AIRLINE SERVICES AGREEMENT

Exhibit 10.5

[CONFIDENTIAL TREATMENT REQUESTED.  CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION]

AIRLINE SERVICES AGREEMENT

by and between

MESABA AVIATION, INC.

and

NORTHWEST AIRLINES, INC.

Dated as of August 29, 2005

*** Denotes portions omitted pursuant to a request for confidentiality under Rule 24b-2 of the Securities Exchange Act of 1934. A copy of this agreement with the omitted information intact has been filed separately with the Securities and Exchange Commission

TABLE OF CONTENTS

EXHIBITS

AIRLINE SERVICES AGREEMENT

THIS AIRLINE SERVICES AGREEMENT (the “Agreement”) is dated as of the 29th day of August, 2005 by and between MESABA AVIATION, INC., a Minnesota corporation (“Mesaba”), and NORTHWEST AIRLINES, INC., a Minnesota corporation (“Northwest”).

WITNESSETH:

WHEREAS, Mesaba and Northwest are parties to (i) a Regional Jet Services Agreement, dated October 25, 1996, as amended (the “RJ Agreement”), and (ii) an Airline Services Agreement, dated July 1, 1997, as amended (the “Saab Agreement”), and Mesaba and Northwest desire to replace the RJ Agreement and the Saab Agreement with this Agreement;

WHEREAS, Mesaba, Northwest and ▇▇▇▇ Holdings, Inc. executed a Term Sheet Proposal for New Omnibus Airline Services Agreement dated April 20, 2005 (the “Term Sheet Proposal”), pursuant to which, among other things, Mesaba agreed to fly additional regional jet aircraft for Northwest;

WHEREAS, Mesaba and Northwest desire to make certain arrangements between them which will enable Mesaba to continue to provide Northwest with turboprop air transportation services and to provide Northwest with additional regional jet air transportation services;

WHEREAS, Mesaba and Northwest are each willing to perform in the manner and upon the conditions and terms hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Northwest and Mesaba do hereby agree as follows:

ARTICLE I   

DEFINITIONS

Section 1.01     Definitions.  For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(1)                                  the terms as defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

(2)                                  all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; and

(3)                                  the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article or other subdivision; and

(4)                                  Exhibits C, D and E each include defined terms that have meanings assigned to them in such Exhibits.

“ACARS” means the Aircraft Communications Addressing and Reporting System which provides datalink communications between the Aircraft and Mesaba with respect to operational matters.

“Affiliate” means, as applied to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person.  For purposes of this definition “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract or otherwise.

“Air Cargo” means air freight, United States mail and small package services appropriate for the Aircraft.

“Air Cargo Handling Services” means the Air Cargo handling services to be performed pursuant to Section 4.09.

“Aircraft” means, the Avro Regional Jet Aircraft, the CRJ-200/440 Aircraft and the Saab 340 Aircraft.

“Aircraft Rental Expense” means the Basic Rent charged in the Leases between Northwest and Mesaba with respect to the CRJ-200/440 Aircraft.

“Airlink Carrier” means an airline operating regional jet and/or turboprop air transportation services as a Northwest Airlink carrier pursuant to an airline services agreement between such airline and Northwest.

“Airport Landing Fees” shall include all landing fees, airport user fees and assessments to the extent such fees and assessments are attributable to or result from Regional Airline Services.

“Annual Operating Plan” shall have the meaning ascribed to such term in Section 2.12.

“Avro Regional Jet Aircraft” means the thirty-five (35) Avro Regional Jet aircraft in Mesaba’s fleet as of the Effective Date.

“Baggage Handling Services” means the baggage handling services to be performed pursuant to Section 4.08.

“Basic Rent” shall have the meaning ascribed to such term in the Leases.

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“Beneficial Ownership” has the meaning given such term as defined as of the date hereof in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended.

“Block Hour” means the period of time (in minutes) beginning when an Aircraft first moves from the ramp blocks in connection with a Scheduled Flight, a Non-Scheduled Flight or a Charter Flight and ending when the Aircraft next comes to a stop at the ramp blocks at any station or other point of termination as recorded by ACARS or another mutually agreed system, divided by sixty (60).

“Capital Stock” of any Person means any and all shares, interests, rights to purchase, options, warrants, participation or other equivalents of or interests in (however designated) the equity of such Person, including any preferred stock.

“Charter Flights” means revenue passenger flights using the Aircraft (other than Scheduled Flights).

“COMAT” means company material, including but not limited to priority aircraft maintenance parts.

“CRJ-200/440 Aircraft” means (i) up to *** CRJ-200 or CRJ-440 Canadair Regional Jet aircraft when and as such aircraft are added to Mesaba’s fleet pursuant to Section 3.02, and (ii) up to *** additional CRJ-200 or CRJ-440 Canadair Regional Jet aircraft when and if such aircraft are added to Mesaba’s fleet pursuant to Section 3.02.

“CRJ Spare Engine Rental Expense” means the Basic Rent charged in the Leases between Northwest and Mesaba for the CRJ Spare Engines.

“CRJ Spare Engines” means the General Electric CF34-3B1 spare engines to be added to Mesaba’s fleet pursuant to Section 3.02, when and as such spare engines are added to Mesaba’s fleet pursuant to Section 3.02.  Any CRJ Spare Engine removed from Mesaba’s fleet ceases to be a “CRJ Spare Engine” hereunder upon the date of such removal.

“Dangerous Goods” shall have the meaning ascribed to such term in Section 1.0 of the Dangerous Goods Regulations of the International Air Transport Association (“IATA”), as such term may be amended from time to time by IATA.

“Data Communication Equipment” shall have the meaning ascribed to such term in Section 4.04.

“Default” means the occurrence of an event set forth in Section 10.02 or Section 10.03, and the expiration of any cure period provided therein without cure or other remedial action having occurred, permitting termination of this Agreement.

“Designator” means “NW” or such other designator code selected by Northwest from time to time in its sole discretion to identify Northwest’s own flights.

“Direct Costs” means Northwest’s or Mesaba’s, as applicable, actual cost for goods and services without any surcharge for administrative or general overhead expenses.

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“DOT” means the United States Department of Transportation or any successor to its functions with respect to the regulation of air transportation.

“DOT Certification” means any and all certifications and approvals by the DOT, the FAA and other regulatory agencies required for Mesaba to operate the Aircraft and to perform pursuant to the terms of this Agreement and all Governmental Regulations.

“Effective Date” means the date specified in Section 10.01 of this Agreement.

“Equipment” means the Aircraft and the CRJ Spare Engines.

“FAA” means the Federal Aviation Administration or any successor organization.

“Facilities Leases” shall have the meaning ascribed to such term in Section 4.03(g).

“Governmental Regulations” means the rules and regulations prescribed by an airport authority at a Service City or by any local, state or federal unit of government having authority and jurisdiction to regulate the business and affairs of an air carrier having DOT Certification, including without limitation, the DOT and the FAA.

“Ground Handling Functions” shall have the meaning ascribed to such term in Section 4.02.

“Hub Cities” means Memphis, Tennessee (“MEM”), Minneapolis/St. ▇▇▇▇, Minnesota (“MSP”), Detroit, Michigan (“DTW”) and any other city in the United States where Northwest, together with its subsidiaries and Airlink Carriers operating under Northwest’s Designator, operate an average of more than fifty (50) departures per day during any Northwest Schedule Period.

“Identification” means a trade name, trademark, service ▇▇▇▇, graphic, logo, distinctive color scheme or other trade dress, domain name and/or other identification or indication of source or origin.

“Lease” means (i) the leases, subleases and/or sub-subleases entered into with respect to the Avro Regional Jet Aircraft, (ii) the leases, subleases and/or sub-subleases entered into or to be entered into pursuant to Section 3.03 in respect of the CRJ-200/440 Aircraft substantially in the form of Exhibit A-1,  (iii) the leases, subleases and/or sub-subleases entered into or to be entered into pursuant to Section 3.03 in respect of CRJ Spare Engines substantially in the form of Exhibit A-2, and (iv) the leases, subleases and/or sub-subleases with respect to the Saab 340 Aircraft.

“Maintenance Facilities” shall have the meaning ascribed to such term in Section 4.03(c).

“Maintenance Program” shall have the meaning ascribed to such term in the Leases.

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“▇▇▇▇ Holdings, Inc.” means Mesaba’s parent company ▇▇▇▇ Holdings, Inc., a Minnesota corporation, and any successor.

“Margin Payment” shall have the meaning ascribed to such term in Attachment A of Exhibit E.

“Mesaba Change of Control” means:

(a)                                  The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”) (a “Person”)) (other than Northwest) of Beneficial Ownership of 20% or more of either (i) the then outstanding shares of Capital Stock of ▇▇▇▇ Holdings, Inc. (the “Outstanding Holdings Capital Stock”) or (ii) the combined Voting Power of the then outstanding voting securities of ▇▇▇▇ Holdings, Inc. entitled to vote generally in the election of directors (the “Outstanding Holdings Voting Securities”); provided, however, the term “Person” as used in this definition shall not include Northwest, any Northwest assignee or transferee, or ▇▇▇▇ ▇. ▇▇▇▇▇▇ and his family or any Affiliate of ▇▇▇▇ ▇. ▇▇▇▇▇▇ which beneficially owns directly or indirectly shares of ▇▇▇▇ Holdings, Inc. common stock as of the date hereof;

(b)                                 Approval by the Board of Directors of Mesaba or ▇▇▇▇ Holdings, Inc. of a reorganization, merger or consolidation (a “Business Combination”), in each case, unless, following such Business Combination, all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Holdings Capital Stock and Outstanding Holdings Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 75% of, respectively, the then outstanding shares of Capital Stock and the combined Voting Power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns ▇▇▇▇ Holdings, Inc. or Mesaba through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Holdings Capital Stock and Outstanding Holdings Voting Securities, as the case may be; or

(c)                                  Approval by the Board of Directors of Mesaba or ▇▇▇▇ Holdings, Inc. of (i) a complete liquidation or dissolution, or (ii) the sale or other disposition of all or substantially all of the assets of Mesaba or ▇▇▇▇ Holdings, Inc., other than to a corporation with respect to which following such sale or other disposition, more than 75% of, respectively, the then outstanding shares of Capital Stock of such corporation and the combined Voting Power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Holdings Capital Stock and Outstanding Holdings Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership immediately prior to such sale or other disposition of the Outstanding Holdings Capital Stock and Outstanding Holdings Voting Securities, as the case may be.

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“Mesaba Identification” means any Identification selected by Mesaba from time to time for use in connection with the business of Mesaba, including without limitation “Mesaba,” “Mesaba Airlines,” “XJ” or any similar name.

“Mesaba Service Cities” means those Service Cities at which Mesaba operates Saab 340 Aircraft and which are not Northwest Service Cities or Hub Cities (as determined by Northwest and Mesaba from time to time).

“Northwest Schedule Period” means the planned duration of various time periods for which Northwest’s flight schedule is for sale in computer reservation systems.

“Northwest Service Cities” means those Service Cities at which Mesaba operates Regional Airline Services and Northwest’s employees or contract agents perform the Ground Handling Functions and which are listed in Exhibit G hereto (as amended by Northwest in its sole discretion from time to time).

“Northwest Tickets” shall have the meaning ascribed to such term in Section 4.07(a).

“NW Identification” means any Identification specifically selected by Northwest from time to time in its sole discretion for use by Mesaba in connection with the Regional Airline Services (including without limitation “Northwest Airlink” or any similar name).

“Performance Period” means each six (6) month period ending on a June 30 or December 31 occurring during the Term of this Agreement.

“Person” means an individual, partnership, corporation, business trust, joint stock company, limited liability company, unincorporated association, joint venture or other entity of whatever nature.

“PPI” means Producer Price Index for Commodities, Item Finished Goods – not seasonally adjusted, published by the United States Department of Labor, Bureau of Labor Statistics, and, if no longer published, any comparable successor index agreed to by both Northwest and Mesaba.

“Regional Airline Services” means the provisioning by Mesaba to Northwest of Scheduled Flights and Charter Flights using the Aircraft in accordance with this Agreement.

“Revenue Passenger” means a revenue passenger flown on a Scheduled Flight or a Charter Flight.

“Saab 340 Aircraft” means the sixty-three (63) turboprop aircraft leased by Mesaba as of the Effective Date (forty-nine (49) Saab 340B+ turboprop aircraft leased from Northwest, eleven (11) Saab 340B turboprop aircraft leased from Pinnacle Airlines, Inc. and three (3) Saab 340A turboprop aircraft leased by Mesaba directly from third parties).

“Scheduled Flights” means revenue passenger flights (other than Charter Flights) using the Aircraft which, regardless of frequency, are held out to the public and

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published in the customary and applicable schedule distribution systems, such as the Official Airline Guide (“OAG”), or published by Northwest in its own system timetables.  In addition, Scheduled Flights shall include all regularly scheduled flights which are not revenue passenger flights as determined by Northwest in its sole discretion.

“Service Cities” means those cities identified from time to time by Northwest to which Mesaba shall provide Regional Airline Services.

“Support Agreements” shall have the meaning ascribed to such term in Section 3.11.

“Term” means the term of this Agreement as determined by the length of time between the Effective Date and Termination Date as set forth in Article X herein (unless otherwise terminated earlier pursuant to the terms of this Agreement).

“Termination Date” means the date on which this Agreement terminates pursuant to Article X.

“Ticket Taxes and Fees” means any taxes pursuant to Sections 4261 or 4271 of the U.S. Internal Revenue Code of 1986, as amended or succeeded, on any amounts paid by customers for transportation of persons or packages by air, and any passenger facility charges, airport improvement fees, security fees or charges, stamp taxes, excise taxes, value-added taxes (in the nature of a sales or use tax), gross receipts taxes (in the nature of a sales or use tax), U.S. APHIS user fees, U.S. Customs user fees, U.S. Immigration user fees, and any other taxes and/or user fees imposed by any domestic or foreign governmental entity, airport or taxing authority on a per-passenger basis on any amounts paid by customers for transportation of persons or packages by air.

“Ticketing Services” means the ticketing services to be performed pursuant to Section 4.07.

“Traffic Referral” shall have the meaning ascribed to such term in Section 4.07(e).

“Transfer Manifest” shall have the meaning ascribed to such term in Section 4.09(a).

“TSA” means the United States Transportation Security Administration or any successor governmental organization.

“Voting Power” means, as of the date of determination, the voting power in the general election of directors, managers or trustees, as applicable.

