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Stock Purchase And Reorganization Agreement

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Sectors: Transportation
Governing Law: Minnesota, View Minnesota State Laws
Effective Date: January 22, 2007
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STOCK PURCHASE AND REORGANIZATION AGREEMENT

dated as of January 22, 2007

between

Northwest Airlines, Inc.

and

Mesaba Aviation, Inc.





C-1






TABLE OF CONTENTS

Page

ARTICLE I CANCELLATION AND PURCHASE AND SALE OF SHARES 2

1.1 Cancellation and Purchase and Sale 2

1.2 Closing 3

1.3 Deliveries at the Closing 4

1.4 Plan of Reorganization 5

1.5 Assets and Liabilities 5

1.6 Timing and Interpretation 5

1.7 Buyer Claim 5

ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY 5

2.1 Organization and Good Standing 5

2.2 Capitalization 6

2.3 Authority, Approvals, Enforceability and Consents 6

2.4 Financial Statements 7

2.5 Absence of Undisclosed Liabilities 9

2.6 Absence of Certain Changes 9

2.7 Taxes 11

2.8 Legal Matters 12

2.9 Real Property 12

2.10 Aircraft 13

2.11 Intellectual Property 13

2.12 Insurance 14

2.13 Company Agreements 15

2.14 Labor Relations 16




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2.15 Employee Benefit Plans 17

2.16 Environmental Matters 19

2.17 Title; Condition of Assets 19

2.18 Suppliers 19

2.19 U.S. Citizen; Air Carrier 20

2.20 Brokers 20

ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER 20

3.1 Organization and Good Standing 20

3.2 Authority, Approvals, Enforceability and Consents 20

3.3 Financial Capability 21

3.4 Brokers 21

3.5 Buyer Committee 21

ARTICLE IV COVENANTS 21

4.1 Access 21

4.2 Announcements 22

4.3 Conduct of Business of the Company Prior to the Closing 22

4.4 Further Assurances 24

4.5 Additional Agreements; Notification of Certain Matters 25

4.6 Bankruptcy Proceedings 26

4.7 Acquisition Proposals 28

4.8 Key Employees 30

4.9 State Property Taxes 30

4.10 Cure Amounts 31

ARTICLE V CONDITIONS TO THE OBLIGATIONS OF BUYER TO EFFECT THE CLOSING 31

5.1 Representations and Warranties; Agreements; Covenants 31




ii








5.2 HSR 31

5.3 DOT and FAA; Authorizations; Permits; Consents 32

5.4 Injunction; Litigation; Legislation 32

5.5 Key Employees 32

5.6 Bankruptcy 32

5.7 Delivery of Transaction Documents 32

5.8 Parent 32

ARTICLE VI CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO EFFECT THE CLOSING 33

6.1 Representations and Warranties; Agreements; Covenants 33

6.2 HSR Act; DOT and FAA 33

6.3 Injunction 33

6.4 Bankruptcy 33

6.5 Delivery of Transaction Documents 33

ARTICLE VII TERMINATION 33

7.1 Termination. 33

7.2 Effect of Termination. 35

ARTICLE VIII MISCELLANEOUS 35

8.1 Expenses 35

8.2 Survival 36

8.3 Certain Interpretative Matters 36

8.4 Notices 36

8.5 Assignment 38

8.6 Entire Agreement 38

8.7 Modifications, Amendments and Waivers 38

8.8 Counterparts 39




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8.9 Governing Law 39

8.10 Severability 39

8.11 Submission to Jurisdiction; Waivers 39

8.12 Specific Performance 40

8.13 No Presumption 40

8.14 No Third Party Beneficiary 40

8.15 Representations. 41




Exhibit A Certain Defined Terms

Exhibit B Form of Plan

Exhibit C Form of Buyer Approval Order

iv






STOCK PURCHASE AND REORGANIZATION AGREEMENT

This Stock Purchase and Reorganization Agreement, dated as of January 22, 2007 (this "Agreement" ), is between Northwest Airlines, Inc., a Minnesota corporation ( "Buyer" ) and Mesaba Aviation, Inc., a Minnesota corporation (the "Company" ). Capitalized terms used but not defined herein have the meanings assigned to them on Exhibit A .

