agents,

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representatives, partners, members, officers and directors and each other Person who controls the Corporation (within the meaning of the Securities Act or the Exchange Act) against, and reimburse, (i) any and all losses, claims, damages, liabilities and expenses (including reasonable attorneys’ fees and disbursements) based upon, arising out of, related to or resulting from any untrue statement or alleged untrue statement of a material fact contained in the Conversion Rights Offering Registration Statement, any prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission is contained in any written information or affidavit so furnished by such Selling Stockholder or any Covered Person specifically for inclusion in the Conversion Rights Offering Registration Statement, any prospectus, preliminary prospectus, or amendment or supplement thereto; and (ii) any and all costs and expenses (including reasonable attorney’s fees and disbursements) as may be reasonably incurred in investigating, preparing, or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon, arising out of, related to or resulting from any such untrue statement or omission or alleged untrue statement or omission to the extent that any such expense or cost is not paid under clause (i) and (ii) above; provided that, the obligation to indemnify shall be several (and not joint) among the Selling Stockholders, and the liability of each such Selling Stockholder shall be in proportion to, and shall be limited to, the net amount received by such Selling Stockholder from the sale of Special Conversion Shares pursuant to such Conversion Rights Offering Documents and Conversion Rights Offering Registration Statement; and provided, further that such Selling Stockholders shall not be liable in any such case to the extent that prior to the distribution or filing of any such Conversion Rights Offering Documents or the Conversion Rights Offering Registration Statement or prospectus or amendment thereof or supplement thereto, including a Conversion Rights Offering Supplement, such seller has furnished in writing to the Corporation information expressly for use in such Conversion Rights Offering Registration Statement or prospectus or any amendment thereof or supplement thereto which corrected or made the information previously furnished to the Corporation not misleading.

(iii)          Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give such notice shall not limit the rights of such Person or relieve the indemnifying party of its obligations hereunder unless the indemnifying party is prejudiced by such failure) and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any Person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim at the expense of such indemnified person, unless (x) the indemnifying party has agreed to pay such fees or expenses or (y) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such Person.  If such defense is not assumed by the indemnifying party as permitted hereunder, the indemnified party shall be entitled to assume and control such defense and to settle and agree to pay in full such claim without the consent of the indemnifying party without prejudice to the ability of the indemnified party to enforce its claim for indemnification against the indemnifying party hereunder.

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(iv)          Except as otherwise provided in the preceding paragraph, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent, which consent shall not be unreasonably withheld or delayed.  If such defense is assumed by the indemnifying party pursuant to the provisions hereof, such indemnifying party shall not settle or otherwise compromise the applicable claim (i) unless such settlement or compromise contains a full and unconditional release of the indemnified party or (ii) if such settlement or compromise provides for injunctive or other non-monetary relief, in each case, unless the indemnified party otherwise consents in writing.  An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party, a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the reasonable fees and disbursements of such additional counsel or counsels.

(v)           The indemnification provided for under this Certificate of Designation shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, or controlling Person of such indemnified party and shall survive the transfer of securities.

(vi)          As used in this Section E.1.(f), the terms “officers” and “directors” shall include the direct or indirect partners or members of Selling Stockholders that are partnerships or limited liability companies, as the case may be.

(vii)         The reimbursements required by this Section E.1.(f) shall be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred; provided that in the event it is ultimately determined that any amounts so paid were not subject to indemnification or contribution hereunder, the recipient thereof shall promptly return such amounts to the payer thereof.

(g)           Conversion Rights Notice.  Upon or prior to the effectiveness of the Conversion Offering Registration Statement, the Corporation shall establish a record date for determining Special Conversion Offerees and shall promptly send to each Special Conversion Offeree and counsel for the Special Committee a written notice of the Conversion Rights Offering, which shall include, among other things, the Conversion Rights Offering Documents (a “Conversion Rights Offering Notice”).  Such Conversion Rights Offering Notice shall be consistent with the requirements of Section 7.2(a) of the By-Laws and the Securities Act, but shall provide for a 30-day continuous offer period (the “Conversion Rights Offering Period”) in lieu of the 20-day offer period referred to in the By-Laws.  Notwithstanding anything to the contrary contained herein, in the event that the Conversion Rights Offering is terminated for any reason during such 30-day continuous offer period, unless the Special Committee Agrees otherwise, the Conversion Rights Offering and any related Conversion shall be rescinded, with holders returned to their positions as of immediately prior to the Conversion, including the delivery of Certificates representing the Series A Preferred Stock.

2.             Pro Rata Percentage.  “Pro Rata Percentage” means, with respect to each holder of Common Stock, a fraction, expressed as a percentage, the numerator of which shall be the

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number of shares of Common Stock held by such holder and the denominator of which shall be the aggregate number of shares of Common Stock issued and outstanding as of the record date or other relevant date of determination.

3.             Limitation on Conversion Rights Offering.  Notwithstanding anything herein to the contrary, the Conversion Rights Offering may only be effected after (i) the date on which the Corporation becomes a reporting company under the Exchange Act, and (ii) the Conversion Rights Offering Registration Statement is declared effective under the Securities Act as more fully described in Section E.1.(c).  In addition, the Special Conversion Shares shall be “Registrable Securities” as such term is defined in the By-Laws; provided, however, that upon the purchase of shares of Series A Preferred Stock, each holder of Series A Preferred Stock shall (i) not be entitled to any registration rights relating to the Conversion Rights Offering (and shall be deemed to have waived any piggyback registration rights that such holder would otherwise be entitled to in connection with the Conversion Rights Offering) and (ii) cause their respective affiliates not to exercise any piggyback registration rights relating to the Conversion Rights Offering.

4.             Additional Limitation.  The Conversion and the Conversion Rights Offering, and any shares of Common Stock obtained thereby, shall be subject to the provisions of Article ELEVENTH, Section D of the Corporation’s Amended and Restated Certificate of Incorporation regarding suspension of voting rights.

F.             Anti-dilution and Recomputations of the Conversion Price.  The Conversion Price of the Series A Preferred Stock shall be subject to adjustment from time to time as follows:

1.             Issuance of Additional Stock below Purchase Price.  If the Corporation should issue, at any time after the date upon which any shares of Series A Preferred Stock were first issued (the “Purchase Date”), any Additional Stock (as defined below) without consideration or for a consideration per share less than the then-current Conversion Price in effect immediately prior to the issuance of such Additional Stock, the Conversion Price in effect immediately prior to each such issuance shall automatically be adjusted as set forth in this Section F.1, unless otherwise provided in this Section F.1.

(a)           Adjustment Formula. Whenever the Conversion Price is adjusted pursuant to this Section F.1.(a), the new Conversion Price shall be determined by multiplying the Conversion Price then in effect by a fraction, (x) the numerator of which shall be the number of shares of Common Stock (including shares of Common Stock) outstanding immediately prior to such issuance (the “Outstanding Common”) plus the number of shares of Common Stock (including shares of Common Stock) that the aggregate consideration received by the Corporation for such issuance would purchase at such Conversion Price; and (y) the denominator of which shall be the number of shares of Outstanding Common plus the number of shares of such Additional Stock.

(b)           No Fractional Adjustments. No adjustment of the Conversion Price for the Series A Preferred Stock shall be made in an amount less than one cent per share; provided that, any adjustments that are not required to be made by reason of this sentence shall be carried forward and either shall be taken into account in any subsequent adjustment made prior to three

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years from the date of the event giving rise to the adjustment being carried forward, or shall be made at the end of three years from the date of the event giving rise to the adjustment being carried forward.

(c)           Determination of Consideration. In the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the aggregate amount of cash paid therefor before deducting any reasonable discounts, commissions or other expenses allowed, paid or incurred by the Corporation for any underwriting or otherwise in connection with the issuance and sale thereof.  In the case of the issuance of the Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair value thereof as determined in good faith by the Board of Directors of the Corporation, provided, however, that if such consideration exceeds One Million Dollars ($1,000,000), the Boad of Directors shall be required to obtain a valuation of such consideration from an independent valuation firm or an investment bank.  In the event Additional Stock is issued together with other shares or securities or other assets of the Corporation for consideration which covers both, the consideration for adjustment purposes shall be deemed to be the proportion of such consideration so received for the Additional Stock, computed as provided in the preceding sentences, as determined in good faith by the Board of Directors.

(d)           Deemed Issuances of Common Stock. In the case of the issuance of securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (the “Common Stock Equivalents”), the following provisions shall apply for all purposes of this Section F.1:

(i)            The aggregate maximum number of shares of Common Stock deliverable upon conversion, exchange or exercise (assuming the satisfaction of any conditions to converting, exchanging or exercising, including, without limitation, the passage of time, but without taking into account potential anti-dilution adjustments) of any Common Stock Equivalents and subsequent conversion, exchange or exercise thereof shall be deemed to have been issued at the time such Common Stock Equivalents were issued and for a consideration equal to the consideration, if any, received by the Corporation for any such Common Stock Equivalents (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received by the Corporation (without taking into account potential anti-dilution adjustments) upon the conversion, exchange or exercise of any Common Stock Equivalents (the consideration in each case to be determined in the manner provided in Section F.1(c)).  In any case in which the Conversion Price is adjusted upon the issuance of a Common Stock Equivalent under this Section F.1.(d), no further adjustment to the Conversion Price shall be made upon the issuance of Common Stock resulting from the conversion, exchange or exercise of such Common Stock Equivalent.

(ii)           In the event of any change in the number of shares of Common Stock deliverable or in the consideration payable to the Corporation upon conversion, exchange or exercise of any Common Stock Equivalents, the Conversion Price of the Series A Preferred Stock, to the extent in any way affected by such Common Stock Equivalents, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the conversion, exchange or exercise of such Common Stock Equivalents.

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(e)           No Increased Conversion Price. Notwithstanding any other provisions of this Certificate of Designation, including, without limitation, this Section F.1., no adjustment of the Conversion Price pursuant to this Section F.1. shall have the effect of increasing the Conversion Price above the Conversion Price in effect immediately prior to such adjustment.

(f)            Additional Stock.  For purposes herein, “Additional Stock” shall mean any shares of Common Stock or Common Stock Equivalents issued other than:

(i)            Common Stock issued pursuant to stock dividends, stock splits or similar transactions, as described in Section F.2 hereof;

(ii)           shares of Common Stock issued or issuable to employees, consultants or directors of the Corporation directly or pursuant to a stock option plan or restricted stock plan approved by the Board of Directors of the Corporation;

(iii)          shares of Common Stock or Common Stock Equivalents issued to financial institutions or lessors in connection with commercial credit arrangements, equipment financings, commercial property lease transactions or similar transactions;

(iv)          shares of Common Stock or Preferred Stock issuable upon exercise of warrants outstanding as of the Effective Date;

(v)           Common Stock or Common Stock Equivalents issued in connection with bona fide acquisitions, mergers or similar transactions, the terms of which are approved by the Board of Directors of the Corporation;

(vi)          shares of Common Stock issued or issuable upon conversion of the Series A Preferred Stock;

(vii)         shares of Common Stock issued or issuable in a public offering prior to or in connection with which all outstanding shares of Series A Preferred Stock will be converted to Common Stock; and

(viii)        shares of Common Stock issued or issuable with the affirmative vote of at least a majority of the then-outstanding shares of Series A Preferred Stock, voting together as a class.

2.             Stock Splits and Dividends. In the event the Corporation should, at any time after the date of the issuance of the Series A Preferred, fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or Common Stock Equivalents without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such dividend, distribution, split or subdivision if no record date is fixed), the Conversion Price of the Series A Preferred Stock shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase of the aggregate of shares of Common

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Stock outstanding and those issuable with respect to such Common Stock Equivalents with the number of shares issuable with respect to Common Stock Equivalents determined from time to time in the manner provided for deemed issuances in Section F.1(d).

3.             Reverse Stock Splits. If the number of shares of Common Stock outstanding at any time after the Purchase Date is decreased by a combination or reverse split of the outstanding shares of Common Stock, then, following the record date of such combination or reverse split, the Conversion Price for the Series A Preferred Stock shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in outstanding shares.

4.             Recapitalizations. If at any time or from time to time there shall be a recapitalization of the Common Stock (other than a subdivision, combination or merger or sale of assets transaction provided for elsewhere in this Section F or in Section C) provision shall be made so that the holders of the Series A Preferred Stock shall thereafter be entitled to receive upon conversion of such Series A Preferred Stock the number of shares of stock or other securities or property of the Corporation or otherwise, to which a holder of Common Stock deliverable upon Conversion would have been entitled on such recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section F with respect to the rights of the holders of such Series A Preferred Stock after the recapitalization to the end that the provisions of this Section F (including adjustment of the Conversion Price then in effect and the number of shares of Common Stock issuable upon Conversion of such Series A Preferred Stock) shall be applicable after that event and be as nearly equivalent as practicable.

5.             No Impairment. The Corporation will not, through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section F and in the taking of all such action as may be necessary or appropriate in order to protect the right of Conversion of the holders of Series A Preferred Stock against impairment.

G.            Certificate of Adjustments.  Upon the occurrence of each adjustment of the Conversion Price of Series A Preferred Stock pursuant to Section F above, the Corporation, at its expense, shall promptly compute such adjustment in accordance with the terms hereof and prepare and furnish to each holder of such Series A Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment is based. The Corporation shall, upon the written request at any time of any holder of Series A Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price for such Series A Preferred Stock at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the Conversion of a share of such Series A Preferred Stock.

H.            Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to

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subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property (including the Conversion Rights Offering), or to receive any other right, the Corporation shall mail to each holder of Series A Preferred Stock, at least ten (10) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

I.              Redemption.  The Preferred Stock is not redeemable.

J.             Voting Rights.  The Series A Preferred Stock shall have no voting rights except as required by law or as set forth in Section K.

K.            Protective Provisions.

1.             So long as any shares of Series A Preferred Stock are outstanding (as adjusted for stock splits, stock dividends, reclassification and the like), the Corporation shall not (by amendment, merger, consolidation or otherwise) without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then-outstanding shares of Series A Preferred Stock, voting separately as a class:

(a)           take any action that would adversely affect the rights, preferences or privileges of the Series A Preferred Stock, including without limitation, amending, altering or modifying the Certificate of Incorporation (whether by merger, consolidation, conversion or otherwise) or creating any new class or series of stock which has preference over or is on parity with the Series A Preferred Stock with respect to dividends or rights upon liquidation;

(b)           increase or decrease (other than by conversion) the total number of authorized shares of Series A Preferred Stock;

(c)           redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any share or shares of Series A Preferred Stock or Common Stock; provided, however, that this restriction shall not apply to the repurchase of shares of Common Stock from employees, officers, directors, consultants or other persons performing services for the Corporation or any subsidiary pursuant to agreements under which the Corporation has the requirement or option to repurchase such shares upon the occurrence of certain events, such as the termination of employment, or through the exercise of any right of first refusal; or

(d)           effect any merger, consolidation, reorganization or other business combination transaction involving the Corporation (including a Sale of the Corporation) unless the Series A Preferred Stock shall continue to remain outstanding following any such transaction in accordance with the terms of this Certificate of Designation or, in the case of a Sale of the Corporation, the holders of Series A Preferred Stock shall receive the Sale Consideration.

L.             No Reissuance of Preferred Stock.  No share or shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be cancelled, retired and eliminated from the shares which the Corporation shall be authorized to issue.

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M.           Notices. Unless otherwise provided herein, any notice required by the provisions of this Certificate of Designation to be given to the holders of shares of Series A Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of the Corporation.

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The effective time and date of the series herein certified shall be as of the time and date filed with the Secretary of State of the State of Delaware.

Signed on August 19, 2007
	/s/ Subodh Karnik
	Name:	Subodh Karnik
	Title:	President and CEO

Signature page to Certificate of Designations for
Series A Cumulative Convertible Preferred Stock
of Global Aero Logistics Inc. 

EX-5.1

Exhibit 5.1

[Letterhead of]

CRAVATH, SWAINE & MOORE LLP

[New York Office]

[                 ], 2008

Global Aero Logistics Inc.
Registration Statement on Form S-1
(Registration No. 333-146958)

Ladies and Gentlemen:

We have acted as counsel to Global Aero Logistics Inc., a Delaware corporation (the “Company”), in connection with the Registration Statement on Form S-1, as amended (Registration No. 333-146958) (the “Registration Statement”), filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), with respect to the registration of shares of Common Stock, par value $0.0001 per share, of the Company (the “Common Stock”) and subscription rights (the “Rights”) referred to therein.

In that connection, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the Registration Statement and the exhibits thereto and such documents, corporate records and other instruments as we have deemed necessary or appropriate for purposes of this opinion, including, without limitation, a specimen certificate representing the Common Stock, the form subscription certificate in respect of the Rights, and resolutions adopted by the Board of Directors of the Company.

Based on the foregoing, we are of opinion as follows:

1.  The Rights have been duly and validly authorized, and, when validly issued in accordance with such authorization, will constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law).

2.  The shares of Common Stock issuable upon the exercise of the Rights have been duly and validly authorized, and, when issued and paid for as contemplated in the Registration Statement, will be validly issued, fully paid and nonassessable.

We are admitted to practice in the State of New York, and we express no opinion as to any matters governed by any laws other than the laws of the State of New York, the General Corporation Law of the State of Delaware and the Federal laws of the United States of America.

We hereby consent to the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement.  We also consent to the reference to our firm under the caption “Legal Matters” in the Registration Statement.  In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission.

Very truly yours,

Global Aero Logistics Inc.

HLH Building, 101 World Drive

Peachtree City, GA 30269

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EX-10.1

Exhibit 10.1

STOCK OPTION PLAN FOR MANAGEMENT EMPLOYEES OF

NEW ATA HOLDINGS, INC. AND ITS SUBSIDIARIES

1.Adoption and Purpose of the Plan. New ATA Holdings, Inc., a Delaware corporation (the “Company”), hereby adopts this stock option plan (the “Plan”) providing for the granting of stock options (the “Options”) to certain key employees of the Company and its subsidiaries, in accordance with the terms of the First Amended Joint Chapter 11 Plan for Reorganizing Debtors filed by ATA Holdings Corp. and certain of its affiliates (the “Plan of Reorganization”). The general purpose of the Plan is to promote the interests of the Company and its subsidiaries by providing to their management employees additional incentives to continue and increase their efforts with respect to, and to remain in the employ of, the Company and its subsidiaries.

The Plan provides for the granting of incentive stock options (“Incentive Stock Options”) within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), and nonqualified stock options (“Nonqualified Stock Options”). Each Option agreement (the “Agreement”) shall state whether or not the Option will be treated as an Incentive Stock Option or Nonqualified Stock Option.

2.Stock Subject to the Plan. There will be reserved for issuance upon the exercise of Options to be granted from time to time under the Plan an aggregate of 615,424 shares of common stock, par value $0.0001 (1/100 of 1 cent) per share, of the Company (the “Stock”), which number of shares may be adjusted from time to time in accordance with the terms set forth herein. Some or all of such shares of Stock may be issued upon the exercise of Incentive Stock Options. Shares of Stock issued pursuant to any Option may be authorized and unissued shares of Stock or issued shares of Stock which shall have been reacquired by the Company, in whole or in part, as the Board of Directors of the Company (the “Board”) shall from time to time determine. If any Option granted under the Plan shall expire, terminate or be forfeited or canceled for any reason without having been exercised in full, the relevant Stock subject thereto shall again be available for the purposes of the Plan.

3.Administration. The Plan shall be administered by the Compensation Committee or another committee (the “Committee”) of the Board designated by the Board. At any time during which the Company has a class of equity securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Committee shall be comprised of two or more persons, each of whom shall qualify as (a) an “outside director” within the meaning of Section 162(m) of the Code and (b) a “non-employee director” within the meaning of Rule 16b-3(b)(3) promulgated under the Exchange Act.  Subject to the express provisions of the Plan, the Committee shall have plenary authority, in its discretion, to determine the terms of all Options granted under the Plan (which need not be identical) including, without limitation, the purchase price of the shares of Stock covered by each Option, the individuals to whom and the time or times at which Options shall be granted, the number of shares to be subject to each Option, whether an Option shall be an Incentive Stock Option or a Nonqualified Stock Option, when an Option can be exercised and whether in whole or in installments.  In

making such determinations, the Committee may take into account the nature of the services rendered by employees, their present and potential contributions to the Company’s success and such other factors as the Committee in its discretion shall deem relevant. Subject to the express provisions of the Plan, the Committee shall have plenary authority to interpret the Plan, to prescribe, amend and rescind the rules and regulations relating to it and to make all other determinations deemed necessary or advisable for the administration of the Plan. The determination of the Committee on the matters referred to in this Section 3 shall be conclusive.

The Committee shall hold its meetings at such times and places as it shall deem advisable, a majority of its members shall constitute a quorum and all determinations shall be made by a majority of its members. Any determination reduced to writing and signed by a majority of Committee members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held.

4.Eligibility. Options under the Plan may be granted to any employee of the Company or any of its subsidiaries as defined in Section 424(f) of the Code (each, a “Subsidiary”) selected by the Committee. In no event shall any employee be granted Options in respect of an aggregate of more than 60,000 shares during any calendar year, subject to adjustment as provided herein. A director of the Company or of a Subsidiary who is not also an employee of the Company or of one of its Subsidiaries will not be eligible to receive any Options under the Plan. Options may be granted to employees who hold or have held Options under other plans. An employee who has been granted an Option may be granted additional Options.

5.Option Prices. Subject to the provisions set forth in this Section 5 relating to Incentive Stock Options, the purchase price of the Stock under each Option shall be determined by the Committee, but shall not be less than 100% of the fair market value of the Stock on the date of grant of such Option. Such fair market value shall be determined by the Committee and, unless otherwise determined by the Committee, shall not be less than Market Price (as defined below) on the date of grant of the Option. No Incentive Stock Options shall be granted to an employee who, at the time the Incentive Stock Options are granted, owns (or is considered as owning within the meaning of Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary (a “10% Shareholder”), unless at the time the Incentive Stock Options are granted (a) the purchase price of the Stock under such Incentive Stock Options is at least 110% of the Market Price of the Stock and (b) the Incentive Stock Options by their terms are not exercisable after the expiration of five years from the date they are granted. For purposes of the Plan, “Market Price” shall mean at any date (or if no shares of Stock were traded on such date, on the next preceding date on which Stock was traded) the (i) mean between the high and low sales prices of a share of Stock underlying the Option on the New York Stock Exchange (“NYSE”), or (ii) if the Stock is not listed on the NYSE, the mean between the high and low sales prices of a share of Stock on the principal national securities exchange on which the Stock is listed, or (iii) if the Stock is not then listed or admitted to trading on any national securities exchange, on the basis of the average of the high bid and low asked quotations for shares of Stock on the day in question in the over-the-counter market as reported by the Nasdaq Stock Market’s National

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Market System, or (iv) in all other cases, the value set in good faith by the Committee. In no event shall the purchase price of Stock under a Nonqualified Stock Option be less than the fair market value of the Stock on the date of grant, as determined in a manner consistent with Code Section 409A and its interpretive regulations.

6.Term of Options. The term of each Option shall be for such period as the Committee shall determine, but not more than 10 years from the date of granting thereof (except that an Incentive Stock Option granted to a 10% Shareholder shall not have a term of more than five years) or such shorter period as is prescribed in Section 8 hereof.

7.Exercise of Options. The Committee shall, in its discretion, determine the installments in which an Option granted under the Plan shall become exercisable and shall specify such terms in the applicable Agreement. In no case may an option be exercised at any time for less than 50 shares (or the remaining shares covered by the Option if less than 50).

Payment shall be made in cash or, unless otherwise provided in the applicable Agreement, in whole shares of Stock already owned by the holder of the Option or partly in cash and partly in such shares; provided, however, that if shares of Stock are to be used to satisfy the exercise price such shares shall have been acquired (i) at least six months prior to the exercise date (or such longer or shorter period as may be required to avoid a charge to earnings for financial accounting purposes) or (ii) in an open market purchase. An Option may be exercised by written notice to the Company. Such notice shall state that the holder of the Option elects to exercise the Option, the number of shares in respect of which the Option is being exercised and the manner of payment for such shares, and shall either (i) be accompanied by payment of the full purchase price of such shares or (ii) fix a date (not more than 10 business days from the date of exercise) for the payment of the full purchase price of such shares. Cash payments shall be made by wire transfer or check payable to the order of the Company. Stock payments (valued at Market Price on the date of exercise) shall be made by delivery of (i) stock certificates in negotiable form or (ii) a completed attestation form prescribed by the Company setting forth the whole shares of stock owned by the holder which the holder wishes to utilize to satisfy the exercise price. If certificates representing stock are used to pay all or part of the purchase price of an option, a separate certificate shall be delivered by the Company representing the same number of shares as each certificate so used, and an additional certificate shall be delivered representing the additional shares to which the holder of the Option is entitled as a result of the exercise of the Option. Except as otherwise provided herein, no Option may be exercised at any time unless the holder thereof is then a full-time employee of the Company or a Subsidiary. The holder of an Option shall have none of the rights of a shareholder with respect to the shares of Stock subject to the Option until such shares are transferred to the holder upon the exercise of the Option.

The aggregate Market Price of the Stock for which Incentive Stock Options granted to any one employee under this Plan or any other incentive stock option plan of the Company or of any of its Subsidiaries may by their terms first become exercisable during any calendar year shall not exceed $100,000, determining Market Price as of the date each respective

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Incentive Stock Option is granted. In the event such threshold is exceeded in any calendar year, such excess Options shall be automatically deemed to be Nonqualified Stock Options. To the extent that any Option granted under this Plan which is intended to be an Incentive Stock Option fails for any reason to qualify as such at any time, such Option shall be a Nonqualified Stock Option.

8.Termination of Employment. If the holder’s employment shall terminate or the holder shall become a part-time employee (as defined in the Company’s employment policies or practices or, in the absence thereof, as defined by the Committee, on the date the Option is granted) prior to the complete exercise of an Option, then such Option shall thereafter be exercisable solely to the extent provided herein; provided, however, that (a) no Option may be exercised after the scheduled expiration date of such Option; (b) if the holder’s employment terminates by reason of death, Disability (as defined in Section 422(c)(6) of the Code) or retirement after age 60, the Option shall be accelerated in accordance with Section 11 and shall remain exercisable for a period of one year following such termination (but not later than the scheduled expiration of such Option); (c) any termination by the Company for Cause (as defined below) will be treated in accordance with the provisions of the next succeeding paragraph; and (d) if the holder’s employment terminates for any other reason, or the holder becomes a part-time employee, the Option shall remain exercisable for a period of three months following the date of such termination or such conversion to part-time employment (unless the Agreement provides otherwise). The holder must be a full-time salaried employee of the Company or a Subsidiary on the vesting dates set forth in the Option Agreement in order to become vested in the shares that are scheduled to become vested on such dates.

Prior to the exercise of any Option, if the holder’s employment with the Company or a Subsidiary shall be terminated by the Company or such Subsidiary for Cause, then all Options whether exercisable or unexercisable held by such holder shall immediately terminate. Cause shall have the meaning established by the Committee or, in the absence thereof, shall mean (y) gross negligence or willful misconduct in the performance of the material duties and services required of a holder or (z) the conviction of a felony or a crime involving an act of moral turpitude; provided, however, that if such termination occurs within 12 months after a Significant Event (as defined herein), Cause shall only have the meaning set forth in clause (z) of the immediately preceding sentence.

The Committee may determine whether any given leave of absence constitutes a termination of employment. Options granted under the Plan shall not be affected by any change of position so long as the holder continues to be a full-time employee of the Company or a Subsidiary.

9.Nontransferability of Options.   Except as provided in this Section 9, no Option granted under the Plan shall be transferable otherwise than by will or the laws of descent and distribution. The designation of a beneficiary by an Option holder shall not constitute a transfer. With the approval of the Committee, a Nonqualified Stock Option may be transferred by gift to any member of the holder’s immediate family or to a trust for the benefit of one or

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more of such immediate family members. For the purposes of this Section 9, “immediate family” shall mean the spouse, children and grandchildren, parents, grandparents, former spouses, siblings, nieces, nephews, parents-in-law, sons-in-law, daughters-in-law, brothers-in-law, sisters-in-law, including adoptive or step relationships and any person sharing the employee’s household (other than as a tenant or employee).

10.Acceleration of Vesting. In the event of any Significant Event (as defined in Section 11), or if a holder’s employment shall terminate by reason of death, Disability or retirement after age 60, then, notwithstanding any contrary vesting period in any Agreement or in the Plan, and unless the applicable Agreement provides otherwise, each outstanding Option granted under the Plan shall immediately become exercisable in full in respect of the aggregate number of shares covered thereby.

11.Significant Event. Each of the following shall be a Significant Event:

(a)(i) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of capital stock of the Company entitled to vote generally in any election of directors (“Voting Stock”) would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the outstanding Voting Stock immediately prior to the merger have the same proportionate voting interests in the capital stock of the surviving corporation immediately after the merger, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company or (iii) the adoption of any plan for the liquidation or dissolution of the Company; or

(b)during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board ceased for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company’s shareholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. No transaction contemplated in the Plan of Reorganization shall be deemed a Significant Event.

12.Effect of Certain Changes. Notwithstanding any other provisions of the Plan, unless the Agreement provides otherwise, the Committee shall adjust the number of shares subject to each unexercised or unvested Option and the option prices upon the occurrence of an event described in the next paragraph. Upon any such event, the aggregate number of shares available under the Plan shall also be appropriately adjusted by the Committee, whose determination shall be conclusive.

In the event of changes in the outstanding Stock by reason of any stock dividend, stock split, recapitalization, combination, exchange of shares, merger consolidation, liquidation, split-up, split-off, spin-off or other similar change in capitalization, any distribution to common shareholders, including a rights offering, other than cash dividends or any like change or in the event of any reorganization, recapitalization, merger, consolidation, acquisition of property or stock, separation or liquidation of the Company, or any other event similarly affecting the

5

Company, the Committee shall have the right, but not the obligation, to (a) appropriately adjust the number of shares of Stock subject to outstanding Options and the related purchase prices or (b) provide that outstanding Options shall be canceled in respect of a cash payment or the payment of securities or property, or any combination thereof, with a per share value determined by the Committee in good faith.

Such adjustments shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. Any fractional shares resulting from such adjustment shall be eliminated.

13.Written Agreement. Each Option shall be evidenced by an Agreement which may contain such terms as the Committee from time to time shall approve provided that such terms are not inconsistent with the provisions of the Plan. Unless the Agreement specifies otherwise, the effective date of the granting of an Option shall be the date on which the Committee approves such grant. Each grantee of an Option shall be notified promptly of such grant and a written Agreement shall be promptly executed and delivered by the Company and the grantee, provided that such grant of Options shall terminate if such written Agreement is not signed by such grantee (or his attorney) and delivered to the Company within 60 days after the effective date of such grant.

14.Termination and Amendment. Unless the Plan shall theretofore have been terminated as hereinafter provided, the Plan shall terminate on, and no Option shall be granted after February 28, 2016. The Plan may be terminated, modified or amended by the shareholders of the Company. The Board may at any time terminate, modify or amend the Plan in such respects as it shall deem advisable; provided, however, that the Board may not, without approval by the holders of a majority of the outstanding shares of voting stock of the Company present and voting at a duly held meeting at which a quorum is present, (a) increase the maximum number of shares of Stock as to which Options may be granted under the Plan other than pursuant to the anti-dilution provision of Section 12 hereof, (b) change the class of employees eligible to receive Options or (c) adopt such other amendment for which stockholder approval is required by law or the rules of any exchange upon which the Stock is listed. No termination, modification or amendment of the Plan may, without the consent of the employee to whom any Option shall theretofore have been granted, adversely affect the rights of such employee under such Option.

15.Effectiveness of the Plan. The Plan shall become effective upon its adoption by the Board, but the grant of any Incentive Stock Option shall be subject to the approval of the holders of a majority of the outstanding shares of voting stock of the Company, which approval must occur within 12 months after the date the Plan is adopted by the Board.

16.Tax Withholding. In connection with the transfer of shares of Stock as a result of the exercise of an Option or upon any other event that would subject the holder of an Option to taxation, the Company shall have the right to require the holder to pay an amount in cash or to retain or sell without notice, or to demand surrender of, shares of Stock in value

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sufficient to cover any tax, including any Federal, state or local income tax, required by any governmental entity to be withheld or otherwise deducted and paid with respect to such transfer (‘‘Withholding Tax”), and to make payment (or to reimburse itself for payment made) to the appropriate taxing authority of an amount in cash equal to the amount of such Withholding Tax, remitting any balance to the employee. For purposes of this Section 16, the value of shares of Stock so retained or surrendered shall be the Market Price on the date that the amount of the Withholding Tax is to he determined (the “Tax Date”), and the value of shares of Stock so sold shall be the actual net sale price per share (after deduction of commissions) received by the Company.

Notwithstanding the foregoing, the employee shall be entitled to satisfy the obligation to pay any Withholding Tax, in whole or in part, by providing the Company with funds sufficient to enable the Company to pay such Withholding Tax or by requiring the Company to retain or to accept upon delivery thereof shares of Stock sufficient in value (determined in accordance with the last sentence of the preceding paragraph) to cover the amount of such Withholding Tax. Each election by an employee to have shares retained or to deliver shares for this purpose shall be subject to the following restrictions: (a) the election must be in writing and made on or prior to the Tax Date; and (b) the election shall be subject to the disapproval of the Committee.

17.Section 16 Persons. With respect to persons subject to Section 16 of the Exchange Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.

18.Code Section 409A Standards. This Plan, and all Options and all Option Agreements shall be effected and interpreted in a manner consistent with the standards of nonqualified deferred compensation plans established by Code Section 409A and its interpretive regulations (the “Section 409A Standards”). To the extent that any provisions of the Plan, an Option, or an Agreement would subject an employee to gross income inclusion, interest, or additional taxation under Code Section 409A, those provisions shall be superseded by the applicable Section 409A Standards.

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EX-10.2

Exhibit 10.2

NEW ATA HOLDINGS INC. 2006

LONG TERM INCENTIVE PLAN

Article I
NATURE AND PURPOSE OF PLAN

This 2006 Long Term Incentive Plan is established by New ATA Holdings Inc., (the “Company”) to promote the interests of the Company and its subsidiaries by providing certain officers of the Company with additional incentives, through a grant of stock options (the “Options”), to enhance the value of the Company.

The Plan provides for the granting of incentive stock options (“Incentive Stock Options”) within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), and nonqualified stock options (“Nonqualified Stock Options”).  Each Option agreement (the “Agreement”) shall state whether or not the Option will be treated as an Incentive Stock Option or Nonqualified Stock Option.

Article II
DEFINITIONS AND RULES OF CONSTRUCTION

Section 2.1.  Definitions.  As used in the Plan, the following words and phrases, when capitalized, have the following meanings:

(a) “Beneficiary” means, with respect to each Participant, the person or persons, including a trustee, designated by the Participant to receive the Participant’s incentive benefits under the Plan upon his death.  If no Beneficiary has been designated, or if no designated Beneficiary survives a Participant, the Beneficiary shall be the Participant’s estate.

(b) “Board” means the Board of Directors of the Company.

(c) “Code” means the Internal Revenue Code of 1986, as amended.

(d) “Company” means New ATA Holdings Inc., and its wholly owned subsidiary, ATA Airlines, Inc.

(e) “Effective Date” means September 12, 2006.

(f) “Eligible Office” means the Chief Executive Officer, the Chief Operating Officer, or a Senior Vice President.

(g) “Employee” means an individual who is a common law employee of the Company.

(h) “Participant” means an individual who holds an Eligible Office.

(i) “Plan” means this instrument, as amended from time to time, and the incentive compensation plan established by this instrument.

(j) “Plan Administrator” means a committee of the Board, authorized to administer the Plan and to interpret and apply its terms.

(k) “Significant Event” each of the following shall be a Significant Event:

1. (a) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of capital stock of the Company entitled to vote generally in any election of directors (“Voting Stock”) would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the outstanding Voting Stock immediately prior to the merger have the same proportionate voting interests in the capital stock of the surviving corporation immediately after the merger, or (b) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company or (c) the adoption of any plan for the liquidation or dissolution of the Company; or

2. during any period of two consecutive years, individuals who at the beginning of such period constituted the entire Board ceased for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company’s shareholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.

(l) “Tag Along Event” means sale of the Company’s Class A Common Stock, par value $0.0001, by a holder of Class A Common Stock of the Company which holds at least 25% of the voting stock of the Company (a “Qualified Class A Stockholder”) in which the purchaser of such stock acquires shares representing 50% or more of the then outstanding Class A Common Stock of the Qualified Class A Stockholder.

(m) “Term” means the time period beginning with the Effective Date and ending on September 11, 2016.

Section 2.2. Rules of Construction.  The following rules of construction shall govern in interpreting the Plan:

(a) The Plan is intended to be an incentive compensation program that is not subject to the Employee Retirement Income Security Act of 1974, as amended.

(b) The Plan and all option agreements shall be effected, interpreted, and applied in a manner consistent with the standards for nonqualified deferred compensation plans established by Code Section 409A and its interpretive regulations (the “Section 409A Standards”).  To the extent that any terms of the Plan or option agreement would subject any Participant to gross income inclusion, interest, or additional tax pursuant to Code Section 409A, those terms are to that extent superseded by the applicable Section 409A Standards.

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(c) If any provision of the Plan shall be held to be illegal or invalid for any reason, that provision shall be deemed to be null and void, but the invalidation of that provision shall not otherwise impair or affect the Plan.

Section 2.3. The provisions of this Plan shall be construed and governed in all respects under and by the internal laws of the State of Indiana.

Article III
INCENTIVE BENEFIT

Section 3.1. Stock Subject to the Plan.  There will be reserved for issuance upon the exercise of Options to be granted from time to time under the Plan an aggregate of 2,000,000 shares of common stock, par value $0.0001 (1/100 of 1 cent) per share, of the Company (the “Stock”), which number of shares may be adjusted from time to time in accordance with the terms set forth herein.  Some or all of such shares of Stock may be issued upon the exercise of Incentive Stock Options.  Shares of Stock issued pursuant to any Option may be authorized and unissued shares of Stock or issued shares of Stock which shall have been reacquired by the Company, in whole or in part, as the Board shall from time to time determine.  If any Option granted under the Plan shall expire, terminate or be forfeited or cancelled for any reason without having been exercised in full, the relevant Stock subject thereto shall again be available for the purposes of the Plan.

Section 3.2. Eligibility.  Options under the Plan may be granted to any employee of the Company or any of its subsidiaries as defined in Section 424(f) of the Code (each, a “Subsidiary”) selected by the Committee.  Options may be granted to employees who hold or have held Options under other plans.  An employee who has been granted an Option may be granted additional Options.

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Section 3.3. Option Prices.  Subject to the provisions set forth in this Section 3.3 relating to Incentive Stock Options, the purchase price of the Stock under each Option shall be determined by the Committee, but shall not be less than 100% of the fair market value of the Stock on the date of grant of such Option.  Such fair market value shall be determined by the Committee and, unless otherwise determined by the Committee, shall not be less than Market Price (as defined below) on the date of grant of the Option.  No Incentive Stock Options shall be granted to an employee who, at the time the Incentive Stock Options are granted, owns (or is considered as owning within the meaning of Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary (a “10% Shareholder”), unless at the time the Incentive Stock Options are granted (a) the purchase price of the Stock under such Incentive Stock Options is at least 110% of the Market Price of the Stock and (b) the Incentive Stock Options by their terms are not exercisable after the expiration of five years from the date they are granted.  For purposes of the Plan, “Market Price” shall mean at any date (or if no shares of Stock were traded on such date, on the next preceding date on which Stock was traded) the (i) mean between the high and low sales prices of a share of Stock underlying the Option on the New York Stock Exchange (“NYSE”), or (ii) if the Stock is not listed on the NYSE, the mean between the high and low sales prices of a share of Stock on the principal national securities exchange on which the Stock is listed, or (iii) if the Stock is not then listed or admitted to trading on any national securities exchange, on the basis of the average of the high bid and low asked quotations for shares of Stock on the day in question in the over-the-counter market as reported by the Nasdaq Stock Market’s National Market System, or (iv) in all other cases, the value set in good faith by the Committee.  In no event shall the purchase price of Stock under a Nonqualified Stock Option be less than the fair market value of the Stock on the date of grant, as determined in a manner consistent with Code Section 409A and its interpretive regulations.

Section 3.4. Term of Options.  The term of each Option shall be for such period as the Committee shall determine, but not more than 10 years from the date of granting thereof (except that an Incentive Stock Option granted to a 10% Shareholder shall not have a term of more than five years) or such shorter period as is prescribed in Section 3.6 hereof.

Section 3.5. Exercise of Options.  The Committee shall, in its discretion, determine the installments in which an Option granted under the Plan shall become exercisable and shall specify such terms in the applicable Agreement.  In no case may an option be exercised at any time for less than 50 shares (or the remaining shares covered by the Option if less than 50).

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Payment shall be made in cash or, unless otherwise provided in the applicable Agreement, in whole shares of Stock already owned by the holder of the Option or partly in cash and partly in such shares; provided, however, that if shares of Stock are to be used to satisfy the exercise price such shares shall have been acquired (i) at least six months prior to the exercise date (or such longer or shorter period as may be required to avoid a charge to earnings for financial accounting purposes) or (ii) in an open market purchase.  An Option may be exercised by written notice to the Company.  Such notice shall state that the holder of the Option elects to exercise the Option, the number of shares in respect of which the Option is being exercised and the manner of payment for such shares, and shall either (i) be accompanied by payment of the full purchase price of such shares or (ii) fix a date (not more than 10 business days from the date of exercise) for the payment of the full purchase price of such shares.  Cash payments shall be made by wire transfer or check payable to the order of the Company.  Stock payments (valued at Market Price on the date of exercise) shall be made by delivery of (i) stock certificates in negotiable form or (ii) a completed attestation form prescribed by the Company setting forth the whole shares of stock owned by the holder which the holder wishes to utilize to satisfy the exercise price.  If certificates representing stock are used to pay all or part of the purchase price of an option, a separate certificate shall be delivered by the Company representing the same number of shares as each certificate so used, and an additional certificate shall be delivered representing the additional shares to which the holder of the Option is entitled as a result of the exercise of the Option.  Except as otherwise provided herein, no Option may be exercised at any time unless the holder thereof is then a full-time employee of the Company or a Subsidiary.  The holder of an Option shall have none of the rights of a shareholder with respect to the shares of Stock subject to the Option until such shares are transferred to the holder upon the exercise of the Option.

The aggregate Market Price of the Stock for which Incentive Stock Options granted to any one employee under this Plan or any other incentive stock option plan of the Company or of any of its Subsidiaries may by their terms first become exercisable during any calendar year shall not exceed $100,000, determining Market Price as of the date each respective Incentive Stock Option is granted.  In the event such threshold is exceeded in any calendar year, such excess Options shall be automatically deemed to be Nonqualified Stock Options.  To the extent that any Option granted under this Plan which is intended to be an Incentive Stock Option fails for any reason to qualify as such at any time, such Option shall be a Nonqualified Stock Option.

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Section 3.6. Termination of Employment.  If the holder’s employment shall terminate or the holder shall become a part-time employee (as defined in the Company’s employment policies or practices or, in the absence thereof, as defined by the Committee, on the date the Option is granted) prior to the complete exercise of an Option, then such Option shall thereafter be exercisable solely to the extent provided herein; provided, however, that (a) no Option may be exercised after the scheduled expiration date of such Option; (b) if the holder’s employment terminates by reason of death, Disability (as defined in Section 422(c)(6) of the Code) or retirement after age 60, the Option shall be accelerated in accordance with Section 3.8 and shall remain exercisable for a period of one year following such termination (but not later than the scheduled expiration of such Option); (c) any termination by the Company for Cause (as defined below) will be treated in accordance with the provisions of the next succeeding paragraph; and (d) if the holder’s employment terminates for any other reason, or the holder becomes a part-time employee, the Option shall remain exercisable for a period of three months following the date of such termination or such conversion to part-time employment (unless the Agreement provides otherwise).  The holder must be a full-time salaried employee of the Company or a Subsidiary on the vesting dates set forth in the Option Agreement in order to become vested in the shares that are scheduled to become vested on such dates.

Prior to the exercise of any Option, if the holder’s employment with the Company or a Subsidiary shall be terminated by the Company or such Subsidiary for Cause, then all Options whether exercisable or unexercisable held by such holder shall immediately terminate.  Cause shall have the meaning established by the Committee or, in the absence thereof, shall mean (y) gross negligence or willful misconduct in the performance of the material duties and services required of a holder or (z) the conviction of a felony or a crime involving an act of moral turpitude; provided, however, that if such termination occurs within 12 months after a Significant Event or Tag Along Event (as defined herein), Cause shall only have the meaning set forth in clause (z) of the immediately preceding sentence.

The Committee may determine whether any given leave of absence constitutes a termination of employment.  Options granted under the Plan shall not be affected by any change of position so long as the holder continues to be a full-time employee of the Company or a Subsidiary.

Section 3.7. Non-transferability of Options.  Except as provided in this Section 3.7, no Option granted under the Plan shall be transferable otherwise than by will or the laws of descent and distribution.  The designation of a Beneficiary by an Option holder shall not constitute a transfer.  With the approval of the Committee, a Nonqualified Stock Option may be transferred by gift to any member of the holder’s immediate family or to a trust for the benefit of one or more of such immediate family members.  For the purposes of this Section 3.7, “immediate family” shall mean the spouse, children and grandchildren, parents, grandparents, former spouses, siblings, nieces, nephews, parents-in-law, sons-in-law, daughters-in-law, brothers-in-law, sisters-in-law, including adoptive or step relationships and any person sharing the employee’s household (other than as a tenant or employee).

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Section 3.8. Acceleration of Vesting.  In the event of any Significant Event (as defined in Section 2.1(k), Tag Along Event (as defined in Section 2.1 (l), or if a holder’s employment shall terminate by reason of termination without Cause, death, Disability or retirement after age 60, then, notwithstanding any contrary vesting period in any Agreement or in the Plan, and unless the applicable Agreement provides otherwise, each outstanding Option granted under the Plan shall immediately become exercisable in full in respect of the aggregate number of shares covered thereby.

Article IV
ADMINISTRATION

Section 4.1. Plan Administrator.  The Plan Administrator shall administer the Plan and may delegate all or a portion of its responsibility to such individuals as deemed appropriate.

Section 4.2. Powers and Duties of the Plan Administrator.  Subject to the specific limitations stated in this Plan, the Plan Administrator shall have the following powers, duties, and responsibilities:

(a)  To carry out the general administration of the Plan;

(b)  To cause to be prepared all forms necessary or appropriate for the administration of the Plan;

(c)  To keep appropriate books and records;

(d)  To determine amounts to be distributed to each Participant and Beneficiary under the provisions of the Plan;

(e)  To determine, consistently with the provisions of this instrument, all questions of eligibility, rights, and status of each Participant and Beneficiary under the Plan;

(f)  To issue, amend, and rescind rules relating to the administration of the Plan, to the extent those rules are consistent with the provisions of this instrument;

(g)  To exercise all other powers and duties specifically conferred upon the Plan Administrator elsewhere in this instrument; and

(h)  To interpret, with discretionary authority, the provisions of this Plan and to resolve, with discretionary authority, all disputed questions of Plan interpretation and benefit eligibility.

The Plan Administrator’s determinations in carrying out its powers and duties shall be final and binding for all purposes and upon all persons, including each Participant and his Beneficiaries.

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Section 4.3. Effect of Certain Changes.  Notwithstanding any other provisions of the Plan, unless the Agreement provides otherwise, the Committee shall adjust the number of shares subject to each unexercised or unvested Option and the option prices upon the occurrence of an event described in the next paragraph.  Upon any such event, the aggregate number of shares available under the Plan shall also be appropriately adjusted by the Committee, whose determination shall be conclusive.

In the event of changes in the outstanding Stock by reason of any stock dividend, stock split, recapitalization, combination, exchange of shares, merger consolidation, liquidation, split-up, split-off, spin-off or other similar change in capitalization, any distribution to common shareholders, including a rights offering, other than cash dividends or any like change or in the event of any reorganization, recapitalization, merger, consolidation, acquisition of property or stock separation or liquidation of the Company, or any other event similarly affecting the Company, the Committee shall have the right, but not the obligation, to (a) appropriately adjust the number of shares of Stock subject to outstanding Options and the related purchase prices or (b) provide that outstanding Options shall be cancelled in respect of a cash payment or the payment of securities or property, or any combination thereof, with a per share value determined by the Committee in good faith.

Such adjustments shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive.  Any fractional shares resulting from such adjustment shall be eliminated.

Article V
AMENDMENT AND TERMINATION

Section 5.1. Termination and Amendment.  Unless the Plan shall theretofore have been terminated as hereinafter provided, the Plan shall terminate on, and no Option shall be granted after September 11, 2016.  The Plan may be terminated, modified or amended by the shareholders of the Company.  The Board may at any time terminate, modify or amend the Plan in such respects as it shall deem advisable; provided, however, that the Board may not, without approval by the holders of a majority of the outstanding shares of voting stock of the Company present and voting at a duly held meeting at which a quorum is present, (a) increase the maximum number of shares of Stock as to which Options may be granted under the Plan other than pursuant to the anti-dilution provision of Section 4.3 hereof, (b) change the class of employees eligible to receive Options or (c) adopt such other amendment for which stockholder approval is required by law or the rules of any exchange upon which the Stock is listed.  No termination, modification or amendment of the Plan may, without the consent of the employee to whom any Option shall theretofore have been granted, adversely affect the rights of such employee under such Option.

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Article VI

MISCELLANEOUS

Section 6.1. Written Agreement.  Each Option shall be evidenced by an Agreement which may contain such terms as the Committee from time to time shall approve provided that such terms are not inconsistent with the provisions of the Plan.  Unless the Agreement specifies otherwise, the effective date of the granting of an Option shall be the date on which the Committee approves such grant.  Each grantee of an Option shall be notified promptly of such grant and a written Agreement shall be promptly executed and delivered by the Company and the grantee, provided that such grant of Options shall terminate if such written Agreement is not signed by such grantee (or his attorney) and delivered to the Company within 60 days after the effective date of such grant.

Section 6.2.  Anticipation of Benefits.  Neither a Participant nor his Beneficiary shall have the power to transfer, assign, pledge, or otherwise encumber in advance any of the incentive benefits that may become due under this Plan, and any attempt to do so shall be void.  Except with respect to incentive benefits already paid in cash, any incentive benefits under this Plan shall not be subject to attachment, garnishment, execution, or be transferable by operation of law in the event of bankruptcy, insolvency, or otherwise.

Section 6.3. No Guarantee of Continued Employment.  Nothing contained in this Plan or any action taken under the Plan shall be construed as a contract of employment or as giving a Participant any right to be retained in employment with the Company.

Section 6.4. Persons Subject to the Plan.  This Plan shall be binding upon and inure to the benefit of each Participant and his Beneficiaries and upon the Company and its successors and assigns.

Section 6.5. Tax Withholding.  In connection with the transfer of shares of Stock as a result of exercise of an Option or upon any other event that would subject the holder of an Option to taxation, the Company shall have the right to require the holder to pay an amount in cash or to retain or sell without notice, or to demand surrender of, shares of Stock in value sufficient to cover any tax, including any Federal, state or local income tax, required by any governmental entity to be withheld or otherwise deducted and paid with respect to such transfer (“Withholding Tax”), and to make payment (or to reimburse itself for payment made) to the appropriate taxing authority of an amount in cash equal to the amount of such Withholding Tax, remitting any balance to the employee.  For purposes of this Section 6.5, the value of shares of Stock so retained or surrendered shall be the Market Price on the date that the amount of the Withholding Tax is to be determined (the “Tax Date”), and the value of shares of Stock so sold shall be the actual net sale price per share (after deduction of commissions) received by the Company.

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Notwithstanding the foregoing, the employee shall be entitled to satisfy the obligation to pay any Withholding Tax, in whole or in part, by providing the Company with funds sufficient to enable the Company to pay such Withholding Tax or by requiring the Company to retain or to accept upon delivery thereof shares of Stock sufficient in value (determined in accordance with the last sentence of the preceding paragraph) to cover the amount of such Withholding Tax.  Each election by an employee to have shares retained or to deliver shares for this purpose shall be subject to the following restrictions: (a) the election must be in writing and made on or prior to the Tax Date; and (b) the election shall be subject to the disapproval of the Committee.

New ATA Holdings Inc. has caused this Plan to be executed by its duly authorized officer on the 4th day of October, 2006.

New ATA Holdings Inc.
By:	/s/ JOHN G. DEVISON

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EX-10.3

Exhibit 10.3

AMENDMENT TO

THE NEW ATA HOLDINGS INC.

2006 LONG TERM INCENTIVE PLAN

Whereas, the New ATA Holdings Inc. 2006 Long Term Incentive Plan provides in Section 6.1 thereof that grants of Options under the Plan shall terminate if a written Agreement evidencing an Option grant is not signed by the grantee of the Option (or his attorney) and delivered to the Company within 60 days after the effective date of the grant of the Option; and

Whereas, there may be occasions when such Agreements are not signed and returned within the 60-day period due to various reasons; and

Whereas, although every effort will be made by the Plan Administrator to secure the prompt return to the Company of a signed Agreement evidencing an Option grant, the Board does not deem it necessary to retain the requirement that it be returned within 60 days; and

Whereas, the Board therefore deems it advisable to eliminate the requirement that Agreements evidencing the grant of an Option be signed and returned within 60 days of the effective date of the grant of such Option;

Now therefore, the Plan is hereby amended, effective as of August 14, 2007, by amending Section 6.1 of the Plan so that Section 6.1, as so amended shall read in its entirety as follows:

Section 6.1. Written Agreement.  Each Option shall be evidenced by an Agreement which may contain such terms as the Committee from time to time shall approve provided that such terms are not inconsistent with the provisions of the Plan.  Unless the Agreement specifies otherwise, the effective date of the granting of an Option shall be the date on which the Committee approves such grant.  Each grantee of an Option shall be notified promptly of such grant and a written Agreement shall be promptly executed and delivered by the Company and the grantee.

Capitalized term used herein shall have the meanings ascribed to them in the Plan,

In witness whereof, this amendment to the Plan has been executed by the undersigned duly authorized officer, this      day of                              , 2007.

Global Aero Logistics Inc.

(formerly known as New ATA
Holdings Inc.)

By:

Name:

Title:

EX-10.11

Exhibit 10.11

SEVERANCE AGREEMENT

J. George Mikelsons (‘Mikelsons”) and ATA Holdings Corp. (“ATA Holdings”), together with ATA Holdings’ subsidiaries ATA Airlines, Inc. (“ATA Airlines”), Ambassadair Travel Club, Inc., ATA Leisure Corp., Amber Travel, Inc., American Trans Air Execujet, Inc., ATA Cargo, Inc., and C8 Airlines, Inc. (collectively, ATA Airlines and the other subsidiaries of ATA Holdings identified above shall be referred to as the “ATA Subsidiaries” and ATA Holdings and the ATA Subsidiaries collectively shall be referred to as the “ATA Group”), hereby execute this Severance Agreement (“Agreement”) as of the 31^st of August, 2005 and agree as follows:

1.Employment History, Retirement and Termination. Mikelsons has been employed by ATA Holdings or ATA Airlines or their predecessor entities and their affiliated entities respectively since 1973. Mikelsons wishes to retire. This Agreement provides for (i) the termination of Mikelsons’s employment as President and Chief Executive Officer of ATA Holdings, (ii) Mikelsons’ resignation as an officer and/or as the sole member of the Board of Directors of each member of the ATA Subsidiaries, respectively, and (iii) the retirement and resignation of Mikelsons from the position of Chairman of the Board of ATA Holdings. Mikelsons hereby retires from and resigns, effective as of 5:00p.m., Indianapolis time, on August 31, 2005 (the “Severance Date”), as (i) the President and Chief Executive Officer of ATA Holdings and (ii) an officer and/or member of the Board of Directors of each member of the ATA Subsidiaries, with Mikelsons being relieved of all employment duties and performance obligations effective as of the Severance Date. After the Severance Date, Mikelsons shall continue to serve as non-executive Chairman of the Board of ATA Holdings until the earlier of the “Effective Date” (as defined therein) of a confirmed plan of reorganization of the ATA Group or December 31, 2005 (“Chair Retirement Date”), and in such capacity as non-executive Chairman of the Board, Mikelsons shall not be an employee of ATA Holdings. During the period that Mikelsons is serving as non-executive Chairman of the Board, he shall be entitled to and receive the same rights and privileges as all other members of the Board of Directors of ATA Holdings, including, but not limited to, and to the extent such exist, directors fees and indemnification and coverage under the directors and officers liability insurance policies of each member of the ATA Group, provided that any such directors fees may be no more than any other director receives in the same period and in no event exceed the aggregate of $10,000. On the Chair Retirement Date, Mikelsons shall retire from his position as Chairman of the Board of ATA Holdings and resign from such Board.

2.Authority. ATA Holdings and each member of the ATA Subsidiaries, respectively, is the subject of a case under chapter 11 of the United States Bankruptcy Code pending in the United States Bankruptcy Court, Southern District of Indiana, Indianapolis Division (the “Bankruptcy Court”), jointly administered under case number 04-19866. The parties agree and acknowledge that this Agreement is being entered into pursuant to an Order of the Bankruptcy Court dated August 25, 2005, approving generally the terms of this

Agreement (the “Order”) and (ii) the counsel for the Official Committee of Unsecured Creditors appointed in the chapter 11 cases of the ATA Group, shall have the right to review the terms hereof to confirm that such terms are consistent with the Order.

3.Voluntary Agreement.   Mikelsons, ATA Holdings and each of the ATA Subsidiaries, respectively, desire to resolve any and all claims and disputes or issues which have arisen or could arise concerning Mikelsons’s employment with or service for the ATA Group and the termination of that employment and service. To accomplish such a resolution, they have voluntarily entered into this Agreement. Each member of the ATA Group, respectively, expressly agrees and acknowledges that its obligations, including, without limitation, the obligations to pay the Severance Benefit and the Non-Compete Payments, as each is defined herein, shall in no way depend on the continued existence, operation or solvency of any other member of the ATA Group.

4.Salary and Vacation Benefits.   The ATA Group will pay Mikelsons any and all salary payments and any earned, but unused, vacation benefits (“Vacation Payment”) to which Mikelsons is entitled up to and including the Severance Date, less all customary payroll withholdings, including deductions for federal, state and local taxes. The Vacation Payment, if any, will be paid to Mikelsons on the first regular payroll date following the Severance Date.

5.Confirmation of Receipt of Salary and Benefits.   Mikelsons has received or will receive all wages, salary payments and earned, but unused, vacation benefits and bonuses which were or are due and payable to Mikelsons by any member of the ATA Group on or prior to the Severance Date or the first pay date after the Severance Date.   Except for the salary payments and Vacation Payment provided for in Section 4 of this Agreement and the additional compensation and considerations provided for in Section 6 of this Agreement, Mikelsons shall not be entitled to payment by any member of the ATA Group of any additional amounts for wages, salary, vacation benefits or bonuses.

6.Additional Considerations.   In consideration of Mikelsons’ service to the ATA Group and execution of and compliance with the terms of this Agreement, and in full payment of any remaining obligations of the ATA Group to Mikelsons (other than as set forth in or contemplated by this Agreement, the Non-Compete Agreement (as hereinafter defined) and the respective Articles of Incorporation and by-laws of each member of the ATA Group), the ATA Group agrees to provide to Mikelsons, and Mikelsons agrees to accept, the following additional payments and benefits:

a.As of the Severance Date, the ATA Group shall pay to Mikelsons severance pay (the “Severance Benefit”) in the aggregate gross sum of $650,000, less the amount of applicable federal and state withholding and employment taxes, payable on fixed bi-weekly terms over a period of one year beginning two weeks following the Severance Date (the “Severance Period”). The Severance Benefit shall be deemed fully earned on the Severance Date and shall not be affected in the event of Mikelsons’ death prior to the end of the Severance Period and shall continue to be paid to Mikelsons’ designees

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(however such designees may be designated, whether by will, trust or testamentary or other instrument) in accordance with the above payment schedule until paid in full.

b.Concurrent with the execution of this Agreement, Mikelsons shall execute an appropriate confidentiality and non-competition agreement (“Non-Compete Agreement”) for a two-year period to commence at the end of the Severance Period (the “Non- Compete Term”). As consideration to Mikelsons for the Non-Compete Agreement, ATA Holdings, ATA Airlines and each other member of the ATA Group shall pay to Mikelsons the annual aggregate gross sum of $200,000, payable quarterly (collectively, the “Non-Compete Payments”) for each year of the Non-Compete Term. The Non- Compete Payments shall be paid to Mikelsons, in accordance with and subject to the terms of the Non-Compete Agreement, beginning September 1, 2006 and on each December 1, March 1, June 1 and September 1 thereafter until paid in full. All Non-Compete Payments shall be paid as a credit against the JGM Obligations (as defined in Section 12 hereof). The Non-Compete Payments shall be deemed fully earned in the event of Mikelsons’ death during the Non-Compete Term, with any remaining Non-Compete Payments owed to Mikelsons to be aggregated and applied to the JGM Obligations (as hereinafter defined).

c.Mikelsons and his spouse, Muriel Mikelsons (“Mrs. Mikelsons”) shall receive lifetime positive space travel on each airline operated by any member of the ATA Group and successors thereto. No member of the ATA Group shall have any liability to reimburse Mikelsons for income or other taxes arising from, or payable by, Mikelsons or Mrs. Mikelsons by reason of this benefit or its utilization. Mikelsons agrees that he will not resell or permit to be resold by Mrs. Mikelsons any flight passes or tickets issued pursuant to this benefit.

d.From and after the Severance Date, upon their respective requests, Mikelsons and Mrs. Mikelsons may receive a distribution of their vested 401(k) plan benefits, respectively, subject to the terms of such plan.

e.After the Severance Date and pursuant to its terms, Mikelsons at his expense may convert the MetLife group term life insurance policy provided by one or more members of the ATA Group into a personal policy;

f.After the Severance Date, the ATA Group agrees to continue to include Mikelsons and Mrs. Mikelsons among the individuals covered in any health insurance plans offered by the ATA Group at their requests respectively, provided that (i) the inclusion of Mikelsons and Mrs. Mikelsons, respectively, is permissible under such plans; (ii) Mikelsons and Mrs. Mikelsons, respectively, reimburse the ATA Group no less frequently than monthly for the employee cost of such coverage; (iii) to the extent that Mikelsons may be covered, such inclusion on the ATA Group’s health insurance plans shall not extend after the third anniversary of the Severance Date; and (iv) to the extent Mrs. Mikelsons may be covered, such inclusion in the ATA Group’s health insurance plans shall not extend beyond Mrs. Mikelsons’ 65th birthday. If and to the extent that it is or becomes impermissible to include Mikelsons or Mrs. Mikelsons among individuals

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covered by the ATA Group’s health insurance plan, the ATA Group shall not be deemed in default of this undertaking and shall not have any obligation to pay all or any the costs of Mikelsons’ or Mrs. Mikelsons’ alternative coverages.

g.After the Severance Date, all as more fully set forth in a separate lease agreement, Mikelsons shall be permitted continued use through December 31, 2007 of the 2005 Jeep Grand Cherokee owned by ATA Airlines, and shall have no obligation to reimburse ATA Airlines for such use. Mikelsons shall be solely responsible for all costs of insurance, licensing, taxes, gas, maintenance, repairs and any other miscellaneous expenses typically associated with the ownership or operation of a vehicle.

7.Confidential and Proprietary Information. Mikelsons recognizes Mikelsons’s continuing responsibilities to each member of the ATA Group with respect to confidential and proprietary information and material. Mikelsons therefore covenants and agrees that:

a.prior to the Severance Date, Mikelsons has not disclosed, outside the ordinary course of business to others not employed by, or a director or agent of, a member of the ATA Group, any proprietary, confidential or competitively-sensitive information and materials which are the property of or relate to the ATA Group or the business of any member of the ATA Group, including, without limitation, (i) all information and materials, whether or not reduced to writing or other tangible medium of expression, created by, provided to or otherwise disclosed to Mikelsons in connection with Mikelsons’ employment with any member of the ATA Group or continued interim service as the non-executive Chairman of the Board of ATA Holdings Corp. (excepting only information and materials already known by the general public); (ii) trade secrets, (iii) the names and addresses of any member of the ATA Group’s past, present or prospective customers or business contacts, and all information relating to such customers or business contacts, regardless of whether such information was supplied or produced by any member of the ATA Group or such customers or business contacts; (iv) the terms of employment between any member of the ATA Group and its employees; (v) proprietary information regarding or with respect to any member of the ATA Group’s services, products, prices, pricing methods, fees, costs, processes, training materials, financing sources, marketing plans or techniques, business plans, operational strategies and tactical plans; and (vi) the financial condition and operating results of any member of the ATA Group (all such trade secrets and confidential and/or proprietary information of ATA Holdings or any other member of the ATA Group shall be hereinafter referred to collectively as the “Confidential Information”);

b.subsequent to the Severance Date, Mikelsons will not, without prior written consent from ATA Holdings, use or disclose to anyone any of the Confidential Information;

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c.Mikelsons has returned, or will return, prior to September 30, 2005, to ATA Holdings all originals and all copies (including all computer or other electronically-stored data) of all materials of any kind whatsoever constituting or containing any of the Confidential Information which are or were in Mikelsons’ possession or custody or under Mikelsons’ control during Mikelsons’ employment and up to and including the Severance Date; that Mikelsons has not given any such materials, either directly or indirectly, to others not in the employ or a director or agent of a member of the ATA Group without prior written consent of a member of the ATA Group; and that in the future Mikelsons will not obtain or give any such materials, either directly or indirectly, to others not in the employ or a director or agent of a member of the ATA Group without ATA Holdings prior written consent; and

d.in conjunction with maintaining strict confidentiality as set forth herein, in the event that Mikelsons is requested by oral or written order, inquiry or request for information or documents in legal proceedings, government investigations, interrogatories, subpoenas or any other similar process to disclose any Confidential Information, he agrees that he will provide notice of any such order, inquiry or request to ATA Holdings so that it may seek an appropriate protective order, or by mutual written agreement waive compliance with the provisions of this Agreement. Finally, Mikelsons shall not make or publish disparaging statements concerning ATA Holdings or any other member of the ATA Group, their respective products or services, or current or former officers, directors, attorneys, agents or employees.

8.Company Property. Mikelsons represents and covenants that Mikelsons has returned, or will return prior to September 30, 2005, all other property of any member of the ATA Group, including but not limited to keys, credit cards, files, personal computers, documents and any other such property of any member of the ATA Group in Mikelsons’s possession or custody at Mikelsons’s office, personal residence, or elsewhere, with the exception of the vehicle contemplated by Section 6(g) hereof and such property or materials Mikelsons reasonably desires to retain in service as the non-executive Chairman of the Board of ATA Holdings up to and through the Chair Retirement Date, which property Mikelsons will return to ATA Holdings by not later than the Chair Retirement Date. No later than September 30, 2005, Mikelsons shall remove from the ATA Group’s offices or facilities Mikelsons’ personal assets, furniture and any other personal property located at such offices or facilities

9.Cooperation. If it is necessary for any member of the ATA Group to call upon Mikelsons to provide evidence in any judicial, administrative or other proceedings occurring during the Severance Period, Mikelsons agrees to cooperate in making himself available for such proceedings, and the ATA Group agrees to reimburse Mikelsons’ reasonable out-of-pocket expenses for such matters. If it is necessary for any member of the ATA Group to call upon Mikelsons to provide evidence in any judicial, administrative or other proceedings occurring subsequent to the Severance Period, Mikelsons agrees to cooperate in making himself reasonably available for such

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proceedings, and the ATA Group agrees to pay Mikelsons reasonable compensation for his time (at a rate to be mutually agreed upon by the ATA Group and Mikelsons at such time) and to reimburse Mikelsons’ reasonable out-of-pocket expenses for such matters.

10.Mutual Release.

a.Mikelsons hereby covenants not to sue, releases and forever discharges ATA Holdings, ATA Airlines and each other member of the ATA Group, and the officers, directors, employees, agents, successors and assigns of each member of the ATA Group from any and all claims, liabilities, demands, actions and causes of action of every nature, kind and character, known and unknown, which have or may have arisen or accrued to Mikelsons by reason of Mikelsons’ employment by or service for ATA Holdings or any other member of the ATA Group, including, without limitation, any and all claims that the retirement and termination of Mikelsons’ employment and/or resignation of Mikelsons’ board directorships resulted from a violation or breach of any federal, state, or local statute, regulation, ordinance, or common law, or any contract, any charges or claims regarding possible discrimination (based on age, race, national origin, ethnic background, sex, disability, religion), wrongful termination, or express or implied contract, any and all claims for salary, vacation pay, fringe benefits, bonuses, severance pay, profit sharing benefits, costs and attorneys’ fees and any and all claims for other compensation, benefits, damages or fees, whether or not any of such claims have been or could have been asserted by Mikelsons at any time up to and including the Chair Retirement Date, excepting only: (1) any claims, liabilities, demands, actions and causes of action which may arise under this Agreement or the Non-Compete Agreement as the result of the failure of any member of the ATA Group to perform under, or any breach of, this Agreement or the Non-Compete Agreement; (2) any claims for indemnification which may arise under the Articles of Incorporation or by-laws of any member of the ATA Group; (3) any outstanding and properly documented expense reports that have not been reimbursed as of the Severance Date, or with respect to outstanding and properly documented expense reports in connection with Mikelsons’ continuing service as non-executive Chairman of the Board of ATA Holdings, reimbursed as of the Chair Retirement Date; (4) any benefits claims (not including any bonus or bonus claims) outstanding on the Severance Date that have not been reimbursed (consistent with the provisions of the applicable benefits plans); and (5) all other amounts to which Mikelsons is entitled under any retirement savings plan administered by any member of the ATA Group. Mikelsons agrees to indemnify and hold harmless each member of the ATA Group, and the officers, directors, employees, agents, successors and assigns of each member of the ATA Group, from and against any and all claims, demands, damages, liabilities, obligations, costs, expenses, attorneys fees’, actions, causes of action and/or claims for relief arising from any demand, claim or action released herein or in connection with any lawsuit, action or other proceeding initiated or prosecuted contrary to the provisions of this Agreement.

Further, with particularity with respect to any claim based on alleged age discrimination: (i) Mikelsons acknowledges that the ATA Group has advised him that his

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employment with the ATA Group was covered by the Age Discrimination in Employment Act of 1967 (29 U.S.C. § 621 et. seq.), as amended (commonly referred to as the “ADEA”); (ii) Mikelsons acknowledges that the ATA Group has advised him by this writing to consult with an attorney prior to signing this Agreement and that he has done so; (iii) Mikelsons acknowledges in exchange for this waiver he is receiving consideration beyond what he would otherwise be entitled to under any contract or employee benefit plan; (iv) Mikelsons acknowledges that the ATA Group has advised him that under the ADEA he has up to twenty-one (21) days to consider and accept this Agreement by signing and returning this Agreement to the ATA Group; and (v) Mikelsons acknowledges that the ATA Group has advised him that for a period of seven (7) days following Mikelsons’ signing of this Agreement, Mikelsons’ may revoke this Agreement by written notice to the ATA Group. This Agreement will not become binding and enforceable until the 7-day revocation period has expired.

b.Each member of the ATA Group, respectively, hereby covenants not to sue, releases and forever discharges Mikelsons and his heirs, successors and assigns from any and all claims, liabilities, demands, actions and causes of action of every nature, kind and character, known and unknown, costs and attorneys’ fees, which have or may have arisen or accrued to any member of the ATA Group in connection with any act or omission relating to Mikelsons’ employment by or service for any member of the ATA Group, including, without limitation, his services as a fiduciary in connection with any employee benefit plan, and Mikelsons’ service as a member of the board of directors of any member of the ATA Group, whether or not any of such claims have been or could have been asserted by any or each member of the ATA Group at any time up to and including the Chair Retirement Date, excepting only (1) any claims, liabilities, demands, actions and causes of action which may arise as the result of the failure of Mikelsons to perform under, or any breach of, this Agreement or the Non-Compete Agreement and (2) the JGM Obligations. Each member of the ATA Group, respectively, agrees to indemnify and hold harmless Mikelsons and his heirs, successors and assigns, from and against any and all claims, demands, damages, liabilities, obligations, costs, expenses, attorneys fees’, actions, causes of action and/or claims for relief arising from any demand, claim or action released herein or in connection with any lawsuit, action or other proceeding initiated or prosecuted contrary to the provisions of this Agreement.

c.Mikelsons hereby represents and covenants that he (i) has not, on or prior to the date of this Agreement, transferred or assigned any claim, demand, action or cause of action against any member of the ATA Group that he has released and discharged under Section 10(a) hereof and (ii) will not, subsequent to the date of this Agreement, transfer or assign any claim, demand, action or cause of action against any member of the ATA Group that he has released and discharged under Section 10(a) hereof. Each member of the ATA Group, respectively, hereby represents and covenants that none of them (i) has, on or prior to the date of this Agreement, transferred or assigned any claim, demand, action or cause of action against Mikelsons that it has released and discharged under Section 10(b) hereof and (ii) will, subsequent to the date of this Agreement, transfer or assign any claim, demand, action or cause of action against Mikelsons that it has released and discharged under Section 10(b) hereof.