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ARTICLE II   

PROVISION OF REGIONAL AIRLINE SERVICES

Section 2.01     Operation of Scheduled Flights.  Subject to the terms and conditions of this Agreement, Mesaba shall use the Aircraft to operate Scheduled Flights and Charter Flights as shall be designated by Northwest from time to time in Northwest’s sole discretion, provided that (a) Northwest will not schedule the CRJ-200/440 Aircraft operated by Mesaba pursuant to this Agreement to operate Scheduled Flights to/from a Hub City other than Minneapolis/St. ▇▇▇▇, Minnesota until after the date on which Mesaba is operating at least *** such Aircraft pursuant to this Agreement, and (b) if Northwest schedules CRJ-200/440 Aircraft operated by Mesaba pursuant to this Agreement to operate Scheduled Flights to/from a Hub City other than Minneapolis/St. ▇▇▇▇, Minnesota pursuant to this Section 2.01(a), Northwest will nonetheless continue to schedule at least *** such Aircraft to operate Scheduled Flights to/from Minneapolis/St. ▇▇▇▇, Minnesota.  All schedules and aircraft routing for such Scheduled Flights and all utilization of the Aircraft shall be determined by Northwest from time to time, in its sole discretion, subject to the reasonable operating constraints of Mesaba taking into consideration airport gate constraints, Aircraft maintenance, crew training and Aircraft rotation requirements.  Scheduled block times shall be set in accordance with Northwest’s standards unless otherwise mutually agreed by Northwest and Mesaba.  Minimum turn times shall be mutually agreed to by Mesaba and Northwest and set in conformity with standard industry practices and Aircraft type.

Section 2.02     Use of Designator, NW Identification and Related Matters.  Subject to the applicable provisions of Article VII below, Mesaba shall operate the Scheduled Flights and Charter Flights provided under this Agreement using the Designator.  The Scheduled Flights and Charter Flights shall be identified by Mesaba solely with flight numbers assigned by Northwest.  Subject to the applicable provisions of Article VII below, Mesaba shall use only the NW Identification for the Aircraft (except as otherwise required by Governmental Regulations), and for all airport terminal facilities (such as gates, passenger waiting areas and jetways), signage, equipment, uniforms and advertising, promotional and business materials in any form or media that are used in connection with the Regional Airline Services; provided, however, all Mesaba uniforms shall be determined by Mesaba, provided that such uniforms shall at all times be consistent with Mesaba’s existing uniform standards and subject to the approval of Northwest (including approval of any use of the NW Identification thereon) which shall not be unreasonably withheld.  Mesaba shall not use the Mesaba Identification for the Aircraft (except as required by Governmental Regulation), airport terminal facilities (such as gates, passenger waiting areas and jetways), signage or advertising, promotional or business materials in any form or media that are used in connection with the Regional Airline Services; provided, however, nothing in the foregoing prohibition shall preclude Mesaba from using the Mesaba Identification for general corporate purposes, investor relations, responding to customer inquiries, on crew wings and employee service pins, and for purposes that are not covered by the foregoing prohibition.

Section 2.03     Use of Other Designators.  Mesaba shall not use on the Aircraft the airline designator, Identification, or any other identifying feature of a foreign or United States airline other than Northwest (except as otherwise required by Governmental Regulations), without the express prior written consent of Northwest, or unless Northwest directs Mesaba to

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use such other designator, Identification, or identifying feature.  Notwithstanding the foregoing, Northwest acknowledges the existence of the following current letter agreements between Northwest and Mesaba:  Delta Letter Number 1 side letter agreement dated June 19, 2003; Delta Letter Number 2 side letter agreement dated June 19, 2003; Continental Letter Number 1 side letter agreement dated January 4, 1999; and Continental Letter Number 2 side letter agreement dated January 4, 1999, all pursuant to which Northwest has provided its written consent to Mesaba’s use of Delta’s and/or Continental’s designator code on specified Mesaba flights pursuant to separate Implementation Agreements between Mesaba and such airlines.

Section 2.04     Personnel and Dispatch Control.  Mesaba shall be responsible for providing all crews (flight and cabin) to operate the Scheduled Flights and any Charter Flights and for all aspects (personnel and other) of dispatch control, including but not limited to load control.

Section 2.05     Inventory Management.  Northwest shall have  complete control over all inventory management functions for all Scheduled Flights and Charter Flights operated pursuant to this Agreement, including, without limitation, overbooking levels, discount seat levels, and allocation of seats among the various fare buckets.   In performing Mesaba’s inventory management, Northwest shall conform in all material respects to its own procedures and standards, taking into account the type of Aircraft operated by Mesaba.

Section 2.06     Passenger Fares.  Northwest shall be the sole authority for filing tariffs for Scheduled Flights operated pursuant to this Agreement, and Northwest shall establish all passenger fares for Scheduled Flights and Charter Flights operated pursuant to this Agreement.  All charges for filing of fares or tariffs for Scheduled Flights operated pursuant to this Agreement shall be paid by Northwest.

Section 2.07     DOT Certification.  Mesaba has and shall maintain DOT Certification and all other permits, licenses, certificates and insurance required by governmental authorities and Article IX hereof to enable Mesaba to perform the services required by this Agreement.

Section 2.08     Compliance with Governmental Regulations.  All flight operations, dispatch operations and all other operations undertaken by Mesaba pursuant to this Agreement shall be conducted and operated by Mesaba in strict compliance with all Governmental Regulations, including, without limitation, those relating to airport security, the use and transportation of hazardous materials, flight crew and mechanic qualifications and licensing requirements, crew training and hours.  All Equipment shall be operated and maintained by Mesaba in strict compliance with all Governmental Regulations, Mesaba’s own operations manuals and maintenance manuals and procedures, and all applicable equipment manufacturer’s instructions.  At all times, Mesaba shall operate with the highest standards of care.

Section 2.09     Quality of Service.  Northwest policies, procedures, performance standards (including but not limited to Northwest’s “Customers First” customer service plan) and means of measurement thereof concerning the provision of air passenger and air cargo services shall be applicable to all services provided by Mesaba under this Agreement.  Mesaba shall

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achieve at least the same quality of airline service provided by Northwest, subject to limitations imposed by the type of Aircraft used by Mesaba, its route network, the availability of equipment and facilities at the Service Cities and the performance by Northwest of its obligations under this Agreement.  Mesaba shall maintain adequate staffing levels to ensure at least the same level of customer service and operational efficiency that Northwest achieves; Mesaba shall cooperate with Northwest in any way necessary or desirable to provide such comparable level of customer service in connection with the operation of Regional Airline Services; and Mesaba shall maintain new hire and recurrent training programs for all job descriptions, and such programs shall be reasonably acceptable to Northwest.

Section 2.10     Service Standards.  Without limiting Section 2.09, Mesaba shall achieve the following specific performance standards.

(a)                                  For Scheduled Flights operated with CRJ-200/440 Aircraft:

(i)                                     Minimum Completion Factor.  Mesaba shall achieve not less than *** points less than the mutually agreed completion factor percentage goal for the current calendar year for all Scheduled Flights which are scheduled to be operated by Mesaba during each Performance Period.  Scheduled Flights which are cancelled at Northwest’s request (as determined by Northwest’s System Operations Control (“SOC”) operations reporting group) and/or due to Northwest controllable events will not be included in calculating Mesaba’s completion factor.  The excluded cancellation codes are listed in Exhibit I.

(ii)                                  Minimum On-Time Reliability.  Mesaba shall achieve not less than *** points less than the mutually agreed arrival within zero minutes factor goal for the current calendar year and not less than *** points less than the mutually agreed departure within zero minutes factor goal for the current calendar year for all Scheduled Flights which are scheduled to be operated and are actually completed by Mesaba during each Performance Period (collectively, the “On-Time Reliability Factors”).  All Scheduled Flights actually completed will be included in this calculation, except for those operated on days when Northwest and Mesaba mutually agree that Mesaba’s on-time performance was significantly degraded by Northwest’s implementation of its Irregular Operating Procedures Program.  Upon mutual agreement between Northwest’s Vice President of System Operations Control and Mesaba, all Scheduled Flights operated on days with such extraordinary events will be excluded from the calculation of Mesaba’s On-Time Reliability Factors.  If Northwest and Mesaba are unable to reach agreement on the exclusion of certain days, then all Scheduled Flights completed on such days will be included in the calculation of Mesaba’s On-Time Reliability Factors.

In conjunction with Mesaba’s arrival within zero minutes (“A0”) performance, Mesaba’s block within zero minutes (“B0”) performance “cap” will equal ***.  If Mesaba’s actual B0 exceeds the cap, Mesaba’s actual A0 will be *** for every ***.  The cap and *** amount will be predetermined in the fourth quarter of the prior year based on the most recent five-year monthly regression (the “Regression”) for D0, B0 and A0 for Avro Regional Jet Aircraft and CRJ-200/440 Aircraft.

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Example:  If the agreed upon goals are as follows:  *** and the agreed upon *** is ***  (based on regression analysis), then:

1.                                       DO Penalty high point is *** (see Exhibit E, section 1.08);

2.                                       B0 regression analysis to achieve *** is ***; and

3.                                       If B0 is greater than ***, then A0 *** will be *** for each ***.

Subsequent to a Performance Period, Northwest and Mesaba agree to meet and confer if passenger/luggage holding delays (LXS/LTS) materially differ from historical norms.

(iii)                               Establishment of Goals.  In the fourth quarter of the each year, Northwest and Mesaba will mutually agree on the operating goals for the upcoming year regarding completion factor, arrival within zero minutes and departure within zero minutes.  Failure to reach an agreement on the goals will result in the completion factor percentage goal defaulting to Northwest’s North American completion factor goal, and the on-time reliability goals defaulting to Northwest’s North American arrival within zero minutes and departure within zero minutes goals, as adjusted below.

Mesaba default on-time reliability goals (rounded to half-point):
XJ D0 goal = ***

XJ A0 goal = Regression (assuming calculated D0 and current year B0 goals).

Northwest and Mesaba shall mutually agree on seasonalized goals for each Performance Period.

(b)                                 For Scheduled Flights operated with Avro Regional Jet Aircraft:

(i)                                     Completion Factor.  Mesaba shall achieve not less than a *** percent (***%) completion factor for all Scheduled Flights which are scheduled to be operated by Mesaba during each Performance Period.  For purposes of this Agreement, all cancellations due to airport closure and weather minima at the Service Cities or the Hub Cities, or Northwest controllable events, will be excluded from this calculation.

(ii)                                  Minimum On-Time Reliability.  Mesaba shall achieve a *** percent (***%) on-time arrival factor (“On-Time Factor”) for all Scheduled Flights actually completed by Mesaba during each Performance Period.  An arrival will be considered on-time if it arrives not later than *** after its published, scheduled arrival time.  All Scheduled Flights that arrive *** later than their published, scheduled arrival time will not be considered on-time, regardless of the reason for the delay.  All Scheduled Flights that are actually completed by Mesaba will be included in this calculation, except for those Scheduled Flights operated on days when Northwest and Mesaba mutually agree that Mesaba’s on-time performance was significantly degraded by Northwest’s implementation of an Irregular Operating Procedures Program.  Upon mutual agreement between Northwest’s Vice President of System Operations Control and Mesaba, all Scheduled Flights operated on days with such extraordinary events will be excluded from

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the calculation of Mesaba’s On-Time Factor.  If Northwest and Mesaba are unable to reach agreement on the exclusion of certain days, then all Scheduled Flights actually completed by Mesaba on such days will be included in the calculation of Mesaba’s On-Time Factor.

(c)                                  For Scheduled Flights operated with Saab 340 Aircraft:

(i)                                     Completion Factor.  Mesaba shall achieve not less than a *** percent (***%) completion factor for all Scheduled Flights which are scheduled to be operated by Mesaba during each Performance Period.  ***  

(ii)                                  Minimum On-Time Reliability.  Mesaba shall achieve a *** percent (***%) On-Time Factor for all Scheduled Flights actually completed by Mesaba during each Performance Period.  An arrival will be considered on-time if it arrives not later than *** after its published, scheduled arrival time.  All Scheduled Flights that arrive *** later than their published, scheduled arrival time will not be considered on-time, regardless of the reason for the delay.  ***

(iii)                               Mishandled Luggage Factor.  The number of incidences of mishandled luggage by Mesaba shall not exceed *** enplaned Revenue Passengers during any Performance Period.  The number of incidences of mishandled luggage shall be determined by Northwest by dividing (i) the total number of Mesaba caused claims at Primary Service Cities, Complementary Service Cities and the Hub Cities during the applicable Performance Period, by (ii) the total number of enplaned Revenue Passengers during such Performance Period.

(iv)                              Customer Complaints Factor.  The number of customer complaints received by Northwest in respect of Regional Airline Services shall not exceed *** enplaned Revenue Passengers during any Performance Period.

Section 2.11     Service Recovery.  Mesaba shall provide service recovery for passengers affected by service disruptions involving the Saab 340 Aircraft in accordance with Sections 1.01(c) and 1.01(d) of Exhibit D hereto and the terms of any separate ground handling agreement(s) between the parties.  With respect to all flights utilizing Avro Regional Jet Aircraft and CRJ-200/440 Aircraft and for which Mesaba provides ground handling services for passengers affected by service disruptions, Mesaba shall provide service recovery in accordance with Northwest’s standard policies and procedures, but Northwest shall, pursuant to a separate agreement between the parties, reimburse Mesaba for all Direct Costs incurred as a result of providing such service recovery, provided that Mesaba provides Northwest with sufficient detail and supporting documentation to allow Northwest to verify the invoiced amount.

Section 2.12     Annual Operating Plan.  At least 90 days prior to January 1 of each year during the term of this Agreement, Mesaba and Northwest shall confer and prepare an operating plan for the succeeding calendar year, which plan shall include (i) Northwest’s forecast with respect to the schedule and routing for all Scheduled Flights for such year, (ii) Northwest’s forecast of the Service Cities to which Mesaba shall operate Regional Airline Services, (iii) Northwest’s forecast of specific dates for the commencement of service to new Service Cities, if

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any, (iv) Northwest’s forecast of the number of Aircraft to be added to or removed from Mesaba’s fleet (subject to Section 3.02), and (v) such other matters as Northwest and Mesaba shall determine (as amended in accordance with this Section 2.12, the “Annual Operating Plan”).  Northwest and Mesaba shall meet and confer on a quarterly basis (or more frequently if requested by either Northwest or Mesaba) to review the implementation of the Annual Operating Plan and to discuss any changes to the Annual Operating Plan.  In the event Northwest elects to alter the Annual Operating Plan during the course of a year, Northwest shall use its reasonable best efforts to provide at least sixty (60) days prior notice to Mesaba.  Notwithstanding the foregoing provisions of Section 2.12, Northwest shall promptly notify Mesaba of any determination by Northwest to increase or decrease Mesaba’s fleet size, and, except as provided in Section 3.02 (a)(iii) below, Northwest shall give Mesaba no less than ninety (90) days prior notice.  Northwest agrees that any substantial increases in Mesaba’s fleet size pursuant to the preceding sentence are subject to Mesaba’s reasonable operating constraints.

Section 2.13     Inflight Food, Beverages and Supplies.