WHEREAS, MAIR Holdings, Inc., a Minnesota corporation ( "Parent" ) is the sole owner of the Company92s issued and outstanding shares (the "Shares" ) of common stock, par value $0.01 per share (the "Common Stock" ).

WHEREAS, the Company filed on October 13, 2005 (the " Company Petition Date "), a voluntary petition (the " Company Case ") for relief under chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq. (the " Bankruptcy Code ") in the United States Bankruptcy Court for the District of Minnesota (the " Company Bankruptcy Court ");

WHEREAS, on September 14, 2005, Buyer and certain of its Affiliates filed a voluntary petition (the " Buyer Case ") for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the " Buyer Bankruptcy Court ");

WHEREAS, the Company intends to seek the entry of an order of the Company Bankruptcy Court (the " Company Confirmation Order ") to approve the restructuring of the Company pursuant to a plan of reorganization, substantially in the form attached hereto as Exhibit B (the " Plan ", and such restructured Company, "Reorganized Company" ), including the approval of this Agreement and the authorization of the Company to consummate the transactions contemplated hereby and thereby, and Buyer intends to seek the entry of an order of the Buyer Bankruptcy Court to approve this Agreement, the Allowed Claim and the authorization of Buyer to consummate the transactions contemplated hereby (the " Buyer Approval Order ");

WHEREAS, the Official Committee of Unsecured Creditors of the Company (the " Company Committee ") has agreed to submit a letter of support with respect to the Plan to be mailed to all creditors of the Company along with the Disclosure Statement and ballots; and

WHEREAS, pursuant to the Plan, the Company desires to sell to Buyer new shares of common stock representing 100 percent of the ownership interests of the Reorganized Company and to cancel the Shares.

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows:






ARTICLE I

CANCELLATION AND PURCHASE AND SALE OF SHARES

1.1 Cancellation and Purchase and Sale .

(a) Upon the terms and subject to the conditions set forth in this Agreement, at or prior to the Closing and pursuant to the Plan (i) all Company Equity shall, without any action on the part of the holder thereof, cease to be outstanding, shall be cancelled and retired and shall cease to exist and (ii) Reorganized Company shall issue and sell to Buyer and Buyer shall purchase from Reorganized Company 1,000 duly and validly authorized and issued, fully paid and nonassessable shares (the " New Shares") of common stock, par value $.01 per share (the "New Common Stock" ) of Reorganized Company, free and clear of all Liens. The transactions referred to in the foregoing clause (i) are herein referred to as the " Equity Cancellation" and the transactions referred to in the foregoing clause (ii) are herein referred to as the " New Shares Issuance". The Equity Cancellation and the New Shares Issuance are herein collectively referred to as the " Cancellation and Issuance".

(b) As consideration for the New Shares, Buyer agrees that, upon the consummation of the Closing, the Company Bankruptcy Estate shall have a final, non-appealable order, including the waiver of Bankruptcy Code Section 502(j) reconsideration rights, granting the Company an allowed general unsecured claim in the Buyer Case in an amount equal to $145 million plus interest on such amount from and after the petition date of Buyer92s Case (the " Buyer Petition Date") to the extent that other general unsecured creditors of Buyer receive interest from and after the Buyer Petition Date pursuant to Buyer92s plan of reorganization (the "Allowed Claim" ). The parties acknowledge and agree that the Allowed Claim will not be effective unless and until the Closing has been consummated. The Allowed Claim will be classified as a general unsecured claim in the plan of reorganization submitted to the Buyer Bankruptcy Court and supported by Buyer in the Buyer Case and will receive the same treatment in such plan of reorganization as the other general unsecured claims against Buyer. Notwithstanding anything in this Agreement to the contrary, the parties understand and agree that unless and until the Plan becomes effective, the Closing is consummated and the transactions contemplated hereby have been consummated, nothing in this Agreement or any other Transaction Document shall have, or shall be deemed to have, created an allowed claim in the Buyer Case or constitute an admission by Buyer, the Company or any of their Affiliates as to the amount, if any, of the Company92s claim against the Buyer Bankruptcy Estate, nor of Buyer92s claim against the Company Bankruptcy Estate. The parties agree that from the date of this Agreement until the Closing, the Company shall have the right to enter into a forward Contract with a Third Party to sell the Allowed Claim (the "Forward Contract" , and the aggregate consideration in exchange for the Allowed Claim, valued as of the date of the Forward Contract, provided for in the Forward Contract is herein referred to as the "Forward Price" ), provided that the settlement of any such Forward Contract shall be contingent on the consummation of the Closing.