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11.Continuing Indemnification.

a.Each member of the ATA Group shall indemnify and reimburse Mikelsons against all Liability and Expense that may be incurred for all acts or omissions of Mikelsons in his capacity as an officer, director or employee of each member of the ATA Group up to and through the Chair Retirement Date for, in connection with, or resulting from any Claim to the fullest extent authorized or permitted by law, as the same exists or may hereafter be amended (but in the case of any such amendment, only to the extent that such amendment permits the ATA Group to provide broader indemnification rights than such law permitted the ATA Group to provide prior to such amendment), or otherwise consistent with the public policy of the State of Indiana. In furtherance of the foregoing, and not by way of limitation, Mikelsons shall be indemnified and reimbursed by each member of the ATA Group against all Liability and reasonable Expense that may be incurred by him in connection with or resulting from any Claim, (1) if Mikelsons is Wholly Successful with respect to the Claim, or (2) if not Wholly Successful, then if Mikelsons is determined to have acted in good faith, in what he reasonably believed to be the best interests of the ATA Group or at least not opposed to its best interests and, in addition, with respect to any criminal claim is determined to have had reasonable cause to believe that his conduct was lawful or had no reasonable cause to believe that his conduct was unlawful. The termination of any Claim, by judgment, order, settlement (whether with or without court approval), or conviction or upon a plea of guilty or of nolo contendere, or its equivalent, shall not create a presumption that Mikelsons did not meet the standards of conduct set forth in clause (2) of this subsection (a).

b.The term “Claim” as used in this Section 11 shall include every pending, threatened, or completed claim, action, suit, or proceeding (including but not limited to arbitration, mediation or other form of alternative dispute resolution) and all appeals thereof (whether asserted or unasserted on the date of this Agreement, or brought by or in the right of any member of the ATA Group or otherwise), civil, criminal, administrative, or investigative, formal or informal, in which Mikelsons may become involved, as a party or otherwise: (1) by reason of his having been an officer, director employee, trustee or agent of any member of the ATA Group prior to the Chair Retirement Date, or (2) by reason of any action taken or not taken by him in his capacity as an officer, director, employee, fiduciary or agent of or for any member of the ATA Group prior to the Chair Retirement Date or arising out of his status as such.

c.The terms “Liability” and “Expense” as used in this Section 11 shall include, but shall not be limited to, counsel fees, expert and investigation costs and disbursements and amounts of judgments, fines, or penalties against (including excise taxes assessed with respect to an employee benefit plan), and amounts paid in settlement by or on behalf of Mikelsons.

d.The term “Wholly Successful” as used in this Section 11 shall mean (1) termination of any Claim, whether on the merits or otherwise, against Mikelsons in

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question without any finding of liability or guilt against him, (2) approval by a court, with knowledge of the indemnity herein provided, of a settlement of any Claim, or (3) the expiration of a reasonable period of time after the making or threatened making of any Claim without the institution of the same, without any payment or promise made to induce a settlement.

e.The rights of indemnification and reimbursement provided under this Section 11 are not exclusive and shall be in addition to any rights to which Mikelsons may otherwise be entitled by contract, vote of directors not a party to the Claim, vote of shareholders, the Articles of Incorporation or by-laws of any member of the ATA Group or as a matter of law. In the event of any conflict in any indemnification or reimbursement provided to Mikelsons by contract, director or shareholder vote, the Articles of Incorporation or by-laws of any member of the ATA Group, as a matter of law or this Agreement, Mikelsons shall be entitled to the broadest indemnification and reimbursement provided by any of the foregoing.

f.All obligations of each member of the ATA Group under this Section 11 shall survive the Severance Date and the termination of Mickelsons’ service in any capacity covered by this Section 11.

12.Affirmation of Indebtedness. Mikelsons acknowledges and affirms that (i) he is indebted to one or more members of the ATA Group as affirmed in that certain letter agreement, dated as of October 26, 2004 (the “JGM Debt Agreement”), in the initial principal amount of Six Hundred Fifty-three Thousand Two Hundred Twenty-five Dollars and Nine Cents($653,225.09) (the “JGM Obligations”), and (ii) nothing herein shall alter the repayment terms or obligations of Mikelsons with respect to the JGM Obligations, except as contemplated by the payment of the Non-Compete Payments as credits to be applied to the JGM Obligations. The ATA Group represents and agrees that all payments under the JGM Debt Agreement have been made as agreed prior to the date of this Agreement and that, as of July 31, 2005, the outstanding principal balance of the JGM Obligations is $612,285.

13.Directors and Officers Liability Insurance. Each member of the ATA Group and its successors and assigns shall continue to extend to and cover Mikelsons under and within its directors and officers liability insurance policies, respectively, for so long and on the same terms as such policies are maintained for current directors and officers, for all acts and omissions up to and through the Chair Retirement Date of Mikelsons in his capacity as a director or officer of such member of the ATA Group, consistent with and to the fullest extent authorized or permitted by its Articles of Incorporation and by-laws.

14.Severability. Should any provision of this Agreement be declared or determined by any court of competent jurisdiction to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms or provisions shall not be affected thereby and said illegal, unenforceable or invalid part, term or provision shall be deemed not to be a part of this Agreement. Should any particular confidentiality

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covenant, provision or clause of this Agreement be held unreasonable or contrary to public policy for any reason, including, without limitation, the time period, geographic area and/or scope of activity covered by any confidentiality covenant, provision or clause, Mikelsons and each member of the ATA Group acknowledge and agree that such covenant, provision or clause shall automatically be deemed modified such that the contested covenant, provision or clause will have the closest effect permitted by applicable law to the original form and shall be given effect and enforced as so modified to whatever extent would be reasonable and/or enforceable under applicable law.

15.Mikelsons Acknowledgment. Mikelsons represents and acknowledges that in executing this Agreement, Mikelsons does not rely and has not relied upon any representation or statement with regard to the subject matter, basis or effect of this Agreement, other than those specifically stated in this Agreement.

16.Entire Agreement. Except for the Non-Compete and Confidentiality Agreement provided for in Section 6.b. hereof and the lease provided for in Section 6.g. hereof, this Agreement sets forth the entire agreement between the parties hereto, and fully supersedes any and all prior agreements or understandings, written or oral, between the parties hereto pertaining to the subject matter hereof. It may be modified only by the agreement of the parties hereto memorialized in writing and executed by each of them.

17.Amendment; Waiver; Successors. This Agreement may not be modified, amended or waived in any manner except by a written document executed by the ATA Group and Mikelsons, with the approval of the Bankruptcy Court to the extent required. The waiver by either party of compliance with any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other provision of this Agreement (whether or not similar), or a continuing waiver or a waiver of any subsequent breach by such party of a provision of this Agreement. This Agreement and the covenants herein shall extend to and inure to the benefit of and shall be binding upon the legal representatives, heirs, successors and assigns of Mikelsons and the legal representatives, successors and assigns of the ATA Group. Further, the parties agree that this Agreement shall be incorporated into, and assumed as part of, any plan of reorganization confirmed in any of the pending chapter 11 cases of the members of the ATA Group.

18.Governing Law and Forum. Mikelsons acknowledges and agrees that the State of Indiana has a substantial connection with this Agreement. This Agreement shall therefore be governed by and construed according to the internal laws of the State of Indiana, without regard to conflict of law principles. The parties further agree that any disputes arising under this Agreement and/or any action brought to enforce this Agreement may be brought in a state court of competent jurisdiction in Marion County, Indiana, or in the federal court for the Southern District of Indiana, and the parties consent to personal jurisdiction of such courts and waive any defense of forum non-conveniens.

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IN WITNESS WHEREOF, Mikelsons and each member of the ATA Group have executed this Agreement on the date(s) indicated below.

ATA Holdings Corp
By:	/s/ Brian T. Hunt		,	General Counsel	(Title)
Dated: August 31, 2005
ATA Airlines, Inc.
By:	/s/ Brian T. Hunt		,	General Counsel	(Title)
Dated: August 31, 2005
Ambassadair Travel Club, Inc.
By:	/s/ Brian T. Hunt		,	General Counsel	(Title)
Dated: August 31, 2005
ATA Leisure Corp.
By:	/s/ Brian T. Hunt		,	General Counsel	(Title)
Dated: August 31, 2005
Amber Travel, Inc.
By:	/s/ Brian T. Hunt		,	General Counsel	(Title)
Dated: August 31, 2005
American Trans Air Execujet, Inc.
By:	/s/ Brian T. Hunt		,	General Counsel	(Title)
Dated: August 31, 2005
ATA Cargo, Inc.
By:	/s/ Brian T. Hunt		,	General Counsel	(Title)
Dated: August 31, 2005
C8 Airline, Inc.
By:	/s/ Brian T. Hunt		,	General Counsel	(Title)
Dated: August 31, 2005
By:		/s/ J. George Mikelsons
J. George Mikelsons
Date: August 31, 2005

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EX-10.12

Exhibit 10.12

NON-COMPETITION AND CONFIDENTIALITY AGREEMENT

J. George Mikelsons (“Mikelsons”) and ATA Holdings Corp. (“ATA Holdings”), together with ATA Holdings’ subsidiaries ATA Airlines, Inc. (“ATA Airlines”), Ambassadair Travel Club, Inc., ATA Leisure Corp., Amber Travel, Inc., American Trans Air Execujet, Inc., ATA Cargo, Inc., and C8 Airlines, Inc. (collectively, ATA Airlines and the other subsidiaries of ATA Holdings identified above shall be referred to as the “ATA Subsidiaries” and ATA Holdings and the ATA Subsidiaries collectively shall be referred to as the “ATA Group”), hereby execute this Non-Competition and Confidentiality Agreement (“Agreement”), and enter into this Agreement effective as of the 31^st of August, 2005.

In consideration of Mikelsons’ prior employment by the ATA Group and additional good and valuable consideration hereunder, Mikelsons and the ATA Group agree as follows:

1.             Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below:

a.             “Business” shall mean collectively the sale or provision of air carrier services certificated by the Federal Aviation Association or United States Department of Transportation, non-military charter and air taxi services, military charter services to the United States’ military, cargo services, travel agency services, travel club services, wet leasing or any other businesses conducted by any member of the ATA Group as such business of each member of the ATA Group existed at any time prior to or exists upon the Commencement Date of this Agreement.

b.             “Commencement Date” shall mean September 1, 2005.

c.             “Confidential Information” shall mean any proprietary, confidential or competitively-sensitive information and materials which are the property of or relate to the ATA Group or the Business of any member of the ATA Group. Confidential Information shall include without limitation all information and materials, whether or not reduced to writing or other tangible medium of expression, created by, provided to or otherwise disclosed to Mikelsons in connection with Mikelsons’ employment with any member of the ATA Group or continued interim service as the non-executive Chairman of the Board of ATA Holdings Corp. (excepting only information and materials already known by the general public), including without limitation (i) trade secrets, (ii) the names and addresses of any member of the ATA Group’s past, present or prospective customers or business contacts, and all information relating to such customers or business contacts, regardless of whether such information was supplied or produced by any member of the ATA Group or such customers or business contacts; (iii) the terms of employment between any member of the ATA Group and its employees; (iv) proprietary information regarding or with respect to any member of the ATA Group’s services, products, prices, pricing methods, fees, costs, processes, training materials, financing sources, marketing plans or techniques, business plans, operational strategies and tactical plans; and (v) the financial condition and operating results of any member of the ATA Group.

d.             “Expiration Date” shall mean August 31, 2008.

e.             “Non-Compete Payments” shall mean the annual aggregate gross sum of $200,000, payable in each of the final two years of the Non-Compete Term (as defined herein). The parties agree and acknowledge that for the first twelve (12) months of the Non-Compete Term, Mikelsons shall receive certain severance payments from the ATA Group under that certain Severance Agreement dated August 31, 2005 between Mikelsons and each member of the ATA Group respectively (the “Severance Agreement”) and that such severance payments are additional consideration to Mikelsons for the agreements, covenants, obligations and restrictions under this Agreement.

f.              “Non-Compete Term” shall mean that thirty-six (36) month period beginning on the Commencement Date and extending through and ending on the Expiration Date.

g.             “Territory” shall mean (i) the geographic area of the continental United States plus the State of Hawaii plus any geographic area within a 100 mile radius of any destination in the world to which any member of the ATA Group has flown commercial airline passengers at any time prior to the Commencement Date; (ii) the geographic area of the continental United States plus the State of Hawaii plus any geographic area within a 50 mile radius of any destination in the world to which any member of the ATA Group has flown executive charter passengers within one year prior to the Commencement Date; (iii) the geographic area of the continental United States plus the State of Hawaii plus any geographic area within a 100 mile radius of any destination in the world to which any member of the ATA Group has flown United States’ military charters at any time prior to the Commencement Date; and (iv) any additional geographic areas in which any member of the ATA Group sold or solicited or marketed the sale of any aspect of its Business within one year prior to the Commencement Date. The parties acknowledge and agree that the Business of the ATA Group collectively is generally located at least within the Territory, extends throughout the Territory and is not limited to any particular region of the Territory.

2.             Authority. ATA Holdings and each member of the ATA Subsidiaries, respectively, is the subject of a case under chapter 11 of the United States Bankruptcy Code pending in the United States Bankruptcy Court, Southern District of Indiana, Indianapolis Division (the “Bankruptcy Court”), jointly administered under case number 04-19866 (collectively, the “Bankruptcy Cases;” individually, a “Bankruptcy Case”). The parties agree and acknowledge that (i) this Agreement is being entered into pursuant to an Order of the Bankruptcy Court dated August 25, 2005, approving generally the terms of this Agreement (the “Order”); and (ii) the counsel for the Official Committee of Unsecured Creditors appointed in the chapter 11 cases of the ATA Group, shall have the right to review the terms hereof to confirm that such terms are consistent with the Order.

3.             Acknowledgments. Mikelsons acknowledges and agrees that in connection with Mikelsons’ employment with the members of the ATA Group, respectively, Mikelsons (a) directed, developed, received, participated and engaged in all proprietary information involving, concerning or relating to the Business, (b) established business relationships or had contact with

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the customers, prospective customers, regulatory agencies, airport authorities and others who do business with the ATA Group, and/or (c) had access to, generated or otherwise came into contact with or become aware of Confidential Information, including without limitation, Confidential Information concerning the operations of each member of the ATA Group, including the requirements, habits and/or preferences of the regulatory agencies, airport authorities and customers of each member of the ATA Group. Mikelsons therefore acknowledges and agrees to the restrictions set forth in Sections 4, 6 and 7 of this Agreement are reasonably necessary to protect the legitimate business interests of the members of the ATA Group

4.            Use; Confidentiality. Mikelsons acknowledges and agrees that Confidential Information is the property of the ATA Group and its customers, and that Mikelsons has no ownership rights in Confidential Information. Mikelsons (a) shall not directly or indirectly disclose, use or exploit any Confidential Information for Mikelsons’ own benefit or for the benefit of any person or entity, other than the ATA Group at any and all times up to and through the Expiration Date; and (b) shall hold Confidential Information in trust and confidence, and use all reasonable means to assure that it is not directly or indirectly disclosed to or copied by unauthorized persons or used in an unauthorized manner, at any and all times up to and through the Expiration Date.

5.            Disclosure; Assistance. To the extent that Mikelsons created or developed any Confidential Information during the course of Mikelsons’ employment with the ATA Group, Mikelsons agrees and acknowledges such Confidential Information is the sole and exclusive property of the ATA Group.

6.            Non-Competition. Mikelsons agrees commencing on the Commencement Date and up to and through the Expiration Date, to be subject to the following restrictions on competition:

a.             During the Non-Compete Term, Mikelsons (on Mikelsons’ own behalf or that of any other person or entity) shall not directly or indirectly own, manage, operate, control, invest in, lend to, acquire an interest in, or otherwise engage or participate in (whether as an employee, independent contractor, consultant, partner, shareholder, joint venturer, investor, or any other type of participant), or use or permit Mikelsons’ name to be used in, any business (including the sale of any product or service) which directly or indirectly competes with any Business of the ATA Group.

b.             During the Non-Compete Term, Mikelsons (on Mikelsons’ own behalf or that of any other person or entity) shall not within the Territory directly or indirectly own, manage, operate, control, invest in, lend to, acquire an interest in, or otherwise engage or participate in (whether as an employee, independent contractor, consultant, partner, shareholder, joint venturer, investor, or any other type of participant), or use or permit Mikelsons’ name to be used in, any business (including the sale of any product or service) which directly or indirectly competes with any Business of the ATA Group.

c.              During the Non-Compete Term, Mikelsons (on Mikelsons’ own behalf or that of any other person or entity) shall not directly or indirectly own, manage, operate, control,

3

invest in, lend to, acquire an interest in, or otherwise engage or participate in (whether as an employee, independent contractor, consultant, partner, shareholder, joint venturer, investor, or any other type of participant), or use or permit Mikelsons’ name to be used in, any business (including the sale of any product or service) which directly or indirectly competes with any FAA or DOT certificated air carrier operations, non-military charter and air taxi operations, military charter services to the United States’ military, cargo services, travel agency services, travel club services, wet leasing or any other businesses conducted by any member of the ATA Group, as such exist on the Commencement Date or existed within twenty-four (24) months prior to the Commencement Date.

d.              During the Non-Compete Term, Mikelsons (on Mikelsons’ own behalf or that of any other person or entity) shall not directly or indirectly own, manage, operate, control, invest in, lend to, acquire an interest in, or otherwise engage or participate in (whether as an employee, independent contractor, consultant, partner, shareholder, joint venturer, investor, or any other type of participant), or use or permit Mikelsons’ name to be used in, any business (including the sale of any product or service) which competes with directly or indirectly any charter or commercial air carrier routes flown by any member of the ATA Group as such exist on the Commencement Date or existed within twenty-four (24) months prior to the Commencement Date.

e.            Notwithstanding the provisions of Sections 6a, 6b, 6c and 6d hereof, each member of the ATA Group agrees that at all times during the Non-Compete Term, Mikelsons shall be permitted to directly or indirectly own, manage, operate, control, invest in, lend to, acquire an interest in, or otherwise engage or participate in (whether as an employee, independent contractor, consultant, partner, shareholder, joint venturer, investor, or any other type of participant), or use or permit Mikelsons’ name to be used in connection with any certificated non-military charter or air taxi service that exclusively flies aircraft each of which holds no more than eighteen (18) passengers.

7.            Non-Solicitation. During the Non-Compete Term, Mikelsons (on Mikelsons’ own behalf or that of any other person or entity) shall not directly or indirectly solicit, induce or influence any customer of any member of the ATA Group, any employee of any member of the ATA Group or any other person or entity who has an actual or prospective business or employment relationship with any member of the ATA Group to discontinue, reduce, reject or otherwise change in any manner adverse to the interests of the ATA Group the nature or extent of such relationship with the ATA Group.

8.            Non-Compete Payments. The Non-Compete Payments shall be paid quarterly to Mikelsons beginning September 1, 2006 and on each December 1, March 1, June 1 and September 1 thereafter until paid in full. All Non-Compete Payments shall be paid as a credit against the JGM Obligations (as defined below). The Non-Compete Payments shall be deemed fully earned in the event of Mikelsons’ death during the Non-Compete Term, with any remaining Non-Compete Payments owed to him to be applied to the JGM Obligations. Mikelsons acknowledges and affirms that (i) he is indebted to one or more members of the ATA Group, as affirmed in that certain letter agreement dated as of October 26, 2004 (the “JGM Debt Agreement”), in the initial principal amount of Six Hundred Fifty-three Thousand Two Hundred

4

Twenty-five Dollars and Nine Cents($653,225.09) (the “JGM Obligations”), and (ii) nothing herein shall alter the repayment terms or obligations of Mikelsons with respect to the JGM Obligations, except as contemplated by the payment of the Non-Compete Payments as credits to be applied to the JGM Obligations. The ATA Group represents and agrees that all payments under the JGM Debt Agreement have been made as agreed prior to the date of this Agreement and that, as of July 31, 2005, the outstanding principal balance of the JGM Obligations is Six Hundred Twelve Thousand Two Hundred Twenty-five Dollars and No Cents ($612,285). Each member of the ATA Group, respectively, expressly agrees and acknowledges that the obligations of each member of the ATA Group under this Agreement shall in no way depend on the continued existence, operation or solvency of any other member of the ATA Group.

9.            Breach of Agreement and Remedies. Mikelsons acknowledges and agrees that Mikelsons’ actual or threatened breach of this Agreement will cause or threaten irreparable injury to the ATA Group that cannot adequately be measured in money damages. The ATA Group shall therefore be entitled to obtain injunctive relief with respect to any such actual or threatened breach by Mikelsons in addition to and not in lieu of any other available remedies. Mikelsons shall also pay any and all costs, damages and other expenses, including without limitation all attorneys’ fees, witness fees and other legal expenses which are incurred by the ATA Group in enforcing this Agreement

10.          Entire Agreement. Except for the Severance Agreement, this Agreement sets forth the entire agreement between the parties hereto, and fully supersedes any and all prior agreements or understandings, written or oral, between the parties hereto pertaining to the subject matter of this Agreement. It may be modified only by the agreement of the parties hereto memorialized in writing and executed by each of them.

11.          Other Agreements. Mikelsons represents and warrants to the ATA Group that Mikelsons’ agreements herein do not breach, violate, interfere with or otherwise conflict with any oral or written agreement between Mikelsons and any other person or entity, including without limitation non-competition and/or non-disclosure provisions in any such agreement. Mikelsons shall indemnify, defend and hold harmless the ATA Group and all of its officers, directors, shareholders, employees and agents against any and all claims, damages, losses and expenses (including without limitation attorneys’ fees) incurred by the ATA Group in connection with Mikelsons’ breach of this representation and warranty.

12.          Severability. Should any provision of this Agreement be declared or determined by any court of competent jurisdiction to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms or provisions shall not be affected thereby and said illegal, unenforceable or invalid part, term or provision shall be deemed not to be a part of this Agreement. Should any particular confidentiality covenant, provision or clause of this Agreement be held unreasonable or contrary to public policy for any reason, including, without limitation, the time period, geographic area and/or scope of activity covered by any confidentiality covenant, provision or clause, Mikelsons and each member of the ATA Group acknowledge and agree that such covenant, provision or clause shall automatically be deemed modified such that the contested covenant, provision or clause will have the closest effect

5

permitted by applicable law to the original form and shall be given effect and enforced as so modified to whatever extent would be reasonable and/or enforceable under applicable law.

13.          Amendment; Waiver; Successors. This Agreement may not be modified, amended or waived in any manner except by a written document executed by the ATA Group and Mikelsons, with the approval of the Bankruptcy Court to the extent required. The waiver by either party of compliance with any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other provision of this Agreement (whether or not similar), or a continuing waiver or a waiver of any subsequent breach by such party of a provision of this Agreement. This Agreement and the covenants herein shall extend to and inure to the benefit of and shall be binding upon the legal representatives, heirs, successors and assigns of Mikelsons and the legal representatives, successors and assigns of the ATA Group. Further, the parties agree that this Agreement shall be incorporated into, and assumed as part of, any plan of reorganization confirmed in any of the pending chapter 11 cases of the members of the ATA Group.

14.          Governing Law and Forum. Mikelsons acknowledges and agrees that the State of Indiana has a substantial connection with this Agreement. This Agreement shall therefore be governed by and construed according to the internal laws of the State of Indiana, without regard to conflict of law principles. The parties further agree that any disputes arising under this Agreement and/or any action brought to enforce this Agreement may be brought in a state court of competent jurisdiction in Marion County, Indiana, or in the federal court for the Southern District of Indiana, and the parties consent to personal jurisdiction of such courts and waive any defense of forum non-conveniens.

ATA Holdings Corp
By:	/s/ Brian T. Hunt	,	General Counsel	(Title)
Dated: August 31, 2005
ATA Airlines, Inc.
By:	/s/ Brian T. Hunt	,	General Counsel	(Title)
Dated: August 31, 2005
Ambassadair Travel Club, Inc.
By:	/s/ Brian T. Hunt	,	General Counsel	(Title)
Dated: August 31, 2005
ATA Leisure Corp.
By:	/s/ Brian T. Hunt	,	General Counsel	(Title)
Dated: August 31, 2005
Amber Travel, Inc.
By:	/s/ Brian T. Hunt	,	General Counsel	(Title)
Dated: August 31, 2005

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American Trans Air Execujet, Inc.
By:	/s/ Brian T. Hunt		,	General Counsel	(Title)
Dated: August 31, 2005
ATA Cargo, Inc.
By:	/s/ Brian T. Hunt		,	General Counsel	(Title)
Dated: August 31, 2005
C8 Airlines, Inc.
By:	/s/ Brian T. Hunt		,	General Counsel	(Title)
Dated: August 31, 2005
By:		/s/ J. George Mikelsons
J. George Mikelsons
Date: August 31, 2005

7

EX-10.13

Exhibit 10.13

EXECUTION VERSION

$340,000,000

TERM LOAN AGREEMENT

among

NEW ATA ACQUISITION INC.,

The Several Lenders from Time to Time Parties Hereto,

JEFFERIES FINANCE LLC,

as Documentation Agent,

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

Dated as of August 14, 2007

J.P. Morgan Securities Inc.,
as Sole Lead Arranger and Sole Bookrunner

TABLE OF CONTENTS

	Page
SECTION 1.  DEFINITIONS	1
1.1  Defined Terms	1
1.2  Other Definitional Provisions	29
SECTION 2.  AMOUNT AND TERMS OF LOANS	30
2.1  Loans	30
2.2  Procedure for Borrowing	30
2.3  Maturity and Exchange Notes	30
2.4  Repayment of Loans	31
2.5  Optional and Mandatory Prepayment	31
2.6  Interest Rates and Payment Dates	32
2.7  Computation of Interest and Fees	33
2.8  Pro Rata Treatment and Payments	33
2.9  Requirements of Law	34
2.10  Taxes	35
2.11  Indemnity	36
2.12  Change of Lending Office	36
SECTION 3.  REPRESENTATIONS AND WARRANTIES	37
3.1  Financial Condition	37
3.2  No Change	38
3.3  Corporate Existence; Compliance with Law	38
3.4  Corporate Power; Authorization; Enforceable Obligations	38
3.5  No Legal Bar	39
3.6  No Material Litigation	39
3.7  No Default	39
3.8  Ownership of Property; Liens	39
3.9  Intellectual Property	39
3.10  Taxes	39
3.11  Federal Regulations	39
3.12  Labor Matters	40
3.13  ERISA	40
3.14  Investment Company Act; Other Regulations	40
3.15  Subsidiaries	40
3.16  Purpose of Loans	40
3.17  Environmental Matters	40
3.18  Solvency	41
3.19  Accuracy of Information, etc	41
3.20  Delivery of the Transaction Documents	42
3.21  Security Documents	42
3.22  Section 1110	42
SECTION 4.  CONDITIONS PRECEDENT	43
SECTION 5.  AFFIRMATIVE COVENANTS	47
5.1  Financial Statements	47
5.2  Certificates; Other Information	47

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	Page
5.3  Payment of Obligations	48
5.4  Maintenance of Existence; Compliance	48
5.5  Maintenance of Property; Insurance	49
5.6  Inspection of Property; Books and Records; Discussions	49
5.7  Notices	49
5.8  Environmental Laws	50
5.9  Take-Out Financing	50
5.10  Exchange Notes	51
5.11  Use of Proceeds of the Take-Out Debt	52
5.12  Additional Collateral	52
5.13  Post-Closing Matters	53
5.14  Further Assurances	54
SECTION 6.  NEGATIVE COVENANTS	54
6.1  Limitation on Indebtedness	54
6.2  Limitation on Restricted Payments	58
6.3  Limitation on Restrictions on Distributions from Subsidiaries	60
6.4  Limitation on Sales of Assets and Subsidiary Stock	61
6.5  Limitation on Liens	62
6.6  Limitation on Affiliate Transactions	62
6.7  Change of Control	64
6.8  Limitation on Sale of Voting Stock of Subsidiaries	64
6.9  Merger, Consolidation, etc.	64
6.10  Limitation on Lines of Business	65
6.11  Limitation on Sale/Leaseback and Aircraft Lease Transactions	65
6.12  Payments for Consent	65
SECTION 7.  EVENTS OF DEFAULT	65
SECTION 8.  THE AGENTS	68
8.1  Appointment	68
8.2  Delegation of Duties	68
8.3  Exculpatory Provisions	68
8.4  Reliance by Administrative Agent	69
8.5  Notice of Default	69
8.6  Non-Reliance on Agents and Other Lenders	69
8.7  Indemnification	70
8.8  Agent in Its Individual Capacity	70
8.9  Successor Administrative Agent	70
8.10  Documentation Agent	71
SECTION 9.  MISCELLANEOUS	71
9.1  Amendments and Waivers	71
9.2  Notices	72
9.3  No Waiver; Cumulative Remedies	73
9.4  Survival of Representations and Warranties	73
9.5  Payment of Expenses and Taxes	73
9.6  Successors and Assigns; Participations and Assignments	74
9.7  Adjustments; Set-off	77
9.8  Counterparts	78
9.9  Severability	78

ii

	Page
9.10  Integration	78
9.11  GOVERNING LAW	78
9.12  Submission To Jurisdiction; Waivers	78
9.13  Acknowledgements	79
9.14  WAIVERS OF JURY TRIAL	79
9.15  Confidentiality	79
9.16  Releases of Guarantees and Liens	80

SCHEDULES:
1.1A	Commitments
1.1B	Mortgaged Real Property
1.1C	Mortgaged Aircraft
1.1D	Specified Aircraft
3.1(d)	Pro Forma Financial Statements
3.15	Subsidiaries
3.21(a)	UCC Filing Jurisdictions
3.21(b)	Mortgage Filing Jurisdictions
6.1(a)(iii)	Existing Indebtedness
6.2(b)(vi)	Agreements Relating to Transactions
6.3(a)	Existing Encumbrances or Restrictions
6.5	Existing Liens
6.6(b)	Existing Affiliate Transactions
EXHIBITS:
A	Form of Guarantee and Collateral Agreement
B	Description of Exchange Notes
C	Form of Closing Certificate
D	[Intentionally Omitted]
E	Form of Assignment and Assumption
F-1	Form of Legal Opinion of Cravath, Swaine & Moore LLP
F-2	Form of Legal Opinion of Delaware counsel
F-3	Form of Legal Opinion of FAA counsel
F-4	Form of Legal Opinion of General Counsel of ATA
F-5	Form of Legal Opinion of General Counsel of Target
G	[Intentionally Omitted]
H	Form of Exemption Certificate
I-1	Form of Initial Loan Note
I-2	Form of Term Note
J	Form of Warrant Agreement
K	Form of Exchange and Registration Rights Agreement

iii

TERM LOAN AGREEMENT, dated as of August 14, 2007, among NEW ATA ACQUISITION INC., a Delaware corporation (the “Company”), the several lenders from time to time parties hereto (collectively, the “Lenders”; individually, a “Lender”), JEFFERIES FINANCE LLC, as documentation agent (in such capacity, the “Documentation Agent”), and JPMORGAN CHASE BANK, N.A., as administrative agent for the Lenders hereunder (in such capacity, the “Administrative Agent”).

The parties hereto hereby agree as follows:

SECTION 1.    DEFINITIONS

1.1Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

“Acquired Indebtedness”:  Indebtedness (i) of a Person or any of its Subsidiaries existing at the time such Person becomes a Subsidiary, (ii) assumed in connection with the acquisition of assets from such Person, or (iii) of a Person at the time such Person merges with or into or consolidates or otherwise combines with the Company or any Subsidiary, in each case whether or not Incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to have been Incurred, with respect to clause (i) of the preceding sentence, on the date such Person becomes a Subsidiary and, with respect to clause (ii) of the preceding sentence, on the date of consummation of such acquisition of assets.

“Additional Assets”:  (i) any property, plant, equipment or other asset (excluding current assets) used or to be used by the Company or a Subsidiary in a Related Business or otherwise useful in a Related Business (it being understood that capital expenditures on property or assets already used in a Related Business or to replace any property or assets that are the subject of an Asset Disposition generating the proceeds being invested in such property or assets shall be deemed an investment in Additional Assets); (ii) the Capital Stock of a Person that becomes a Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Subsidiary; or (iii) Capital Stock constituting a minority interest in any Person that at such time is a Subsidiary; provided, however, that, in the case of clauses (ii) and (iii), such Subsidiary is primarily engaged in a Related Business.

“Adjusted LIBO Rate”: with respect to each day pertaining to a Eurodollar Loan, a rate per annum determined for such day in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):

Eurodollar Base Rate

1.00 – Eurocurrency Reserve Requirements

“Adjusted Margin”:  with respect to any Loan, 0 basis points during the three-month period commencing on the Initial Maturity Date and for each subsequent three-month period thereafter, 50 basis points higher than the Adjusted Margin for the immediately preceding three-month period.

“Adjusted Rate”:  the rate equal to 50 basis points plus the interest rate borne by the Loans on the day immediately preceding the Initial Maturity Date (excluding the PIK Margin).

“Administrative Agent”:  as defined in the preamble hereto.

“Affiliate”:  as to any Person, any other Person (other than a Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person.  For

purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.  For purposes of Sections 6.4, 6.6 and 6.8 only, “Affiliate” shall also mean any beneficial owner of shares representing 20% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof.

“Affiliate Transaction”:  as defined in Section 6.6.

“Agents”:  the collective reference to the Documentation Agent and the Administrative Agent.

“Agreement”:  this Term Loan Agreement, as amended, supplemented or otherwise modified from time to time.

“Aircraft Acquisition Debt”:  Indebtedness Incurred by the Company or any Subsidiary in connection with an acquisition of Specified Aircraft, (i) which Indebtedness (x) either constitutes all or part of the purchase price thereof, or is Incurred prior to, at the time of or within one year after the acquisition thereof for the purpose of financing or refinancing part of the purchase price thereof and (y) is non-recourse other than to the assets financed, and (ii) which equipment was not owned by the Company or a Subsidiary immediately prior to such purchase; provided, however, that in either case the proportion (expressed as a percentage) of such Indebtedness to the purchase price or appraised value of such equipment at the time of such financing does not exceed 90% (except that the foregoing limitation shall not apply to aircraft under order or option on the Closing Date for which vendor financing (including by way of vendor guarantee) is initially obtained).

“Aircraft Lease Transaction”:  any lease (other than a lease creating Capitalized Lease Obligations) by the Company or any Subsidiary of aircraft, related engines or spare engines, spare parts or other related equipment (including ground equipment) from any Person other than the Company or any Subsidiary for an initial term (inclusive of renewal terms solely at the option of the Company or such Subsidiary, as the case may be) of at least 12 months.

“Aircraft Mortgage”:  each of the mortgages and deeds of trust made by any Loan Party with respect to an aircraft owned by such Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, in form and substance reasonably satisfactory to the Administrative Agent.

“Airport Authority”:  any city or any public or private board or other body or organization chartered or otherwise established for the purpose of administering, operating or managing airports or related facilities, which in each case is an owner, administrator, operator or manager of one or more airports or related facilities.

“Applicable Margin”:  with respect to any Loan, (i) 0 basis points during the six-month period commencing on the Closing Date, (ii) 100 basis points during the three-month period following the period in clause (i) and (iii) for each three-month period subsequent to the period in clause (ii) until the Initial Maturity Date, 50 basis points higher than the Applicable Margin for the immediately preceding three-month period.

2

“Approved Fund”:  as defined in Section 9.6(b).

“Asset Disposition”:  any direct or indirect sale, lease (other than an operating lease entered into in the ordinary course of business), transfer, or other disposition (or series of related sales, leases, transfers or dispositions that are part of a common plan) of shares of Capital Stock of a Subsidiary (other than directors’ qualifying shares), property or other assets (including aircraft, aircraft engines and related equipment (and leasehold interest therein)) (each referred to for the purposes of this definition as a “disposition”) by the Company or any of its Subsidiaries (including any disposition by means of a merger, consolidation or similar transaction), other than:

(i)a disposition of assets by a Subsidiary to the Company or by the Company or a Subsidiary to another Subsidiary; provided that in the case of a sale by a Subsidiary to another Subsidiary involving a Subsidiary that is not a Loan Party, the Company directly or indirectly owns an equal or greater percentage of the Common Stock of the transferee than of the transferor; and provided further that in the case of a sale of Collateral, the transferee shall take such action reasonably requested by the Administrative Agent to cause such amendments, supplements or other instruments to be executed, filed and recorded in such jurisdictions as may be required by applicable law to preserve and protect the Lien on the Collateral owned by or transferred to the transferee, together with such financing statements or comparable documents as may be required to perfect any security interests in such Collateral which may be perfected by the filing of a financing statement or a similar document under the Uniform Commercial Code or other similar statute or regulation of the relevant states or jurisdictions;

(ii)dispositions of cash and Cash Equivalents in the ordinary course of business;

(iii)(A) a disposition of fuel or inventory in the ordinary course of business and (B) swaps, exchanges, interchange or pooling of assets or, in the case of Mortgaged Aircraft, other transfers of possession (subject to the limitations set forth in the Security Documents) in the ordinary course of business;

(iv)a disposition of surplus, obsolete or worn out equipment (including aircrafts, aircraft engines and spare parts) or equipment (including aircrafts, aircraft engines and spare parts) that is no longer used or useful in the conduct of the business of the Company and its Subsidiaries and that is disposed of in each case in the ordinary course of business;

(v)transactions permitted under Section 6.9;

(vi)an issuance of Capital Stock by a Subsidiary to the Company or to another Subsidiary or as part of or pursuant to an equity incentive or compensation plan approved by the Board of Directors of the Company;

(vii)(x) for purposes of Section 6.4 only, the making of a Permitted Investment (other than a Permitted Investment to the extent such transaction results in the receipt of cash or Cash Equivalents by the Company or its Subsidiaries) or (y) a disposition permitted by (and subject to the terms of) Section 6.2;

(viii)the creation of a Permitted Lien and dispositions in connection with Permitted Liens;

3

(ix)dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements;

(x)the issuance by a Subsidiary of Preferred Stock that is permitted by Section 6.1;

(xi)(A) abandonment of FAA Slots, Gate Interests, Routes or Supporting Route Facilities; provided that such abandonment is (1) in connection with the downsizing of any hub or facility which does not materially and adversely affect the business of Company and its Subsidiaries, taken as a whole, or (2) in the ordinary course of business consistent with past practices and does not materially and adversely affect the business of Company and its Subsidiaries, taken as a whole, (B) exchange of FAA Slots in the ordinary course of business that in the Company’s reasonable judgment are of reasonably equivalent value and (C) assignments of leases or granting of leases of aircraft or engines (that do not constitute Collateral), in each case, in the ordinary course of business;

(xii)any fuel supply arrangements in the ordinary course of business;

(xiii)sales, transfers and other dispositions of Investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in the joint venture arrangements and similar binding agreements;

(xiv)the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property in the ordinary course of business which do not materially interfere with the business of the Company and its Subsidiaries;

(xv)foreclosure on assets;

(xvi)dispositions of property or other assets to the extent subject to Casualty Events; and

(xvii)dispositions of property or other assets having book values not to exceed than $5,000,000 in the aggregate.

“Assignee”:  as defined in Section 9.6(b).

“Assignment and Assumption”:  an assignment and assumption, substantially in the form of Exhibit E hereto.

“ATA”:  ATA Airlines, Inc., an Indiana corporation.

“ATSB Loan Agreement”:  the Amended and Restated Loan Agreement, dated as of February 28, 2006, among ATA Airlines, Inc., New ATA Holdings Inc. and its subsidiaries from time to time party thereto, Air Transportation Stabilization Board and Citibank, N.A.

“Attributable Indebtedness”:  in respect of a Sale/Leaseback Transaction or Aircraft Lease Transaction means, as at the time of determination, the present value (discounted at the interest rate implicit in the transaction) of the total obligations of the lessee for rental payments

4

during the remaining term of the lease included in such Sale/Leaseback Transaction or Aircraft Lease Transaction (including any period for which such lease has been extended), determined in accordance with GAAP; provided, however, that if such Sale/Leaseback Transaction results in a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capitalized Lease Obligations”.

“Average Life”:  as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (ii) the sum of all such payments.

“Benefitted Lender”:  as defined in Section 9.7(a).

“Board of Directors”:  as to any Person, the board of directors of such Person or any committee thereof duly authorized to act on behalf of such board.

“Board of Governors”:  the Board of Governors of the Federal Reserve System (or any successor thereto).

“Business Day”: a day other than a Saturday, Sunday or other day on which banking institutions in New York, New York are authorized or required by law to close; provided that with respect to notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in the interbank eurodollar market.

“Cape Town Convention”: the official English language texts of the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment which were signed in Cape Town, South Africa, as in effect in any applicable jurisdiction, as the same may be amended from time to time.

“Capital Stock”:  of a Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of, or interests in (however designated) equity of such Person, including any Preferred Stock, partnership interests and limited liability company membership interests, but excluding any debt securities convertible into such equity.

“Capitalized Lease Obligations”:  an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty.

“Cash Equivalents”:

(i)United States dollars, Euros or any national currency of any participating member state of the European Monetary Union, or such local currencies held by the Company and its Subsidiaries from time to time in the ordinary course of business;

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(ii)securities issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality of the United States (provided that the full faith and credit of the United States is pledged in support thereof) or a member nation of the European Union, having maturities of not more than one year from the date of acquisition;

(iii)marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof (provided that the full faith and credit of the United States is pledged in support thereof) and, at the time of acquisition, having a credit rating of “A” or better from either Standard & Poor’s Ratings Group, Inc. or Moody’s Investors Service, Inc.;

(iv)certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances having maturities of not more than one year from the date of acquisition thereof issued by any commercial bank the long term debt of which is rated at the time of acquisition thereof at least “A” or the equivalent thereof by Standard & Poor’s Ratings Group, Inc., or “A” or the equivalent thereof by Moody’s Investors Service, Inc., and having combined capital and surplus in excess of $500,000,000;

(v)repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (i), (ii) and (iii) entered into with any bank meeting the qualifications specified in clause (iii) above;

(vi)commercial paper rated at the time of acquisition thereof at least “A 2” or the equivalent thereof by Standard & Poor’s Ratings Group, Inc. or “P 2” or the equivalent thereof by Moody’s Investors Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and in any case maturing within one year after the date of acquisition thereof; and

(vii)interests in any investment company or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (i) through (v) above.

“Cash Pay Date”:  the second anniversary of the Closing Date.

“Casualty Event”:  any taking under power of eminent domain or similar proceeding and any insured loss (excluding business interruption), in each case relating to property or other assets that constitute Collateral.

“Change of Control”:

(i)prior to the first Equity Offering of Common Stock of Holdings, the Permitted Holders cease to be the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a majority in the aggregate of the total voting power of the Voting Stock of the Company or Holdings then outstanding, whether as a result of the issuance of securities of the Company or Holdings, any merger, consolidation, liquidation or dissolution of the Company

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or Holdings, any direct or indirect transfer of securities by any Permitted Holder or otherwise (for purposes of this clause (i) and clause (ii) below, the Permitted Holders shall be deemed to beneficially own any Voting Stock of an entity (the “specified entity”) held by any other entity (the “parent entity”) so long as the Permitted Holders beneficially own (as so defined), directly or indirectly, in the aggregate a majority of the voting power of the Voting Stock of the parent entity); or

(ii)on the date of or after the first Equity Offering of Common Stock referred to in clause (i), (A) any “person” or “group” of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Company or Holdings (or its successor by merger, consolidation or purchase of all or substantially all of its assets) (for the purposes of this clause, such person or group shall be deemed to beneficially own any Voting Stock of the Company or Holdings held by a parent entity, if such person or group “beneficially owns” (as defined above), directly or indirectly, more than a majority of the voting power of the Voting Stock of such parent entity); and (B) the Permitted Holders “beneficially own” (as defined in Rules 13d-3 and 13d-5 of the Exchange Act), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Company or Holdings, as the case may be (or its successor by merger, consolidation or purchase of all or substantially all of its assets) than such other person or group and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of the Company or Holdings or such successor (for the purposes of this clause, such other person or group shall be deemed to beneficially own any Voting Stock of a specified entity held by a parent entity, if such other person or group “beneficially owns”, directly or indirectly, more than 35% of the voting power of the Voting Stock of such parent entity and the Permitted Holders “beneficially own”, directly or indirectly, in the aggregate a lesser percentage of the voting power of the Voting Stock of such parent entity and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of such parent entity);

(iii)the first day on which a majority of the members of the Board of Directors of Holdings are not Continuing Directors; or

(iv)the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company or Holdings and its Subsidiaries taken as a whole to any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder; or

(v)the adoption by the stockholders of the Company or Holdings of a plan or proposal for the liquidation or dissolution of the Company or Holdings; or

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(vi)the first date on which Holdings no longer directly or indirectly owns 100% of the Capital Stock of the Company.

“Closing Date”:  the date on which the conditions precedent set forth in Section 4 shall be satisfied or waived.

“Code”:  the Internal Revenue Code of 1986, as amended from time to time.

“Collateral”:  all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.

“Commitment”:  as to any Lender, its obligation to make a Loan to the Company on the Closing Date in an amount equal to the amount set forth opposite such Lender’s name in Schedule 1.1A under the heading “Commitment”; collectively, as to all such Lenders, the “Commitments”. The aggregate amount of the Commitments as of the Closing Date is $340,000,000.

“Commitment Percentage”:  as to any Lender at any time, the percentage of the aggregate Commitments then constituted by such Lender’s Commitment (or, after the Loans are made on the Closing Date, the percentage of the aggregate Loans then constituted by such Lender’s Loans).

“Common Stock”:  with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Closing Date, and includes, without limitation, all series and classes of such common stock.

“Commonly Controlled Entity”:  an entity, whether or not incorporated, which is under the same “controlled group” within the meaning of Section 4001 of ERISA, as the Company or which, together with the Company, is treated as a single employer under Section 414 of the Code.

“Company”:  as defined in the preamble hereto.

“Continuing Directors”:  as of any date of determination, any member of the Board of Directors of the Company or Holdings, as the case may be, who (1) was a member of such Board of Directors on the date of this Agreement; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of the relevant Board at the time of such nomination or election or the approval of the Permitted Holders.

“Contractual Obligation”:  as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“Currency Agreement”:  in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement as to which such Person is a party or a beneficiary.

“Default”:  any event or condition that is, or after notice or passage of time or both would be, an Event of Default.

“Description of Exchange Notes”: the description contained in Exhibit B hereto.

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“Disqualified Stock”:  with respect to any Person, any Capital Stock that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event (i) matures or is mandatorily redeemable (other than solely for Qualified Stock) pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock that is convertible or exchangeable solely at the option of the Company or a Subsidiary) or (iii) is redeemable at the option of the holder thereof (other than solely for Qualified Stock), in whole or in part, in each case, on or prior to the date that is 91 days after the Final Maturity Date; provided that (x) only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; (y) if such Capital Stock is issued to any plan for the benefit of employees, directors or consultants of the Company or its Subsidiaries or by any such plan to such employees, directors or consultants such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations; and (z) any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or asset disposition (each defined in a substantially identical manner to the corresponding definitions in this Agreement) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) provide that the Company is not required to repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to compliance by the Company with the provisions of this Agreement or repayment in full of the Loans.

“Documentation Agent”:  as defined in the preamble hereto.

“Dollars” and “$”:  dollars in lawful currency of the United States of America.

“DOT”:  the United States Department of Transportation and any successor thereto.

“Entry Point Filing Forms”:  each of the FAA form AC 8050-135 forms to be filed with the FAA on the Closing Date.

“Environmental Laws”:  any and all applicable foreign, federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or other Requirements of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health as it relates to the environment or the environment, as now or may at any time hereafter be in effect.

“Equity Offering”:  a public offering for cash by the Company or Holdings, as the case may be, of its Common Stock, or options, warrants or rights with respect to its Common Stock, registered under the Securities Act, other than (x) public offerings with respect to the Company’s or Holdings’, as the case may be, Common Stock, or options, warrants or rights with respect thereto, registered on Form S-4 or S-8, (y) an issuance to any Subsidiary or (z) any offering of Common Stock issued in connection with a transaction that constitutes a Change of Control.

“ERISA”:  the Employee Retirement Income Security Act of 1974, as amended from time to time.

“Eurocurrency Reserve Requirements”:  for any day as applied to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve

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requirements in effect on such day (including, without limitation, basic, supplemental, marginal and emergency reserves) under any regulations of the Board of Governors or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board of Governors) maintained by a member bank of the Federal Reserve System.

“Eurodollar Base Rate”: with respect to each Eurodollar Loan, the rate per annum determined by the Administrative Agent to be the offered rate for deposits in Dollars with a term of three months and that appears on the applicable Reuters Screen LIBOR01 Page at approximately 10:00 a.m., New York City time, two Business Days prior to (i) the Closing Date for the Interest Period commencing on the Closing Date and (ii) thereafter, the last day of the next preceding Interest Period; provided, however, that if at any time for any reason such offered rate does not appear on the applicable Reuters Screen LIBOR01 Page, “Eurodollar Base Rate” shall mean, with respect to each day pertaining to a Eurodollar Loan, the rate per annum equal to the rate at which the Administrative Agent is offered Dollar deposits at or about 10:00 a.m., New York City time, two Business Days prior to the Closing Date in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans are then being conducted for delivery on the Closing Date for a term of three months and in an amount comparable to the amount of its Initial Loan.

“Eurodollar Loan”:  a Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default”:  any of the events specified in Section 7; provided that all requirements for the giving of notice, the lapse of time, or both, and any other conditions, have been satisfied.

“Exchange Act”:  the Securities Exchange Act of 1934, as amended.

“Exchange Note”:  each note issued under the Indenture delivered pursuant to Section 2.3 and 5.10; collectively, the “Exchange Notes”.

“Exchange Request”:  as defined in Section 5.10.

“Excluded Foreign Subsidiary”:  any Foreign Subsidiary in respect of which either (a) the pledge of all of the Capital Stock of such Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of the Loans and other obligations under this Agreement, would, in the good faith judgment of the Company, result in adverse tax consequences to the Company.

“Existing Credit Facilities”:  the ATSB Loan Agreement and the Wachovia Facility.

“FAA” the Federal Aviation Administration of the United States of America and any successor thereto.

“FAA Slots”: all “slots” as defined in 14 CFR § 93.213(a)(2), as that section may be amended or re-codified from time to time, or, in the case of slots at New York LaGuardia, as defined in the Final Order, Operating Limitations at New York LaGuardia Airport, Docket No. FAA 2006-25755-82 dated December 13, 2006, as such order may be amended or re-codified from time to time, and in any subsequent order issued by the FAA related to New York’s LaGuardia Airport, as such order may be amended or re-codified from time to time, in each case of the Company or any Subsidiary Guarantor, now held or hereafter acquired (other than “slots”

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which have been permanently allocated to another air carrier and in which the Company or any Subsidiary Guarantor holds temporary use rights).

“Final Maturity Date”:  the eighth anniversary of the Closing Date.

“Foreign Subsidiary”:  any Subsidiary of the Company that is not organized under the laws of the United States of America or any state thereof or the District of Columbia.

“Fuel Protection Agreement”: any fuel protection agreement or other similar agreement or arrangement entered into by the Company or any Subsidiary designed to protect the Company or any of its Subsidiaries against fluctuations in the market prices of aircraft fuels and not for the purpose of speculation.

“GAAP”:  generally accepted accounting principles in the United States of America as in effect from time to time, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such entity as are approved by a significant segment of the accounting profession; provided, however, that if the Company notifies the Administrative Agent that the Company requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Company that the Administrative Agent or the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. All ratios and computations based on GAAP contained in this Agreement will be computed in conformity with GAAP, except that in the event the Company is acquired in a transaction that is accounted for using purchase accounting, the effects of the application of purchase accounting shall be disregarded in the calculation of such ratios and other computations contained in this Agreement.

“Gate Interests”: all of the right, title, privilege, interest and authority now or hereafter acquired or held by the Company or, if applicable, a Subsidiary Guarantor in connection with the right to use or occupy holdroom and passenger boarding and deplaning space in any airport terminal located in the United States at which the Company conducts scheduled operations.

“Governmental Authority”:  any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization (including the National Association of Insurance Commissioners).

“Group Members”:  the collective reference to the Company, Holdings, IntermediateCo and their respective Subsidiaries.

“Guarantee”:  any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person, and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase

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assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” used as a verb has a corresponding meaning.

“Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement, to be executed and delivered by Holdings, IntermediateCo, the Company and the Subsidiary Guarantors, substantially in the form of Exhibit A.

“Guarantor”:  each of Holdings, IntermediateCo and each Subsidiary Guarantor.

“Guarantor Subordinated Obligation”: with respect to a Guarantor, any Indebtedness of such Guarantor (whether outstanding on the Closing Date or thereafter Incurred) which is expressly subordinate in right of payment to the obligations of such Guarantor under the Guarantee and Collateral Agreement pursuant to a written agreement.

“Hedging Obligations”:  of any Person means the obligations of such Person pursuant to any Interest Rate Agreement, Currency Agreement or Fuel Protection Agreement.

“Holder” or “Noteholder”:  the Person in whose name an Exchange Note or a Loan (and any corresponding Note(s)) is registered.

“Holdings”:  Global Aero Logistics Inc., a Delaware corporation.

“Incur”:  issue, create, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary and the terms “Incurred” and “Incurrence” have meanings correlative to the foregoing.

“Indebtedness”:  with respect to any Person on any date of determination (without duplication):

(i)the principal of and premium, if any, in respect of indebtedness of such Person for borrowed money,

(ii)the principal of and premium, if any, in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments,

(iii)the principal component of all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments (including reimbursement obligations with respect thereto except to the extent such reimbursement obligation relates to a trade payable and such obligation is satisfied within 30 days of Incurrence),

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(iv)the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property (except (x) trade payables and (y) deferred or equity compensation arrangements payable to directors, officers or employees), which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto,

(v)all Capitalized Lease Obligations and all Attributable Indebtedness of such Person,

(vi)the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of Disqualified Stock or, with respect to any Subsidiary of the Company, any Preferred Stock (but excluding, in each case, any accrued dividends),

(vii)the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided, however, that the amount of Indebtedness of such Person shall be the lesser of (A) the fair market value of such asset at such date of determination and (B) the amount of such Indebtedness of such other Persons,

(viii)the principal component of all Indebtedness of other Persons to the extent Guaranteed by such Person, and

(ix)to the extent not otherwise included in this definition, net obligations of such Person under Hedging Obligations (the amount of any such obligations to be equal at any time of determination to the termination value of such agreement or arrangement giving rise to such obligation that would be payable by such Person at such time).

The term “Indebtedness” shall not include any lease, concession or license of property (or Guarantee thereof) which would be considered an operating lease under GAAP (other than Aircraft Lease Transactions), any advances, prepayments or deposits (or interest thereon) received from clients or customers in the ordinary course of business, or obligations under any license, permit or other approval (or Guarantees given or deposits made in respect of such obligations) Incurred prior to the Closing Date or in the ordinary course of business.

The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability at such date (or if the maximum liability is not stated, or determinable, the maximum reasonably anticipated liability as determined in good faith by the Company), upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations described above at such date.

In addition, “Indebtedness” of any Person shall include Indebtedness described in the preceding paragraph that would not appear as a liability on the balance sheet of such Person if:

(i)such Indebtedness is the obligation of a partnership or joint venture that is not a Subsidiary (a “Joint Venture”);

(ii)such Person or a Subsidiary of such Person is a general partner of the Joint Venture (a “General Partner”); and

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(iii)there is recourse, by contract or operation of law, with respect to the payment of such Indebtedness to property or assets of such Person or a Subsidiary of such Person; and then such Indebtedness shall be included in an amount not to exceed:

(a)the lesser of (1) the net assets of the General Partner and (2) the amount of such obligations to the extent that there is recourse, by contract or operation of law, to the property or assets of such Person or a Subsidiary of such Person; or

(b)if less than the amount determined pursuant to clause (a) immediately above, the actual amount of such Indebtedness that is recourse to such Person or a Subsidiary of such Person, if the Indebtedness is evidenced by a writing and is for a determinable amount.

Notwithstanding the above provisions, in no event shall the following constitute Indebtedness:

(i)in connection with the purchase by the Company or any Subsidiary of any business, any post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that at the time of the closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 45 days thereafter;

(ii)for the avoidance of doubt, any obligations in respect of workers’ compensation claims, early retirement or termination obligations, pension fund obligations or contributions or similar claims, obligations or contributions or social security or wage taxes; or

(iii)money borrowed and set aside at the time of the Incurrence of any Indebtedness in order to pre-fund the payment of interest on such Indebtedness; provided that such money is held to secure the payment of such interest.

“Indenture”:  an Indenture, having terms and conditions substantially as set forth in the Description of Exchange Notes (with such changes therein as the Company may request and the Administrative Agent may approve, such approval not to be unreasonably withheld), if and when executed and delivered by the Company and the Trustee thereunder, as amended, waived, supplemented or otherwise modified from time to time.

“Initial Loan”:  as defined in Section 2.1(a).

“Initial Loan Rate”:  with respect to any Interest Period, the sum of (i) (A) 131 divided by 340 multiplied by (B) the greater of (x) the Adjusted LIBO Rate for such Interest Period plus 425 basis points, and (y) the Treasury Rate for such Interest Period plus 500 basis points plus (ii) (A) 209 divided by 340 multiplied by (B) the Adjusted LIBO Rate for such Interest Period plus 625 basis points.

“Initial Maturity Date”:  August 14, 2008.

“Initial Note”:  as defined in Section 9.6(e).

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“Insolvency”:  with respect to any Multiemployer Plan, the condition that such Multiemployer Plan is insolvent within the meaning of Section 4245 of ERISA.

“Insolvent”:  pertaining to a condition of Insolvency.

“Intellectual Property”:  the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

“Interest Payment Date”:  with respect to any Loan, the last day of the Interest Period applicable to the Loan, and in addition, the date of any prepayment of such Loan.

“Interest Period”:  (a) prior to the Initial Maturity Date, as to any Initial Loan, (i) initially, the period commencing on the Closing Date and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is three months thereafter and (ii) thereafter, each period commencing on the last day of the next preceding Interest Period and ending on the earlier of (A) the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is three months thereafter and (B) the Initial Maturity Date, and (b) following the Initial Maturity Date, as to any Term Loan, (i) initially, the period commencing on the Initial Maturity Date and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is six months thereafter and (ii) thereafter, each period commencing on the last day of the next preceding Interest Period and ending on the earlier of (A) the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is six months thereafter and (B) the Final Maturity Date. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.

“Interest Rate Agreement”:  with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary.

“IntermediateCo”:  New ATA Investment Inc., a Delaware corporation.

“International Registry”: “International Registry” as defined in the Cape Town Convention.

“Investment”: with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit, advances to customers, commissions, travel and similar advances to officers, employees and consultants, in each case made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Capital Stock or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes) of such Person in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of covenant compliance, the amount of any

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Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“Investment Bank”:  one or more investment banks reasonably satisfactory to the Administrative Agent which may be engaged by the Company to publicly sell or privately place the Take-Out Debt as contemplated by Section 5.9.

“LC Credit Facility”:  the Amended and Restated Credit Agreement between ATA and National City Bank of Indiana, dated as of February 27, 2006.

“Lenders”:  as defined in the preamble to this Agreement.

“Lessor Maintenance Reserve Accounts”:  accounts paid in by a lessee and held by a lessor for reimbursement of certain aircraft maintenance obligations.

“Lien”:  any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

“Loans”:  as defined in Section 2.1.

“Loan Documents”:  this Agreement, the Warrant Agreement, the Loan Notes and the Security Documents.

“Loan Notes”:  the collective reference to the Term Notes and the Initial Notes.

“Loan Parties”:  the collective reference to Holdings, IntermediateCo, the Company and each of their respective Subsidiaries which from time to time is a party to any Loan Document.

“Material Adverse Effect”:  any event, development or circumstance that has had or could reasonably be expected to have a material adverse effect on (a) the business, operations, property or condition (financial or otherwise) of the Company and its Subsidiaries (including the Target and its Subsidiaries) taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder or thereunder.

“Materials of Environmental Concern”:  any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, to the extent defined or regulated as such in or under any Environmental Law, including, without limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.

“Merger”:  as defined in Section 4(b)(i).

“Merger Agreement”:  the Agreement and Plan of Merger, dated April 5, 2007, between Holdings, the Company and World Air Holdings, Inc., a Delaware corporation, as amended, supplemented or modified from time to time prior to the Closing Date.

“Merger Documents”:  the Merger Agreement, and any other document entered into in connection therewith, in each case as amended, supplemented or modified from time to time prior to the Closing Date.

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“Mortgaged Aircraft”:  the aircraft, engines and spare engines listed on Schedule 1.1C and owned by a Loan Party, as to which the Administrative Agent for the benefit of the Lenders shall be granted a Lien pursuant to the Aircraft Mortgages.

“Mortgaged Properties”:  the collective reference to the Mortgaged Aircraft and the Mortgaged Real Properties.

“Mortgaged Real Properties”:  the real properties listed on Schedule 1.1B and owned by a Loan Party, as to which the Administrative Agent for the benefit of the Lenders shall be granted a Lien pursuant to the Real Estate Mortgages.

“Mortgages”:  the collective reference to the Aircraft Mortgages and the Real Estate Mortgages.

“MP Bridge Loan Agreement”: the Bridge Loan Agreement, dated January 16, 2007, between ATA, as borrower, Holdings, certain subsidiaries of Holdings from time to time party thereto, and MatlinPatterson ATA Holdings LLC, as lender (as amended, supplemented or otherwise modified on the date hereof).

“MP Term Loan Agreement”: the Term Loan Agreement, dated February 28, 2006, between ATA, as borrower, Holdings, subsidiaries of Holdings from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and the lenders from time to time parties thereto, pursuant to which MatlinPatterson ATA Holdings LLC is the sole lender (as amended, supplemented or otherwise modified on the date hereof).

“Multiemployer Plan”:  a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“NAA”:  North American Airlines, Inc., a Delaware corporation.

“Net Available Cash”:  from an Asset Disposition or Casualty Event, cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and net proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or Casualty Event or received in any other non-cash form) therefrom, in each case net of: (i) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses Incurred, and all Federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Disposition or Casualty Event; (ii) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition or Casualty Event, in accordance with the terms of any Lien upon such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition or Casualty Event, or by applicable law be repaid out of the proceeds from such Asset Disposition or Casualty Event; (iii) all distributions and other payments required to be made to minority interest holders (other than any direct or indirect parent company, the Company or any of their respective Subsidiaries) in Subsidiaries or joint ventures as a result of such Asset Disposition or Casualty Event; and (iv) the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated

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with the assets disposed of in such Asset Disposition or Casualty Event and retained by the Company or any Subsidiary after such Asset Disposition or Casualty Event.

“Net Cash Proceeds”:  with respect to any issuance or sale of Capital Stock or Indebtedness, the cash proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements); provided that the cash proceeds of an Equity Offering by Holdings shall not be deemed Net Cash Proceeds, except to the extent such cash proceeds are contributed to the Company.

“Non-Excluded Taxes”:  as defined in Section 2.10(a).

“Non-U.S. Lender”:  as defined in Section 2.10(d).

“Notes”:  the Loan Notes and the Exchange Notes, as originally executed or as subsequently amended from time to time pursuant to the applicable provisions hereof.

“Officer”:  the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer or the Secretary of the Company. Officer of any Subsidiary Guarantor has a correlative meaning.

“Officer’s Certificate”:  a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company.

“Opinion of Counsel”:  a written opinion from legal counsel who is reasonably acceptable to the Administrative Agent. The counsel may be an employee of or counsel to Holdings, the Company or the Administrative Agent.

“Original Initial Note”:  as defined in Section 9.6(e).

“Original Term Note”:  as defined in Section 9.6(e).

“Other Taxes”:  any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

“Participant”:  as defined in Section 9.6(c).

“Payment Default”:  as defined in Section 7(e).

“PBGC”:  the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor thereto).

“Permitted Holders”: the Sponsor.  Any person or group whose acquisition of beneficial ownership constitutes a Change of Control will thereafter, together with any of its Affiliates, constitute additional Permitted Holders.

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“Permitted Investment”: an Investment by the Company or any Subsidiary in:

(i)the Company or a Subsidiary (including the Capital Stock of a Subsidiary);

(ii)cash and Cash Equivalents;

(iii)receivables owing to the Company or any Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Subsidiary deems reasonable under the circumstances;

(iv)payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

(v)loans or advances to employees, officers or directors of the Company or any Subsidiary of the Company in the ordinary course of business consistent with past practices, in an aggregate amount not in excess of $1,000,000 at any one time outstanding;

(vi)Capital Stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Subsidiary, or as a result of foreclosure, perfection or enforcement of a Lien, or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor;

(vii)Investments (x) made as a result of the receipt of noncash consideration from an Asset Disposition that was made pursuant to and in compliance with Section 6.4 or (y) made to effect Restricted Payments expressly permitted by Section 6.2 or Dispositions expressly permitted by Section 6.4;

(viii)Investments in existence on or made pursuant to legally binding commitments in existence on the Closing Date;

(ix)Currency Agreements, Interest Rate Agreements, Fuel Protection Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with Section 6.1;

(x)Guarantees issued in accordance with Section 6.1 and (other than respect to Indebtedness) guarantees, keepwells and similar arrangements made in the ordinary course of business;

(xi)Investments in an amount not to exceed $5,000,000 in the aggregate at any one time outstanding in connection with Investments in travel or airline related businesses made in connection with marketing and promotion agreements, alliance agreements, distribution agreements, agreements with respect to fuel consortiums, agreements relating to flight training, agreements relating to insurance arrangements, agreements relating to parts management systems and other similar agreements;

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(xii)deposits in connection with the acquisition or maintenance of aircraft in the ordinary course of business or customary in the airline industry;

(xiii)pledges or deposits with respect to leases (other than leases of aircraft) or utilities provided to third parties in the ordinary course of business or Liens otherwise described in the definition of “Permitted Liens” or made in connection with Liens permitted under Section 6.5;

(xiv)any Investment to the extent made using Capital Stock of the Company (other than Disqualified Stock) or Capital Stock of any direct or indirect parent company as consideration;

(xv)Investments consisting of purchases and acquisitions of inventory, supplies, materials and equipment or licenses or leases of intellectual property, in each case in the ordinary course of business; and

(xvi)other Investments in an amount not to exceed $1,000,000 in the aggregate at any one time outstanding.

“Permitted Liens”: with respect to any Person:

(i)Liens incurred or pledges or deposits made by such Person under workers’ compensation laws, unemployment insurance laws, social security laws or similar legislation, or insurance related obligations (including pledges or deposits securing liability to insurance carriers under insurance or self-insurance arrangements), to secure performance in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or public or statutory obligations of such Person to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business;

(ii)Liens imposed by law, including carriers’, warehousemen’s, mechanics’, materialmen’s and repairmen’s Liens, in each case for sums not yet due or that are bonded or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made in respect thereof;

(iii)Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings; provided that appropriate reserves required pursuant to GAAP have been made in respect thereof;

(iv)Liens in favor of issuers of surety, performance or other bonds or guarantees or letters of credit or bankers’ acceptances issued pursuant to the request of and for the account of such Person in the ordinary course of its business; provided, however, that such letters of credit do not support Indebtedness;

(v)encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions

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(including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(vi)Liens securing Hedging Obligations so long as any related Indebtedness is, and is permitted to be under this Agreement, secured by a Lien on the same property securing such Hedging Obligation;

(vii)leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) which do not materially interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries;

(viii)judgment Liens not giving rise to an Event of Default;

(ix)Liens for the purpose of securing Indebtedness represented by Capitalized Lease Obligations, mortgage financings, purchase money obligations or other payments Incurred to finance all or any part of the purchase price or cost of construction or improvement of assets or property (other than Capital Stock or other Investments) acquired, constructed or improved in the ordinary course of business; provided that:

(A)the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be Incurred under this Agreement and does not exceed the cost of the assets or property so acquired, constructed or improved; and

(B)such Liens are created within 180 days of construction, acquisition or improvement of such assets or property and do not encumber any other assets or property of the Company or any Subsidiary other than such assets or property and assets affixed or appurtenant thereto;

(x)Liens arising solely by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution; provided that:

(A)such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board; and

(B)such deposit account is not intended by the Company or any Subsidiary to provide collateral to the depository institution;

(xi)Liens arising from Uniform Commercial Code financing statement filings (or similar filings in other applicable jurisdictions) regarding operating leases entered into by the Company and its Subsidiaries in the ordinary course of business;

(xii)Liens existing on the Closing Date and set forth on Schedule 6.5;

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(xiii)Liens on property, other assets or shares of stock of a Person at the time such Person becomes a Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Subsidiary; provided further, however, that any such Lien may not extend to any other property owned by the Company or any Subsidiary;

(xiv)Liens on property or other assets at the time the Company or a Subsidiary acquired the property or assets, including any acquisition by means of a merger, consolidation or other combination with or into the Company or any Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that such Liens may not extend to any other property owned by the Company or any Subsidiary;

(xv)Liens securing Indebtedness or other obligations of the Company or a Subsidiary owing to the Company or another Subsidiary;

(xvi)Liens securing the Loans and Guarantees under the Guarantee and Collateral Agreement or any obligations owing to the Administrative Agent under this Agreement or the other Loan Documents;

(xvii)Liens securing Refinancing Indebtedness Incurred to refinance, refund, replace, amend, extend or modify, as a whole or in part, Indebtedness that was previously so secured pursuant to clauses (ix), (xii), (xiii), (xiv), (xvi) and (xvii) of this definition; provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien hereunder;

(xviii)any interest or title of a lessor under any Capitalized Lease Obligation or operating lease;

(xix)Liens under industrial revenue, municipal or similar bonds;

(xx)Liens securing Indebtedness permitted to be incurred pursuant to clauses (v) (provided that such Liens extend only to the property so acquired, constructed or improved) and (ix) (provided that such Liens extend only to leased equipment subject to such “return condition”) of Section 6.1(a);

(xxi)Liens securing Indebtedness (other than Subordinated Obligations and Guarantor Subordinated Obligations) and other obligations in an aggregate principal amount outstanding at any one time not to exceed $2,500,000;

(xxii)Liens imposed by applicable law on the assets of the Company or any Subsidiary located at an airport for the benefit of any nation or government or national or governmental authority of any nation, state, province or other political subdivision thereof, and any agency, department, regulator, airport authority, air navigation authority or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government in respect

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of the regulation of commercial aviation or the registration, airworthiness or operation of civil aircraft and having jurisdiction over the Company or such Subsidiary including, without limitation, the FAA or DOT;

(xxiii)deposits in Lessor Maintenance Reserve Accounts;

(xxiv)deposits securing obligations in respect of letters of credit issued for the account of any Group Member in the ordinary course of business, including pursuant to the LC Credit Facility or the Wachovia Facility;

(xxv)any encumbrance or restriction (including put and call arrangements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar arrangement;

(xxvi)(A) mortgages, liens, security interests, restrictions, encumbrances or any other matters of record that have been placed by any government, statutory or regulatory authority, developer, landlord or other third party on property over which the Company or any Subsidiary has easement rights or on any leased property and subordination or similar arrangements relating thereto and (B) any condemnation or eminent domain proceedings affecting any real property;

(xxvii)Liens on property or assets under construction (and related rights) in favor of a contractor or developer or arising from progress or partial payments by a third party relating to such property or assets;

(xxviii)deposits in Trust Tax Accounts in favor of governmental taxing authorities arising as a matter of law to secure payment of governmental taxes imposed on airline tickets;

(xxix)Liens securing Indebtedness represented by Take-Out Debt, so long as such Liens are subject to an intercreditor arrangement reasonably satisfactory to the Administrative Agent; and

(xxx)Liens arising or granted in the ordinary course of business in favor of Persons performing credit card processing services, travel charge processing services, clearinghouse services or similar services.

“Person”:  an individual, partnership, corporation, limited liability company, association, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

“PIK Interest Amount”:  as defined in Section 2.6(d).

“PIK Margin”:  75 basis points per annum.

“Plan”:  at a particular time, any employee benefit plan which is covered by Title IV of ERISA and in respect of which the Company or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

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“Preferred Stock”:  as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation.

“Projections”:  as defined in Section 5.2(c).

“Properties”:  as defined in Section 3.17.

“Purchaser”:  Hugo Acquisition Corp., a Delaware corporation and an indirect wholly owned subsidiary of Holdings and the Company.

“Qualified Stock”:  any Capital Stock that is not Disqualified Stock.

“Real Estate Mortgages”:  each of the mortgages and deeds of trust made by any Loan Party with respect to the Mortgaged Real Properties owned by such Loan Party in favor of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, in form and substance satisfactory to the Administrative Agent.

“Refinancing Indebtedness”:  Indebtedness that is Incurred to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, “refinance”, “refinances,” and “refinanced” shall have a correlative meaning) any Indebtedness existing on the date of this Agreement or Incurred in compliance with this Agreement (including Indebtedness of the Company that refinances Indebtedness of any Subsidiary and Indebtedness of any Subsidiary that refinances Indebtedness of another Subsidiary) including Indebtedness that refinances Refinancing Indebtedness; provided, however, that (i) (x) if the Stated Maturity of the Indebtedness being refinanced is earlier than the Final Maturity Date, the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (y) if the Stated Maturity of the Indebtedness being refinanced is later than the Final Maturity Date, the Refinancing Indebtedness has a Stated Maturity at least 91 days later than the Final Maturity Date, (ii) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced, (iii) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest or premiums required by the instruments governing such existing Indebtedness and fees and expenses Incurred in connection therewith), (iv) if the Indebtedness being extended, refinanced, replaced, exchanged, defeased or refunded is subordinated in right of payment to the Loans or the Guarantees under the Guarantee and Collateral Agreement, such Refinancing Indebtedness is subordinated in right of payment to the Loans or the Guarantees under the Guarantee and Collateral Agreement on terms at least as favorable to the Holders as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded and (v) if the Indebtedness being refinanced is secured, the Lien securing Refinancing Indebtedness Incurred to refinance Indebtedness that was previously so secured is no less favorable to the Lenders and is no more favorable to the lienholder with respect to such Lien than the Lien in respect of the Indebtedness being refinanced.

“Register”:  as defined in Section 9.6(b).

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“Registration Rights Agreement”:  the Registration Rights Agreement substantially in the form of Exhibit K hereto (with such changes therein as the Company may request and Administrative Agent may approve, such approval not to be unreasonably withheld), as amended, waived, supplemented or otherwise modified from time to time.