(a)                                  CRJ Aircraft.  For all Scheduled Flights utilizing ▇▇▇-▇▇▇/▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ shall, at its sole cost, provide catering services and beverages for passengers and crews, in accordance with Northwest’s specifications and directions.  To the extent food is provided by Northwest, it shall be at Northwest’s sole cost, and any revenue associated with on-board sales of the food product shall be handled pursuant to Section 5.01.  In the event Mesaba is responsible and incurs expenses associated with the provision of food, the parties agree to revise the rates in Exhibit E, Section 1.02, to account for the incremental food cost incurred by Mesaba.  Mesaba shall be solely responsible for maintaining all licenses necessary for the serving of inflight food and beverages on Scheduled Flights.  Northwest shall furnish Mesaba, at Northwest’s sole cost, adequate supplies of its customary inflight supplies including, but not limited to, the Northwest inflight magazine, cups, napkins, pillows, blankets, trash bags, sick sacks, lavatory supplies, creamers, swizzle sticks and sugar in a form similar or identical to that used by Northwest.  Notwithstanding anything to the contrary in this Agreement, Northwest may, at its option, require Mesaba upon ninety (90) days prior written notice to utilize Northwest or a Northwest-designated contract agent to provide catering services, food and beverages for passengers and crews on Scheduled Flights utilizing CRJ-200/440 Aircraft, provided that (i) any modifications to the provision of catering services, food and beverages that result in the addition or removal of costs to Mesaba shall result in an adjustment to the rates in Section 1.02 of Exhibit E, and (ii) the service standards applicable to any such Northwest-designated contract agent are either reasonably satisfactory to Mesaba or no less stringent than the standards applicable to Northwest’s own operations.

(b)                                 Avro Regional Jet Aircraft.  For all Scheduled Flights utilizing Avro Regional Jet Aircraft, Northwest shall provide catering services, food and beverages for passengers and crews, all at Northwest’s sole cost.  Northwest shall furnish Mesaba, at Northwest’s sole cost, adequate supplies of its customary inflight supplies including, but not limited to, the Northwest inflight magazine, cups, napkins, pillows, blankets, trash bags, sick sacks, lavatory supplies, creamers, swizzle sticks and sugar in a form similar or identical to that used by Northwest.  Any modifications to the provision of catering services, food and beverages that result in additional costs to Mesaba shall be reimbursed by Northwest.

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(c)                                  Saab 340 Aircraft.  For all Scheduled Flights utilizing Saab 340 Aircraft, Mesaba shall, at its sole cost, provide beverages for passengers and crews, in accordance with Northwest’s specifications and directions.  Northwest shall furnish Mesaba, at Northwest’s sole cost, adequate supplies of its customary inflight supplies including, but not limited to, the Northwest inflight magazine, cups, napkins, pillows, blankets, trash bags, sick sacks, lavatory supplies, creamers, swizzle sticks and sugar in a form similar or identical to that used by Northwest.  Notwithstanding anything to the contrary in this Agreement, Northwest may, at its option, require Mesaba upon ninety (90) days prior written notice to utilize Northwest or a Northwest-designated contract agent to provide beverages for passengers and crews on Scheduled Flights utilizing Saab 340 Aircraft, provided that (i) any modifications to the provision of catering services, food and beverages that result in additional costs to Mesaba shall be reimbursed by Northwest, and (ii) the service standards applicable to any such Northwest-designated contract agent are either reasonably satisfactory to Mesaba or no less stringent than the standards applicable to Northwest’s own operations.

Section 2.14     Exclusivity Arrangements.  During the term of this Agreement, Mesaba shall not operate any flights to or from the Hub Cities using its own airline code or the airline code, logo, or any other identifying feature of a foreign or United States airline (other than Northwest) without the express prior written consent of Northwest.

Nothing in this Agreement shall preclude Northwest from (i) entering into code share, alliance or other commercial cooperation arrangements with any other airline, or (ii) subject to Northwest’s obligations pursuant to Section 3.02 below, entering into similar or other arrangements with other carriers for the provisioning of regional airline services using Avro Regional Jet Aircraft, CRJ-200/440 Aircraft or any other aircraft to or from the Hub Cities, the same Service Cities or elsewhere; subject to the following condition:  Mesaba shall have the exclusive right to operate Scheduled Flights which (i) use the Identification and Designator, (ii) originate or terminate at Minneapolis/St. ▇▇▇▇, Minnesota (“MSP”), Detroit, Michigan (“DTW”) and Memphis, Tennessee (“MEM”) and (iii) use turboprop aircraft with fifty (50) or fewer seats, provided that with respect to Scheduled Flights which (a) use the Identification and Designator, (b) originate or terminate at MSP, DTW or MEM and (c) use turboprop aircraft with nineteen (19) or fewer seats, Northwest may solicit bids from other airlines for operation of such Scheduled Flights and Northwest may enter into an agreement with another airline to operate such Scheduled Flights unless, after notification by Northwest of the terms of the bid Northwest intends to accept, Mesaba submits an economically equivalent bid to operate such Scheduled Flights and is willing to enter into an agreement with Northwest to operate such Scheduled Flights on such terms.  Northwest further acknowledges and agrees that, with respect to Scheduled Flights operated with turboprop aircraft with more than fifty (50) seats, Northwest will give Mesaba the right to submit a bid for operation of such Scheduled Flights.

ARTICLE III   

EQUIPMENT

Section 3.01     Use of the Equipment.  Mesaba agrees (a) that the Equipment shall be used only to provide and/or support the Regional Airline Services contemplated by this

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Agreement, (b) that the Equipment shall not be used by Mesaba for any other purpose without the prior written consent of Northwest, and (c) that Mesaba shall not acquire, lease or operate any aircraft other than the Aircraft, and with respect to the engines utilized by the ▇▇▇-▇▇▇/▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ shall not acquire, lease or operate any spare engines other than the CRJ Spare Engines.  Mesaba shall use its best efforts to achieve Category II status for CRJ-200/440 Aircraft and Category IIIa status for Avro Regional Jet Aircraft as soon as reasonably practicable.

Section 3.02     Fleet Size and Related Matters.

(a)                                  Determination of Fleet Size.  As of the Effective Date, Mesaba’s fleet consisted of thirty-five (35) Avro Regional Jet Aircraft and sixty-three (63) Saab 340 Aircraft.

(i)                                     Additional Aircraft

(aa)            CRJ Aircraft.

(1) Northwest and Mesaba agree that (A) subject to Bombardier (x) continuing to provide or cause to be provided to Northwest financing for the Equipment on a basis no less favorable to Northwest than the terms of such financing in effect as of the Effective Date, and (y) delivering Canadair Regional Jet Aircraft to Northwest as scheduled as of the Effective Date, fifteen (15) CRJ-200/440 Aircraft shall be added to Mesaba’s fleet on or before March 31, 2006 and in accordance with the delivery schedule set forth in Exhibit B, one (1) CRJ Spare Engine shall be added to Mesaba’s fleet on or before January 31, 2006, and if the parties mutually agree that it is necessary, a second CRJ Spare Engine shall be added to Mesaba’s fleet on a mutually agreed date, and Mesaba shall accept such CRJ-200/440 Aircraft and CRJ Spare Engines into its fleet, (B) after fifteen (15) CRJ-200/440 Aircraft and one (1) CRJ Spare Engine are added to Mesaba’s fleet pursuant to Section 3.02(a)(i) (aa)(A), Mesaba shall have the exclusive right to operate the next twenty (20) new or used CRJ-200/440 Aircraft operated for the benefit of Northwest, and (C) Northwest shall have the right to cause from time to time up to an additional *** CRJ-200/440 Aircraft and *** CRJ Spare Engines to be added to Mesaba’s fleet, or such number of CRJ Spare Engines as are mutually determined by the parties pursuant to Section 3.02(a)(v).

(2)  Northwest and Mesaba agree that if Northwest becomes aware that Bombardier will not meet the financing and aircraft delivery conditions for any of the fifteen (15) CRJ-200/440 Aircraft (set forth in Section 3.02(a)(i)(aa)(1)(A) above), (i) Northwest shall use commercially reasonable efforts to ***, and (y) if Mesaba is operating such Aircraft pursuant to this Agreement when this Agreement terminates or expires with respect to such Aircraft, *** at the termination date or expiration date of the Agreement on the same terms and conditions as apply to ***, and Northwest shall *** provided that in connection with any ***.

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(3)  Northwest and Mesaba agree that if Northwest becomes aware that Bombardier will not meet the financing and aircraft delivery conditions for any of the fifteen (15) CRJ-200/440 Aircraft (set forth in Section 3.02(a)(i)(aa)(1)(A) above) and *** pursuant to Section 3.02(a)(i)(aa)(2)(i) above, then (i) Northwest will cooperate with Mesaba or ▇▇▇▇ Holdings, Inc. in good faith with respect to Mesaba’s or ▇▇▇▇ Holdings, Inc.’s efforts to obtain replacement CRJ-200/440 Aircraft from another source at the then prevailing market terms and conditions, and (ii) the parties will negotiate in good faith with respect to any modifications to this Agreement that may be necessary as a result of Mesaba or ▇▇▇▇ Holdings, Inc. obtaining replacement CRJ-200/440 Aircraft from a source other than Bombardier.  However, under no circumstances will Northwest be obligated to accept economic terms deemed by Northwest to be materially worse than those contemplated if Northwest had provided such CRJ-200/440 Aircraft to Mesaba pursuant to Section 3.02(a)(i)(aa)(1) above.  For the avoidance of doubt, nothing in this Section 3.02(a)(i)(aa)(3) shall obligate Northwest to source such replacement CRJ-200/440 Aircraft or procure the financing for such replacement CRJ-200/440 Aircraft for Mesaba.

(4)  Notwithstanding anything to the contrary in Sections 3.02(a)(i)(aa)(1) and (2) above, if Northwest determines in its sole discretion that the terms and conditions on which Bombardier will provide Northwest with financing for one or more of the fifteen (15) CRJ-200/440 Aircraft (as referenced in Section 3.02(a)(i)(aa)(1) above) are considered above market and Northwest therefore does not take delivery of such Aircraft, or if Bombardier *** (pursuant to Section 3.02(a)(i)(aa)(2) above) and Northwest *** because such terms and conditions are considered above market, then Northwest shall obtain replacement CRJ-200/440 Aircraft from another source at market rates and provide such Aircraft to Mesaba.

(bb)          ARJ Aircraft.  If Northwest requires the removal of Avro Regional Jet Aircraft from Mesaba’s fleet pursuant to Section 3.02(a)(ii)(bb) below, Northwest and Mesaba agree that subject to (x) Northwest obtaining financing for the Equipment on a commercially reasonable basis, and (y) Bombardier delivering Canadair Regional Jet Aircraft to Northwest as ordered by Northwest from time to time, after *** CRJ-200/440 Aircraft are added to Mesaba’s fleet pursuant to Section 3.02(a)(i)(aa) above, the next ***  and up to *** ordered by and delivered to Northwest shall be added to Mesaba’s fleet; provided, however, that if Northwest determines, in its sole discretion, to utilize aircraft other than *** to replace the Avro Regional Jet Aircraft, and if Mesaba is awarded the right to operate such ***, Northwest’s obligation to provide Mesaba with *** pursuant to this Section 3.02(a)(i)(bb) shall be *** delivered to Mesaba.  For the avoidance of doubt, if more than *** are added to Mesaba’s fleet pursuant to Section 3.02(a)(i)(aa)(B) above, Northwest’s obligation to provide Mesaba with *** pursuant to this Section 3.02(a)(i)(bb) shall be reduced by ***.

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(cc)            Saab 340 Aircraft.  Northwest shall have the right to cause from time to time additional Saab 340 Aircraft to be added to Mesaba’s fleet.

(ii)                                  Equipment Removal Rights.

(aa)              CRJ Aircraft.  Northwest and Mesaba agree that from and after that time when Mesaba has more than *** CRJ-200/440 Aircraft pursuant to Section 3.02(a)(i)(aa) above, Northwest shall have the right upon at least ninety (90) days prior written notice to require the removal of such CRJ-200/440 Aircraft and related Spare Engines selected by Northwest from Mesaba’s fleet provided that at no time shall the number of such Aircraft and Spare Engines removed pursuant to this Section 3.02(a)(ii)(aa) cause the number of such Aircraft in Mesaba’s fleet to be less than *** or cause the number of Spare Engines in Mesaba’s fleet to be less than ***; and further provided that if Mesaba has received CRJ-200/440 Aircraft and Spare Engines pursuant to Section 3.02(a)(i)(bb) above, at no time shall the number of CRJ-200/440 Aircraft and Spare Engines removed pursuant to this Section 3.02(a)(ii)(aa) cause the number of such Aircraft in Mesaba’s fleet to be less than *** plus the number of CRJ-200/440 Aircraft added to Mesaba’s fleet pursuant to Section 3.02(a)(i)(bb) or cause the number of Spare Engines in Mesaba’s fleet to be less than *** plus the number of Spare Engines added to Mesaba’s fleet pursuant to Section 3.02(a)(i)(bb).

(bb)            ARJ Aircraft.  Northwest and Mesaba agree that Northwest shall have the right (i) upon at least ninety (90) days prior written notice to require the removal of any one or more of the Avro Regional Jet Aircraft from Mesaba’s fleet upon early termination of the applicable Lease between Northwest and Mesaba or termination of the debt obligation related to Northwest’s ownership of such Avro Regional Jet Aircraft, or (ii) to require the removal of any one or more of the Avro Regional Jet Aircraft from Mesaba’s fleet upon the final expiration date of the applicable Lease.  Northwest’s removal right in the previous sentence shall apply up to and including removal of all thirty-five (35) Avro Regional Jet Aircraft from Mesaba’s fleet.  If Avro Regional Jet Aircraft are removed from Mesaba’s fleet pursuant to this Section 3.02(a)(ii)(bb), (x) Northwest’s obligation to provide Mesaba with replacement aircraft shall be governed by Section 3.02(a)(i)(bb) above, and (y) Northwest may sell, lease or otherwise transfer the Avro Regional Jet Aircraft which are removed from Mesaba’s fleet to any other entity in Northwest’s sole discretion; provided, however, that Northwest shall not sell, lease, or otherwise transfer such Avro Regional Jet Aircraft to any other entity which will operate such Avro Regional Jet Aircraft for the benefit of Northwest.

(cc)              Saab 340 Aircraft.  Northwest and Mesaba agree that Northwest shall have the right (I) upon at least ninety (90) days prior written notice to require the removal of any one or more of the Saab 340A Aircraft from Mesaba’s fleet,

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up to and including removal of *** Saab 340A Aircraft from Mesaba’s fleet, provided that such Saab 340A Aircraft shall not be removed from Mesaba’s fleet before January 1, 2006, (II) upon expiration of the Lease or upon the occurrence of an early termination event as set forth in the Lease with respect to *** Saab 340B Aircraft in Mesaba’s fleet, to require the removal of such Saab 340B Aircraft from Mesaba’s fleet, up to and including removal of *** Saab 340B Aircraft from Mesaba’s fleet, provided that such Saab 340B Aircraft shall not be removed from Mesaba’s fleet before November 15, 2006 except upon the occurrence of an early termination event as set forth in the Lease, and (III) upon expiration of the Lease or upon the occurrence of an early termination event as set forth in the Lease with respect to *** Saab 340B+ Aircraft in Mesaba’s fleet, to require the removal of such Saab 340B+ Aircraft from Mesaba’s fleet, provided that such Saab 340B+ Aircraft shall not be removed from Mesaba’s fleet before January 1, 2014, except upon the occurrence of an early termination event as set forth in the Lease.