(c) From the date of this Agreement until the entry of the Company Confirmation Order, Buyer and the Company agree that Buyer, in its sole discretion, shall have the right to revise Schedule A-1 and Schedule A-4 to (i) designate any Company Agreement that

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is not an Assumed Contact or a Rejected Contract as either an Assumed Contract or a Rejected Contract; it being agreed that any Company Agreement that is not so designated shall be deemed to be a Rejected Contract and (ii) designate any Company Agreement that was as of the date of this Agreement set forth on Schedule A-1 or Schedule A-4 , as applicable, as (A) an Assumed Contract as a Rejected Contract and (B) a Rejected Contract as an Assumed Contract, provided that if the aggregate unsecured claim amount attributable to rejection damages with respect to any additional Rejected Contracts under clause (ii)(A) minus the aggregate unsecured claim amount attributable to rejection damages with respect to any additional Assumed Contracts under clauses (i) and (ii)(B) exceeds $1 million (the " Rejection Excess"), then Buyer will pay, simultaneous with the consummation of the Closing, to the Company Bankruptcy Estate an amount in cash equal to such Rejection Excess.

(d) Solely to the extent that the Company92s aggregate Cash (without giving effect to any proceeds received in connection with a Forward Contract) were not sufficient to satisfy the post Company Petition Date amounts set forth on Schedule 1.1(d) that are due and payable at the time of the effectiveness of the Plan (any such aggregate Cash deficiency amount, the "Deficiency" ), then, simultaneous with the consummation of the Closing, Buyer shall pay to the Company Bankruptcy Estate the lesser of the Deficiency or the Cap, provided that Buyer shall under no circumstance be obligated to pay an amount that is in excess of the Cap.

(e) Each of the parties understands and agrees that unless the Closing is consummated, nothing contained in this Agreement shall constitute an admission by Buyer, the Company or any of their Affiliates as to the amount, if any, of the Company92s claim against the Buyer Bankruptcy Estate on account of rejection of that certain Airline Services Agreement between Buyer and the Company (the " ASA") or otherwise, nor of Buyer92s claim against the Company Bankruptcy Estate. In the event that this Agreement is terminated and the transactions contemplated hereby are not consummated, Buyer expressly reserves the right to assert that the rejection damages claim of the Company from rejection of the ASA or otherwise is an amount that is lower than the Allowed Claim plus the Cap, including zero, and the Company expressly reserves the right to assert that the rejection damages claim of the Company from rejection of the ASA or otherwise is an amount higher than the Allowed Claim plus the Cap. Further, in the event that the transactions contemplated hereby are not consummated, the Company expressly reserves the right to assert that the claim of Buyer is an amount lower than the Buyer Claim, including zero, and Buyer expressly reserves the right to assert that the claim of Buyer is an amount higher than the Buyer Claim. In addition, neither Buyer nor the Company makes any representation as to the value to be distributed with respect to allowed unsecured claims in the Buyer Case or the Company Case, respectively. Except with respect to the Buyer Claim and the Allowed Claim and with respect to any matter arising out of this Agreement or any Transaction Document, upon consummation of the Closing, each of Buyer, the Buyer Bankruptcy Estate and the Company Bankruptcy Estate agrees that it has no Claims arising from the beginning of the world until the Closing Date against the other Person or the other Person92s Affiliates and that such Person shall not assert any such Claim against the other Person or the other Person92s Affiliates.