“Regulation U”:  Regulation U of the Board of Governors as in effect from time to time.

“Related Business”:  any business which is the same as or related to any of the businesses of the Company, the Target and their respective Subsidiaries on the date hereof.

“Reorganization”:  with respect to any Multiemployer Plan, the condition that such Multiemployer Plan is in reorganization within the meaning of Section 4241 of ERISA.

“Reportable Event”:  any of the events set forth in Section 4043(c) of ERISA and the regulations thereunder, other than those events as to which the 30-day notice period is waived.

“Required Lenders”:  at any time, Lenders holding more than 50% in principal amount of outstanding Loans (or, prior to the Closing Date, more than 50% of the Commitments).

“Requirement of Law”:  as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any present or future law, treaty, statute, rule, regulation, common law or determination of an arbitrator or a court or other Governmental Authority and all official directives, consents, approvals, authorizations, guidelines, restrictions and policies of any Governmental Authority, in each case applicable to and binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Responsible Officer”:  as to any Person, any of the following officers of such Person: (i) the chief executive officer or the president of such Person and, with respect to financial matters, the chief financial officer, the senior vice president–finance, the treasurer or the controller of such Person, (ii) any vice president of such Person or, with respect to financial matters, any assistant treasurer or assistant controller of such Person, who has been designated in writing to the Administrative Agent as a Responsible Officer by such chief executive officer or president of such Person or, with respect to financial matters, such chief financial officer of such Person, (iii) with respect to Section 5.7 and without limiting the foregoing, the general counsel of such Person and (iv) with respect to ERISA matters, the senior vice president–human resources (or substantial equivalent) of such Person.

“Restricted Investment”:  any Investment other than a Permitted Investment.

“Restricted Payment”:  as defined in Section 6.2(a).

“Routes”:  the routes for which the Company or, if applicable, a Subsidiary Guarantor, holds or hereafter acquires the requisite authority to operate foreign air transportation pursuant to Title 49 including, without limitation, applicable frequencies, exemption and certificate authorities, Fifth-Freedom Rights and “behind/beyond rights”.

“Sale/Leaseback Transaction”:  an arrangement relating to property now owned or hereafter acquired by the Company or a Subsidiary whereby the Company or such Subsidiary transfers such property to a Person and the Company or such Subsidiary leases it from such Person.

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“SEC”:  the Securities and Exchange Commission or any Governmental Authority which succeeds to the powers and functions thereof.

“Secured Parties”: as defined in the Guarantee and Collateral Agreement.

“Securities”:  any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit sharing agreement or arrangement, bonds, debentures, options, warrants, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.

“Securities Act”:  the Securities Act of 1933, as amended from time to time.

“Securities Demand”:  as defined in Section 5.9(a).

“Security Documents”:  the collective reference to the Guarantee and Collateral Agreement, the Aircraft Mortgages, the Real Estate Mortgages and all other security documents hereafter delivered to the Administrative Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document.

“Senior ATA Notes”: the senior notes to be issued by the Company in an aggregate principal amount not to exceed $340,000,000.

“Significant Subsidiary”:  any Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

“Single Employer Plan”:  any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan.

“Solvent” and “Solvency”:  with respect to any Person on a particular date, that on such date, (i) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (ii) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature and (iv) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small amount of capital.

“Specified Aircraft”:  the numbers and types of aircraft listed on Schedule 1.1D together with related engines or spare engines, spare parts or other related equipment (including ground equipment).

“Specified Representations”:  the representation set forth in Sections 3.3(a), 3.4, 3.11, and 3.14.

“Sponsor”:  MatlinPatterson Global Advisers LLC and its Affiliates but not including, however, any portfolio companies thereof.

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“Stated Maturity”:  with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.

“Subordinated Obligation”:  any Indebtedness of the Company (whether outstanding on the date of this Agreement or thereafter Incurred) which is subordinate or junior in right of payment to the Loans pursuant to a written agreement.

“Subsequent Initial Note”:  as defined in Section 9.6(e).

“Subsequent Term Note”:  as defined in Section 9.6(e).

“Subsidiary” of any Person means: (a) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or persons performing similar functions) or (b) any partnership, joint venture limited liability company or similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, is, in the case of clauses (a) and (b), at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company.

“Subsidiary Guarantor”:  each Domestic Subsidiary in existence on the Closing Date that provides a Guarantee pursuant to the Guarantee and Collateral Agreement on the Closing Date (and any other Domestic Subsidiary that provides a Guarantee under the Guarantee and Collateral Agreement in accordance with this Agreement); provided that upon release or discharge of such Domestic Subsidiary from its Guarantee under the Guarantee and Collateral Agreement in accordance with this Agreement, such Domestic Subsidiary ceases to be a Subsidiary Guarantor.

“Supporting Route Facilities”:  gates, ticket counters and other facilities assigned, allocated, leased, or made available to the Company at non-U.S. airports used in the operation of scheduled service over a Route.

“Take-Out Debt”:  cash pay or non-cash pay securities, senior or subordinated securities, discount issue securities or a combination of any of the foregoing issued by the Company and/or Holdings to refinance the Loans or Exchange Notes.

“Target”:  World Air Holdings, Inc., a Delaware corporation.

“Target Company Material Adverse Effect”:  any change, effect, event, occurrence, development, circumstance, condition or worsening thereof (an “Effect”) that, individually or when taken together with all other Effects that exist at the date of determination, (A) has or is reasonably likely to have a material adverse effect on the properties, assets, liabilities, condition (financial or otherwise), business or results of operations of the Target and the Target’s Subsidiaries, taken as a whole or (B) prevents or materially delays the Target from performing its obligations under the Merger Agreement in any material respect or materially delays consummating the transactions or would reasonably be expected to have such effect; provided,

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however, that no Effects resulting from, relating to or arising out of the following shall be deemed to be or constitute a Target Material Adverse Effect, and no Effects resulting from, relating to or arising out of the following shall be taken into account when determining whether a Target Material Adverse Effect has occurred or is reasonably likely to exist: (i) conditions (or changes therein) in any industry or industries in which the Target operates (other than any such conditions (or changes therein) resulting from, relating to or arising out of acts of terrorism, which shall not be excluded and may be taken into account) to the extent that such conditions do not have a materially disproportionate effect on the Target and the Target’s Subsidiaries, taken as a whole, (ii) general economic conditions (or changes therein) in the United States, in any country in which the Target or any of the Target’s Subsidiaries conducts business or in the global economy as a whole (other than any such general economic conditions (or changes therein) resulting from, relating to or arising out of acts of terrorism, which shall not be excluded and may be taken into account) to the extent that such conditions do not have a materially disproportionate effect on the Target and the Target’s Subsidiaries, taken as a whole, (iii) any generally applicable change in Law or GAAP or interpretation of any of the foregoing to the extent that such conditions do not have a materially disproportionate effect on the Target and the Target’s Subsidiaries, taken as a whole, (iv) Effects primarily related to the announcement of the execution of the Merger Agreement or the pendency of the Merger, (v) compliance with the terms of, or the taking of any action required by, the Merger Agreement, or the failure to take any action prohibited by this Agreement and (vi) any actions taken, or failure to take action, to which Holdings or Purchaser has expressly consented or requested.

“Term Loan”:  as defined in Section 2.1(b).

“Term Notes”:  as defined in Section 9.6(e).

“Title 49”:  Title 49 of the United States Code, which, among other things, recodified and replaced the U.S. Federal Aviation Act of 1958, and the rules and regulations promulgated pursuant thereto or any subsequent legislation that amends, supplements or supersedes such provisions.

“Transaction Documents”:  the collective reference to the Merger Documents, Loan Documents, the Indenture and the Exchange Notes.

“Transactions”:  the collective reference to the Merger, the issuances of Indebtedness under this Agreement, the Indenture, and the Take-Out Debt.

“Transferee”:  any Assignee or Participant.

“Treasury Rate”:  with respect to each day, the rate per annum determined by the Administrative Agent two days prior to (i) the Closing Date for the Interest Period commencing on the Closing Date and (ii) thereafter, the last day of the next preceding Interest Period as (x) the rate borne by direct obligations of the United States maturing on the eighth anniversary of the first day of the relevant Interest Period or (y) if there are no such obligations, the rate determined by linear interpolation between the rates borne by the two direct obligations of the United States maturing closest to, but straddling, the eighth anniversary of the first day of the relevant Interest Period, in each case as most recently published by the Board of Governors on or prior to such date of determination.

“Trust Tax Accounts”:  trust tax accounts that hold deposits relating to transportation ticket taxes and fees, including, but not limited to, federal excise tax and passenger facility

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charges, collected from passengers until such time as such amounts are remitted to the applicable governmental agency.

“Trustee”:  as defined in Section 5.10(a).

“Underfunding”:  the excess of the present value of all accrued benefits under a Plan (based on those assumptions used to fund such Plan), determined as of the most recent annual valuation date, over the value of the assets of such Plan allocable to such accrued benefits.

“Voting Stock”:  of any Person as of any date, the Capital Stock of such Person that is as of such time entitled to vote in the election of the Board of Directors of such Person.

“Wachovia Facility”:  the Credit Agreement, dated as of March 30, 2006, among World Airways, Inc., North American Airlines, Inc., each of the financial institutions initially a signatory thereto, together with those assignees pursuant thereto and Wachovia Bank, National Association, including any letter of credit facility that replaces or refinances the letter of credit facility under such credit agreement which is unsecured or, if secured, secured only by the deposits described in clause (xxiv) of the definition of Permitted Liens.

“WAI”:  World Airways, Inc., a Delaware corporation.

“Warrant Agreement”:  the Warrant Agreement, substantially in the form of Exhibit J (with such changes as the Company may request and Administrative Agent may approve, such approval not to be unreasonably withheld), to be executed and delivered by Holdings and JPMorgan Chase Bank, N.A., as warrant agent with respect to the Warrants.

“Warrants”:  the warrants of Holdings as described in the Warrant Agreement.

“Warrant Shares”:  the shares of Common Stock of Holdings to be issued and received, as the case may be, upon exercise of the Warrants.

1.2Other Definitional Provisions.  (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Document or any certificate or other document made or delivered pursuant hereto or thereto.

(b)As used herein and in the other Loan Documents, and any certificate or other document made or delivered pursuant hereto or thereto, (i) accounting terms relating to any Group Member not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold interests and contract rights, and (iv) references to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise modified from time to time.

(c)The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule, Annex and Exhibit references are to this Agreement unless otherwise specified.

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(d)     The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

SECTION 2. AMOUNT AND TERMS OF LOANS

2.1     Loans.  (a) Subject to the terms and conditions hereof, each Lender severally agrees to make a loan (individually, an “Initial Loan” and collectively, the “Initial Loans”) to the Company on the Closing Date, in an aggregate principal amount equal to such Lender’s Commitment.  Any Commitments not drawn on the Closing Date shall terminate.

(b)     Subject to the terms and conditions hereof, each Lender severally agrees, if the Initial Loans have not been repaid or exchanged for Exchange Notes on the Initial Maturity Date, to convert the then outstanding principal amount of its Initial Loans into a loan (individually, a “Term Loan” and collectively, the “Term Loans”; the Initial Loans and the Term Loans, collectively, the “Loans”) to the Company, on the Initial Maturity Date, in an aggregate principal amount equal to the then outstanding principal amount of the Initial Loans held by such Lender. Upon the making by such Lender of such Term Loan, each Lender shall cancel on its records a principal amount of the Initial Loans held by such Lender corresponding to the principal amount of Term Loans made by such Lender, which corresponding principal amount of the Initial Loans shall be satisfied by the conversion thereof into Term Loans.

(c)     Each Lender may at its option make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Company to repay such Loan in accordance with the terms of this Agreement.

(d)     The failure of any Lender to make the Initial Loan to be made by it shall not relieve any other Lender of its obligation, if any, hereunder to make its Initial Loan on the Closing Date, but no Lender shall be responsible for the failure of any other Lender to make the Initial Loan to be made by such other Lender on the Closing Date.

2.2     Procedure for Borrowing.  The Company shall give the Administrative Agent notice (which notice must be received by the Administrative Agent prior to 10:00 a.m., New York City time, three Business Days prior to the anticipated Closing Date and may be conditioned on the occurrence of the Closing Date) requesting that the Lenders make the Initial Loans on the Closing Date and specifying the amount to be borrowed. Upon receipt of such notice the Administrative Agent shall promptly notify each Lender thereof. Not later than 9:00 a.m., New York City time, on the Closing Date each Lender shall make available to the Administrative Agent at its office specified in Section 9.2 an amount in immediately available funds equal to the Initial Loans to be made by such Lender.  The Administrative Agent shall credit the account of the Company on the books of such office of the Administrative Agent with the aggregate of the amounts made available to the Administrative Agent by the Lenders in immediately available funds.

2.3     Maturity and Exchange Notes.  (a) Subject to Section 2.1(b), all the Initial Loans will mature on the Initial Maturity Date.

(b)     All the Term Loans will mature on the Final Maturity Date.

(c)     Each Lender will have the option on or after the Initial Maturity Date at any time or from time to time to receive Exchange Notes in exchange for all or any portion of its Term Loan or, on the Initial Maturity Date, its Initial Loan, then outstanding in accordance with Section 5.10 of this Agreement.  The principal amount of the Exchange Notes will equal 100.0% of the aggregate principal amount (including any accrued and unpaid interest not required to be paid in cash) of the Loans for which

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they are exchanged. If a Default (but not an Event of Default) shall have occurred and be continuing on the date of such exchange, any notices given or cure periods commenced while the Loan was outstanding shall be deemed given or commenced (as of the actual dates thereof) for all purposes with respect to the Exchange Note (with the same effect as if the Exchange Note had been outstanding as of the actual dates thereof).

2.4     Repayment of Loans.  Subject to Section 2.1(b), the Company hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan in accordance with the terms hereof and of the Loan Notes. The Company hereby further agrees to pay to the Administrative Agent for the account of each Lender interest on the unpaid principal amount of the Loans from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, in the manner, and on the dates, set forth in Section 2.6.

2.5     Optional and Mandatory Prepayments.  (a) The Company may at any time and from time to time prepay the Loans, in whole or in part, without premium or penalty, upon irrevocable notice delivered to the Administrative Agent at least three Business Days prior thereto, which notice shall specify the date and amount of prepayment, provided that if a Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the Company shall be obligated to pay any amounts owing pursuant to Section 2.11; provided, further, that on or after the Initial Maturity Date, any prepayment shall be applied as provided in Section 2.5(c) below.  Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to such date on the amount prepaid. Partial prepayments of Loans shall be in an aggregate principal amount equal to the lesser of (A) $1,000,000, or a whole multiple thereof and (B) the aggregate unpaid principal amount of the Loans.

(b)     (i) If, subsequent to the Closing Date, the Company or any of its Subsidiaries shall issue the Take-Out Debt or any Indebtedness (other than Indebtedness permitted pursuant to Section 6.1(a)) or Capital Stock (other than shares of Capital Stock of a Subsidiary issued to the Company or any Subsidiary of the Company), an amount equal to 100% of the Net Cash Proceeds thereof shall be promptly applied toward the prepayment of the Loans as provided in Section 2.5(c) below.

(ii)         If, subsequent to the Closing Date, the Company or any of its Subsidiaries shall be required to apply any Net Available Cash pursuant to Section 6.4, an amount equal to such Net Available Cash shall be promptly applied toward the prepayment of the Loans as provided in Section 2.5(c) below.

(iii)        If the Loans would otherwise constitute “applicable high yield discount obligations” within the meaning of Section 163(i)(1) of the Code, on the first Interest Payment Date that occurs after the fifth anniversary of the Closing Date (the “AHYDO Prepayment Date”), the Company shall be required to prepay a portion of each Loan then outstanding equal to the “Mandatory Principal Prepayment Amount” (such prepayment, a “Mandatory Principal Prepayment”).  The “Mandatory Principal Prepayment Amount” means the portion of a Loan required to be redeemed to prevent such Loan from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code. No partial prepayment of the Loans prior to the AHYDO Prepayment Date pursuant to any other provision of this Agreement will alter the Company’s obligation to make the Mandatory Principal Prepayment with respect to any Loans that remain outstanding on the AHYDO Prepayment Date. For the avoidance of doubt, the Mandatory Principal Prepayment Amount shall be determined by the Company and provided to the Administrative Agent in the form of an Officer’s Certificate on which the Administrative Agent may conclusively rely.

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(iv)    The Company shall give the Administrative Agent (which shall promptly notify each Lender) at least one Business Day’s prior notice or, telephone notice promptly confirmed in writing of each prepayment in whole or in part pursuant to this Agreement setting forth the date and amount thereof.

(c)     As promptly as practicable after the Administrative Agent receives notice of a prepayment pursuant to Section 2.5(b)(iv), the Administrative Agent shall notify each Lender thereof including the amount and the expected date of such prepayment.  Promptly upon receipt of any prepayment, the Administrative Agent shall distribute such prepayment in accordance with Section 2.8(b).  Any such prepayment after the Cash Pay Date shall be accompanied by the payment of interest (if any) accrued on the amount of such prepayment after the Cash Pay Date.

(d)     (d)   Notwithstanding anything to the contrary contained in this Agreement, the Company may rescind any notice of prepayment under this Section 2.5 if such prepayment would have resulted from a refinancing of all or any portion of the Loans, which refinancing shall not be consummated or shall otherwise be delayed.

(e)     Notwithstanding any of the provisions of Section 2.5, so long as no Event of Default shall have occurred and be continuing, if any prepayment of Loans is required to be made under Section 2.5(b), other than on the last day of the Interest Period therefor, the Company may, in its sole discretion, deposit the amount of any such prepayment otherwise required to be made thereunder into a cash collateral account until the last day of such Interest Period, at which time the Administrative Agent shall be authorized (without any further action by or notice to or from any Loan Party) to apply such amount to the prepayment of such Loans in accordance with Section 2.5(c). Upon the occurrence and during the continuance of any Event of Default, the Administrative Agent shall also be authorized (without any further action by or notice to or from any Borrower or any other Loan Party) to apply such amount to the prepayment of the outstanding Loans in accordance with Section 2.5(c).

2.6     Interest Rates and Payment Dates.  (a) Initial Loans shall bear interest for the period from and including the date such Initial Loans are made to, but excluding, the Initial Maturity Date on the unpaid principal thereof at a rate per annum equal to the Initial Loan Rate for the Interest Period in effect for such Initial Loans plus the Applicable Margin plus the PIK Margin.

(b)     Term Loans shall bear interest for the period from and including the Initial Maturity Date to, but excluding, the Final Maturity Date or date of exchange for an Exchange Note on the unpaid principal thereof at a rate per annum equal to the Adjusted Rate plus the Adjusted Margin plus, prior to the Cash Pay Date, the PIK Margin.

(c)     Notwithstanding Sections 2.6(a) and (b), the interest rate borne by the Loans (excluding the PIK Margin) shall not exceed 12.88% per annum.

(d)     Interest shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (e) below shall be payable from time to time on demand. On each Interest Payment Date prior to the Cash Pay Date, the Company shall be deemed to have paid the interest accrued on the Loans to and including the Cash Pay Date that is due on such Interest Payment Date through an automatic increase in the principal amount of the applicable Loans equal to the amount of such interest (the “PIK Interest Amount”).

(e)     If all or a portion of (i) the principal amount of any of the Loans, (ii) any interest payable thereon, or (iii) any commitment fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise, but taking into account any applicable

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grace period under Section 7(a)), such overdue amount shall, without limiting the rights of the Lenders under Section 7, bear interest at a rate per annum which is (x) in the case of overdue principal, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section plus 2% or (y) in the case of overdue interest, commitment fees or other amounts due and payable hereunder, the applicable rate hereunder for any Loan (but without giving effect to the foregoing clause (x)) plus 2%.

2.7     Computation of Interest and Fees.  (a) Interest, fees and commissions payable pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Company and the relevant Lenders of each determination of the Initial Loan Rate. The Administrative Agent shall as soon as practicable notify the Company and the relevant Lenders of the effective date and the amount of each such change in interest rate.

(b)     Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Company and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of the Company, deliver to the Company a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Sections 2.6(a) and (b).

2.8     Pro Rata Treatment and Payments.  (a) Except to the extent otherwise provided herein, the borrowing of Loans by the Company from the Lenders and any reduction of the Commitments of the Lenders hereunder shall be made pro rata according to the relevant Commitment Percentages of the Lenders with respect to the Loans borrowed or the Commitments to be reduced.

(b)     Each payment (including each prepayment) by the Company on account of principal of and interest on the Loans shall be made pro rata according to the respective outstanding principal amounts of the Loans then held by the Lenders.

(c)     All payments (including prepayments) to be made by the Company hereunder, whether on account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and shall be made prior to 2:00 p.m., New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders at the Administrative Agent’s office specified in Section 9.2, in lawful money of the United States of America and in immediately available funds.  The Administrative Agent shall promptly distribute such payments in accordance with the provisions of this Section 2.8 to each relevant Lender upon receipt in like funds as received, net of any amounts owing by such Lender pursuant to Section 8.7.  All payments received by the Administrative Agent after 2:00 p.m., New York City time, shall in each case be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day.  In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.

(d)     Unless the Administrative Agent shall have been notified in writing by any Lender prior to the Closing Date that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Company a corresponding amount.  If such amount is not made available to the Administrative Agent by the required time on the Closing Date, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, for the

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period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this Section 2.8(c) shall be conclusive in the absence of manifest error.  If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of the Closing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to such borrowing, on demand, from the Company.

(e)     Unless the Administrative Agent shall have been notified in writing by the Company prior to the date of any payment due to be made by the Company hereunder that the Company will not make such payment to the Administrative Agent, the Administrative Agent may assume that the Company is making such payment, and the Administrative Agent may, but shall not be required to, in reliance upon such assumption, make available to the Lenders their respective pro rata shares of a corresponding amount. If such payment is not made to the Administrative Agent by the Company within three Business Days after such due date, the Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the Administrative Agent or any Lender against the Company.

2.9     Requirements of Law.  (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:

(i)     shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement or any other Loan Document or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes covered by Section 2.10 below and changes in the rate of tax on the overall net income of such Lender);

(ii)    shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the Adjusted LIBO Rate hereunder; or

(iii)   shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, continuing, or maintaining Eurodollar Loans or to reduce any amount receivable hereunder in respect thereof, then, in either case, the Company shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable.  If any Lender becomes entitled to claim any additional amounts pursuant to Section 2.9(a), it shall promptly notify the Company (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled.

(b)     A certificate as to any additional amounts payable pursuant to this Section 2.9 submitted by any Lender to the Company (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error. Notwithstanding anything to the contrary in this Section 2.9, the Company shall not be required to compensate a Lender pursuant to this Section 2.9 for any amounts incurred more than six months prior to the date that such Lender notifies the Company of such Lender’s intention to claim compensation therefor; and provided that, if the circumstances giving rise to such claim have a

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retroactive effect, then such six-month period shall be extended to include the period of such retroactive effect. The obligations of the Company pursuant to this Section 2.9 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

2.10   Taxes.  (a)    All payments made by the Company under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent or any Lender as a result of a present or former connection between the Administrative Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document).  If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded Taxes”) or Other Taxes are required to be withheld from any amounts payable to the Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement, provided, however, that the Company shall not be required to increase any such amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender’s failure to comply with the requirements of paragraph (d) of this Section or (ii) that are United States withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement (or at the time such Lender changes its Lending Office), except to the extent that such Lender’s assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Company with respect to such Non-Excluded Taxes pursuant to this paragraph.

(b)     In addition, the Company shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)     Whenever any Non-Excluded Taxes or Other Taxes are payable by the Company, as promptly as possible thereafter the Company shall send to the Administrative Agent for its own account or for the account of the relevant Lender, as the case may be, a certified copy of an original official receipt received by the Company showing payment thereof.  If the Company fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Company shall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure.

(d)     Each Lender (or Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver to the Company and the Administrative Agent (or, in the case of a Participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement substantially in the form of Exhibit H and a Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Company under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before

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the date such Participant purchases the related participation).  In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify the Company at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Company (or any other form of certification adopted by the U.S. taxing authorities for such purpose).  Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver.

(e)     [Intentionally omitted.]

(f)      If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by the Company or with respect to which the Company has paid additional amounts pursuant to this Section 2.10, it shall pay over such refund to the Company (but only to the extent of indemnity payments made, or additional amounts paid, by the Company under this Section 2.10 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Company, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Company (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Company or any other Person.

(g)     The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

2.11   Indemnity. The Company agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense (excluding anticipated profit) which such Lender may sustain or incur as a consequence of (a) default by the Company in payment when due of the principal amount of or interest on any Eurodollar Loan, (b) default by the Company in making a borrowing of Eurodollar Loans after the Company has given a notice requesting the same in accordance with the provisions of this Agreement, (c) default by the Company in making any prepayment of any Eurodollar Loan after the Company has given a notice thereof in accordance with the provisions of this Agreement or (d) the making of a prepayment of Eurodollar Loans on a day which is not the last day of an Interest Period with respect thereto.  Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so paid or prepaid, or not so borrowed, for the period from the date of such prepayment or of such failure to borrow to the last day of such Interest Period (or, in the case of a failure to borrow, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. A certificate as to any amounts payable pursuant to this Section 2.11 submitted to the Company by any Lender shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

2.12   Change of Lending Office.  (a) Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.9 or 2.10(a) with respect to such Lender (“Designating Event”), it will, if requested by the Company, use reasonable efforts (subject to overall policy

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considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage and provided, further, that nothing in this Section 2.12 shall affect or postpone any of the obligations of any Company or the rights of any Lender pursuant to Section 2.9 or 2.10(a).

(b)     In connection with any Designating Event, if any Lender does not designate another lending office for any Loans affected by such Designating Event as described in paragraph (a) of this Section (such Lender being referred to as a “Non-Designating Lender”), then, so long as the Lender that is acting as Administrative Agent is not a Non-Designating Lender, the Company may, at its sole expense and effort, upon notice to such Non-Designating Lender and the Administrative Agent, require such Non-Designating Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.6), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that (a) the Company shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (b) such Non-Designating Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company (in the case of all other amounts) and (c) the Company or such assignee shall have paid to the Administrative Agent the processing and recordation fee specified in Section 9.6.

SECTION 3.   REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans, the Company hereby represents and warrants to the Administrative Agent and each Lender (x) as of the Closing Date only as to the Specified Representations in respect of the Company and its Subsidiaries (and the Target shall not be deemed a Subsidiary for such purpose) and (y) immediately following consummation of the Merger and funding of the Initial Loans that:

3.1     Financial Condition.  (a) The audited consolidated financial statements of the Company and the Target for fiscal year ended December 31, 2004, 2005 and 2006, copies of each of which have been furnished to each Lender on or before the Closing Date, have been prepared using accounting methods, procedures and policies which are in accordance with GAAP and present fairly in all material respects in accordance with GAAP the financial position of the Company and the Target, respectively, together with their respective predecessors and respective Subsidiaries on a consolidated basis, in each case, as at the dates thereof, and the results of operations and statements of cash flows for the periods then ended.  During the period from December 31, 2006 to and including the date hereof there has been no Asset Disposition by any Group Member of any material part of its business or property.

(b)    The unaudited consolidated financial statements of the Company and the Target for fiscal quarter ended March 31, 2007, and unaudited consolidated financial statements of the Company and the Target for the same period of the prior fiscal year, copies of each of which have been furnished to each Lender on or before the Closing Date, have been prepared using accounting methods, procedures and policies which are in accordance with GAAP and present fairly in all material respects the financial position of the Company and the Target, respectively, together with their respective predecessors and respective Subsidiaries on a consolidated basis, in each case, as at the dates thereof, and the results of operations and statements of cash flows for the periods then ended (as to any unaudited interim financial statements, subject to normal year-end audit adjustments and the absence of footnotes).

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(c)     [Intentionally omitted].

(d)     The pro forma financial statements of the Company and its consolidated Subsidiaries attached hereto as Schedule 3.1(d) (collectively, the “Pro Forma Financial Statements”) have been prepared in good faith based on assumption believed to be reasonable as of the date of delivery thereof, and present fairly in all material respects in accordance with GAAP on a pro forma basis the estimated financial position of Company and its consolidated Subsidiaries with respect to the relevant period and as at the relevant date, assuming that the events specified therein had actually occurred at such date.

3.2     No Change.  Since December 31, 2006 there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect.

3.3     Corporate Existence; Compliance with Law.  Holdings, IntermediateCo, the Company and each of their respective Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

3.4     Corporate Power; Authorization; Enforceable Obligations.  (a) Each Loan Party has the power and authority, and the legal right, to make, deliver and perform this Agreement, any of the Notes and the other Loan Documents to which it is a party and, with respect to the Company, to borrow hereunder.  Each Loan Party has taken all necessary action to authorize the execution, delivery and performance of the Loan Documents to which it is a party and, with respect to the Company, to authorize the borrowings on the terms and conditions of this Agreement and any of the Notes and the other Loan Documents. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of, this Agreement, any of the Notes or the other Loan Documents to which any Loan Party is a party except for (i) filings necessary to perfect or maintain the perfection of the Liens on the Collateral granted by the Loan Parties, (ii) the approvals, consents, exemptions, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect and (iii) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or make could not reasonably be expected to have a Material Adverse Effect.  This Agreement, any Note and each of the other Loan Documents has been duly executed and delivered on behalf of the Loan Party thereto.  This Agreement, any Note and each of the other Loan Documents constitutes a legal, valid and binding obligation of the Loan Party thereto enforceable against such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

(b)     The Warrants have been duly authorized by the Company and, when executed and authenticated pursuant to the terms of the Warrant Agreement and delivered to the Escrow Agent, will be valid and binding obligations of the Company, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). The Warrant Shares have

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been duly authorized and validly issued, and upon exercise of the Warrants in accordance with the terms of the Warrant Agreement will be fully paid and nonassessable.

3.5     No Legal Bar.  The execution, delivery and performance of this Agreement, any of the Notes and the other Loan Documents, the borrowings hereunder and thereunder and the use of the proceeds thereof will not violate any Requirement of Law or any Contractual Obligation of any Group Member and will not result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens created by the Security Documents); except with respect to any violation, to the extent that such violation could not reasonably be expected to have a Material Adverse Effect.

3.6     No Material Litigation.  No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Company, threatened by or against any Group Member or against any of their respective properties or revenues (a) with respect to this Agreement, the other Loan Documents, any of the Transaction Documents or the Transactions contemplated hereby or thereby, or (b) which could reasonably be expected to have a Material Adverse Effect.

3.7     No Default.  No Group Member is in default under or with respect to any of its Contractual Obligations (other than Indebtedness) in any respect which could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.

3.8     Ownership of Property; Liens.  Each Group Member has good and valid title in fee simple to, or a valid leasehold interest in, all its material real property, and good title to, or a valid leasehold interest in, all its other material property, and none of such property is subject to any Lien except as permitted by Section 6.5.

3.9     Intellectual Property.  Each Group Member owns, or is licensed to use, all Intellectual Property material to the conduct of the business of the Company and its Subsidiaries, taken as a whole, as currently conducted. No claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does the Company know of any valid basis for any such claim, other than claims that could not reasonably be expected to have a Material Adverse Effect. The use of such Intellectual Property by each Group Member does not infringe on the rights of any Person, except as could not reasonably be expected to have an Material Adverse Effect.

3.10   Taxes. Each Group Member has filed or caused to be filed all Federal, material state and all other material tax returns which are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any such taxes, assessments, fees or other charges the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the relevant Group Member); no tax Lien has been filed, and, to the knowledge of the Loan Parties, no claim is being asserted, with respect to any such tax, fee or other charge.

3.11   Federal Regulations.  No part of the proceeds of any Loans will be used for any purpose which violates the provisions of the Regulations of the Board of Governors. If reasonably requested by any Lender or the Administrative Agent, the Company will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in said Regulation U.

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3.12   Labor Matters.  There are no strikes or other labor disputes against Holdings, the Company or any of its Subsidiaries pending or, to the knowledge of the Company, threatened that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to employees of the Company and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. All payments due from the Company or any of its Subsidiaries on account of employee health and welfare insurance that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect if not paid have been paid or accrued as a liability on the books of the Company or the relevant Subsidiary.

3.13   ERISA.  Neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Single Employer Plan, and each Single Employer Plan has complied in all material respects with the applicable provisions of ERISA and the Code. No termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen with respect to any Single Employer Plan, during such five-year period.  The present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Single Employer Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Single Employer Plan allocable to such accrued benefits by a material amount.  Neither the Company nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan which has resulted or could reasonably be expected to result in a material liability under ERISA.  No such Multiemployer Plan is in Reorganization or Insolvent.

3.14   Investment Company Act; Other Regulations.  No Loan Party is required to register as an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

3.15   Subsidiaries.  As of the Closing Date, (a) Schedule 3.15 sets forth the name and jurisdiction of incorporation of each Subsidiary and, as to each such Subsidiary, the percentage of each class of Capital Stock owned by any Loan Party and (b) except as set forth on Schedule 3.15, there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than stock options granted to employees, directors or consultants and directors’ qualifying shares) of any nature relating to any Capital Stock of the Company or any Subsidiary, except as created by the Loan Documents.

3.16   Purpose of Loans.  The proceeds of the Loans shall be used to (i) finance a portion of the Merger, (ii) repay the Existing Credit Facilities and (iii) pay certain transactions costs, fees and expenses related to the Transactions and the financing thereof.

3.17   Environmental Matters.  (a) The facilities and properties owned, leased or operated by any Group Member (the “Properties”) do not contain, and have not previously contained, any Materials of Environmental Concern in amounts or concentrations or under circumstances which (i) constitute or constituted a violation of, or (ii) could give rise to liability under, any Environmental Law, except in either case insofar as such violations or liabilities, could not, in the aggregate, be expected to have a Material Adverse Effect.

(b)     The Properties and all operations at the Properties are in compliance, and have in the last five years been in compliance, with all applicable Environmental Laws, and there is no contamination at, under or about the Properties or violation of any Environmental Law with respect to the Properties or the business operated by the Company or any of its Subsidiaries (the “Business”), which could interfere

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with the continued operation of the Properties or impair the fair saleable value thereof, except in either case insofar as such interferences or impairments, could not, in the aggregate, be expected to have a Material Adverse Effect.

(c)     No Group Member has received or is aware of any notice of violation, alleged violation, non-compliance, liability or potential liability under Environmental Laws with regard to any of the Properties or the Business, nor does the Company have knowledge or reason to believe that any such notice will be received or is being threatened, except insofar as such notices or threatened notices, could not, in the aggregate, be expected to have a Material Adverse Effect.

(d)     Materials of Environmental Concern have not been transported or disposed of from the Properties in violation of, or in a manner or to a location which could give rise to liability under, any Environmental Law, nor have any Materials of Environmental Concern been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Law, except insofar as any such violations or liabilities referred to in this paragraph, could not, in the aggregate, be expected to have a Material Adverse Effect.

(e)     No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Company, threatened, under any Environmental Law to which any Group Member is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business, except insofar as such proceedings, actions, decrees, orders or other requirements, could not, in the aggregate, be expected to have a Material Adverse Effect.

(f)      There has been no release or threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations of any Group Member in connection with the Properties or otherwise in connection with the Business, in violation of or in amounts or in a manner that could give rise to liability under Environmental Laws, except insofar as any such violations or liabilities referred to in this paragraph, could not, in the aggregate, be expected to have a Material Adverse Effect.

3.18   Solvency.  Holdings and its consolidated subsidiaries, taken as a whole, are, and immediately after giving effect to the Transactions (other than the issuance of Take-Out Debt) and the incurrence of all Indebtedness and obligations being incurred in connection herewith and therewith will be Solvent.

3.19   Accuracy of Information, etc.  No document, certificate or statement furnished to the Administrative Agent or the Lenders or any of them, by or on behalf of any Loan Party for use in connection with the transactions contemplated by this Agreement or the other Loan Documents, taken as a whole and as modified or supplemented by other information so furnished prior to the Closing Date, contained as of the date such statement, document or certificate was so furnished, any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein or therein not misleading; provided that with respect to projections and pro forma financial information contained in the materials referenced above the Company represents only that such projections and pro forma financial information was based upon good-faith estimates and assumptions believed by management of the Company to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount. As of the date hereof, to the knowledge of the

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Company, the representations and warranties contained in the Merger Documents are true and correct in all material respects.

3.20   Delivery of the Transaction Documents.  The Administrative Agent has received for itself and for each Lender a complete photocopy of the Merger Documents (including all exhibits, schedules and disclosure letters referred to therein or delivered pursuant thereto, if any) and all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof in any material respect.

3.21   Security Documents.  (a)   The Guarantee and Collateral Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof enforceable against the Loan Parties in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). In the case of the Pledged Stock described in the Guarantee and Collateral Agreement, when stock certificates representing such Pledged Stock are delivered to the Administrative Agent, and in the case of the other Collateral described in the Guarantee and Collateral Agreement, when financing statements and other filings specified on Schedule 3.21(a) in appropriate form are filed in the offices specified on Schedule 3.21(a), the Guarantee and Collateral Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for their respective Obligations (as defined in the Guarantee and Collateral Agreement) to the extent a Lien on such Collateral can be perfected by the filing of a financing statement, by filings to be made with the FAA, by filings to be made in respect of Intellectual Property in the United States Patent and Trademark Office and the United States Copyright Office or, in the case of the Pledged Stock, by possession or control, in each case prior and superior in right to any other Person (except (x) in the case of Collateral constituting Pledged Stock, nonconsensual Liens permitted by Section 6.5 and (y) in the case of Collateral other than Pledged Stock, Liens permitted by Section 6.5).

(b)     Each of the Mortgages is effective to create in favor of the Administrative Agent, for the benefit of the Lenders enforceable against the Loan Parties in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law), a legal, valid and enforceable Lien on the Mortgaged Properties described therein and proceeds thereof to the extent provided therein, and when the Mortgages are filed in the offices specified on Schedule 3.21(b), each such Mortgage shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Mortgaged Properties and the proceeds thereof to the extent provided therein, as security for their respective Obligations (as defined in the relevant Mortgage), in each case prior and superior in right to any other Person (except that the security interest created in such real property and the Mortgaged Property may be subject to the Liens permitted by Section 6.5). Schedule 1.1B lists, as of the Closing Date, each parcel of owned real property located in the United States and held by the Company or any of its Subsidiaries that has a value, in the reasonable opinion of the Company, in excess of $2,500,000.

3.22  Section 1110.  The aircraft, engines and spare engines listed on Schedule 1.1C represent each of the Mortgaged Aircraft, engines and spare engines as of the Closing Date that were first placed in service prior to October 22, 1994.

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SECTION 4.   CONDITIONS PRECEDENT

The agreement of each Lender to make the Initial Loan requested to be made by it is subject to the satisfaction on or prior to the Closing Date of the following conditions precedent:

(a)     Loan Documents.  The Administrative Agent shall have received (i) this Agreement, executed and delivered by a duly authorized officer of the Company with a counterpart for each Lender, (ii) for the account of each Lender requesting the same at least two Business Days prior to the Closing Date, a Loan Note conforming to the requirements hereof and executed by a duly authorized officer of the Company, (iii) the Warrant Agreement (including the registration rights agreement attached thereto) executed and delivered by a duly authorized officer of the Company and Holdings shall have executed and delivered to the Administrative Agent Warrants representing 8.5% of Holdings’ outstanding common equity on a fully diluted basis (other than with respect to options to be issued pursuant to the New ATA Holdings Inc. 2006 Long Term Incentive Plan), (iv) the Guarantee and Collateral Agreement to be entered into on the Closing Date, executed and delivered by a duly authorized officer of Holdings, IntermediateCo, the Company and the Subsidiary Guarantors and (v) an Acknowledgement and Consent in the form attached to the Guarantee and Collateral Agreement, executed and delivered by each Issuer (as defined therein), if any, that is not a Loan Party.

(b)     Transactions, etc.  The following transactions shall have been consummated:

(i)     the acquisition of the Target by Affiliates of the Sponsor (the “Merger”) shall have been consummated in accordance with the Merger Documents, without giving effect to any waiver, amendment, supplement or other modification of any term or condition thereunder in any respect that is materially adverse to Holdings, the Company or the Lenders;

(ii)    Holdings shall have received at least $50,000,000 from the proceeds of equity issued by Holdings to funds managed by the Sponsor and other investors, and such proceeds shall have been contributed to the Company;

(iii)   Holdings shall have received at least $161,100,000 from the proceeds of Series A Preferred Stock issued by Holdings to funds managed by the Sponsor, and such proceeds shall have been directly or indirectly contributed to the Company to be used by the Company to (i) repay or otherwise satisfy certain Indebtedness owed by Holdings to certain Affiliates of the Sponsor and (ii) partially finance the cash requirements of the Merger; and

(iv)   (A) The Administrative Agent shall have received reasonably satisfactory evidence that (1) the Existing Credit Facilities (other than any letter of credit facility under the Wachovia Facility which shall be secured only by the deposits described in clause (xxiv) of the definition of Permitted Liens) shall have been terminated and all amounts thereunder shall have been paid in full and any outstanding letters of credit thereunder cash-collateralized and (2) the MP Bridge Loan Agreement and the MP Term Loan Agreement shall have been terminated and all amounts thereunder shall have been paid in full or otherwise satisfied and (B) arrangements reasonably satisfactory to the Administrative Agent shall have been made for the termination of all Liens granted in connection with the credit facilities described in clause (A) (other than Liens described in clause (xxiv) of the definition of Permitted Liens).

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(c)     Payment of Fees.  All fees and invoiced expenses required to be paid on or before the Closing Date to the Administrative Agent and the Lenders shall have been paid or provision for payment thereof shall have been made.

(d)     Historical Financial Statements.  The Lenders shall have received the financial statements referred to in Section 3.1 and all other financial statements for completed or pending acquisitions by any Group Member that may be required under Regulation S-X of the Securities Act.

(e)     Solvency.  The Lenders shall have received a customary solvency certificate executed on behalf of Holdings by the chief financial officer of Holdings certifying that Holdings and its subsidiaries, taken as a whole, and immediately after giving effect to the Transactions (other than the issuance of Take-Out Debt), including the incurrence of all Indebtedness and obligations being incurred in connection herewith and therewith will be Solvent, in form reasonably satisfactory to the Administrative Agent.

(f)      [Intentionally omitted].

(g)     Legal Opinions.  The Administrative Agent shall have received the following legal opinions: (i) opinions from Cravath, Swaine & Moore LLP, special New York counsel to Holdings, substantially in the form of Exhibit F-1, (ii) opinions from Delaware counsel to Holdings and the Company, substantially in the form of Exhibit F-2, (iii) draft opinions from FAA counsel to Holdings and the Company, substantially in the form of Exhibit F-3, and.(iv) opinions from general counsel of ATA, substantially in the form of Exhibit F-4, (v) opinions from general counsel of Target, substantially in the form of Exhibit F-5, and (vi) if agreed by opining counsel, opinions delivered pursuant to the Merger Agreement, accompanied by reliance letters in favor of the Lenders.

(h)Closing Certificate.  The Administrative Agent shall have received a certificate of the Company, dated the Closing Date, substantially in the form of Exhibit C.

(i)Corporate Proceedings of the Loan Parties.  The Administrative Agent shall have received a copy of the resolutions of the board of directors of each Loan Party authorizing, as applicable, (i) the execution, delivery, and performance of this Agreement and the other Loan Documents and the Transaction Documents to which it is or will be a party as of the Closing Date, and (ii) in the case of the Company, the Loans to the Company, certified by the Secretary or an Assistant Secretary of such Loan Party as of the Closing Date, which certificate shall be in form and substance reasonably satisfactory to the Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified (except as any later such resolution may modify any earlier such resolution), revoked or rescinded and are in full force and effect.

(j)Incumbency Certificates of the Loan Parties.  The Administrative Agent shall have received a certificate of each Loan Party, dated the Closing Date, as to the incumbency and signature of the officers of such Loan Party executing any Loan Document, reasonably satisfactory in form and substance to the Administrative Agent, executed by a Responsible Officer and the Secretary or any Assistant Secretary of such Loan Party.

(k)Governing Documents.  The Administrative Agent shall have received copies of the certificate or articles of incorporation and by-laws (or other similar governing documents serving

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the same purpose) of each Loan Party, certified as of the Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of such Loan Party.

(l)      Representations and Warranties.  Each of the representations and warranties made in the Merger Agreement by or on behalf of the Target as are material to the interests of the Lenders (but only to the extent Holdings and the Company have a right to terminate their obligations under the Merger Agreement as a result of a breach of any such representation or warranty) and the Specified Representations shall be true and correct in all material respects on and as of the date of the borrowing of the Initial Loans as if made on and as of such date (unless stated to relate to a specific earlier date, in which case, such representations and warranties shall be true and correct in all material respects as of such earlier date).

(m)    [Intentionally omitted].

(n)     Lien Searches; Perfection.  The following shall have been satisfied:

(i)     the Administrative Agent shall have received UCC searches conducted in the jurisdictions in which the Company and the Guarantors are incorporated or such other jurisdictions as the Administrative Agent may reasonably require and Lien searches conducted in the recording office of the FAA and, with respect to the applicable Mortgaged Aircraft, “priority search certificates” (as defined in the Regulations and Procedures for the International Registry), all as may be reasonably satisfactory to the Administrative Agent (dated as of a date reasonably satisfactory to the Administrative Agent), reflecting the absence of Liens and encumbrances on the assets of the Company and the Guarantors except for Liens permitted by Section 6.5, Liens to be discharged on or prior to the Closing Date pursuant to documentation reasonably satisfactory to the Administrative Agent and Liens as to which arrangements for discharge reasonably satisfactory to the Administrative Agent shall have been made and the absence of registrations on the International Registry with respect to the applicable Mortgaged Aircraft other than the registrations contemplated herein, and (in the case of the searches conducted at the recording office of the FAA) indicating that the Company (or a Guarantor) is the registered owner of each of the aircraft which is intended to be covered by the Aircraft Mortgages;

(ii)    the Administrative Agent shall have received (i) the certificates representing the shares of Capital Stock pledged pursuant to the Guarantee and Collateral Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (ii) each promissory note (if any) pledged to the Administrative Agent pursuant to the Guarantee and Collateral Agreement endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof; and

(iii)   each document (including any Uniform Commercial Code financing statement) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 6.5), shall be in proper form for filing, registration or recordation,

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provided that, notwithstanding anything in this clause (n) to the contrary, but without prejudice to the requirement set forth in Section 5.13 after the Closing Date, with respect to any Collateral the security interest in which may not be perfected by filing of a UCC financing statement or delivery of stock certificates, if the perfection of the Administrative Agent’s security interest in such collateral has not been accomplished prior to the Closing Date, then delivery of documents and instruments for perfection of such security interest shall not constitute a condition precedent to the availability of the Initial Loans.

(o)    Mortgages, etc.  (i) The Administrative Agent shall have received a Mortgage with respect to each Mortgaged Aircraft, including a Mortgage Supplement with respect to each Aircraft Mortgage, executed and delivered by a duly authorized officer of each party thereto.

(ii) With respect to Mortgaged Aircraft, the Administrative Agent shall have received (i) evidence of the filing for recordation with the FAA of each Aircraft Mortgage and Mortgage Supplement (together with any other necessary documents, instruments, affidavits or certificates) as the Administrative Agent may deem reasonably necessary to perfect and protect the Liens created thereby, including, without limitation, recordings and filings with the FAA, and all filings and recording fees and taxes in respect thereof shall have been duly paid, (ii) copies of the Entry Point Filing Forms, and (iii) evidence that all other action that the Administrative Agent may deem reasonably necessary to perfect and protect the Liens and security interests created under each Aircraft Mortgage and Mortgage Supplement has been taken.

Notwithstanding anything in this clause (o) to the contrary, but without prejudice to the requirement set forth in Section 5.13 after the Closing Date, with respect to any Collateral the security interest in which may not be perfected by filing of a UCC financing statement or delivery of stock certificates, if the perfection of the Administrative Agent’s security interest in such collateral has not been accomplished prior to the Closing Date, then delivery of documents and instruments for perfection of such security interest (including all documents described in clause (ii) above) shall not constitute a condition precedent to the availability of the Initial Loans.

(p)    Rating. The Initial Loans shall have received an implied rating from both Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Group.

The making of the Initial Loans by the Lenders hereunder shall conclusively be deemed to constitute an acknowledgement by the Administrative Agent and each Lender that each of the conditions precedent set forth in this Section 4 shall have been satisfied in accordance with its respective terms or shall have been irrevocably waived by such Person.

Notwithstanding anything in the Agreement or any other Loan Document to the contrary, (i) the only representations and warranties (and related defaults) relating to Target, its subsidiaries and their businesses the making of which shall be a condition to availability of the Initial Loans on the Closing Date shall be such of the representations made by Target in the Merger Agreement as are material to the interests of the Lenders, but only to the extent that the Company has the right to terminate its obligations under the Merger Agreement as a result of a breach of such representations in the Merger Agreement, and (ii) the only other representations and warranties (and related defaults) made by the Loan Parties the making of which shall be a condition to availability of the Initial Loans on the Closing Date shall be the Specified Representations.

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SECTION 5.  AFFIRMATIVE COVENANTS

Except as modified on the Initial Maturity Date as set forth in Section 9.1, the Company hereby agrees that, so long as the Commitments remain in effect, any Loan or Loan Note remains outstanding and unpaid, or any other amount is due and owing to any Lender or the Administrative Agent hereunder or under any of the other Loan Documents, the Company shall, and, in the case of the agreements contained in Sections 5.3 through 5.6, 5.8, 5.11 and 5.12, shall cause each of its Subsidiaries to:

5.1     Financial Statements.  Furnish to the Administrative Agent and each Lender:

(a)     as soon as available, but in any event within 90 days after the end of each fiscal year of Holdings, a copy of the audited consolidated balance sheet of Holdings and its consolidated Subsidiaries as at the end of such year and the audited consolidated statements of income and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, by Ernst & Young LLP or other independent certified public accountants of nationally recognized standing;

(b)     as soon as available, but in any event not later than (i) September 15, 2007 for the quarterly period ended June 30, 2007, (ii) November 15, 2007 for the quarterly period ending September 30, 2007 and (iii) 45 days after the end of each of the first three quarterly periods of each fiscal year of Holdings, beginning with the fiscal quarter ended March 31, 2008, the unaudited, consolidated balance sheet of Holdings and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and of cash flows of Holdings and its consolidated Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects in accordance with GAAP (subject to normal year-end audit adjustments and the absence of notes); and

(c)     as soon as available, but in any event not later than 45 days after the end of each month (other than a month the last day of which coincides with the last day of any fiscal quarter) of each fiscal year of the Company, copies of the internal management reports of the Company for such month and the portion of the fiscal year through the end of such month, setting forth in each case in comparative form (i) the corresponding figures for the Company for the previous year and (ii) the corresponding figures set forth in the relevant budgets required to be delivered in accordance with Section 5.2(b);

all such financial statements shall fairly present in all material respects in accordance with GAAP subject in the case of unaudited statements to normal year-end audit adjustments and the absence of notes) the consolidated financial position of Holdings and its Subsidiaries as of such date and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein).

5.2     Certificates; Other Information.  Furnish to the Administrative Agent for delivery to each Lender (or, in the case of clause (e), to the relevant Lender):

(a)     concurrently with the delivery of the financial statements referred to in Section 5.1(a), a certificate of the independent certified public accountants reporting on such

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financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate (which certificate may be limited to the extent required by such firm’s general accounting and auditing rules, policies or guidelines);

(b)     concurrently with the delivery of the financial statements referred to in Sections 5.1(a) and 5.1(b), a certificate of a Responsible Officer (i) stating that such Responsible Officer has obtained no knowledge of any Default or Event of Default existing at the date of such certificate except as specified in such certificate, (ii) stating that all such financial statements fairly present in all material respects in accordance with GAAP the consolidated financial position of Holdings its Subsidiaries as at the date thereof and the results of operations and cash flows for the period then ended (subject, in the case of interim statements, to normal year-end audit adjustment and the absence of notes) and have been prepared in accordance with GAAP applied consistently throughout the periods reflected therein (except as disclosed therein), and (iii) to the extent not previously disclosed to the Administrative Agent, (1) a description of any change in the jurisdiction of organization of any Loan Party, (2) a list of any registered Intellectual Property acquired by any Loan Party and (3) a description of any Person that has become a Group Member, in each case since the date of the most recent report delivered pursuant to this clause (iii) (or, in the case of the first such report so delivered, since the Closing Date);

(c)     as soon as available, and in any event no later than 45 days after the end of each fiscal year of Holdings, the consolidated budget for the following fiscal year used internally by Holdings;

(d)     unless available pursuant to public filings, concurrently with the delivery of the financial statements referred to in Sections 5.1(a) and 5.1(b), a narrative discussion and analysis of the financial condition and results of operations of the Company and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then current fiscal year to the end of such fiscal quarter, as compared to the portion of the Projections covering such periods and to the comparable periods of the previous year;

(e)     within five days after the same are filed, copies of all periodic reports which the Company may make to, or file with, the Securities and Exchange Commission or any successor or analogous Governmental Authority; and

(f)      promptly, such additional financial and other information as any Lender may from time to time reasonably request.

5.3     Payment of Obligations.  Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature (excluding Indebtedness), except where (i) the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves to the extent required by GAAP with respect thereto have been provided on the books of the relevant Group Member or (ii) the failure to pay or discharge the same could not reasonably be expected to have a Material Adverse Effect.

5.4     Maintenance of Existence; Compliance.  (a)(i) Preserve, renew and keep in full force and effect its organizational existence except, in the case of any Subsidiary of the Company, where the failure to perform such obligations, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, as otherwise permitted by Section 6.9 and except, in the case of clause (ii) above, to the extent that failure to do so

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could not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Contractual Obligations (excluding Indebtedness) and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.5     Maintenance of Property; Insurance.  (a) Except if failure to do so could not reasonably be expected to have a Material Adverse Effect, keep all property material to the operation of its business in good working order and condition, ordinary wear and tear excepted.

(b) (i) Maintain with financially sound and reputable insurance companies insurance on all its property in at least such amounts and against at least such risks (but including in any event public liability, product liability and business interruption) as are usually insured against in the same general area by companies engaged in the same or a similar business (in each case, after giving effect to any self-insurance reasonable and customary for similarly situated Persons engaged in the same or similar businesses as the Company and its Subsidiaries).

(ii) Promptly deliver to the Administrative Agent copies of any notices received from its insurers with respect to insurance programs required by the Terrorism Risk Insurance Act of 2002 (as extended by the Terrorism Risk Insurance Extension Act of 2005) and, if so requested by the Administrative Agent, procure and maintain in force the insurance that is offered in such programs to the same extent maintained by companies of the same or similar size in the same or similar businesses.

5.6     Inspection of Property; Books and Records; Discussions.  (a) Keep proper books of records and account in conformity in all material respects with GAAP; and (b) permit representatives of the Administrative Agent (who may be accompanied by representatives of the Lenders) (or during the continuance of an Event of Default, any Lender) to visit and inspect any of its properties and examine and make abstracts from any of its books and records upon reasonable advance notice at any reasonable time on any Business Day and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Group Members with officers and employees of the Group Members and with its independent certified public accountants in all cases subject to applicable law and the terms of any applicable confidentiality agreements not entered into for purposes of obstructing the operation of this Section 5.6.  The Administrative Agent and the Lenders shall give the Company the opportunity to participate in any discussions with the Company’s independent public accountants.

5.7     Notices.  Promptly (but in any event within five Business Days) after any Responsible Officer of the Company obtains knowledge thereof, give notice to the Administrative Agent of:

(a)     the occurrence of any continuing Default or Event of Default;

(b)     any (i) default or event of default under any Contractual Obligation of any Group Member or (ii) litigation, investigation or proceeding which may exist at any time between any Group Member and any Governmental Authority, which in either case, could reasonably be expected to have a Material Adverse Effect;

(c)     any litigation or proceeding affecting any Group Member which relates to any Loan Document;

(d)     the following events, if, individually or in the aggregate, the liability that could reasonably be expected to result would be material to the Company and its Subsidiaries, taken as

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a whole: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Single Employer Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Single Employer Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Company or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any Single Employer Plan or Multiemployer Plan; and

(e)     the receipt by any Group Member of any complaint, order, citation, notice or other written communication from any Person with respect to the existence or alleged existence of a violation of any Environmental Laws or Materials of Environmental Concern or any other environmental, health or safety matter including the occurrence of any spill, discharge or release in a quantity that is reportable under any Environmental Law on any of the Properties but only to the extent that such complaint, order, citation, notice or written communication individually or in the aggregate could reasonably be expected to result in a Material Adverse Effect.

Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the relevant Group Member proposes to take with respect thereto.

5.8     Environmental Laws.  (a) Comply in all material respects with, and use reasonable best efforts to cause all tenants and subtenants, if any, in all material respects to comply with, all applicable Environmental Laws; and

(b)     Conduct and complete (or cause to be conducted and completed) all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws and in a timely fashion comply in all material respects with all lawful orders and directives of all Governmental Authorities regarding Environmental Laws except in each such case to the extent that the same are being contested in good faith by appropriate proceedings and the pendency of such proceedings could not be reasonably expected to have a Material Adverse Effect.

5.9     Take-Out Financing.  (a) Take any action reasonably necessary or desirable so that the Investment Bank can, during the period referred to below, publicly sell or privately place, in one or more offerings or placements, the Take-Out Debt (so long as the Company is legally permitted to do so).  Subject to the other provisions of this Agreement, the Investment Bank, in its reasonable discretion after consultation with the Company, shall determine whether, and in which amounts, the Take-Out Debt shall be issued by the Company and/or Holdings and the amount of each series of Take-Out Debt to be issued if the Take-Out Debt is to be issued in a series of offerings and/or placements and the types or combinations of Take-Out Debt to be issued.  Upon notice by the Investment Bank (a “Securities Demand”), at any time and from time to time (x) after a reasonable marketing period (including a road show) but, unless the Take-Out Debt is to be issued on the Closing Date, no earlier than the 180th day following the Closing Date and (y) prior to the Initial Maturity Date (which notice may be given not more than twice) that, in its reasonable opinion, market conditions are such that the conditions specified in clauses (i) and (ii) of the following proviso can be satisfied, if all Loans shall not have been repaid in full or the commitments in respect thereof shall not have been terminated, the Company and Holdings will cause the issuance and sale of Take-Out Debt upon such terms and conditions as specified in the Securities Demand; provided that (i) the interest rate (whether floating or fixed) or dividend rate, as the case may be, shall be determined by the Investment Bank in light of the then prevailing market conditions for comparable securities but in no event shall the weighted average effective yield on the Take-Out Debt exceed 12.88% per annum (excluding the PIK Margin); (ii) the maturity of the Take-Out Debt shall be no less than eight years from the date of issuance thereof; (iii) the Investment Bank, in its reasonable

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discretion after consultation with the Company, shall determine whether the Take-Out Debt shall be issued through a public offering or a private placement; (iv) the Take-Out Debt will be issued pursuant to an indenture or other agreement or instrument that shall contain such terms, conditions and covenants as are typical and customary for similar financings and as are reasonably satisfactory in all respects to the Investment Bank, the Company and the Administrative Agent; and (v) all other arrangements with respect to the Take-Out Debt shall be reasonably satisfactory in all respects to the Investment Bank in light of the then prevailing market conditions.

(b)     The Company will give the Administrative Agent prior notice of its intention to file the registration statement or to effect a private placement of the Take-Out Debt.  The Company will notify the Administrative Agent promptly upon the receipt of any comments from the SEC in connection with the registration statement, will furnish the Administrative Agent with a copy of any written comments from the SEC, will respond in a reasonably prompt manner and appropriately to any such comments and will furnish a copy to the Administrative Agent of any such response to the SEC.

(c)     The Company will deliver (and, if applicable, cause Holdings to deliver) preliminary offering memoranda or preliminary prospectuses and other marketing materials relating to the Senior ATA Notes usable in a customary high-yield road show (with the industry section being written by Seabury Group or any other airline industry expert having similar qualifications), which shall be reasonably satisfactory to the Administrative Agent and shall comply with the rules and regulations (including Regulation S-X) of the Securities Act, and shall in any event include information that would be required in a registration statement on Form S-1 for an offering registered under the Securities Act, including without limitation the unaudited (or, in the case of fiscal years, audited) financial statements of the Company (and, if applicable, Holdings) for the most recent fiscal quarter or fiscal year then ended (each, a “Preliminary OM”) no later than (x) September 15, 2007 in the case of the Preliminary OM covering the fiscal quarter ended June 30, 2007, (y) November 15, 2007 in the case of the Preliminary OM covering the fiscal quarter ended September 30, 2007 and (z) 45 days after the end of each subsequent fiscal quarter (other than the fourth fiscal quarter of any fiscal year) and 90 days after the end of each fiscal year.

5.10   Exchange Notes.  (a) The Company shall, prior to the Initial Maturity Date, enter into the Indenture with a bank or trust company acting as indenture trustee thereunder (the “Trustee”), which shall be a corporation organized and doing business under the laws of the United States of America or any state thereof, in good standing, which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by Federal or state authority and which has a combined capital and surplus of not less than $500,000,000.

(b)     Following the Initial Maturity Date, the Company will, on or prior to the third Business Day following the written request (the “Exchange Request”) of any Lender execute, and cause the Trustee to authenticate, and deliver to such Lender in accordance with the Indenture an Exchange Note bearing interest as set forth therein in exchange for such Lender’s Loan dated the date of the issuance of such Exchange Note, registered in the name specified by such Lender, in the principal amount equal to 100% of the aggregate principal amount (including any accrued and unpaid interest not required to be paid in cash) of the Loans for which they are exchanged; provided that Lenders have given Exchange Requests with respect to Initial Loans or Term Loans in an aggregate principal amount equal to the lesser of $25,000,000 and 10% of the aggregate principal amount of the Initial Loans or Term Loans then outstanding.  Each Exchange Request shall specify the principal amount of the Loans to be exchanged pursuant to this Section 5.10, which shall be at least $1,000,000 and, if such Lender holds Loan Notes, be accompanied by the Loan Notes to be exchanged for Exchange Notes. Any Loan Notes delivered to Company under this Section 5.10 in exchange for Exchange Notes shall be canceled by the

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Company and the corresponding amount of the Lender’s Loan deemed repaid and the Exchange Notes shall be governed by and construed in accordance with the terms of the Indenture.

(c)     If Exchange Notes are issued pursuant to the terms hereof, the holders of such Exchange Notes shall have the registration rights set forth the Registration Rights Agreement.

5.11   Use of Proceeds of the Take-Out Debt.  Use the net proceeds received by it from the sale of the Take-Out Debt to repay the Loans pursuant to Section 2.5(a).

5.12   Additional Collateral.  (a) With respect to any property acquired after the Closing Date by any Loan Party that constitutes Collateral under the Guaranty on Collateral Agreement (other than (x) any property described in paragraph (b), (c) or (d) below and (y) Excluded Property (as defined in the Guarantee and Collateral Agreement) as to which the Administrative Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent reasonably requests, to grant to the Administrative Agent, for the benefit of the Lenders, a security interest in such property and (ii) take all actions reasonably requested by the Administrative Agent to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in such property, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be requested by the Administrative Agent.

(b)     With respect to any fee interest in any real property having a value (together with improvements thereof) of at least $2,500,000 acquired after the Closing Date by any Loan Party (other than (x) any such real property subject to a Lien expressly permitted under clause (x) of the definition of “Permitted Liens” and (y) real property acquired by any Excluded Foreign Subsidiary), promptly.(i) execute and deliver a first priority Real Estate Mortgage subject to Permitted Liens, in favor of the Administrative Agent, for the benefit of the Lenders, covering such real property, (ii) if reasonably requested by the Administrative Agent, provide the Lenders with (x) title and extended coverage insurance covering such real property in an amount equal to the purchase price of such real property as well as current ALTA survey thereof, together with any surveyor’s certificate that exists and (y) use commercially reasonable efforts to obtain any consents or estoppels reasonably deemed necessary or advisable by the Administrative Agent in connection with such Real Estate Mortgage, each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent and (iii) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

(c)     With respect to any aircraft (including the related engines and spare engines) acquired after the Closing Date by any Loan Party that is not financed or to be financed by Aircraft Acquisition Debt (and any such Aircraft Mortgage shall provide for the release of such assets upon the incurrence of Aircraft Acquisition Debt or the entering into a Sale/Leaseback Transaction in respect of such assets in accordance with Sections 6.1 and 6.11), promptly (i) execute and deliver an Aircraft Mortgage in favor of the Administrative Agent, for the benefit of the Lenders, covering such assets, and the other documents referred to in Section 4(o)(ii), each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent and (iii) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

(d)     With respect to any new Subsidiary (other than an Excluded Foreign Subsidiary) created or acquired after the Closing Date by any Loan Party (which, for the purposes of this

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paragraph (c), shall include any existing Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or desirable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in the Capital Stock of such new Subsidiary that is owned by any Loan Party, (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Loan Party, (iii) cause such new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement, (B) to take such actions reasonably requested by the Administrative Agent to grant to the Administrative Agent for the benefit of the Lenders a perfected first priority security interest in the Collateral described in the Guarantee and Collateral Agreement with respect to such new Subsidiary, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be requested by the Administrative Agent and (C) to deliver to the Administrative Agent a certificate of such Subsidiary, substantially in the form of Exhibit C, with appropriate insertions and attachments and (D) if such new Subsidiary owns any aircraft that is not financed or to be financed by Aircraft Acquisition Debt, execute and deliver an Aircraft Mortgage (which shall provide for the release of such assets upon the incurrence of Aircraft Acquisition Debt or the entering into a Sale/Leaseback Transaction in respect of such assets in accordance with Sections 6.1 and 6.11) in favor of the Administrative Agent, for the benefit of the Lenders, covering such property, and the other documents referred to in Section 4(o)(ii), each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent, and (iv) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

(e)     With respect to any new Excluded Foreign Subsidiary created or acquired after the Closing Date by any Loan Party, promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent reasonably requests to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in the Capital Stock of such new Subsidiary that is owned by any such Loan Party (provided that in no event shall more than 66% of the total outstanding voting Capital Stock of any such new Subsidiary be required to be so pledged), (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Loan Party, and take such other action as may be reasonably requested by the Administrative Agent to perfect the Administrative Agent’s security interest therein, and (iii) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

5.13   Post-Closing Matters.  (a) Within 60 days after the Closing Date or such longer period reasonably satisfactory to the Administrative Agent, the Company agrees to take or cause to be taken the actions to perfect the security interest in all items of Collateral, described in Section 4(n), Section 4(o) (including the delivery of the corresponding opinions from FAA counsel) and Schedule 3.21(a) of this Agreement and in Section 5.10 and Schedule 3 of the Guarantee and Collateral Agreement that were not completed on the Closing Date.

(b)     Within 30 days after the Closing Date or such longer period reasonably satisfactory to the Administrative Agent, the Company agrees to provide to the Administrative Agent (i) evidence of insurance complying with the requirements of Section 5.5(b) of this Agreement and Section 5.2 of the Guarantee and Collateral Agreement and (ii) an insurance broker’s or agent’s certificate certifying that the insurance coverage maintained by the Company and its Subsidiaries are endorsed or amended to include a “standard” or New York” lender’s loss payable endorsement and name the Administrative Agent as

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additional insured/loss payee, in each case in form and substance reasonably satisfactory to the Administrative Agent. Notwithstanding the foregoing, the certificates described above shall also provide that (i) the insurers thereunder shall waive all rights of subrogation against the Administrative Agent and the Lenders, any right of setoff or counterclaim and any other right to deduction, whether by attachment or otherwise; (ii) such insurance shall be primary without right of contribution of any other insurance carried by or on behalf of the Administrative Agent or the Lenders; and, (iii) if such insurance is cancelled for any reason whatsoever, including nonpayment of premium, or any changes are initiated by the Company or carrier which affect the interests of the Administrative Agent or the Lenders, such cancellation or change shall not be effective as to the Administrative Agent (on behalf of the Lenders) until thirty (30) days thereafter, except in the case of non-payment of premium, which shall not be effective as to the Administrative Agent or the Lenders until ten (10) days after such cancellation or change, in each case after receipt by the Administrative Agent (on behalf of the Lenders) of written notice sent by registered mail from such insurer.

(c)     No later than September 15, 2007 or such longer period reasonably satisfactory to the Administrative Agent, the Company shall provide to the Administrative Agent a five-year model reflecting updated accounting policies with respect to maintenance expenses.

5.14     Further Assurances.  Execute any and all further documents and instruments, and take all further actions, that the Administrative Agent may reasonably request, in order to create, grant, establish, preserve, protect and perfect the validity, perfection and priority of the Liens and security interests created or intended to be created by the Security Documents, to the extent required under this Agreement or the Security Documents, including, without limitation, amending, amending and restating, supplementing, assigning or otherwise modifying, renewing or replacing any Aircraft Mortgage or other agreements, instruments or documents relating thereto, in each case as may be reasonably requested by the Administrative Agent, in order to (i) create interests (including, but not limited to, International Interests, Assignments, Prospective International Interests, Prospective Assignments, Sales, Prospective Sales, Assignments of Associated Rights and Subordinations as each such term is defined in the Cape Town Convention) that may be registered and/or assigned under the Cape Town Convention, (ii) create, grant, establish, preserve, protect and perfect the Liens in favor of the Administrative Agent for the benefit of the Lenders to the fullest extent possible under the Cape Town Convention, including, where necessary, the subordination of other rights or interests and (iii) realize the benefit of the remedial provisions that are contemplated by the Cape Town Convention, subject to the provisions of the Aircraft Mortgages.

SECTION 6.  NEGATIVE COVENANTS

Except as modified on the Initial Maturity Date as set forth in Section 9.1, so long as any Loan or Loan Note remains outstanding and unpaid, or any other amount is due and owing to any Lender or the Administrative Agent hereunder or under any other Loan Document:

6.1     Limitation on Indebtedness.  (a) The Company shall not, and shall not permit any of its Subsidiaries to, Incur any Indebtedness (including Acquired Indebtedness), except:

(i)      Indebtedness represented by this Agreement, the Loan Notes, the Guarantees under the Guarantee and Collateral Agreement and other Guarantees by the Subsidiary Guarantors of Indebtedness Incurred in accordance with the provisions of this Agreement;

(ii)     Indebtedness of the Company owing to and held by any Subsidiary or Indebtedness of a Subsidiary owing to and held by the Company or any Subsidiary; provided,

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however, that (A) if the Company is the obligor on such Indebtedness and a Subsidiary Guarantor is not the obligee, such Indebtedness is expressly subordinated in right of payment from and after such time as the Loans shall become due and payable (whether at Stated Maturity, acceleration or otherwise) to the prior payment in full in cash of all obligations with respect to the Loans, (B) if a Subsidiary Guarantor is the obligor on such Indebtedness and the Company or a Subsidiary Guarantor is not the obligee, such Indebtedness constitutes a Guarantor Subordinated Obligation and (C)(1) any subsequent issuance or transfer of Capital Stock or any other event which results in any such Indebtedness being beneficially held by a Person other than the Company or a Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person other than the Company or a Subsidiary of the Company shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by the issuer thereof;

(iii)    Indebtedness represented by (x) the Take-Out Debt, (y) any Indebtedness (other than the Indebtedness described in clauses (i), (ii), (iv), (v), (vi), (vii), (viii), (ix), (x) and (xvii) of this Section 6.1(a)) outstanding on the Closing Date (including Aircraft Acquisition Debt outstanding on the Closing Date) and set forth on Schedule 6.1(a)(iii) and (z) any Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (iii);

(iv)    Indebtedness under Hedging Obligations that are Incurred in the ordinary course of business (and not for speculative purposes);

(v)     the Incurrence by the Company or any of its Subsidiaries of (A) Indebtedness represented by Capitalized Lease Obligations, mortgage financings, purchase money obligations or other payments, in each case Incurred to finance all or any part of the purchase price or cost of construction or improvement of aircraft, aircraft engines, spare parts, other aircraft-related equipment (including ground equipment), plant, equipment or property (including the cost of design, development, acquisition, construction, installation, improvement, transportation or integration but excluding Capital Stock or other Investments) acquired, constructed or improved in the ordinary course of business of the Company or such Subsidiary, and (B) Attributable Indebtedness, in an aggregate principal amount, including all Refinancing Indebtedness Incurred to refund, defease, renew, extend, refinance or replace any Indebtedness Incurred pursuant to this clause (v), not to exceed the sum of (1) any prepayment, repayment, redemption or other discharge or reduction of such Indebtedness or Attributable Indebtedness outstanding on the Closing Date or under Refinancing Indebtedness in respect thereof (other than with the proceeds of or in exchange for Refinancing Indebtedness) and (2) $10,000,000 at any time outstanding;

(vi)    Indebtedness Incurred in respect of workers’ compensation claims, health, disability or other employee benefits or insurance or self-insurance obligations, performance, surety and similar bonds and completion guarantees provided by the Company or a Subsidiary in the ordinary course of business;

(vii)   Indebtedness arising from agreements of the Company or a Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the disposition of any business, assets or Capital Stock of a Subsidiary in accordance with the terms of this Agreement, other than Guarantees by the Company or any Subsidiary of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary of the Company for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such

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Indebtedness shall at no time exceed the gross proceeds actually received by the Company and its Subsidiaries in connection with such disposition;

(viii)  Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within five Business Days of Incurrence;

(ix)    Indebtedness Incurred in satisfaction of “return condition” obligations of the Company or its Subsidiaries under aircraft leases in an aggregate principal amount not to exceed $5,000,000 at any time outstanding;

(x)     Indebtedness consisting of Indebtedness issued by the Company or any of its Subsidiaries to current or former officers, directors, consultants and employees thereof, their respective estates, spouses or former spouses, in each case to finance the purchase or redemption of Capital Stock of the Company or any direct or indirect parent company of the Company to the extent described in Section 6.2(b)(v)(E), in an aggregate amount not to exceed $1,000,000 at any one time outstanding;

(xi)    Indebtedness of any of the Company and the Subsidiary Guarantors to credit card processors in connection with credit card processing services incurred in the ordinary course of business of the Company and the Subsidiary Guarantors;

(xii)   Aircraft Acquisition Debt and Capitalized Lease Obligations and Attributable Indebtedness in respect of Specified Aircraft;

(xiii)  To the extent constituting Indebtedness, judgments, decrees, attachments or awards not constituting an Event of Default under Section 7(g);

(xiv)  Indebtedness constituting Permitted Investments under clause (xvi) of the definition thereof;

(xv)   cash management obligations and other Indebtedness in respect of netting services, overdraft protection and similar arrangements in each case in connection with deposit accounts incurred in the ordinary course of business in connection with cash management activities;

(xvi)     Guarantees by (x) the Company or Subsidiary Guarantors of Indebtedness Incurred by the Company or a Subsidiary Guarantor in accordance with this Agreement; provided that in the event such Indebtedness that is being Guaranteed is a Subordinated Obligation, then the related Guarantee shall be subordinated in right of payment to the Loans or the Subsidiary Guarantee, as the case may be, and (y) in accordance with this Agreement;

(xvii)    Indebtedness in respect of letters of credit issued in the ordinary course of business, which shall include Indebtedness in respect of letters of credit issued pursuant to the LC Credit Facility or the Wachovia Facility, in an aggregate amount of up to $30,000,000 outstanding at any time, such Indebtedness being secured only by deposits described in clause (xxiv) of the definition of Permitted Liens; and

(xviii) other Indebtedness which (x) is unsecured or (y) if secured, is secured only by nonconsensual Permitted Liens imposed by operation of law or, if in the form of letters of

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credit, secured only by deposits described in clause (xxiv) of the definition of Permitted Liens, in an aggregate principal amount not exceeding $25,000,000 at any time outstanding.