(dd)            For the avoidance of doubt, during the Term of this Agreement, if any Aircraft are lost from Mesaba’s fleet and are replaced with other aircraft, the replacement aircraft will be flown by Mesaba as long as Mesaba operates the aircraft type.

(ee)              In the event Mesaba ceases operating a specific Aircraft type during the Term of this Agreement or will cease operating a specific Aircraft type upon the Termination Date, the parties will cooperate in good faith to develop and implement an orderly wind-down/termination plan including but not limited to responsibility for wind-down costs (other than aircraft return costs which are governed by this Agreement), and such plan will be implemented over a period not to exceed nine (9) months.

(iii)                               Additional Equipment Removal Rights.  Notwithstanding Section 3.02(a)(ii), in the event of (aa) an event giving rise to Northwest’s right to terminate this Agreement pursuant to Section 10.03(e) and (bb) Northwest has not yet exercised its termination rights, (1) if the event is not resolved within ***, Northwest shall have the right to terminate Leases for, and take immediate possession of, up to *** CRJ-200/440 Aircraft and related CRJ Spare Engines selected by Northwest, (2) if the event is not resolved within ***, Northwest shall have the right to terminate Leases for, and take immediate possession of, up to an additional *** CRJ-200/440 Aircraft and related CRJ Spare Engines selected by Northwest, and (3) if the event is not resolved within ***, Northwest shall have the right to terminate Leases for, and take immediate possession of, up to an additional *** CRJ-200/440 Aircraft and related CRJ Spare Engines selected by Northwest, and (4) if the event continues for a period in excess of ***, Northwest shall have the right to select and terminate Leases for, and take immediate possession of, *** CRJ-200/440 Aircraft and the related CRJ Spare Engines in Mesaba’s fleet.

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(iv)                              Unscheduled Aircraft.  Northwest and Mesaba shall mutually determine the appropriate level of unscheduled Aircraft to be included in Mesaba’s fleet from time to time.

(v)                                 Spare Engine Requirements.  Subject to Section 3.02(a)(i) above, Northwest and Mesaba shall mutually determine the appropriate quantity of CRJ Spare Engines to be included in Mesaba’s fleet from time to time.

(vi)                              Other RJ Operations.  The parties agree that notwithstanding anything to the contrary in this Agreement, Northwest has a one-time right to enter an airline services agreement with an airline other than Mesaba or Pinnacle Airlines, Inc. (“Pinnacle”) for such airline to finance and operate between *** and *** CRJ-200/440 Aircraft as an Airlink Carrier, provided that (aa) such CRJ-200/440 Aircraft shall not operate regularly scheduled flights which originate or terminate at MSP, DTW or MEM, and (bb) substantially all of such CRJ-200/440 Aircraft are placed in service for the benefit of Northwest within a period of sixty (60) days of implementation of the arrangement with such other airline.

(b)                                 Induction Costs.  All one-time expenses which are associated with inducting CRJ-200/440 Aircraft into Mesaba’s fleet shall be paid one hundred percent (100%) by Mesaba; provided, however, that (i) if Northwest removes the Avro Regional Jet Aircraft from Mesaba’s fleet pursuant to Section 3.02(a)(ii)(bb)(i) above and replaces the Avro Regional Jet Aircraft with new CRJ-200/440 Aircraft or new 70-seat aircraft, Northwest will be responsible for all one-time expenses associated with inducting such CRJ-200/440 Aircraft or 70-seat aircraft up to an amount of $*** per replacement aircraft, and further provided that Northwest may utilize manufacturer credits to pay such amounts per Aircraft as and to the extent Northwest has available and Mesaba can utilize such manufacturer credits to pay for such induction expenses, and (ii) if Northwest provides Mesaba with used CRJ-200/440 Aircraft, Northwest will be responsible for the costs of conforming such used aircraft to Northwest’s specifications used for the *** CRJ-200/440 Aircraft delivered to Mesaba pursuant to Section 3.02(a)(i)(aa) above, including such items as aircraft livery, interior modifications and maintenance induction.

(c)                                  Termination Costs.  All return costs and expenses associated with the return of Saab 340 Aircraft shall be paid ***; provided, however, that (i) to the extent *** has previously paid *** for part or all of such return costs and expenses through ***, *** rather than *** shall be responsible to pay such portion of the return costs and expenses for such Saab 340 Aircraft, and (ii) return costs and expenses with respect to the eleven Saab 340B turboprop aircraft in Mesaba’s fleet shall be governed by the letter agreement dated March 25, 2003 among Northwest, Mesaba and Mesaba Holdings, Inc.  All return costs and expenses associated with the return of CRJ-200/440 Aircraft shall be paid *** (and *** shall have no obligation to reimburse *** for such costs and expenses) and ***; provided, however, in the event Northwest exercises its Equipment removal rights pursuant to Section 3.02(a)(ii)(aa) above, *** share of return costs and expenses or meet the return conditions in the Leases for the Aircraft and CRJ Spare Engines that are thus removed from Mesaba’s fleet unless (i) Northwest intends to return such Equipment to the lessor under the Leases and (ii) Mesaba has operated the Equipment for more than *** years.  If the Avro Regional Jet Aircraft are returned to Northwest at the final expiration date of the applicable Lease, all return costs and expenses associated with the return of the Avro

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Regional Jet Aircraft shall be paid ***; provided, however, that with respect to such Avro Regional Jet Aircraft which are leased by Northwest from third parties, *** shall not be obligated to pay an amount for such return costs and expenses that exceeds the amount *** for return costs and expenses if *** is then obligated to return such Aircraft to such ***.  If the Avro Regional Jet Aircraft are returned to Northwest prior to the final expiration date of the applicable Lease, all return costs and expenses associated with the return of the Avro Regional Jet Aircraft shall be paid ***; provided, however, that (i)  *** shall not be obligated to pay an amount for such return costs and expenses that exceeds the amount *** may be obligated to pay (x) the holders of any debt financing or (y) in order to exercise any rights it may have under any residual value or deficiency agreement, in either case in connection with the return of such Avro Regional Jet Aircraft, (ii) with respect to such Avro Regional Jet Aircraft which are leased by Northwest from third parties, *** shall not be obligated to pay an amount for such return costs and expenses that exceeds the amount *** for return costs and expenses if *** is then returning such Aircraft to such *** (or such amount as *** is otherwise then obligated to pay the ***), (iii) the return costs and expenses associated with the Avro Regional Jet Aircraft engine leases and simulator agreements shall be paid *** and ***, and (iv) *** total payment obligation for return costs and expenses for such Avro Regional Jet Aircraft engine leases and simulator agreements shall not exceed ***.  In all cases of returned aircraft Mesaba shall use its reasonable commercial efforts to minimize such return costs and expenses.

(d)                                 Aircraft Re-certification.  Northwest may, at its sole option, direct Mesaba to take such actions as are necessary to cause 44-seat Aircraft to be re-certificated as 50-seat Aircraft or to take such actions as are necessary to cause 50-seat Aircraft to be re-certificated as 44-seat Aircraft and all Direct Costs which are associated with such Aircraft re-certifications shall be paid ***.  Any such Aircraft re-certifications will be accomplished within a mutually agreed time frame, but in any event within sixty (60) days unless otherwise directed by Northwest.

Section 3.03     Lease of the Equipment.  As of the Effective Date, Mesaba and Northwest (and/or an Affiliate of Northwest) have entered into Leases with respect to the thirty-five (35) Avro Regional Jet Aircraft in Mesaba’s fleet and agree to enter into (or, as to Northwest, Northwest agrees to cause such Affiliate as Northwest may designate to enter into) a Lease with respect to each CRJ-200/440 Aircraft and each CRJ Spare Engine added to Mesaba’s fleet when and as Northwest takes delivery of such additional Equipment if Northwest has determined to use such Equipment for Regional Airline Services pursuant to this Agreement.  As of the Effective Date, Mesaba and Northwest (and/or an Affiliate of Northwest) have entered into Leases with respect to the forty-nine (49) Saab 340B+ Aircraft in Mesaba’s fleet, Mesaba and Pinnacle have entered into Leases with respect to the eleven (11) Saab 340B Aircraft in Mesaba’s fleet, and Mesaba and third parties have entered into Leases with respect to the three (3) Saab 340A Aircraft in Mesaba’s fleet.  Mesaba and Northwest hereby agree to amend any of the Leases for the Saab 340B+ Aircraft and the Avro Regional Jet Aircraft as may be necessary to take into account the terms and conditions of this Agreement.

Section 3.04     Terms of the CRJ Leases.  Each Lease for the CRJ-200/440 Aircraft and the CRJ Spare Engines shall be substantially in the forms of Exhibit A-1 and Exhibit A-2, respectively, and shall include the following terms:

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(a)                                  the term of each Lease shall be for a period ending on the Termination Date; provided, however, no Lease shall be for a term longer than the term of the related head lease, if any;

(b)                                 the rent for CRJ-200/440 Aircraft shall equal the applicable CRJ 200/440 Aircraft Rental Expense and shall be payable monthly in advance;

(c)                                  the rent for the CRJ Spare Engines shall equal the CRJ Spare Engine Rental Expense and shall be payable monthly in advance; and

(d)                                 the Leases shall include such terms as are necessary to conform provisions of the Leases to the head lease and to any ancillary documents actually entered into by Northwest or any of its Affiliates in connection with such Equipment (to the extent Northwest requests conformation).

Section 3.05     Manufacturer Benefits Agreement.  Pursuant to a letter dated June 27, 2005 (the “Letter Agreement”) from Northwest to Bombardier Aerospace (“Bombardier”), and pursuant to a Manufacturer Benefits Agreement, dated as of the date hereof, between Northwest and Mesaba, Northwest has made available to Mesaba certain benefits under the Purchase Agreements between Northwest and Bombardier, which benefits relate to, among other things, manufacturer credits, inventory service representatives, field service representatives and technical manuals.

Section 3.06     Equipment Maintenance, Servicing and Cleaning.  Mesaba shall be responsible for all aspects of the maintenance in accordance with the Maintenance Program (including any maintenance or modifications required by FAA airworthiness directives and all routine and non-routine maintenance), servicing and cleaning (including painting of aircraft exteriors and replacement of worn interior items) of the Equipment (except for ground handling as specified in Section 4.02).  With respect to the CRJ-200/440 Aircraft and CRJ Spare Engines, Mesaba’s responsibility with respect to the Maintenance Program includes, but is not limited to, incorporating the latest revision of the Original Equipment Manufacturer (OEM) Maintenance Program, collecting log page, non-routine, equipment check findings and Service Difficulty Reports (SDR).

Any Maintenance Program changes on the CRJ-200/440 Aircraft and CRJ Spare Engines that involve expenses pursuant to Exhibit E, Section 1.03 Direct Expenses shall be reviewed by Northwest prior to implementation and will include financial justification/support provided by Mesaba consistent with internal Northwest review requirements (e.g. net present value financial analysis).  Mesaba, however, may on its own authority and cost (with no reimbursement from Northwest) make maintenance program changes on the CRJ-200/440 Aircraft and CRJ Spare Engines.

On a quarterly basis during the Term of this Agreement, Mesaba will provide to Northwest a list of Maintenance Program changes on the CRJ-200/440 Aircraft and CRJ Spare Engines, including required labor, estimated costs to implement, any expenses that are deemed Exhibit E, Section 1.03 expenses and implementation status.  The list shall include:

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(a)                                  Deletion or escalation of a routine task (this does not include a complete “check” such as “A” check),

(b)                                 Deletion of steps to a routine task or procedure that may result in a change to the task intent or task scope,

(c)                                  De-escalation of a task,

(d)                                 Escalation or de-escalation of a “check” such as an “A” check,

(e)                                  Addition of a routine task (adding a function not currently being performed), and

(f)                                    Addition of steps to a routine task or procedure that may result in change to the intent or work scope (a change of access or area for inspection, and/or change of method for inspection).

Section 3.07     CRJ-200/440 Aircraft Maintenance Agreements.

(a)                                  Mesaba shall utilize the Northwest selected vendor(s) for all major shop-level engine maintenance and heavy airframe maintenance in accordance with terms and conditions negotiated by Northwest after review and concurrence by Mesaba that such agreements contain reasonably satisfactory arrangements in respect of Mesaba’s operational requirements.

(b)                                 In the event Northwest enters into agreements for auxiliary power unit (APU) and associated component maintenance, avionics maintenance and/or landing gear overhauls with respect to the Aircraft, Mesaba shall utilize the vendors in such agreements for such services; provided, however, Mesaba’s utilization of such vendors shall be subject to (i) termination of Mesaba’s existing vendor contracts, if any, and Northwest’s payment of any early termination penalties imposed pursuant to Mesaba’s contracts and (ii) reasonably satisfactory arrangements in respect of Mesaba’s operational requirements.

(c)                                  In the event spare engine and/or spare parts pooling agreements are established for Airlink Carriers, Mesaba will participate in such agreements so long as such agreements reasonably address Mesaba’s inventory needs, logistics requirements and configuration concerns and are not contrary to any FAA regulation.

(d)                                 In the event Mesaba is or becomes a party to such agreements as outlined in this Section, Mesaba shall not execute any amendment or side letter to any of those agreements without Northwest’s prior written consent.

(e)                                  The use of such vendors and related agreements by Mesaba as provided for in this Section 3.07, shall be subject to Mesaba formally approving such vendors as part of its FAA approved Maintenance Program, with such approvals not unreasonably withheld.  Pursuant to Mesaba’s FAA approved Maintenance Program the use of such vendors and related agreements may be terminated by Mesaba, with the consent of Northwest, with such consent not being unreasonably withheld, as a remedy for quality control related issues associated with non-compliance

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with the Mesaba FAA approved Maintenance Program or FAA regulatory requirements.

Section 3.08     CRJ-200/440 FAA Airworthiness Directives.  Pursuant to Section 3.06, Mesaba shall be financially responsible for maintenance or modifications required by FAA Airworthiness Directives (ADs) with respect to the CRJ-200/440 Aircraft and CRJ Spare Engines.  Expenses associated with such ADs are not Direct Expenses as defined per Exhibit E, Section 1.03 below.  However,  if during the course of a normally scheduled maintenance visit or an accelerated heavy maintenance visit agreed to by Northwest the maintenance work that is performed also accomplishes the requirements of the AD, Northwest will pay for the AD costs as a Direct Expense under Exhibit E, Section 1.03; provided, however, if the work/costs incurred to accomplish the requirements of the AD are incremental to the other required maintenance performed during the visit, then Mesaba will remain financially responsible for the costs of compliance with the AD.