1.2 Closing . Subject to Section 1.4, on the terms and subject to the conditions set forth in this Agreement, the closing of the transactions contemplated by this Agreement (the "Closing" ) shall take place: (a) at the offices of Hughes Hubbard & Reed LLP, One Battery

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Park Plaza, New York, New York, at 10:00 a.m., local time, on the third Business Day after the day on which the last to be satisfied or waived of the conditions to the Closing set forth in this Agreement (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) are satisfied or waived; or (b) at such other time, on such other date and at such other place as may be mutually agreed upon by the parties. The date on which the Closing is to occur is herein referred to as the "Closing Date."

1.3 Deliveries at the Closing . In addition to the other requirements set forth herein, at the Closing:

(a) Reorganized Company shall deliver to Buyer:

(i) one or more certificates representing the New Shares, and any other documents that are necessary to issue and transfer to Buyer good, valid and marketable title to all the New Shares free and clear of all Liens;

(ii) if requested by Buyer, instruments evidencing the resignation, effective as of the Closing, of the directors of Reorganized Company;

(iii) the certificate called for by Section 5.1;

(iv) certificates from appropriate government officials certifying as to the good standing of Reorganized Company in its jurisdiction of organization and in each jurisdiction in which Reorganized Company is qualified to conduct business as a foreign corporation; and

(v) all other instruments and documents reasonably requested by Buyer;

(b) Buyer shall deliver to

(i) the Company, the certificate called for by Section 6.1;

(ii) the Company Bankruptcy Estate, the amount, if any, payable by Buyer pursuant to Section 1.1(c), in immediately available funds, to an account designated by the Company in writing to Buyer at least three Business Days prior to the Closing;

(iii) the Company Bankruptcy Estate, the amount, if any, payable by Buyer pursuant to Section 1.1(d), in immediately available funds, to an account designated by the Company in writing to Buyer at least three Business Days prior to the Closing;

(iv) the Company Bankruptcy Estate, a certificate of Buyer executed by an officer of Buyer stating that (a) the Buyer Approval Order has been entered by the Buyer Bankruptcy Court, is a Final Order and is in full force and effect and (b) all conditions set forth in the Buyer Approval Order have been satisfied; and

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(v) all other instruments and documents reasonably requested by the Company.

1.4 Plan of Reorganization . The Cancellation and Issuance shall be effected pursuant to a Plan confirmed by the Company Bankruptcy Court. The Closing Date shall occur as provided in Section 1.2.

1.5 Assets and Liabilities . Pursuant to the Plan, on the effective date of the Plan and at the consummation of the Closing:

(a) (i) Reorganized Company shall own the Company Assets, free and clear of all Liens and (ii) the Company Bankruptcy Estate shall own the Excluded Assets; and

(b) the only Liabilities of Reorganized Company shall be the Assumed Liabilities, and all other Liabilities of the Company, including the Excluded Liabilities, shall be solely the obligation and Liability of the Company Bankruptcy Estate.

1.6 Timing and Interpretation . The parties understand and agree that any reference to the Company shall, with respect to any matter determined as of the Closing, be deemed to be a reference to Reorganized Company as if it were the successor to the Company.

1.7 Buyer Claim . As part of the consideration for the transactions contemplated by this Agreement, the Company agrees that the Buyer Bankruptcy Estate shall have a final, non-appealable order, including the waiver of Bankruptcy Code Section 502(j) reconsideration rights, granting Buyer an allowed general unsecured claim in the Company Case in an amount equal to $7,300,000 plus interest on such amount from and after the Company Petition Date to the extent that other general unsecured creditors of the Company receive interest from and after the Company Petition Date pursuant to the Plan (the " Buyer Claim"). The parties acknowledge and agree that the Buyer Claim will not be effective unless and until the Closing has been consummated.

ARTICLE II

REPRESENTATIONS AND WARRANTIES
OF THE COMPANY

The Company hereby represents and warrants to Buyer as follows:

2.1 Organization and Good Standing . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota and has the requisite corporate power and authority to own, lease and operate the properties used in its business and to carry on its business as currently conducted and currently contemplated to be conducted. The Company is duly qualified to do business and is in good standing as a foreign corporation in the states and jurisdictions set forth on Schedule 2.1 and in each other jurisdiction where qualification as a foreign corporation is required. Prior to the date of this Agreement, the Company has delivered to Buyer complete and correct copies of the articles of incorporation, bylaws and other organizational documents of the Company, each as presently in effect.