(b)     Notwithstanding the foregoing, the Company shall not Incur any Indebtedness under Section 6.1(a) if the proceeds thereof are used, directly or indirectly, to refinance any Subordinated Obligations unless such Indebtedness shall be subordinated to the Loans to at least the same extent as such Subordinated Obligations. No Subsidiary Guarantor shall Incur any Indebtedness under Section 6.1(a) if the proceeds thereof are used, directly or indirectly, to refinance any Subordinated Obligations of such Subsidiary Guarantor unless such Indebtedness shall be subordinated to the obligations of such Subsidiary Guarantor under its Guarantees under the Guarantee and Collateral Agreement to at least the same extent as such Subordinated Indebtedness.  No Subsidiary (other than a Subsidiary Guarantor) may Incur Indebtedness if the proceeds are used to refinance Indebtedness of the Company or a Subsidiary Guarantor.

(c)     For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this covenant:

(i)      in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in Section 6.1, the Company, in its sole discretion, will classify such item of Indebtedness on the date of Incurrence and may later classify such item of Indebtedness in any manner that complies with this covenant and only be required to include the amount and type of such Indebtedness in one of such clauses;

(ii)     guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included;

(iii)    the principal amount of any Disqualified Stock of the Company or a Subsidiary, or Preferred Stock of a Subsidiary that is not a Subsidiary Guarantor, will be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof;

(iv)    Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness; and

(v)     the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with GAAP.

Accrual of interest, accrual of dividends, the accretion of accreted value, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value of the Indebtedness in the case of any Indebtedness issued with original issue discount and (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.  For purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term

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Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-dominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-dominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced.  Notwithstanding any other provision of this Section 6.1, the maximum amount of Indebtedness that the Company may Incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

6.2     Limitation on Restricted Payments.  (a) The Company shall not, and shall not permit any Subsidiary, directly or indirectly, to (i) declare or pay any dividend or make any distribution (whether made in cash, securities or other property) on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company or any of its Subsidiaries) except dividends or distributions payable in Capital Stock of the Company (other than Disqualified Stock) or in options, warrants or other rights to purchase such Capital Stock of the Company and except dividends or distributions payable to the Company, another Subsidiary or to each other owner of Capital Stock of such Subsidiary based on their relative ownership interests of the relevant class of Capital Stock, (ii) purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company or any direct or indirect parent of the Company held by Persons other than the Company or a Subsidiary (other than in exchange for Capital Stock of the Company (other than Disqualified Stock)); (iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations or Guarantor Subordinated Obligations (other than (x) Indebtedness of the Company owing to and held by any Subsidiary Guarantor or Indebtedness of a Subsidiary Guarantor owing to and held by the Company or any other Subsidiary Guarantor permitted under Section 6.1(a)(iii) or (y) the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations or Guarantor Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement), or (iv) make any Restricted Investment in any Person (any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Restricted Investment referred to in clauses (i) through (iv) being herein referred to as a “Restricted Payment”).

(b)     The provisions of Section 6.2(a) shall not prohibit:

(i)      any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Capital Stock, Disqualified Stock or Subordinated Obligations of the Company or Guarantor Subordinated Obligations of any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company or Holdings (to the extent that Holdings contributes the proceeds of such substantially concurrent sale to the Company as common equity capital) (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Company or any Subsidiary unless such loans have been repaid with cash on or prior to the date of determination);

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(ii)     any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations of the Company or Guarantor Subordinated Obligations of any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Subordinated Obligations of the Company or any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Guarantor Subordinated Obligations made by exchange for or out of the proceeds of the substantially concurrent sale of Guarantor Subordinated Obligations that, in each case, is permitted to be Incurred pursuant to Section 6.1 and that in each case constitutes Refinancing Indebtedness;

(iii)    any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Stock of the Company or a Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Disqualified Stock of the Company or such Subsidiary, as the case may be, that, in each case, is permitted to be Incurred pursuant to Section 6.1 and that in each case constitutes Refinancing Indebtedness;

(iv)    repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible securities if such Capital Stock represents a portion of the exercise price thereof;

(v)     cash dividends, distributions, loans or other transfers directly or indirectly to Holdings in amounts equal to:

(A)     the amounts required for Holdings and IntermediateCo to pay any Federal, state or local income taxes to the extent that such income taxes are directly attributable to the income of the Company and its Subsidiaries;

(B)     the amounts required for Holdings and IntermediateCo to pay franchise taxes and other fees required to maintain their respective legal existence;

(C)     an amount to permit Holdings and IntermediateCo to pay their respective corporate overhead expenses incurred in the ordinary course of business, and to pay salaries or other compensation of employees, directors and consultants who perform services for Holdings, IntermediateCo and the Company;

(D)     fees and expenses related to any unsuccessful equity or debt offering or other financing transaction of, or otherwise payable in connection with the Transactions and in accordance with Section 6.2(b)(vi) below by, such parent entity; and

(E)      the amounts required by Holdings to permit Holdings to pay for the purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock of the Company or any direct or indirect parent of the Company held by any existing, former or future employees, management, consultants or directors of the Company or Holdings or any Subsidiary of the Company or their assigns, estates or heirs, (or loans or cash dividends distributed to Holdings for the purpose of consummating such purchase, redemption or other acquisition, cancellation or retirement for value), in each case in connection with the repurchase provisions under employee, director or consultant stock option or stock purchase agreements or any other employee or director benefit plan or agreements to compensate management employees; provided that such redemptions or repurchases pursuant to this clause will not exceed $5,000,000 in the aggregate during any calendar year and $10,000,000 in the aggregate for all such redemptions and repurchases, plus to the extent not previously applied the amount of any capital

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contributions to the Company as a result of sales of Capital Stock of the Company or any direct or indirect parent of the Company to such persons, provided, further, that cancellation of Indebtedness owing to the Company or any Subsidiary from members of management of the Company, any of the Company’s direct or indirect parent companies or any of the Company’s Subsidiaries in connection with a repurchase of Capital Stock of the Company or any of its direct or indirect parent companies will not be deemed to constitute a Restricted Payment for purposes of this Section 6.2 or any other provision of this Agreement; and

(F)      the amounts required by Holdings to permit Holdings to make all payments required pursuant to the terms of any Take-Out Debt issued by Holdings.

(vi)    any payments made in connection with the Transactions pursuant to the Merger Agreement and any other agreements or documents related to the Transactions and set forth on Schedule 6.2(b)(vi) in effect on the Closing Date (without giving effect to subsequent amendments, waivers or other modifications to such agreements or documents).

The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Company or such Subsidiary, as the case may be, pursuant to such Restricted Payment.

6.3     Limitation on Restrictions on Distributions from Subsidiaries.  The Company shall not, and shall not permit any of its Subsidiaries to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Subsidiary to (i) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Company or any Subsidiary (it being understood that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock shall not be deemed a restriction on the ability to make distributions on Capital Stock); (ii) make any loans or advances to the Company or any Subsidiary (it being understood that the subordination of loans or advances made to the Company or any Subsidiary to other Indebtedness Incurred by the Company or any Subsidiary shall not be deemed a restriction on the ability to make loans or advances); or (iii) transfer any of its property or assets to the Company or any Subsidiary (it being understood that such transfers shall not include any type of transfer described in clause (i) or (ii) above); except:

(a)     any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Closing Date and identified on Schedule 6.3(a), including, without limitation, this Agreement and the Security Documents;

(b)     any encumbrance or restriction with respect to a Subsidiary pursuant to an agreement effecting a refunding, replacement or refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (a) above or this clause (b) or contained in any amendment, restatement, modification, renewal, supplement, refunding, replacement or refinancing of an agreement referred to in clause (a) above or this clause (c); provided, however, that the encumbrances and restrictions with respect to such Subsidiary contained in any such agreement are no less favorable in any material respect, taken as a whole, to the Lenders than the encumbrances and restrictions contained in such agreements referred to in clause (a) above on the Closing Date or the date such Subsidiary became a Subsidiary or was merged into a Subsidiary, whichever is applicable;

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(c)     in the case of clause (iii) of the lead-in paragraph of this Section 6.3, any encumbrance or restriction:

(x)       that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract, or the assignment or transfer of any such lease, license or other contract;

(y)      contained in mortgages, pledges or other security agreements permitted under this Agreement securing Indebtedness of the Company or a Subsidiary to the extent such encumbrances or restrictions restrict the transfer of the property subject to such mortgages, pledges or other security agreements; or

(z)       pursuant to customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Company or any Subsidiary;

(d)     (i) purchase money obligations for property acquired in the ordinary course of business and (ii) Capitalized Lease Obligations permitted under this Agreement, in each case, that impose encumbrances or restrictions of the nature described in clause (iii) of the lead-in paragraph of this Section 6.3 on the property so acquired;

(e)     any restriction with respect to a Subsidiary (or any of its property or assets) imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of the Capital Stock or assets of such Subsidiary (or the property or assets that are subject to such restriction) pending the closing of such sale or disposition;

(f)      net worth provisions in leases and other agreements entered into by the Company or any Subsidiary in the ordinary course of business;

(g)     encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation or order;

(h)     encumbrances or restrictions contained in indentures or debt instruments or other debt arrangements Incurred or Preferred Stock issued by Subsidiary Guarantors in accordance with Section 6.1 that are not more restrictive, taken as a whole, than those applicable to the Company in this Agreement on the Closing Date (which results in encumbrances or restrictions comparable to those applicable to the Company at a Subsidiary level);

(i)      restrictions on cash or other deposits or net worth imposed by customers under contracts entered into the ordinary course of business;

(j)      customary provisions in joint venture agreements and other similar agreements relating solely to such joint venture; and

(k)     customary provisions contained in leases and other agreements, in each case entered into in the ordinary course of business.

6.4     Limitation on Sales of Assets and Subsidiary Stock. (a) The Company shall not, and shall not permit any of its Subsidiaries to, make any Asset Disposition unless:  (i) the Company or such Subsidiary, as the case may be, receives consideration at least equal to the fair market value (such fair market value to be determined on the date of contractually agreeing to such Asset Disposition), as

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determined in good faith by the Board of Directors (including as to the value of all non-cash consideration), of the property or asset subject to such Asset Disposition; (ii) prior to the Initial Maturity Date, 100%, and from and after the Initial Maturity Date, at least 80% of the consideration from such Asset Disposition received by the Company or such Subsidiary, as the case may be, is in the form of cash or Cash Equivalents and 100% of the Net Available Cash therefrom is deposited directly by the Company (or the Subsidiary that owned the sold assets, as the case may be) into a segregated Collateral Account, under the sole control of the Administrative Agent, that includes only proceeds from Asset Dispositions and interest earned thereon (“Collateral Account”) and is free from all other Liens, all on terms and pursuant to arrangements reasonably satisfactory to the Administrative Agent in its reasonable determination (which may include, at the Administrative Agent’s reasonable request, customary officer’s certificates and opinions of counsel and shall include release provisions requiring the Administrative Agent to release deposits in the Collateral Account as requested to permit the Company or its Subsidiaries to apply such Net Available Cash in the manner described in the immediately succeeding paragraph below, unless the Administrative Agent has received written notice that an Event of Default has occurred and is continuing); and (iii) the remaining consideration from such Asset Disposition that is not in the form of cash or Cash Equivalents is thereupon with its acquisition pledged as Collateral to secure the Loans and the Guarantees under the Guarantee and Collateral Agreement on a first-priority basis.

(b)     An amount equal to 100% of the Net Available Cash deposited into the Collateral Account from any Asset Dispositions may be withdrawn by the Company (or such Subsidiary, as the case may be) to be invested by the Company or such Subsidiary in Additional Assets constituting Collateral to be owned by the Company or a Subsidiary Guarantor within 365 days of the date of such Asset Disposition and the Administrative Agent shall promptly be granted a perfected first-priority security interest on all such Additional Assets as Collateral under the Security Documents to secure the Loans and the Guarantees under the Guarantee and Collateral Agreement on terms and pursuant to arrangements reasonably satisfactory to the Administrative Agent in its reasonable determination (which may include, at the Administrative Agent’s reasonable request, customary officer’s certificates and legal opinions.

(c)     In addition, upon receipt of any Net Available Cash from a Casualty Event, the Company (or the Subsidiary that owned those assets, as the case may be) shall treat such Net Available Cash as if it were proceeds of an Asset Disposition and apply such proceeds in accordance with this Section 6.4(a).

(d)     If on or prior to the Initial Maturity Date, the Company shall determine that it will not or does not intend to use any amount then deposited in the Collateral Account to invest, or to have a Subsidiary invest, in Additional Assets, the Company shall apply such amount toward the prepayment of the Loans in accordance with Section 2.5.

6.5     Limitation on Liens.  The Company shall not, and shall not permit any Subsidiary to, directly or indirectly, create, Incur or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock of Subsidiaries), whether owned on the Closing Date or acquired after that date, which Lien is securing any Indebtedness; provided that the Company and its Subsidiaries may incur Liens (in addition to Permitted Liens) securing Indebtedness on property or assets that are not Collateral if the Loans and the Guarantees under the Guarantee and Collateral Agreement are equally and ratably secured by a Lien on such property or assets or are secured by a Lien on such property or assets that is senior in right of priority to such Liens.

6.6     Limitation on Affiliate Transactions.  (a) The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an “Affiliate Transaction”) unless: (i) the terms of such Affiliate Transaction are no less

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favorable to the Company or such Subsidiary, as the case may be, than those that could be obtained in a comparable transaction at the time of such transaction in arm’s-length dealings with a Person who is not such an Affiliate; (ii) in the event such Affiliate Transaction involves an aggregate consideration in excess of $20,000,000, the terms of such transaction have been approved by a majority of the members of the Board of Directors of the Company and by a majority of the members of such Board having no personal stake in such transaction, if any (and such majority or majorities, as the case may be, determines that such Affiliate Transaction satisfies the criteria in clause (i) above); and (iii) in the event such Affiliate Transaction involves an aggregate consideration in excess of $30,000,000 prior to the Initial Maturity Date and $40,000,000 thereafter, the Company has received a written opinion from an independent investment banking, accounting or appraisal firm of nationally recognized standing that such Affiliate Transaction is not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm’s-length basis from a Person that is not an Affiliate.

(b)      The foregoing provisions of Section 6.6(a) shall not apply to:

(i)      transactions between or among the Company and its Subsidiaries;

(ii)     any Permitted Investment and any Restricted Payment permitted to be made pursuant to Section 6.2;

(iii)    any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements and other compensation arrangements, options to purchase Capital Stock of the Company, restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee or directors benefits plans and/or indemnity provided on behalf of officers and employees;

(iv)    payments, advances or loans (or cancellation of loans) to employees, officers or directors of the Company, any of its direct or indirect parent companies or any Subsidiary of the Company in the ordinary course of business consistent with past practices in an aggregate amount not in excess of $1,000,000 with respect to all loans or advances made since the Closing Date (without giving effect to the forgiveness of any such loan);

(v)     Guarantees issued by the Company or a Subsidiary for the benefit of the Company or a Subsidiary, as the case may be, in accordance with Section 6.1;

(vi)    the payment of customary compensation, benefits, and reimbursement of reasonable out-of-pocket expenses to, and indemnities provided for the benefit of, officers, directors, employees or consultants of the Company, any of its direct or indirect parent companies or any of its Subsidiaries;

(vii)   the existence of, and the performance of obligations of the Company or any of its Subsidiaries under the terms of any agreement to which the Company or any of its Subsidiaries is a party as of or on the Closing Date and identified on Schedule 6.6(b), including, without limitation, the Merger Documents, as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided, however, that any future amendment, modification, supplement, extension or renewal entered into after the Closing Date will be permitted to the extent that its terms taken as a whole are not more disadvantageous to the Lenders than the terms of the relevant agreements in effect on the Closing Date;

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(viii)  any issuance or sale of Capital Stock (other than Disqualified Stock) to Affiliates of the Company and the granting of registration and other customary rights in connection therewith;

(ix)    any agreement between any Person and an Affiliate of such Person existing at the time such Person is acquired by or merged into the Company or a Subsidiary; provided that such agreement was not entered into in contemplation of such acquisition or merger, or any amendment thereto (so long as any such amendment is not disadvantageous to the Lenders in the good faith judgment of the Board of Directors of the Company when taken as a whole as compared to the applicable agreement as in effect on the date of such acquisition or merger); and

(x)     transactions with customers, clients, suppliers, joint venture partners or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Agreement, in each case which are fair to the Company and its Subsidiaries, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as would reasonably have been obtained at such time from an unaffiliated party.

6.7     Change of Control.  Upon a Change of Control, the Company shall immediately prepay the Loans and pay accrued and unpaid interest thereon, if any, to the date of prepayment.

6.8     Limitation on Sale of Voting Stock of Subsidiaries.  The Company will not, and will not permit any Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose of any Voting Stock of any Subsidiary or, with respect to a Subsidiary, to issue any of its Voting Stock (other than, if necessary, shares of its Voting Stock constituting directors’ qualifying shares) to any Person except (i) to the Company or a Subsidiary; or (ii) in compliance with Section 6.4 and immediately after giving effect to such issuance or sale, such Subsidiary continues to be a Subsidiary. Notwithstanding the foregoing, the Company may sell all the Voting Stock of a Subsidiary as long as the Company complies with the terms of Section 6.4.

6.9     Merger, Consolidation, etc.  Neither the Company nor any of its Subsidiaries may merge with or consolidate with any other Person, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of its assets or liquidate, wind up or dissolve itself except that, (i) any Subsidiary may merge into or consolidate with the Company in a transaction in which the Company is the surviving corporation or sell or transfer all or substantially all of its assets to the Company (upon voluntary liquidation or otherwise), (ii) any Subsidiary may merge into or consolidate with or sell all or substantially all of its assets to, any other Subsidiary in a transaction in which the surviving entity or transferee is a Subsidiary and no Person other than the Company or a Subsidiary receives any consideration, (iii) any Subsidiary may merge with any other Person in order to effect a Permitted Investment; provided that the continuing or surviving Person shall be a Subsidiary; (iv) the Company and the Subsidiaries may consummate the Merger and the Transactions; and (v) a merger, dissolution, liquidation, consolidation or disposition, the purpose of which is to effect a disposition in compliance with Section 6.4 shall be permitted.

For purposes of this Section 6.9, the sale, lease, conveyance, assignment, transfer, or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

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6.10   Limitation on Lines of Business.  Company shall not, and shall not permit any Subsidiary to, engage in any business other than a Related Business.

6.11   Limitation on Sale/Leaseback and Aircraft Lease Transactions.  Company shall not, and shall not permit any Subsidiary to, enter into any Sale/Leaseback Transaction or Aircraft Lease Transaction unless: (i) in the case of a Sale/Leaseback Transaction, the Company or such Subsidiary, as the case may be, receives consideration at the time of such Sale/Leaseback Transaction at least equal to the fair market value (as evidenced by a resolution of the Board of Directors of the Company) of the property subject to such transaction; (ii) the Company or such Subsidiary could have Incurred Indebtedness in an amount equal to the Attributable Indebtedness in respect of such Sale/Leaseback Transaction or Aircraft Lease Transaction pursuant to Section 6.1 (it being understood that a Sale/Leaseback Transaction may constitute Aircraft Acquisition Debt); and (iii) in the case of a Sale/Leaseback Transaction, such Sale/Leaseback Transaction is treated as an Asset Disposition and all of the conditions of this Agreement described under Section 6.4 (including the provisions concerning the application of Net Available Cash within the time periods set forth therein) are satisfied with respect to such Sale/Leaseback Transaction, treating all of the consideration received in such Sale/Leaseback Transaction as Net Available Cash for purposes of such Section 6.4.

6.12   Payments for Consent.  Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Lender for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Agreement or the Loans unless such consideration is offered to be paid and is paid to all Lenders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

SECTION 7. EVENTS OF DEFAULT

Except as modified on the Initial Maturity Date as set forth in Section 9.1, if any of the following events shall occur and be continuing:

(a)   default in the payment of any principal of any Loan when due in accordance with the terms hereof, or the failure to redeem, prepay or purchase Loans when required pursuant to this Agreement or any Note; or the failure to pay any interest on any Loan, or any other amount payable hereunder, within five days after any such interest or other amount becomes due in accordance with the terms hereof; or

(b)   any representation or warranty made or deemed made by the Company or any Guarantor herein or in any other Loan Document or which is contained in any certificate, document, or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or

(c)   the Company shall default in the observance or performance of any agreement contained in Section 5.9(a), 5.9(b) or 5.10 or Section 6; or

(d)   the Company or any Guarantor shall default in the observance or performance of any other agreement contained in this Agreement or the Guarantee and  Collateral Agreement (other than as provided in paragraphs (a) through (c) of this Section 7), and such default shall continue unremedied for a period of 30 days after notice to the Company from the Administrative Agent or the Required Lenders; or

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(e)   default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Subsidiaries (or the payment of which is guaranteed by the Company or any of its Subsidiaries), other than Indebtedness owed to the Company or a Subsidiary, whether such Indebtedness or guarantee now exists, or is created after the date of this Agreement, which default (i) is caused by a failure to pay principal of, or premium, if any, or interest on, such Indebtedness prior to the expiration of the grace period provided in such Indebtedness unless being contested in good faith by appropriate proceedings (“Payment Default”) or (ii) has resulted in the acceleration of such Indebtedness prior to its maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10,000,000 or more; or

(f)   (i) the Company, any Significant Subsidiary or group of Subsidiaries that, taken together (as of the latest audited financial statements for the Company and its Subsidiaries), would constitute a Significant Subsidiary, shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it or them, or seeking to adjudicate it or them a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or them or its or their debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or them or for all or any substantial part of its or their assets, or the Company, any Significant Subsidiary or group of Subsidiaries that, taken together (as of the latest audited financial statements for the Company and its Subsidiaries), would constitute a Significant Subsidiary, shall make a general assignment for the benefit of its or their creditors; or (ii) there shall be commenced against the Company, any Significant Subsidiary or group of Subsidiaries that, taken together (as of the latest audited financial statements for the Company and its Subsidiaries), would constitute a Significant Subsidiary, any case, proceeding or other action of a nature referred to in clause (i) above which(A) results in the entry of an order for relief or any such adjudication or appointment or(B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Company, any Significant Subsidiary or group of Subsidiaries that, taken together (as of the latest audited financial statements for the Company and its Subsidiaries), would constitute a Significant Subsidiary, any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its or their assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Company, any Significant Subsidiary or group of Subsidiaries that, taken together (as of the latest audited financial statements for the Company and its Subsidiaries), would constitute a Significant Subsidiary, shall take any corporate action in furtherance of, or indicating its or their consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Company, any Significant Subsidiary or group of Subsidiaries that, taken together (as of the latest audited financial statements for the Company and its Subsidiaries), would constitute a Significant Subsidiary, shall be generally unable to, or shall admit in writing its or their inability generally to, pay its or their debts as they become due; or

(g)   one or more judgments or decrees not fully paid or covered by insurance or indemnity agreements shall be entered against the Company, any Significant Subsidiary or group of Subsidiaries that, taken together (as of the latest audited financial statements for the Company and its Subsidiaries), would constitute a Significant Subsidiary, involving in the aggregate at any

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time a liability (net of any insurance or indemnity payments actually received in respect thereof prior to or within 60 days from the entry thereof, or to be received in respect thereof in the event any appeal thereof shall be unsuccessful) of $10,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or

(h)   the Guarantee under the Guarantee and Collateral Agreement of any Significant Subsidiary or group of Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Subsidiaries), would constitute a Significant Subsidiary, or any Security Document, ceases to be in full force and effect (except as contemplated by the terms of this Agreement) or is declared null and void in a judicial proceeding or any of the Company or any Subsidiary Guarantor denies or disaffirms its obligations under this Agreement or any other Loan Document to which it is a party; or

(i)   with respect to any Collateral having a fair market value in excess of $10,000,000, individually or in the aggregate, (A) the security interest under the Security Documents, at any time, ceases to be in full force and effect for any reason other than in accordance with their terms and the terms of this Agreement and other than the satisfaction in full of all obligations secured thereby (other than as a result of any action or inaction on the part of the Administrative Agent), (B) the security interest created under the Guarantee and Collateral is declared invalid or unenforceable, provided that in the event that the security interest under any Real Estate Mortgage is declared invalid or unenforceable, it shall not be an Event of Default if a claim is successfully made under the title insurance policy, if any, applicable to such Real Estate Mortgage, and the Administrative Agent receives the proceeds therefrom in an amount equal to the lesser of the then fair market value of the property then subject to such Real Estate Mortgage or the maximum aggregate amount, if any, secured by such Real Estate Mortgage or (C) the Company or any Subsidiary Guarantor asserts, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable; or

(j)   (i) any Single Employer Plan shall suffer an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA) or, after the effectiveness of the Pension Protection Act of 2006, any Single Employer Plan shall fail to satisfy the minimum funding standard required for any plan year or part thereof or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 of the Code; (ii) any Plan is or shall have been terminated or is the subject of termination proceedings under Title IV of ERISA, or, after the effectiveness of the Pension Protection Act of 2006, any Multiemployer Plan is in endangered or critical status within the meaning of Section 305 of ERISA (including the giving of written notice thereof); (iii) a trustee shall be appointed by a United States district court to administer any Single Employer Plan; (iv) the PBGC shall institute proceedings to terminate any Single Employer Plan; (v) the Company or any Subsidiary or any Commonly Controlled Entity shall have been notified by the sponsor of a Multiemployer Plan that it has incurred or will be assessed liability to such Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan (as such terms are defined in Part I of Subtitle E of Title IV of ERISA, hereinafter “Withdrawal Liability”) and such entity does not have reasonable grounds for contesting such Withdrawal Liability or is not contesting such Withdrawal Liability in a timely and appropriate manner; or (v) the Company, any Subsidiary or any Commonly Controlled Entity shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Single Employer Plan; and in each case in clauses (i) through (v) above, such event or condition, together with all such events or conditions, if any could reasonably be expected to have a Material Adverse Effect; or

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(k)   Holdings or IntermediateCo shall (i) conduct, transact or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or operations other than those incidental to (w) its ownership of the Capital Stock of IntermediateCo or the Company, as the case may be, and the management of the business of, and the provision of services to, IntermediateCo or the Company, as the case may be, and its Subsidiaries, (x) maintenance of its legal existence and compliance with applicable Laws, (y) the performance of the Loan Documents, documents in respect of Take-Out Debt, and documents governing the terms of its Capital Stock or entered into with the holders of its Capital Stock with respect thereto and (z) any offerings of its Capital Stock, (ii) incur, create, assume or suffer to exist any Indebtedness or other financial obligations, except (1) nonconsensual obligations and immaterial obligations, (2) obligations pursuant to the Loan Documents to which it is a party, (3) obligations in connection with the Take-Out Debt, (4) obligations with respect to its Capital Stock and, (5) obligations related to its existence and permitted business and activities specified in this clause (k), or (iii) own, lease, manage or otherwise operate any properties or assets other than the ownership of shares of Capital Stock of, and management of the business of, and the provision of services to, IntermediateCo or the Company, as the case may be, cash and cash equivalents and de minimis amounts of other assets incidental to the conduct of its business,

then, and in any such event, (A) if such event is an Event of Default specified in clause (i), (ii) or (iii) of paragraph (f) of this Section with respect to the Company, the Loans (with accrued interest thereon) and all other amounts owing under this Agreement shall immediately become due and payable, and (B) if such event is any other Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Company declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement to be due and payable forthwith, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived.

SECTION 8. THE AGENTS

8.1   Appointment.  Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

8.2   Delegation of Duties.  The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

8.3   Exculpatory Provisions.  Neither any Agent nor any of its officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan

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Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any Loan Party or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of any Loan Party a party thereto to perform its obligations hereunder or thereunder. The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party.

8.4   Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Company), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Loans as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans.

8.5   Notice of Default.  The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders.  The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

8.6   Non-Reliance on Agents and Other Lenders.  Each Lender expressly acknowledges that neither the Agents nor any of their respective officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by any Agent hereinafter taken, including any review of the affairs of any Loan Party or any affiliate of any Loan Party, shall be deemed to constitute any representation or warranty by such Agent to any Lender.  Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and

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creditworthiness of the Loan Parties and their affiliates and made its own decision to make its Loans hereunder and enter into this Agreement.  Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates.  Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of any Loan Party which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, advisors, attorneys-in-fact or affiliates.

8.7   Indemnification.  The Lenders agree to indemnify each Agent and its officers, directors, employees, affiliates, agents, advisors and controlling persons (each, an “Agent Indemnitee”) (to the extent not reimbursed by the Company and without limiting the obligation of the Company to do so), ratably according to their respective Commitment Percentages in effect on the date on which indemnification is sought under this Section 8.7 (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with their Commitment Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent Indemnitee in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent Indemnitee under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements which are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent Indemnitee’s gross negligence or willful misconduct.  The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.

8.8   Agent in Its Individual Capacity.  Each Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Loan Party as though such Agent were not an Agent hereunder.  With respect to the Loans made or renewed by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.

8.9   Successor Administrative Agent.  The Administrative Agent may resign as Administrative Agent upon thirty (30) days’ notice to the Lenders and the Company. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default under Section 7(a) or Section 7(f) with respect to the Company shall have occurred and be continuing) be subject to the approval of the Company (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to

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this Agreement or any holders of the Loans. If no successor agent has accepted appointment as Administrative Agent by the date that is 30 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 9 and of Section 9.5 shall continue to inure to its benefit.

8.10   Documentation Agent.  The Documentation Agent shall not have any duties or responsibilities hereunder in its capacity as such.

SECTION 9. MISCELLANEOUS

9.1   Amendments and Waivers.  (a) Neither this Agreement nor any other Loan Document, nor any terms hereof or thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section 9.1. The Required Lenders and each Loan Party party to the relevant Loan Document may, or, with the written consent of the Required Lenders, the Administrative Agent and each Loan Party party to the relevant Loan Document may, from time to time,(a) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement, or modification shall (i) (A) reduce the amount or extend the scheduled date of maturity of any Loan or of any mandatory prepayment thereof, (B) reduce the stated rate of any interest thereon or fee payable hereunder or extend the scheduled date of any payment thereof or increase the aggregate amount or extend the expiration date of any Lender’s Commitment or (C) restrict the right of each Lender to exchange Term Loans, or Initial Loans on the Initial Maturity Date, for Exchange Notes or amend the rate of such exchange, in each case without the written consent of each Lender directly affected thereby, (ii) (A) amend, modify, or waive any provision of this Section 9.1, (B) reduce the percentage specified in the definition of Required Lenders, (C) consent to the assignment or transfer by the Company of any of its rights and obligations under the Loan Documents except as expressly permitted hereby, (D) amend, modify or waive any provision in the Exchange Notes that requires (or would, if any Exchange Notes were outstanding, require) the approval of all holders of Exchange Notes, in each case without the consent of all of the Lenders or (E) release all or substantially all of the Collateral or release all or substantially all of the Guarantors from their obligations under the Guarantee and Collateral Agreement, other than in accordance with the terms thereof, in each case, without the consent of all Lenders, or (iii) amend, modify or waive any provision of Section 9 without the written consent of the then Administrative Agent. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Company and the other Loan Parties, the Lenders, the Administrative Agent, and all future holders of the Loans.  In the case of any waiver, the Company and the other Loan Parties, the Lenders and the Administrative Agent shall be restored to their former positions and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

(b)   In connection with any proposed amendment, modification, waiver or termination (a “Proposed Change”) requiring the consent of all Lenders or all affected Lenders, if the consent of the Required Lenders to such Proposed Change is obtained, but the consent to such Proposed Change of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as

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described in paragraph (a) of this Section being referred to as a “Non-Consenting Lender”), then, so long as the Lender that is acting as Administrative Agent is not a Non-Consenting Lender, the Company may, at its sole expense and effort, upon notice to such Non-Consenting Lender and the Administrative Agent, require such Non-Consenting Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.6), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that (a) the Company shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (b) such Non-Consenting Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company (in the case of all other amounts) and (c) the Company or such assignee shall have paid to the Administrative Agent the processing and recordation fee specified in Section 9.6.

(c) Notwithstanding anything in clause (a) above or in this Agreement and the other Loan Documents to the contrary, without notice to or the consent of any Lender, the Administrative Agent or the Company, immediately following the Initial Maturity Date:

(i) the affirmative covenants set forth in Section5 (other than (A) Section 5.10 (Exchange Notes) and (B) for so long as any Loans are outstanding, Section 5.1 (Financial Statements), Section 5.2 (Certificates; Other Information), Section 5.12 (Additional Collateral) and Section 5.14 (Further Assurances)) shall be deemed deleted;

(ii) the negative covenants set forth in Section6 shall be deemed to have been automatically replaced by the corresponding covenants set forth in the Description of Exchange Notes; provided that the covenant corresponding to Section 6.7 (Change of Control) shall continue to apply with respect to outstanding Term Loans with such appropriate changes to conform to the “Change of Control” provision of the Indenture, and

(iii) the Events of Default and remedies set forth in Section7 shall be deemed to have been automatically replaced by the defaults and remedies described in the Description of Exchange Notes under the heading “Events of Default,”

each as applicable, which replacement provisions, along with the relevant defined terms used therein for the purposes thereof, will thereupon be deemed incorporated by reference herein, with references therein to the “Issuer” and the “Trustee” being deemed to be references to the “Company” and the “Administrative Agent,” respectively, and with such other modifications to this Agreement necessary to give effect to the foregoing; in furtherance of the foregoing, the Administrative Agent will, at the request of the Company, enter into such technical amendments to the Loan Documents reasonably necessary to effect the foregoing and to secure the Exchange Notes with the Collateral ratably with the Loans; provided that following the Initial Maturity Date, (i) the proceeds of any mandatory prepayment event set forth in Section 2.5 shall continue to be applied in accordance with Section 2.5, and (ii) the Collateral securing the Exchange Notes shall be subject to the limitations described in Exhibit B with respect to the exclusion from Collateral of Capital Stock of a Subsidiary to the extent inclusion would require Holdings or the Company to file with the SEC separate financial statements of such Subsidiary.

9.2   Notices.  All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of the Company and the Administrative Agent, and as set forth in an administrative

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questionnaire delivered to the Administrative Agent in the case of the Lenders, or to such other address as may be hereafter notified by the respective parties hereto:

Company:New ATA Acquisition Inc.
7337 West Washington Street
Indianapolis, IN 46231
Attention:  General Counsel
Telecopy:   (317) 282-7091
Telephone: (317) 282-7006

Administrative Agent:JPMorgan Chase Bank, N.A.
1111 Fannin Street, Floor 10
Houston, TX 77002-6925
Attention:   Daniel Blazei
Telecopy:   (713) 750-2938
Telephone: (713) 750-7924

provided that any notice, request or demand to or upon the Administrative Agent or the Lenders shall not be effective until received.

Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2 unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

9.3   No Waiver; Cumulative Remedies.  No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

9.4   Survival of Representations and Warranties.  All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder.

9.5   Payment of Expenses and Taxes.  The Company agrees (a) to pay or reimburse the Administrative Agent for all its reasonable and documented out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements of counsel to the Administrative Agent and filing and recording fees and expenses, with statements with respect to the foregoing to be submitted to the Company prior to the Closing Date (in the case of amounts to be paid on the Closing Date) and from time to time thereafter on a quarterly basis or such other periodic basis as the Administrative Agent shall deem appropriate; provided that the Company shall not be liable for any costs

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and expenses described in this clause (a) in the event that the funding of the Initial Loans does not occur on the Closing Date, (b) to pay or reimburse each Lender and the Administrative Agent for all its reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents, including the fees and disbursements of counsel to each Lender and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each Lender and the Administrative Agent harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, that may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender and the Administrative Agent and their respective officers, directors, employees, affiliates, agents, advisors and controlling persons (each, an “Indemnitee”) harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits and related reasonable out-of-pocket costs, expenses or disbursements of any kind or nature whatsoever arising out of this Agreement, the other Loan Documents and any such other documents, including any of the foregoing relating to the use of proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental Law applicable to the operations of any Group Member or any of the Properties and the reasonable fees and expenses of legal counsel in connection with claims, actions or proceedings by any Indemnitee against any Loan Party under any Loan Document (all the foregoing in this clause (d), collectively, the “Indemnified Liabilities”), provided, that the Company shall have no obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee.  Without limiting the foregoing, and to the extent permitted by applicable law, the Company agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives and agrees to cause its Subsidiaries to waive, rights for contribution or any other rights of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee.  All amounts due under this Section 9.5 shall be payable not later than 10 days after written demand therefor.  Statements payable by the Company pursuant to this Section 9.5 shall be submitted to the General Counsel (Telephone No. (317) 282-7006) (Telecopy No. (317) 282-7091), at the address of the Company set forth in Section 9.2, or to such other Person or address as may be hereafter designated by the Company in a written notice to the Administrative Agent. The agreements in this Section 9.5 shall survive repayment of the Loans and all other amounts payable hereunder.

9.6   Successors and Assigns; Participations and Assignments.  (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Company may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Company without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.

(b)   (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (each, an “Assignee”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Loans at the time owing to it) with the prior written consent of the Administrative Agent, provided that no consent of the Administrative Agent shall be required of all or any portion of any Loan to a Lender, an affiliate of a Lender or an Approved Fund.

(ii)   Assignments shall be subject to the following additional conditions:

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(A)   except in the case of an assignment to a Lender, an affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans under any Facility, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless the Administrative Agent otherwise consents, provided that such amounts shall be aggregated in respect of each Lender and its affiliates or Approved Funds, if any;

(B)   (1) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 and (2) the assigning Lender shall have paid in full any amounts owing by it to the Administrative Agent; and

(C)   the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire in which the Assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Company and its Affiliates and their related parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.

For the purposes of this Section 9.6, “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity that administers or manages a Lender.

(ii)   Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from and after the effective date specified in each Assignment and Assumption the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.9, 2.10, 2.11 and 9.5).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

(iii)   The Administrative Agent, acting for this purpose as an agent of the Company, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Company, the Administrative Agent, the Issuing Lender and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.

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(iv)   Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(c)  (i)  Any Lender may, without the consent of the Company or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Company, the Administrative Agent, the Issuing Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to the proviso to the second sentence of Section 9.1 and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this Section, the Company agrees that each Participant shall be entitled to the benefits of Sections 2.9, 2.10 and 2.11 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.7(b) as though it were a Lender, provided such Participant shall be subject to Section 9.7(a) as though it were a Lender.

(ii)   A Participant shall not be entitled to receive any greater payment under Section 2.9 or 2.10 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Company’s prior written consent.  Any Participant that is a Non-U.S. Lender shall not be entitled to the benefits of Section 2.10 unless such Participant complies with Section 2.10(d).

(d)   Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto. The Company, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in this paragraph (d).

 (e)  (i)  To the extent requested by any Lender, the Company shall execute and deliver to such Lender an Initial Note dated the Closing Date substantially in the form of Exhibit I-1 hereto to evidence the portion of the Initial Loan made by such Lender and with appropriate insertions (“Original Initial Notes”).  On each Interest Payment Date prior to the Cash Pay Date, to the extent requested by any Lender, the Company shall execute and deliver to such Lender on such Interest Payment Date a note dated such Interest Payment Date substantially in the form of Exhibit I-1 hereto in a principal amount equal to such Lender’s pro rata portion of the PIK Interest Amount and with other appropriate insertions

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(each a “Subsequent Initial Note” and, together with the Original Initial Notes, the “Initial Notes”). A Subsequent Initial Note shall bear interest from the date of its issuance at the same rate borne by all Initial Notes at the date of issuance and from time to time thereafter.

(ii)   Unless converted to an Exchange Note and, to the extent requested by any Lender, the Company shall execute and deliver to such Lender a Term Note dated the Initial Maturity Date substantially in the form of Exhibit I-2 hereto to evidence the Term Loan made on such date, in the principal amount of the Initial Notes held by such Lender on such date and with other appropriate insertions (collectively, the “Original Term Notes”).  On or after the Initial Maturity Date, on each Interest Payment Date prior to the Cash Pay Date, to the extent requested by any Lender, the Company shall execute and deliver to such Lender on such Interest Payment Date a Term Note dated such Interest Payment Date substantially in the form of Exhibit I-2 hereto in a principal amount equal to such Lender’s pro rata portion of the PIK Interest Amount and with other appropriate insertions (each a “Subsequent Term Note” and, together with the Original Term Notes, the “Term Notes”).  A Subsequent Term Note shall bear interest from the date of its issuance at the same rate borne by all Term Notes at the date of issuance and from time to time thereafter.

(iii)   On or prior to the effective date of any Assignment and Assumption, the assigning Lender shall surrender any outstanding Loan Notes held by it all or a portion of which are being assigned, and the Company, at its own expense, shall, upon a request to the Administrative Agent by the assigning Lender or the Assignee, as applicable, execute and deliver to the Administrative Agent (in exchange for outstanding Loan Notes of the assigning Lender, if any) a new Loan Note to the order of such Assignee in an amount equal to the amount of such Assignee’s Loans after giving effect to such Assignment and Acceptance and, if the assigning Lender has retained a Loan hereunder, a new Loan Note, to the order of the assigning Lender in an amount equal to the amount of such Lender’s Loans after giving effect to such Assignment and Acceptance. Any such new Loan Notes shall be dated the Closing Date and shall otherwise be in the form of the Loan Note replaced thereby.  Any Loan Notes surrendered by the assigning Lender shall be returned by the Administrative Agent to the Company marked “cancelled”.

9.7   Adjustments; Set-off.  (a) Except to the extent that this Agreement, any other Loan Document or a court order expressly provides for payments to be allocated to a particular Lender or to the Lenders, if any Lender (a “Benefitted Lender”) shall at any time receive any payment of all or part of its Loans or interest thereon (other than in connection with an assignment made pursuant to Section 9.6), or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 7(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender’s Loans or interest thereon, such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender’s Loan, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

(b)  In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Company, any such notice being expressly waived by the Company to the extent permitted by applicable law, upon any amount becoming due and payable by the Company hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand,

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provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Company. Each Lender agrees promptly to notify the Company and the Administrative Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application.

9.8   Counterparts.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile or email transmission shall be effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be lodged with the Company and the Administrative Agent.

9.9   Severability.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

9.10   Integration.  This Agreement and the other Loan Documents represent the entire agreement of the Company, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.

9.11   GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

9.12   Submission To Jurisdiction; Waivers.  The Company hereby irrevocably and unconditionally:

(a)   submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;

(b)   consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court or forum and agrees not to plead or claim the same;

(c)   agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Company, at the address specified in Section 9.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

(d)   agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

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(e)   waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

9.13   Acknowledgements.  The Company hereby acknowledges that:

(a)   it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;

(b)   neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to the Company arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Administrative Agent and Lenders, on one hand, and the Company, on the other hand, in connection herewith or therewith is solely that of creditor and debtor; and

(c)   no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Company and the Lenders.

9.14   WAIVERS OF JURY TRIAL.  THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

9.15   Confidentiality.  (a) Each of the Administrative Agent and each Lender agrees to keep confidential all non-public information provided to it by any Loan Party, the Administrative Agent or any Lender pursuant to or in connection with this Agreement that is designated by the provider thereof as confidential; provided that nothing herein shall prevent the Administrative Agent or any Lender from disclosing any such information (i) to the Administrative Agent, any other Lender or any affiliate thereof,(ii) subject to an agreement for the benefit of the Company to comply with the provisions of this Section, to any actual or prospective Transferee or any direct or indirect counterparty to any Currency Agreement or Interest Rate Agreement (or any professional advisor to such counterparty), (iii) to its employees, directors, agents, attorneys, accountants and other professional advisors or those of any of its affiliates (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such information and instructed to keep such information confidential pursuant to the terms hereof), (iv) upon the request or demand of any Governmental Authority, (v) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (vi) if requested or required to do so in connection with any litigation or similar proceeding, (vii) that has been publicly disclosed other than as a result, to the knowledge of the Administrative Agent or such Lender, of a breach of this Section 9.15, (viii) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender (it being understood that, prior to any such disclosure, such rating agency shall undertake to preserve the confidentiality of any information relating to the Loan Parties received by it from such Lender), or (ix) in connection with the exercise of any remedy hereunder or under any other Loan Document.

(b)   Each Lender acknowledges that information furnished to it pursuant to this Agreement or the other Loan Documents may include material non-public information concerning the Company and its Affiliates and their related parties or their respective securities, and confirms that it has

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developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including Federal and state securities laws.

(c)   All information, including requests for waivers and amendments, furnished by the Company or the Administrative Agent pursuant to, or in the course of administering, this Agreement or the other Loan Documents will be syndicate-level information, which may contain material non-public information about the Company and its Affiliates and their related parties or their respective securities. Accordingly, each Lender represents to the Company and the Administrative Agent that it has identified in its administrative questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including Federal and state securities laws.

9.16   Releases of Guarantees and Liens.  (a) Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent is hereby irrevocably authorized by each Lender (without requirement of notice to or consent of any Lender except as expressly required by Section 9.1) to take any action requested by the Company having the effect of releasing any Collateral or guarantee obligations (i) to the extent necessary to permit consummation of any transaction not prohibited by any Loan Document or that has been consented to in accordance with Section 9.1 or (ii) under the circumstances described in paragraph (b) below.

(b)   At such time as the Loans and the other obligations under the Loan Documents (other than obligations under or in respect of any Currency Agreement or Interest Rate Agreement and contingent reimbursement and indemnification obligations not yet accrued and payable) shall have been paid in full, the Collateral shall be released from the Liens created by the Security Documents, and the Security Documents and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Loan Party under the Security Documents shall terminate, all without delivery of any instrument or performance of any act by any Person.

(c)   The Lenders irrevocably agree:

(i) that any Lien on any property granted to or held by the Administrative Agent under any Loan Document shall be automatically released (x) at the time the property subject to such Lien is transferred or to be transferred as part of or in connection with any transfer permitted hereunder or under any other Loan Document to any Person other than a Loan Party, (y) if the release of such Lien is approved, authorized or ratified in writing by the Required Lenders (or such greater number of Lenders as may be required pursuant to Section 9.1) or (z) if the property subject to such Lien is owned by a Subsidiary Guarantor, upon release of such Subsidiary Guarantor from its obligations under its Guarantee under the Guarantee and Collateral Agreement pursuant to clause (iii) below;

(ii) (x) to release or subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by clause (ix) of the definition of Permitted Liens and (y) that the Administrative Agent is authorized (but not required) to release or subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Permitted Lien on such property; and

(iii) that any Subsidiary Guarantor shall be automatically released from its obligations under the Guarantee and Collateral Agreement if such Person ceases to be a Subsidiary as a result of a transaction or designation permitted hereunder.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

NEW ATA ACQUISITION INC.
By:	/s/ Subodh Karnik
	Name:	Subodh Karnik
	Title:	President and CEO

[Signature Page to Term Loan Agreement]

JP MORGAN CHASE BANK, N.A., as Administrative
Agent and as a Lender
By:	/s/ John C. Riordan
	Name:	JOHN C. RIORDAN
	Title:	VICE PRESIDENT

[Signature Page to Term Loan Agreement]

JEFFERIES FINANCE LLC, as Documentation Agent
By:	/s/ E.J.Hess
	Name:	E.J.Hess
	Title:	Managing Director
JEFFERIES FINANCE CP FUNDING LLC, as a
Lender
By:	/s/ E.J.Hess
	Name:	E.J.Hess
	Title:	Managing Director

[Signature Page to Term Loan Agreement]

EX-10.14

Exhibit 10.14

EXECUTION VERSION

FIRST AMENDMENT AND WAIVER

FIRST AMENDMENT AND WAIVER, dated as of December 10, 2007 (this “First Amendment and Waiver”), to the Term Loan Agreement, dated as of August 14, 2007 (the “Term Loan Agreement”), among New ATA Acquisition Inc., a Delaware corporation (the “Company”), the several lenders from time to time parties thereto (the “Lenders”), Jefferies Finance LLC, as documentation agent, and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders thereunder (in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Company, the Lenders and the Administrative Agent are parties to the Term Loan Agreement;

WHEREAS, the Company has requested that the Lenders amend and waive certain terms in the Term Loan Agreement in the manner provided for herein; and

WHEREAS, the Administrative Agent and the Lenders party hereto are willing to agree to the requested amendment and waiver subject to the provisions of this First Amendment and Waiver;

NOW, THEREFORE, in consideration of the premises contained herein, the parties hereto agree as follows:

1.     Defined Terms.     Unless otherwise defined herein, terms which are defined in the Term Loan Agreement and used herein as defined terms are so used as so defined.

2.     Amendment to Section 5.2(d).   Section 5.2(d) of the Term Loan Agreement is hereby amended by deleting such Section 5.2(d) in its entirety and substituting in lieu thereof the following:

“(d) unless available pursuant to public filings, concurrently with the delivery of the financial statements referred to in Sections 5.1(a) and 5.1(b), a narrative discussion and analysis of the financial condition and results of operations of the Company and its Subsidiaries for such fiscal quarter and for the period from the beginning of the then-current fiscal year to the end of such fiscal quarter, as compared to the comparable periods of the previous year; provided that such narrative discussion and analysis with respect to such periods ending September 30, 2007, shall not be required to be so furnished until the delivery of a Preliminary OM covering the fiscal quarter ending September 30, 2007, pursuant to Section 5.9(c);

3.     Amendment to Section 5.9(a).    (a) Subclause (x) of Section 5.9(a) of the Term Loan Agreement is hereby amended by deleting such subclause (x) in its entirety and substituting in lieu thereof the following:

“(x) after a reasonable marketing period (including a road show) that does not commence until the delivery of a Preliminary OM pursuant to Section 5.9(c) and”

(b) Subclause (y) of Section 5.9(a) of the Term Loan Agreement is hereby amended by deleting the word “twice” appearing therein and substituting, in lieu thereof, the words “four times, but in no event earlier than January 2, 2008”.

4.     Amendment to Section 5.9(c).    Section 5.9(c) of the Term Loan Agreement is hereby amended by deleting such Section 5.9(c) in its entirety and substituting in lieu thereof the following:

“(c) No later than 15 days (or such longer period, not to exceed 30 days, as is determined by the Administrative Agent to be reasonably necessary) after delivery by the Administrative Agent of a Securities Demand, the Company will deliver (and, if applicable, cause Holdings to deliver) preliminary offering memoranda or preliminary prospectuses and other marketing materials relating to the Senior ATA Notes usable in a customary high-yield road show (with the industry section being written by Seabury Group or any other airline industry expert having similar qualifications), which shall be reasonably satisfactory to the Administrative Agent and shall comply with the rules and regulations (including Regulation S-X) of the Securities Act, and shall in any event include information that would be required in a registration statement on Form S-1 for an offering registered under the Securities Act, including without limitation the unaudited (or, in the case of fiscal years, audited) financial statements of the Company (and, if applicable, Holdings) for the most recent fiscal quarter or fiscal year then ended (each, a “Preliminary OM”); provided that no Preliminary OM covering a particular fiscal quarter or fiscal year shall be required to be delivered prior to the date that is 15 days after financial statements covering such quarter or year are delivered pursuant to Section 5.1(a) or 5.1(b), as applicable.”

5      Amendment to Section 7.  Subclause (c) of Section 7 of the Term Loan Agreement is hereby amended by deleting such subclause (c) in its entirety and substituting in lieu thereof the following:

“(c) the Company shall default in the observance or performance of any agreement contained in Section 5.9, Section 5.10 or Section 6; or”

6.     Waiver of Section 5.1(b).    Notwithstanding anything in the Term Loan Agreement to the contrary, the Lenders hereby waive (x) compliance with the requirements of Section 5.1(b) of the Term Loan Agreement, solely with respect to the quarterly period ended September 30, 2007, until and including December 17, 2007, and (y) any Default or Event of Default that may have resulted from the failure of the Company to comply with such requirements prior to the effectiveness of this First Amendment and Waiver. It is agreed that, if the items described in Section 5.1(b) with respect to such quarterly period are not delivered by December 17, 2007, then an Event of Default with respect to such Section shall thereafter be in existence, without requirement of delivery of notice or any other action.

7.     Waiver of Section 5.9(c).    Notwithstanding anything in the Term Loan Agreement to the contrary, the Lenders hereby waive any Default or Event of Default that may have resulted from the failure of the Company to comply with the requirements of Section 5.9(c) of the Term Loan Agreement prior to the effectiveness of this First Amendment and Waiver.

8.     Representations and Warranties.      On and as of the date hereof, the Company hereby confirms that, after giving effect to this First Amendment and Waiver, the representations and warranties set forth in Section 3 of the Term Loan Agreement are true and correct in all material respects, except to the extent that such representations and warranties expressly relate to an earlier date (in which case, the Company hereby confirms that such representations and warranties are true and correct in all material respects as of such earlier date).

9.     Effectiveness of First Amendment and Waiver.     This First Amendment and Waiver shall become effective as of the date hereof when the Administrative Agent shall have received counterparts of this First Amendment and Waiver duly executed by the Company and the Required Lenders.

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10. Continuing Effect; No Other Amendments, Waivers or Consents.       Except as expressly provided herein, all of the terms and provisions of the Term Loan Agreement are and shall remain in full force and effect. The waiver provided for herein is limited to the specific Section of the Term Loan Agreement specified herein and shall not constitute a consent, waiver or amendment of, or an indication of the Administrative Agent’s or the Lenders’ willingness to consent to any action requiring consent under any other provisions of the Term Loan Agreement or the same subsection for any other date or time period. This First Amendment and Waiver shall be binding on the parties hereto and their respective successors and permitted assigns under the Term Loan Agreement.

11. Expenses.        The Company agrees to pay and reimburse the Administrative Agent for all its reasonable and documented out-of-pocket costs and expenses incurred in connection with the preparation and delivery of this First Amendment and Waiver, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent, in each case to the extent required to be paid or reimbursed pursuant to Section 9.5 of the Term Loan Agreement.

12. Counterparts.  This First Amendment and Waiver may be executed in any number of counterparts by the parties hereto (including by facsimile transmission), each of which counterparts when so executed shall be an original, but all the counterparts shall together constitute one and the same instrument.

13. GOVERNING LAW.       THIS FIRST AMENDMENT AND WAIVER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment and Waiver to be duly executed by their respective authorized officers as of the day and year first above written.

NEW ATA ACQUISITION INC
By:		/s/ William Garrett
	Name:		William Garrett
	Title:		EVP & CFO

[Signature Page to First Amendment and Waiver]

JPMORGAN CHASE BANK, NA., as Administrative
Agent and as a Lender
By:		/s/ Matthew II.Massic
	Name:		Matthew II.Massic
	Title:		Managing Director

[Signature Page to First Amendment and Waiver]

JEFFERIES FINANCE LLC, as Documentation Agent
By:		/s/E.J. Hess
	Name:			E.J. Hess
	Title:		Managing Director

JEFFERIES FINANCE CP FUNDING LLC, as a Lender
By:		/s/E.J. Hess
	Name:			E.J. Hess
	Title:		Managing Director

EX-10.15

Exhibit 10.15

EXECUTION VERSION

GUARANTEE AND COLLATERAL AGREEMENT

made by

GLOBAL AERO LOGISTICS INC.,

NEW ATA INVESTMENT INC.,

NEW ATA ACQUISITION INC.

and

THE GUARANTORS IDENTIFIED HEREIN

in favor of

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

Dated as of August 14, 2007

TABLE OF CONTENTS

		Page
Section 1.	DEFINED TERMS	1
1.1.	Definitions	1
1.2.	Other Definitional Provisions	5
Section 2.	GUARANTEE	5
2.1.	Guarantee	5
2.2.	Right of Contribution	6
2.3.	No Subrogation	6
2.4.	Amendments, etc., with respect to the Borrower Obligations	6
2.5.	Guarantee Absolute and Unconditional	7
2.6.	Reinstatement	7
2.7.	Payments	8
Section 3.	GRANT OF SECURITY INTEREST	8
Section 4.	REPRESENTATIONS AND WARRANTIES	10
4.1.	Title; No Other Liens	10
4.2.	Perfected First Priority Liens	10
4.3.	Jurisdiction of Organization	11
4.4.	Inventory and Equipment	11
4.5.	Farm Products	11
4.6.	Investment Property	11
4.7.	Receivables	11
4.8.	Intellectual Property	11
4.9.	Commercial Tort Claims	12
4.10.	Deposit Accounts, Etc.	12
Section 5.	COVENANTS	12
5.1	Delivery of Instruments, Certificated Securities and Chattel Paper	12
5.2.	Maintenance of Insurance	12
5.3.	Maintenance of Perfected Security Interest; Further Documentation	12
5.4.	Changes in Locations, Name, etc.	13
5.5.	Notices	13
5.6.	Investment Property	13
5.7.	Receivables	14
5.8.	Intellectual Property	15
5.9.	Commercial Tort Claims	16
5.10.	Deposit Accounts	16
Section 6.	REMEDIAL PROVISIONS	17
6.1.	Certain Matters Relating to Receivables	17
6.2.	Communications with Obligors; Grantors Remain Liable	17
6.3.	Pledged Equity	18
6.4.	Proceeds to be Turned Over to Administrative Agent	19
6.5.	Application of Proceeds	19
6.6.	Code and Other Remedies	19
6.7.	Registration Rights	20

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		Page
6.8.	Deficiency	21
6.9.	Notice of Sole Control	21
Section 7.	THE ADMINISTRATIVE AGENT	21
7.1	Administrative Agent’s Appointment as Attorney-in-Fact, etc.	21
7.2.	Duty of Administrative Agent	23
7.3.	Execution of Financing Statements	23
7.4.	Authority of Administrative Agent	23
Section 8.	MISCELLANEOUS	24
8.1.	Amendments in Writing	24
8.2.	Notices	24
8.3.	No Waiver by Course of Conduct; Cumulative Remedies	24
8.4.	Enforcement Expenses; Indemnification	24
8.5.	Successors and Assigns	25
8.6.	Setoff	25
8.7.	Counterparts	25
8.8.	Severability	25
8.9.	Section Headings	26
8.10.	Integration	26
8.11.	GOVERNING LAW	26
8.12.	Submission To Jurisdiction; Waivers	26
8.13.	Acknowledgments	26
8.14.	Additional Guarantors and Grantors	27
8.15.	Releases	27
8.16.	WAIVER OF JURY TRAIL	27
8.17.	Effectiveness of the Merger; Assignment and Delegation to and Assumption by the Target	28

SCHEDULES

Schedule 1	Notice Addresses
Schedule 2	Investment Property
Schedule 3	Perfection Matters
Schedule 4	Jurisdictions of Organization
Schedule 5	Inventory and Equipment Locations
Schedule 6	Intellectual Property
Schedule 7	Commercial Tort Claims
Schedule 8	Deposit Accounts

Acknowledgment and Consent

ANNEX

Annex 1 Form of Assumption Agreement

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GUARANTEE AND COLLATERAL AGREEMENT, dated as of August 14, 2007, made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the “Grantors”), in favor of JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”) for the Secured Parties (as defined below).

W I T N E S S E T H:

WHEREAS, pursuant to the Term Loan Agreement, dated as of August 14, 2007 (as amended, supplemented or otherwise modified from time to time, the “Term Loan Agreement”), among New ATA Acquisition Inc. (the “Borrower”), the Lenders, the Administrative Agent and the other parties thereto, the Lenders have severally agreed to make term loans to the Borrower upon the terms and subject to the conditions set forth therein;

WHEREAS, pursuant to the Term Loan Agreement, loans made by the Lenders may be exchanged for Exchange Notes issued pursuant to the Indenture upon the Initial Maturity Date (as defined in the Term Loan Agreement);

WHEREAS, the Borrower is a member of an affiliated group of companies that, following the consummation of the Merger, will include each other Grantor;

WHEREAS, the proceeds of the term loans under the Term Loan Agreement will be used in part enable the Borrower to make valuable transfers to one or more of the other Grantors in connection with the operation of their respective businesses;

WHEREAS, the Borrower and the other Grantors and engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the term loans under the Term Loan Agreement, and

WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective term loans to the Borrower under the Term Loan Agreement that the Grantors shall have executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the Secured Parties;

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Term Loan Agreement and to induce the Lenders to make their respective loans to the Borrower thereunder, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of the Secured Parties, as follows:

SECTION 1.           DEFINED TERMS

1.1.          Definitions.  (a) Unless otherwise defined herein, terms defined in the Term Loan Agreement and used herein shall have the meanings given to them in the Term Loan Agreement, and the following terms are used herein as defined in the New York UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Commodity Account, Commodity Intermediary, Documents, Equipment, Farm Products, General Intangibles, Instruments, Inventory, Letter of Credit Rights, Securities Account, Securities Intermediary and Supporting Obligations.

(b)  The following terms shall have the following meanings:

“Agreement”:  this Guarantee and Collateral Agreement, as the same may be amended, supplemented or otherwise modified from time to time.

“Borrower Obligations”:  the collective reference to the unpaid principal of and interest on the Loans, any Exchange Notes and all other monetary obligations and liabilities of the Borrower (including, without limitation, interest accruing at the then applicable rate provided in the Term Loan Agreement or, if Exchange Notes are outstanding, the Indenture, as applicable, after the maturity of the Loans or the Exchange Notes, as the case may be, and interest accruing at the then applicable rate provided in the Term Loan Agreement or the Indenture, as applicable, after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to the Administrative Agent, any Lender or, if Exchange Notes are outstanding, the Trustee of any Holder, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, or pursuant to, the Financing Documents or any other document made, delivered or given in connection with any of the foregoing, in each case whether on account of principal, interest, reimbursement obligations, premium, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent, to the Lenders and, if Exchange Notes are outstanding, to the Trustee or to the Holders, that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements).

“Collateral”:  as defined in Section 3.

“Collateral Account”:  any collateral account established by the Administrative Agent as provided in Section 6.1 or 6.4.

“Collateral Deposit Account”:  any Deposit Account other than an Excluded Account.

“Copyrights”:  (i) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished (including, without limitation, those listed in Schedule 6), all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof.

“Copyright Licenses”:  any written agreement naming any Grantor as licensor or licensee, granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright.

“Deposit Account”:  as defined in the Uniform Commercial Code of any applicable jurisdiction and, in any event, including, without limitation, any demand, time savings, passbook or like account maintained with a depositary institution.

“Deposit Account Control Agreement”:  an agreement in form and substance reasonably satisfactory to the Administrative Agent, among any Grantor, a banking institution holding such Grantor’s funds, and the Administrative Agent with respect to collection and control of all deposits and balances held in a Collateral Deposit Account maintained by any Grantor with such banking institution.

“Excluded Accounts”:  (i) Deposit Accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments and any Deposit Account, Securities Account or Commodity Account with an average annual balance of less than $1,000,000, or that is exclusively used to hold Excluded Cash, (ii) Trust Tax Accounts, and (iii) Lessor Maintenance Reserve Accounts.

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“Excluded Cash”: cash and Cash Equivalents pledged or deposited in accordance with clause (i), (iv), (xxiii), (xxiv), (xxviii) or (xxx) of the definition of Permitted Liens in the Term Loan Agreement.

“Excluded Property”: as defined in Section 3.

“FAA Act”: the collective reference to the United States Transportation Code (currently codified at Subtitle VII of Title 49 of the U.S. Code) as amended, supplemented, or otherwise modified from time to time, and all FARs and other rules, regulations, directives and orders issued or promulgated from time to time thereunder.

“FAA Collateral”: Collateral as to which filing of a security interest requires compliance with filing requirements of the FAA Act.

“FARs”: the FAA Regulations as in effect from time to time under Title 14 of the U.S. Code of Federal Regulations, including, without limitation, the Special Federal Aviation Regulations (as applicable), as amended, supplemented or otherwise modified from time to time.

“Financing Documents”: the Term Loan Agreement, this Agreement, the other Loan Documents, and, if Exchange Notes are outstanding, the Indenture and the Exchange Notes.

“Foreign Subsidiary”: any direct or indirect Subsidiary of the Borrower which is not a Domestic Subsidiary.

“Foreign Subsidiary Voting Stock”: the voting Capital Stock of any Foreign Subsidiary and of any Domestic Subsidiary substantially all of whose assets consist of voting Capital Stock of one or more Foreign Subsidiaries.

“Guarantor Obligations”: with respect to any Guarantor, all monetary obligations and liabilities of such Guarantor which may arise under or pursuant to this Agreement (including, without limitation, Section 2) or any other Financing Document to which such Guarantor is a party, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent, to the Lenders and, if Exchange Notes are outstanding, to the Trustee or to the Holders, that are required to be paid by such Guarantor pursuant to the terms of this Agreement or any other Financing Document).

“Guarantors”: the collective reference to each Grantor other than the Borrower.

“Holdings”: Global Aero Logistics Inc., a Delaware corporation.

“Intellectual Property”: the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

“Intercompany Note”: any promissory note evidencing loans made by any Grantor to Holdings or any of its Subsidiaries.

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“Investment Property”: the collective reference to (i) all “investment property” as such term is defined in Section 9-102(a)(49) of the New York UCC (other than any Foreign Subsidiary Voting Stock) and (ii) whether or not constituting “investment property” as so defined, all Pledged Debt and all Pledged Equity.

“Issuers”: the collective reference to each issuer of any Investment Property.

“New York UCC”: the Uniform Commercial Code as from time to time in effect in the State of New York.

“Obligations”: (i) in the case of each Borrower, its Borrower Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.

“Patents”: (i) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, including, without limitation, any of the foregoing referred to in Schedule 6, (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including, without limitation, any of the foregoing referred to in Schedule 6, and (iii) all rights to obtain any reissues or extensions of the foregoing.

“Patent License”: all agreements, whether written or oral, providing for the grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to in Schedule 6.

“Pledged Debt”: all promissory notes listed on Schedule 2, all Intercompany Notes at any time issued to any Grantor and all other promissory notes issued to or held by any Grantor (other than promissory notes issued in connection with extensions of trade credit by any Grantor in the ordinary course of business).

“Pledged Equity”: the Capital Stock listed on Schedule 2, together with any other shares, stock certificates, options or rights of any nature whatsoever in respect of the Capital Stock of any Person that may be issued or granted to, or held by, any Grantor while this Agreement is in effect; provided that in no event shall more than 65% of the issued and outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary or of any Domestic Subsidiary substantially all of whose assets consist of voting Capital Stock of one or more Foreign Subsidiaries be required to be pledged hereunder.

“Proceeds”: all “proceeds” as such term is defined in Section 9-102(a)(64) of the New York UCC and, in any event, shall include, without limitation, all dividends or other income from the Investment Property, collections thereon or distributions or payments with respect thereto.

“Receivable”: any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account).

“Secured Parties”: the collective reference to the Administrative Agent, the Lenders and, if Exchange Notes are outstanding, the Trustee and the Holders.

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

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“Subsidiary Guarantor”: any Subsidiary of the Borrower that is or becomes a party to this Agreement.

“Trademarks”: (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other county or any political subdivision thereof, or otherwise, and all common-law rights related thereto, including, without limitation, any of the foregoing referred to in Schedule 6, and (ii) the right to obtain all renewals thereof.

“Trademark License”: any agreement, whether written or oral, providing for the grant by or to any Grantor of any right to use any Trademark.

1.2.          Other Definitional Provisions. (a) The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified.

(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

(c) Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part thereof.

SECTION 2.           GUARANTEE

2.1.          Guarantee. (a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Secured Parties and their respective successors and permitted indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations.

(b) Anything herein or in any other Financing Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Financing Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors (after giving effect to the right of contribution established in Section 2.2).

(c) Each Guarantor agrees that the Borrower Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Administrative Agent or any other Secured Party hereunder.

(d) The guarantee contained in this Section 2 shall remain in full force and effect until all the Obligations (other than contingent indemnification and contingent expense reimbursement obligations) shall have been satisfied by payment in full.

(e) Except as provided in Section 8.15, no payment made by any Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Administrative Agent

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or any other Secured Party from any Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any setoff, appropriation or application at any time or from time to time in reduction of or in payment of the Borrower Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Borrower Obligations or any payment received or collected from such Guarantor in respect of the Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability of such Guarantor hereunder until the Borrower Obligations are paid in full.

2.2.          Right of Contribution. Each Subsidiary Guarantor hereby agrees that to the extent that a Subsidiary Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Subsidiary Guarantor shall be entitled to seek and receive contribution from and against any other Subsidiary Guarantor hereunder which has not paid its proportionate share of such payment. Each Subsidiary Guarantor’s right of contribution shall be subject to the terms and conditions of Section 2.3. The provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any Subsidiary Guarantor to the Administrative Agent and the other Secured Parties, and each Subsidiary Guarantor shall remain liable to the Administrative Agent and the other Secured Parties for the full amount guaranteed by such Subsidiary Guarantor hereunder.

2.3.          No Subrogation. Notwithstanding any payment made by any Guarantor hereunder or any setoff or application of funds of any Guarantor by the Administrative Agent or any other Secured Parties, no Guarantor shall be entitled to be subrogated to any of the rights of Administrative Agent or any other Secured Party against any Borrower or any other Guarantor or any collateral security, guarantee or right of offset held by the Administrative Agent or any other Secured Party for the payment of the Borrower Obligations, nor shall any Guarantor seek any contribution or reimbursement from any Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Administrative Agent and the other Secured Parties by the Borrower on account of the Borrower Obligations are paid in full. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Borrower Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Administrative Agent and the other Secured Parties, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if required), to be applied against the Borrower Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine in coordination with the Trustee if Exchange Notes are outstanding. For the avoidance of doubt, nothing in the foregoing shall operate as a waiver of any subrogation rights.

2.4.          Amendments, etc., with respect to the Borrower Obligations. To the fullest extent permitted by applicable law, each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Borrower Obligations made by the Administrative Agent or any other Secured Party may be rescinded by the Administrative Agent or such Secured Party and any of the Borrower Obligations continued, and the Borrower Obligations, or the liability of any other Person upon them or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waiver, surrendered or released by the Administrative Agent or any other Secured Party, and the Term Loan Agreement and the other Financing Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required Lenders or all Lenders, as the case may be) and, if Exchange Notes are outstanding, as the Trustee (or the required Holders of Exchange Notes in an aggregate principal amount of more than 50% of the aggregate principal amount of

6

all the outstanding Exchange Notes) may reasonably deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any other Secured Party for the payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or released. Neither the Administrative Agent nor any other Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Borrower Obligations or for the guarantee contained in this Section 2 or any property subject thereto.

2.5.          Guarantee Absolute and Unconditional. To the fullest extent permitted by applicable law, each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or proof of reliance by the Administrative Agent or any other Secured Party upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Borrower Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between any Borrower and any of the Guarantors, on the one hand, and the Administrative Agent and the other Secured Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2. To the fullest extent permitted by applicable law, each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon any Borrower or any of the Guarantors with respect to the Borrower Obligations. Each Guarantor understands and agrees that the guarantee contained in this Section 2, to the fullest extent permitted by applicable law, shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Term Loan Agreement or any other Financing Document, any of the Borrower Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any other Secured Party, (b) any defense, setoff or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any Borrower or any other Person against the Administrative Agent or any other Secured Party or (c) any other circumstance whatsoever (with or without notice to or knowledge of any Borrower or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of any Borrower for the Borrower Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Administrative Agent or any other Secured Party may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against any Borrower, any other Guarantor or any other Person or against any collateral security or guarantee for the Borrower Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any other Secured Party to make any such demand, to pursue such other rights or remedies or to collect any payments from any Borrower, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of any Borrower, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent or any other Secured Party against any Guarantor. For the purpose hereof “demand” shall include the commencement and continuance of any legal proceedings.

2.6.          Reinstatement. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Borrower Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any other Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not bee made.

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2.7.          Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without setoff or counterclaim in Dollars at the Administrative Agent’s Office.