Section 3.09     CRJ-200/440 Aircraft and Engine/APU Configuration. Mesaba shall be responsible for review, justification and implementation of OEM safety and reliability service bulletins with respect to the CRJ-200/440 Aircraft, the CRJ Spare Engines and the CRJ APUs.  In order to maintain consistency in engine and APU configuration, Northwest will work with the respective Airlink Carriers to create and maintain one Engine Configuration Specification Manual (CSM) and one APU CSM.  Mesaba agrees to participate in the CSM process, and Northwest shall obtain the concurrence of Mesaba prior to any changes being made to the CSMs, including incorporation of any service bulletins, and Mesaba shall not unreasonably withhold such concurrence.  If concurrence between the parties cannot be achieved, then Mesaba may, on its own authority and cost (with no reimbursement by Northwest) incorporate revisions to the CSM.  Upon completion of this Agreement and if requested by Northwest, Mesaba shall restore any engine or APU to CSM configuration at Mesaba’s sole cost.

Northwest shall have responsibility for oversight of Aircraft modifications and/or projects for incorporation on the Mesaba CRJ fleet subject to the following criteria:

(a)                                  All Aircraft modifications/projects that involve expenses deemed Exhibit E, Section 1.03 Direct Expenses, shall, prior to implementation, be treated in a manner consistent with internal Northwest standards and procedures for approval by Northwest.  Mesaba shall request funding for modifications/projects involving Exhibit E, Section 1.03 Direct Expenses, through the Northwest required process, including use of Northwest forms.  Should Northwest not approve such modifications or projects, Mesaba may elect to perform such activity solely at its expense and shall perform such actions in accordance with terms of its Aircraft Lease,

(b)                                 All Engine/APU costs involving work outside the scope of a third-party contract shall require Northwest workscope approval prior to shop induction,

(c)                                  A listing of all in-production and pending ADs, Notice of Proposed Rule Making (NPRM), safety-related, reliability, operator-designed and Supplemental Type Certificate (STC) Aircraft projects shall be provided to Northwest on a quarterly basis.  The listing shall include Aircraft/Engine/APU effectivity and implementation status.  Such

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information shall be treated as confidential in nature in accordance with Section 6.04 of this Agreement.

The CRJ-200/440Aircraft shall be included in the Northwest Reliability Control Board (RCB) Fleet Briefing twice per year.  The fleet briefing content will be similar to Northwest operated aircraft.  Mesaba agrees to provide the following information, at the minimum, subject to mutual agreement of the parties as to specific details:

(i)                                     Fleet performance (i.e. On-Time, On-Time within 30 minutes, Completion Factor and Operational Difficult Index) vs. mutually agreed goals and vs. other CRJ-200/440 operators as applicable,

(ii)                                  AD and safety-related modifications/projects,

(iii)                               Top five (5) reliability drivers with root cause and corrective action,

(iv)                              Engine performance (i.e. removal rate, low-time engine removal rate), and

(v)                                 Routine and Periodic Maintenance Intervals and Maintenance Program status with differences that exist against mutually agreed comparative programs, and in comparison to other CRJ-200/440 operators as applicable.

Section 3.10     Third Party Guarantees and Warranties.  Mesaba shall administer, track and pursue warranty and guaranty claims under the purchase, support and service agreements for the Equipment, so as to minimize operating costs for the Equipment.  Such efforts shall include establishment of all systems and procedures necessary to track and submit warranty and guaranty claims, including providing reports and information required to be provided under the purchase, support or services agreement.  Mesaba shall not operate or maintain the Equipment in a manner that could result in any warranty or guaranty being terminated or voided, without the prior written consent of Northwest.

Section 3.11     Related Transfer Arrangements.  All leases and subleases of simulators, tooling and spare parts inventory agreements and vendor and/or maintenance agreements with respect to the Equipment (collectively “Support Agreements”) entered into by Mesaba after the Effective Date shall be assignable to Northwest without the consent of the other party to such Support Agreement on termination of this Agreement.  On termination of this Agreement, Mesaba shall, at Northwest’s option, assign to Northwest such Support Agreements as Northwest shall designate.  Mesaba shall use its best efforts to obtain the consent of the other party to any such Support Agreements in effect as of the Effective Date and, subject to obtaining such consents, if necessary, shall, at Northwest’s option, assign such Support Agreements as Northwest shall designate to Northwest on termination of this Agreement.  On termination of this Agreement, Northwest shall have the option to purchase from Mesaba all simulators, tooling and spare parts inventory then owned by Mesaba which are used with or related to the Equipment for an amount equal to such assets’ then fair market value.  In the event Northwest invokes its Equipment removal rights under Section 3.02 above, on the Equipment removal date and for a period of thirty (30) days thereafter, Northwest shall have the option to purchase from Mesaba all

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simulators, tooling and spare parts inventory then owned by Mesaba which are used with or related to the returning Equipment for an amount equal to such assets’ then fair market value.  Upon termination of this Agreement or upon removal of Equipment from Mesaba’s fleet pursuant to Section 3.02 above, Mesaba shall make available to Northwest at no cost all aircraft records required in order to operate and maintain the Equipment.

Section 3.12     Equipment Financing Coordination.  Mesaba shall coordinate and cooperate with Northwest with respect to Equipment sale, purchase and lease transactions.  Such coordination and cooperation shall include, but is not limited to, cooperating with Northwest in structuring the closing of Equipment sale, purchase or lease transactions in a manner that will minimize the imposition of any local, city, county, state, provincial, federal or foreign taxes or other governmental transfer charges related to such transactions, providing Northwest with financial information (audited and unaudited) that Northwest may then provide to third parties, assisting Northwest in raising capital through the sale of either debt and/or equity in connection with the financing or leasing of the Equipment where and as requested by Northwest (including but not limited to participating in meeting with the manufacturer, potential investors and sources of financing or lease equity to discuss Mesaba’s financial and operational performance and outlook), and full cooperation in meeting appropriate return conditions of the Equipment upon expiration of the Equipment’s Lease.

Section 3.13     Spare Parts Inventory; Application of Credits.  If Mesaba acquires spare parts or inventory from Bombardier, Mesaba shall purchase from Northwest manufacturer, supplier or servicer credits obtained from third parties at the face value of the credits in an amount equal to the amount to be purchased from Bombardier (but only to the extent Bombardier will accept such credits).  In addition, Mesaba shall purchase from Northwest credits in amount equal to any service provided by Bombardier where credits are accepted by Bombardier, provided that if Mesaba receives credits from Bombardier in connection with Mesaba’s purchase of CRJ-200/440 Aircraft pursuant to Section 3.02(a)(i)(aa) above, Mesaba may utilize such credits prior to purchasing credits from Northwest.  Following notification by Mesaba to Northwest of Mesaba’s intent to utilize credits, Northwest shall deduct the amount of such credits from the next payment due to Mesaba hereunder, and on such date, Northwest shall deliver to Mesaba a credit memorandum equal to the amount of such credits purchased by Mesaba.

ARTICLE IV   

ANCILLARY ARRANGEMENTS

Section 4.01     Coordination with Mesaba.

(a)                                  Schedules and Timetables.  Northwest shall file and maintain schedules with all applicable schedule distribution systems for all Scheduled Flights, and such schedules shall be filed and maintained by Northwest together with the schedules for its flights.  Northwest shall include and list all Scheduled Flights providing Regional Airline Services in the schedule publication program of Northwest.  Northwest shall include Scheduled Flights operated by Mesaba in all appropriate flight information systems on which Northwest flights are listed.

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(b)                                 Travel Privileges.  Northwest and Mesaba shall each be entitled to make available for their respective employees and members of their respective Boards of Directors, the travel privileges set forth on Exhibit F attached hereto in accordance with the terms and conditions set forth therein.

(c)                                  United States Weather Bureau Information.  Upon request of Mesaba or its flight crews, Northwest shall, pursuant to a separate Agreement, dated December 18, 1997, by and between Northwest and Mesaba, or any amendment thereto or successor agreement, furnish Mesaba such weather information or data as may be produced by or available to Northwest (subject to any restrictions imposed by third party data providers); provided, however, that neither Northwest nor its employees will be responsible or liable for the accuracy thereof.

Section 4.02     Ground Handling and Dangerous Goods Handling; Technological Improvements; Weather-event Recovery

(a)                                  Ground Handling.  The ground handling functions for Regional Airline Services operated pursuant to this Agreement shall consist of the following functions:  (i) all gate check-in activities, (ii) passenger enplaning/deplaning activities, (iii) sky cap and wheelchair services, (iv) aircraft loading/unloading services, included but not limited to airside busing, (v) passenger ticketing, (vi) jetbridge maintenance, (vii) janitorial services, (viii) deicing services, (ix) pushback, tow or taxi, (x) airstarts, and (xi) aircraft cleaning, including but not limited to overnight cleaning, lavatory service and water service (collectively, the “Ground Handling Functions”).

With respect to Scheduled Flights or Charter Flights operated by Mesaba with Saab 340 Aircraft, (i) at Mesaba Service Cities, Mesaba shall be responsible for performing all the Ground Handling Functions, including but not limited to providing passengers with the services specified in Exhibit D, Sections 1.01(c) and 1.01(d) hereto, (ii) at Northwest Service Cities, Northwest shall be responsible for performing all the Ground Handling Functions, including but not limited to providing passengers with amenities, denied boarding compensation and transportation to their destinations by other means in accordance with Northwest’s policies and procedures; Northwest agrees to provide such Ground Handling Functions to Mesaba at Northwest Service Cities at the rate of $*** per turn for aircraft with 20 to 39 passenger seats; such rates shall be adjusted each April 1 by increasing such rates by the CPPI, but in no event shall an annual adjustment result in an increase of more than *** percent (***%); Mesaba shall at its sole expense provide to Northwest any specialized equipment necessary to handle the Saab 340 Aircraft at Northwest Service Cities; and (iii) at DTW, MEM and MSP, Mesaba shall be responsible for performing the Ground Handling Functions listed in sub-sections (i), (ii), (iv), (viii), (ix) and (xi) of the definition of Ground Handling Functions, and Northwest shall be responsible for performing all other Ground Handling Functions.

With respect to Scheduled Flights or Charter Flights operated by Mesaba with Avro Regional Jet Aircraft or ▇▇▇-▇▇▇/▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ shall be responsible for performing all of the Ground Handling Functions.

Notwithstanding anything to the contrary in this Agreement, Northwest may, at its option, require Mesaba upon ninety (90) days prior written notice to utilize Northwest, a Northwest-designated

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contract agent, or Mesaba’s own personnel and equipment to perform the Ground Handling Functions at a Mesaba Service City, a Northwest Service City or a Hub City.

(b)                                 Dangerous Goods Handling.  At Mesaba Service Cities and at Hub Cities where Mesaba is responsible for performing gate check-in and aircraft loading/unloading services, Mesaba shall comply with Northwest’s policies and procedures with respect to the handling of Dangerous Goods; provided, however, that Northwest acknowledges that Mesaba has not in the past, and will not in the future, carry Dangerous Goods on any flight operated with Saab 340 Aircraft.

(c)                                  Weather-event Recovery.  With respect to recovery from weather events that disrupt the Regional Airline Services operated by Mesaba, Mesaba’s System Operations Control shall coordinate with Northwest’s System Operations Control for returning to normal operations.

Section 4.03     Facilities.

(a)                                  Hub Cities and Northwest Service Cities.  During the term hereof, Northwest will provide Mesaba, at no cost to Mesaba, with access to a portion of the premises and facilities leased by Northwest pursuant to Northwest’s lease with the applicable airport authority at the Hub Cities and Northwest Service Cities on the terms and conditions set forth in the form of Facilities Use Agreement attached hereto as Exhibit H (the “Facilities Use Agreement”).  Northwest, in its sole discretion, shall designate from time to time the portion of such premises and facilities to be used by Mesaba solely for the performance of Regional Airline Services hereunder.  In the event Northwest determines that Mesaba requires additional facilities at any of the Hub Cities or Northwest Service Cities for the performance of Regional Airline Services, Northwest shall use its reasonable efforts to obtain such facilities and provide them to Mesaba at no additional charge to Mesaba.  Northwest and Mesaba agree that Northwest may relocate Mesaba to comparable facilities at the Hub Cities and Northwest Service Cities, provided that Northwest pays Mesaba’s reasonable relocation expenses in connection with any such relocation.  Upon request by Northwest, Mesaba agrees to use its best efforts to obtain signatory carrier status at any Hub City or Northwest Service City and shall perform all conditions required by the applicable airport authority to obtain such status, including without limitation the posting of a bond or letter of credit to the airport authority, provided that, if Mesaba becomes a signatory carrier at any Hub City or Northwest Service City, Mesaba shall vote as directed by Northwest on any matters submitted to the signatory carriers for a vote.  Northwest shall cooperate with Mesaba in obtaining such signatory status at any such airport.

(b)                                 Mesaba Service Cities.  During the term hereof, at all Mesaba Service Cities and at any other location where Mesaba handles flights operated by Mesaba hereunder or by Northwest pursuant to a ground handling agreement, Mesaba shall be responsible for obtaining, constructing and maintaining, at no cost to Northwest (other than amounts payable by Northwest pursuant to the next sentence), adequate airport facilities and equipment consistent with Northwest’s standards to provide such ground handling services.  With respect to (i) flights operated by Mesaba with Avro Regional Jet Aircraft or CRJ-200/440 Aircraft which are handled by Mesaba, or (ii) flights operated by Northwest which are handled by Mesaba, Mesaba will allocate amounts payable or assessed by the airport in connection with such flights for joint or

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common use facilities and Northwest will reimburse Mesaba for such expenses in accordance with Section 5.03 below (for Northwest-operated flights), in accordance with Section 1.09 of Exhibit C (for flights operated by Mesaba with Avro Regional Jet Aircraft) and pursuant to such separate ground handling agreement (for flights operated by Mesaba with CRJ-200/440 Aircraft).

(c)                                  Maintenance Facilities.  During the term hereof, Mesaba shall be responsible for obtaining and maintaining adequate maintenance facilities required for the maintenance of all Equipment operated or utilized in connection with the performance of Regional Airlines Services hereunder (the “Maintenance Facilities”).   In the event Northwest elects to provide any Maintenance Facilities to Mesaba, such facilities will be provided on the terms and conditions set forth in the Facilities Use Agreement or such other mutually agreeable terms and conditions.

(d)                                 Airport Landing Fees.

(i)                                     Mesaba shall be responsible for all Airport Landing Fees (as defined in Article I of this Agreement) with respect to flights operated with Saab 340 Aircraft at all airports to which it provides Regional Airline Services pursuant to this Agreement and at all airports to which a Saab 340 Aircraft Scheduled Flight, Non-Scheduled Flight or Charter Flight is diverted.