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2.2 Capitalization .

(a) The authorized capital stock of the Company consists of 10,000 shares of Common Stock. As of the date of this Agreement and immediately prior to the Equity Cancellation, there are 500 shares of Common Stock issued and outstanding, all of which are owned by Parent. As of the Cancellation and Issuance, the New Shares shall constitute all the issued and outstanding shares of New Common Stock of Reorganized Company. As of the Cancellation and Issuance, the New Shares shall have been duly and validly authorized and issued, shall be fully paid and nonassessable with no personal liability attaching to the ownership thereof and shall not have been issued in violation of any preemptive right or of any federal or state securities law. Except for the New Shares Issuance, there is no security, option, warrant, right, call, subscription, agreement, commitment or understanding of any nature whatsoever, fixed or contingent, that directly or indirectly (i) calls for the issuance, redemption, sale, pledge or other disposition of any shares of capital stock of the Company or any securities convertible into, or other rights to acquire, any shares of capital stock of the Company, (ii) obligates the Company to grant, offer or enter into any of the foregoing or (iii) relates to the voting or control of such capital stock, securities or rights. There is no "phantom stock," stock appreciation rights or other similar rights the value of which is related to or based upon the price or value of any class or series of capital stock of the Company. No Person is entitled to any preemptive or similar rights to subscribe for shares of capital stock of the Company. The Company has not granted to any Person the right to demand or request that the Company effect a registration under the Securities Act of any securities held by such Person or to include any securities of such Person in any such registration by the Company.

(b) The Company (i) does not own and is not bound by any Contract or other obligation to acquire or sell, any equity securities of or ownership interest in any Person or any direct or indirect equity or ownership interest in any other business and (ii) is not bound by any joint venture Contract or any Contract or other obligation to provide funds to, or make any investment in, any Person.

2.3 Authority, Approvals, Enforceability and Consents .

(a) The Company has the corporate power and authority to enter into this Agreement and the other Transaction Documents to be executed and delivered by it and, subject to entry of the Company Confirmation Order, to perform its obligations hereunder and thereunder.

(b) The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to be executed and delivered by it and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized and approved by the Board of Directors of the Company and, subject to entry of the Company Confirmation Order, no other corporate proceedings or other approvals on the part of the Company are necessary to authorize, approve and perform its obligations under this Agreement and the other Transaction Documents to be executed and delivered by it and the transactions contemplated hereby and thereby.

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(c) This Agreement has been, and the other Transaction Documents to be executed and delivered by the Company at the Closing will, at the Closing, have been, duly executed and delivered by the Company and, subject to entry of the Company Confirmation Order, constitutes (or will constitute at the Closing, as applicable) the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, subject to the discretion of the Company Bankruptcy Court for so long as the Company Bankruptcy Court retains jurisdiction over the Company Case.

(d) The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to be executed and delivered by the Company and the consummation of the transactions contemplated hereby and thereby do not and will not:

(i) contravene any provision of the articles of incorporation or bylaws (or comparable organizational documents) of the Company;

(ii) subject to entry of the Company Confirmation Order, after notice or lapse of time or both, result in a material violation, material conflict with, or material breach of any provision of, constitute a material default under, result in or permit the material modification, revocation, cancellation, termination or acceleration of, any Contract to which the Company is a party or by which any of its properties or assets are bound or otherwise subject or, require any consent or waiver of any party to any such Contract;

(iii) result in the creation or imposition of any Lien upon, or any Person obtaining any right to acquire or other interest in, any properties, assets or rights of the Company;

(iv) to the Company92s Knowledge, violate or conflict with any Law applicable to the Company or its business or properties; or

(v) except for the Company Confirmation Order and any authorization, consent, order, permit, approval, notice, filing, registration or qualification (i) required under the HSR Act, (ii) with, from or to the Federal Aviation Administration (the "FAA" ) and (iii) with, from or to the United States Department of Transportation (the " DOT"), require any authorization, consent, order, permit or approval of, or notice to, or filing, registration or qualification with, any Government Authority.

2.4
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