SECTION 3.           GRANT OF SECURITY INTEREST

Each Grantor hereby assigns and transfers to the Administrative Agent, and hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest in, all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest other than Excluded Property (collectively, the “Collateral”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor’s Obligations:

(a)  all Accounts;

(b)  all Chattel Paper;

(c)  all Deposit Accounts, Securities Accounts and Commodity Accounts;

(d)  all Documents;

(e)  all Equipment;

(f)  all Fixtures;

(g)  all General Intangibles;

(h)  all Instruments;

(i)  all Intellectual Property;

(j)  all Inventory;

(k)  all Investment Property;

(l)  all Letter of Credit Rights;

(m)  all Commercial Tort Claims with respect to the matters described on Schedule 7;

(n)  all other personal property not otherwise described above;

(o)  all books and records pertaining to the Collateral; and

(p)  to the extent not otherwise included, all Proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing;

provided, however, that notwithstanding any of the other provisions set forth in this Section 3, the term Collateral and the terms set forth in this Section defining the components of Collateral shall not include, and this Agreement shall not constitute a grant of a security interest in, any of the following (the “Excluded Property”): (i) any property to the extent that such grant of a security interest is prohibited by

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any applicable Law of a Governmental Authority, requires a consent not obtained of any Governmental Authority pursuant to such Law or is prohibited by, or constitutes a breach or default under or results in the termination of or gives rise to a right on the part of the parties thereto other than Holdings, the Borrower and the Borrower’s Subsidiaries to terminate (or materially modify) or requires any consent not obtained under any contract, license, agreement, instrument or other document evidencing or giving rise to such property or to a Lien on such property permitted to be incurred pursuant to the Term Loan Agreement or, in the case of any Investment Property, Pledged Equity or Pledged Debt, any applicable shareholder or similar agreement, except to the extent that such Law or the term in such contract, license, agreement, instrument or other document or shareholder or similar agreement providing for such prohibition, breach, default or right of termination or modification or requiring such consent is ineffective under applicable law, (ii) any property owned by any Grantor on the date hereof or hereafter acquired that is subject to a Lien securing a purchase money or capital or finance lease obligation permitted to be incurred pursuant to the Term Loan Agreement if the contract or other agreement in which such Lien is granted (or the documentation providing for such purchase money, project financing or capital or finance lease obligation) prohibits the creation of any other Lien on such property, (iii) any trucks, trailers, tractors, service vehicles, automobiles, rolling stock or other registered mobile equipment or equipment covered by certificates of title or ownership of any Grantor, (iv) Excluded Accounts, (v) the Capital Stock of any joint venture in respect of which Holdings or any of its Subsidiaries holds Capital Stock if (and only so long as), in any case, the grant of any such security interest is prohibited by, or constitutes a breach or default under or results in the termination of or gives rise to a right on the part of the parties thereto other than Holdings, the Borrower and the Borrower’s Subsidiaries to terminate (or materially modify) or requires any consent not obtained under any contract, license, agreement, instrument or other document evidencing or giving rise to such property or any applicable shareholder, joint venture of similar agreement, (vi) FAA Collateral and (vii) Excluded Case; provided, however, that Excluded Property shall not include any Proceeds, substitutions or replacements of any Excluded Property referred to above and such Proceeds shall not constitute “Excluded Property” (unless such Proceeds, substitutions or replacements would constitute Excluded Property referred to above). If an Event of Default shall have occurred and be continuing, each Grantor shall, if requested to do so by the Administrative Agent, use commercially reasonable efforts to obtain any required consent that is reasonably obtainable with respect to Collateral which the Administrative Agent reasonably determines to be material.

In addition, any Collateral consisting of Capital Stock or other securities of a Subsidiary shall be deemed to constitute Excluded Property to the extent that the pledge of such Capital Stock or other securities results in the Company or Holdings being required to file separate financial statements of such Subsidiary with the SEC, but only to the extent necessary to not be subject to such requirement and only for so long as such requirement is in existence. In addition, in the event that Rule 3-16 of Regulation S-X under the Securities Act is amended, modified or interpreted by the SEC to require (or is replaced with another rule or regulation or another law, rule or regulation is adopted which would require) the filing with the SEC (or another governmental agency) of separate financial statements of any Subsidiary of the Company due to the fact that the Subsidiary’s Capital Stock or other securities secure any Obligations, then the Capital Stock or other securities of such Subsidiary will automatically be deemed Excluded Property, but only to the extent necessary to not be subject to such requirement and only for so long as is required to not be subject to such requirement. In such event, this Agreement may be amended or modified, without the consent of any Secured Party, to the extent necessary to release the security interests in the shares of Capital Stock or other securities that are so deemed to constitute Excluded Property. In the event that Rule 3-16 of Regulation S-X under the Securities Act is amended, modified or interpreted by the SEC to permit (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted which would permit) such Subsidiary’s Capital Stock or other securities to secure the Obligations in excess of the amount then pledged without the filing with the SEC (or any other governmental agency) of separate financial statements of such Subsidiary, then the Capital Stock or other securities of such Subsidiary will

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automatically be deemed to no longer constitute Excluded Property but only to the extent necessary to not be subject to any such financial statement requirement.

SECTION 4.           REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into the Term Loan Agreement and to induce the Lenders to make their respective loans to the Borrower thereunder, each Grantor hereby represents and warrants to the Administrative Agent and each other Secured Party that:

4.1           Title; No Other Liens.  Except for security interest granted to the Administrative Agent for the ratable benefit of the Secured Parties pursuant to this Agreement and the other Liens permitted to exist on the Collateral by the Term Loan Agreement, such Grantor owns each item of the Collateral free and clear of any and all Liens. No effective financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in ay public office, except such as have been filed in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, pursuant to this Agreement or as are permitted by the Term Loan Agreement or as to which documentation to terminate the same shall have been delivered to the Administrative Agent. For the avoidance of doubt, it is understood and agreed that any Grantor may, as part of its business, grant licenses to third parties to use Intellectual Property owned or developed by a Grantor. For purpose of this Agreement and the other Financing Documents, such licensing activity shall not constitute a “Lien” on such Intellectual Property. Each of the Administrative Agent and each other Secured Party understands that any such licenses may be exclusive to the applicable licenses, and such exclusivity provisions may limit the ability of the Administrative Agent to utilize, sell, lease or transfer the related Intellectual Property or otherwise realize value from such Intellectual Property pursuant hereto.

4.2           Perfected First Priority Liens.  The security interests granted pursuant to this Agreement (i) upon completion of the fillings and other actions specified on Schedule 3 (x) will constitute valid perfected security interests in all of the Collateral (other than Intellectual Property) in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor’s Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase any Collateral from such Grantor, to the extent a security interest therein may be perfected by filing, recording or registration in the United States pursuant to the New York UCC, (y) will constitute valid perfected security interests in all of the Collateral constituting of Intellectual Property in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor’s Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons, purporting to purchase any Collateral from such Grantor, to the extent a security interest therein may be perfected by filings to be made in the United States Patent and Trademark Office and the United States Copyright Office, and (z) will constitute valid perfected security interests in each Collateral Deposit Account in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor’s Obligations, enforceable in accordance with the terms hereof upon the Administrative Agent obtaining “control” of such Collateral Deposit Account for purposes of the New York UCC, and (ii) are prior to all other Liens on the Collateral in existence on the date hereof except for Liens permitted by the Term Loan Agreement which have priority over the Liens on the Collateral by operation of law (including the priority rues under the New York UCC) or which, in the case of Collateral consisting of Pledged Equity and Pledged Debt, are nonconsensual Liens permitted pursuant to the Term Loan Agreement to be prior to the security interests granted pursuant to this Agreement or which, in the case of Collateral other than Pledged Equity and Pledged Debt, are permitted pursuant to the Term Loan Agreement to be prior to the security interests granted pursuant to this Agreement.

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4.3           Jurisdiction of Organization. On the date hereof, such Grantor’s jurisdiction of organization and identification number from the jurisdiction of organization (if any) are specified on Schedule 4. Such Grantor has furnished to the Administrative Agent a certified charter, certificate of incorporation or other organization document and long-form good standing certificate as of a date which is recent to the date hereof.

4.4           Inventory and Equipment. On the date hereof, the Inventory and the Equipment of each Grantor (other than aircraft and Inventory and Equipment on any aircraft) are kept at the locations listed on Schedule 5. The provisions of the Section 4.4 shall not apply to Equipment or Inventory in transit, that has been sold (including sales on consignment or approval in the ordinary course of business), that is out for repair, that is at other locations for purposes of onsite maintenance or repair, or that is at airports to permit onsite maintenance or repair of aircraft or aircraft engines, or to Equipment and Inventory at location with less than $2,000,000 in aggregate value.

4.5.          Farm Products. None of the Collateral constitutes, or is the Proceeds of, Farm Products.

4.6           Investment Property. (a) On the date hereof, the shares of Pledged Equity pledged by such Grantor hereunder constitute all the issued and outstanding shares of all classes of the Capital Stock of each Subsidiary owned by such Grantor or, in the case of Subsidiaries that are Foreign Subsidiaries or Domestic Subsidiaries substantially all of whose assets consist of voting Capital Stock of one or more Foreign Subsidiaries, the shares of such Issuers pledged by the such Grantor constitute 65% of the outstanding Foreign Subsidiary Voting Stock of each such Issuer (Or, if such Grantor owns less than 65% of the outstanding Foreign Subsidiary Voting Stock of any such Issuer, constitute all the Foreign subsidiary Voting Stock of such Issuer owned by such Grantor).

(b) All the shares of the Pledged Equity as to which the Borrower or a Subsidiary of the Borrower is the Issuer have been duly and validly issued and are fully paid and nonassessable.

(c) To the best of such Grantor’s knowledge, each of the Pledged Debt constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

(d) Such Grantor is the beneficial owner of, and has good and marketable title to, the Investment Property pledged by it hereunder, free of any and all Liens or options in favor of any other Person, except the security interest created by this Agreement or nonconsensual Liens permitted pursuant to the Term Loan Agreement.

4.7           Receivables. No amount payable to such Grantor under or in connection with any Receivable of an amount greater that $2,000,000 is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent.

4.8           Intellectual Property. Schedule 6 lists all Intellectual Property (other than Copyright Licenses and Trademark Licenses) that is registered in the United States or for which application for registration in the United States has been filed and that is material to the operation of the business of the Borrower and its Subsidiaries taken as a whole owned by such Grantor in its own name on the date hereof. Such Intellectual Property is valid and enforceable, the use thereof does not infringe, misappropriate or otherwise violate the Intellectual Property rights of any third party and, to the

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knowledge of such Grantor, as of the date hereof, no third party has or is infringing, misappropriating or otherwise violating Grantor’s rights in and to such Intellectual Property, except to the extent that the invalidity or unenforceability of such Intellectual Property or such infringement, misappropriation or violation could not reasonably be expected to have a Material Adverse Effect.

4.9           Commercial Tort Claims. On the date hereof, except to the extent listed in Section 3 above, no Grantor has knowledge of rights in any Commercial Tort Claim as to which it reasonably expects to recover more than $2,000,000.

4.10.        Deposit Accounts, Etc. All of such Grantor’s Deposit Accounts, Securities Accounts and Commodity Accounts (other than Excluded Accounts) as of the date hereof are listed on Schedule 8.

SECTION 5.           COVENANTS

Each Grantor covenants and agrees with the Administrative Agent and the other Secured Parties that, from and after the date of this Agreement until the Obligations (other than contingent indemnification and contingent expense reimbursement obligations) shall have been paid in full:

5.1           Delivery of Instruments, Certificated Securities and Chattel Paper. (a) If (i) any amount in excess of $2,000,000 owned by any Subsidiary of the Borrower to any Grantor or (ii) any other amount in excess of $2,000,000 payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument, Certificated Security or Chattel Paper, such Instrument, Certificated Security or Chattel Paper shall be delivered as soon as reasonably practicable to the Administrative Agent, duly indorsed in a manner reasonably satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement.

(b) Any Pledged Debt required to be subordinated pursuant to the Term Loan Agreement shall, in each case, be fully subordinated to the payment in full of the Obligations.

5.2           Maintenance of Insurance. (a) Such Grantor will maintain the insurance required by the Term Loan Agreement.

(b) All such insurance shall (i) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 30 days or, in the case of insurance existing as of the date hereof, at least 10 days after receipt by the Administrative Agent of written notice thereof and (ii) name the Administrative Agent as insured party or loss payee.

5.3           Maintenance of Perfected Security Interest; Further Documentation. (a) Such Grantor shall take all actions reasonably requested by the Administrative Agent to maintain the security interest created by this Agreement as a security interest having at least the perfection and priority described in Section 4.2 and shall take all commercially reasonable actions to defend such security interest against the claims and demands of all Persons whomsoever, subject in each case to, in the case of Collateral consisting of Pledged Equity and Pledged Debt, nonconsensual Liens permitted by the Term Loan Agreement and, in the case of Collateral other than Pledged Equity and Pledged Debt, Liens permitted by the Term Loan Agreement and to the rights of such Grantor under the Financing Documents to dispose of the Collateral.

(b) Such Grantor will furnish to the Administrative Agent from time to time statements and schedules further identifying and describing the assets and property of such Grantor and such other reports in connection therewith as the Administrative Agent may reasonably request, all in reasonable

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detail. Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to the Term Loan Agreement, the Borrower shall deliver to the Administrative Agent a certificate executed by the associate general counsel or the chief legal officer of the Borrower setting forth, as of the date of such certificate, the information required pursuant to Schedules 2, 4, 6, 7 and 8 hereto and Schedules 1.1B, 1.1C, 3.15, 3.21(a) and 3.21(b) to the Term Loan Agreement or confirming that there has been no change in such information since (i) such information was furnished or otherwise updated, amended, changed or supplemented, or (ii) the date of the most recent certificate delivered pursuant to this Section 5.3(b).

(c)  At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, (i) filing any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby and (ii) in the case of Investment Property not issued by the Borrower or its Subsidiaries, Deposit Accounts, Securities Accounts, Commodity Accounts, Letter of Credit Rights and any other relevant Collateral, using commercially reasonable efforts to take, at any time after the occurrence and during the continuation of an Event of Default, any actions necessary to enable the Administrative Agent to obtain “control” (within the meaning of the applicable Uniform Commercial Code) with respect thereto.

5.4.          Changes in Locations, Name, etc. Such Grantor will not, except upon 10 days’ prior written notice to the Administrative Agent (or such shorter notice as shall be reasonably satisfactory to the Administrative Agent) and delivery to the Administrative Agent of all additional executed financing statements and other documents reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the security interests provided for herein, (i) change its jurisdiction of organization from that referred to in Section 4.3 or (ii) change its name.

5.5.          Notices. Such Grantor will advise the Administrative Agent promptly, in reasonable detail, of:

(a)  any Lien (other than security interests created hereby or Liens permitted under the Term Loan Agreement) on any of the Collateral which would adversely affect the ability of the Administrative Agent to exercise any of its remedies hereunder; and

(b)  the occurrence of any other event which could reasonably be expected to have a material adverse effect on the aggregate value of the Collateral or on the security interests created hereby.

5.6.          Investment Property. (a) If such Grantor shall become entitled to receive or shall receive any certificate (including, without limitation, any certificate representing a dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of the Capital Stock of any Subsidiary, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of the Pledged Equity, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the Administrative Agent and the other Secured Parties, hold the same in trust for the Administrative Agent and the other Secured Parties and deliver the same forthwith to the Administrative Agent in the exact form received, duly indorsed by such Grantor to the Administrative Agent, if required, together with an undated stock power covering such certificate duly executed in blank by such Grantor, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Obligations. If

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an Event of Default shall have occurred and be continuing, and any distribution of capital to a Grantor (other than cash) required to be included in Collateral shall be made on or in respect of the Investment Property or any property (other than cash) required to be included in Collateral shall be distributed to a Grantor upon or with respect to the Investment Property pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, such Grantor shall, unless such distribution of capital or property is otherwise subject to a perfected security interest in favor of the Administrative Agent, use commercially reasonable efforts to cause it to be subject to a perfected security interest in favor of the Administrative Agent to the extent and in the manner required pursuant to Section 5.3 hereof. If any such property so distributed in respect of the Investment Property shall be received by such Grantor, such Grantor shall, until such property is delivered to the Administrative Agent, hold such property in trust for the Administrative Agent and the other Secured Parties as additional collateral security for the Obligations.

(b)  Without the prior written consent of the Administrative Agent, such consent not to be unreasonably withheld, such Grantor will not (i) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Investment Property or Proceeds thereof (except pursuant to a transaction permitted by the Term Loan Agreement), (ii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Investment Property or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement or permitted under the Term Loan Agreement or (iii) except as permitted by the Term Loan Agreement, enter, subsequent to the date upon which such Investment Property becomes collateral hereunder, into any agreement (other than the Term Loan Agreement) or undertaking restricting the right or ability of such Grantor or the Administrative Agent to sell, assign or transfer any of the Investment Property required to be included in Collateral or proceeds thereof.

(c)  In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Investment Property required to be included in Collateral issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 5.6(a) with respect to such Investment Property issued by it and (iii) the terms of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Section 6.3(c) and 6.7 with respect to such Investment Property issued by it.

(d)  No Grantor shall permit any security interest in certificated Pledged Equity of any Issuer that is not a Subsidiary to be perfected by possession in favor of a Person other than the Administrative Agent.

5.7.          Receivables. (a) Other than in the ordinary course of business, such Grantor will not (i) grant any extension of the time of payment of any Receivable required to be included in Collateral, (ii) compromise or settle any Receivable required to be included in Collateral for less than the full amount thereof, (iii) release, wholly or partially, any Person liable for the payment of any Receivable required to be included in Collateral, (iv) allow any credit or discount whatsoever on any Receivable required to be included in Collateral or (v) amend, supplement or modify any Receivable required to be included in Collateral in any manner that could adversely affect the value thereof.

(b)  Such Grantor will deliver to the Administrative Agent a copy of each material demand, notice or document received by it that questions or calls into doubt the validity or enforceability of more than 20% of the aggregate amount of the then-outstanding Receivables.

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(c)  Notwithstanding anything herein or in any other Financing Document to the contrary, such Grantor shall not be required to comply with the requirements of the Federal Assignment of Claims Act of 1940.

5.8.          Intellectual Property. (a) Such Grantor (either itself or through licensees) will (i) continue to use each Trademark that is material to the operation of the business of the Borrower and its Subsidiaries taken as a whole on each and every trademark class of goods applicable to its current line as reflected in its current catalogs, brochures and price lists in order to maintain such Trademark in full force free from any claim of abandonment for non-use, (ii) maintain as in the past the quality of products and services offered under such Trademark, (iii) use such Trademark with the appropriate notice of registration and all other notices and legends required by applicable Law, (iv) not adopt or use any mark which is confusingly similar or a colorable imitation of such Trademark unless the Administrative Agent, for the ratable benefit of the Secured Parties, shall obtain a perfected security interest in such mark pursuant to this Agreement and (v) not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby such Trademark may become invalidated or impaired in any material respect.

(b)  Such Grantor (either itself or through licensees) will not do any act, or omit to do any act, whereby any Patent that is material to the operation of the business of the Borrower and its Subsidiaries taken as a whole may become forfeited abandoned or dedicated to the public.

(c)  Such Grantor (either itself or through licensees) (i) will employ each Copyright that is material to the operation of the business of the Borrower and its Subsidiaries taken as a whole and (ii) will not (and will not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any portion of the Copyrights that is material to the operation of the business of the Borrower and its Subsidiaries taken as a whole may become invalidated or otherwise impaired. Such Grantor will not (either itself or through licensees) do any act whereby any portion of the Copyrights that is material to the operation of the business of the Borrower and its Subsidiaries taken as a whole may fall into the public domain.

(d)  Such Grantor (either itself or through licensees) will not do any act that knowingly uses any Intellectual Property that is material to the operation of the business of the Borrower and its Subsidiaries taken as a whole to infringe the intellectual property rights of any other Person.

(e)  Such Grantor will notify the Administrative Agent immediately if it knows, or has reason to know, that any application or registration relating to any Intellectual Property that is material to the operation of the business of the Borrower and its Subsidiaries taken as a whole may become forfeited, abandoned or dedicated to the public, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court or tribunal in any country) regarding such Grantor’s ownership of, or the validity of, any such Intellectual Property or such Grantor’s right to register the same or to own and maintain the same.

(f)  In the event such Grantor, either by itself or through any agent, employee, licensee or designee, shall in any fiscal year file an application for the registration of any Intellectual Property that is material to the operation of the Borrower and its Subsidiaries taken as a whole with the United States Patent and Trademark Office, the United States Copyright Office or any political subdivision thereof, such Grantor shall report such filing to the Administrative Agent at the time of delivery of annual financial statements with respect to such fiscal year pursuant to the Term Loan Agreement. Upon reasonable request of the Administrative Agent, such Grantor shall execute and deliver, and have recorded, any and all agreements, instruments, documents,

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and papers as the Administrative Agent may reasonably request to evidence the Administrative Agent’s and the other Secured Parties’ security interest in any such Copyright, Patent to Trademark and the goodwill and general intangibles of such Grantor relating thereto or represented thereby.

(g)  Such Grantor will take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other county or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of the Intellectual Property that is material to the operation of the business of the Borrower and its Subsidiaries taken as a whole, including without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability.

(h)  In the event that any Intellectual Property that is material to the operation of the business of the Borrower and its Subsidiaries taken as a whole is infringed, misappropriated or diluted by a third party, such Grantor shall (i) take such actions as such Grantor shall reasonably deem appropriate under the circumstance to protect such Intellectual Property and (ii) if such Intellectual Property is of material economic value, promptly notify the Administrative Agent after it learns thereof and sue for infringement, misappropriation or dilution, to seek injunctive relief where appropriate and to recover any and all damages for such infringement, misappropriation or dilution.

(i)  Notwithstanding anything to the contrary in this Agreement, subject to the provisions of the Term Loan Agreement, nothing shall prevent any Grantor in the ordinary course of business from abandoning, ceasing to use or otherwise impairing or disposing of any Intellectual property if such Grantor reasonably believes that doing so is in its business interest. For the avoidance of doubt, nothing in this Section 5.8 shall prohibit a sale, transfer or disposition of any Intellectual Property made in accordance with Sections 6.4 or 6.9 of the Term Loan Agreement.

(j)  No Grantor shall, and the Grantors in the aggregate shall not, make filings in the United States Copyright Office or the United States Trademark Office to perfect any security interest in all or substantially all of the Copyright Licenses held by the Grantors in the aggregate or all or substantially all of the Trademark Licenses held by the Grantors in the aggregate (other than to perfect the security interest in such Copyright Licenses and Trademark Licenses securing the Obligations).

(k)  Upon and during the continuance of an Event of Default, each Grantor shall use all commercially reasonable efforts to obtain all requisite consents or approvals under such Copyright License, Patent License and Trademark License reasonably requested by the Administrative Agent to effect the assignment of all such Grantor’s right, title and interest thereunder to the Administrative Agent or its designee.

5.9.          Commercial Tort Claims.  If such Grantor shall obtain an interest in any Commercial Tort Claim as to which it determines that it reasonably expects to recover more than $2,000,000, such Grantor shall within 30 days of making such determination (or such other period reasonably satisfactory to the Administrative Agent) sign and deliver documentation reasonably acceptable to the Administrative Agent granting a security interest under the terms and provisions of this Agreement in and to such Commercial Tort Claim.

5.10.        Deposit Accounts.  (a) Each Grantor shall execute and deliver to the Administrative Agent Deposit Account Control Agreements for each Collateral Deposit Account identified on Schedule 8 within 60 days after the Closing Date, or such longer period as is reasonably acceptable to the Administrative Agent.

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(b)  Before opening, closing or replacing any Collateral Deposit Account, each Grantor shall give 5 Business Days’ prior notice to the Administrative Agent and, if requested by the Administrative Agent, shall cause each bank of financial institution in which it seeks to open a Collateral Deposit Account, to enter into a Deposit Account Control Agreement with the Administrative Agent in order to give the Administrative Agent control of such Deposit Account. In the case of Collateral Deposit Accounts maintained with Lenders, the terms of such letter shall be subject to the provisions of the Term Loan Agreement or this Agreement regarding setoffs.

SECTION 6.           REMEDIAL PROVISIONS

6.1.          Certain Matters Relating to Receivables. (a) The Administrative Agent shall have the right annually (or, if an Event of Default has occurred and is continuing, at any time) to make test verifications of the Receivables required to be included in Collateral in any manner and through any medium that it reasonably considers advisable, and each Grantor shall furnish all such assistance and information that it reasonably considers advisable, and each Grantor shall furnish all such assistance and information as the Administrative Agent may require in connection with such test verifications. Annually (or, if an Event of Default has occurred and is continuing, at any time), upon the Administrative Agent’s reasonable request and at the expense of the relevant Grantor, such Grantor shall use commercially reasonable efforts to cause independent public accountants or other satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing reconciliations, aging and test verifications of, and trial balances for, such Receivables.

(b)  The Administrative Agent hereby authorizes each Grantor to collect such Grantor’s Receivables required to be included in Collateral and the Administrative Agent may curtail or terminate said authority at any time after the occurrence and during the continuance of an Event of Default. If required by the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, any payments of such Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any event, within two Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Administrative Agent if required, in a Collateral Account maintained under the sole dominion and control of the Administrative Agent if required, in a collateral Account maintained under the sole dominion and control of the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the other Secured Parties only as provided in Section 6.5, and (ii) until so turned over, shall be held by such Grantor in trust for the Administrative Agent and the other Secured Parties, segregated from other funds of such Grantor. Each such deposit of Proceeds of Receivables required to be included in Collateral shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit.

(c)  If an Event of Default has occurred and is continuing, at the Administrative Agent’s request, each Grantor shall deliver to the Administrative Agent all original and other document evidencing, and relating to, the agreements and transactions which gave rise to the Receivables required to be included in Collateral, including, without limitation, all original orders, invoices and shipping receipts.

6.2.          Communications with Obligors; Grantors Remain Liable. (a) The Administrative Agent in its own name or in the name of others may at any time when an Event of Default has occurred and is continuing, communicate with obligors under the Receivables required to be included in Collateral to verify with them to the Administrative Agent’s satisfaction the existence, amount and terms of any such Receivables.

(b)  Upon the request of the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, each Grantor shall notify obligors on the Receivables required to be included in Collateral that such Receivables have been assigned to the Administrative

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Agent for the ratable benefit of the Secured Parties and that payments in respect thereof shall be made directly to the Administrative Agent.

(c)  Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of the Receivables required to be included in Collateral to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto. Neither the Administrative Agent nor any other Secured Party shall have any obligation or liability under any such Receivable (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Administrative Agent or any other Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any such Receivable (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

6.3.          Pledged Equity. (a) Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the relevant Grantor of the Administrative Agent’s intent to exercise its corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted to receive all dividends (other than dividends payable in Capital Stock) Paid in respect of the Pledged Equity and all payments made in respect of the Pledged Debt, in each case to the extent permitted in the Term Loan Agreement, and to exercise all voting and corporate or other organizational rights with respect to the Investment Property; provided, however, that such Grantor will not be entitled to exercise any such right if the result thereof could materially and adversely affect the right inuring to a holder of the Investment Property or the right and remedies of the Administrative Agent or the other Secured Parties under Financing Document or the ability of the Administrative Agent or the other Secured Parties to exercise the same.

(b)  If an Event of Default shall occur and be continuing and the Administrative Agent shall give notice of its intent to exercise such rights to the relevant Grantor or Grantors, (i) the Administrative Agent shall have the right to receive any and all cash dividends, payments (including sums paid upon the liquidation or dissolution of any Issuer or in connection with any distribution of capital) or other Proceeds paid in respect of the Investment Property and make application thereof to the Obligations in accordance with the provisions of the Term Loan Agreement and (ii) any or all of the Investment Property shall be registered in the name of the Administrative Agent or its nominee, and the Administrative Agent or its nominee may thereafter exercise (x) all voting, corporate and other right pertaining to such Investment Property at any meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Investment Property as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of the Investment Property upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate or other organizational structure of any Issuer, or upon the exercise by any Grantor or the Administrative Agent of any right, privilege or option pertaining to such Investment Property, and in connection therewith, the right to deposit and deliver any and all of the Investment Property with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Administrative Agent may determine), all without liability except to account for property actually received by it, but the Administrative Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing. If any sums of money paid or distributed in respect of Investment Property, which the Administrative Agent shall be entitled to receive pursuant to clause (i) above, shall be received by a

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Grantor, such Grantor shall, until such money is paid to the Administrative Agent, hold such money in trust for the Administrative Agent and the other Secured Parties as additional collateral for the Obligations.

(c)  Each Grantor hereby authorizes and instructs each Issuer of any Investment Property pledged by such Grantor hereunder to (i) comply with any instruction received by it from the Administrative Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Investment Property directly to the Administrative Agent.

6.4.          Proceeds to be Turned Over to Administrative Agent. If an Event of Default occurs and is continuing and the Administrative Agent so requests, all Proceeds received by any Grantor consisting of cash, checks and other near-cash items shall be held by such Grantor in trust for the Administrative Agent and the other Secured Parties, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to the Administrative Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Administrative Agent, if required). All Proceeds received by the Administrative Agent hereunder shall be held by the Administrative Agent in a Collateral Account maintained under its sole dominion and control. All Proceeds while held by the Administrative Agent in a Collateral Account (or by such Grantor in trust for the Administrative Agent and the other Secured Parties) shall continue to be held as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided in Section 6.5.

6.5.          Application of Proceeds. At such intervals as may be agreed upon by the Borrower and the Administrative Agent, or, if an Event of Default has occurred and is continuing, at any time at the Administrative Agent’s election, the Administrative Agent shall apply all or any part of Proceeds required to be included in Collateral, whether or not held in any Collateral Account, and any proceeds of the guarantee set forth in Section 2, in payment of the Obligations in the following order:

First, to pay Obligations in respect of incurred and unpaid fees and expenses of the Administrative Agent and the Trustee (if any) under the Financing Documents;

Second, towards payment of amounts then due and owing and remaining unpaid in respect of the Obligations, pro rata among the Secured Parties according to the amounts of the Obligations then due and owing and remaining unpaid to the Secured Parties;

Third, towards payment of any remaining Obligations, pro rata among the Secured Parties according to the amounts of the Obligations then held by the Secured Parties; and

Fourth, any balance remaining after the Obligations shall have been paid in full shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive the same.

6.6.          Code and Other Remedies. If an Event of Default occurs and is continuing, the Administrative Agent, on behalf of the Secured Parties, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the New York UCC or any other applicable law. Without limiting the generality of the foregoing, if an Event of Default occurs and is continuing, the Administrative Agent, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses,

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advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Administrative Agent or any other Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Administrative Agent or any other Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released. Each Grantor further agrees, at the Administrative Agent’s request following and during the continuance of an Event of Default, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at such Grantor’s premises or elsewhere. The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this Section 6.6, after deducting all reasonable out-of-pocket costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Administrative Agent may elect, and only after such application and after the payment by the Administrative Agent of any other amount required by any provision of law, including, without limitation, Section 9-615(a)(3) of the New York UCC, need the Administrative Agent account for the surplus, if any, to any Grantor. To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against the Administrative Agent or any other Secured Party arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition.

6.7.          Registration Rights.  (a) If the Administrative Agent shall determine to exercise its rights to sell all or any of the Pledged Equity pursuant to Section 6.6, and if, in the opinion of the Administrative Agent, it is necessary or advisable to have the Pledged Equity, or that portion thereof to be sold, registered under the provisions of the Securities Act, the relevant Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the directors and officers of such Issuer to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts as may be, in the opinion of the Administrative Agent, necessary or advisable to register the Pledged Equity, or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use its best efforts to cause the registration statement relating thereto to become effective and to remain effective for a period of one year from the date of the first public offering of the Pledged Equity, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the related prospectus which, in the opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto. Each Grantor agrees to cause such Issuer to comply with the provisions of the securities or “Blue Sky” laws of any and all jurisdictions with the Administrative Agent shall designate and to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act.

(b)  Each Grantor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Equity, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the

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distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Equity for the period of time necessary to permit the Issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such Issuer would agree to do so.

(c)  Each Grantor agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Equity pursuant to this Section 6.7 valid and binding and in compliance with any and all other applicable Law. Each Grantor further agrees that a breach of any of the covenants contained in this Section 6.7 will cause irreparable injury to the Administrative Agent and the other Secured Parties, that the Administrative Agent and the other Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 6.7 shall be specifically enforceable against such Grantor, and such Grantor hereby waives, to the fullest extent permitted by applicable law, and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing under the Term Loan Agreement.

6.8.          Deficiency.  Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the reasonable fees and disbursements of any attorneys employed by the Administrative Agent or any other Secured Party to collect such deficiency.

6.9.          Notice of Sole Control.  Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may give notice of sole control or any other instruction under any Deposit Account Control Agreement with respect to any Collateral Deposit Account or and other control agreement with any Securities Intermediary with respect to any Securities Account or with any Commodity Intermediary with respect to any Commodity Account and take any action therein with respect to such Collateral, and the Administrative Agent agrees not to give any such notice or instruction unless there is an occurrence and continuance of an Event of Default. The Administrative Agent agrees to withdraw any such notice of sole control as soon as practicable upon any such Event of Default ceasing to exist (or, if any such notice of sole control may not be withdrawn, to terminate the applicable control agreement and enter into a new control agreement on the same terms).

SECTION 7.           THE ADMINISTRATIVE AGENT

7.1.          Administrative Agent’s Appointment as Attorney-in-Fact, etc.  (a) Each Grantor hereby irrevocably constitutes and appoints the Administrative Agent and any officer or agent thereof, with full power or substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following:

(i)            in the name of such Grantor or its own name, or otherwise, take possession of and indorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable required to be included in Collateral hereunder or with respect to any other Collateral and file any claim or take any other action or proceeding in

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any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any such Receivable or with respect to any other Collateral whenever payable;

(ii)           in the case of any Intellectual Property required to be included in Collateral hereunder, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as the Administrative Agent may request to evidence the Administrative Agent’s and the other Secured Parties’ security interest in such Intellectual Property and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;

(iii)          pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof;

(iv)          execute, in connection with any sale provided for in Section 6.6 or 6.7, any indorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and

(v)           (1) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (2) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (3) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (5) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (6) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Administrative Agent may reasonably deem appropriate; (7) subject to any licenses (and the rights granted therein) existing at the time of such assignment, assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (8) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent’s option and such Grantor’s expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Administrative Agent’s and the other Secured Parties’ security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.

Anything in this Section 7.1(a) to the contrary notwithstanding, the Administrative Agent agrees that it will not exercise any rights under the power of attorney provided for in this Section 7.1(a) unless an Event of Default shall have occurred and be continuing.

(b)  If any Grantor fails to perform or comply with any of its agreements contained herein, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.

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(c)  The reasonable out-of-pocket expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this Section 7.1, together with interest thereon at a rate per annum equal to the highest rate per annum at which interest would then be payable on any category of past due Base Rate Loans under the Term Loan Agreement, from the date of payment by the Administrative Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Administrative Agent on demand.

(d)  Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.

7.2           Duty of Administrative Agent.  The Administrative Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Administrative agent deals with similar property for its own account. Neither the Administrative Agent, any other Secured Party nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the Administrative Agent and the other Secured Parties hereunder are solely to protect the Administrative Agent’s and the other Secured Parties’ interests in the Collateral and shall not impose any duty upon the Administrative Agent or any other Secured Party to exercise any such powers. The Administrative Agent and the other Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct.

7.3           Execution of Financing Statements.  Pursuant to any applicable law, each Grantor authorizes the Administrative Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of such Grantor in such form and in such offices as the Administrative Agent determines appropriate to perfect the security interests of the Administrative Agent under this Agreement. Each Grantor authorizes the Administrative Agent to use the collateral description “all personal property” or “all assets” in any such financing statements. Each Grantor hereby ratifies and authorizes the filing by the Administrative Agent of any financing statement with respect to the Collateral made prior to the date hereof; provided that, at the reasonable request of any Grantor, the Administrative Agent shall amend any such statement (and any other financing statement filed by the Administrative Agent in connection with this Agreement) to exclude any property that is released from, or otherwise not included in, the Collateral. The Administrative Agent agrees promptly to furnish copies of all such filings to the Borrower.

7.4           Authority of Administrative Agent.  Each Grantor acknowledges that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Administrative Agent and the other Secured Parties, be governed by the Term Loan Agreement, and, if Exchange Notes are outstanding, as between the Trustee and the Holders, by the Indenture, and in each case by such other agreements with respect thereto as my exist from time to time among them, but, as between the Administrative Agent and the Grantors, the Administrative Agent shall be conclusively presumed to be acting as agent for the Secured Parties with

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full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.

SECTION 8.           MISCELLANEOUS

8.1.          Amendments in Writing.  (a) None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 9.1 of the Term Loan Agreement.

(b)  The parties hereto agree to amend, or amend and restate, this Agreement or any other Security Document upon the request of the Administrative Agent in connection with the issuance of Exchange Notes and the execution and delivery of the Indenture in order, as may be reasonably requested or necessary, to (i) replace the Administrative Agent with the Trustee or its designee and (ii) to facilitate compliance of this Agreement and the Indenture, or of the Trustee, with the Trust Indenture Act of 1939 or any other Federal or state securities laws applicable to this Agreement, the Indenture or the Exchange Notes or the Trustee.

(c)  the parties hereto agree to amend, or amend and restate, this Agreement or any other Security Document upon the request of the Borrower in connection with the issuance of Take-Out Debt, as may be reasonably requested or necessary, to (i) provide for obligations in respect of the Take-Out Debt to be guaranteed and secured hereunder on the same basis as the Exchange Notes and (ii) to facilitate compliance of this Agreement and any indenture governing the Take-Out Debt, or of the trustee under any such indenture, with the Trust Indenture Act of 1939 or any other Federal or State securities laws applicable to this Agreement, any such indenture or the Take-Out Debt or any such trustee.

8.2           Notices.  All notices, requests and demands to or upon the Administrative Agent or any Grantor hereunder shall be effected in the manner provided for in Section 9.2 of the Term Loan Agreement; provided that any such notice, request or demand to or upon any Guarantor shall be addressed to such Guarantor at its notice address set forth on Schedule 1.

8.3           No Waiver by Course of Conduct; Cumulative Remedies.  Neither the Administrative Agent nor any other Secured Party shall by any act (except by a written instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event or Default. No failure to exercise, nor any delay in exercising, on the part of the Administrative Agent or any other Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any other Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such Secured Party would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

8.4           Enforcement Expenses; Indemnification.  (a) Each Guarantor agrees to pay or reimburse each Secured Party and the Administrative Agent for all its reasonable out-of-pocket costs and expenses incurred in collecting against such Guarantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights under this Agreement and the other Financing Documents to which such Guarantor is a party, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent.

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(b)  Each Guarantor agrees to pay, and to save the Administrative Agent and the other Secured Parties harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.

(c)  Each Guarantor agrees to pay, and to save the Administrative Agent and the other Secured Parties harmless from, any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments and suits and related reasonable out-of-pocket expenses (including Attorney Costs) of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to Section 9.5 of the Term Loan Agreement.

(d)  The agreements in this Section 8.4 shall survive repayment of the Obligations and all other amounts payable under the Term Loan Agreement and the other Financing Documents.

8.5.          Successors and Assigns.  This Agreement shall be binding upon the permitted successors and assigns of each Grantor and shall inure to the benefit of the Administrative Agent and the other Secured Parties and their permitted successors and assigns; provided that no Grantor may, except pursuant to a merger or consolidation permitted by the Term Loan Agreement, assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent.

8.6           Setoff.  In addition to any rights and remedies of the Lenders provided by Law, upon the occurrence and during the continuance of any Event of Default, each Lender and its Affiliates is authorized at any time and from time to time, without prior notice to any Grantor, any such notice being waived by each Grantor to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other Indebtedness at any time owing by, such Lender and its Affiliates to or for the credit or the account of any Grantor against any and all Obligations owing to such Lender and its Affiliates hereunder or under any other Financing Document, now or hereafter existing, irrespective of whether or not such Agent or such Lender or Affiliate shall have made demand under this Agreement or any other Financing Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or indebtedness; provided that, in the case of any such deposits or other Indebtedness for the credit or the account of any Foreign Subsidiary, such set off may only be against any Obligations of Foreign Subsidiaries. Each Lender agrees promptly to notify such Grantor and the Administrative Agent after any such set off and application made by such Lender; provided, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of the Administrative Agent and each Lender under this Section 8.6 are in addition to other rights and remedies (including other rights of setoff) that the Administrative Agent and such Lender may have.

8.7           Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by telecopier of an executed counterpart of a signature page to this Agreement shall be effective as delivery of an original executed counterpart of this Agreement.

8.8           Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

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8.9.          Section Headings.  The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

8.10.        Integration.  This Agreement, together with the other Financing Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.

8.11.       GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

8.12.        Submission To Jurisdiction; Waivers.  (a) Any legal action or proceeding arising under any Financing Document or in any way connected with or related or incidental to the dealings of the parties hereto or any of them with respect to any Financing Document, or the transactions related thereto, in each case whether now existing or hereafter arising, may be brought in the courts of the State of New York sitting in New York City or of the United States for the southern District of such State, and by execution and delivery of this Agreement, each Grantor and the Administrative Agent consents, for itself and in respect of its property, to the non-exclusive jurisdiction of those courts. Each Grantor and the Administrative Agent irrevocably waives any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action or proceeding in such courts in respect of any Financing Document or other document related thereto.

(b)  Each Grantor hereby irrevocably and unconditionally:

(i)            agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Grantor at its address referred to in Section 8.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

(ii)           agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

(iii)          waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

8.13.        Acknowledgements.  Each Grantor hereby acknowledges that:

(a)  it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Financing Documents to which it is a party;

(b)  neither the Administrative Agent nor any other Secured Party has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Financing Documents, and the relationship between the Grantors, on the one hand, and the Administrative Agent and the other Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(c)  no joint venture is created hereby or by the other Financing Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or among the Grantors and the Secured Parties.

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8.14.        Additional Guarantors and Grantors.  Each Subsidiary of the Borrower that is required to become a party to this Agreement pursuant to the Term Loan Agreement shall become a Guarantor and a Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption Agreement in the form of Annex 1 hereto.

8.15.        Releases.  (a) At such time as the Loans and the other Obligations (other than contingent indemnification and contingent expense reimbursement obligations) shall have been paid in full, the Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantors. At the request and sole expense of any Grantor following any such termination, the Administrative Agent shall deliver to such Grantor any Collateral held by the Administrative Agent hereunder and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

(b)  If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Term Loan Agreement, then (i) the Liens created hereby on such Collateral shall automatically be released and (ii) the Administrative Agent, at the request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral. In addition, at the request and at the sole expense of the Borrower, the Administrative Agent agrees to (x) provide to each Grantor a power of attorney to execute any document reasonably required to permit any sale permitted by the Term Loan Agreement of any asset, the perfection of which is governed by a certificate-of-title statute, free of the Liens created by the Security Documents and (y) with respect to any jurisdiction in which releases executed pursuant to such power of attorney are insufficient to release such Liens, (1) execute in blank any document reasonably required to permit any sale permitted by the Term Loan Agreement of any asset, the perfection of which is governed by a certificate-of-title statute, free of the Liens created by the Security Documents and (2) authorize such Grantor to fill in the relevant information to release such Lien. At the request and sole expense of the Borrower, a Subsidiary Guarantor shall be released from its obligations hereunder in the event that all the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or otherwise disposed of in a transaction permitted by the Term Loan Agreement; provided that the Borrower shall have delivered to the Administrative Agent, at least five Business Days prior to the date of proposed release, a written request for release identifying the relevant Subsidiary Guarantor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by the Borrower stating that such transaction is in compliance with the Term Loan Agreement and the other Financing Documents.

8.16.       WAIVER OF JURY TRIAL.  EACH GRANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY FINANCING DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY FINANCING DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 8.16 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

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8.17.        Effectiveness of the Merger; Assignment and Delegation to and Assumption by the Target.  The Target and its Subsidiaries shall have no rights or obligations hereunder until the consummation of the Merger and any representations and warranties of the Target or any of its Subsidiaries hereunder shall not become effective until such time.  Upon consummation of the Merger, all rights, obligations, representations and warranties of the Target and its Subsidiaries under this Agreement and the other Financing Documents shall become effective as of the date hereof, without any further action by any Person.

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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Collateral Agreement to be duly executed and delivered as of the date first above written.

GLOBAL AERO LOGISTICS INC.
By:	/s/ Subodh Karnik
	Name:	Subodh Karnik
	Title:	President and CEO

[Signature Page to Guarantee and Collateral Agreement]

NEW ATA INVESTMENT INC.
By:	/s/ Subodh Karnik
	Name:	Subodh Karnik
	Title:	President and CEO

[Signature Page to Guarantee and Collateral Agreement]

NEW ATA ACQUISITION INC.
By:	/s/ Subodh Karnik
	Name:	Subodh Karnik
	Title:	President and CEO

[Signature Page to Guarantee and Collateral Agreement]

ATA AIRLINES, INC.
By:		/s/ Subodh Karnik
	Name:		Subodh Karnik
	Title:		President and CEO

[Signature Page to Guarantee and Collateral Agreement]

WORLD AIR HOLDINGS, INC.
By:	/s/ Randy J. Martinez
	Name:	Randy J. Martinez
	Title:	CEO

[Signature Page to Guarantee and Collateral Agreement]

NORTH AMERICAN AIRLINES, INC.
By:	/s/ Mark M. McMillin
	Name:	Mark M. McMillin
	Title:	General Counsel & Corp Secretary

[Signature Page to Guarantee and Collateral Agreement]

WORLD AIRWAYS, INC.
By:	/s/ Mark M. McMillin
	Name:	Mark M. McMillin
	Title:	General Councel & Corp Secretary

[Signature Page to Guarantee and Collateral Agreement]

WORLD AIRWAYS PARTS COMPANY, LCC
By:	/s/ Michael W. Towe
	Name:	Michael W. Towe
	Title:	Manager

[Signature Page to Guarantee and Collateral Agreement]

JPMORGAN CHASE BANK, N.A., as Administrative Agent
By:	/s/ John C. Riordan
	Name:	JOHN C. RIORDAN
	Title:	VICE PRESIDENT

[Signature Page to Guarantee and Collateral Agreement]

EX-10.16

Exhibit 10.16

EXECUTION VERSION

MORTGAGE AND SECURITY AGREEMENT

Dated as of August 14, 2007

between

ATA AIRLINES, INC.

and

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

in respect of

TWO (2) L1011-500 (385-3) AIRCRAFT

1. Manufacturer’s Serial No. 1238, FAA Registration No. N164AT

2. Manufacturer’s Serial No. 1219, FAA Registration No. N161AT

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		1
Section 1.1.	Certain Definitions	1
ARTICLE II SECURITY		1
Section 2.1.	Grant of Security Interest	1
Section 2.2.	Exclusion for Certain Inflight Equipment	3
ARTICLE III COVENANTS OF THE COMPANY		4
Section 3.1.	[Intentionally left blank]	4
Section 3.2.	Lease	4
Section 3.3.	Identification of Security Interest; Filings	4
ARTICLE IV REMEDIES OF THE ADMINISTRATIVE AGENT UPON AN EVENT OF DEFAULT		5
Section 4.1.	Event of Default	5
Section 4.2.	Remedies with Respect to Collateral	5
Section 4.3.	Waiver of Appraisement, etc., Laws	7
Section 4.4.	Remedies Cumulative	7
Section 4.5.	Discontinuance of Proceedings	8
Section 4.6.	Concerning the Cape Town Convention	8
ARTICLE V DUTIES OF THE ADMINISTRATIVE AGENT		9
Section 5.1.	Action Upon Event of Default	9
Section 5.2.	[Intentionally left blank]	9
Section 5.3.	Indemnification	9
Section 5.4.	No Duties Except as Specified in Collateral Documents or Instructions	9
Section 5.5.	No Action Except Under Collateral Documents or Instructions	9
Section 5.6.	Capacity of the Administrative Agent	10
ARTICLE VI SUPPLEMENTS AND AMENDMENTS TO THIS MORTGAGE AND OTHER DOCUMENTS		10
Section 6.1.	Supplemental Mortgages	10
Section 6.2.	Exchange Notes; Take-Out Debt	10
Section 6.3.	Administrative Agent Protected	11
ARTICLE VII INVESTMENT OF SECURITY FUNDS		11
Section 7.1.	Investment of Security Funds	11

iii

		Page
ARTICLE VIII MISCELLANEOUS		11
Section 8.1.	Termination of Mortgage	11
Section 8.2.	Alterations to Mortgage	12
Section 8.3.	No Legal Title to Collateral in Lender or Holder	12
Section 8.4.	Sale of the Aircraft by Administrative Agent Is Binding	12
Section 8.5.	Benefit of Mortgage	13
Section 8.6.	Section 1110 of the Bankruptcy Code	13
Section 8.7.	Notices	13
Section 8.8.	Severability	13
Section 8.9.	No Waiver; Cumulative Remedies	13
Section 8.10.	Separate Counterparts	13
Section 8.11.	Successors and Assigns	13
Section 8.12.	Headings	14
Section 8.13.	Governing Law	14
Section 8.14.	Normal Commercial Relations	14
Section 8.15.	Language	14
Section 8.16.	Execution of Financing Statements	14

iv

MORTGAGE AND SECURITY AGREEMENT

This MORTGAGE AND SECURITY AGREEMENT, dated as of August 14, 2007, between ATA AIRLINES, INC., an Indiana corporation (together with its successors and permitted assigns, the “Company”), and JPMORGAN CHASE BANK, N.A., a national banking association formed under the federal laws of the United States of America, as Administrative Agent for the benefit of the Lenders and the other Secured Parties (together with its permitted successors and assigns, the “Administrative Agent”);

W I T N E S S E T H:

WHEREAS, pursuant to the Term Loan Agreement, dated as of August 14, 2007 (as amended, supplemented or otherwise modified from time to time, the “Term Loan Agreement”), among New ATA Acquisition Inc. (the “Borrower”), the Lenders parties thereto from time to time (the “Lenders”), the Administrative Agent and the other parties thereto, the Lenders have severally agreed to make term loans to the Borrower upon the terms and subject to the conditions set forth therein;

WHEREAS, pursuant to the Term Loan Agreement, loans made by the Lenders may be exchanged for Exchange Notes issued pursuant to the Indenture upon the Initial Maturity Date (as each such term is defined in the Term Loan Agreement);

WHEREAS, the Borrower is a member of an affiliated group of companies that includes the Company; and

WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective term loans to the Borrower under the Term Loan Agreement that the Company shall have executed and delivered this Mortgage to the Administrative Agent for the ratable benefit of the Secured Parties;

NOW, THEREFORE, to secure the due and punctual payment of the Obligations, it is hereby covenanted and agreed by and between the parties hereto as follows:

ARTICLE I

DEFINITIONS

Section 1.1.            Certain Definitions.

Unless otherwise defined herein or the context requires otherwise, capitalized terms used herein shall have the meanings set forth in Appendix A hereto.

ARTICLE II

SECURITY

Section 2.1.            Grant of Security Interest.

The Company, in order to secure (i) the prompt payment when due of the Loans and of the other Obligations and (ii) the performance and observance by the Company of all agreements,

covenants and provisions contained herein and in the Financing Documents, and in consideration of the premises and of the covenants herein contained, and of other good and valuable consideration, the receipt of which is hereby acknowledged, has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed and does hereby (subject to the terms and conditions hereof) grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm unto the Administrative Agent, its permitted successors and assigns, for the security and benefit of the Secured Parties, forever, a continuing security interest in, and mortgage lien on, all estate, right, title and interest of the Company in, to and under the following described properties, rights, interests and privileges (which, collectively, including all property hereafter specifically subjected to the lien of this Mortgage by any instrument supplemental hereto, are referred to herein as the “Collateral”):

(a)           the Airframe and the Engines, each of which Engines is of 49,120 or more pounds of thrust or its equivalent, and in the case of such Engines, whether or not any such Engine shall be installed in or attached to the Airframe or any other airframe, together with all accessories, equipment, parts and appurtenances appertaining or attached to the Airframe (other than aircraft engines not constituting Engines) or Engines and owned by the Company, whether now owned or hereafter acquired, and all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines and all records, logs, manuals and other documents (“Documents”) at any time maintained with respect to the foregoing;

(b)           any Lease Assignment and all rights thereunder;

(c)           all proceeds with respect to the requisition of title to or use of the Aircraft or any part thereof, and all insurance proceeds with respect to the Aircraft or any part thereof, but excluding any insurance maintained by the Company and not required under the Financing Documents;

(d)           all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Administrative Agent in pledge hereunder and held or required to be held by the Administrative Agent hereunder;

(e)           any and all property that may, from time to time hereafter, in accordance with the provisions of this Mortgage, by delivery or by Mortgage Supplement or by other writing of any kind, for the purposes hereof be in any way subjected to the lien and security interest hereof or be expressly conveyed, mortgaged, assigned, transferred, deposited, in which a security interest may be granted by the Company and/or pledged by the Company, or by any Person authorized to so do on its behalf or with its consent, to and with the Administrative Agent hereunder, who is hereby authorized to receive the same at any and all times as and for additional security hereunder; and

(f)            all proceeds of the foregoing;

PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions of this Section 2.1, so long as no Event of Default shall have occurred and be continuing, (i) the Company shall have the right, to the exclusion of the Administrative Agent, to quiet enjoyment of the Airframe, Engines and Documents and to possess, use, retain and control (including entering into Leases and Wet Leases with respect to) the Airframe, Engines and Documents and all revenues, income and profits derived therefrom subject to the terms of the Financing Documents, and (ii) the Administrative Agent, shall not, through its own actions or inactions, nor shall it permit any person lawfully claiming by or through it, including, without limitation, any Secured Party to interfere with, or suffer to exist with respect to the Aircraft any Lien attributable to the Administrative Agent or any such person that might interfere with,

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the Company’s (or any Lessee’s) continued possession, use and operation of, and quiet enjoyment (including, without limitation, administrative quiet enjoyment) of, the Aircraft, Engines and Documents during the term of this Mortgage in accordance with the terms of the Financing Documents so long as no Event of Default shall have occurred and be continuing.  In view of the foregoing provisions of this paragraph, the Company hereby waives the provisions of Article XVI(1)(a) of the Protocol.

TO HAVE AND TO HOLD the Collateral unto the Administrative Agent, its permitted successors and assigns, forever, upon the terms herein set forth, in trust for the benefit, security and protection of the Secured Parties, without any priority of any Loan, Note or Obligation over any other except as may be separately agreed among the Secured Parties and such other secured parties or as provided herein, and for the uses and purposes and subject to the terms and provisions set forth in this Mortgage.

It is expressly agreed that anything herein contained to the contrary notwithstanding, the Company shall remain liable under each of the Financing Documents to which it is a party to perform all of the obligations assumed by it thereunder, all in accordance with and pursuant to the terms and provisions thereof, and neither the Administrative Agent nor any Secured Party shall have any obligation or liability under any of the Financing Documents to which the Company is a party by reason of or arising out of the assignment hereunder, nor shall the Administrative Agent or any Secured Party be required or obligated in any manner to perform or fulfill any obligations of the Company under any of the Financing Documents to which the Company is a party, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts that may have been assigned to it or to which it may entitled at any time or times.

The Company does hereby irrevocably constitute and appoint the Administrative Agent the true and lawful attorney of the Company (which appointment is coupled with an interest) with full power (in the name of the Company or otherwise) to ask, require, demand, receive, compound and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds) and all other property that now or hereafter constitutes part of the Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceeding that the Administrative Agent may deem to be necessary or advisable in the premises; provided that the Administrative Agent shall not exercise any such rights except upon the occurrence and during the continuance of an Event of Default.

The Company agrees that at any time and from time to time, upon the written request of the Administrative Agent, the Company will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Administrative Agent may reasonably request to obtain the full benefits of the assignment hereunder and of the rights and powers herein granted.

The Company does hereby warrant and represent that it has not assigned or pledged (except any assignment or pledge that has been terminated on or prior to the date hereof) and hereby covenants that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, any of its right, title or interest hereby assigned, to anyone other than the Administrative Agent except to the extent permitted by the Term Loan Agreement.

Section 2.2.            Exclusion for Certain Inflight Equipment.

The Administrative Agent acknowledges and agrees that notwithstanding anything to the contrary herein set forth, the Company may at any time during the term of this Mortgage install a

3

telephone system and/or an inflight entertainment system for passenger use on any Aircraft (collectively, the “Inflight Equipment”) provided that in the case of Inflight Equipment which is owned by a third party and leased to the Company:

(a)           the owner or financier of the Inflight Equipment will have no Lien on or against such Aircraft and no rights with respect to such Aircraft except the right to remove the Inflight Equipment from such Aircraft if such owner, financier or the Company repairs and restores such Aircraft as provided below;

(b)           such right of installation and removal is subject to and conditional upon any such owner or financier repairing any damage to the Aircraft in connection therewith and paying (and holding the Agents and the other Secured Parties harmless with respect to) all costs, expenses and liabilities in connection therewith; and

(c)           prior to the installation of any such Inflight Equipment, the Company shall provide the Administrative Agent with the identity and notice particulars of the owner or financier of such Inflight Equipment. The Administrative Agent acknowledges that, whether or not the requirements of this Section 2.2 are satisfied in full, at all times (i) the leased Inflight Equipment will not constitute a Part or a part of such Aircraft, and (ii) the leased Inflight Equipment will not become subject to the Lien of this Mortgage.

ARTICLE III

COVENANTS OF THE COMPANY

Section 3.1.            [Intentionally left blank].

Section 3.2.            Lease.  Lessee agrees that it shall cause any Lease or Wet Lease of more than six (6) months duration (or, if an Event of Default is continuing, any Lease or Wet Lease regardless of its duration) to be assigned to Administrative Agent at the time such Lease or Wet Lease is entered into pursuant to a Lease Assignment substantially in the form of Exhibit B hereto with such changes as may be requested by Company, the consent of Administrative Agent not to be unreasonably withheld, at least ten (10) days before the intended date of execution thereof.  In connection therewith the Company shall cause (subject to the consent of the Administrative Agent) an Assignment of such Lease or Wet Lease to be registered with the International Registry, and in addition shall take such additional actions as are required under Section 5.18 of the Term Loan Agreement.

Section 3.3.            Identification of Security Interest; Filings.

(a)           As soon as practicable after the date hereof but no later than 60 days after the Closing Date, the Company agrees to affix and maintain (or cause to be affixed and maintained), at its expense, in the cockpit of the Airframe adjacent to the airworthiness certificate therein and on each Engine a nameplate bearing the inscription:

“SUBJECT TO A MORTGAGE AND SECURITY AGREEMENT IN FAVOR OF JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT”

(such nameplate to be replaced, if necessary, with a nameplate reflecting the name of any successor Administrative Agent). Except as above provided or as may be required by Law, the Company will not allow the name of any Person (other than the Company) to be placed on the Airframe or on any Engine as

4

a designation that might be interpreted as a claim of security interest or ownership and will remove any such existing designation no later than the time such nameplate is affixed; provided that nothing herein contained shall prohibit the Company (or any Lessee) from placing its customary colors and insignia on the Airframe or any Engine.

(b)           The Company will take, or cause to be taken, at the Company’s cost and expense, such action with respect to the recording, filing, re-recording and re-filing of this Mortgage, each Mortgage Supplement and each Lease Assignment, and any financing statements or other instruments as are reasonably requested by the Administrative Agent to maintain, so long as this Mortgage is in effect, the perfection of the Lien created by this Mortgage and the other Collateral Documents, or at the request of the Administrative Agent, will furnish to the Administrative Agent such instruments, in execution form, and such other information as may be reasonably requested by the Administrative Agent to enable the Administrative Agent to take such action.

ARTICLE IV

REMEDIES OF THE ADMINISTRATIVE AGENT

UPON AN EVENT OF DEFAULT

Section 4.1.            Event of Default.  For purposes of the Cape Town Convention, a “default” means any Event of Default.

Section 4.2.            Remedies with Respect to Collateral.

(a)           Remedies Available.

Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, this Mortgage shall be in default and the Administrative Agent (in accordance with the provisions of Article 5) may, and upon the written instructions of the Required Lenders shall, do one or more of the following:

(A)          cause the Company, upon the written demand of theAdministrative Agent, at the Company’s expense, to deliver promptly, and the Company shall deliver promptly, all or such part of the Airframe or any Engine or other Collateral as the Administrative Agent may so demand to the Administrative Agent or its order, or the Administrative Agent, at its option, may enter upon the premises where all or any part of the Airframe or any Engine or other Collateral are located and take immediate possession (to the exclusion of the Company and all Persons claiming under or through the Company) of and remove the same by summary proceedings or otherwise together with any engine that is not an Engine but which is installed on the Airframe, subject to all of the rights of the owner, lessor, lienor or secured party of such engine; provided that such engine shall be held for the account of any such owner, lessor, lienor or secured party or, if owned by the Company, may at the option of the Administrative Agent, be exchanged with the Company for an Engine;

(B)           sell all or any part of the Airframe and any Engine or other Collateral at public or private sale, whether or not the Administrative Agent shall at the time have possession thereof, as the Administrative Agent may determine, or lease or otherwise dispose of all or any part of the Airframe or such Engine or

5

other Collateral as the Administrative Agent, in its sole discretion, may determine, all free and clear of any rights or claims of whatsoever kind of the Company, provided the same is conducted in accordance with applicable law; or

(C)           exercise any or all of the rights and powers and pursue any and all remedies of a secured party under applicable law, including, without limitation, the Uniform Commercial Code of the State of New York.

Upon every taking of possession of Collateral under this Section 4.2, the Administrative Agent may, from time to time, at the expense of the Administrative Agent, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Collateral, as it may deem proper. In each such case, the Administrative Agent shall have the right to maintain, store, lease, control or manage the Collateral and to exercise all rights and powers of the Company relating to the Collateral in connection therewith, as the Administrative Agent shall deem prudent, including the right to enter into any and all such agreements with respect to the maintenance, insurance, storage, leasing, control, management or disposition of the Collateral or any part thereof as the Administrative Agent may determine; and the Administrative Agent shall be entitled to collect and receive directly all tolls, rents, revenues, issues, income, products and profits of the Collateral and every part thereof, without prejudice, however, to the right of the Administrative Agent under any provision of this Mortgage to collect and receive all cash held by, or required to be deposited with, the Administrative Agent hereunder. Such tolls, rents, revenues, issues, income, products and profits shall be applied to pay the expenses of storage, leasing, control, management or disposition of the Collateral, and of all maintenance, repairs, replacements, alterations, additions and improvements, and to make all payments that the Administrative Agent may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Collateral or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Company), and all other payments that the Administrative Agent may be required or authorized to make under any provision of this Mortgage, as well as just and reasonable compensation for the services of the Administrative Agent, and of all Persons properly engaged and employed by the Administrative Agent.

In addition, the Company shall be liable for all reasonable legal fees and other reasonable out-of-pocket costs and expenses incurred by reason of the occurrence of any Event of Default or the exercise of the Administrative Agent’s remedies with respect thereto, including all costs and expenses incurred in connection with the retaking or return of the Airframe or any Engine in accordance with the terms hereof or under applicable law, including, without limitation, the Uniform Commercial Code of the State of New York, which amounts shall, until paid, be secured by the Lien of this Mortgage.

If an Event of Default shall have occurred and be continuing and the Loans shall have been accelerated pursuant to Section 7 of the Term Loan Agreement, at the request of the Administrative Agent the Company shall promptly execute and deliver to the Administrative Agent such instruments of title and other documents as the Administrative Agent may reasonably request to enable the Administrative Agent or an agent or representative designated by the Administrative Agent, at such time or times and place or places as the Administrative Agent may specify, to obtain possession of all or any part of the Collateral to which the Administrative Agent shall at the time be entitled hereunder. If the Company shall for any reason fail to execute and deliver such instruments and documents after such request by the Administrative Agent, the Administrative Agent may obtain a judgment conferring on the Administrative Agent the right to immediate possession and requiring the Company to execute and deliver such instruments and documents to the Administrative Agent, to the entry of which judgment the Company hereby specifically consents to the fullest extent it may lawfully do so.

6

Nothing in the foregoing shall affect the right of each Secured Party to receive all payments of principal of, and interest on, the Loans held by such Secured Party and all other amounts owing to such Secured Party as and when the same may be due.

(b)           Notice of Sale.

The Administrative Agent shall give the Company at least fifteen (15) days’ prior written notice of the date fixed for any public sale of the Airframe or any Engine or of the date on or after which any private sale will be held, which notice the Company hereby agrees is reasonable notice, and any such public sale shall be conducted in general so as to afford the Company (and any Lessee) a reasonable opportunity to bid.

(c)           Receiver.

If any Event of Default shall occur and be continuing, to the extent permitted by law, the Administrative Agent shall be entitled, as a matter of right as against the Company, without notice or demand and without regard to the adequacy of the security for the Loans or the solvency of the Company, upon the commencement of judicial proceedings by it to enforce any right under this Mortgage, to the appointment of a receiver of the Collateral and of the tolls, rents, revenues, issues, income, products and profits thereof.

(d)           Concerning Sales.

At any sale under this Article, any Secured Party or the Administrative Agent may bid for and purchase the property offered for sale, may make payment on account thereof as herein provided, and, upon compliance with the terms of sale, may hold, retain and dispose of such property without further accountability therefor.  Any purchaser shall be entitled, for the purpose of making payment for the property purchased, to surrender for the cancellation, all or any part of the Loan (and any Notes evidencing the same) in lieu of cash in the amount that shall be payable thereon as principal and/or accrued interest.  In the event that amounts due on any Loan exceed the amounts being surrendered as aforesaid, such Loan shall be returned to the Secured Parties making such surrender after being stamped or endorsed to show partial cancellation.

Section 4.3.            Waiver of Appraisement, etc., Laws.

To the full extent that it may lawfully so agree, the Company agrees that it will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension, or redemption law now or hereafter in force, in order to prevent or hinder the proper enforcement of this Mortgage or the absolute sale of the Collateral as permitted hereunder, or any part thereof, or the possession thereof by any purchaser at any proper sale under this Article; but the Company, for itself and all who may claim under it, so far as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws. The Company, for itself and all who may claim under it, waives, to the extent that it lawfully may, all right to have the property in the Collateral marshaled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclosure this Mortgage may order the sale of the Collateral as an entirety.

Section 4.4.            Remedies Cumulative.

Subject to the provisions of Section 4.6 below, each and every right, power and remedy herein specifically given to the Administrative Agent or otherwise in this Mortgage shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or

7

hereafter existing in the Financing Documents or at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Administrative Agent, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the time or thereafter any other right, power or remedy. No delay or omission by the Administrative Agent in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Company or to be an acquiescence therein. Notwithstanding the foregoing, nothing herein shall be deemed to permit duplicative recovery by Administrative Agent or any Secured Party of any amount due and owing to it hereunder or under any other Financing Document.

Section 4.5.            Discontinuance of Proceedings.

If the Administrative Agent shall have proceeded to enforce any right, power or remedy under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, then and in every such case the Company and the Administrative Agent shall be restored to their former positions and rights hereunder with respect to the property, subject to the Lien of this Mortgage, and all rights, remedies and powers of the Administrative Agent shall continue, as if no such proceedings had been undertaken (but otherwise without prejudice).

Section 4.6.            Concerning the Cape Town Convention.

Without limiting the foregoing, the parties agree that (x) in addition to the remedies set forth in this Article IV or otherwise available to Administrative Agent under this Mortgage and the other Financing Documents, at law or in equity, upon the occurrence and during the continuation of an Event of Default, the Administrative Agent may, but shall not be obligated to, exercise any remedy available to it under the Cape Town Convention (subject, in each case to the requirements and limitations of the Cape Town Convention), including the remedies set forth in Articles 8, 9 and 34 of the Cape Town Convention, but excluding the (a) procurement of the de-registration of the Aircraft (if the Aircraft is registered with the FAA or any successor agency thereto) and the export and physical transfer of the Aircraft or any Engine from the territory (if from a territory within the territorial limits of the United States) in which it is situated pursuant to Article IX of the Protocol (without prejudice to the applicability of other applicable law), and (b) solely to the extent permitted by Article 15 of the Cape Town Convention, the provisions of Chapter III of the Cape Town Convention with regard to default remedies, provided that such exclusion in this clause (b) shall not be applicable (to the extent permitted by Article 15 of the Cape Town Convention) to the extent such default remedies are exercised outside the territorial limits of the United States and in a manner not involving the courts of the United States or of its territorial units; and

(y)           where a remedy is available to it under the Cape Town Convention and also under this Agreement and the other Financing Documents or other applicable law, to the extent permitted by the Cape Town Convention and other applicable law, and subject to the provisions of the previous clause (x), the Administrative Agent may elect under which of the foregoing it shall exercise such remedy.

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ARTICLE V

DUTIES OF THE ADMINISTRATIVE AGENT

Section 5.1.            Action Upon Event of Default.

Subject to the terms of Sections 4.2 and 5.3, the Administrative Agent shall take such action, or refrain from taking such action, with respect to an Event of Default (including with respect to the exercise of any rights or remedies under the Collateral Documents) as it may deem advisable in the best interests of the Lenders or as shall be instructed in writing by the Required Lenders. The Administrative Agent may, but shall not be obligated to, take such action, or refrain from taking such action, under or with respect to the Collateral Documents and with respect to such Event of Default as it shall determine to be advisable in the best interests of the Secured Parties.

Section 5.2.            [Intentionally left blank].

Section 5.3.            Indemnification.

The Administrative Agent shall not be required to take any action or refrain from taking any action under Section 5.1 or Article 4 if it shall have reasonable grounds for believing that repayment of any funds expended by it or adequate indemnification against any risks incurred in connection therewith is not reasonably assured to it. The Administrative Agent shall not be required to take any action under Section 5.1 or Article 4, nor shall any other provision of any Collateral Document be deemed to impose a duty on the Administrative Agent to take any action, if the Administrative Agent shall have been advised in writing by independent counsel that such action is contrary to the terms hereof or is otherwise contrary to law.

Section 5.4.            No Duties Except as Specified in Collateral Documents or Instructions.

The Administrative Agent shall not have any duty or obligation to manage, control, use, sell, operate, store, dispose of or otherwise deal with the Aircraft or any other part of the Collateral, or to otherwise take or refrain from taking any action under, or in connection with, any Collateral Document, except as expressly provided by the terms thereof; and no implied duties or obligations shall be read into any Collateral Document against the Administrative Agent. The Administrative Agent nevertheless agrees that it will, at its own cost and expense, promptly take such action as may be necessary duly to discharge any Liens on any part of the Collateral, or on any properties of the Company assigned, pledged or mortgaged under the Collateral Documents, that result from claims against the Administrative Agent in its individual capacity not related to the administration of such properties or any other transaction under this Mortgage or any document included in the Collateral.

Section 5.5.            No Action Except Under Collateral Documents or Instructions.

The Administrative Agent agrees that it will not manage, control, use, sell, operate, store, dispose of or otherwise deal with the Aircraft or other property constituting part of the Collateral or subject to any Lease Assignment except (i) in accordance with the powers granted to, or the authority conferred upon, the Administrative Agent pursuant to the applicable Collateral Documents, or (ii) in accordance with the express terms hereof.

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Section 5.6.            Capacity of the Administrative Agent.

The Administrative Agent has been appointed under Section 8 of the Term Loan Agreement, and is acting hereunder, as a “secured party” for purposes of Section 9-102 of the New York Uniform Commercial Code, as a representative party of and for the benefit of the Secured Parties.  Any property held by the Administrative Agent under this Agreement shall be held in trust for the benefit of the Secured Parties and such other secured parties.

ARTICLE VI

SUPPLEMENTS AND AMENDMENTS
TO THIS MORTGAGE AND OTHER DOCUMENTS

Section 6.1.            Supplemental Mortgages.

The Company and the Administrative Agent may, from time to time, enter into a Mortgage or Mortgages supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Mortgage or of modifying in any manner the rights and obligations of the Company under this Mortgage; provided, however, without the consent of each Secured Party directly affected thereby, no such supplemental Mortgage shall, except as provided in Section 6.2:

(i)   create any Lien with respect to the Collateral except such as are permitted by this Mortgage or the Term Loan Agreement, or release the Lien on the Collateral created by this Mortgage except as provided herein or in the Term Loan Agreement; or

(ii)   change the composition of Secured Parties the consent of which is required for any such supplemental mortgage, or the consent of which is required for any waiver (of compliance with certain provisions of this Mortgage, or of certain defaults hereunder and their consequences) provided for in this Mortgage; or

(iii)   modify any provisions of this Section 6.1, except to provide that certain other provisions of this Mortgage cannot be modified or waived without the consent of each Secured Party affected thereby.

Section 6.2.            Exchange Notes; Take-Out Debt.

(a)           The parties hereto agree to supplement, or amend and restate, this Mortgage upon the request of the Administrative Agent in connection with the issuance of Exchange Notes and the execution and delivery of the Indenture in order, as may be reasonably requested or necessary, to (i) replace the Administrative Agent with the Trustee or its designee and (ii) to facilitate compliance of this Mortgage and the Indenture, or of the Trustee, with the Trust Indenture Act of 1939 or any other Federal or state securities laws applicable to this Mortgage, the Indenture or the Exchange Notes or the Trustee.

(b)           The parties hereto agree to supplement, or amend and restate, this Mortgage upon the request of the Company in connection with the issuance of Take-Out Debt, as may be reasonably requested or necessary, to (i) provide for obligations in respect of the Take-Out Debt to be guaranteed and secured hereunder on the same basis as the Exchange Notes and (ii) to facilitate compliance of this Mortgage and any indenture governing the Take-Out Debt, or of the trustee under any such indenture,

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with the Trust Indenture Act of 1939 or any other Federal or State securities laws applicable to this Mortgage, any such indenture or the Take-Out Debt or any such trustee.

Section 6.3.            Administrative Agent Protected.

If in the opinion of the Administrative Agent any document required to be executed pursuant to the terms of Section 6.1 adversely affects any right, duty, immunity or indemnity in favor of the Administrative Agent under this Mortgage, the Administrative Agent may in its discretion decline to execute such document.