(ii)                                  Subject to the consent of the applicable airport authority and Northwest’s receipt of a copy of any report submitted by Mesaba to any airport authority for purposes of calculation of Airport Landing Fees (as defined in Exhibit C below), with respect to flights operated hereunder with Avro Regional Jet Aircraft, (aa) Northwest shall be invoiced for and shall pay all applicable Airport Landing Fees at Hub Cities and Northwest Service Cities and at all airports to which a Scheduled Flight, Non-Scheduled Flight or Charter Flight is diverted, or Mesaba shall be invoiced for and shall pay all applicable Airport Landing Fees at Hub Cities and Northwest Service Cities and at all airports to which a Scheduled Flight, Non-Scheduled Flight or Charter Flight is diverted, and following Northwest’s receipt of a report by Mesaba detailing payment of such Airport Landing Fees, Northwest shall reimburse Mesaba for such amounts in accordance with Section 1.09 of Exhibit C, (bb) Mesaba shall be invoiced for and shall pay all applicable Airport Landing Fees at Mesaba Service Cities and at all airports to which a Scheduled Flight, Non-Scheduled Flight or Charter Flight is diverted, and following Northwest’s receipt of a report by Mesaba detailing payment of such Airport Landing Fees, Northwest shall reimburse Mesaba for such amounts in accordance with Section 1.09 of Exhibit C.

(iii)                               Subject to the consent of the applicable airport authority and Northwest’s receipt of a copy of any report submitted by Mesaba to any airport authority for purposes of calculation of Airport Landing Fees (as defined in Article I of this Agreement), with respect to flights operated hereunder with ▇▇▇-▇▇▇/▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ shall be invoiced for and shall pay all applicable Airport Landing Fees at Hub Cities, Northwest Service Cities, Mesaba Service Cities and at all airports to which a Scheduled Flight, Non-Scheduled Flight or Charter Flight is diverted, and following Northwest’s receipt of

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a report by Mesaba detailing payment of such Airport Landing Fees, Northwest shall reimburse Mesaba for such amounts in accordance with Section 1.03 of Exhibit E.

(e)                                  Passenger Facility Charges.  Northwest shall be responsible for the collection and remittance of all passenger facility charges, if any, at all Service Cities and the Hub Cities.

(f)                                    Signage.  Subject to Governmental Regulations, Mesaba shall display at all ticketing and check-in locations such signage or other forms of advertisement to identify and promote Northwest’s service as Northwest may specify and as approved by the applicable airport authority.  All signage utilizing the NW Identification shall be provided by Northwest at its sole cost, shall be the property of Northwest and shall be subject to the applicable provisions of Article VII below.  Mesaba shall not use the Mesaba Identification on any signage or other forms of advertisement used to identify or promote the Regional Airline Services (except as otherwise required by Governmental Regulations).

(g)                                 Related Transfer Arrangements.  All leases and subleases of airport facilities used in connection with Regional Airline Services (collectively, “Facilities Leases”) entered into by Mesaba after the Effective Date shall be assignable to Northwest without the consent of the other party to such Facility Lease upon termination of this Agreement, the withdrawal of Scheduled Flights from such airport or upon written notice from Northwest to Mesaba, provided that if the consent of the facility lessor is required by contract or Governmental Regulations, Mesaba will use its best efforts to obtain such consent at the time the Facility Lease is entered into and to incorporate such consent in the terms of the Facility Lease.  Upon termination of this Agreement, the withdrawal of Scheduled Flights from such airport or upon receipt of written notice from Northwest, upon Northwest’s option, Mesaba shall assign all of its right, title and interest in and to such Facilities Leases, together with all improvements and fixtures located on such facilities as Northwest shall designate and Mesaba shall use its best efforts to obtain the consent of the other party to any such assignment.

(h)                                 Facilities Lease Option.  Notwithstanding anything to the contrary in this Agreement, Northwest may, at its option, elect to hold the leasehold interest in any facilities to be used by Mesaba at any new or existing Service City, and in the event Northwest exercises this option (i) Northwest shall enter into a Facilities Lease with the lessor of such facilities, (ii) Mesaba shall utilize such facilities pursuant to a Facilities Use Agreement with Northwest, (iii) the rent/facilities charges payable by Mesaba in such Facilities Use Agreement shall be the same as Northwest’s Direct Cost under the Facilities Lease for the facilities used by Mesaba, (iv) the Facilities Use Agreement shall terminate when Mesaba ceases to operate Regional Airline Services at the airport, and (v) Northwest shall lease facilities which are reasonably suitable for Mesaba’s operational needs and, with respect to new Service Cities, Northwest shall complete the leasing arrangements in a manner that will allow Mesaba adequate time to prepare to commence Regional Airline Services at the Service City in accordance with the Annual Operating Plan or as otherwise scheduled by Northwest.

Section 4.04     Data Communications. Northwest shall provide to Mesaba at all Service Cities and Hub Cities, *** data circuit lines, any required data networking equipment, the use of computer reservation terminals, printers and modems, including hardware, software

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and maintenance support for such equipment (the “Data Communication Equipment”).  Such Data Communication Equipment shall be of the same type and quality as that used by Northwest in its airline operations.  In connection with the commencement of Regional Airline Services at a new Service City, Northwest will provide Mesaba with Northwest’s standard Data Communications Equipment ***.

Section 4.05     Security.  Airport security and passenger screening is conducted by the TSA as of the Effective Date.  To the extent airlines have responsibility for airport security and/or passenger screening (i) at all Northwest Service Cities and the Hub Cities, Northwest is solely responsible for Mesaba’s allocated share of all maintenance expenses associated with all security equipment and Mesaba’s allocated share of all personnel expenses (including overtime) associated with the operation of the equipment and all airport security-related functions, including, without limitation, passenger screening and activities related to security directives imposed by Governmental Regulations, and (ii) at Mesaba Service Cities, Mesaba is solely responsible for all or its allocated share of all maintenance expenses associated with all security equipment and all or its allocated share of all personnel expenses (including overtime) associated with the operation of the equipment and all airport security related functions, including, without limitation, passenger screening and activities related to security directives imposed by Governmental Regulations; provided that, Northwest shall, pursuant to a separate agreement, reimburse Mesaba for all such expenses at Mesaba Service Cities related to passengers and flights utilizing the CRJ 200/440 Aircraft and Avro Regional Jet Aircraft.  Notwithstanding the foregoing, the parties acknowledge and agree that should the U.S. government augment or change the directives, requirements, processes, procedures or the activities related to passenger screening as may be imposed by future Governmental Regulations, then the parties will negotiate in good faith regarding any changes to this Agreement that may be necessary as a result.

Section 4.06     Reservation Services.  During the term of this Agreement, Northwest shall handle, at its sole expense, reservations for all passenger air transportation on Scheduled Flights operated pursuant to this Agreement.  Reservations shall be handled in the same manner and subject to the same standards utilized by Northwest for its own reservations.  All reservations shall be made in the name of Northwest unless otherwise required by Governmental Regulations.  Northwest shall be sole owner of any customer or passenger data relating to the Scheduled Flights and related reservation services.  However, upon the reasonable request of Mesaba, Northwest will share such customer or passenger data relating to the Scheduled Flights and related reservation services when reasonably necessary to resolve Customer/Passenger complaints or claims, or if Mesaba is required to produce such customer or passenger data relating to the Scheduled Flights and related reservation services in response to a valid subpoena, order of a court or other governmental body of the United States or any political subdivision thereof (provided, however, that Mesaba shall have given notice to Northwest and shall allow Northwest to make a reasonable effort to obtain a protective order requiring that such information so disclosed shall be used only for the purposes for which the order was issued) or if otherwise required by law, or if necessary to establish rights or enforce obligations under this Agreement.

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Section 4.07     Ticketing Services and Ticketing Procedures.

(a)                                  Ticketing Services.  At all of its ticketing locations, Northwest shall, ***, sell, issue and exchange tickets for passenger air transportation on all Scheduled Flights to be operated pursuant to this Agreement utilizing Northwest ticket stock and all related accounting forms printed with the Northwest logo, name and format (“Northwest Tickets”).  Northwest hereby appoints Mesaba as its agent, and Mesaba hereby agrees to act as Northwest’s agent, at all Mesaba ticketing locations in connection with the sale and issuance of all passenger tickets by Mesaba and with the same duties owed to Northwest in that capacity as is customary in the industry between airlines.  At all of its ticketing locations, Mesaba shall sell, issue and exchange Northwest Tickets for passenger air transportation on all Scheduled Flights to be operated pursuant to this Agreement and to be provided by and over the routes of Northwest (collectively, “Ticketing Services”).  Nothing in this Section 4.07(a) shall be deemed to alter or conflict with the provisions of Section 9.01 hereof.  Air carriers and other agencies other than Northwest may also issue tickets for travel to be performed by Mesaba.

(b)                                 Booking and Ticketing Procedures.  The procedures followed and standards applied by Mesaba in booking flights and performing the Ticketing Services shall conform in all material respects to Northwest’s own tariffs, procedures and standards applicable to the booking of Northwest flights and the issuance of Northwest Tickets and to the collection and remittance of the proceeds of such sales.  Mesaba employees booking flights and performing Ticketing Services shall adhere to Northwest’s procedures and standards as shall be provided to Mesaba in writing.  In accordance with Section 8.02 below, Mesaba shall be responsible for collecting and shall pay to Northwest any Ticket Taxes and Fees required to be collected under applicable law on Tickets sold by Mesaba utilizing Northwest ticket stock.

(c)                                  Frequent Flyer Program.  Mesaba agrees to accept Northwest frequent flyer tickets and to provide transportation services pursuant to such tickets at no charge to Northwest.  All travel under the frequent flyer program solely on Mesaba shall entitle a passenger to such credit as shall be equivalent to the credit offered on Northwest for comparable mileage segments.  Northwest will provide such credit to members of its frequent flyer program who travel on Mesaba at no charge to Mesaba.

(d)                                 Supplies.  Northwest shall, ***, provide an adequate supply of ticket office forms and specialized supplies (such as baggage tags, but excluding normal office supplies such as paper, stationery, envelopes, memo pads and the like) bearing the NW Identification for use by Mesaba subject to the applicable provisions of Article VII below.

(e)                                  Ticketing Costs.  All travel agency commissions attributable to Scheduled Flights shall be ***.  *** shall pay all computer reservation system fees attributable to passengers on Scheduled Flights.  ***.

Section 4.08     Baggage Handling Procedures.  For Regional Airline Services utilizing the Saab 340 Aircraft, “Baggage Handling Procedures” shall consist of the following:

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(a)                                  At all Northwest Service Cities and Hub Cities, Mesaba and Northwest shall exchange and transfer baggage in accordance with procedures to be mutually agreed upon and generally utilized by the parties.

(b)                                 Subject to Section 4.02(c) above with respect to technological improvements, the procedures utilized by Mesaba in performing such Baggage Handling Services shall conform in all respects to Northwest’s own standards and procedures as adapted to Mesaba’s Aircraft and operations.

(c)                                  With respect to baggage claims, Mesaba shall be responsible for all baggage claim expenses at Mesaba Service Cities, and Northwest shall be responsible for all baggage claim expenses at Hub Cities and at Northwest Service Cities.  Mesaba will make available at the request of any passenger excess valuation insurance, if any, offered by Northwest to the extent such insurance covers Mesaba’s flights and Northwest’s flights.

Section 4.09     Air Cargo Handling Services.  “Air Cargo Handling Services” shall consist of the following:

(a)                                  At each location at which Northwest operates Ticketing Services, Northwest shall *** accept Air Cargo for shipment on flights to be operated by and over the routes of Mesaba or Northwest. Northwest shall issue air waybills covering Air Cargo and shall prepare a “Transfer Manifest” for each Mesaba flight on which there shall be an Air Cargo shipment which transfer manifest shall set forth all Air Cargo to be carried on the flight.

(b)                                 Northwest hereby appoints Mesaba as its agent, and Mesaba hereby agrees to act as Northwest’s agent, at all Mesaba ticketing locations in connection with the sale and issuance of all air waybills by Mesaba and with the same duties owed to Northwest in that capacity as is customary in the industry between airlines.  Mesaba agrees to observe all Northwest procedures and standards applicable to the issuance of air waybills and to the collection and remittance of the proceeds of such sales.  Mesaba employees performing such duties shall adhere to Northwest’s procedures and standards as shall be provided to Mesaba in writing.  In accordance with Section 8.02 below, Mesaba shall be responsible for collecting and shall pay to Northwest any applicable Ticket Taxes and Fees required to be collected under applicable law on air waybills sold by Mesaba utilizing Northwest air waybills.  Nothing in this Section 4.09(b) shall be deemed to alter or conflict with the provisions of Section 9.01 hereof.  Air carriers other than Northwest may also issue air waybills for cargo transportation to be performed by Mesaba.

(c)                                  At Mesaba’s ticketing locations, Mesaba shall provide Air Cargo handling services in connection with the Regional Airline Services for and on behalf of Northwest for Air Cargo carried solely on Mesaba or on both a Mesaba flight and a Northwest flight.  Such handling services shall be performed in accordance with Northwest’s procedures and standards as provided to Mesaba in writing, including but not limited to (1) accepting all Air Cargo in accordance with Northwest’s procedures with the following exceptions (items that will not be accepted):

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(i)                                     Restricted Articles (dry ice will be accepted at a maximum of 5 pounds per container for refrigeration only),

(ii)                                  Articles having a declared value exceeding $*** USD or more,

(iii)                               Adult human remains other than cremated,

(iv)                              Air Cargo shipments having pieces weighing more than *** pounds.  VIP express cargo having pieces weighing more than *** pounds,

unless otherwise mutually agreed, and (2) keeping facilities open at least *** hours before and *** after each Scheduled Flight for customers to deliver and pick up Air Cargo.  Air Cargo will be accepted until *** prior to departure.

(d)                                 For Air Cargo carried solely on Mesaba or on both a Mesaba flight and a Northwest flight, Mesaba and Northwest shall charge rates in accordance with Northwest’s applicable rates and tariffs; such revenues shall be allocated between the parties in accordance with Section 5.01 below.

(e)                                  For purposes of Air Cargo claims, Mesaba will be treated as if it were a party to standard industry ticketing and baggage agreements with Northwest and other air carriers, provided that all damage claims involving routing on both Northwest and Mesaba will be determined and managed by Northwest’s cargo claims department.  If Northwest determines Mesaba is liable for the loss, the claim will be forwarded to Mesaba for review and reimbursement to Northwest.

(f)                                    Northwest shall, at its sole expense, supply Mesaba with all necessary Air Cargo forms and supplies in an agreed upon form with the NW Identification, subject to the applicable provisions of Article VII below.  Northwest and Mesaba shall utilize such forms and supplies when accepting Air Cargo for transport on Mesaba’s flights.

(g)                                 Mesaba agrees that it shall provide necessary training to its employees to satisfy Northwest’s requirements for training of employees with respect to Air Cargo; provided that if Northwest makes any material changes in its training program following the Effective Date, Northwest shall reimburse Mesaba for any incremental costs Mesaba incurs as a result of its compliance with such changes to the training program.

Section 4.10     Use of COMAT.  Northwest and Mesaba shall each provide to the other, at no cost to the other and on a non-discriminatory basis, access to its respective COMAT system for the movement and acquisition of priority aircraft maintenance parts and other company material.  Northwest’s failure to deliver timely a maintenance component via COMAT, whether timely or at all, shall not cause an affected Scheduled Flight to be excluded in calculating Mesaba’s on-time performance and completion factors.  All access shall be consistent with Northwest’s and Mesaba’s respective published COMAT procedures and policies, as amended from time to time.  Northwest shall provide to Mesaba on a non-discriminatory basis, access to Northwest’s VIP express cargo service at a cost of $*** USD per piece.

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Section 4.11     Slots and Route Authorities.  During the Term of this Agreement or upon the expiration or termination of this Agreement, Northwest may, in its sole discretion, require Mesaba to transfer to Northwest or its designee at no charge any airport takeoff or landing slots, route authorities or other regulatory authorities as Northwest shall designate which have been or are being used for Regional Airlines Services under this Agreement, provided that if Mesaba is operating Regional Airline Services at a Service City pursuant to the DOT’s Essential Air Service (“EAS”) program on behalf of Northwest, upon the expiration or termination of this Agreement, Northwest will obtain another operator to provide air service to such city and the parties will cooperate in good faith to transfer the EAS designation and air service responsibility to the new operator.

Section 4.12     Emergency Response and Family Assistance.  Northwest and Mesaba have entered into a Family Assistance Services Agreement, dated March 1, 2005, and retroactively effective as of April 1, 2004, with respect to emergency response and family assistance services to be provided to Mesaba by Northwest in connection with the Regional Airlines Services operated under this Agreement.

Section 4.13     Technology Improvements.  In the event Northwest begins utilizing new technology, tools, systems or procedures for the provision of Regional Airline Services, Mesaba will also utilize such new technology, tools, systems or procedures for performing Regional Airline Services, provided that the net present value of any required capital investment by Mesaba is zero or positive at Mesaba’s cost of capital.

ARTICLE V    REVENUES, PAYMENTS AND SETOFF

Section 5.01     Revenues.  Mesaba acknowledges and agrees that all revenues resulting from the sale and issuance of passenger tickets and cargo air waybills associated with the operation of the Aircraft and all other sources of revenue associated with the operation of the Aircraft are the sole property of Northwest, including without limitation ticket change fees and other fees or charges which are applicable pursuant to Northwest’s tariffs, fuel surcharges, governmental subsidies, revenue guarantees, unaccompanied minor fees, snack/beverage services, luggage fees, advertising revenue, excess baggage fees and nonrevenue pass travel charges; provided, however, that through June 30, 2007 (i) revenues from cargo air waybills associated solely with the operation of the Saab 340 Aircraft are the sole property of Mesaba, and (ii) revenues from cargo air waybills associated with cargo carried on both a Mesaba-operated flight and a Northwest-operated flight will be divided in accordance with the Bilateral Prorate Cargo Agreement, dated December 21, 1998, between Mesaba and Northwest, as amended from time to time.

In addition, Mesaba shall pay Northwest a one-time payment of $*** on the date this Agreement is executed as additional consideration for placing the CRJ-200/440 Aircraft at Mesaba.

Section 5.02     Payments to Mesaba.  Northwest will pay Mesaba for the Regional Airline Services in accordance with Exhibits C, D and E hereto.  The parties will negotiate in good faith with respect to modifying Exhibits C and D to utilize the same payment methodology as is used in Exhibit E.  The parties intend to conclude these negotiations on or

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before December 31, 2005.  In this regard, the parties agree that (i) the transition of the Avro Regional Jet Aircraft and Saab 340 Aircraft payment methodologies to the same methodology as used in Exhibit E will not change the financial outcome for either party with respect to the Avro Regional Jet Aircraft and the Saab 340 Aircraft through March 31, 2007, (ii) Mesaba’s operating expenses used to calculate the payment from Northwest for the Avro Regional Jet Aircraft and the Saab 340 Aircraft shall be *** through March 31, 2007 at the expenses incurred for the twelve-month period ending March 31, 2005 adjusted for average annual PPI percentage increases and adjusted for changes in fleet size, (iii) from the Effective Date until March 31, 2007 the margin with respect to the Avro Regional Jet Aircraft and the Saab 340 Aircraft shall remain unchanged from the margin for such Aircraft for the twelve-month period ending March 31, 2005, (iv) after March 31, 2007, the Margin with respect to each Aircraft type shall be set at the Market Margin Rate, as defined in Exhibit E, (v) after March 31, 2007, Northwest and Mesaba will share any Margin exceeding *** above the base target Margin on a *** basis, Mesaba’s Margin will be *** Margin and such Margin sharing and *** will be calculated on Mesaba’s total operating Margin, not per Aircraft type, (vi) in the event the Avro Regional Jet Aircraft are removed from Mesaba’s fleet, the parties shall reset the then applicable overhead reimbursement rate, and (vii) the parties will negotiate in good faith regarding system-wide service standards for completion factor and minimum on-time reliability to be effective after March 31, 2007 with respect to Regional Airline Services operated by Mesaba, provided that after December 31, 2006 incentive/penalty payments will not exceed *** of Margin.

Section 5.03     Billing.  Northwest and Mesaba shall ▇▇▇▇ each other on a monthly basis (or as otherwise agreed) in respect of amounts owed to each other under this Agreement not contemplated under Exhibits C, D or E.  If such billed items are not paid by the party within sixty (60) days of the statement date, the aggregate amount of undisputed items may be offset against or included in the next scheduled wire transfer pursuant to Exhibits C, D or E.  Disputed amounts must be paid when the dispute is resolved, provided that such amount may be set off against or included in the next scheduled wire transfer pursuant to Exhibits C, D or E if the formerly disputed amount is not paid within seven (7) days of resolution.  Northwest may also offset against the next scheduled wire transfer pursuant to Exhibits C, D or E the amount of any payment (including those under any Lease) with respect to which Mesaba shall have defaulted and shall have failed to cure before the expiration of any applicable grace period.

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Section 5.04     Credit Card Chargebacks.

(a)           Mesaba shall be billed for credit card chargebacks resulting from Mesaba’s noncompliance with Northwest’s credit card acceptance procedures.  Northwest shall apply the same card acceptance procedures and standards to Mesaba as applied to Northwest by Northwest’s credit card contractors.  Northwest will inform Mesaba in writing regarding any material changes in Northwest’s agreements with its credit card contractors to the extent such changes will impact the procedures and standards to be applied by Mesaba.

(b)           With respect to all credit card charge forms returned to Mesaba by Northwest, Northwest will furnish Mesaba with a complete written explanation of the reason therefore accompanied by relevant documentation received from the credit card issuer or credit card holder.

(c)           Upon receipt of a chargeback, Mesaba shall have a reasonable period of time, but not to exceed 60 days, to review the validity of the chargeback notice.  If the chargeback is valid (within the scope of the circumstances for the chargeback), Mesaba shall remit to Northwest a gross amount equal to such credit card charge form.  If, in Mesaba’s good faith opinion, the chargeback is not valid, Mesaba will so notify Northwest and provide Northwest with a complete written explanation of the transaction together with any necessary supporting documentation within the 60-day period.

(d)           All revisions to Northwest’s credit card acceptance procedures must be in writing and must be submitted to Mesaba at least 30 days in advance of the effective date of such procedures or such shorter notification period as Northwest may utilize in notifying its own personnel.  All warning notices must be current and stored in Northwest’s computerized reservation credit card check system and accessible to Mesaba on the transaction date.

Section 5.05     Returned Checks.

(a)           Mesaba shall be billed pursuant to Section 5.04 above for all returned checks resulting from Mesaba’s non-compliance with Northwest’s check acceptance procedures.

(b)           Northwest will furnish Mesaba with a complete written explanation of the reason therefore, accompanied with the relevant documentation.

(c)           Mesaba shall refund Northwest the full amount of the dishonored check within 30 days.  If, in Mesaba’s reasonable opinion, the charge is not valid, Mesaba will so notify Northwest and provide Northwest with a complete written explanation of the transaction together with any necessary supporting documentation within the 30-day period.

(d)           All revisions to Northwest’s check acceptance procedures will be in writing and will be submitted to Mesaba at least 30 days in advance of the effective date of such procedures or such shorter notification period as Northwest may utilize in notifying its own personnel.

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ARTICLE VI   

REPORTING OBLIGATIONS, AUDITING, INSPECTIONS AND CONFIDENTIALITY/PUBLICITY

Section 6.01     Reporting Obligations.

(a)                                  Certain Notices to Northwest.  Mesaba shall give prompt written notice to Northwest of (i) any litigation involving an uninsured claim of more than $*** against Mesaba, (ii) any proceeding before any governmental agency which, if adversely determined, would materially and adversely affect Mesaba’s financial condition, affairs, operations or prospects, including but not limited to any significant FAA enforcement or civil penalty action, and (iii) any other matter which would materially and adversely affect the financial condition, affairs, operations or prospects of Mesaba or its ability to perform its obligations under this Agreement.

(b)                                 Financial and Reporting Covenants.  Mesaba shall provide to Northwest promptly following the filing or providing thereof copies of all financial statements, reports, notices and proxy statements filed with or provided to the Securities and Exchange Commission or the United States Department of Transportation.  Mesaba shall also promptly provide to Northwest notice of and adequate information regarding any material weaknesses noted in any management letters received by Mesaba or its Affiliates from its independent auditors and the company’s responses thereto.  Mesaba shall also provide Northwest with monthly financial statements, annual expense budgets and periodic business plans and related projections.  Mesaba shall not be required to provide any of the foregoing information to Northwest if such information is publicly available and accessible by Northwest.

(c)                                  Certain Notices to Mesaba.  Northwest shall report to Mesaba not later than the last day of each month the number of customer complaints, the completion factor and on-time factor for the previous month related to the Regional Airline Services provided hereunder.  Upon the reasonable prior written request by Mesaba, Northwest shall make available its books and records related to customer complaints in connection with the Regional Airline Services provided hereunder.

Section 6.02     Audits.

(a)                                  Compliance Audits.  Upon the reasonable prior written request by Northwest, Mesaba shall make available its books and records, including but not limited to general ledger backup (monthly) for financial statements and records for operations with respect to this Agreement.  Northwest shall also be entitled to make copies and notes of such information as it deems necessary and to discuss such records and the finances and accounts of Mesaba with the Chief Financial Officer or other employee or agent of Mesaba knowledgeable about such records.  Any audit completed in compliance with this Section 6.02(a) shall be conducted as follows:  (i) Northwest shall give not less than thirty (30) days written notice to Mesaba of its intention to audit Mesaba’s books and records, including a request list of the books and records that are to be made available; (ii) Northwest shall have the right to audit the first nine (9) months of Mesaba’s fiscal year at any time after December 31; and (iii) Northwest shall have the right to audit the last three (3) months of Mesaba’s fiscal year at any time, provided that all issues

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identified in the audit for a fiscal year be finally completed by May 15 of the following fiscal year.  If the audit has not been completed within the time period described above, Northwest forever waives its audit rights for the relevant fiscal year.    Northwest and Mesaba agree that all payments or reimbursements from one party to the other resulting from any audit conducted under this Agreement shall relate only to services, goods or payments to be performed, provided, or made during the period under audit.  For the avoidance of doubt and notwithstanding the foregoing, nothing in this Section 6.02(a) shall preclude Northwest from bringing a breach of contract claim against Mesaba with respect to matters discovered in an audit or otherwise (even if such matter(s) relates to a period previously audited or no longer subject to audit).

(b)                                 Inventory Audits.  At Northwest’s request, during the term of this Agreement Mesaba and Northwest shall conduct an annual inventory audit of all spare parts, tooling and ground support equipment owned by Northwest and leased to Mesaba or owned by Northwest and supplied to Mesaba.  Such audit shall not be requested more than one time per calendar year.  In conducting such audit, the parties shall tabulate the quantity and type of all spare parts and ground support equipment including recognition of spare parts and ground support equipment which were scrapped in the preceding year(s). Such audit, when completed and agreed to by both parties, shall be final.

Section 6.03     Inspections.  Northwest shall be entitled to conduct on-site observations of Mesaba’s in-flight service, flight, maintenance, technical operations, gate-check in service, ground operations, Aircraft cleaning and any and all other services and operations performed under this Agreement to monitor Mesaba’s operations in the same manner as similar functions are evaluated at Northwest.  The purpose of such inspections shall be to determine Mesaba’s compliance with applicable Governmental Regulations, state and local laws, equipment manufacturer’s instructions and the standards established by this Agreement.  Mesaba’s operation will be evaluated according to the same standard as Northwest taking into account the differences in size and operational capabilities between the two airlines.  Such inspections may be announced or unannounced, but under no circumstances shall they interfere with the operation of Mesaba’s business.  Northwest shall report the findings of any such inspection to Mesaba in writing.  Mesaba shall provide a timely written response detailing a plan of corrective action to remedy any deficiencies noted in an inspection.  If any deficiency comes to the attention of Mesaba through audits or any other means, Mesaba shall take immediate corrective action.

Section 6.04     Confidentiality/Publicity.  Each of Northwest and Mesaba agrees that, except as otherwise required by Governmental Regulations or any other applicable law, it shall not disclose to others and shall keep confidential the terms of this Agreement and any confidential, non-public information concerning the other that it obtains as a result of or pursuant to this Agreement.  The Parties agree, however, that each Party may share this Agreement, and the terms and details herein, with its respective outside financial auditors or attorneys without the consent of the other Party, and without breach or violation of this Section 6.04 or this Agreement.  Mesaba shall not issue any press release or public announcement relating to new Scheduled Flights, the cessation of Scheduled Flights in any Service City, schedule changes, customer initiatives, marketing programs or promotions, without Northwest’s prior written approval of the press release or public announcement.  In any such press release or public announcement, Mesaba shall identify itself as a Northwest Airlink carrier.

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ARTICLE VII   

NORTHWEST IDENTIFICATION

Section 7.01     Identification License.  Northwest hereby grants to Mesaba a non-exclusive, non-transferable, non-sublicensable license to use the NW Identification in connection with its operation of the Regional Airline Services as authorized hereunder.

Section 7.02     Designator License.  Northwest hereby grants to Mesaba a non-exclusive, non-transferable, non-sublicensable license to use the Designator in connection with its operation of the Scheduled Flights as authorized hereunder.

Section 7.03     New Identifications.  From time to time in its sole discretion, Northwest may change any NW Identifications and/or Designators upon notice to Mesaba.  After receipt of such notice, Mesaba shall, as soon as practicable, but no later than thirty (30) days thereafter, commence use solely of the new NW Identifications and/or Designators and cease all use of any superseded ones.  Northwest shall reimburse Mesaba for the reasonable out-of-pocket expenses incurred by Mesaba in making such changes.