ARTICLE VII

INVESTMENT OF SECURITY FUNDS

Section 7.1.            Investment of Security Funds.

Any monies paid to or retained by the Administrative Agent that are required to be paid to the Company or applied for the benefit of the Company, but that the Administrative Agent is entitled to hold under the terms hereof pending the occurrence of some event or the performance of some act (including, without limitation, the remedying of an Event of Default), shall, until paid to the Company or applied as provided herein, be invested by the Administrative Agent at the written authorization and direction of the Company from time to time at the sole expense and risk of the Company in Permitted Investments. After the occurrence and during the continuance of an Event of Default, Permitted Investments will be selected by the Administrative Agent at its discretion. At the time of such payment or application, there shall be remitted to the Company any gain (including interest received) realized as the result of any such investment (net of any fees, commissions, other expenses or losses, if any, incurred in connection with such investment) unless an Event of Default shall have occurred and be continuing in which event the same shall be held by Administrative Agent until the earlier of (x) such time as there shall not be continuing any such Event of Default or (y) the termination of this Mortgage in accordance with Section 8.1. The Administrative Agent shall not be liable for any loss relating to a Permitted Investment made pursuant to this Article 7. The Company will promptly pay to the Administrative Agent, on demand, the amount of any loss (net of any gains, including interest received) realized as the result of any such investment (together with any reasonable fees, commissions and other expenses, if any, incurred in connection with such investment).

ARTICLE VIII

MISCELLANEOUS

Section 8.1.            Termination of Mortgage.

(a)           Upon the payment in full of the principal of, and accrued interest on, the Loans and any other Obligations then due and payable, the Aircraft and the balance of the Collateral shall be released from the Lien of this Mortgage, and, in such event, this Mortgage shall terminate and this Mortgage shall be of no further force or effect, all without delivery of any instrument or performance of any act by any party and all rights to the Aircraft and the balance of the Collateral shall revert to the Company.  At the written request of the Company following any such termination, the Administrative Agent shall deliver to, or as directed in writing by, the Company any Collateral held by the

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Administrative Agent hereunder and execute and deliver to the Company such documents as such the Company shall reasonably request to evidence such termination, including an appropriate instrument(s) (in due form for recording) discharging from the International Registry the registration of the International Interest created by this Mortgage (and any other registered interests in the Aircraft in favor of the Administrative Agent).

(b) If any Collateral shall be sold, transferred or otherwise disposed of by the Company in a transaction permitted by the Term Loan Agreement, then (i) the Lien created hereby on such Collateral shall automatically be released and (ii) the Administrative Agent, at the request of the Company, shall execute and deliver to the Company all releases or other documents reasonably necessary or desirable for the release of the Lien created hereby, including an appropriate instrument(s) (in due form for recording) discharging from the International Registry the registration of the International Interest created by this Mortgage (and any other registered interests in the Aircraft in favor of the Administration Agent).  In addition, at the request and at the sole expense of the Company, the Administrative Agent agrees to (x) provide to the Company a power of attorney to execute any document reasonably required to permit any sale permitted by the Term Loan Agreement of such Collateral and (y) with respect to any jurisdiction or registration system in which releases executed pursuant to such power of attorney are insufficient to release such Liens, (1) execute in blank any document reasonably required to permit any sale permitted by the Term Loan Agreement of any such Collateral, free of the Liens created hereby (and discharge any registration of such Lien) and (2) authorize the Company to fill in the relevant information to release such Lien (and discharge such registration and file such document when necessary or advisable).

Section 8.2.            Alterations to Mortgage.

This Mortgage shall not be varied except by an instrument in writing of even date herewith or subsequent hereto executed by each of the parties hereto through its duly authorized representative.

Section 8.3.            No Legal Title to Collateral in Lender or Holder.

No Lender or Holder shall have legal title to any part of the Collateral. No transfer, by operation of law or otherwise, of its Loan or Note or other right, title and interest of a Lender or Holder in and to the Collateral or this Mortgage shall operate to terminate this Mortgage or entitle any successor or transferee of such Lender or Holder to an accounting or to the transfer to it of legal title to any part of the Collateral.

Section 8.4.            Sale of the Aircraft by Administrative Agent Is Binding.

Any sale or other conveyance of the Aircraft, the Airframe, any Engine or any other part of the Collateral or any interest therein by the Administrative Agent made pursuant to the terms of this Mortgage shall bind the Administrative Agent, the other Secured Parties and the Company, and shall be effective to transfer or convey all right, title and interest of the Company, the Administrative Agent and the other Secured Parties in and to the Aircraft, the Airframe, any Engine or any interest therein. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Administrative Agent. Notwithstanding the foregoing, nothing herein contained shall be deemed to constitute a waiver by the Company of any right it may have against the Administrative Agent or any other Secured Party as a result of any sale or other conveyance in contravention of the terms and conditions of this Mortgage.

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Section 8.5.            Benefit of Mortgage.

Nothing in this Mortgage, whether express or implied, shall be construed to give to any Person other than the Company, the Administrative Agent and the other Secured Parties any legal or equitable right, remedy or claim under or in respect of this Mortgage or any Loan.

Section 8.6.            Section 1110 of the Bankruptcy Code.

It is the intention of the parties hereto that the security interest created hereby entitles the Administrative Agent on behalf of the Secured Parties to all of the benefits of Section 1110 of the Bankruptcy Code in the event of any reorganization of the Company under the Bankruptcy Code subject, in each case, to the relevant provisions of Section 1110.

Section 8.7.            Notices.

All notices, requests and demands to or upon the Administrative Agent or any Grantor hereunder shall be effected in the manner provided for in Section 8.2 of the Guarantee and Collateral Agreement.

Section 8.8.            Severability.

Should any one or more provisions of this Mortgage be determined to be illegal or unenforceable by a court of any jurisdiction, such provision shall be ineffective to the extent of such illegality or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction. The Company and the Administrative Agent agree, as to such jurisdiction and to the extent permitted by such jurisdiction’s laws, to replace any provision of this Mortgage that is so determined to be illegal or unenforceable by a valid provision that has as nearly as possible the same effect; provided that such replacement provision shall not expand the Company’s or the Administrative Agent’s obligations hereunder.

Section 8.9.            No Waiver; Cumulative Remedies.

No failure on the part of the Administrative Agent to exercise, and no course of dealing with respect to, and no delay in exercising, any remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Administrative Agent of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

Section 8.10.          Separate Counterparts.

This Mortgage may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Mortgage including a signature page executed by each of the parties hereto shall be an original counterpart of this Mortgage, but all of such counterparts together shall constitute one instrument.

Section 8.11.          Successors and Assigns.

All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Company and its successors and permitted assigns, and the Administrative Agent and its successors and permitted assigns, and the other Secured Parties, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by a Secured Party (unless withdrawn by

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such Secured Party or successor or assign prior to it being acted upon by the Administrative Agent) shall bind the successors and assigns of such Secured Party.

Section 8.12.          Headings.

The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

Section 8.13.          Governing Law.

THIS MORTGAGE IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

Section 8.14.          Normal Commercial Relations.

Anything contained in this Mortgage to the contrary notwithstanding, the Company, any Secured Party, the Administrative Agent or any Affiliate of the Company, any Secured Party or the Administrative Agent may enter into commercial banking or other financial transactions with each other, and conduct banking or other commercial relationships with each other, fully to the same extent as if this Mortgage were not in effect, including, without limitation, the making of loans or other extensions of credit for any purpose whatsoever.

Section 8.15.          Language. All correspondence, documents and any other written matters in connection with this Mortgage shall be in English.

Section 8.16.          Execution of Financing Statements. Pursuant to any applicable law, the Company authorizes the Administrative Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of the Company in such form and in such offices as the Administrative Agent determines appropriate to perfect the security interests of the Administrative Agent under and in accordance with this Agreement. The Company hereby ratifies and authorizes the filing by the Administrative Agent of any financing statement with respect to the Collateral made prior to the date hereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed by their respective officers, as the case may be, there unto duly authorized, as of the day and year first above written.

ATA AIRLINES, INC.
By:	/s/ SUBODH KARNIK
	Title: President and CEO
JPMORGAN CHASE BANK, N.A., as Administrative
Agent
By:	/s/ JOHN C. RIORDAN
	Title: Vice President

APPENDIX A

DEFINITIONS RELATING TO THE
MORTGAGE AND SECURITY AGREEMENT

The definitions stated herein shall apply equally to both the singular and plural forms of the terms defined.  Capitalized terms used herein and not defined herein have the meanings set forth in the Term Loan Agreement.

“Administrative Agent” has the meaning specified in the recitals to the Mortgage.

“Affiliate” has the meaning specified in the Term Loan Agreement.

“Aircraft” means the Airframe, together with the Engines, whether or not any of such Engines may from time to time be installed on such Airframe or may be installed on any other airframe or any other aircraft, as further specified in the Mortgage.

“Airframe” means (A) the L1011-500 (385-3) aircraft (excluding the Engines or engines from time to time installed thereon), identified by U.S. registration mark and manufacturer’s serial number in the initial Mortgage Supplement; and (B) any and all Parts so long as the same shall be incorporated or installed in or attached to such Airframe, or so long as the same shall be subject to the Lien of this Mortgage after removal from the Airframe.

“Assignment” has the meaning specified in the Cape Town Convention.

“Bankruptcy Code” means Title 11 of the United States Code, as amended from time to time, and any successor provisions thereof.

“Cape Town Convention” means the official English language texts of the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment that were signed in Cape Town, South Africa.

“Collateral” has the meaning given such term in Section 2.1 of the Mortgage.

“Collateral Documents” means the Mortgage and each Lease Assignment, if any.

“Company” has the meaning specified in the recitals to the Mortgage.

“Dollars” and “$” means the lawful currency of the United States of America.

“Engine” means: (A) each of the Rolls Royce Model RB211-524B listed by manufacturer’s serial number in the initial Mortgage Supplement, whether or not from time to time installed on the Airframe or installed on any other aircraft; and (B) any Replacement Engine that may from time to time be substituted for such Engine; together in each case with any and all Parts incorporated or installed in or attached thereto or so long as such Parts shall be subject to the Lien of this Mortgage after removal from an Engine.

“Events of Default” has the meaning set forth in the Term Loan Agreement.

“Exchange Notes” has the meaning specified in the Term Loan Agreement.

“FAA” mean the United States Federal Aviation Administration, and any agency or instrumentality of the United States government succeeding to its functions.

“FARs” mean the FAA Regulations as in effect from time to time under Title 14 of the United States Code of Federal Regulations, including, without limitation, the Special Federal Aviation Regulations (as applicable), as amended, or any successor or substitute provisions.

“Federal Aviation Act” means the collective reference to the United States Transportation Code (currently codified at Subtitle VII of Title 49 of the United States Code), as amended, or any successor or substitute provisions, and all FARs and other rules, regulations, directives and orders issued or promulgated from time to time thereunder.

“Financing Documents” means the Term Loan Agreement, the other Loan Documents, and if Exchange Notes are outstanding, the Indenture and the Exchange Notes.

“Guarantee and Collateral Agreement” has the meaning specified in the Term Loan Agreement.

“Holders” has the meaning specified in the Term Loan Agreement.

“Indenture” has the meaning specified in the Term Loan Agreement.

“International Interest” has the meaning specified in the Cape Town Convention.

“International Registry” has the meaning specified in the Cape Town Convention.

“Lease” means any lease of the Airframe or any Engine permitted by the terms of the Financing Documents.

“Lease Assignment” means an assignment of a Lease or Wet Lease, substantially the form of Exhibit B hereto.

“Lender” has the meaning set forth in introductory paragraph of the Term Loan Agreement.

“Lessee” means any lessee pursuant to a Lease.

“Lien” means any lien (statutory or otherwise), security interest or other charge or encumbrance of any kind, including any interest registered with the International Registry, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor.

“Loan Documents” has the meaning specified in the Term Loan Agreement.  The term “Loan Documents” shall include the Mortgage, the Mortgage Supplement and each Lease Assignment.

“Loans” means the loans made under the Term Loan Agreement.

“Merger” has the meaning specified in the Term Loan Agreement.

“Mortgage” means the Mortgage and Security Agreement covering the Collateral dated as of August 14, 2007, between the Company and the Administrative Agent, as the same may be amended, modified or supplemented from time to time.

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“Mortgage Supplement” means (a) the Mortgage and Security Agreement Supplement No. 1 dated August 14, 2007, substantially in the form of Exhibit A to the Mortgage and (b) any other supplement to the Mortgage from time to time executed and delivered.

“Notes” has the meaning specified in the Term Loan Agreement.

“Obligations” means all monetary obligations and liabilities of the Company which may arise under or pursuant to this Mortgage, the Guarantee and Collateral Agreement or any other Financing Document to which the Company is a party, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent, to the Lenders and, if Exchange Notes are outstanding, to the Trustee or to the Holders, that are required to be paid by the Company pursuant to the terms of this Mortgage, the Guarantee and Collateral Agreement or any other Financing Document).

“Parts” means any and all appliances, parts, instruments, appurtenances, accessories, furnishings, seats, buyer furnished equipment, and other equipment of whatever nature (other than (a) complete Engines or engines, (b) any items leased by the Company from a third party and (c) cargo containers) that may from time to time be incorporated or installed in or attached to any Airframe or any Engine.

“Permitted Investments” means (i) direct obligations of the United States of America and agencies guaranteed by the United States government having a final maturity of 90 days or less from date of purchase thereof; (ii) certificates of deposit issued by, bankers’ acceptances of, or time deposits with, any bank, trust company or national banking association incorporated under the laws of the United States of America or one of the states thereof having combined capital and surplus and retained earnings as of its last report of condition of at least $500,000,000 and having a rating of Aa or better by Moody’s Investors Service, Inc. (“Moody’s”) or AA or better by Standard & Poor’s Corporation (“S&P”) and having a final maturity of 90 days or less from date of purchase thereof; and (iii) commercial paper of any holding company of a bank, trust company or national banking association described in (ii) and commercial paper of any corporation or finance company incorporated or doing business under the laws of the United States of America or any state thereof having a rating assigned to such commercial paper of Al by S&P or P1 by Moody’s and having a final maturity of 90 days or less from the date of purchase thereof; provided that the aggregate amount at any one time so invested in certificates of deposit issued by any one bank shall not be in excess of 5% of such bank’s capital and surplus.

“Person” means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.

“Protocol” means the Protocol referred to in the defined term “Cape Town Convention.”

“Replacement Engine” means a Rolls Royce Model RB211-524B engine (or engine of the same manufacturer of the same or a comparable or an improved model and suitable for installation and use on the Airframe) that has a value, utility and remaining useful life (except for maintenance cycle condition) at least equal to the Engine that it is replacing (immediately prior to such replacement), assuming such Engine was of the value, utility and remaining useful life (except for maintenance cycle condition) required by the terms of the Mortgage, and which shall have been made subject to the Lien of the Mortgage.

“Secured Parties” has the meaning specified in the Guarantee and Collateral Agreement.

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“Take-Out Debt”has the meaning specified in the Term Loan Agreement.

“Term Loan Agreement” means the Term Loan Agreement, dated as of August 14, 2007, among New ATA Acquisition Inc., the several lenders from time to time parties thereto, Jefferies Finance LLC, as documentation agent, and JPMorgan Chase Bank, N.A., as administrative agent, as amended, supplemented or otherwise modified from time to time.

“Trustee”has the meaning specified in the Term Loan Agreement.

“Wet Lease” means any arrangement whereby the Company agrees to furnish the Airframe and Engines or engines installed thereon to a third party pursuant to which such Airframe and Engines or engines (i) shall be operated solely by regular employees of the Company possessing all current certificates and licenses that would be required under the Federal Aviation Act for the performance by such employees of similar functions within the United States of America or such other jurisdiction of registry (it is understood that cabin attendants need not be regular employees of the Company) and (ii) shall be maintained by the Company in accordance with its normal maintenance practices.

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EX-10.17

EXHIBIT 10.17

MORTGAGE AND SECURITY
AGREEMENT SUPPLEMENT NO 1

Mortgage and Security Agreement Supplement No. 1 dated August 14, 2007 (“Mortgage Supplement”) of ATA Airlines, Inc. (the “Company”).

W I T N E S S E T H:

WHEREAS, the Mortgage and Security Agreement, dated as of August 14, 2007, (the “Mortgage”), between the Company and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), provides for the execution and delivery of supplements thereto substantially in the form hereof that shall particularly describe the Aircraft (such term and other defined terms in the Mortgage being used herein with the same meanings), and shall specifically grant a security interest in the Aircraft to the Administrative Agent; and

WHEREAS, the Mortgage relates to the Airframe and Engines described in Annex A attached hereto and made a part hereof, and a counterpart of the Mortgage is attached to and, made a part of this Mortgage Supplement;

NOW, THEREFORE, in order to secure the prompt payment of the Obligations, subject to the terms and conditions of the Mortgage, and in consideration of the premises and of the covenants contained in the Mortgage, and of other good and valuable consideration given to the Company at or before the delivery hereof, the receipt whereof is hereby acknowledged, the Company has mortgaged, assigned, pledged, hypothecated and granted, and does hereby mortgage, assign, pledge, hypothecate and grant, a continuing security interest in, and mortgage lien on, the property comprising all its right, title and interest in and to the Airframe and Engines described in Annex A attached hereto, whether or not such Engines shall be installed in or attached to the Airframe or any other aircraft, to the Administrative Agent, its successors and assigns, for the benefit and security of the Secured Parties;

To have and to hold all and singular the aforesaid property unto the Administrative Agent, its successors and assigns, for the benefit and security of the Secured Parties and for the uses and purposes and subject to the terms and provisions set forth in the Mortgage.

Notwithstanding the foregoing, for purposes of the International Registry, model references for (i) the Airframe shall be “L1011 385 3” and (ii) each Engine shall be “RB211 524”, which, the Company represents and warrants, constitute the manufacturer’s respective generic model designations for such Airframe and Engines (as required to be used pursuant to the “regulations” as defined in the Cape Town Convention).

This Mortgage Supplement shall be construed as supplemental to the Mortgage and shall form a part thereof, and the Mortgage is hereby incorporated by reference herein and is hereby ratified, approved and confirmed and terms not otherwise defined herein shall have the meaning provided in the Mortgage.

THIS MORTGAGE SUPPLEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the Company has caused this Supplement No.      to be duly executed by one of its duly authorized officers, as of the day and year first above written.

	ATA AIRLINES, INC.
By:	/s/ Subodh Karnik
	Name:	Subodh Karnik
	Title:	President and CEO

Annex A

to Mortgage

Supplement No. 1

DESCRIPTION OF AIRFRAME AND ENGINES

AIRFRAME

		FAA	Manufacturer’s
		Registration	Serial
Manufacturer	Model	No.	No.
Lockheed	L-1011-385-3	N164AT	1238
Lockheed	L-1011-385-3	N161AT	1219

ENGINES

		Manufacturer’s
		Serial
Manufacturer	Model	No.
Rolls Royce	RB211-524B	14820
Rolls Royce	RB211-524B	14821
Rolls Royce	RB211-524B	14853
Rolls Royce	RB211-524B	14784
Rolls Royce	RB211-524B	14855
Rolls Royce	RB211-524B	14839
Rolls Royce	RB211-524B	14859
Rolls Royce	RB211-524B	14811
Rolls Royce	RB211-524B	14812

Each Engine is of 49,120 or more pounds of thrust or its equivalent.

EX-10.18

Exhibit 10.18

EXECUTION VERSION

MORTGAGE AND SECURITY AGREEMENT

Dated as of August 14, 2007

between

WORLD AIRWAYS, INC.

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

in respect of

ONE (1) DC-10-30 AIRCRAFT

Manufacturer’s Serial No. 46922, FAA Registration No. N14075

TABLE OF CONTENTS

							Page
ARTICLE I DEFINITIONS							1
Section 1.1.						Certain Definitions	1
ARTICLE II SECURITY							1
Section 2.1.					Grant of Security Interest		1
Section 2.2.					Exclusion for Certain Inflight Equipment		3
ARTICLE III COVENANTS OF THE COMPANY							4
Section 3.1.					[Intentionally left blank]		4
Section 3.2.					Lease		4
Section 3.3.					Identification of Security Interest; Filings		4
ARTICLE IV REMEDIES OF THE ADMINISTRATIVE AGENT UPON AN EVENT OF DEFAULT							5
Section 4.1.				Event of Default			5
Section 4.2.				Remedies with Respect to Collateral			5
Section 4.3.				Waiver of Appraisement, etc., Laws			7
Section 4.4.				Remedies Cumulative			7
Section 4.5.				Discontinuance of Proceedings			8
Section 4.6.				Concerning the Cape Town Convention			8
ARTICLE V DUTIES OF THE ADMINISTRATIVE AGENT							8
Section 5.1.			Action Upon Event of Default				8
Section 5.2.			[Intentionally left blank]				9
Section 5.3.			Indemnification				9
Section 5.4.			No Duties Except as Specified in Collateral Documents or Instructions				9
Section 5.5.			No Action Except Under Collateral Documents or Instructions				9
Section 5.6.			Capacity of the Administrative Agent				9
ARTICLE VI SUPPLEMENTS AND AMENDMENTS TO THIS MORTGAGE AND OTHER DOCUMENTS							10
Section 6.1.		Supplemental Mortgages					10
Section 6.2.		Exchange Notes; Take-Out Debt					10
Section 6.3.		Administrative Agent Protected					10
ARTICLE VII INVESTMENT OF SECURITY FUNDS							11
Section 7.1.	Investment of Security Funds						11

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		Page
ARTICLE VIII MISCELLANEOUS		11
Section 8.1.	Termination of Mortgage	11
Section 8.2.	Alterations to Mortgage	12
Section 8.3.	No Legal Title to Collateral in Lender or Holder	12
Section 8.4.	Sale of the Aircraft by Administrative Agent Is Binding	12
Section 8.5.	Benefit of Mortgage	12
Section 8.6.	Section 1110 of the Bankruptcy Code	12
Section 8.7.	Notices	13
Section 8.8.	Severability	13
Section 8.9.	No Waiver; Cumulative Remedies	13
Section 8.10.	Separate Counterparts	13
Section 8.11.	Successors and Assigns	13
Section 8.12.	Headings	13
Section 8.13.	Governing Law	13
Section 8.14.	Normal Commercial Relations	14
Section 8.15.	Language	14
Section 8.16.	Execution of Financing Statements	14

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MORTGAGE AND SECURITY AGREEMENT

This MORTGAGE AND SECURITY AGREEMENT, dated as of August 14, 2007, between WORLD AIRWAYS, INC., a Delaware corporation (together with its successors and permitted assigns, the “Company”), and JPMORGAN CHASE BANK, N.A., a national banking association formed under the federal laws of the United States of America, as Administrative Agent for the benefit of the Lenders and the other Secured Parties (together with its permitted successors and assigns, the “Administrative Agent”);

W I T N E S S E T H :

WHEREAS, pursuant to the Term Loan Agreement, dated as of August 14, 2007 (as amended, supplemented or otherwise modified from time to time, the “Term Loan Agreement”), among New ATA Acquisition Inc. (the “Borrower”), the Lenders parties thereto from time to time (the “Lenders”), the Administrative Agent and the other parties thereto, the Lenders have severally agreed to make term loans to the Borrower upon the terms and subject to the conditions set forth therein;

WHEREAS, pursuant to the Term Loan Agreement, loans made by the Lenders may be exchanged for Exchange Notes issued pursuant to the Indenture upon the Initial Maturity Date (as each such term is defined in the Term Loan Agreement);

WHEREAS, the Borrower is a member of an affiliated group of companies that, following the consummation of the Merger, will include the Company; and

WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective term loans to the Borrower under the Term Loan Agreement that the Company shall have executed and delivered this Mortgage to the Administrative Agent for the ratable benefit of the Secured Parties;

NOW, THEREFORE, to secure the due and punctual payment of the Obligations, it is hereby covenanted and agreed by and between the parties hereto as follows:

ARTICLE I

DEFINITIONS

Section 1.1.            Certain Definitions.

Unless otherwise defined herein or the context requires otherwise, capitalized terms used herein shall have the meanings set forth in Appendix A hereto.

ARTICLE II

SECURITY

Section 2.1.            Grant of Security Interest.

The Company, in order to secure (i) the prompt payment when due of the Loans and of the other Obligations and (ii) the performance and observance by the Company of all agreements, covenants and provisions contained herein and in the Financing Documents, and in consideration of the

premises and of the covenants herein contained, and of other good and valuable consideration, the receipt of which is hereby acknowledged, has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed and does hereby (subject to the terms and conditions hereof) grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm unto the Administrative Agent, its permitted successors and assigns, for the security and benefit of the Secured Parties, forever, a continuing security interest in, and mortgage lien on, all estate, right, title and interest of the Company in, to and under the following described properties, rights, interests and privileges (which, collectively, including all property hereafter specifically subjected to the lien of this Mortgage by any instrument supplemental hereto, are referred to herein as the “Collateral”):

(a)           the Airframe and the Engines, each of which Engines is of 49,120 or more pounds of thrust or its equivalent, and in the case of such Engines, whether or not any such Engine shall be installed in or attached to the Airframe or any other airframe, together with all accessories, equipment, parts and appurtenances appertaining or attached to the Airframe (other than aircraft engines not constituting Engines) or Engines and owned by the Company, whether now owned or hereafter acquired, and all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines and all records, logs, manuals and other documents (“Documents”) at any time maintained with respect to the foregoing;

(b)           any Lease Assignment and all rights thereunder;

(c)           all proceeds with respect to the requisition of title to or use of the Aircraft or any part thereof, and all insurance proceeds with respect to the Aircraft or any part thereof, but excluding any insurance maintained by the Company and not required under the Financing Documents;

(d)           all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with the Administrative Agent in pledge hereunder and held or required to be held by the Administrative Agent hereunder;

(e)           any and all property that may, from time to time hereafter, in accordance with the provisions of this Mortgage, by delivery or by Mortgage Supplement or by other writing of any kind, for the purposes hereof be in any way subjected to the lien and security interest hereof or be expressly conveyed, mortgaged, assigned, transferred, deposited, in which a security interest may be granted by the Company and/or pledged by the Company, or by any Person authorized to so do on its behalf or with its consent, to and with the Administrative Agent hereunder, who is hereby authorized to receive the same at any and all times as and for additional security hereunder; and

(f)            all proceeds of the foregoing;

PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions of this Section 2.1, so long as no Event of Default shall have occurred and be continuing, (i) the Company shall have the right, to the exclusion of the Administrative Agent, to quiet enjoyment of the Airframe, Engines and Documents and to possess, use, retain and control (including entering into Leases and Wet Leases with respect to) the Airframe, Engines and Documents and all revenues, income and profits derived therefrom subject to the terms of the Financing Documents, and (ii) the Administrative Agent, shall not, through its own actions or inactions, nor shall it permit any person lawfully claiming by or through it, including, without limitation, any Secured Party to interfere with, or suffer to exist with respect to the Aircraft any Lien attributable to the Administrative Agent or any such person that might interfere with, the Company’s (or any Lessee’s) continued possession, use and operation of, and quiet enjoyment

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(including, without limitation, administrative quiet enjoyment) of, the Aircraft, Engines and Documents during the term of this Mortgage in accordance with the terms of the Financing Documents so long as no Event of Default shall have occurred and be continuing.  In view of the foregoing provisions of this paragraph, the Company hereby waives the provisions of Article XVI(1)(a) of the Protocol.

TO HAVE AND TO HOLD the Collateral unto the Administrative Agent, its permitted successors and assigns, forever, upon the terms herein set forth, in trust for the benefit, security and protection of the Secured Parties, without any priority of any Loan, Note or Obligation over any other except as may be separately agreed among the Secured Parties and such other secured parties or as provided herein, and for the uses and purposes and subject to the terms and provisions set forth in this Mortgage.

It is expressly agreed that anything herein contained to the contrary notwithstanding, the Company shall remain liable under each of the Financing Documents to which it is a party to perform all of the obligations assumed by it thereunder, all in accordance with and pursuant to the terms and provisions thereof, and neither the Administrative Agent nor any Secured Party shall have any obligation or liability under any of the Financing Documents to which the Company is a party by reason of or arising out of the assignment hereunder, nor shall the Administrative Agent or any Secured Party be required or obligated in any manner to perform or fulfill any obligations of the Company under any of the Financing Documents to which the Company is a party, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts that may have been assigned to it or to which it may entitled at any time or times.

The Company does hereby irrevocably constitute and appoint the Administrative Agent the true and lawful attorney of the Company (which appointment is coupled with an interest) with full power (in the name of the Company or otherwise) to ask, require, demand, receive, compound and give acquittance for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds) and all other property that now or hereafter constitutes part of the Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceeding that the Administrative Agent may deem to be necessary or advisable in the premises; provided that the Administrative Agent shall not exercise any such rights except upon the occurrence and during the continuance of an Event of Default.

The Company agrees that at any time and from time to time, upon the written request of the Administrative Agent, the Company will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Administrative Agent may reasonably request to obtain the full benefits of the assignment hereunder and of the rights and powers herein granted.

The Company does hereby warrant and represent that it has not assigned or pledged (except any assignment or pledge that has been terminated on or prior to the date hereof) and hereby covenants that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, any of its right, title or interest hereby assigned, to anyone other than the Administrative Agent except to the extent permitted by the Term Loan Agreement.

Section 2.2.            Exclusion for Certain Inflight Equipment.

The Administrative Agent acknowledges and agrees that notwithstanding anything to the contrary herein set forth, the Company may at any time during the term of this Mortgage install a telephone system and/or an inflight entertainment system for passenger use on any Aircraft (collectively,

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the “Inflight Equipment”) provided that in the case of Inflight Equipment which is owned by a third party and leased to the Company:

(a)           the owner or financier of the Inflight Equipment will have no Lien on or against such Aircraft and no rights with respect to such Aircraft except the right to remove the Inflight Equipment from such Aircraft if such owner, financier or the Company repairs and restores such Aircraft as provided below;

(b)           such right of installation and removal is subject to and conditional upon any such owner or financier repairing any damage to the Aircraft in connection therewith and paying (and holding the Agents and the other Secured Parties harmless with respect to) all costs, expenses and liabilities in connection therewith; and

(c)           prior to the installation of any such Inflight Equipment, the Company shall provide the Administrative Agent with the identity and notice particulars of the owner or financier of such Inflight Equipment. The Administrative Agent acknowledges that, whether or not the requirements of this Section 2.2 are satisfied in full, at all times (i) the leased Inflight Equipment will not constitute a Part or a part of such Aircraft, and (ii) the leased Inflight Equipment will not become subject to the Lien of this Mortgage.

ARTICLE III

COVENANTS OF THE COMPANY

Section 3.1.            [Intentionally left blank].

Section 3.2.            Lease.  Lessee agrees that it shall cause any Lease or Wet Lease of more than six (6) months duration (or, if an Event of Default is continuing, any Lease or Wet Lease regardless of its duration) to be assigned to Administrative Agent at the time such Lease or Wet Lease is entered into pursuant to a Lease Assignment substantially in the form of Exhibit B hereto with such changes as may be requested by Company, the consent of Administrative Agent not to be unreasonably withheld, at least ten (10) days before the intended date of execution thereof.  In connection therewith the Company shall cause (subject to the consent of the Administrative Agent) an Assignment of such Lease or Wet Lease to be registered with the International Registry, and in addition shall take such additional actions as are required under Section 5.18 of the Term Loan Agreement.

Section 3.3.            Identification of Security Interest; Filings.

(a)           As soon as practicable after the date hereof but no later than 60 days after the Closing Date, the Company agrees to affix and maintain (or cause to be affixed and maintained), at its expense, in the cockpit of the Airframe adjacent to the airworthiness certificate therein and on each Engine a nameplate bearing the inscription:

“SUBJECT TO A MORTGAGE AND SECURITY AGREEMENT IN FAVOR OF JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE AGENT”

(such nameplate to be replaced, if necessary, with a nameplate reflecting the name of any successor Administrative Agent). Except as above provided or as may be required by Law, the Company will not allow the name of any Person (other than the Company) to be placed on the Airframe or on any Engine as a designation that might be interpreted as a claim of security interest or ownership and will remove any such existing designation no later than the time such nameplate is affixed; provided that nothing herein

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contained shall prohibit the Company (or any Lessee) from placing its customary colors and insignia on the Airframe or any Engine.

(b)           The Company will take, or cause to be taken, at the Company’s cost and expense, such action with respect to the recording, filing, re-recording and re-filing of this Mortgage, each Mortgage Supplement and each Lease Assignment, and any financing statements or other instruments as are reasonably requested by the Administrative Agent to maintain, so long as this Mortgage is in effect, the perfection of the Lien created by this Mortgage and the other Collateral Documents, or at the request of the Administrative Agent, will furnish to the Administrative Agent such instruments, in execution form, and such other information as may be reasonably requested by the Administrative Agent to enable the Administrative Agent to take such action.

ARTICLE IV

REMEDIES OF THE ADMINISTRATIVE AGENT
UPON AN EVENT OF DEFAULT

Section 4.1.            Event of Default.  For purposes of the Cape Town Convention, a “default” means any Event of Default.

Section 4.2.            Remedies with Respect to Collateral.

(a)           Remedies Available.

Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, this Mortgage shall be in default and the Administrative Agent (in accordance with the provisions of Article 5) may, and upon the written instructions of the Required Lenders shall, do one or more of the following:

(A)          cause the Company, upon the written demand of the Administrative Agent, at the Company’s expense, to deliver promptly, and the Company shall deliver promptly, all or such part of the Airframe or any Engine or other Collateral as the Administrative Agent may so demand to the Administrative Agent or its order, or the Administrative Agent, at its option, may enter upon the premises where all or any part of the Airframe or any Engine or other Collateral are located and take immediate possession (to the exclusion of the Company and all Persons claiming under or through the Company) of and remove the same by summary proceedings or otherwise together with any engine that is not an Engine but which is installed on the Airframe, subject to all of the rights of the owner, lessor, lienor or secured party of such engine; provided that such engine shall be held for the account of any such owner, lessor, lienor or secured party or, if owned by the Company, may at the option of the Administrative Agent, be exchanged with the Company for an Engine;

(B)           sell all or any part of the Airframe and any Engine or other Collateral at public or private sale, whether or not the Administrative Agent shall at the time have possession thereof, as the Administrative Agent may determine, or lease or otherwise dispose of all or any part of the Airframe or such Engine or other Collateral as the Administrative Agent, in its sole discretion, may determine, all free and clear of any rights or claims of whatsoever kind of the Company, provided the same is conducted in accordance with applicable law; or

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(C)           exercise any or all of the rights and powers and pursue any and all remedies of a secured party under applicable law, including, without limitation, the Uniform Commercial Code of the State of New York.

Upon every taking of possession of Collateral under this Section 4.2, the Administrative Agent may, from time to time, at the expense of the Administrative Agent, make all such expenditures for maintenance, insurance, repairs, replacements, alterations, additions and improvements to and of the Collateral, as it may deem proper. In each such case, the Administrative Agent shall have the right to maintain, store, lease, control or manage the Collateral and to exercise all rights and powers of the Company relating to the Collateral in connection therewith, as the Administrative Agent shall deem prudent, including the right to enter into any and all such agreements with respect to the maintenance, insurance, storage, leasing, control, management or disposition of the Collateral or any part thereof as the Administrative Agent may determine; and the Administrative Agent shall be entitled to collect and receive directly all tolls, rents, revenues, issues, income, products and profits of the Collateral and every part thereof, without prejudice, however, to the right of the Administrative Agent under any provision of this Mortgage to collect and receive all cash held by, or required to be deposited with, the Administrative Agent hereunder. Such tolls, rents, revenues, issues, income, products and profits shall be applied to pay the expenses of storage, leasing, control, management or disposition of the Collateral, and of all maintenance, repairs, replacements, alterations, additions and improvements, and to make all payments that the Administrative Agent may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Collateral or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Company), and all other payments that the Administrative Agent may be required or authorized to make under any provision of this Mortgage, as well as just and reasonable compensation for the services of the Administrative Agent, and of all Persons properly engaged and employed by the Administrative Agent.

In addition, the Company shall be liable for all reasonable legal fees and other reasonable out-of-pocket costs and expenses incurred by reason of the occurrence of any Event of Default or the exercise of the Administrative Agent’s remedies with respect thereto, including all costs and expenses incurred in connection with the retaking or return of the Airframe or any Engine in accordance with the terms hereof or under applicable law, including, without limitation, the Uniform Commercial Code of the State of New York, which amounts shall, until paid, be secured by the Lien of this Mortgage.

If an Event of Default shall have occurred and be continuing and the Loans shall have been accelerated pursuant to Section 7 of the Term Loan Agreement, at the request of the Administrative Agent the Company shall promptly execute and deliver to the Administrative Agent such instruments of title and other documents as the Administrative Agent may reasonably request to enable the Administrative Agent or an agent or representative designated by the Administrative Agent, at such time or times and place or places as the Administrative Agent may specify, to obtain possession of all or any part of the Collateral to which the Administrative Agent shall at the time be entitled hereunder. If the Company shall for any reason fail to execute and deliver such instruments and documents after such request by the Administrative Agent, the Administrative Agent may obtain a judgment conferring on the Administrative Agent the right to immediate possession and requiring the Company to execute and deliver such instruments and documents to the Administrative Agent, to the entry of which judgment the Company hereby specifically consents to the fullest extent it may lawfully do so.

Nothing in the foregoing shall affect the right of each Secured Party to receive all payments of principal of, and interest on, the Loans held by such Secured Party and all other amounts owing to such Secured Party as and when the same may be due.

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(b)           Notice of Sale.

The Administrative Agent shall give the Company at least fifteen (15) days’ prior written notice of the date fixed for any public sale of the Airframe or any Engine or of the date on or after which any private sale will be held, which notice the Company hereby agrees is reasonable notice, and any such public sale shall be conducted in general so as to afford the Company (and any Lessee) a reasonable opportunity to bid.

(c)           Receiver.

If any Event of Default shall occur and be continuing, to the extent permitted by law, the Administrative Agent shall be entitled, as a matter of right as against the Company, without notice or demand and without regard to the adequacy of the security for the Loans or the solvency of the Company, upon the commencement of judicial proceedings by it to enforce any right under this Mortgage, to the appointment of a receiver of the Collateral and of the tolls, rents, revenues, issues, income, products and profits thereof.

(d)           Concerning Sales.

At any sale under this Article, any Secured Party or the Administrative Agent may bid for and purchase the property offered for sale, may make payment on account thereof as herein provided, and, upon compliance with the terms of sale, may hold, retain and dispose of such property without further accountability therefor.  Any purchaser shall be entitled, for the purpose of making payment for the property purchased, to surrender for the cancellation, all or any part of the Loan (and any Notes evidencing the same) in lieu of cash in the amount that shall be payable thereon as principal and/or accrued interest.  In the event that amounts due on any Loan exceed the amounts being surrendered as aforesaid, such Loan shall be returned to the Secured Parties making such surrender after being stamped or endorsed to show partial cancellation.

Section 4.3.            Waiver of Appraisement, etc., Laws.

To the full extent that it may lawfully so agree, the Company agrees that it will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension, or redemption law now or hereafter in force, in order to prevent or hinder the proper enforcement of this Mortgage or the absolute sale of the Collateral as permitted hereunder, or any part thereof, or the possession thereof by any purchaser at any proper sale under this Article; but the Company, for itself and all who may claim under it, so far as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws. The Company, for itself and all who may claim under it, waives, to the extent that it lawfully may, all right to have the property in the Collateral marshaled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclosure this Mortgage may order the sale of the Collateral as an entirety.

Section 4.4.            Remedies Cumulative.

Subject to the provisions of Section 4.6 below, each and every right, power and remedy herein specifically given to the Administrative Agent or otherwise in this Mortgage shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing in the Financing Documents or at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Administrative Agent, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of

7

the right to exercise at the time or thereafter any other right, power or remedy. No delay or omission by the Administrative Agent in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Company or to be an acquiescence therein. Notwithstanding the foregoing, nothing herein shall be deemed to permit duplicative recovery by Administrative Agent or any Secured Party of any amount due and owing to it hereunder or under any other Financing Document.

Section 4.5.            Discontinuance of Proceedings.

If the Administrative Agent shall have proceeded to enforce any right, power or remedy under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, then and in every such case the Company and the Administrative Agent shall be restored to their former positions and rights hereunder with respect to the property, subject to the Lien of this Mortgage, and all rights, remedies and powers of the Administrative Agent shall continue, as if no such proceedings had been undertaken (but otherwise without prejudice).

Section 4.6.            Concerning the Cape Town Convention.

Without limiting the foregoing, the parties agree that (x) in addition to the remedies set forth in this Article IV or otherwise available to Administrative Agent under this Mortgage and the other Financing Documents, at law or in equity, upon the occurrence and during the continuation of an Event of Default, the Administrative Agent may, but shall not be obligated to, exercise any remedy available to it under the Cape Town Convention (subject, in each case to the requirements and limitations of the Cape Town Convention), including the remedies set forth in Articles 8, 9 and 34 of the Cape Town Convention, but excluding the (a) procurement of the de-registration of the Aircraft (if the Aircraft is registered with the FAA or any successor agency thereto) and the export and physical transfer of the Aircraft or any Engine from the territory (if from a territory within the territorial limits of the United States) in which it is situated pursuant to Article IX of the Protocol (without prejudice to the applicability of other applicable law), and (b) solely to the extent permitted by Article 15 of the Cape Town Convention, the provisions of Chapter III of the Cape Town Convention with regard to default remedies, provided that such exclusion in this clause (b) shall not be applicable (to the extent permitted by Article 15 of the Cape Town Convention) to the extent such default remedies are exercised outside the territorial limits of the United States and in a manner not involving the courts of the United States or of its territorial units; and

(y)           where a remedy is available to it under the Cape Town Convention and also under this Agreement and the other Financing Documents or other applicable law, to the extent permitted by the Cape Town Convention and other applicable law, and subject to the provisions of the previous clause (x), the Administrative Agent may elect under which of the foregoing it shall exercise such remedy.

ARTICLE V

DUTIES OF THE ADMINISTRATIVE AGENT

Section 5.1.            Action Upon Event of Default.

Subject to the terms of Sections 4.2 and 5.3, the Administrative Agent shall take such action, or refrain from taking such action, with respect to an Event of Default (including with respect to the exercise of any rights or remedies under the Collateral Documents) as it may deem advisable in the best interests of the Lenders or as shall be instructed in writing by the Required Lenders. The Administrative Agent may, but shall not be obligated to, take such action, or refrain from taking such

8

action, under or with respect to the Collateral Documents and with respect to such Event of Default as it shall determine to be advisable in the best interests of the Secured Parties.

Section 5.2.            [Intentionally left blank].

Section 5.3.            Indemnification.

The Administrative Agent shall not be required to take any action or refrain from taking any action under Section 5.1 or Article 4 if it shall have reasonable grounds for believing that repayment of any funds expended by it or adequate indemnification against any risks incurred in connection therewith is not reasonably assured to it. The Administrative Agent shall not be required to take any action under Section 5.1 or Article 4, nor shall any other provision of any Collateral Document be deemed to impose a duty on the Administrative Agent to take any action, if the Administrative Agent shall have been advised in writing by independent counsel that such action is contrary to the terms hereof or is otherwise contrary to law.

Section 5.4.            No Duties Except as Specified in Collateral Documents or Instructions.

The Administrative Agent shall not have any duty or obligation to manage, control, use, sell, operate, store, dispose of or otherwise deal with the Aircraft or any other part of the Collateral, or to otherwise take or refrain from taking any action under, or in connection with, any Collateral Document, except as expressly provided by the terms thereof; and no implied duties or obligations shall be read into any Collateral Document against the Administrative Agent. The Administrative Agent nevertheless agrees that it will, at its own cost and expense, promptly take such action as may be necessary duly to discharge any Liens on any part of the Collateral, or on any properties of the Company assigned, pledged or mortgaged under the Collateral Documents, that result from claims against the Administrative Agent in its individual capacity not related to the administration of such properties or any other transaction under this Mortgage or any document included in the Collateral.

Section 5.5.            No Action Except Under Collateral Documents or Instructions.

The Administrative Agent agrees that it will not manage, control, use, sell, operate, store, dispose of or otherwise deal with the Aircraft or other property constituting part of the Collateral or subject to any Lease Assignment except (i) in accordance with the powers granted to, or the authority conferred upon, the Administrative Agent pursuant to the applicable Collateral Documents, or (ii) in accordance with the express terms hereof.

Section 5.6.            Capacity of the Administrative Agent.

The Administrative Agent has been appointed under Section 8 of the Term Loan Agreement, and is acting hereunder, as a “secured party” for purposes of Section 9-102 of the New York Uniform Commercial Code, as a representative party of and for the benefit of the Secured Parties.  Any property held by the Administrative Agent under this Agreement shall be held in trust for the benefit of the Secured Parties and such other secured parties.

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ARTICLE VI

SUPPLEMENTS AND AMENDMENTS TO
THIS MORTGAGE AND OTHER DOCUMENTS

Section 6.1.            Supplemental Mortgages.

The Company and the Administrative Agent may, from time to time, enter into a Mortgage or Mortgages supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Mortgage or of modifying in any manner the rights and obligations of the Company under this Mortgage; provided, however, without the consent of each Secured Party directly affected thereby, no such supplemental Mortgage shall, except as provided in Section 6.2:

(i)  create any Lien with respect to the Collateral except such as are permitted by this Mortgage or the Term Loan Agreement, or release the Lien on the Collateral created by this Mortgage except as provided herein or in the Term Loan Agreement; or

(ii)  change the composition of Secured Parties the consent of which is required for any such supplemental mortgage, or the consent of which is required for any waiver (of compliance with certain provisions of this Mortgage, or of certain defaults hereunder and their consequences) provided for in this Mortgage; or

(iii)  modify any provisions of this Section 6.1, except to provide that certain other provisions of this Mortgage cannot be modified or waived without the consent of each Secured Party affected thereby.

Section 6.2.            Exchange Notes; Take-Out Debt.

(a)           The parties hereto agree to supplement, or amend and restate, this Mortgage upon the request of the Administrative Agent in connection with the issuance of Exchange Notes and the execution and delivery of the Indenture in order, as may be reasonably requested or necessary, to (i) replace the Administrative Agent with the Trustee or its designee and (ii) to facilitate compliance of this Mortgage and the Indenture, or of the Trustee, with the Trust Indenture Act of 1939 or any other Federal or state securities laws applicable to this Mortgage, the Indenture or the Exchange Notes or the Trustee.

(b)           The parties hereto agree to supplement, or amend and restate, this Mortgage upon the request of the Company in connection with the issuance of Take-Out Debt, as may be reasonably requested or necessary, to (i) provide for obligations in respect of the Take-Out Debt to be guaranteed and secured hereunder on the same basis as the Exchange Notes and (ii) to facilitate compliance of this Mortgage and any indenture governing the Take-Out Debt, or of the trustee under any such indenture, with the Trust Indenture Act of 1939 or any other Federal or State securities laws applicable to this Mortgage, any such indenture or the Take-Out Debt or any such trustee.

Section 6.3.            Administrative Agent Protected.

If in the opinion of the Administrative Agent any document required to be executed pursuant to the terms of Section 6.1 adversely affects any right, duty, immunity or indemnity in favor of the Administrative Agent under this Mortgage, the Administrative Agent may in its discretion decline to execute such document.

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ARTICLE VII

INVESTMENT OF SECURITY FUNDS

Section 7.1.            Investment of Security Funds.

Any monies paid to or retained by the Administrative Agent that are required to be paid to the Company or applied for the benefit of the Company, but that the Administrative Agent is entitled to hold under the terms hereof pending the occurrence of some event or the performance of some act (including, without limitation, the remedying of an Event of Default), shall, until paid to the Company or applied as provided herein, be invested by the Administrative Agent at the written authorization and direction of the Company from time to time at the sole expense and risk of the Company in Permitted Investments. After the occurrence and during the continuance of an Event of Default, Permitted Investments will be selected by the Administrative Agent at its discretion. At the time of such payment or application, there shall be remitted to the Company any gain (including interest received) realized as the result of any such investment (net of any fees, commissions, other expenses or losses, if any, incurred in connection with such investment) unless an Event of Default shall have occurred and be continuing in which event the same shall be held by Administrative Agent until the earlier of (x) such time as there shall not be continuing any such Event of Default or (y) the termination of this Mortgage in accordance with Section 8.1. The Administrative Agent shall not be liable for any loss relating to a Permitted Investment made pursuant to this Article 7. The Company will promptly pay to the Administrative Agent, on demand, the amount of any loss (net of any gains, including interest received) realized as the result of any such investment (together with any reasonable fees, commissions and other expenses, if any, incurred in connection with such investment).

ARTICLE VIII

MISCELLANEOUS

Section 8.1.            Termination of Mortgage.

(a)           Upon the payment in full of the principal of, and accrued interest on, the Loans and any other Obligations then due and payable, the Aircraft and the balance of the Collateral shall be released from the Lien of this Mortgage, and, in such event, this Mortgage shall terminate and this Mortgage shall be of no further force or effect, all without delivery of any instrument or performance of any act by any party and all rights to the Aircraft and the balance of the Collateral shall revert to the Company.  At the written request of the Company following any such termination, the Administrative Agent shall deliver to, or as directed in writing by, the Company any Collateral held by the Administrative Agent hereunder and execute and deliver to the Company such documents as such the Company shall reasonably request to evidence such termination, including an appropriate instrument(s) (in due form for recording) discharging from the International Registry the registration of the International Interest created by this Mortgage (and any other registered interests in the Aircraft in favor of the Administrative Agent).

(b)           If any Collateral shall be sold, transferred or otherwise disposed of by the Company in a transaction permitted by the Term Loan Agreement, then (i) the Lien created hereby on such Collateral shall automatically be released and (ii) the Administrative Agent, at the request of the Company, shall execute and deliver to the Company all releases or other documents reasonably necessary or desirable for the release of the Lien created hereby, including an appropriate instrument(s) (in due form for recording) discharging from the International Registry the registration of the International Interest created by this Mortgage (and any other registered interests in the Aircraft in favor of the Administration

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Agent).  In addition, at the request and at the sole expense of the Company, the Administrative Agent agrees to (x) provide to the Company a power of attorney to execute any document reasonably required to permit any sale permitted by the Term Loan Agreement of such Collateral and (y) with respect to any jurisdiction or registration system in which releases executed pursuant to such power of attorney are insufficient to release such Liens, (1) execute in blank any document reasonably required to permit any sale permitted by the Term Loan Agreement of any such Collateral, free of the Liens created hereby (and discharge any registration of such Lien) and (2) authorize the Company to fill in the relevant information to release such Lien (and discharge such registration and file such document when necessary or advisable).

Section 8.2.            Alterations to Mortgage.

This Mortgage shall not be varied except by an instrument in writing of even date herewith or subsequent hereto executed by each of the parties hereto through its duly authorized representative.

Section 8.3.            No Legal Title to Collateral in Lender or Holder.

No Lender or Holder shall have legal title to any part of the Collateral. No transfer, by operation of law or otherwise, of its Loan or Note or other right, title and interest of a Lender or Holder in and to the Collateral or this Mortgage shall operate to terminate this Mortgage or entitle any successor or transferee of such Lender or Holder to an accounting or to the transfer to it of legal title to any part of the Collateral.

Section 8.4.            Sale of the Aircraft by Administrative Agent Is Binding.

Any sale or other conveyance of the Aircraft, the Airframe, any Engine or any other part of the Collateral or any interest therein by the Administrative Agent made pursuant to the terms of this Mortgage shall bind the Administrative Agent, the other Secured Parties and the Company, and shall be effective to transfer or convey all right, title and interest of the Company, the Administrative Agent and the other Secured Parties in and to the Aircraft, the Airframe, any Engine or any interest therein. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Administrative Agent. Notwithstanding the foregoing, nothing herein contained shall be deemed to constitute a waiver by the Company of any right it may have against the Administrative Agent or any other Secured Party as a result of any sale or other conveyance in contravention of the terms and conditions of this Mortgage.

Section 8.5.            Benefit of Mortgage.

Nothing in this Mortgage, whether express or implied, shall be construed to give to any Person other than the Company, the Administrative Agent and the other Secured Parties any legal or equitable right, remedy or claim under or in respect of this Mortgage or any Loan.

Section 8.6.            Section 1110 of the Bankruptcy Code.

It is the intention of the parties hereto that the security interest created hereby entitles the Administrative Agent on behalf of the Secured Parties to all of the benefits of Section 1110 of the Bankruptcy Code in the event of any reorganization of the Company under the Bankruptcy Code subject, in each case, to the relevant provisions of Section 1110.

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Section 8.7.            Notices.

All notices, requests and demands to or upon the Administrative Agent or any Grantor hereunder shall be effected in the manner provided for in Section 8.2 of the Guarantee and Collateral Agreement.

Section 8.8.            Severability.

Should any one or more provisions of this Mortgage be determined to be illegal or unenforceable by a court of any jurisdiction, such provision shall be ineffective to the extent of such illegality or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction. The Company and the Administrative Agent agree, as to such jurisdiction and to the extent permitted by such jurisdiction’s laws, to replace any provision of this Mortgage that is so determined to be illegal or unenforceable by a valid provision that has as nearly as possible the same effect; provided that such replacement provision shall not expand the Company’s or the Administrative Agent’s obligations hereunder.

Section 8.9.            No Waiver; Cumulative Remedies.

No failure on the part of the Administrative Agent to exercise, and no course of dealing with respect to, and no delay in exercising, any remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Administrative Agent of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

Section 8.10.          Separate Counterparts.

This Mortgage may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Mortgage including a signature page executed by each of the parties hereto shall be an original counterpart of this Mortgage, but all of such counterparts together shall constitute one instrument.

Section 8.11.          Successors and Assigns.

All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Company and its successors and permitted assigns, and the Administrative Agent and its successors and permitted assigns, and the other Secured Parties, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by a Secured Party (unless withdrawn by such Secured Party or successor or assign prior to it being acted upon by the Administrative Agent) shall bind the successors and assigns of such Secured Party.

Section 8.12.          Headings.

The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

Section 8.13.          Governing Law.

THIS MORTGAGE IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

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Section 8.14.          Normal Commercial Relations.

Anything contained in this Mortgage to the contrary notwithstanding, the Company, any Secured Party, the Administrative Agent or any Affiliate of the Company, any Secured Party or the Administrative Agent may enter into commercial banking or other financial transactions with each other, and conduct banking or other commercial relationships with each other, fully to the same extent as if this Mortgage were not in effect, including, without limitation, the making of loans or other extensions of credit for any purpose whatsoever.

Section 8.15.          Language. All correspondence, documents and any other written matters in connection with this Mortgage shall be in English.

Section 8.16.          Execution of Financing Statements. Pursuant to any applicable law, the Company authorizes the Administrative Agent to file or record financing statements and other filing or recording documents or instruments with respect to the Collateral without the signature of the Company in such form and in such offices as the Administrative Agent determines appropriate to perfect the security interests of the Administrative Agent under and in accordance with this Agreement. The Company hereby ratifies and authorizes the filing by the Administrative Agent of any financing statement with respect to the Collateral made prior to the date hereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed by their respective officers, as the case may be, there unto duly authorized, as of the day and year first above written.

WORLD AIRWAYS, INC.
By:	/s/ MARK McMILLIN
	Title: General Counsel & Corporate Secretary
JPMORGAN CHASE BANK, N.A., as Administrative
Agent
By:	/s/ JOHN C. RIORDAN
	Title: Vice President

APPENDIX A

DEFINITIONS RELATING TO THE
MORTGAGE AND SECURITY AGREEMENT

The definitions stated herein shall apply equally to both the singular and plural forms of the terms defined.  Capitalized terms used herein and not defined herein have the meanings set forth in the Term Loan Agreement.

“Administrative Agent” has the meaning specified in the recitals to the Mortgage.

“Affiliate” has the meaning specified in the Term Loan Agreement.

“Aircraft” means the Airframe, together with the Engines, whether or not any of such Engines may from time to time be installed on such Airframe or may be installed on any other airframe or any other aircraft, as further specified in the Mortgage.

“Airframe” means (A) the DC-10-30 aircraft (excluding the Engines or engines from time to time installed thereon), identified by U.S. registration mark and manufacturer’s serial number in the initial Mortgage Supplement; and (B) any and all Parts so long as the same shall be incorporated or installed in or attached to such Airframe, or so long as the same shall be subject to the Lien of this Mortgage after removal from the Airframe.

“Assignment” has the meaning specified in the Cape Town Convention.

“Bankruptcy Code” means Title 11 of the United States Code, as amended from time to time, and any successor provisions thereof.

“Cape Town Convention” means the official English language texts of the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment that were signed in Cape Town, South Africa.

“Collateral” has the meaning given such term in Section 2.1 of the Mortgage.

“Collateral Documents” means the Mortgage and each Lease Assignment, if any.

“Company” has the meaning specified in the recitals to the Mortgage.

“Dollars” and “$” means the lawful currency of the United States of America.

“Engine” means: (A) each of the General Electric Model CF6-50C2 listed by manufacturer’s serial number in the initial Mortgage Supplement, whether or not from time to time installed on the Airframe or installed on any other aircraft; and (B) any Replacement Engine that may from time to time be substituted for such Engine; together in each case with any and all Parts incorporated or installed in or attached thereto or so long as such Parts shall be subject to the Lien of this Mortgage after removal from an Engine.

“Events of Default” has the meaning set forth in the Term Loan Agreement.

“Exchange Notes” has the meaning specified in the Term Loan Agreement.

“FAA” mean the United States Federal Aviation Administration, and any agency or instrumentality of the United States government succeeding to its functions.

“FARs” mean the FAA Regulations as in effect from time to time under Title 14 of the United States Code of Federal Regulations, including, without limitation, the Special Federal Aviation Regulations (as applicable), as amended, or any successor or substitute provisions.

“Federal Aviation Act” means the collective reference to the United States Transportation Code (currently codified at Subtitle VII of Title 49 of the United States Code), as amended, or any successor or substitute provisions, and all FARs and other rules, regulations, directives and orders issued or promulgated from time to time thereunder.

“Financing Documents” means the Term Loan Agreement, the other Loan Documents, and if Exchange Notes are outstanding, the Indenture and the Exchange Notes.

“Guarantee and Collateral Agreement” has the meaning specified in the Term Loan Agreement.

“Holders” has the meaning specified in the Term Loan Agreement.

“Indenture” has the meaning specified in the Term Loan Agreement.

“International Interest” has the meaning specified in the Cape Town Convention.

“International Registry” has the meaning specified in the Cape Town Convention.

“Lease” means any lease of the Airframe or any Engine permitted by the terms of the Financing Documents.

“Lease Assignment” means an assignment of a Lease or Wet Lease, substantially the form of Exhibit B hereto.

“Lender” has the meaning set forth in introductory paragraph of the Term Loan Agreement.

“Lessee” means any lessee pursuant to a Lease.

“Lien” means any lien (statutory or otherwise), security interest or other charge or encumbrance of any kind, including any interest registered with the International Registry, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor.

“Loan Documents” has the meaning specified in the Term Loan Agreement.  The term “Loan Documents” shall include the Mortgage, the Mortgage Supplement and each Lease Assignment.

“Loans” means the loans made under the Term Loan Agreement.

“Merger” has the meaning specified in the Term Loan Agreement.

“Mortgage” means the Mortgage and Security Agreement covering the Collateral dated as of August 14, 2007, between the Company and the Administrative Agent, as the same may be amended, modified or supplemented from time to time.

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“Mortgage Supplement” means (a) the Mortgage and Security Agreement Supplement No. 1 dated August 14, 2007, substantially in the form of Exhibit A to the Mortgage and (b) any other supplement to the Mortgage from time to time executed and delivered.

“Notes” has the meaning specified in the Term Loan Agreement.

“Obligations” means all monetary obligations and liabilities of the Company which may arise under or pursuant to this Mortgage, the Guarantee and Collateral Agreement or any other Financing Document to which the Company is a party, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent, to the Lenders and, if Exchange Notes are outstanding, to the Trustee or to the Holders, that are required to be paid by the Company pursuant to the terms of this Mortgage, the Guarantee and Collateral Agreement or any other Financing Document).

“Parts” means any and all appliances, parts, instruments, appurtenances, accessories, furnishings, seats, buyer furnished equipment, and other equipment of whatever nature (other than (a) complete Engines or engines, (b) any items leased by the Company from a third party and (c) cargo containers) that may from time to time be incorporated or installed in or attached to any Airframe or any Engine.

“Permitted Investments” means (i) direct obligations of the United States of America and agencies guaranteed by the United States government having a final maturity of 90 days or less from date of purchase thereof; (ii) certificates of deposit issued by, bankers’ acceptances of, or time deposits with, any bank, trust company or national banking association incorporated under the laws of the United States of America or one of the states thereof having combined capital and surplus and retained earnings as of its last report of condition of at least $500,000,000 and having a rating of Aa or better by Moody’s Investors Service, Inc. (“Moody’s”) or AA or better by Standard & Poor’s Corporation (“S&P”) and having a final maturity of 90 days or less from date of purchase thereof; and (iii) commercial paper of any holding company of a bank, trust company or national banking association described in (ii) and commercial paper of any corporation or finance company incorporated or doing business under the laws of the United States of America or any state thereof having a rating assigned to such commercial paper of Al by S&P or P1 by Moody’s and having a final maturity of 90 days or less from the date of purchase thereof; provided that the aggregate amount at any one time so invested in certificates of deposit issued by any one bank shall not be in excess of 5% of such bank’s capital and surplus.

“Person” means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.

“Protocol” means the Protocol referred to in the defined term “Cape Town Convention.”

“Replacement Engine” means a General Electric CF6-50C2 engine (or engine of the same manufacturer of the same or a comparable or an improved model and suitable for installation and use on the Airframe) that has a value, utility and remaining useful life (except for maintenance cycle condition) at least equal to the Engine that it is replacing (immediately prior to such replacement), assuming such Engine was of the value, utility and remaining useful life (except for maintenance cycle condition) required by the terms of the Mortgage, and which shall have been made subject to the Lien of the Mortgage.

“Secured Parties” has the meaning specified in the Guarantee and Collateral Agreement.

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“Take-Out Debt” has the meaning specified in the Term Loan Agreement.

“Term Loan Agreement” means the Term Loan Agreement, dated as of August 14, 2007, among New ATA Acquisition Inc., the several lenders from time to time parties thereto, Jefferies Finance LLC, as documentation agent, and JPMorgan Chase Bank, N.A., as administrative agent, as amended, supplemented or otherwise modified from time to time.

“Trustee” has the meaning specified in the Term Loan Agreement.

“Wet Lease” means any arrangement whereby the Company agrees to furnish the Airframe and Engines or engines installed thereon to a third party pursuant to which such Airframe and Engines or engines (i) shall be operated solely by regular employees of the Company possessing all current certificates and licenses that would be required under the Federal Aviation Act for the performance by such employees of similar functions within the United States of America or such other jurisdiction of registry (it is understood that cabin attendants need not be regular employees of the Company) and (ii) shall be maintained by the Company in accordance with its normal maintenance practices.

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Exhibit A

To

Mortgage

MORTGAGE AND SECURITY
AGREEMENT SUPPLEMENT NO.      

Mortgage and Security Agreement Supplement No.      dated            , (“Mortgage Supplement”) of [   ] (the “Company”).

W I T N E S S E T H:

WHEREAS, the Mortgage and Security Agreement, dated as of August o, 2007, (the “Mortgage”), between the Company and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), provides for the execution and delivery of supplements thereto substantially in the form hereof that shall particularly describe the Aircraft (such term and other defined terms in the Mortgage being used herein with the same meanings), and shall specifically grant a security interest in the Aircraft to the Administrative Agent; and

[WHEREAS, the Mortgage relates to the Airframe and Engines described in Annex A attached hereto and made a part hereof, and a counterpart of the Mortgage is attached to and, made a part of this Mortgage Supplement;](1)

[WHEREAS, the Company has, as provided in the Mortgage, heretofore executed and delivered to the Administrative Agent _ Mortgage Supplement(s) for the purpose of specifically subjecting to the Lien of the Mortgage certain airframes and/or engines therein described, which Mortgage Supplement(s) is/are dated and has/have been duly recorded with the FAA as set forth below, to wit:

Date Recordation Date FAA Conveyance Number](2)

NOW, THEREFORE, in order to secure the prompt payment of the Obligations, subject to the terms and conditions of the Mortgage, and in consideration of the premises and of the covenants contained in the Mortgage, and of other good and valuable consideration given to the Company at or before the delivery hereof, the receipt whereof is hereby acknowledged, the Company has mortgaged, assigned, pledged, hypothecated and granted, and does hereby mortgage, assign, pledge, hypothecate and grant, a continuing security interest in, and mortgage lien on, the property comprising all its right, title and interest in and to the Airframe and Engines described in Annex A attached hereto, whether or not such Engines shall be installed in or attached to the Airframe or any other aircraft, to the Administrative Agent, its successors and assigns, for the benefit and security of the Secured Parties;

(1)           Use of Mortgage Supplement No. 1 only.

(2)           Use for all Mortgage Supplements other than Mortgage Supplement No. 1.

To have and to hold all and singular the aforesaid property unto the Administrative Agent, its successors and assigns, for the benefit and security of the Secured Parties and for the uses and purposes and subject to the terms and provisions set forth in the Mortgage.

Notwithstanding the foregoing, for purposes of the International Registry, model references for (i) the Airframe shall be “[   ]” and (ii) each Engine shall be “[   ]”, which, the Company represents and warrants, constitute the manufacturer’s respective generic model designations for such Airframe and Engines (as required to be used pursuant to the “regulations” as defined in the Cape Town Convention).

This Mortgage Supplement shall be construed as supplemental to the Mortgage and shall form a part thereof, and the Mortgage is hereby incorporated by reference herein and is hereby ratified, approved and confirmed and terms not otherwise defined herein shall have the meaning provided in the Mortgage.

THIS MORTGAGE SUPPLEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

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IN WITNESS WHEREOF, the Company has caused this Supplement No.     to be duly executed by one of its duly authorized officers, as of the day and year first above written.

[   ]
By:
	Title:

Annex A

to Mortgage

Supplement No.    

DESCRIPTION OF AIRFRAME AND ENGINES

AIRFRAME

		FAA	Manufacturer’s
Manufacturer	Model	Registration No.	Serial No.
McDonnell Douglas	DC-10-30	N14075	46922

ENGINES

		Manufacturer’s
		Serial
Manufacturer	Model	No.
General Electric	CF6-50C2	455736
General Electric	CF6-50C2	455894
General Electric	CF6-50C2	517833

Each Engine is of 49,120 or more pounds of thrust or its equivalent.

EXHIBIT B to Mortgage and

Security Agreement

FORM OF LEASE ASSIGNMENT

LEASE ASSIGNMENT dated as of                 (this “Assignment”), from [   ], a [   ] [corporation] (the “Assignor”), to JPMORGAN CHASE BANK, N.A., a national banking association formed under the federal laws of the United States of America, as Administrative Agent (the “Assignee”).

W I T N E S S E T H :

WHEREAS, the Assignor and the Assignee have entered into the Mortgage and Security Agreement dated as of August    , 2007 (as the same may be amended, supplemented or otherwise modified from time to time, the “Mortgage”), pursuant to which the Assignor has mortgaged to the Assignee the Aircraft and the other “Collateral” described therein;

WHEREAS, the Assignor, as lessor, is entering into a [Lease Agreement] [Wet Lease Agreement] dated as of                (as the same may be amended, supplemented or otherwise modified from time to time, the “Lease”) with                , as Lessee (the “Lessee”), and, in connection therewith, Assignor desires to assign such Lease as collateral security to Assignee in accordance with the provisions of Section 3.2 of the Mortgage;

WHEREAS, in order to induce the Assignee to accept this Assignment the Assignor has caused the Lessee to execute and deliver in favor of the Assignee a Consent and Agreement substantially in the form annexed hereto as Exhibit A; and

WHEREAS, capitalized terms used in this Assignment that are not otherwise defined in this Assignment are used as they are defined in the Mortgage;

NOW, THEREFORE, in consideration of the promises and obligations contained herein, the parties hereto hereby agree as follows:

1.             Assignment of Lease.  For value received and to secure the due and punctual payment and performance by the Company of the Obligations and the performance and observance by the Company of all agreements, covenants, and provisions contained in the Financing Documents, all of which obligations are hereby incorporated by this reference as fully as if set forth in their entirety herein (the “Obligations”), the Assignor hereby assigns, transfers and conveys to the Assignee, its successors and assigns, all its right, title and interest in, to and under the Lease, including, but not limited to:

(i)            (x) all rents or other amounts or payments of any kind paid or payable by the Lessee under the Lease (including, without limitation, all claims for damages or other sums arising upon sale or other disposition of, or loss of use of or requisition of title or use of, the Aircraft, Airframe, Engines, Parts and related equipment at any time subject to the Lease or upon any Event of Default specified therein (a “Lease Event of Default”) or in respect thereof and all collateral security or credit support with respect to the Lease (whether cash or in the nature of a guarantee, letter of credit, credit insurance, lien on or security interest in property or otherwise) (any such support or collateral security being herein called “Additional Collateral”) for the obligations of the Lessee thereunder as well as all rights of the Assignor to enforce payment of any such rents, amounts or payments, (y) all rights of the Assignor to exercise any election or option to make any decision or determination or to give or receive

any notice, consent, waiver or approval or to take any other action under or in respect of the Lease or to accept surrender or redelivery of the Aircraft or any part thereof, as well as the rights, powers and remedies on the part of the Assignor, whether acting under the Lease or by statute or at law or in equity, or otherwise, arising out of any default under the Lease, and (z) any right to restitution from the Lessee or any guarantor of the Lessee in respect of any determination of invalidity of the Lease; and

(ii)           all proceeds of the foregoing;

This Assignment is a present assignment and shall be effective, and the security interests created hereby shall attach immediately upon execution of this Assignment; provided, however, that it is expressly agreed that the Assignee shall not be entitled to exercise or receive, and that the Assignor shall be entitled to exercise and receive, any of the claims, rights, powers, privileges, remedies and other benefits (including, without limitation, the right to receive all moneys due or to become due under or arising out of the Lease) of the Assignor described above (including without limitation, the right to consent, waive or amend any term or provision of any Additional Collateral) unless and until an Event of Default under the Mortgage shall have occurred and be continuing.

2.             Performance of Assignor’s Obligations.  It is expressly agreed that anything herein contained to the contrary notwithstanding, (i) the Assignor shall remain liable under the Lease and all related documentation to perform all of its obligations thereunder, to the same extent as if this Assignment had not been executed, and nothing in the Lease or this Assignment shall relieve the Assignor of any of its obligations under the Mortgage or any of the Financing Documents, (ii) the Assignee shall not have any obligation or liability under the Lease by reason of or arising out of this Assignment, nor shall the Assignee be required or obligated in any manner to perform or fulfill any obligation of the Assignor under or pursuant to the Lease, or to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or to present or file any claim or to take any other action to collect or enforce the payment of any amounts to which it or they may be entitled hereunder at any time or times and (iii) at any time when an Event of Default under the Mortgage has occurred and is continuing, at the Assignee’s option, the Assignee may perform, or cause to be performed, all or any part of the obligations and agreements of the Assignor under the Lease or any related documentation, without releasing the Assignor therefrom.  Notwithstanding the foregoing, in the event that the Assignee (or its successors or assigns) exercises any right or power of the Assignor under or with respect to the Lease it shall be liable to perform any corresponding obligations of the Assignor to the Lessee.

3.             Event of Default.  Upon the occurrence of any Event of Default under the Mortgage and at any time thereafter so long as the same shall be continuing, the Assignee may, at its option, exercise any one or more of the remedies set forth below, in the Lease, or that may otherwise be available to it under the New York Uniform Commercial Code or other applicable law, as the Assignee in its sole discretion may determine, which remedies are cumulative and in addition to every other right or remedy provided by law:

3.1           Collection of Lease Payments. The Assignee may collect and retain all rents, proceeds, payments and other moneys due or to become due under the Lease and/or the other property assigned hereunder and apply such amounts to the payment of the Obligations, all as the Assignee, in its discretion, shall determine; and/or

3.2           Maintenance of Lease.  The Assignee may assume all or any part of the Assignor’s right, title and interest in the Lease and/or the other property assigned hereunder and maintain the Lease and/or the other property assigned hereunder in full force and effect, with the Assignee substituted for the Assignor or beneficiary thereunder, and in any such event all of the

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right, title and interest of the Assignor therein shall be extinguished and the Assignee shall be entitled to collect and retain all rents and payments thereunder; and/or

3.3           Sale.  The Assignee may sell in accordance with applicable law at public or private sale, without appraisal, for such price as it may deem fair, the Lease and all the Assignor’s right, title and interest therein, in which case the Assignee will give the Assignor and the Lessee at least 15 calendar days’ notice of the date fixed for any public sale or of the date on or after which will occur the execution of any contract providing for any private sale thereof, and each purchaser at any such sale shall hold such property absolutely free from any claim or right on the part of the Assignor, the Assignor hereby waiving and releasing (to the extent permitted by applicable law) all rights of redemption, stay, appraisal, reclamation and turnover that the Assignor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

4.             Expenses and Fees.  The Assignor shall pay to the Assignee and its successors and assigns on demand all reasonable attorney’s fees and other reasonable out-of-pocket expenses incurred by the Assignee in exercising its rights and remedies provided hereunder and in enforcing the terms hereof.

5.             Waiver; Invalidity Of Remedies.  The Assignor waives any right to require the Assignee to pursue any other remedy it may have against the Assignor or any guarantor or surety or provider of credit support.  The invalidity or unenforceability of any remedy in any jurisdiction shall not invalidate such remedy or render it unenforceable in any other jurisdiction.  The invalidity or unenforceability of any of the remedies provided herein in any jurisdiction shall not in any way affect the right to enforcement in such jurisdiction or elsewhere of any of the other remedies provided herein.

6.             Power of Attorney.  Effective upon the occurrence of an Event of Default under the Mortgage and for so long as such Event of Default shall be continuing, the Assignor does hereby constitute the Assignee, and its successors and permitted assigns, the Assignor’s true and lawful attorney-in-fact, irrevocably with full power (in the name of the Assignor or otherwise) and at the expense of the Assignor but for the use and benefit of the Assignee, at any time after an Event of Default under the Mortgage has occurred and for so long as it is continuing, to enforce each and every term and provision of the Lease and other property assigned hereunder (including, without limitation, the Additional Collateral), to ask, require, demand, receive, collect, compound and give acquittance and discharge for any and all moneys and claims for moneys (in each case including insurance and requisition proceeds) due and to become due under or arising out of the Lease, and other property assigned hereunder (including, without limitation, the Additional Collateral), to endorse any checks or other instruments or orders in connection therewith, to settle, compromise, compound or adjust any such claims, to exercise and enforce any and all claims, rights, powers or remedies of every kind and description of the Assignor under or arising out of the Lease and other property assigned hereunder (including, without limitation, the Additional Collateral), to file, commence, prosecute, compromise and settle in the name of the Assignor or the Assignee or otherwise any suits, actions or proceedings at law or in equity in any court, to collect any such moneys or to enforce any rights in respect thereto on all other claims, rights, powers and remedies of every kind and description of the Assignor under or arising out of the Lease and the other property assigned hereunder (including without limitation, the Additional Collateral) and generally to sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with any of such claims, rights, powers and remedies as fully and completely as though the Assignee were the absolute owner thereof for all purposes, and at such times and in such manner as may seem to the Assignee to be necessary or advisable or convenient or proper in its absolute discretion; provided that this power of attorney shall not apply to any right, power or privilege that, by the terms of this Assignment other than this Section 6, is reserved to or not assigned by the Assignor.

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7.             Execution of Additional Documents.  The Assignor agrees that at any time or from time to time, at its own reasonable expense, upon the written request of the Assignee, the Assignor shall promptly and duly execute and deliver any and all such further instruments, documents and financing statements and do such other acts and things as the Assignee may, acting reasonably, deem necessary or desirable in order to obtain the full benefits of this Assignment and the rights and powers granted herein.

8.             Assignment.  The Assignor shall not assign, delegate, pledge or otherwise encumber any of its rights or obligations hereunder except as permitted by the Mortgage or the Term Loan Agreement.

9.             Assignor’s Representations and Warranties.  The Assignor represents and warrants that the Lease is in full force and effect and is enforceable in accordance with its terms as against it (except to the extent enforcement may be affected by bankruptcy, moratorium, reorganization and other laws affecting creditors’ rights in general and governed by principles of equity), that as of the date hereof neither the Assignor nor, to the knowledge of the Assignor, the Assignee is in default thereunder, that a true and correct copy of the executed original of the Lease to be held by the Assignee has been delivered to Assignee, and that it has not assigned, transferred or pledged, and hereby covenants that it will not assign or transfer (except as permitted by Section 8), or pledge, the whole or any part of the rents, moneys, claims, rights, powers, remedies, title or interests hereby assigned to any Person other than the Assignee and its successors and permitted assigns.

10.           GOVERNING LAW.  THIS ASSIGNMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.  THIS ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

11.           Counterparts.  This Assignment may be executed in several counterparts, each of which shall be deemed an original, and all such counterparts shall constitute one and the same instrument.

12.           Miscellaneous.  This Assignment may not be amended, supplemented, modified or waived without the prior written consent of the Assignee and Assignor.  This Assignment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  Except as otherwise provided in this Agreement, all notices hereunder shall be in writing and shall be given in the manner and at the addresses provided for notices under the Lease.

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IN WITNESS WHEREOF, the Assignor and the Assignee have duly executed this Assignment as of the date first set forth above.

[   ]
	as Assignor
By:
	Name:
	Title:
JPMORGAN CHASE BANK, N.A.,
	as Assignee
By:
	Name:
	Title:

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EXHIBIT A

TO LEASE

ASSIGNMENT

CONSENT AND AGREEMENT

                       , a                         corporation (the “Lessee”), hereby acknowledges receipt of notice of and consents to all the terms of the foregoing Lease Assignment (the “Assignment”, terms being used herein as therein defined or incorporated therein by reference) and agrees that:

1.The Lessee shall be fully bound by all terms and conditions of the Assignment.

2.All representations, warranties, indemnities, covenants and agreements of the Lessee hereunder and under the Lease shall inure to the benefit of, and to the extent provided in the Assignment shall be enforceable by, the Assignee, its successors and permitted assigns, to the same extent as if originally named the Lessor therein.

3.None of the Assignee and its successors and assigns shall be liable for any of the obligations or duties of the Assignor under the Lease except as provided in the Assignment.

4.Upon receipt of written notice from the Assignee that an Event of Default has occurred under the Mortgage, the Lessee agrees to thereafter pay all rent, reserves, damages and other amounts becoming due and payable under the Lease directly to the Assignee.

5.The Lessee hereby represents and warrants that (a) the Lessee is a Company validly existing under the laws of the jurisdiction of its organization, (b) the making and performance of the Lease and this Consent and Agreement have been duly authorized by all necessary action on the part of the Lessee, and do not contravene the Lessee’s organizational documents or any indenture, credit or loan agreement or other contractual agreement to which the Lessee is a party or by which it is bound, (c) the Lease constitutes, as of the date thereof and at all time thereafter to and including the date of this Consent and Agreement, and this Consent and Agreement constitutes, legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their respective terms except to the extent such enforceability is affected by moratorium, insolvency, bankruptcy, reorganization and other losses affecting creditors’ rights in general and general principles of equity, and (d) as of the date hereof, no “Event of Default” or “Default” under the Lease has occurred and is continuing.

6.The Lessee covenants and agrees that if an Event of Default exists under the Mortgage, the Lessee will, at the request of the Assignee, consent to the termination of the Lease and (or, if the Lease has been terminated without such consent, thereupon) enter into a new lease directly with the Assignee in respect of the Aircraft on the same terms and conditions as the Lease.

7.It is understood that:

(a)           Notices to the Lessee pursuant to or in connection with the Assignment shall be in writing and shall be addressed to the Lessee at [ADDRESS], Attention:                            .

(b)           This Consent and Agreement may be signed in any number of counterparts with the same effect as if the signature to all such counterparts were upon the same instrument, and all such counterparts shall constitute but one instrument.

(c)           This Consent and Agreement shall be governed by and construed in accordance with the laws of the State of New York.

8.     The Lessee hereby confirms that as of the date hereof, except for the transactions contemplated by this Consent and Agreement, it has not received notice from any Person of, and has not consented to, any assignment by any Person of any rights in, to or under the Lease.

			,
	[Name of Lessee]
	By:
		Title:
Dated:

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EX-10.19

Exhibit 10.19

MORTGAGE AND SECURITY

AGREEMENT SUPPLEMENT NO. 1

Mortgage and Security Agreement Supplement No. 1 dated August 14, 2007 (“Mortgage Supplement”) of World Airways, Inc. (the “Company”).

W I T N E S S E T H:

WHEREAS, the Mortgage and Security Agreement, dated as of August 14, 2007, (the “Mortgage”), between the Company and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), provides for the execution and delivery of supplements thereto substantially in the form hereof that shall particularly describe the Aircraft (such term and other defined terms in the Mortgage being used herein with the same meanings), and shall specifically grant a security interest in the Aircraft to the Administrative Agent; and

WHEREAS, the Mortgage relates to the Airframe and Engines described in Annex A attached hereto and made a part hereof, and a counterpart of the Mortgage is attached to and, made a part of this Mortgage Supplement;

NOW, THEREFORE, in order to secure the prompt payment of the Obligations, subject to the terms and conditions of the Mortgage, and in consideration of the premises and of the covenants contained in the Mortgage, and of other good and valuable consideration given to the Company at or before the delivery hereof, the receipt whereof is hereby acknowledged, the Company has mortgaged, assigned, pledged, hypothecated and granted, and does hereby mortgage, assign, pledge, hypothecate and grant, a continuing security interest in, and mortgage lien on, the property comprising all its right, title and interest in and to the Airframe and Engines described in Annex A attached hereto, whether or not such Engines shall be installed in or attached to the Airframe or any other aircraft, to the Administrative Agent, its successors and assigns, for the benefit and security of the Secured Parties;

To have and to hold all and singular the aforesaid property unto the Administrative Agent, its successors and assigns, for the benefit and security of the Secured Parties and for the uses and purposes and subject to the terms and provisions set forth in the Mortgage.

Notwithstanding the foregoing, for purposes of the International Registry, model references for (i) the Airframe shall be “DC-10-30” and (ii) each Engine shall be “CF6-50/-45”, which, the Company represents and warrants, constitute the manufacturer’s respective generic model designations for such Airframe and Engines (as required to be used pursuant to the “regulations” as defined in the Cape Town Convention).

This Mortgage Supplement shall be construed as supplemental to the Mortgage and shall form a part thereof, and the Mortgage is hereby incorporated by reference herein and is hereby ratified, approved and confirmed and terms not otherwise defined herein shall have the meaning provided in the Mortgage.

THIS MORTGAGE SUPPLEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the Company has caused this Supplement No.     to be duly executed by one of its duly authorized officers, as of the day and year first above written.

WORLD AIRWAYS, INC.
By:	/s/ MARK McMILLIN
	Name: Mark McMillin
	Title: General Counsel & Corporate Secretary

Annex A

to Mortgage

Supplement No. 1

DESCRIPTION OF AIRFRAME AND ENGINES

AIRFRAME

		FAA	Manufacturer’s
Manufacturer	Model	Registration No.	Serial No.
McDonnell Douglas	DC-10-30	N14075	46922

ENGINES

		Manufacturer’s
		Serial
Manufacturer	Model	No.
General Electric	CF6-50C2	455736
General Electric	CF6-50C2	455894
General Electric	CF6-50C2	517833

Each Engine is of 49,120 or more pounds of thrust or its equivalent.

EX-10.21

Exhibit 10.21

EXECUTION COPY

BRIDGE AND PURCHASE AGREEMENT

This Bridge and Purchase Agreement (the “Agreement”), dated as of August 14, 2007, is entered into by and among Global Aero Logistics Inc. (formerly known as New ATA Holdings, Inc.) (the “Company”) and MatlinPatterson ATA Holdings LLC (including its successors and assigns, the “Investor”).

PRELIMINARY STATEMENTS

WHEREAS, on February 28, 2006, ATA Airlines, Inc. (“ATA”), as borrower, together with the Company, certain subsidiaries of the Company, JPMorgan Chase Bank, N.A., as administrative agent and the lender parties thereto entered into that certain Loan Agreement, whereby the lender parties agreed to make a term loan to ATA in an aggregate amount equal to $24,178,666.67 (the “Term Loan”) pursuant to which the Investor is the sole lender;

WHEREAS, on January 16, 2007, ATA, as borrower, the Company, certain subsidiaries of the Company and the Investor, as lender, entered into that certain Bridge Loan Agreement, whereby the Investor agreed to lend to the Company an amount equal to $28,000,000 (the “Bridge Loan”, together with the Term Loan, the “Company Loans”);

WHEREAS, on April 5, 2007, the Company, Hugo Acquisition Corporation (“Hugo”) and World Air Holdings, Inc., a Delaware Corporation (“World”), entered into that certain Agreement and Plan of Merger (the “Merger Agreement”), whereby Hugo will merge with and into World with World being the surviving entity (the “Merger”);

WHEREAS, in connection with the closing of the Merger (the “Merger Closing”), and as a condition to obtaining financing for the Merger, the Company and the Investor desire to cancel the Company’s existing obligations under the Company Loans in exchange for that number of shares of series A preferred stock of the Company, par value $0.0001 per share, with terms substantially the same as set forth on Exhibit A (the “Series A Preferred”), that is equal to the quotient obtained by dividing the Adjusted Principal Balance (as defined below) by $14.00 (the “Price Per Share”). In addition, the Investor will purchase for cash, at a per share price equal to the Price Per Share, a number of additional shares of Series A Preferred equal to the quotient obtained by dividing (i) $161,100,000 (the “Aggregate Purchase Price”) less the Adjusted Principal Balance by (ii) the Price Per Share. The Aggregate Purchase Price may be adjusted downward if a lesser amount is required to finance the Merger, but in no event shall the Aggregate Purchase Price be adjusted downward to an amount that is less than the aggregate amount necessary to satisfy the Adjusted Principal Balance.

NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

CERTAIN DEFINED TERMS

Section 1.01  Capitalized terms used in this Agreement shall have the following meanings:

“Adjusted Principal Balance” means the outstanding principal balance under the Company Loans, plus any accrued but unpaid interest, as of immediately prior to the Merger Closing.

“Aggregate Purchase Price” has the meaning stated in the Preliminary Statements.

“Affiliate” means any other Person directly or indirectly “controlling” or “controlled by” or “under common control with” such specified Person within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

“Agreement” has the meaning stated in the Preamble.

“ATA” has the meaning stated in the Preliminary Statements.

“Bridge Loan” has the meaning stated in the Preliminary Statements.

“Bridge Purchase” has the meaning stated in Section 2.01(a).

“Bridge Shares” has the meaning stated in Section 2.01(b).

“Business Day” means any day other than a Saturday, Sunday or any other day on which banks in the City of New York are required or permitted to be closed.

“Closing” has the meaning stated in Section 2.03(a).

“Closing Date” has the meaning stated in Section 2.03(a).

“Common Stock” has the meaning stated in the Preliminary Statements.

“Company” has the meaning stated in the Preamble.

“Company Loans” has the meaning stated in Preliminary Statements.

“Conversion” has the meaning stated in Section 2.01(b).

“Conversion Shares” has the meaning stated in Section 2.01(b).

“Fairness Opinion” has the meaning stated in Section 3.01(h)

“Hugo” has the meaning statement in the Preliminary Statements.

“Investor” has the meaning stated in the Preamble.

“Material Adverse Effect” has the meaning stated in Section 3.01(a).

“Merger” has the meaning stated in the Preliminary Statements.

“Merger Agreement” has the meaning stated in the Preliminary Statements.

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“Merger Closing” has the meaning stated in the Preliminary Statements.

“Options” has the meaning stated in Section 4.01(d).

“Price Per Share” has the meaning stated in the Preliminary Statements.

“Person” shall be construed broadly and means any individual, corporation, association, partnership (limited or general), limited liability company, joint venture, joint stock company, association, trust, estate, unincorporated organization or government or any agency or political subdivision, or other entity or organization.

“Reg D” means Rule 506 of Regulation D promulgated under the Securities Act.

“Remaining Payment” has the meaning stated in Section 2.01(b).

“Remaining Shares” has the meaning stated in Section 2.01(b).

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

“Series A Preferred” has the meaning stated in the Preliminary Statements.

“Surviving Company Representation” has the meaning stated in Section 3.01(i).

“Surviving Investor Representation” has the meaning stated in Section 3.02(k).

“Term Loan” has the meaning stated in the Preliminary Statements.

“World” has the meaning stated in the Preliminary Statements.

“World Equity” has the meaning stated in Section 2.02.

“World Equity Consideration” has the meaning stated in Section 2.02.

ARTICLE II

PURCHASE OF SERIES A PREFERRED;

CANCELLATION OF COMPANY LOANS

Section 2.01      Bridge Purchase.

(a)           The Investor agrees to purchase a number of shares of Series A Preferred on the Closing Date (as defined below) equal to the Aggregate Purchase Price divided by the Price Per Share (the “Bridge Purchase”).

(b)           The Investor shall satisfy the Bridge Purchase by (i) converting (instead of paying cash) all of the Adjusted Principal Balance under the Company Loans into a number of shares of Series A Preferred (the “Conversion Shares”) equal to the quotient obtained by dividing the Adjusted Principal Balance by the Price Per Share (the “Conversion”) and (ii) paying an amount in cash (the “Remaining Payment”) for the remaining portion of the Series A Preferred

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comprising the Bridge Purchase after giving effect to the Conversion, which shall be calculated as the quotient obtained by dividing (x) the Aggregate Purchase Price less the Adjusted Principal Balance by (y) the Price Per Share (the “Remaining Shares”, and together with the Conversion Shares, the “Bridge Shares”). Upon the issuance of the Conversion Shares by the Company, the Adjusted Principal Balance shall be satisfied in full and the Company Loans shall be cancelled and of no further effect.

Section 2.02      World Equity Contribution.  On the Closing Date, the Investor shall contribute to the Company all of the shares of World common stock, par value $0.001 per share held by it and its Affiliates (the “World Equity”), in exchange for, and in lieu of Merger Consideration (as defined in the Merger Agreement), cash equal to the cost of the World Equity, including the amounts paid therefore and commissions paid thereunder, plus all documented and reasonable out-of-pocket fees and expenses, including, without limitation, the reasonable fees and expenses of counsel and consultants (including, without limitation, Bracewell & Giuliani LLP, the Seabury Group and Joele Frank, Wilkinson Brimmer and Katcher) incurred by the Investor and its fund Affiliates in connection with (i) the Bridge Purchase, (ii) the purchase of the World Equity and (iii) the Merger (collectively, the “World Equity Consideration”); provided, however that such amount shall not exceed the Merger Consideration (as defined in the Merger Agreement) that the Investor would have received with respect to the World Equity.

Section 2.03      Closing; Cancellation of Company Loans.

(a)           Closing.  The closing of the Bridge Purchase (the “Closing”) shall take place at the offices of Bracewell & Giuliani LLP, 1177 Avenue of the Americas, New York, New York 10036 immediately upon the satisfaction and/or waiver of closing conditions set forth in Article V below (the “Closing Date”) (other than such conditions by their nature to be satisfied or waived at the Closing) or at such other place and time as is mutually agreed to in writing by the parties hereto.

(b)           Upon the Closing:

(i)            the Company shall deliver a stock certificate or certificates to the Investor representing the Bridge Shares (which shall include the Conversion Shares resulting from the Conversion) in the denominations and registered in the name of the Investor or such other Affiliates of the Investor as designated in writing by the Investor not later than three (3) Business Days prior to the Closing;

(ii)           the Company shall deliver to the Investor the World Equity Consideration and any other payments under Section 7.08 hereof;

(iii)          the Investor shall deliver to the Company a termination letter under each of the Term Loan and the Bridge Loan, respectively;

(iv)          the Investor shall pay to the Company the Remaining Payment;

(v)           the Investor shall deliver to the Company a stock certificate or certificates representing the World Equity; and

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(vi)          all deliveries required to satisfy the conditions set forth in Article V hereof shall have been made.

Section 2.04      Satisfaction of Purchase Obligation.  The Investor may, in its sole discretion, purchase the Bridge Shares, directly and/or indirectly through one or more of their respective Affiliates, separate accounts within their control, or investment funds under their or their respective Affiliates’ management; provided, however, any such non-Investor entities shall be required to make the representations and warranties set forth in Section 3.02 to the Company; and provided further that the Investor shall remain liable and obligated under this Agreement in all respects, including without limitation, the obligation with respect to the Bridge Purchase.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Section 3.01      Representations and Warranties of the Company.  The Company represents and warrants to the Investor as follows:

(a)           Organization and Qualification.  The Company is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Delaware and under the laws of any other jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except where the failure to be so qualified or to be in good standing is not, other than as set forth on Schedule 3.01(a), individually or in the aggregate, reasonably expected to (i) have a material adverse effect on the assets, condition (financial or otherwise), business or results of operations of the Company and its subsidiaries taken as a whole or (ii) prevent or materially delay the consummation of any of the transactions contemplated by this Agreement (collectively, a “Material Adverse Effect”). The Company has all requisite corporate power and authority to own, operate, and lease its properties and carry on its businesses as now conducted in all material respects. In addition, each of the subsidiaries of the Company is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization except where the failure to be so organized, existing or in good standing would not individually or in the aggregate have a Material Adverse Effect. All of the outstanding shares of capital stock of each of the Company’s subsidiaries are duly authorized, validly issued, fully paid and nonassessable and all such shares are owned by the Company or another wholly owned subsidiary of the Company (other than director’s qualifying shares) free and clear of all preemptive rights of first refusal, subscription and similar rights other than such preemptive rights, subscription and similar rights as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b)           Authority and Validity of Agreement.  The Company has the requisite corporate power and authority to execute and deliver this Agreement. This Agreement and the consummation and performance by the Company of the transactions contemplated by this Agreement have been duly authorized by all requisite corporate action on the part of the Company. The Company has duly executed and delivered this Agreement. This Agreement constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as the enforceability of this Agreement may otherwise be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other

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similar laws affecting the enforcement of creditors’ rights generally, public policy and general equitable principles.

(c)           Capitalization.  The authorized capital stock of the Company consists of 50,000,000 shares of capital stock, par value $0.0001 per share, of which 14,708,480 shares have been designated as Class A Common Stock of which (A) 10,712,549 shares of Common Stock are issued and outstanding, (B) 2,659,523 shares of Common Stock are issuable upon the exercise of outstanding options under the Stock Option Plan for Management Employees of New ATA Holdings Inc., the New ATA Holdings Inc. 2006 Long-Term Incentive Plan, the Non-Qualified Stock Option Plan for Flight Deck Crewmembers of ATA Airlines, Inc. and the Stock Incentive Plan for Non-Employee Directors of New ATA Holdings and (C) 448,029 shares of Class A Common Stock are issuable upon the exercise of outstanding warrants. There are currently no shares of preferred stock issued or outstanding. Except as set forth above, no shares of capital stock or other equity or voting securities of the Company are issued, reserved for issuance or outstanding. In addition, except as set forth above, there are no issued, outstanding or authorized options, warrants, rights, calls, convertible instruments, phantom stock, stock appreciation or similar rights or other agreements or commitments or except as discussed in Schedule 3.01(c), preemptive rights to which the Company is a party or which is binding upon the Company providing for the issuance, disposition or acquisition of any of its capital stock or any other debt or equity security, or voting rights, rights of first refusal, subscription, stock restriction or similar rights. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable.

(d)           No Conflict.  Except for waivers or consents that have been obtained or are in full force and effect, the execution and delivery of this Agreement by the Company does not, and the consummation of the transactions contemplated hereby will not, conflict with or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation, modification or acceleration of any obligation or to a loss of a benefit under, or result in the creation of any lien upon any of the properties or assets of the Company or any of its subsidiaries under (i) the certificate of incorporation, bylaws or other organizational documents of the Company; (ii) any law, order or agreement applicable to the Company or by which any property or asset of the Company is bound or affected; or (iii) any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise, or other instrument or obligation to which the Company is a party or by which the Company or any property or asset of the Company is bound or affected, except, in the case of clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults, events, losses, payments, cancellations, encumbrances, or other occurrences that are not, individually or in the aggregate, reasonably expected to have a Material Adverse Effect.

(e)           Exempt from Registration.  Assuming the accuracy of the representations made or to be made by Investor, the issuance of the Series A Preferred to Investor as contemplated hereby has not been consummated pursuant to a “general solicitation” within the meaning of Reg D. Based, in part, on the representations and warranties of the Investor in Section 3.02 in connection with the Bridge Purchase, the issuance of the Series A Preferred to the Investor is exempt from the registration under the Securities Act and under the securities or blue sky laws in any applicable state.

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(f)            Valid Issuance of Series A Preferred.  Upon delivery of the Series A Preferred to the Investor and the cancellation of the Company Loans, in each case in accordance with the terms of this Agreement (including, without limitation, payment of the Remaining Payment and the Conversion), such Series A Preferred will be duly authorized, validly issued, fully paid and nonassessable, and free and clear of all liens, preemptive rights, rights of first refusal, subscription and similar rights.

(g)           Special Committee Approval. A special committee of independent directors of the Company’s board of directors has unanimously determined that this Agreement and the transactions contemplated hereby, including the sale of shares of Series A Preferred in an amount equal to the Aggregate Purchase Price, are in the best interests of the Company and the stockholders of the Company, and has approved the same.

(h)           Fairness Opinion.  The Company’s Board of Directors has received a written opinion (the “Fairness Opinion”) from Houlihan Lokey Howard and Zukin Financial Advisors, Inc., dated as of August 12, 2007, to the effect that, as of such date and subject to the matters set forth in the Fairness Opinion (i) the Aggregate Purchase Price is fair from a financial point of view to the Company and (ii) the issuance of the Series A Preferred and the Conversion Rights Offering (as defined in the Certificate of Designations of the Series A Preferred Stock) is fair to the Company’s stockholders other than the Investor from a financial point of view. A written copy of such Fairness Opinion has been provided to the Investor prior to the execution of this Agreement.

(i)            No General Solicitation.  In connection with the Series A Preferred being offered to the Investor hereunder:

(i)            the Company has not offered the Series A Preferred by means of any form of general solicitation or general advertising (within the meaning of Reg D), including, but not limited to, (i) any advertisement, article notice or other communication published in any newspaper, magazine or website or similar publication or similar medium or broadcast over television or the internet or (ii) any seminar, meeting or webcast whose attendees have been invited by a general solicitation or general advertising;

(ii)           the Company has no knowledge of any fact or circumstance that would prohibit the issuance, sale and delivery of the Series A Preferred or affect the ability of the Company to issue the Series A Preferred to the Investor without registration under the Securities Act, as contemplated herein; and

(iii)          Based upon representations made or to be made by the Investor pursuant to this Agreement, the offer and sale of the Series A Preferred to the Investor in accordance with the terms of this Agreement will not constitute a “general solicitation” within the meaning of Reg D.

The representations and warranties set forth in this Section 3.01(i) (the “Surviving Company Representation”) shall survive for a period of twelve (12) months following the date of the Closing.

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Section 3.02      Representations and Warranties of the Investor.  The Investor represents and warrants to the Company as follows:

(a)          Organization and Qualification.  The Investor is duly organized, validly existing, and in good standing under the laws of the state of its organization.

(b)          Authority and Validity of Agreement.  The Investor has all requisite power and authority to execute and deliver this Agreement, and all requisite power and authority to perform its obligations hereunder, and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement, and the consummation of the transactions contemplated hereby, have been duly authorized by all requisite action of the Investor. The Investor has duly executed and delivered this Agreement. This Agreement constitutes a valid and legally binding obligation of the Investor, enforceable against the Investor in accordance with its terms, except that the enforceability of this Agreement may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting the enforcement of creditors’ rights generally, public policy and general equitable principles.

(c)          Institutional Accredited Investor.  The Investor is an “accredited investor” within the meaning of Reg D promulgated by the SEC under the Securities Act.

(d)          Sophisticated and Knowledgeable.  The Investor is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in shares representing an investment decision like that involved in the purchase of the Series A Preferred, including investments in securities issued by the Company and comparable entities, and has had the opportunity to request, receive, review and consider all information it deems relevant in making an informed decision to purchase the Series A Preferred.

(e)           Purchase for Own Account.  The Investor is acquiring the Series A Preferred in the ordinary course of its business and for its own account for investment only and with no present intention of distributing any of such Series A Preferred or any arrangement or understanding with any other Persons regarding the distribution of such Series A Preferred.

(f)           Restricted Shares.  The Investor will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Series A Preferred except in compliance with the Securities Act and the rules and regulations promulgated thereunder and any applicable state securities laws.

(g)           Exemption from Registration.  The Investor understands that the Series A Preferred is being offered and sold to it in reliance upon specific exemptions from the registration requirements of the Securities Act and state securities laws and that the Company is relying upon the truth and accuracy of, and the Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Series A Preferred.

(h)           Legend.  The Investor understands that, until such time as a registration statement has been declared effective for shares of Series A Preferred or Common Stock issuable upon conversion of the Series A Preferred, or such shares may be sold pursuant to Rule 144 under the

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Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the certificates representing Series A Preferred and the certificates representing any shares of Common Stock issued upon conversion of the Series A Preferred will bear a restrictive legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR OF COUNSEL TO THE HOLDER OF SUCH SECURITIES (WHICH COUNSEL IS SATISFACTORY TO THE COMPANY) THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

(i)            Executive Office.  The Investor’s principal executive offices are at 520 Madison Avenue, New York, New York 10022 in the jurisdiction set forth immediately below the Investor’s name on the signature pages hereto.

(j)            Acknowledge Company Reliance on Exemption from Registration.  The Investor hereby acknowledges that the Series A Preferred is not registered under the Securities Act and agrees that the Company is under no obligation to register the Series A Preferred or any shares of Common Stock issuable upon conversion of the Series A Preferred (other than the registration of the Special Conversion Shares under the Conversion Rights Offering Registration Statement (as such terms are defined in the Certificate of Designations of the Series A Preferred)).

(k)           No General Solicitation.  In connection with the Series A Preferred being offered by the Company under the Bridge Purchase:

(i)            the Investor has not offered the Series A Preferred by means of any form of general solicitation or general advertising (within the meaning of Reg D), including, but not limited to, (i) any advertisement, article notice or other communication published in any newspaper, magazine or website or similar publication or similar medium or broadcast over television or the internet or (ii) any seminar, meeting or webcast whose attendees have been invited by a general solicitation or general advertising; and

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(ii)          the Investor has no knowledge of any fact or circumstance that would prohibit the issuance, sale and delivery of the Series A Preferred or affect the ability of the Company to issue the Series A Preferred to the Investor without registration under the Securities Act, as contemplated herein.

The representations and warranties set forth in this Section 3.02(k) (the “Surviving Investor Representation”) shall survive as if made by, and shall be assumed by, the Investor for a period of twelve (12) months following the date of the Closing.

ARTICLE IV

COVENANTS

Section 4.01      The Company.  The Company agrees that:

(a)           Restricted Payments.  From the date hereof until the date of the Closing, the Company shall not:

(i)            declare or pay any dividend or make any other payment or distribution on account of the Common Stock (including, without limitation, any such payment in connection with any merger or consolidation involving the Company or any of its subsidiaries); or

(ii)            purchase, redeem, or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company or any of their subsidiaries other than the Merger) any equity interests of the Company or any direct or indirect subsidiary of the Company.

(b)           Limitation on Business Combinations.  From the date hereof until the Closing, other than the Merger, the Company shall not engage in any merger, consolidation, reorganization, recapitalization or other business combination.

(c)            Limitation on Equity Issuances.  From the date hereof until the date of the Closing, except for (i) equity-based compensation awards granted to directors, officers and employees of the Company in accordance with the Company’s equity compensation plans as in effect on the date hereof and (ii) shares of Common Stock issuable upon exercise of any options and/or warrants to purchase Common Stock outstanding on the date of this Agreement, the Company shall not issue or otherwise sell, at a price per share or exercise price, as applicable, less than the Offering Price, any shares of Common Stock, including, without limitation, any rights to subscribe for or to purchase, or any warrants or options for the purchase of, Common Stock or any stock or securities convertible into or exchangeable for Common Stock (such rights, warrants or options being referred to herein as “Options” and such convertible or exchangeable stock or securities being retained to herein as “Convertible Securities”), whether or not such Options or the right to convert or exchange any such Convertible Securities are immediately exercisable.

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(d)           No Amendment of Merger Terms.  From the date hereof until the Closing, the Company shall not, without the prior written consent of the Investor, amend, modify or waive any material term or condition of the Merger Agreement.

Section 4.02      Covenants of both the Company and the Investor.  Each of the Company and the Investor agree that:

(a)            Cooperation to Consummate Transactions.  It will use reasonable commercial efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things reasonably necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated hereby.

(b)           Notice of Breach of Representation or Warrant or Covenant.  It will promptly deliver to the other written notice of any matter, event or development that is or could (i) render any representation or warranty made by it herein inaccurate or incomplete in any respect or (ii) constitute or result in a breach by it of, or a failure by it to comply with, any covenant herein.

(c)           Public Announcements.  It will consult with the other party before issuing, and provide the other party the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated by this Agreement, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law or court process.

ARTICLE V

CLOSING CONDITIONS

Section 5.01      Investor’s Conditions to Closing.  The obligation of the Investor to consummate the Bridge Purchase and close in the manner provided hereunder shall be subject to the satisfaction (or waiver by the Investor) of each of the following conditions (unless stated otherwise):

(a)           the representations and warranties of the Company contained in Section 3.01 that are qualified as to materiality shall be true and correct in all respects on and as of the date hereof, and on and as of the Closing Date, with the same force and effect as though made on and as of each such date, except to the extent that any representation or warranty is made as of a specified date, in which case such representation or warranty shall be true and correct as of such specified date, and the representations and warranties that are not so qualified shall be true and correct in all material respects on and as of the date hereof, and on and as of the Closing Date, with the same force and effect as though made on and as of each such date, except to the extent that any representation or warranty is made as of a specified date, in which case such representation or warranty shall be true and correct in all material respects as of such specified date, and the Company shall have performed or complied with, in all material respects, its covenants required to be performed or complied with under this Agreement (and the Company shall have delivered to the Investor a certificate signed by an authorized executive to the effect that each of the conditions specified in this subsection (a) is satisfied in all respects); provided that, the Surviving

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Company Representation set forth in Section 3.01(i) shall survive and remain true and correct in all respects for a period of twelve (12) months following the Closing Date;

(b)            no provision of any applicable law or regulation and no judgment, injunction, order, decree or other legal restraint shall prohibit or threaten to prohibit the consummation of the Bridge Purchase;

(c)            the Company shall have received the Fairness Opinion and such Fairness Opinion shall not have been revoked or modified in any adverse manner; and

(d)           the conditions precedent to the Merger Closing set forth in the Merger Agreement shall have been satisfied as of the Closing Date and the Closing shall be effectuated immediately prior to, or simultaneously with, the Merger Closing.

Section 5.02      The Company’s Conditions to Closing.  The obligation of the Company to consummate and close the Bridge Purchase shall be subject to the satisfaction (or waiver by the Company) of each of the following conditions:

(a)          the representations and warranties of the Investor contained in Section 3.02 that are qualified as to materiality shall be true and correct in all respects on and as of the date hereof, and on and as of the Closing Date, with the same force and effect as though made on and as of each such date, except to the extent that any representation or warranty is made as of a specified date, in which case such representation or warranty shall be true and correct as of such specified date, and the representations and warranties that are not so qualified shall be true and correct in all material respects on and as of the date hereof, and on and as of the Closing Date, with the same force and effect as though made on and as of each such date, except to the extent that any representation or warranty is made as of a specified date, in which case such representation or warranty shall be true and correct in all material respects as of such specified date, and the Investor shall have performed or complied with, in all material respects, its covenants required to be performed or complied with under this Agreement (and the Investor shall have delivered to the Company a certificate signed by an authorized executive to the effect that each of the conditions specified in this subsection (a) is satisfied in all respects); provided that, the Surviving Investor Representation set forth in Section 3.02(k) shall survive and remain true and correct in all respects for a period of twelve (12) months following the Closing Date;

(b)           no provision of any applicable law or regulation and no judgment, injunction, order, decree or other legal restraint shall prohibit the consummation of the Bridge Purchase;

(c)           the Company shall have received the Fairness Opinion and such Fairness Opinion shall not have been revoked or modified in any adverse manner; and

(d)           the conditions precedent to the Merger Closing set forth in the Merger Agreement shall have been satisfied as of the Closing Date and the Closing shall be effectuated immediately prior to, or simultaneously with, the Merger Closing.

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ARTICLE VI

TERMINATION

Section 6.01    Termination.

(a)          This Agreement may be terminated at any time by mutual written consent of the Company and the Investor.

(b)          This Agreement shall automatically terminate upon the termination of the Merger Agreement without the closing of the Merger having occurred.

ARTICLE VII

MISCELLANEOUS

Section 7.01      Amendments.  This Agreement may not be modified, amended or supplemented except in a writing signed by each of the parties hereto.

Section 7.02     GOVERNING LAW; JURISDICTION.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISIONS WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION. BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ANY LEGAL ACTION, SUIT OR PROCEEDING AGAINST IT WITH RESPECT TO ANY MATTER UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH ACTION, SUIT OR PROCEEDING, MAY BE BROUGHT IN ANY FEDERAL OR STATE COURT IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE NONEXCLUSIVE JURISDICTION OF EACH SUCH COURT, GENERALLY AND UNCONDITIONALLY, WITH RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING.

Section 7.03     Headings.  The headings of the Sections, paragraphs and subsections of this Agreement are inserted for convenience only and shall not affect the interpretation hereof.

Section 7.04     Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of the parties hereto and their respective successors, assigns, heirs, executors, administrators and representatives. Except as set forth herein, neither the Company nor the Investor shall assign its rights, duties or obligations under this Agreement without the prior written consent of the other party hereto; provided that, the Investor shall be permitted to assign its respective rights, duties or obligations under this Agreement to any of its respective subsidiaries or Affiliates in its sole and absolute discretion (without the requirement to obtain consent, whether written or otherwise, from any other Person, including the Company);

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provided, further, however, that the Investor shall remain liable for all obligations of the Investor hereunder from and after any such assignment.

Section 7.05      Severability.  The invalidity or unenforceability at any time of any provision hereof shall not affect or diminish in any way the continuing validity and enforceability of the remaining provisions hereof.

Section 7.06      No Third-Party Beneficiaries.  This Agreement shall be solely for the benefit of the parties hereto and no other Person shall be a third-party beneficiary hereof.

Section 7.07      Prior Negotiations: Entire Agreement.  This Agreement constitutes the entire agreement of the parties and supersedes all prior negotiations with respect to the subject matter hereof.

Section 7.08      Expenses.  The Company shall reimburse the Investor for all documented and reasonable out-of-pocket fees and expenses of the Investor, not paid for pursuant to Section 2.02, in connection with (i) the Bridge Purchase, (ii) the purchase by the Investor of the World Equity and (iii) the Merger, including, without limitation, the reasonable fees and expenses of counsel and consultants, including, without limitation, Bracewell & Giuliani LLP, the Seabury Group and Joele Frank, Wilkinson Brimmer Katcher, at the Closing, so long as the Investor is not in material breach of its respective obligations under this Agreement at the time of such Closing.

Section 7.09      Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same agreement.

Section 7.10     Notices.  All notices and other communications under this Agreement shall be in writing, sent contemporaneously to all of the parties hereto, and deemed given when delivered by hand or by facsimile during standard business hours (from 8:00 a.m. to 6:00 p.m.) at the place of receipt at the addresses and facsimile numbers set forth below, with a copy to each person identified thereon.

If to the Company:

Global Aero Logistics Inc.
c/o ATA Airlines, Inc.
7337 West Washington Street
Indianapolis, Indiana 46231
Attention: Chief Financial Officer
Phone: (317) 282-7080
Facsimile: (317) 282-7091
Doug.Yakola@iflyata.com

With a copy to:

Global Aero Logistics Inc.

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c/o ATA Airlines, Inc.
7337 West Washington Street
Indianapolis, Indiana 46231
Attention: General Counsel
Phone: (317) 282-7006
Facsimile: (317) 282-7091
E-mail: Brian.Hunt@iflyata.com

Global Aero Logistics Inc.

The Special Committee of the Board of Directors
7337 West Washington Street
Indianapolis, Indiana 46231
Attention: Harvey Tepner
Phone: (212) 702-8511
Facsimile: (212) 702-9587
E-mail: harvey.tepner@ca-llp.com

Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Phone: (212) 474-1000
Facsimile: (212) 474-3700
Attention: Ronald Cami Esq.
E-mail: RCami@cravath.com

Dickstein Shapiro LLP
1177 Avenue of Americas
New York, New York 10036
Phone: (212) 277-6525
Facsimile: (212) 277-6501
Attention: Malcolm I. Ross, Esq.
E-mail: rossm@dicksteinshapiro.com

If to the Investor:

c/o MatlinPatterson Global Advisers LLC
520 Madison Avenue 35^th Floor
New York, New York 10022-4213
Attention: Lawrence M. Teitelbaum
Phone: (212) 651-9524
Facsimile: (212) 651-4014
E-mail: teitelbaum@mpasset.com

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With a copy to:

Bracewell & Giuliani LLP
1177 Avenue of the Americas
New York, New York 10036
Phone: (212) 508-6100
Fax: (212) 508-6101

Attention: Mark Palmer, Esq. and Robb Tretter, Esq.

Section 7.11      Survival Upon Termination.  Notwithstanding the termination of this Agreement pursuant to Section 6.01, the agreements and obligations of the parties in Sections 7.02, 7.04, 7.05, 7.06, 7.07, 7.08 and this Section 7.11 shall survive such termination and shall continue in full force and effect in accordance with the terms hereof.

Remainder of Page Left Intentionally Blank
Signature Page to Follow

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

GLOBAL AERO LOGISTICS INC.
/s/ Subodh Karnik
Name:	Subodh Karnik
Title:	President and CEO
MATLINPATTERSON ATA HOLDINGS LLC
Name:
Title:

SIGNATURE PAGE TO BRIDGE AND PURCHASE AGREEMENT

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

GLOBAL AERO LOGISTICS INC.
Name:
Title:
MATLINPATTERSON ATA HOLDINGS LLC
/s/ Robert H. Weiss
	Name:	Robert H. Weiss
	Title:	Vice President

SIGNATURE PAGE TO BRIDGE AND PURCHASE AGREEMENT

EXHIBIT A

FORM OF SERIES A PREFERRED STOCK DESIGNATION

Section 3.01(c)
Capitalization

1.   The Company has authorized 43,139 shares of Class A Common Stock to be issued to certain bankruptcy creditors.

2.    The Company has authorized 173,213 shares of restricted stock to be issued to employees.

3.     Section 7.2 of the Company’s Amended and Restated Bylaws provide the Company’s Class A Stockholders with preemptive rights in connection with any New Securities (as such term is defined in the Company’s Amended and Restated Bylaws) that the Company proposes to sell and issue. In accordance with Section 7.2(c) of the Company’s Amended and Restated Bylaws, on August 13, 2007 the Company’s Board of Directors adopted resolutions to exempt the shares of Series A Preferred Stock and the Conversion Shares from the definition of New Securities.

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EX-10.22

Exhibit 10.22

EXECUTION VERSION

WARRANT AGREEMENT

Dated as of

August 14, 2007

between

GLOBAL AERO LOGISTICS INC.

and

JP MORGAN CHASE BANK, N.A

as the Warrant Agent

TABLE OF CONTENTS

		Page
ARTICLE 1. Defined Terms		1
SECTION 1.1.	Definitions	1
SECTION 1.2.	Other Definitions	2
SECTION 1.3.	Terms Generally	2
ARTICLE 2. Warrant Certificates		3
SECTION 2.1.	Issuance and Dating	3
SECTION 2.2.	Execution and Countersignature	3
SECTION 2.3.	Certificate Register	3
SECTION 2.4.	Transfer and Exchange	4
SECTION 2.5.	Legends	5
SECTION 2.6.	Replacement Certificates	6
SECTION 2.7.	Temporary Certificates	6
SECTION 2.8.	Cancellation	6
ARTICLE 3. Issuance and Exercise Terms		7
SECTION 3.1.	Issuance of Warrants	7
SECTION 3.2.	Exercise Price	7
SECTION 3.3.	Exercise Periods	7
SECTION 3.4.	Expiration	7
SECTION 3.5.	Manner of Exercise	8
SECTION 3.6.	Issuance of Warrant Shares	8
SECTION 3.7.	Fractional Warrant Shares	9
SECTION 3.8.	Reservation of Warrant Shares	9
SECTION 3.9.	Compliance with Law	9

ARTICLE 4. Antidilution Provisions		9
SECTION 4.1.	Changes in Common Stock	9
SECTION 4.2.	Cash Dividends and Other Distributions	10
SECTION 4.3.	Rights Issue	10
SECTION 4.4.	Issuance of Additional Shares of Common Stock	11
SECTION 4.5.	Combination; Liquidation	12
SECTION 4.6.	Tender Offers: Exchange Offers	12
SECTION 4.7.	Other Events	13
SECTION 4.8.	Current Market Value	13
SECTION 4.9.	Superseding Adjustment	14
SECTION 4.10.	When No Adjustment Required	14
SECTION 4.11.	Notice of Adjustment	14
SECTION 4.12.	Notice of Certain Transactions	15
SECTION 4.13.	Adjustment to Warrant Certificate	15
SECTION 4.14.	Consideration Received	15
SECTION 4.15.	Ranking	16
ARTICLE 5. Rights of Holders		16
SECTION 5.1.	Registration Rights	16
SECTION 5.2.	Tag-Along Rights	16
ARTICLE 6. Warrant Agent		17
SECTION 6.1.	Appointment of Warrant Agent	17
SECTION 6.2.	Rights and Duties of Warrant Agent	17
SECTION 6.3.	Individual Rights of Warrant Agent	17
SECTION 6.4.	Warrant Agent’s Disclaimer	18

SECTION 6.5.	Compensation and Indemnity	18
SECTION 6.6.	Successor Warrant Agent	18
ARTICLE 7. Representations and Agreement of The Company		19
ARTICLE 8. Miscellaneous		20
SECTION 8.1.	Persons Benefiting	20
SECTION 8.2.	Rights of Holders; Representations and Warranties of Holders	20
SECTION 8.3.	Amendment	20
SECTION 8.4.	Notices	21
SECTION 8.5.	Govering Law	22
SECTION 8.6.	Successors	22
SECTION 8.7.	Counterparts	22
SECTION 8.8.	Table of Contents	22
SECTION 8.9.	Severability	22
SECTION 8.10.	Effectiveness	22

EXHIBIT A	-	Form of Warrant Certificate
EXHIBIT B		Form of Transfer Certificate
EXHIBIT C	-	Form of Warrant Agent Order
EXHIBIT D	-	Form of Lender Certifications
EXHIBIT E	-	Registration Rights
EXHIBIT F	-	Tag-Along Rights

WARRANT AGREEMENT, dated as of August 14, 2007 (this “Agreement”), between GLOBAL AERO LOGISTICS INC., a Delaware corporation (the “Company”), and JP MORGAN CHASE BANK, N.A., a national bank association, as Warrant Agent (in such capacity, the “Warrant Agent”).

W I T N E S S E T H :

WHEREAS, it is a condition to the obligations of the Lenders under the Term Loan Agreement, dated as of August 14, 2007 (the “Term Loan Agreement”), among NEW ATA ACQUISITION INC., as borrower, the several lenders from time to time parties hereto, JEFFERIES FINANCE LLC, as documentation agent thereunder, and JPMORGAN CHASE BANK, N.A., as administrative agent thereunder (in such capacity, the “Administrative Agent”), that the Company execute and deliver this Warrant Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree as follows:

ARTICLE 1.

Defined Terms

SECTION 1.1.   Definitions.  All terms defined in the Term Loan Agreement shall have such defined meanings when used herein or in any Exhibit hereto unless otherwise defined herein or therein.  As used in this Agreement, the following terms shall have the following meanings:

“Cashless Exercise Ratio” means a fraction, the numerator of which is the excess of the Current Market Value per share of Common Stock on the date of exercise over the Exercise Price per share as of the date of exercise and the denominator of which is the Current Market Value per share of the Common Stock on the date of exercise.

“Combination” means an event in which the Company consolidates with, merges with or into, or sells all or substantially all its property and assets to another Person.

“Expiration Date” means August 14, 2015.

“Holder” means the duly registered holder of a Warrant under the terms of this Warrant Agreement or in the case of Exhibit E shall mean the holder or beneficial owner of Registrable Securities.

“Initial Lenders” mean the lenders, parties to the Term Loan Agreement on the Closing Date, or any affiliate thereof.

“Issuance Date” means, as to any Warrant, the date on which such Warrant is issued in accordance with Section 3.1 hereof.

“Rule 144” means Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any successor rule or regulation hereinafter adopted by the SEC.

“Transfer Restricted Securities” means the Warrants and the Warrant Shares which may be issued to Holders upon exercise of the Warrants, whether or not such exercise has been effected.  Each

such security shall cease to be a Transfer Restricted Security when the legend set forth in Section 2.5 is, or may be, removed pursuant to Section 2.4(b)(v).

“Warrant” means a warrant to purchase shares of Common Stock issued pursuant to the terms of this Agreement, each of which shall be evidenced by Warrant Certificates.

“Warrant Certificates” means the certificates evidencing the Warrants to be delivered pursuant to this Agreement, substantially in the form of Exhibit A hereto.

SECTION 1.2.   Other Definitions

	Defined in
Term	Section
“Administrative Agent”	Recitals
“Agreement”	Preamble
“Cashless Exercise”	3.5
“Certificate Register”	2.3
“Company”	Preamble
“Current Market Value”	4.8
“Eligible Assignee”	3.1
“Exercise Price”	3.2
“Fair Value”	4.2
“Purchased Shares”	4.6
“QIB”	2.4(a)(ii)(A)(4)(w)
“Registrar”	3.8
“Securities”	2.5
“Securities Act”	2.5
“Successor Company”	4.5(a)
“Term Loan Agreement”	Recitals
“Time of Determination”	4.8
“Transfer Agent”	3.6
“Warrant Agent”	Preamble
“Warrant Agent Fees”	6.5

SECTION 1.3.   Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise (a) any definition of or reference to any Loan Document, agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any person shall be construed to include such person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections and Exhibits shall be construed to refer to Articles and Sections of, and Exhibits to, this Agreement, (e) any reference to any law or regulation herein shall refer to such law or regulation as amended, modified or supplemented from time to time and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and

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to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

ARTICLE 2.

Warrant Certificates

SECTION 2.1.   Issuance and Dating

The Warrant Certificates will be issued in registered form as definitive Warrant Certificates, substantially in the form of Exhibit A, which is hereby incorporated in and expressly made a part of this Agreement.  The Warrant Certificates may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company) and shall bear the legend required by Section 2.5.  Each Warrant shall be dated the date of its countersignature.  The terms of the Warrants set forth in Exhibit A are part of the terms of this Agreement.

SECTION 2.2.   Execution and Countersignature

(a)           The Warrants to be issued pursuant to Section 3.1 hereof shall be executed on behalf of the Company by manual or facsimile signature by one Officer and attested by its Secretary or an Assistant Secretary under its corporate seal which may be impressed, affixed, imprinted or reproduced on such Warrant Certificates or may be in facsimile form.  The Warrant Agent shall countersign such Warrant Certificate(s) by manual or facsimile signature, and such Warrant Certificate(s) shall be delivered in accordance with Section 2.1 hereof.

(b)           With respect to all other Warrants, the Warrant Certificates therefore shall be executed on behalf of the Company by one Officer and attested by its Secretary or an Assistant Secretary under its corporate seal.  Such signature may be manual or facsimile signature.  The Company’s seal shall be impressed, affixed, imprinted or reproduced on the Warrant Certificates and may be in facsimile form.  If an Officer whose signature is on a Warrant Certificate no longer holds that office at the time the Warrant Agent countersigns the Warrant Certificate, the Warrant Certificate shall be valid nevertheless. A Warrant Certificate shall not be valid until an authorized signatory of the Warrant Agent manually counter-signs the Warrant Certificate.  The signature shall be conclusive evidence that the Warrant Certificate has been countersigned under this Agreement.

(c)           The Warrant Agent may appoint an agent reasonably acceptable to the Company to countersign the Warrant Certificate.  Unless limited by the terms of such appointment, such agent may countersign the Warrant Certificate whenever the Warrant Agent may do so.  Each reference in this Agreement to countersignature by the Warrant Agent includes countersignature by such agent.  Such agent will have the same rights as the Warrant Agent for service of notices and demands.

SECTION 2.3.   Certificate Register

The Warrant Agent shall keep a register (“Certificate Register”) of the Warrant Certificates and of their transfer and exchange.  The Certificate Register shall show the names and addresses of the respective Holders and the date and number of Warrants evidenced on the face of each of the Warrant Certificates.  The Company and the Warrant Agent may deem and treat the Person in whose name a Warrant Certificate is registered as the absolute owner of such Warrant Certificate for all purposes whatsoever and neither the Company nor the Warrant Agent shall be affected by notice to the contrary.

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SECTION 2.4.   Transfer and Exchange

(a)  When Warrants are presented to the Warrant Agent with a request to register the transfer of such Warrants or to exchange such Warrants for an equal number of Warrants of other authorized denominations, the Warrant Agent shall provide the Company with prompt written notice and register the transfer or make the exchange as requested and in accordance with the prompt written instructions of the Company if its reasonable requirements for such transaction are met; provided, however, that the Warrant Certificates representing such Warrants surrendered for transfer or exchange:

(i)            shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Warrant Agent, duly executed by the Holder thereof or his attorney duly authorized in writing; and

(ii)           in the case of Warrants that are Transfer Restricted Securities, shall be accompanied by the following additional information and documents:

(A)          a certificate from such Holder in substantially the form of Exhibit B hereto certifying that:

(1)           such securities are being delivered for registration in the name of such Holder without transfer;

(2)           such securities are being transferred to the Company;

(3)           such securities are being transferred pursuant to an effective registration statement under the Securities Act; or

(4)           such securities are being transferred (w) to a “qualified institutional buyer” (“QIB”) as defined in Rule 144A under the Securities Act pursuant to such Rule 144A, (x) in an offshore transaction in accordance with Rule 904 under the Securities Act, (y) in a transaction meeting the requirements of Rule 144 under the Securities Act or (z) pursuant to another available exemption from the registration requirements of the Securities Act; and

(B)           in the case of any transfer described under clauses (a)(ii)(A)(4)(x), (y) and (z) of this Section 2.4, evidence reasonably satisfactory to the Warrant Agent and the Company (which may include an opinion of counsel) as to compliance with the restrictions set forth in the legend in Section 2.5.

(b)           (i)            To permit registrations of transfers and exchanges, the Company shall execute and the Warrant Agent shall countersign Warrant Certificates as required pursuant to the provisions of this Section 2.4.

(ii)           All Warrant Certificates issued upon any registration of transfer or exchange of Warrants shall be the valid obligations of the Company, entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered upon such registration of transfer or exchange.

(iii)          Prior to due presentment for registration of transfer of any Warrant, the Warrant Agent and the Company may deem and treat the Person in whose name any Warrant is registered

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as the absolute owner of such Warrant and neither the Warrant Agent nor the Company shall be affected by notice to the contrary.

(iv)          No service charge shall be made to a Holder for any registration of transfer or exchange upon surrender of any Warrant Certificate at the office of the Warrant Agent maintained for that purpose.  However, the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Warrant Certificates.

(v)           Upon any sale or transfer of Warrants pursuant to an effective registration statement under the Securities Act, pursuant to Rule 144(k) under the Securities Act or pursuant to an opinion of counsel reasonably satisfactory to the Company that no legend is required, the Warrant Agent shall permit the Holder thereof to exchange such Warrants for Warrants represented by Warrant Certificates that do not bear the legend set forth in Section 2.5 and rescind any restriction on the transfer of such Warrants.

SECTION 2.5.   Legends

(a) Except for Warrant Certificates delivered pursuant to Section 2.4(b)(v) of this Agreement, each Warrant Certificate evidencing the Warrants (and all Warrant Certificates issued in exchange therefor or substitution thereof) and each certificate representing the Warrant Shares (unless such Warrant Shares are not Transfer Restricted Securities) shall bear a legend in substantially the following form (with any appropriate modification for the Warrant Shares):

“THE WARRANTS AND THE WARRANT SHARES (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS.  THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, UNLESS PREVIOUSLY REGISTERED UNDER THE SECURITIES ACT, ONLY (A) TO THE COMPANY; (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (D) PURSUANT TO AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATIONS UNDER THE SECURITIES ACT; OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. IN THE CASE OF CERTAIN TRANSFERS OR OTHER DISPOSITIONS MADE OTHERWISE THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, THE HOLDER HEREOF SHALL BE REQUIRED TO PROVIDE TO THE ISSUER HEREOF AN OPINION OF COUNSEL, ALL IN ACCORDANCE WITH THE

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PROVISIONS OF THE AGREEMENT PURSUANT TO WHICH THIS SECURITY WAS ORIGINALLY OFFERED AND SOLD BY THE ISSUER HEREOF.”

(b)           Warrant Certificates shall bear an additional legend in substantially the following form:

“THE WARRANTS EVIDENCED BY THIS CERTIFICATE MAY ONLY BE EXERCISED IF A REGISTRATION STATEMENT RELATING TO THE ISSUANCE OF SHARES OF COMMON STOCK UPON THE EXERCISE OF SUCH WARRANTS IS THEN IN EFFECT, OR IF SUCH ISSUANCE OF SHARES OF COMMON STOCK IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND SUCH ISSUANCE OF SUCH SHARES OF COMMON STOCK IS QUALIFIED FOR SALE OR IS EXEMPT FROM QUALIFICATION UNDER THE APPLICABLE SECURITIES LAWS OF THE STATE IN WHICH THE HOLDER OF THIS CERTIFICATE RESIDES.”

SECTION 2.6.   Replacement Certificates

If a mutilated Warrant Certificate is surrendered to the Warrant Agent or if the Holder of a Warrant Certificate claims that the Warrant Certificate has been lost, destroyed or wrongfully taken, the Company shall issue, and the Warrant Agent shall countersign a replacement Warrant Certificate if the reasonable requirements of the Warrant Agent and of Section 8-405 of the Uniform Commercial Code as in effect in the State of New York are met.  If required by the Warrant Agent or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Warrant Agent to protect the Company and the Warrant Agent from any loss which either of them may suffer if a Warrant Certificate is replaced.  The Company and the Warrant Agent may charge the Holder for their expenses in replacing a Warrant Certificate.  Every replacement Warrant Certificate is an additional obligation of the Company.

SECTION 2.7.   Temporary Certificates

Until definitive Warrant Certificates are ready for delivery, the Company may prepare, and the Warrant Agent shall countersign temporary Warrant Certificates.  Temporary Warrant Certificates shall be substantially in the form of definitive Warrant Certificates but may have variations that the Company considers appropriate for temporary Warrant Certificates.  Without unreasonable delay, the Company shall prepare, and, upon receipt of prompt written instructions from the Company, the Warrant Agent shall countersign definitive Warrant Certificates and deliver them in exchange for temporary Warrant Certificates.

SECTION 2.8.   Cancellation

(a)           In the event the Company shall purchase or otherwise acquire Warrants, the Warrant Certificates in respect thereof shall thereupon be delivered to the Warrant Agent for cancellation.

(b)           The Warrant Agent and no one else shall cancel and destroy all Warrant Certificates surrendered for transfer, exchange, replacement, exercise or cancellation and deliver a certificate of such destruction to the Company unless the Company directs the Warrant Agent to deliver canceled Warrant Certificates to the Company.  The Company may not issue new Warrant Certificates to replace Warrant Certificates to the extent they evidence Warrants which have been exercised or Warrants which the Company has purchased or otherwise acquired.

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ARTICLE 3.

Issuance and Exercise Terms

SECTION 3.1.   Issuance of Warrants

On the Business Day prior to the Closing Date, the Administrative Agent shall deliver to the Company a written order in the form of Exhibit C hereto specifying (x) the names of the Initial Lender(s) to whom Warrants shall be issued by the Company, (y) the number of Warrants to be delivered to such Initial Lender and (z) the corresponding number of shares of Common Stock into which such Warrants shall be exercisable.  On the Closing Date, (i) contemporaneous with the funding by each Initial Lender of its pro rata percentage of the Initial Loans and (ii) subject to receipt by the Company of a Certificate from such Initial Lender, substantially in the form of Exhibit D hereto, the Company shall execute and deliver to the Warrant Agent, and the Warrant Agent shall countersign and deliver to such Initial Lender, Warrant Certificates registered in the name or names and for such number of Warrants as shall be specified by the Administrative Agent in such order.

Following the Closing Date, the Company shall issue Warrants directly to Persons who execute an Assignment and Assumption (as defined in the Term Loan Agreement) with an Initial Lender in accordance with this paragraph (each such Person, an “Eligible Assignee”).  Not less than one Business Day prior to the proposed Issuance Date of such Warrants the Administrative Agent shall deliver to the Company a written order in the form of Exhibit C hereto specifying (x) the names of each Eligible Assignee to whom Warrants shall be issued by the Company, (y) the number of Warrants to be delivered to such Eligible Assignee and (z) the corresponding number of shares of Common Stock into which such Warrants shall be exercisable.  The Administrative Agent may not deliver a written order as aforesaid pursuant to this paragraph at any time following the fifth Business Day following the Closing Date.  On the Issuance Date, subject to receipt by the Company of a Certificate from such Initial Lender, substantially in the form of Exhibit D hereto, the Company shall execute and deliver to the Warrant Agent, and the Warrant Agent shall countersign and deliver to such Eligible Assignee, Warrant Certificates registered in the name or names and for such number of Warrants as shall be specified by the Administrative Agent in such order.

SECTION 3.2.   Exercise Price

Each Warrant shall entitle the Holder thereof, subject to adjustment pursuant to the terms of this Agreement, to purchase one share of Common Stock for a per share exercise price of $0.01 (as the same may be adjusted pursuant to Article 4, the (“Exercise Price”).

SECTION 3.3.   Exercise Periods

(a)  Subject to the terms and conditions set forth herein, each Warrant shall be exercisable at any time or from time to time on or after the Issuance Date thereof.

(b)           No Warrant shall be exercisable after the Expiration Date.

SECTION 3.4.   Expiration

A Warrant shall terminate and become void as of the earlier of (a) the close of business on the Expiration Date and (b) the time and date such Warrant is exercised.  The Warrants shall terminate and become void after the Expiration Date.

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SECTION 3.5.   Manner of Exercise

Warrants may be exercised upon (a) surrender to the Warrant Agent of the Warrant Certificates, together with the form of election to purchase Common Stock on the reverse thereof duly filled in and signed by the Holder thereof and (b) payment to the Warrant Agent, for the account of the Company, of the Exercise Price for the number of Warrant Shares in respect of which such Warrant is then exercised.  Such payment shall be made (i) in cash or by certified or official bank check payable to the order of the Company or by wire transfer of funds to an account designated by the Company for such purpose or (ii) by the surrender (which surrender shall be evidenced by cancellation of the number of Warrants represented by any Warrant Certificate presented in connection with a Cashless Exercise) of a Warrant or Warrants (represented by one or more relevant Warrant Certificates), and without the payment of the Exercise Price in cash, in exchange for the issuance of such number of shares of Common Stock equal to the product of (1) the number of shares of Common Stock for which such Warrant would otherwise then be nominally exercised if payment of the Exercise Price as of the date of exercise were being made in cash and (2) the Cashless Exercise Ratio.  An exercise of a Warrant in accordance with the immediately preceding sentence is herein called a “Cashless Exercise”.  All provisions of this Agreement shall be applicable with respect to an exercise of Warrant Certificates pursuant to a Cashless Exercise for less than the full number of Warrants represented thereby.  Subject to Section 3.2, the rights represented by the Warrants shall be exercisable at the election of the Holders thereof either in full at any time or from time to time in part and in the event that a Warrant Certificate is surrendered for exercise in respect of less than all the Warrant Shares purchasable on such exercise at any time prior to the Expiration Date a new Warrant Certificate exercisable for the remaining Warrant Shares will be issued.  The Warrant Agent shall countersign and deliver the required new Warrant Certificates, and the Company, at the Warrant Agent’s request, shall supply the Warrant Agent with Warrant Certificates duly signed on behalf of the Company for such purpose.

SECTION 3.6.   Issuance of Warrant Shares

Subject to Section 2.6, upon the surrender of Warrant Certificates and payment of the per share Exercise Price, as set forth in Section 3.5, the Company shall issue and cause the Warrant Agent or, if appointed, a transfer agent for the Common Stock (“Transfer Agent”) to countersign and deliver to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate or certificates for the number of full Warrant Shares so purchased upon the exercise of such Warrants or other securities or property to which it is entitled, registered or otherwise to the Person or Persons entitled to receive the same, together with cash as provided in Section 3.5 in respect of any fractional Warrant Shares otherwise issuable upon such exercise; provided, however, that if the Company is requested to issue Common Stock upon the exercise of a Warrant to any Person other than the Holder, then the Company shall be entitled to request, and the Holder will be obligated to provide, at the expense of the Holder, an opinion of counsel for the Holder, reasonably satisfactory to it, that the requested issuance will not violate applicable federal or state securities laws; and provided further that no Holder shall be entitled to exercise such Holder’s Warrants at any time unless, at the time of exercise, (i) a registration statement under the Securities Act relating to the Warrant Shares has been filed with, and declared effective by, the SEC, and no stop order suspending the effectiveness of such registration statement has been issued by the SEC or (ii) the issuance of the Warrant Shares is permitted pursuant to an exemption from the registration requirements of the Securities Act.  Such certificate or certificates shall be deemed to have been issued and any Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares as of the date of the surrender of such Warrant Certificates and payment of the per share Exercise Price.

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SECTION 3.7.   Fractional Warrant Shares

The Company shall not be required to issue fractional Warrant Shares on the exercise of Warrants.  If more than one Warrant shall be exercised in full at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of Warrant Shares purchasable pursuant thereto.  If any fraction of a Warrant Share would, except for the provisions of this Section 3.7, be issuable on the exercise of any Warrant (or specified portion thereof), the Company shall pay an amount in cash equal to the Current Market Value for one Warrant Share on the Business Day immediately preceding the date the Warrant is exercised, multiplied by such fraction, computed to the nearest whole cent.

SECTION 3.8.   Reservation of Warrant Shares

The Company shall at all times keep reserved out of its authorized shares of Common Stock a number of shares of Common Stock sufficient to provide for the exercise of all outstanding Warrants.  The registrar for the Common Stock, which may be the Company secretary (the “Registrar”), shall at all times until the Expiration Date, or the time at which all Warrants have been exercised or cancelled, reserve such number of authorized shares as shall be required for such purpose.  The Company will keep a copy of this Agreement on file with the Transfer Agent.  All Warrant Shares which may be issued upon exercise of Warrants shall, upon issue, be fully paid, nonassessable, free of preemptive rights and free from all taxes, liens, charges and security interests with respect to the issue thereof.  The Company will supply such Transfer Agent with duly executed stock certificates for such purpose and will itself provide or otherwise make available any cash which may be payable as provided in Section 3.5.  The Company will furnish to such Transfer Agent a copy of all notices of adjustments and certificates related thereto transmitted to each Holder.

SECTION 3.9.   Compliance with Law

If any shares of Common Stock required to be reserved for purposes of exercise of Warrants require, under any other Federal or state law or applicable governing rule or regulation of any national securities exchange, registration with or approval of any Governmental Authority, or listing on any such national securities exchange before such shares may be issued upon exercise, the Company will cause such shares to be duly registered or approved by such Governmental Authority or listed on the relevant national securities exchange; provided that the Company shall not have any obligation to register the Warrant Shares under the Securities Act or state securities laws except pursuant to Exhibit E hereto.

ARTICLE 4.

Antidilution Provisions

SECTION 4.1.   Changes in Common Stock

In the event that at any time or from time to time after the date hereof the Company shall (a) pay a dividend or make a distribution on its Common Stock in shares of its Common Stock or other shares of capital stock, (b) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, (c) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock or (d) increase or decrease the number of shares of Common Stock outstanding by reclassification of its Common Stock, then the number of shares of Common Stock purchasable upon exercise of each Warrant immediately after the happening of such event shall be adjusted so that, after giving effect to such adjustment, the Holder of each Warrant shall be entitled to receive the number of shares of Common Stock upon exercise that such holder would have owned or have been entitled to receive had such Warrants been exercised immediately prior to the happening of the events described

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above (or, in the case of a dividend or distribution of Common Stock, immediately prior to the record date therefor).  An adjustment made pursuant to this Section 4.1 shall become effective immediately after the effective date, retroactive to the record date therefor in the case of a dividend or distribution in shares of Common Stock, and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.

SECTION 4.2.   Cash Dividends and Other Distributions

In the event that at any time or from time to time after the date hereof the Company shall distribute to holders of Common Stock (a) any dividend or other distribution of cash, evidences of its indebtedness, shares of its capital stock or any other properties or securities or (b) any options, warrants or other rights to subscribe for or purchase any of the foregoing (other than, in each case set forth in (a) and (b), (i) any dividend or distribution described in Section 4.1, (ii) any rights, options, warrants or securities described in Section 4.3 or (iii) any rights, options, warrants or other rights issued pursuant to the New ATA Holding Inc. 2006 Long-Term Incentive Plan) then the number of shares of Common Stock thereafter purchasable upon the exercise of each Warrant shall be increased to a number determined by multiplying the number of shares of Common Stock purchasable upon the exercise of such Warrant immediately prior to the record date for any such dividend or distribution by a fraction, the numerator of which shall be the Current Market Value per share of Common Stock on the record date for such distribution, and the denominator of which shall be such Current Market Value per share of Common Stock less the sum of (x) any cash distributed per share of Common Stock and (y) the fair value (the “Fair Value”) (as determined in good faith by the Board, whose determination shall be evidenced by a board resolution filed with the Warrant Agent, a copy of which will be sent to Holders upon request) of the portion, if any, of the distribution applicable to one share of Common Stock consisting of evidences of indebtedness, shares of stock, securities, other property, warrants, options or subscription of purchase rights.  Such adjustments shall be made whenever any distribution is made and shall become effective as of the date of distribution, retroactive to the record date for any such distribution; provided, however, that the Company is not required to make an adjustment pursuant to this Section 4.2 if at the time of such distribution the Company makes the same distribution to Holders as it makes to holders of Common Stock pro rata based on the number of shares of Common Stock for which such Warrants are exercisable (whether or not currently exercisable).

SECTION 4.3.   Rights Issue

In the event that at any time or from time to time after the date hereof the Company shall issue, sell, distribute or otherwise grant any rights to subscribe for or to purchase, or any options or warrants for the purchase of, or any securities convertible or exchangeable into, Common Stock, entitling such holders to subscribe for or purchase shares of Common Stock or stock or securities convertible into Common Stock, whether or not immediately exercisable, convertible or exchangeable, as the case may be, and the consideration to be received per share of Common Stock issuable upon exercise, conversion or exchange thereof is lower at the record date for such issuance than the then Current Market Value per share of Common Stock, then the number of shares of Common Stock thereafter purchasable upon the exercise of each Warrant shall be increased to a number determined by multiplying the number of shares of Common Stock purchasable upon the exercise of such Warrant immediately prior to the date of issuance of such rights, options, warrants or securities by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such rights, options, warrants or securities plus the number of additional shares of Common Stock offered for subscription or purchase or issuable upon exercise of options or warrants or into or for which such securities are convertible or exchangeable, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such rights, options, warrants or securities plus the

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total number of shares of Common Stock which could be purchased at the Current Market Value with the aggregate consideration received through issuance, exercise, conversion or exchange of such rights, warrants, options, or convertible securities.  Such adjustment shall be made whenever such rights, options or warrants are issued and shall become effective retroactively immediately after the record date for the determination of stockholders entitled to receive such rights, options, warrants or securities.  Notwithstanding any other provision of this Section 4.3, the number of shares of Common Stock purchasable upon exercise of any Warrant shall not be adjusted pursuant to this Section 4.3 in connection with the issuance or sale of rights, options, warrants or convertible or exchangeable securities in connection with:  (a) a firm commitment underwritten public offering of rights, or convertible or exchangeable securities by the Company, (b) a private placement of rights or convertible or exchangeable securities by the Company in which at least 50% of the securities being issued are issued to Persons who are not Affiliates of the Company or any holder of Common Stock other than the Warrants or the Warrant Shares, and (c) the issuance or grant of rights or options to the Company’s employees under bona fide employee benefit plans adopted by the Board and approved by the holders of Common Stock when required by law, provided that the number of shares of Common Stock underlying such rights and options do not exceed 5% of the Common Stock outstanding on the date hereof.

If the Company at any time shall issue two or more securities as a unit and one or more of such securities shall be rights, options or warrants for or securities convertible into or exchangeable for, Common Stock subject to this Section 4.3, the consideration allocated to each such security shall be determined in good faith by the Board.

SECTION 4.4.   Issuance of Additional Shares of Common Stock

(a)  Subject to Section 4.4(b), in the event that at any time or from time to time after the date hereof the Company shall issue or sell any additional shares of Common Stock for consideration in an amount per additional share of Common Stock less than the Current Market Value, then the number of shares of Common Stock thereafter purchasable upon the exercise of each Warrant shall be increased to a number determined by multiplying the number of shares of Common Stock purchasable upon the exercise of each Warrant immediately prior to such issue or sale by a fraction the numerator of which shall be the number of shares of Common Stock outstanding immediately after such issue or sale, and the denominator of which shall be the sum of (i) the number of shares of Common Stock outstanding immediately prior to such issue or sale, and (ii) the number of shares of Common Stock which could be purchased at the Current Market Value with the aggregate consideration received from the issuance or sale of the additional shares of Common Stock.  For the purposes of this Section 4.4, the date as of which the Current Market Value per share of Common Stock shall be computed shall be the earlier of (x) the date on which the Company shall enter into a firm contract for the issuance of such additional shares of Common Stock or (y) the date of actual issuance of such additional shares of Common Stock.  Notwithstanding any other provision of this Section 4.4, the number of shares of Common Stock purchasable upon exercise of any Warrant shall not be adjusted pursuant to this Section 4.4 as a result of the issuance or sale of Common Stock in connection with:  (a) a bona fide firm commitment underwritten public offering of Common Stock of the Company, (b) a private placement transaction in which at least 50% of the shares of Common Stock being issued are issued to Persons who are not Affiliates of the Company or any holder of Common Stock other than the Warrants or the Warrant Shares, (c) a transaction to which Section 4.1, 4.2 or 4.3 is applicable, (d) the exercise of the Warrants, (e) the exercise of rights or options issued to the Company’s employees under bona fide employee benefit plans adopted by the Board and approved by the holders of Common Stock when required by law, if such Common Stock would otherwise be covered by this Section 4.4 (but only to the extent that the aggregate number of shares excluded hereby does not exceed 5% of the Common Stock outstanding on the date hereof) and (f) Common Stock issued to stockholders of any Person that is not an Affiliate of the Company and that

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merges with the Company in proportion to their stock holdings of such Person immediately prior to such merger.

(b)           Notwithstanding Section 4.4(a), the Company is not required to make an adjustment pursuant to this Section 4.4 if at the time of an issuance or sale of additional shares of Common Stock to holders of Common Stock, the Company offers the same sale or issuance of additional shares of Common Stock to Holders as it makes to holders of Common Stock pro rata based on the number of shares of Common Stock for which such Warrants are exercisable (whether or not currently exercisable).

SECTION 4.5.   Combination; Liquidation

(a)  Except as provided in Section 4.5(b), in the event of any Combination, the Holders shall have the right to receive upon exercise of the Warrants such number of shares of capital stock or other securities or property which such Holder would have been entitled to receive upon or as a result of such Combination had such Warrant been exercised immediately prior to such event.  Unless paragraph (b) is applicable to a Combination, the Company shall provide that the surviving or acquiring Person (the “Successor Company”) in such Combination will enter into an agreement with the Warrant Agent confirming the Holders’ rights pursuant to this Section 4.5(a) and providing for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 4.  The provisions of this Section 4.5(a) shall similarly apply to successive Combinations involving any Successor Company.

(b)           In the event of (i) a Combination where consideration to holders of Common Stock in exchange for their shares is payable solely in cash, or (ii) the dissolution, liquidation or winding-up of the Company, then the Holders of the Warrants will be entitled to receive distributions on an equal basis with the holders of the Common Stock or other securities issuable upon exercise of the Warrants, as if the Warrants had been exercised immediately prior to such event, less the Exercise Price.

In case of any Combination described in this Section 4.5(b), the surviving or acquiring Person and, in the event of any dissolution, liquidation or winding-up of the Company, the Company, shall deposit promptly with the Warrant Agent the funds, if any, necessary to pay to the holders of the Warrants the amounts to which they are entitled as described above.  After such funds and the surrendered Warrant Certificates are received, the Warrant Agent shall make payment to the Holders by delivering a check in such amount as is appropriate (or, in the case of consideration other than cash, such other consideration as is appropriate) to such Person or Persons as it may be directed in writing by the Holders surrendering such Warrants. Upon the deposit of sufficient funds to fulfill the Company’s obligations hereunder, which amount shall be further adjusted in accordance with subsequent changes in the terms of any Combination described herein, if any, the Warrants shall thereafter represent only the right to receive such cash payments or other consideration and the Company’s obligations in respect of the Warrants shall be discharged; provided, however, that if such a deposit is made in anticipation of a Combination, such Combination must actually be consummated before the Company’s obligations in respect of the Warrants shall be discharged.

SECTION 4.6.   Tender Offers: Exchange Offers

In the event that the Company or any subsidiary of the Company shall purchase shares of Common Stock pursuant to a tender offer or an exchange offer for a price per share of Common Stock that is greater than the then Current Market Value per share of Common Stock in effect at the end of the trading day immediately following the day on which such tender offer or exchange offer expires, then the

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number of shares of Common Stock thereafter purchasable upon the exercise of each Warrant shall be increased to a number determined by multiplying the number of shares of Common Stock purchasable upon the exercise of such Warrant immediately prior to such purchase by a fraction the numerator of which shall be the sum of (x) the fair market value of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender offer or exchange offer) of all shares of Common Stock validly tendered or exchanged and not withdrawn as of the expiration time of such tender offer or exchange offer (the “Purchased Shares”) and (y) the product of the number of shares of Common Stock outstanding (less the Purchased Shares) at the expiration time of such offer or exchange offer and the first reported sales price of the Common Stock on the trading day immediately following the day on which such tender offer or exchange offer expires and the denominator of which shall be the number of shares of Common Stock outstanding (including any Purchased Shares) at the expiration time of such tender offer or exchange offer multiplied by the first reported sales price of the Common Stock on the trading day immediately following the day on which such tender offer or exchange offer expires, such increase to become effective immediately prior to the opening of business on the day immediately following the day on which such tender offer or exchange offer expires.

SECTION 4.7.   Other Events

If any event occurs as to which the foregoing provisions of this Article 4 are not strictly applicable but as to which failure to make any adjustment would, in the good faith judgment of the Board, adversely affect the purchase rights of the Warrants in accordance with the essential intent and principles of such provisions, then such Board shall make such adjustments in the application of such provisions, in accordance with such essential intent and principles, as shall be reasonably necessary, in the good faith opinion of such Board, to protect such purchase rights as aforesaid, but in no event shall any such adjustment have the effect of decreasing the number of shares of Common Stock subject to purchase upon exercise of this Warrant.

SECTION 4.8.   Current Market Value

For the purpose of any computation of Current Market Value under this Section 4 and Section 3.5, the “Current Market Value” per share of Common Stock at any date shall be (a) for purposes of Section 3.5, the closing price on the Business Day immediately prior to the date of the exercise of the applicable Warrant pursuant to Section 3 and (b) in all other cases, the average of the daily closing prices for the shorter of (i) the 20 consecutive trading days ending on the last full trading day on the exchange or market specified in the second succeeding sentence prior to the Time of Determination (as defined below) and (ii) the period commencing on the date next succeeding the first public announcement of the issuance, sale, distribution or granting in question through such last full trading day prior to the Time of Determination.  The term “Time of Determination” as used herein shall be the time and date of the earlier to occur of (A) the date as of which the Current Market Value is to be computed and (B) the last full trading day on such exchange or market before the commencement of “ex-dividend” trading in the Common Stock relating to the event giving rise to the adjustment required by this Section 4.  The closing price for any day shall be the last reported sale price regular way or, in case no such reported sale takes place on such day, the average of the closing bid and asked prices regular way for such day, in each case (1) on the principal national securities exchange on which the shares of Common Stock are listed or to which such shares are admitted to trading or (2) if the Common Stock is not listed or admitted to trading on a national securities exchange, in the over-the-counter market as reported by the NASDAQ National Market or any comparable system or (3) if the Common Stock is not listed on a national securities exchange, the NASDAQ National Market or a comparable system, or if for any other reason the Current Market Value per share cannot be determined pursuant to the foregoing provisions of this Section 4.8, the

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Current Market Value per share shall be the fair market value thereof determined in good faith by the Board.

SECTION 4.9.   Superseding Adjustment

Upon the expiration of any rights, options, warrants or conversion or exchange privileges which resulted in the adjustments pursuant to this Article 4, if any thereof shall not have been exercised, the number of Warrant Shares purchasable upon the exercise of each Warrant shall be readjusted as if (a) the only shares of Common Stock issuable upon exercise of such rights, options, warrants, conversion or exchange privileges were the shares of Common Stock, if any, actually issued upon the exercise of such rights, options, warrants or conversion or exchange privileges and (b) shares of Common Stock actually issued, if any, were issuable for the consideration actually received by the Company upon such exercise plus the aggregate consideration, if any, actually received by the Company for the issuance, sale or grant of all such rights, options, warrants or conversion or exchange privileges whether or not exercised; provided, however, that no such readjustment shall (except by reason of an intervening adjustment under Section 4.1) have the effect of decreasing the number of Warrant Shares purchasable upon the exercise of each Warrant by an amount in excess of the amount of the adjustment initially made in respect of the issuance, sale or grant of such rights, options, warrants or conversion or exchange privileges.

SECTION 4.10.   When No Adjustment Required

(a)           Notwithstanding any other provision of this Article 4, no adjustment to the Exercise Price shall reduce the Exercise Price below the then par value per share of the Common Stock, and any such purported adjustment shall instead reduce the Exercise Price to such par value.  Holdings hereby covenants not to take any action to increase the par value per share of the Common Stock.

(b)           The adjustments required by the preceding Sections of this Article 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that the Company shall not be obligated to make any adjustment of the number of shares of Common Stock purchasable upon exercise of Warrants that would otherwise be required shall be made unless and until such adjustment either by itself or with other adjustments not previously made increases or decreases by at least 1% the number of shares of Common Stock purchasable upon exercise of Warrants immediately prior to the making of such adjustment.  Any adjustment representing a change of less than such minimum amount shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Article 4 and not previously made, would result in a minimum adjustment.

SECTION 4.11.   Notice of Adjustment

Whenever the number of shares of Common Stock and other property, if any, purchasable upon exercise of Warrants is adjusted, as herein provided, the Company shall deliver to the Warrant Agent a certificate of a firm of independent accountants (who may be the regular accountants employed by the Company) setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated (including a description of the basis on which the Board determined the fair market value of any evidences of indebtedness, other securities or property or warrants or other subscription or purchase rights), and specifying the number of shares of Common Stock purchasable upon exercise of Warrants after giving effect to such adjustment.  The Company shall promptly cause the Warrant Agent to mail a copy of such certificate to each Holder in accordance with Section 8.4.  The Warrant Agent shall be entitled to rely on such certificate and shall be under no duty or

14

responsibility with respect to any such certificate, except to exhibit the same from time to time, to any Holder desiring an inspection thereof during reasonable business hours.  The Warrant Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist which may require any adjustment of the Exercise Price or the number of shares of Common Stock or other stock or property, purchasable on exercise of the Warrants, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making such adjustment or the validity or value of any shares of Common Stock.

SECTION 4.12.   Notice of Certain Transactions

In the event that the Company shall propose (a) to pay any dividend payable in securities of any class to the holders of its Common Stock or to make any other distribution of securities to the holders of its Common Stock, (b) to offer the holders of its Common Stock rights to subscribe for or to purchase any securities convertible into shares of Common Stock or shares of Common Stock or shares of stock of any class or any other securities, rights or options, (c) to effect any reclassification of its Common Stock, capital reorganization or Combination or (d) to effect the voluntary or involuntary dissolution, liquidation or winding-up of the Company, or in the event of a tender offer or exchange offer described in Section 4.6, the Company shall within five Business Days send to the Warrant Agent and the Administrative Agent and the Warrant Agent shall within five Business Days thereafter send the Holders a notice (in such form as shall be furnished to the Warrant Agent by the Company) of such proposed action or offer, such notice to be mailed by the Warrant Agent to the Holders at their addresses as they appear in the Certificate Register, which shall specify the record date for the purposes of such dividend, distribution or rights, or the date such issuance or event is to take place and the date of participation therein by the holders of Common Stock, if any such date is to be fixed, and shall briefly indicate the effect of such action on the Common Stock and on the number and kind of any other shares of stock and on other property, if any, and the number of shares of Common Stock and other property, if any, purchasable upon exercise of each Warrant after giving effect to any adjustment which will be required as a result of such action.  Such notice shall be given by the Company as promptly as possible and, in the case of any action covered by clause (a) or (b) above, at least five (5) Business Days prior to the record date for determining holders of the Common Stock for purposes of such action and, in the case of any other such action, at least ten (10) Business Days prior to the date of the taking of such proposed action or the date of participation therein by the holders of Common Stock, whichever shall be the earlier.

SECTION 4.13.   Adjustment to Warrant Certificate

The form of Warrant Certificate need not be changed because of any adjustment made pursuant to this Article 4, and Warrant Certificates issued after such adjustment may state the same number of shares of Common Stock as are stated in any Warrant Certificates issued prior to the adjustment.  The Company, however, may at any time in its sole discretion make any change in the form of Warrant Certificate that it may deem appropriate to give effect to such adjustments and that does not affect the substance of the Warrant Certificate, and any Warrant Certificate thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant Certificate or otherwise, may be in the form as so changed.

SECTION 4.14.   Consideration Received

For purpose of any computation respecting consideration received pursuant to Sections 4.3 and 4.4, the following shall apply:

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(1)           in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith;

(2)           in the case of the issuance of shares of Common Stock for a consideration, in whole or in part, other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors (irrespective of the accounting treatment thereof) and described in a board resolution which shall be filed with the Warrant Agent; and

(3)           in the case of the issuance of securities convertible into or exerciseable or exchangeable for shares, the aggregate consideration received therefor shall be deemed to be the consideration received by the Company for the issuance of such securities plus the additional minimum consideration, if any, to be received by the Company upon the conversion or exchange thereof (the consideration in each case to be determined in the same manner as provided in clauses (1) and (2) of this Section 4.14.

SECTION 4.15.   Ranking

Notwithstanding anything to the contrary contained herein, so long as any shares of the Company’s Series A Convertible Cumulative Preferred Stock (the “Preferred Stock”) are outstanding, in the event of a liquidation, dissolution or winding-up of the Company (each, a “Liquidation Event”), the Warrants shall be adjusted so that the Holders shall be entitled to recover on a pari passu basis with the Preferred Stock (on a pro rata as converted basis) with respect to any proceeds distributed to the holders of the Preferred Stock in connection with such Liquidation Event.

ARTICLE 5.

Rights of Holders

SECTION 5.1.   Registration Rights

The Holders of the Warrants and Warrant Shares shall be entitled to the registration rights set forth in Exhibit E hereto.

SECTION 5.2.   Tag-Along Rights

The Holders of the Warrants and Warrant Shares shall be entitled to the tag-along rights set forth in Exhibit F hereto.

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ARTICLE 6.

Warrant Agent

SECTION 6.1.   Appointment of Warrant Agent

The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with provisions of this Agreement and the Warrant Agent hereby accepts such appointment.

SECTION 6.2.   Rights and Duties of Warrant Agent

(a)           In acting under this Warrant Agreement and in connection with the Warrant Certificates, the Warrant Agent is acting solely as agent of the Company and does not assume any obligation or relationship or agency or trust for or with any of the holders of Warrant Certificates or beneficial owners of Warrants.

(b)           The Warrant Agent may consult with counsel reasonably satisfactory to it and the Company, and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with the advice of such counsel.

(c)           The Warrant Agent shall be protected and shall incur no liability for or in respect of any action taken or thing suffered by it in reliance upon any Warrant Certificate, notice, direction, consent, certificate, affidavit, statement or other paper or document reasonably believed by it to be genuine and to have been presented or signed by the proper parties.

(d)           The Warrant Agent shall be obligated to perform only such duties as are specifically set forth herein and in the Warrant Certificates and no implied duties or obligations shall be read into this Agreement or the Warrant Certificates against the Warrant Agent.  The Warrant Agent shall not be under any obligation to take any action hereunder which may tend to involve it in any expense or liability for which it does not receive indemnity if such indemnity is reasonably requested.  The Warrant Agent shall not be accountable or under any duty or responsibility for the use by the Company of any of the Warrant Certificates countersigned by the Warrant Agent and delivered by it to the Holders or on behalf of the Holders pursuant to this Agreement or for the application by the Company of the proceeds of the Warrants.  The Warrant Agent shall have no duty or responsibility in case of any default by the Company in the performance of its covenants or agreements contained herein or in the Warrant Certificates or in the case of the receipt of any written demand from a Holder with respect to such default, including any duty or responsibility to initiate or attempt to initiate any proceedings at law or otherwise.

(e)           The Warrant Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist that may require an adjustment of the number of shares of Common Stock purchasable upon exercise of each Warrant or with respect to the nature or extent of any adjustment when made, or with respect to the method employed, or herein or in any supplemental agreement provided to be employed, in making the same.  The Warrant Agent shall not be accountable with respect to the validity or value of any shares of Common Stock or of any securities or property which may at any time be issued or delivered upon the exercise of any Warrant or upon any adjustment pursuant to Article 4, and it makes no representation with respect thereto.  The Warrant Agent shall not be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or stock certificates upon the surrender of any Warrant Certificate for the purpose of exercise or upon any adjustment pursuant to Article 4, or to comply with any of the covenants of the Company contained in Article 4.

SECTION 6.3.   Individual Rights of Warrant Agent

The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or its affiliates or

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become pecuniarily interested in transactions in which the Company or its affiliates may be interested, or contract with or lend money to the Company or its affiliates or otherwise act as fully and freely as though it were not the Warrant Agent under this Agreement.  Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity.

SECTION 6.4.   Warrant Agent’s Disclaimer

The Warrant Agent shall not be responsible for and makes no representation as to the validity or adequacy of this Agreement or the Warrant Certificates and it shall not be responsible for any statement in this Agreement or the Warrant Certificates other than its countersignature thereon.

SECTION 6.5.   Compensation and Indemnity

The Company and the Warrant Agent have entered into an agreement pursuant to which the Company agrees to pay the Warrant Agent, for its own account, the administrative fees payable in the amounts and at the times separately agreed upon between the Company and the Warrant Agent (the “Warrant Agent Fees”).  The Company shall indemnify the Warrant Agent against any loss, liability or reasonable related out-of-pocket expense (including agents’ and attorneys’ fees and expenses) incurred by it without willful misconduct, gross negligence or bad faith on its part arising out of or in connection with the acceptance or performance of its duties under this Agreement.  The Warrant Agent shall notify the Company promptly, but in any event within ninety (90) days, of any claim for which it may seek indemnity.  The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Warrant Agent through willful misconduct, gross negligence or bad faith.  The Company’s payment obligations pursuant to this Section 6.5 shall survive the termination of this Agreement.

SECTION 6.6.   Successor Warrant Agent

(a)           The Company agrees for the benefit of the Holders that there shall at all times be a Warrant Agent hereunder until all the Warrants have been exercised or are no longer exercisable.

(b)           The Warrant Agent may at any time resign by giving written notice to the Company of such intention on its part, specifying the date on which its desired resignation shall become effective; provided, however, that such date shall not be less than 60 days after the date on which such notice is given unless the Company otherwise agrees.  The Warrant Agent hereunder may be removed at any time by the filing with it of an instrument in writing signed by or on behalf of the Company and specifying such removal and the date when it shall become effective, which date shall not be less than 45 days after such notice is given unless the Warrant Agent otherwise agrees.  Any removal under this Section 6.6 shall take effect upon the appointment by the Company as hereinafter provided of a successor Warrant Agent (which shall be a bank or trust company authorized under the laws of the jurisdiction of its organization to exercise corporate trust powers) and the acceptance of such appointment by such successor Warrant Agent.

(c)           In case at any time the Warrant Agent shall resign, or shall be removed, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall commence a voluntary case under the Federal bankruptcy laws, as now or hereafter constituted, or under any other applicable Federal or state bankruptcy, insolvency or similar law or shall consent to the appointment of or taking possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator (or other similar official) of the Warrant Agent or its property or affairs, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall take corporate

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action in furtherance of any such action, or a decree or order for relief by a court having jurisdiction in the premises shall have been entered in respect of the Warrant Agent in an involuntary case under the Federal bankruptcy laws, as now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or similar law; or a decree order by a court having jurisdiction in the premises shall have been entered for the appointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator (or similar official) of the Warrant Agent or of its property or affairs, or any public officer shall take charge or control of the Warrant Agent or of its property or affairs for the purpose of rehabilitation, conservation, winding up of or liquidation, a successor Warrant Agent, qualified as aforesaid, shall be appointed by the Company by an instrument in writing, filed with the successor Warrant Agent.  Upon the appointment as aforesaid of a successor Warrant Agent and acceptance by the successor Warrant Agent of such appointment, the Warrant Agent shall cease to be Warrant Agent hereunder; provided, however, that in the event of the resignation of the Warrant Agent hereunder, such resignation shall be effective on the earlier of (i) the date specified in the Warrant Agent’s notice of resignation and (ii) the appointment and acceptance of a successor Warrant Agent hereunder.

(d)           Any successor Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its predecessor and to the Company an instrument accepting such appointment hereunder, and thereupon such successor Warrant Agent, without any further act, deed or conveyance, shall become vested with all the rights and obligations of such predecessor with like effect as if originally named as Warrant Agent hereunder, and such predecessor, upon payment of its charges and disbursements then unpaid, shall thereupon become obligated to transfer, deliver and pay over, and such successor Warrant Agent shall be entitled to receive, all monies, securities and other property on deposit with or held by such predecessor, as Warrant Agent hereunder.

(e)           Any corporation into which the Warrant Agent hereunder may be merged or consolidated, or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any corporation to which the Warrant Agent shall sell or otherwise transfer all or substantially all the assets and business of the Warrant Agent, provided that it shall be qualified as aforesaid, shall be the successor Warrant Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto.

ARTICLE 7.

Representations and Agreement of The Company

The Company represents and warrants to and agrees with the Warrant Agent as of the date hereof as follows:

(a)           The Warrants have not been and will not be registered under the Securities Act or any state or other securities law, that the Warrants are being issued by the Company in transactions exempt from the registration requirements of the Securities Act and that the Warrants may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration under the Securities Act is available.

(b)           Subject to compliance by the Holders with the representations and warranties set forth in Section 8.2(b) and in the certificates delivered by such Holders pursuant to Section 3 and with the procedures set forth in Section 2.4, it is not necessary in connection with the offer, issue, sale and delivery of the Warrants to the Holders on the Issuance Dates in the manner contemplated by this Agreement to register the Warrants or Warrant Shares under the Securities Act or to qualify an indenture under the Trust Indenture Act of 1939.

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(c)           The Warrants are eligible for resale pursuant to Rule 144A of the Securities Act and will not, as of each Issuance Date, be of the same class as securities listed on a national securities exchange registered under Section 6 of the Exchange Act or quotes on a U.S. automated inter-dealer quotation system.

(d)           The Company hereby agrees that, for so long as any Warrants or Warrant Shares remain outstanding and during any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to any Holder or beneficial owner of Warrants or Warrant Shares in connection with any sale thereof and any prospective purchaser thereof from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales pursuant to Rule 144A.

(e)           None of the Company, their Affiliates and any person acting on any of their behalf (other than the Holders and their Affiliates, as to whom the Company makes no representation or warranty) has, directly or indirectly, offered, issued, sold or solicited any offer to buy any security of a type which would be integrated with the sale of the Warrants in any manner that would require the Warrants to be registered under the Securities Act.  None of the Company, their Affiliates and any person acting on any of their behalf (other than the Holders and their Affiliates, as to whom the Company makes no representation or warranty) has engaged in any form of general solicitation or general advertising within the meaning of Rule 502 in connection with the offering of the Warrants.

ARTICLE 8.

Miscellaneous

SECTION 8.1.   Persons Benefiting

Nothing in this Agreement is intended or shall be construed to confer upon any Person other than the Company, the Warrant Agent and the Holders any right, remedy or claim under or by reason of this agreement or any part hereof.

SECTION 8.2.   Rights of Holders; Representations and Warranties of Holders

(a)           Except as otherwise specifically required herein, holders of unexercised Warrants are not entitled (a) to receive dividends or other distributions, (b) to receive notice of or vote at any meeting of the stockholders, (c) to consent to any action of the stockholders, (d) to receive notice of any other proceedings of the Company or (e) to exercise any other rights as stockholders of the Company.

(b)           Each Holder represents and warranties to the Company as of the date hereof the representations and warranties in Exhibit D hereto.

SECTION 8.3.   Amendment

This Agreement may be amended by the parties hereto without the consent of any Holder for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein or making any other provisions with respect to matters or questions arising under this Agreement as the Company and the Warrant Agent may deem necessary or desirable; provided, however, that such action shall not affect adversely the rights of the Holders.  Any amendment or supplement to this Agreement (including any Exhibit hereto) that has or would have an adverse effect on the interests of the Holders shall require the written consent of the Holders of a majority of the

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outstanding Warrants or, if no Warrants are outstanding, the Initial Lenders.  Exhibit E hereto may be amended as provided therein.  The consent of each Holder affected shall be required for any amendment pursuant to which the Exercise Price would be increased or the number of Warrant Shares purchasable upon exercise of Warrants would be decreased (other than pursuant to adjustments provided herein).  In determining whether the Holders of the required number of Warrants have concurred in any direction, waiver or consent, Warrants owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company other than the Warrant Agent or its Affiliates (other than the Company) shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Warrant Agent shall be protected in relying on any such direction, waiver or consent, only Warrants which the Warrant Agent knows are so owned shall be so disregarded.  Also, subject to the foregoing, only Warrants outstanding at the time shall be considered in any such determination.

SECTION 8.4.   Notices

Any notice or communication shall be in writing and delivered in Person or mailed by first-class mail addressed as follows:

if to the Company:	Global Aero Logistics Inc.
	7337 West Washington Street
	Indianapolis, IN 46231
	Attention: General Counsel
	Telecopy: (317) 282-7091
if to the Warrant Agent:
	JPMorgan Chase Bank, N.A.
	270 Park Avenue, Floor 04
	New York, NY 10017-2014
	Attention: Matthew Massie
	Telecopy: 212-270-5100
if to the Administrative Agent:
	JPMorgan Chase Bank, N.A.
	1111 Fannin Street, Floor 10
	Houston, TX 77002-6925
	Attention: Daniel Blazei
	Telecopy: 713-750-2938

The Company or the Warrant Agent or the Administrative Agent by notice to the other may designate additional or different addresses for subsequent notices or communications.

Any notice or communication mailed to a Holder shall be mailed to the Holder at the Holder’s address as it appears on the Certificate Register and shall be sufficiently given if so mailed within the time prescribed.

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.  If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

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SECTION 8.5.   GOVERNING LAW

THIS AGREEMENT AND THE WARRANT CERTIFICATES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

SECTION 8.6.   Successors

All agreements of the Company in this Agreement and the Warrant Certificates shall bind its successors.  All agreements of the Warrant Agent in this Agreement shall bind its successors.

SECTION 8.7.   Counterparts

This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

SECTION 8.8.   Table of Contents

The table of contents and headings of the Articles and Sections of this Agreement have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

SECTION 8.9.   Severability

The provisions of this Agreement are severable, and if any clause or provision shall be held invalid, illegal or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect in that jurisdiction only such clause or provision, or part thereof, and shall not in any manner affect such clause or provision in any other jurisdiction or any other clause or provision of this Agreement in any jurisdiction.

SECTION 8.10.   Effectiveness

This Agreement shall become effective upon the satisfaction of the conditions set forth in Section 4 of the Term Loan Agreement.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first written above.

GLOBAL AERO LOGISTICS INC.
By:	/s/ Subodh Karnik
	Name:	Subodh Karnik
	Title:	President and CEO

[Signature Page to Warrant Agreement]

JPMORGAN CHASE BANK, N.A.,
as Warrant Agent
By:	/s/ JOHN C. RIORDAN
	Name:	JOHN C. RIORDAN
	Title:	VICE PRESIDENT

By:
	Name:
	Title:

[Signature Page to Warrant Agreement]

EXHIBIT A

TO WARRANT AGREEMENT

[FORM OF FACE OF WARRANT CERTIFICATE]

THE WARRANTS AND THE WARRANT SHARES (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS.  NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS.  THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, UNLESS PREVIOUSLY REGISTERED UNDER THE SECURITIES ACT, ONLY (A) TO THE COMPANY; (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE); (C) TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (D) PURSUANT TO AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATIONS UNDER THE SECURITIES ACT: OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. IN THE CASE OF CERTAIN TRANSFERS OR OTHER DISPOSITIONS MADE OTHERWISE THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, THE HOLDER HEREOF SHALL BE REQUIRED TO PROVIDE TO THE ISSUER HEREOF AN OPINION OF COUNSEL, ALL IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT PURSUANT TO WHICH THIS SECURITY WAS ORIGINALLY OFFERED AND SOLD BY THE ISSUER THEREOF.

THE WARRANTS EVIDENCED BY THIS CERTIFICATE MAY ONLY BE EXERCISED IF A REGISTRATION STATEMENT RELATING TO THE ISSUANCE OF SHARES OF COMMON STOCK UPON THE EXERCISE OF SUCH WARRANTS IS THEN IN EFFECT, OR IF SUCH ISSUANCE OF SHARES OF COMMON STOCK IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND SUCH ISSUANCE OF SUCH SHARES OF COMMON STOCK IS QUALIFIED FOR SALE OR IS EXEMPT FROM QUALIFICATION UNDER THE APPLICABLE SECURITIES LAWS OF THE STATE IN WHICH THE HOLDER OF THIS CERTIFICATE RESIDES.

No.
	WARRANTS TO PURCHASE COMMON STOCK OF
	GLOBAL AERO LOGISTICS INC.

THIS CERTIFIES THAT,                         , or its registered assigns, is the registered holder of the number of Warrants set forth above (the “Warrants”).  Each Warrant entitles the holder thereof (the “Holder”), at its option and subject to the provisions contained herein and in the Warrant Agreement referred to below, to purchase from GLOBAL AERO LOGISTICS INC., a Delaware corporation (“the Company”), the

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number of shares of Common Stock, $0.0001 par value, of the Company (the “Common Stock”) at the per share exercise price of $0.01 (the “Exercise Price”), or by Cashless Exercise, referred to below.

On the date hereof, this Warrant Certificate entitles the Holder at its option and subject to the provisions contained herein and in the Warrant Agreement, to purchase from the Company, [  ] shares of Common Stock at the per share Exercise Price or by Cashless Exercise.

This Warrant Certificate shall terminate and become void as of the close of business on August 14, 2015 (the “Expiration Date”) or upon the exercise hereof as to all the shares of Common Stock subject hereto.  The number of shares purchasable upon exercise of the Warrants and the Exercise Price per share shall be subject to adjustment from time to time as set forth in the Warrant Agreement.

This Warrant Certificate is issued under and in accordance with a Warrant Agreement dated as of August 14, 2007 (the “Warrant Agreement”), between the Company and JP Morgan Chase Bank, N.A. (the “Warrant Agent”, which term includes any successor Warrant Agent under the Warrant Agreement), and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the Holder of this Warrant Certificate consents by acceptance hereof.  The Warrant Agreement is hereby incorporated herein by reference and made a part hereof.  Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties and obligations of the Company, the Warrant Agent and the Holders of the Warrants.  Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Warrant Agreement.  A copy of the Warrant Agreement may be obtained for inspection by the Holder hereof upon written request to the Warrant Agent at JP Morgan Chase Bank, N.A., 270 Park Avenue, Floor 04, New York, NY 10017-2014, Attention: Matthew Massie.

Subject to the terms of the Warrant Agreement, the Warrants may be exercised in whole or in part (i) by surrender of this Warrant Certificate with the form of election to purchase Warrant Shares attached hereto duly executed and with the simultaneous payment of the Exercise Price in cash (subject to adjustment) to the Warrant Agent for the account of the Company at the office of the Warrant Agent or (ii) by Cashless Exercise.  Payment of the Exercise Price in cash shall be made in cash or by certified or official bank check payable to the order of the Company or by wire transfer of funds to an account designated by the Company for such purpose.  Payment by Cashless Exercise shall be made by the surrender of a Warrant or Warrants represented by one or more Warrant Certificates and without payment of the Exercise Price in cash, in exchange for the issuance of such number of shares of Common Stock equal to the product of (1) the number of shares of Common Stock for which such Warrant would otherwise then be nominally exercised if payment of the Exercise Price were being made in cash and (2) the Cashless Exercise Ratio.

As provided in the Warrant Agreement and subject to the terms and conditions therein set forth, the Warrants shall be exercisable at any time and from time to time; provided, however, that no Warrant shall be exercisable after the Expiration Date.

In the event the Company enters into a Combination, the Holder hereof will be entitled to receive upon exercise of the Warrants the shares of capital stock or other securities or other property of such surviving entity as such Holder would have been entitled to receive upon or as the result of such Combination had the Holder exercised its Warrants immediately prior to such Combination; provided, however, that in the event that, in connection with such Combination, consideration to holders of Common Stock in exchange for their shares is payable solely in cash or in the event of the dissolution, liquidation or winding-up of the Company, the Holder hereof will be entitled to receive distributions on

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an equal basis with the holders of Common Stock or other securities issuable upon exercise of the Warrants, as if the Warrants had been exercised immediately prior to such events, less the Exercise Price.

The Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with the transfer or exchange of the Warrant Certificates pursuant to Section 2.4 of the Warrant Agreement but not for any exchange or original issuance (not involving a transfer) with respect to temporary Warrant Certificates, the exercise of the Warrants or the Warrant Shares.

Upon any partial exercise of the Warrants, there shall be countersigned and issued to the Holder hereof a new Warrant Certificate in respect of the shares of Common Stock as to which the Warrants shall not have been exercised.  This Warrant Certificate may be exchanged at the office of the Warrant Agent by presenting this Warrant Certificate properly endorsed with a request to exchange this Warrant Certificate for other Warrant Certificates evidencing an equal number of Warrants.  No fractional Warrant Shares will be issued upon the exercise of the Warrants, but the Company shall pay an amount in cash equal to the Current Market Value for one Warrant Share on the date the Warrant is exercised, multiplied by such fraction, computed to the nearest whole cent.

The Warrants do not entitle any holder hereof to any of the rights of a stockholder of the Company.  All shares of Common Stock issuable by the Company upon the exercise of the Warrants shall, upon such issue, be duly and validly issued and fully paid and non-assessable.

The holder in whose name the Warrant Certificate is registered may be deemed and treated by the Company and the Warrant Agent as the absolute owner of the Warrant Certificate for all purposes whatsoever and neither the Company nor the Warrant Agent shall be affected by notice to the contrary.

This Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Warrant Agent.

GLOBAL AERO LOGISTICS INC.

By

Attest:

Secretary

DATED:

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Countersigned:
JP Morgan Chase Bank, N.A.
as Warrant Agent,
by
	Authorized Signatory
by
	Authorized Signatory

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[Reverse of Warrant]

FORM OF ELECTION TO PURCHASE WARRANT SHARES

(to be executed only upon exercise of Warrants)

GLOBAL AERO LOGISTICS INC.

The undersigned hereby irrevocably elects to exercise                      Warrants at an exercise price per Warrant (subject to adjustment) of $0.01 to acquire shares of Common Stock of GLOBAL AERO LOGISTICS INC., on the terms and conditions specified in the within Warrant Certificate and the Warrant Agreement therein referred to, surrenders this Warrant Certificate and all right, title and interest therein to                 , and directs that the shares of Common Stock deliverable upon the exercise of such Warrants be registered or placed in the name and at the address specified below and delivered thereto.

Date:	,
			1
		(Signature of Owner)
		(Street Address)
		(City)      (State)    (Zip Code)
		Signature Guaranteed by:

Securities and/or check to be issued to:

Please insert social security or identifying number:

(1)The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatever, and must be guaranteed by a national bank or trust company or by a member firm of any national securities exchange.

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Name:

Street Address:

City, State and Zip Code:

Any unexercised Warrants evidenced by the within Warrant Certificate to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

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EXHIBIT B

TO

WARRANT AGREEMENT

CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR

REGISTRATION OF TRANSFER OF WARRANTS

Re:          Warrants to Purchase Common Stock (the “Warrants”) of GLOBAL AERO LOGISTICS INC. (the “Company”)

This Certificate relates to                      Warrants held in definitive form by                                (the “Transferor”).

The Transferor has requested the Warrant Agent by written order to exchange or register the transfer of a Warrant or Warrants.  In connection with such request and in respect of each such Warrant, the Transferor does hereby certify that the Transferor is familiar with the Warrant Agreement relating to the above captioned Warrants and that the transfer of this Warrant does not require registration under the Securities Act of 1933  (the “Securities Act”), because(1):

oSuch Warrant is being acquired for the Transferor’s own account without transfer.

oSuch Warrant is being transferred to the Company.

oSuch Warrant is being transferred in a transaction meeting the requirements of Rule 144 under the Securities Act.

oSuch Warrant is being transferred to a qualified institutional buyer (as defined in Rule 144A under the Securities Act), in reliance on Rule 144A.

oSuch Warrant is being transferred pursuant to an offshore transaction in accordance with Rule 904 under the Securities Act.

oSuch warrant is being transferred pursuant to another available exemption from the registration requirements under the Securities Act.

(1)Please check applicable box.

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The Warrant Agent and the Company are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

	[INSERT NAME OF TRANSFEROR]
	by
Date:

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EXHIBIT C

TO

WARRANT AGREEMENT

FORM OF WARRANT AGENT ORDER

Reference is made to the Warrant Agreement dated as of August 14, 2007, between Global Aero Logistics Inc. and the undersigned, as Warrant Agent (the “Warrant Agreement”). Capitalized terms used herein shall have their defined meanings in the Warrant Agreement.

In accordance with Section 3.1 of the Warrant Agreement, this constitutes an order to issue Warrants registered in the names of the following entities and representing the right to purchase on the date hereof the number of shares of Common Stock corresponding to the name of such entity; it being understood that the terms of the Warrants shall be governed by the Warrant Agreement and the Warrant Certificates representing such Warrants:

Name of Registered Holder	Initial Number of Shares
1.
2.
3.
4.
5.

JPMORGAN CHASE BANK, N.A.
as Warrant Agent
By:
	Name:
	Title:
By:
	Name:
	Title:

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EXHIBIT D

TO

WARRANT AGREEMENT

FORM OF LENDER CERTIFICATION

The undersigned hereby acknowledges receipt of            Warrants at an exercise price per Warrant (subject to adjustment) of $0.01 to acquire shares of Common Stock of Global Aero Logistics Inc., on the terms and conditions specified in the Warrant Certificate and the Warrant Agreement therein referred (a “Holder”).

Each Holder, severally and not jointly, represents and warrants to Global Aero Logistics Inc. (the “Company”) as of the date hereof as follows:

(a)           Such Holder is a Lender under the Term Loan Agreement dated August 14, 2007, with Global Aero Logistics Inc. and is acquiring the Warrants for its own account, for investment purposes only and not with a view to any distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

(b)           Such Holder has received such information as it deems necessary in order to make an investment decision with respect to the Warrants and has had the opportunity to ask questions of and receive answers from the Company and its officers and directors and to obtain such additional information which the Company possess or could acquire without unreasonable effort or expense as such Holder deems necessary to verify the accuracy of the information furnished to such Holder and has asked questions, received such answers and obtained such information as it deems necessary to verify the such accuracy of the information furnished to such Holder.

(c)           Such Holder is an “accredited investor” within the meaning of Rule 501 of the Securities Act.

(d)           Such Holder understands that the Warrants have not been and will not be registered under the Securities Act or any state or other securities law, that the Warrants are being issued by the Company in transactions exempt from the registration requirements of the Securities Act and that the Warrants may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration under the Securities Act is available.

(e)           Such Holder further understands that the exemption from registration afforded by Rule 144 of the Securities Act depends on the satisfaction of various conditions, and that, if applicable, Rule 144 of the Securities Act may afford the basis for sales only in limited amounts.

(f)            Such Holder did not employ any broker or finder in connection with the transaction contemplated in this Agreement and no fees or commissions are payable to the Holders except as otherwise provided for in the Warrant Agreement and the Term Loan Agreement.

(g)           The source of funds to be used by such Holder to pay the purchase price does not include assets of any employee benefit plan (other than a plan exempt from the coverage of ERISA) or plan or any other entity the assets of which consist of “plan assets” of employee benefit plans or plans as defined in Department of Labor regulation Section 2510.3-101.  As used in this paragraph (g), the term

D-1

“employee benefit plan” shall have the meaning assigned to such term in Section 3 of ERISA, and the term “plan” shall have the meaning assigned thereto in Section 4975(e)(1) of the Code.

[                                        ]

By

DATED:

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EXHIBIT E

TO

WARRANT AGREEMENT

REGISTRATION RIGHTS OF HOLDERS

OF THE WARRANT SHARES

Section 1.  Definitions.  As used in this Exhibit E, terms defined in, or by reference in, the Warrant Agreement shall have such defined meanings and the following defined terms shall have the following meanings:

“Advice” has the meaning ascribed to such term in the last paragraph of Section 3 hereof.

“Demand Registration” has the meaning ascribed to such term in Section 2.1(a) hereof.

“DTC” means The Depository Trust Company.

“Indemnified Person” has the meaning ascribed to such term in Section 4(c) hereof.

“Indemnifying Person” has the meaning ascribed to such term in Section 4(c) hereof.

“Piggy-Back Registration” has the meaning ascribed to such term in Section 2.2(a) hereof.

“Prospectus” means the prospectus included in any Registration Statement (including, without limitation, any prospectus subject to completion and a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, and all other amendments and supplements to the Prospectus, all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“Registrable Securities” means any of (i) the Warrant Shares (whether or not the related Warrants have been exercised) and (ii) any other securities issued or issuable with respect to any Warrant Shares by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise.  As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (i) a Registration Statement with respect to the offering of such securities by the Holder thereof shall have been declared effective under the Securities Act and such securities shall have been disposed of by such Holder pursuant to such Registration Statement, (ii) such securities are eligible for sale to the public pursuant to Rule 144(k) (or any similar provision then in force) promulgated under the Securities Act, (iii) such securities shall have been otherwise transferred by such Holder and new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company or its transfer agent and subsequent disposition of such securities shall not require registration or qualification under the Securities Act or any similar state law then in force or (iv) such securities shall have ceased to be outstanding.

“Registration Event” means the first to occur of (i) the first firm commitment underwritten public offering of Common Stock by the Company for an aggregate price of at least $100,000,000, pursuant to an effective registration statement under the Securities Act or (ii) the Common

E-1

Stock being listed on a national securities exchange or becoming eligible for quotation in the NASDAQ Market System.

“Registration Expenses” shall mean all expenses incident to the Company’s performance of or compliance with this Exhibit E, including, without limitation, (i) all SEC and stock exchange or National Association of Securities Dealers, Inc. registration and filing fees, (ii) expenses and fees incurred in compliance with state securities or blue sky laws (including reasonable fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities), (iii) preparing, printing, filing, duplicating and distributing the Registration Statement, the related Prospectus and any amendments or supplements thereto, (iv) the cost of printing stock certificates and complying with the requirements of DTC, (v) the cost and charges of any transfer agent, (vi) the fees and disbursements of counsel for the Company and (vii) the fees and disbursements of the independent public accountants of the Company, including the expenses of any special audits or “comfort” letters required by or incident to the performance of and compliance with this Exhibit E, but excluding fees and expenses of counsel to the underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder.

“Registration Statement” shall mean any appropriate registration statement of the Company filed with the SEC pursuant to the Securities Act which covers any of the Registrable Securities pursuant to the provisions of this Exhibit E and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

“Requisite Securities” shall mean a number of Registrable Securities equal to not less than 25% of the Registrable Securities held in the aggregate by all Holders.

Section 2.  Registration Rights.

2.1           (a)  Demand Registration.  At any time and from time to time after the occurrence of a Registration Event, Holders owning, individually or in the aggregate, not less than the Requisite Securities may make a written request for registration under the Securities Act of their Registrable Securities (a “Demand Registration”).  The Company shall give written notice of such registration request to all other Holders of Registrable Securities within 5 days after the receipt thereof.  Within 10 days after receipt by any Holder of Registrable Securities of such notice from the Company, such Holder may request in writing that all or a specified portion of such Holder’s Registrable Securities be included in such Registration Statement.  Each request to the Company under this Section 2.1(a) will specify the name of the Holder, the number of Registrable Securities proposed to be sold and will also specify the proposed manner of sale.  Subject to the conditions set forth in Section 2.3 hereof, within 60 days of the receipt of such written request for a Demand Registration, the Company shall file with the SEC and use its reasonable best efforts to cause to become effective under the Securities Act a Registration Statement with respect to all Registrable Securities requested to be included therein.  Subject to Section 2.1(b) hereof, the Company shall be required to effect a maximum of two Demand Registrations pursuant to this Section 2.1(a).

Subject to Section 2.1(f) hereof, no other securities of the Company except Registrable Securities held by any Holder and shares of Common Stock held by any Person entitled to exercise “piggy back” registration rights pursuant to contractual commitments of the Company shall be included in a Demand Registration.

E-2

(b)           Effective Registration.  A Registration Statement will not be deemed to have been effected as a Demand Registration unless it has been declared effective by the SEC; provided, however, that if, after such Registration Statement has become effective, (i) the offering of Registrable Securities pursuant to such Registration Statement is or becomes the subject of any stop order, injunction or other order or requirement of the SEC or any other governmental or administrative agency or court that prevents, restrains or otherwise limits the sale of Registrable Securities pursuant to such Registration Statement or (ii) such Registration Statement does not remain effective under the Securities Act until the earlier to occur of (A) the consummation of the distribution by the Selling Holders of all of the Registrable Securities covered thereby or (B) 90 days after the effective date of such Registration Statement, such Demand Registration will be deemed not to have been effected.  The Holders of Registrable Securities shall be permitted to withdraw all or any part of the Registrable Securities from a Demand Registration at any time prior to the effective date of the Registration Statement; provided, however, that any Demand Registration that is subsequently withdrawn shall be deemed to be a Demand Registration.

(c)           Restrictions on Sale by Holders.  If the Company shall at any time register any Registrable Securities or Common Stock under the Securities Act (including any registration pursuant to this Exhibit E) for sale to the public, each Holder of Registrable Securities agrees, if and to the extent reasonably requested by the Company or the managing underwriter or underwriters in an underwritten offering, not to effect any public sale or distribution of Registrable Securities or Common Stock, including a sale pursuant to Rule 144 (except as part of such offering), during the 60-day period prior to, and during the 180-day period beginning on, the closing date of each offering made pursuant to such registration, to the extent timely notified in writing by the Company or such managing underwriter or underwriters.

(d)           Underwritten Registrations.  If any of the Registrable Securities covered by a Demand Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will manage the offering will be selected by the Holders of not less than a majority of the Registrable Securities to be sold thereunder and will be reasonably acceptable to the Company.

(e)           Expenses.  The Company will pay all Registration Expenses in connection with any registration requested pursuant to Section 2.1(a) hereof.  Each Holder of Registrable Securities shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder’s Registrable Securities pursuant to a Registration Statement requested pursuant to this Section 2.1.

(f)            Priority in Demand Registration.  In a Demand Registration involving an underwritten offering, if the managing underwriter or underwriters of such underwritten offering have informed the Company and the Selling Holders that in such underwriter’s or underwriters’ opinion the total number of securities which the Selling Holders and any other Person which has exercised “piggy-back” registration rights pursuant to contractual commitments of the Company intend to include in such offering exceeds the number of securities which can be sold without having an adverse effect on such offering, including the price at which such securities can be sold, then the Company will be required to include in such registration only the amount of securities which it is so advised should be included in such registration.  In such event, securities shall be registered in such registration in the following order of priority:  (i) first, the securities which have been requested to be included in such registration by the Selling Holders pursuant to this Exhibit E (pro rata based on the amount of securities sought to be registered by such Holders) and (ii) second, provided that no securities sought to be included by the Selling Holders have been excluded from such registration, the securities of other Persons entitled to

E-3

exercise “piggy-back” registration rights pursuant to contractual commitments of the Company (pro rata based on the amount of securities sought to be registered by such Persons).

2.2           (a)  Piggy-Back Registration.  If at any time the Company proposes to file a Registration Statement under the Securities Act with respect to an offering by the Company for its own account or for the account of any of its securityholders of any class of its common equity securities (other than (i) the first firm commitment underwritten public offering of Common Stock by the Company pursuant to an effective registration statement under the Securities Act, (ii) a Registration Statement on Form S-4 or S-8 (or any substitute form that may be adopted by the SEC), or (iii) a Registration Statement filed in connection with an exchange offer or offering of securities solely to the Company’s existing securityholders), then the Company shall give written notice of such proposed filing and the intended method of sale or disposition in such offering to the Holders of Registrable Securities as soon as practicable (but in no event fewer than 20 days before the anticipated filing date), and such notice shall offer such Holders the opportunity to register for disposition by the intended method thereof such number of shares of Registrable Securities, subject to Section 2.2(b), as each such Holder may request in writing within 15 days after receipt of such written notice from the Company (a “Piggy-Back Registration”).  The Company shall use its reasonable best efforts to keep such Piggy-Back Registration continuously effective under the Securities Act until the earlier to occur of (A) the consummation of the distribution by the Selling Holders of all of the Registrable Securities covered thereby or (B) 90 days after the effective date of such Registration Statement.  Any Selling Holder shall have the right to withdraw its request for inclusion of its Registrable Securities in any Registration Statement pursuant to this Section 2.2 by giving written notice to the Company of its irrevocable election to withdraw.  The Company may withdraw a Piggy-Back Registration at any time prior to the time it becomes effective or the Company may elect to delay the registration; provided, however, that the Company shall give prompt written notice thereof to participating Selling Holders.  The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2.2, and each Selling Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder’s Registrable Securities pursuant to a Registration Statement effected pursuant to this Section 2.2.

No registration effected under this Section 2.2, and no failure to effect a registration under this Section 2.2, shall relieve the Company of its obligation to effect a registration upon the request of Holders of Registrable Securities pursuant to Section 2.1 hereof.

(b)           Priority in Piggy-Back Registration.  In a registration pursuant to Section 2.2 hereof involving an underwritten offering, if the managing underwriter or underwriters of such underwritten offering have informed, in writing, the Company and the Selling Holders that in such underwriter’s or underwriters’ opinion the total number of securities which the Company, the Selling Holders and any other Persons with contractual “piggy-back” rights to participate in such registration intend to include in such offering exceeds the number of securities which can be sold without having an adverse effect on such offering, including the price at which such securities can be sold, then the Company will be required to include in such registration only the amount of securities which it is so advised should be included in such registration.  In such event:  (x) in cases initially involving the registration for sale of securities for the Company’s own account, securities shall be registered in such offering in the following order of priority:  (i) first, the securities which the Company proposes to register and (ii) second, provided no securities proposed to be registered by the Company have been excluded, the securities which have been requested to be included in such registration by the Holders of Registrable Securities pursuant to this Exhibit E and the securities of other Persons entitled to exercise “piggy-back” registration rights pursuant to contractual commitments of the Company (pro rata based on the aggregate amount of securities sought to be registered by such Holders and other Persons); and (y) in cases not

E-4

initially involving the registration for sale of securities for the Company’s own account, securities shall be registered in such offering as follows: (i) first, the securities of any Person whose exercise of a “demand” registration right pursuant to a contractual commitment of the Company is the basis for the registration (provided that if such Person is a Holder of Registrable Securities, there shall be no priority as among such Holders and Registrable Securities sought to be included shall be included pro rata based on the aggregate amount of Registrable Securities sought to be registered by such Holders), and (ii) second, provided no securities to be included by such Persons have been excluded, the securities requested to be included in such registration by the Holders of Registrable Securities pursuant to this Exhibit E and the securities of other Persons entitled to exercise “piggy back” registration rights pursuant to contractual commitments (pro rata based on the aggregate amount of securities sought to be registered by such Holders and other Persons) and (iii) third, the securities which the Company proposes to register.

If, as a result of the provisions of this Section 2.2(b), any Selling Holder shall not be entitled to include all Registrable Securities in a Piggy-Back Registration that such Selling Holder has requested to be included, such Selling Holder may elect to withdraw his request to include Registrable Securities in such registration; provided, however, that such election shall be irrevocable and, after making such withdrawal election, a Selling Holder shall no longer have any right to include Registrable Securities in the registration as to which such election was made.

2.3           Limitations, Conditions and Qualifications to Obligations Under Registration Covenants.  The obligations of the Company set forth in Sections 2.1 and 2.2 hereof are subject to each of the following limitations, conditions and qualifications:

(i)            Subject to the next sentence of this paragraph, the Company shall be entitled to postpone, for a reasonable period of time, the filing or effectiveness of, or suspend the rights of any Holders to make sales pursuant to, any Registration Statement otherwise required to be prepared, filed and made and kept effective by it hereunder; provided, however, that the duration of such postponement or suspension may not exceed the earlier to occur of (A) 15 days after the cessation of the circumstances described in the next sentence of this paragraph on which such postponement or suspension is based or (B) 90 days after the date of the determination of the Board referred to in the next sentence.  Such postponement or suspension may only be effected if the Board determines in its good faith judgment that the filing or effectiveness of, or sales pursuant to, such Registration Statement could materially impede, delay or interfere with any financing, offer or sale of securities, acquisition, corporate reorganization or other significant transaction involving the Company or require disclosure of material information or other material development which the Company has a bona fide business purpose for preserving as confidential.  If the Company shall so postpone the filing or effectiveness of, or suspend the rights of any Holders to make sales pursuant to, a Registration Statement it shall, as promptly as possible, notify any Selling Holders of such determination, and the Selling Holders shall (y) have the right, in the case of a postponement of the filing or effectiveness of a Registration Statement, upon the affirmative vote of the Selling Holders of not less than a majority of the Registrable Securities to be included in such Registration Statement, to withdraw the request for registration by giving written notice to the Company within 10 days after receipt of such notice or (z) in the case of a suspension of the right to make sales, receive an extension of the registration period equal to the number of days of the suspension.  Any Demand Registration as to which the withdrawal election referred to in the preceding sentence has been effected shall not be counted for purposes of a Demand Registration the Company is required to effect pursuant to Section 2.1 hereof.

(ii)           The Company shall not be required by this Exhibit E to include securities in a Registration Statement if (i) in the written opinion of counsel to the Company, addressed to the Holders and delivered to them, the Holders of such securities seeking registration would be free to sell all such

E-5

securities within the current calendar quarter without registration under Rule 144(k) under the Securities Act, which opinion may be based in part upon the representation by the Holders of such securities seeking registration, which representation shall not be unreasonably withheld, that each such Holder is not an affiliate of the Company within the meaning of the Securities Act, and (ii) all requirements under the Securities Act for effecting such sales are satisfied at such time.

(iii)          The Company’s obligations shall be subject to the obligations of the Selling Holders to furnish all information and materials and to take any and all actions as may be required under applicable federal and state securities laws and regulations to permit the Company to comply with all applicable requirements of the SEC and to obtain any acceleration of the effective date of such Registration Statement.

2.4           Restrictions on Sale by the Company and Others.  The Company covenants and agrees that (i) it shall not, and that it shall not cause or permit any of its subsidiaries to, effect any public sale or distribution of any securities of the same class as any of the Registrable Securities or any securities convertible into or exchangeable or exercisable for such securities (or any option or other right for such securities) during the 60-day period prior to, and during the 180-day period beginning on, the commencement of any underwritten offering of Registrable Securities pursuant to a Demand Registration which has been requested pursuant to this Exhibit E, or a Piggy-Back Registration which has been scheduled, prior to the Company or any of its subsidiaries publicly announcing its intention to effect any such public sale or distribution; (ii) any agreement entered into after the date of this Exhibit E pursuant to which the Company grants registration rights with respect to any securities of the Company shall contain a provision under which the holders of such securities agree, in the event of an underwritten offering of Registrable Securities, not to effect any public sale or distribution of any securities of the same class as any of the Registrable Securities (or any securities convertible into or exchangeable or exercisable for any such securities), or any option or other right for such securities, during the periods described in clause (i) of this Section 2.4, in each case including a sale pursuant to Rule 144; (iii) the Company will not, and the Company will not cause or permit any subsidiary of the Company to, after the date hereof, enter into any agreement or contract that conflicts with or limits or prohibits the full and timely exercise by the Holders of Registrable Securities of the rights herein to request a Demand Registration or to join in any Piggy-Back Registration; and (iv) it shall use its reasonable best efforts to secure the written agreement of each of its officers, directors and principal stockholders to not effect any public sale or distribution of any securities of the same class as the Registrable Securities (or any securities convertible into or exchangeable or exercisable for any such securities), or any option or right for such securities during the period described in clause (i) of this Section 2.4.

Section 3.  Registration Procedures.  In connection with the obligations of the Company with respect to any Registration Statement pursuant to Sections 2.1 and 2.2 hereof, the Company shall as expeditiously as possible:

(a)           Prepare and file with the SEC each such Registration Statement (but in any event on or prior to the date of filing thereof required under this Exhibit E) and use its best efforts to cause such Registration Statement to become effective and remain effective as provided herein; provided, however, that before filing any such Registration Statement or any Prospectus or any amendments or supplements thereto (including documents that would be incorporated or deemed to be incorporated therein by reference, including such documents filed under the Exchange Act that would be incorporated therein by reference), the Company shall afford promptly to the Holders of the Registrable Securities covered by such Registration Statement, the managing underwriter or underwriters, if any, and their respective counsel an opportunity to review copies of all such documents proposed to be filed a reasonable time, but in any event within five (5) Business Days, prior to the proposed filing thereof.  The Company shall not

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file any Registration Statement or Prospectus or any amendments or supplements thereto if the Holders of a majority of the Registrable Securities covered by such Registration Statement, their counsel, or the managing underwriter or underwriters, if any, shall reasonably object within five (5) Business Days after receipt thereof in writing unless failure to file any such amendment or supplement would involve a violation of the Securities Act or other applicable law.

(b)           Prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement as may be necessary to keep such Registration Statement continuously effective for the time periods prescribed hereby; cause the related Prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; and comply with the provisions of the Securities Act, the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to it with respect to the disposition of all securities covered by such Registration Statement as so amended or in such prospectus as so supplemented.

(c)           Notify the Holders of Registrable Securities, their counsel and the managing underwriter or underwriters, if any, promptly (but in any event within two (2) Business Days), (i) when a Prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective (including in such notice a written statement that any Holder may, upon request, obtain, without charge, one conformed copy of such Registration Statement or post-effective amendment including financial statements and schedules and exhibits), (ii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or of any order preventing or suspending the use of any preliminary Prospectus or the initiation or threatening of any proceedings for that purpose, (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of the Registration Statement or any of the Registrable Securities covered thereby for offer or sale in any jurisdiction, or the initiation of any proceeding for such purpose, (iv) of the happening of any event, the existence of any condition or information becoming known that requires the making of any changes in such Registration Statement, Prospectus or documents so that, in the case of such Registration Statement, it will conform in all material respects with the requirements of the Securities Act and it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the Prospectus, it will conform in all material respects with the requirements of the Securities Act and it will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (v) of the Company’s reasonable determination that a post-effective amendment to such Registration Statement would be appropriate.

(d)           Furnish to each Holder of Registrable Securities who so requests and to Holders’ counsel and each managing underwriter, if any, without charge, one conformed copy of the Registration Statement and each post-effective amendment thereto, and if requested, all documents incorporated or deemed to be incorporated therein by reference and all exhibits (including exhibits incorporated by reference).

(e)           Deliver to each Holder of Registrable Securities, Holders’ counsel and each underwriter, if any, without charge, as many copies of each Prospectus (including each form of Prospectus) and each amendment or supplement thereto as such Persons may reasonably request; and, subject to the last paragraph of this Section 3, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the Holders of Registrable Securities and the

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underwriter or underwriters or agents, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto.

(f)            use its reasonable best efforts to qualify or register (or exempt from such registration or qualification) such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the managing underwriter or underwriters reasonably request, or, in the event of a non-underwritten offering, as the Holders of a majority of the Registrable Securities may request; provided, however, that the Company will not be required (A) to qualify generally to do business in any jurisdiction where it is not then so qualified, (B) consent to general service of process in any such jurisdiction where it is not then so subject or (C) to become subject to taxation in any jurisdiction where it is not then so subject.

(g)           prior to the completion of the sale of any Registrable Securities hereunder, provide the registrar for the Registrable Securities with certificates representing Registrable Securities to be sold, which certificates shall not bear any restrictive legends whatsoever and shall be in a form eligible for deposit with DTC and provide a CUSIP number for such securities.

(h)           Upon the occurrence of any event contemplated by Section 3(c)(iv) or 3(c)(v) above, use its reasonable best efforts to prepare as promptly as practicable a post-effective amendment to the Registration Statement or a supplement to the related Prospectus or a report under the Exchange Act to be incorporated therein by reference, and, subject to Section 3(a) hereof, file such with the SEC so that such Registration Statement, as so amended, and such Prospectus, as so supplemented, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and will otherwise comply with law.

(i)            In connection with each underwritten offering of Registrable Securities, enter into an underwriting agreement containing representations and warranties, covenants, conditions and indemnification provisions in form, substance and scope as are customarily made in underwritten offerings and take all such other actions as are reasonably requested by the managing underwriter or underwriters in order to expedite or facilitate the registration or disposition of such Registrable Securities in any underwritten offering to be made of the Registrable Securities in accordance with this Exhibit E.

(j)            Furnish to the Holders of Registrable Securities being sold, on the date such Registrable Securities are delivered to the underwriters if such Registrable Securities are being sold through underwriters or, if such Registrable Securities are not being sold through underwriters, on the effective date of the Registration Statement covering such Registrable Securities, (i) an opinion of counsel to the Company covering the matters customarily covered in opinions to underwriters in underwritten offerings and (ii) a “cold comfort” letter from the independent certified public accountants of the Company and, if necessary, any other independent certified public accountants of any entity or business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement, in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with underwritten offerings.

(k)           Give the Holders of Registrable Securities being sold, the underwriters, if any, participating in any such disposition of Registrable Securities and their respective counsel and any accountant retained by such Holders or underwriters such access to its relevant books and records and such opportunities to discuss the business and financial condition of the Company with its officers and accountants as shall be reasonably requested to enable them to conduct a reasonable investigation within the meaning of the Securities Act; provided, however, that such records which the Company determines,

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in good faith, to be confidential and which the Company notifies such person in writing are confidential, shall not be disclosed by such person unless (i) the release of such records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction or (ii) such records have previously been generally made available to the public.

(l)            Make generally available to its securityholders earnings statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act).

(m)          Use its reasonable best efforts to cause all Registrable Securities relating to such Registration Statement to be listed on each securities exchange, if any, on which similar securities issued by the Company are then listed.

No Holder of Registrable Securities may participate in any underwritten registration pursuant to a Registration Statement filed under this Exhibit E unless such Holder (a) agrees (i) to sell such Holder’s Registrable Securities on the basis provided in and in compliance with any underwriting arrangements approved by the Holders of not less than a majority of the Registrable Securities to be sold thereunder and (ii) to comply with Regulation M under the Exchange Act, (b) completes and executes all customary questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and (c) furnishes to the Company such information regarding such Holder and the distribution of such Registrable Securities as the Company may, from time to time, reasonably request in writing to comply with the Securities Act and other applicable law.  The Company may exclude from such registration the Registrable Securities of any Holder who fails to furnish such information within a reasonable time after receiving such request.

Each Holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv) or 3(c)(v) hereof, such Holder will forthwith discontinue disposition of such Registrable Securities covered by the Registration Statement or Prospectus until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(h) hereof), or until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any amendments or supplements thereto.  In the event the Company shall give any such notice, the period of time for which a Registration Statement is required hereunder to be effective shall be extended by the number of days during such periods from and including the date of the giving of such notice to and including the date when each seller of Registrable Securities covered by such Registration Statement shall have received the Advice or the copies of the supplemented or amended Prospectus contemplated by Section 3(h) hereof.

Section 4.  Indemnification and Contribution.  (a)  To the extent permitted by law, the Company will indemnify and hold harmless each Holder and each Person, if any, who controls any Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expense are incurred), joint or several, that arise out of, or are based upon any of the following statements, omissions or violations (collectively, a “Violation”):  (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or any Prospectus or any amendment or supplement thereto or any preliminary Prospectus, and (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and the Company will pay to each such Holder or controlling person any legal or other expenses reasonably incurred by

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them in connection with investigating or defending any such loss, claim, damage or liability as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 4(a) shall not apply to amounts paid in settlement of any such losses, claims, damages or liabilities if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any case for any such losses, claims, damages or liabilities to the extent that they arise out of, or are based upon a Violation which occurs in reliance upon and in conformity with any information furnished in writing to the Company by any Holder or controlling Person expressly for use therein.

(b)           To the extent permitted by law, each selling Holder will, severally and not jointly, indemnify and hold harmless the Company, the Company’s directors, the Company’s officers who sign the Registration Statement, any person controlling the Company, any other Holder selling securities in such Registration Statement, against any losses, claims, damages or liabilities that arise out of, or are based upon, any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with any information relating to such Holder furnished in writing by such Holder expressly for use in connection with such registration, and each such Holder will pay any legal or other expenses reasonably incurred by any person intended to be indemnified under this Section 4(b) in connection with investigating or defending any such loss, claim, damage or liability as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 4(b) shall not apply to amounts paid in settlement of any such losses, claims, damages or liabilities if such settlement is effected without the consent of the Holder (which consent shall not be unreasonably withheld).  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any such director, officer or Person controlling the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and shall survive the transfer of such securities by such Holder.

(c)           If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such Person (the “Indemnified Person”) shall promptly notify the Person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under this Section 4 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under this Section 4.  If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 4 that the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred.  In any such proceeding, any Indemnified Person, together with all other Indemnified Persons which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses of such counsel to be paid by the Indemnifying Person, if the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between such Indemnified Person and any other party represented by such counsel in such proceeding.  It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees

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and expenses shall be reimbursed as they are incurred.  The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

(d)           If the indemnification provided for in Section 4(a) or Section 4(b) is held by a court of competent jurisdiction (by the entry of a final judgment or decree by such court and the expiration of time to appeal or the denial of the last right to appeal) to be unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under either such Section, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and of the Holders of Registrable Securities covered by the Registration Statement in question on the other hand, or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company on the one hand and the Holders on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations.  The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Holders of Registrable Securities covered by the Registration Statement in question and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(e)           The foregoing indemnity agreement of the Company and the Holders are subject to the condition that, insofar as they relate to any Violation made in a preliminary Prospectus but eliminated or remedied in the amended Prospectus on file with the SEC at the time the Registration Statement in question becomes effective or the amended Prospectus filed with the SEC pursuant to SEC Rule 424(b) (the “Final Prospectus”), such indemnity agreement shall not inure to the benefit of any person if a copy of the Final Prospectus was furnished to the Indemnified Person and was not furnished to the person asserting the loss, claim, damage or liability no less than two (2) Business Days prior to the applicable time of sale.

(f)            The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 4(e) were determined by pro rata allocation or (even if the holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph.  The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph of this Section 4(e) shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim.  Notwithstanding the provisions of this Section 4, in no event shall a Holder be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities sold by such Holder and distributed to the public were offered to the public exceeds

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the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(g)           The remedies provided for in this Section 4 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity.

(h)           The indemnity and contribution provisions contained in this Section 4 shall remain in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Holder or any Person controlling such Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and (iii) any sale of Registrable Securities pursuant to this Exhibit E.

Section 5.  Miscellaneous.

(a)           Amendments and Waivers.  The provisions of this Exhibit E may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company has obtained the prior written consent of Holders of not less than a majority of the outstanding Warrants and/or Registrable Securities affected by such amendment, modification, supplement, waiver or consent.  Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders of Registrable Securities whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders of Registrable Securities may be given by the Holders of not less than a majority of the Registrable Securities proposed to be sold by such Holders pursuant to such Registration Statement.

(b)           Successors and Assigns.  This Exhibit E shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders.  If any transferee of any Holder shall acquire Warrants and/or Registrable Securities, in any manner, whether by operation of law or otherwise, such Warrants and/or Registrable Securities shall be held subject to all of the terms of this Exhibit E, and by taking and holding such Warrants and/or Registrable Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Exhibit E and such Person shall be entitled to receive the benefits hereof.

(c)           Third Party Beneficiaries.  Each Holder shall be a third party beneficiary to the agreements made hereunder between the Company and the Holders and the Holders shall have the right to enforce such agreements directly to the extent they deem such enforcement necessary or advisable to protect their rights or the rights of the Holders.

(d)           GOVERNING LAW.  THIS EXHIBIT E SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

(e)           Severability. If any term, provision, covenant or restriction of this Exhibit E is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find

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and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.

(f)            Remedies.  In the event of a breach by the Company of any of its obligations under this Exhibit E, each Holder, in addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, will be entitled to specific performance of its rights hereunder.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any of the provisions of this Exhibit E.

(g)           Underwriting Agreement.  Notwithstanding the provisions of Sections 2.1(c), 2.1(e), 2.4, 3 and 4, to the extent that the holders of Registrable Securities shall enter into an underwriting or similar agreement, which agreement contains provisions covering one or more issues addressed in such Sections with substantially similar effect, those particular provisions contained in such Sections addressing such issue or issues shall be of no force or effect with respect to the registration of Registrable Securities being effected in connection with such underwriting or similar agreement.

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EXHIBIT F

TO

WARRANT AGREEMENT

TAG ALONG RIGHTS

As used in this Exhibit F, “Permitted Holder” shall mean Global Aero Logistics Inc.

With respect to any proposed transfer, sale or other disposition (each, a “proposed transfer”) of shares of the Company’s Common Stock by any Permitted Holder (the “seller”) to a person other than a Subsidiary of the Company (such other person being hereinafter referred to as the “proposed purchaser”), each Holder of Warrants and Warrant Shares (in such capacity, a “Tag-Along Investor”) shall have the right (the “Tag Along Right”) to require the proposed purchaser to purchase all or any portion of such Tag-Along Investor’s Pro Rata Allocation (as defined below) of the shares of Common Stock proposed to be transferred simultaneously with consummating the proposed transfer.  A Tag-Along Investor’s “Pro Rata Allocation” of the number of shares of Common Stock proposed to be transferred in any proposed transfer shall equal the total number of shares of Common Stock proposed to be transferred multiplied by a fraction the numerator of which is the total number of Warrant Shares held by such Tag-Along Investor and the denominator of which is the total aggregate number of Warrant Shares and shares of Common Stock held by the Tag-Along Investors and the Permitted Holder (for purposes of such calculation, all outstanding Warrants shall be deemed to have been exercised).  Any shares purchased from Tag-Along Investors shall be purchased at the same price per share and upon the same terms and conditions as such proposed transfer by the seller, it being agreed, however, that such terms and conditions shall not include the making of any representations and warranties, indemnities or other similar agreements other than representations and warranties with respect to title of the Warrant Shares being sold and authority to sell such Warrant Shares and indemnities related thereto.  The seller proposing to sell shares of Common Stock shall, not less than 15 or more than 45 days prior to a proposed transfer, notify, or cause to be notified, each Tag-Along Investor in writing of such proposed transfer.  Such notice (the “Transfer Notice” shall set forth:  (i) the name of the seller and the number of shares of Common Stock proposed to be transferred, (ii) the name and address of the proposed purchaser, (iii) the proposed amount and form of consideration and terms and conditions of payment offered by such proposed purchaser, (iv) each Tag-Along Investor’s Pro Rata Allocation of the shares proposed to be transferred and (v) that the proposed purchaser has been informed of the Tag-Along Right provided for herein and has agreed to purchase shares in accordance with the terms hereof.

The Tag-Along Right may be exercised by any Tag-Along Investor by delivery of a written notice to the Permitted Holder proposing to sell shares of Common Stock (the “Tag-Along Notice”) within 10 days following its receipt of the Transfer Notice.  The Tag-Along Notice shall state the number of Warrant Shares (the “Tag-Along Shares”) that such Tag-Along Investor proposes to include in such transfer to the proposed purchaser, which number of Tag-Along Shares shall not exceed such Tag-Along Investor’s Pro Rata Allocation of the total shares of Common Stock proposed to be transferred.  Delivery of the Tag-Along Notice by any Tag-Along Investor shall constitute an agreement by such Tag-Along Investor to sell, on the terms and conditions specified in the Transfer Notice, the Tag-Along Shares to the proposed purchaser specified in the Transfer Notice.  In the event that the proposed purchaser does not purchase the Tag-Along Shares from the Tag-Along Investors on the same terms and conditions as specified in the Transfer Notice, then the seller shall not be permitted to sell any shares of Common Stock to the proposed purchaser in the proposed transfer.  If no Tag-Along Notice is received during the 10 day period referred to above, the seller shall have the right thereafter, prior to the expiration of 15 days from

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the date of the Transfer Notice, to transfer the shares of Common Stock specified in the Transfer Notice (or a portion thereof) on terms and conditions no more favorable than those stated in the Transfer Notice.

Any transfer of an equity interest of an entity that was formed for the purpose of acquiring shares of Common Stock shall be deemed to be a transfer of such portion of the shares of Common Stock owned by such entity as corresponds to the portion of the equity of such entity that has been so transferred.  The Company agrees not to effect any transfer of shares by any Permitted Holder, and to instruct the transfer agent for the Common Stock not to effect any such transfer of shares of Common Stock, until the Company and the transfer agent have received evidence reasonably satisfactory to it that the Tag-Along Right, if applicable to such transfer, has been complied with.

The foregoing provisions shall not apply to a sale to the public pursuant to Rule 144 or an effective registration statement under the Securities Act.

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EX-21.1

Exhibit 21.1

GLOBAL AERO LOGISTICS INC.

SUBSIDIARIES

ATA Airlines, Inc., an Indiana corporation

North American Airlines, Inc., a Delaware corporation

World Air Holdings, Inc., a Delaware corporation

World Airways, Inc., a Delaware corporation

World Risk Solutions, Ltd., a Delaware corporation

EX-23.1

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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

        We consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 16, 2007 (except paragraph 2 of Note 13, as to which the date is April 2, 2007), with respect to the consolidated financial statements of Global Aero Logistics Inc. and Subsidiaries (f/k/a New ATA Holdings Inc.), and our report dated March 16, 2007, with respect to the consolidated financial statements of ATA Holdings Corp. and Subsidiaries (the Predecessor), in the Registration Statement (Amendment No. 1 to Form S-1) and related Prospectus of Global Aero Logistics Inc. for the registration of shares of its common stock.

Ernst & Young LLP
January 4, 2008

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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of DirectorsWorld Air Holdings, Inc.:

We consent to the incorporation in the registration statement on Form S-l (No. 333-146958) of Global Aero Logistics, Inc. (“Global”) of our report dated July 3, 2007, with respect to the consolidated balance sheets of World Air Holdings, Inc. and subsidiaries (the “Company”) as of December 31, 2006 and 2005 and the related consolidated statements of operations, changes in stockholders’ equity (deficit) and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 31, 2006, and with respect to management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2006 and the effectiveness of internal control over financial reporting as of December 31, 2006, which reports appear in the December 31, 2006 annual report on Form 10-K of World Air Holdings, Inc.

Our report, dated July 3, 2007, on management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2006 expresses our opinion that World Air Holdings, Inc. did not maintain effective internal control over financial reporting as of December 31, 2006, because of the effect of material weaknesses on the achievement of the objectives of the control criteria and contains an explanatory paragraph that states that material weaknesses were identified in the following areas: accounting policies and procedures, information and communication, accounting for income taxes, accounting for accrued liabilities, and financial reporting close process.

Our report dated July 3, 2007 contains an explanatory paragraph that states that effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, and effective December 31, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 158, Employers’Accounting for Defined Benefit Pension and Other Post-Retirement Plans.

/s/ KPMG LLP

Atlanta, GeorgiaJanuary 9, 2008