Section 7.04     Use of Identification.  Northwest shall have exclusive control over the use and display of all NW Identifications and Designators, and Mesaba shall comply with all policies and guidelines of Northwest in this regard.   Mesaba shall use the NW Identifications and Designators in good faith, in a dignified manner and in compliance with good trademark practice.  Mesaba shall use the NW Identifications and Designators exactly as prescribed by Northwest, and shall not use (i) any stylization, abbreviation or variation thereof or (ii) the NW Identifications and Designators in connection or combination with any other Identification, in each case, without Northwest’s prior written consent, which may be withheld in its sole discretion.

Section 7.05     Quality Control.  Mesaba shall use the NW Identifications and Designators only in connection with products and services that comply with the high standards of quality associated with Northwest. At Northwest’s request, Mesaba shall submit representative samples to Northwest of all uses by Mesaba of the NW Identifications and Designators pursuant to this Agreement, including Sections 2.02, 4.03(f), 4.07(d) and 4.09(e).  Mesaba shall receive the prior written approval of Northwest for any new uses of the NW Identifications and Designators, including on any advertising and promotional materials.  Once such approval is received, Mesaba need not resubmit such materials for approval unless they contain non-trivial modifications.

Section 7.06     Reservation of Rights.  All rights not expressly granted to Mesaba hereunder are expressly reserved by Northwest, including without limitation the right to use or license others to use any NW Identifications or Designators.  Mesaba shall not use the NW Identification or Designator except as expressly authorized herein, and has no right to use any other Identification of Northwest other than the specific NW Identification in the exact form prescribed by Northwest from time to time.

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Section 7.07     Ownership.  Mesaba hereby acknowledges that, as between the parties, Northwest is the sole owner of the names “Northwest” and “Northwest Airlink,” the initials “NW,” and any Designators or NW Identifications related thereto or otherwise licensed to Mesaba hereunder.  Mesaba agrees not to directly or indirectly question attack, contest or impugn the validity and/or Northwest’s rights in the Designators and NW Identifications, including without limitation by attempting to register title to or any intellectual property rights in same or by participating in any action or proceeding adverse to Northwest in this regard.  Mesaba agrees to cooperate fully with Northwest in all actions to enforce, police and defend Northwest’s rights in the Designators and NW Identifications, subject to reimbursement for its out-of-pocket expenses.

Section 7.08     Termination.  Should this Agreement expire or terminate for any reason, the licenses in Sections 7.01 and 7.02 shall immediately terminate (although Sections 7.07 and 7.08 shall survive), and Mesaba shall promptly, but in any event within ninety (90) days (one hundred twenty (120) days with respect to any distinctive color scheme), take all such actions as may be necessary to change its facilities, equipment, uniforms, supplies and other materials to cease all use of any Designators and NW Identifications and to avoid any customer confusion or the suggestion or appearance that Mesaba continues to have an operating relationship with Northwest.

Section 7.09     Bankruptcy.  The parties intend that the identity of Mesaba as the licensee hereunder is a material condition to Northwest’s granting of the licenses in 7.01 and 7.02, and that this Agreement should be construed overall as a contract for the personal services of Mesaba.  Therefore, in the event Mesaba becomes subject to a bankruptcy proceeding, the parties intend that this Agreement shall not be assumed and/or assigned by Mesaba or its representative without Northwest’s consent.

ARTICLE VIII   

TAXES AND FEES

Section 8.01     Taxes and Fees.

(a)                                  Mesaba shall be liable for and pay the amount of any taxes (other than Ticket Taxes and Fees which are addressed separately in Section 8.02 below), duties, license fees, assessments, and other charges, together with any interest and penalties thereon, levied, assessed, or imposed by any federal, foreign, state or local taxing or airport authority related or attributable to (i) the property owned or used by Mesaba, and (ii) the performance of Regional Airline Services pursuant to this Agreement.

(b)                                 Excluded from the coverage of Section 8.01(a) are any taxes based on the net income of Northwest.

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Section 8.02     Ticket Taxes and Fees.

(a)                                  For all sales by Mesaba using Northwest ticket stock or air waybills, Mesaba shall be responsible for (1) collecting all Ticket Taxes and Fees, and (2) remitting such Ticket Taxes and Fees to Northwest at the same time as the revenues to which the Ticket Taxes and Fees relate are received by Northwest.  Northwest then shall be responsible for remitting to the appropriate governmental entities and taxing authorities Ticket Taxes and Fees remitted by Mesaba to Northwest.

(b)                                 Mesaba shall indemnify, defend, and hold harmless Northwest and its current or former officers, directors, employees, agents, and its Affiliates (the “NW Indemnitees”) from and against all assessments or payments for Ticket Taxes and Fees related to all sales by Mesaba using Northwest ticket stock or air waybills, and any interest and/or penalties related thereto.  This indemnification specifically includes, but is not limited to, assessments or payments under Sections 4261, 4263, 4271, 4291, 6662, 6672, 6861 or 7275 of the Internal Revenue Code of 1986, as amended, and any successor provisions.  Mesaba further agrees as part of this indemnification to reimburse the NW Indemnitees for any reasonable out-of-pocket expenses, including attorneys’ fees and expenses, the NW Indemnitees have incurred in connection with any such assessment or payment.  The obligations of Mesaba under this Section 8.02(b) shall remain in effect and shall survive without limitation the termination of this Agreement.

Section 8.03     Property Tax, Fuel Tax, and Sales and Use Tax Compliance.

(a)                                  With respect to fuel taxes, Northwest and Mesaba shall cooperate to ensure that Mesaba is filing appropriate fuel tax returns and refund claims to minimize Mesaba’s taxes.  Northwest shall determine which entity, Northwest or Mesaba, shall be responsible for preparing and filing appropriate fuel tax returns and refund claims.  Unless Northwest determines otherwise and notifies Mesaba in writing, Mesaba shall be responsible for all Mesaba fuel tax filings and payments. Upon the request of Northwest, Northwest shall be entitled to review any actual or proposed Mesaba fuel tax filings.  Mesaba shall notify Northwest of the commencement of any fuel tax audit. Prior to resolving any fuel tax audit, Mesaba shall receive approval from Northwest to resolve any such audit.

(b)                                 With respect to sales and use taxes, Northwest and Mesaba shall cooperate to ensure that Mesaba is filing appropriate sales and use tax returns and refund claims to minimize Mesaba’s taxes.  Northwest shall determine which entity, Northwest or Mesaba, shall be responsible for preparing and filing appropriate sales and use tax returns and refund claims.  Unless Northwest determines otherwise and notifies Mesaba in writing, Mesaba shall be responsible for all Mesaba sales and use tax filings and payments.  Upon the request of Northwest, Northwest shall be entitled to review any actual or proposed Mesaba sales and use tax filings. Mesaba shall notify Northwest of the commencement of any sales or use tax audit. Prior to resolving any sales or use tax audit, Mesaba shall receive approval from Northwest to resolve any such audit.

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(c)                                  To the extent requested by Northwest, Mesaba shall cooperate with Northwest to minimize Mesaba’s property, fuel, excise, sales, use, value-added, or similar transactional taxes.  Mesaba shall in good faith and using reasonable best efforts supply Northwest with such information and documents reasonably requested by Northwest to minimize Mesaba’s property, fuel, excise, sales, use, value-added, or similar transactional taxes.  Unless Northwest determines otherwise, Mesaba shall use its reasonable best efforts to seek any and all applicable refunds or credits of excise, sales, use, value-added, or similar transactional taxes paid by Mesaba.

Section 8.04     Refunds of Tax.  To the extent Northwest prepares and/or is responsible for pursuing any refunds or refund claims related to Mesaba’s aviation fuel, excise, sales, use, value-added or similar transactional taxes, Northwest shall be entitled to retain *** of the amount of any such refund, credit or other benefit.  To the extent Mesaba prepares or is responsible for pursuing any such refunds or refund claims, Mesaba shall retain *** of the amount of any such refund, credit or other benefit (inclusive of interest) it receives, and the remaining *** (inclusive of interest) shall be paid to Northwest within ten (10) days of its receipt or recognition of benefit by Mesaba.  Any refunds, credits or other benefits received related to Mesaba’s property taxes on Avro Regional Jet Aircraft and aircraft parts will be remitted to Northwest within ten (10) days of its receipt or recognition of benefit by Mesaba.  All other refunds, credits or other benefits received related to Mesaba’s property taxes will be retained by Mesaba.

ARTICLE IX   

LIABILITY, INDEMNIFICATION AND INSURANCE

Section 9.01     Independent Contractor.

(a)                                  Except for the limited purpose described in Section 5.01 hereof, Mesaba shall act as an independent contractor.  The employees, agents and/or independent contractors of Mesaba engaged in performing any of the services Mesaba is obligated to perform pursuant to this Agreement shall be employees, agents and independent contractors of Mesaba for all purposes and under no circumstances shall employees, agents or independent contractors of Mesaba be deemed to be employees, agents or independent contractors of Northwest.  Except for the limited purpose described in Section 5.01 hereof, in its performance of obligations under this Agreement, Mesaba shall act, for all purposes, as an independent contractor and not as an agent for Northwest.  Northwest shall have no supervisory power or control over any employees, agents or independent contractors engaged by Mesaba in connection with Mesaba’s performance of its obligations hereunder, and all complaints or requested changes in procedure shall, in all events, be transmitted by Northwest to a designated representative of Mesaba.  Nothing contained in this Agreement is intended to limit or condition Mesaba’s control over its operation or the conduct of its business as an air carrier, and Mesaba assumes all risks of financial losses which may result from the operation of the air services to be provided by Mesaba hereunder.

(b)                                 Northwest shall act as an independent contractor. The employees, agents and/or independent contractors of Northwest engaged in performing any of the services Northwest is to perform pursuant to this Agreement shall be employees, agents and independent

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contractors of Northwest for all purposes and under no circumstances shall employees, agents and independent contractors of Northwest be deemed to be employees, agents or independent contractors of Mesaba.  In performing its obligations under this Agreement, Northwest shall act, for all purposes, as an independent contractor and not as an agent for Mesaba.  Mesaba shall have no supervisory power or control over any employees, agents or independent contractors engaged by Northwest in connection with the performance of its obligations hereunder, and all complaints or requested changes in procedure shall, in all events, be transmitted by Mesaba to a designated representative of Northwest.  Nothing contained in this Agreement is intended to limit or condition Northwest’s control over its operation or the conduct of its business as an air carrier.

Section 9.02     Indemnification.

(a)                                  Each party assumes full responsibility for any and all liability to its own officers, employees or agents on account of injury or death resulting from or sustained in the performance of their respective services under this Agreement.  Each party shall indemnify, defend, protect, save and hold harmless the other party, its officers, employees, and agents from and against any and all liabilities, claims, demands, suits, judgments, damages and losses (including the costs, fees and expenses in connection therewith and incident thereto) brought against the other party, its officers, employees or agents by or on behalf of any other person, by reason of damage to or destruction of property of any such person, or injury to or death of such person, caused by or arising out of any act or omission by the indemnifying party occurring while this Agreement is in effect.  Notwithstanding the foregoing, neither party shall be liable for indemnifying the other for claims of third parties if caused by the gross negligence or willful misconduct of the other.  Each party shall give the other party prompt and timely notice if it has actual knowledge of any claim made or suit instituted against the other party which in any way results in indemnification hereunder, and the other party shall have the right to compromise or participate in the defense of such claim or suit to the extent of its own interest.

(b)                                 Each party (“Party A”) agrees that it will not seek damages from the other party (“Party B”) or make a claim against Party B if Party B causes damage to an aircraft operated by Party A; provided, however, that if Northwest subcontracts its responsibility to perform part or all of the Ground Handling Functions to a third party vendor, Northwest shall indemnify Mesaba against any physical loss of or damage to the Aircraft caused by the negligent act or omission of such vendor in performing such ground handling functions, and further provided that Northwest’s liability pursuant to this provision shall be limited to an amount not exceeding the amount of the deductible with respect to such Aircraft under Mesaba’s hull risk insurance policy, except that loss or damage in respect of any incident below $*** shall not be indemnified.  Neither party shall be liable to the other for any consequential loss or damage arising from physical loss of or damage to aircraft, and neither party shall make any claim against the other regarding any liability in respect of any and all such consequential loss or damage arising from physical loss of or damage to aircraft.

(c)                                  If Mesaba joins a fuel consortium at a Service City at the request of Northwest, (i) Mesaba shall indemnify Northwest against any liabilities, claims, demands, suits, judgments, fines, penalties, damages and losses (including the costs, fees and expenses in connection therewith and incident thereto) brought against Northwest, its officers, employees or agents by or on behalf of any other person, by reason of fuel spills, fuel leaks or other fuel-related

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environmental damage, including but not limited to assessment, cleanup, remediation and natural resource damages, caused by or arising out of any act or omission by Mesaba occurring while this Agreement is in effect, and (ii) Northwest shall indemnify Mesaba against any liabilities, claims, demands, suits, judgments, fines, penalties, damages and losses (including the costs, fees and expenses in connection therewith and incident thereto) brought against Mesaba, its officers, employees or agents by or on behalf of any other person, by reason of fuel spills, fuel leaks or other fuel-related environmental damage, including but not limited to assessment, cleanup, remediation and natural resource damages, caused by or arising out of any act or omission by Northwest or by any other party to such fuel consortium occurring while this Agreement is in effect.

(d)                                 The obligations of Mesaba and Northwest under the indemnity and insurance provisions contained herein shall remain in effect and shall survive without limitation the termination of this Agreement with respect to any occurrence or claims arising during the term of or in connection with this Agreement.

Section 9.03     Insurance.

(a)                                  Mesaba agrees, at its sole expense, to maintain in full force and effect the following insurance coverage with respect to Regional Airline Services:

(1)                                  Workers’ compensation and occupational disease insurance, subject to the laws of the states wherein this Agreement is being performed.  Such coverage shall include employers liability insurance with a minimum limit of $***.

(2)                                  Comprehensive aviation bodily injury and property damage liability insurance with limits of not less than $*** (but limits not greater than the amount of Northwest’s coverage) combined single limit per occurrence (or such other minimum amount as may be reasonably requested by Northwest from time to time and as Mesaba may obtain on a commercially reasonable basis in the event Mesaba no longer obtains airline liability insurance coverage as part of the Northwest’s aviation insurance placement), including, but not limited to, aircraft liability, passenger legal liability, premises and property damage liability, hangar keepers liability and baggage and cargo liability.  Such insurance shall include personal injury and contractual liability, and shall also include war risk and allied perils, hijack and confiscation coverage with a limit of not less than $*** (but limits not greater than the amount of Northwest’s coverage) per incident (or such other minimum amount as may be reasonably requested by Northwest from time to time and as Mesaba may obtain on a commercially reasonable basis in the event Mesaba no longer obtains airline liability insurance coverage as part of the Northwest’s aviation insurance placement).  In the event Northwest requires Mesaba to increase its insurance limits, Northwest agrees that any incremental costs incurred by Mesaba as a result of increasing such limits (other than incremental costs associated with Mesaba unilaterally changing deductibles) will be reimbursed by Northwest.

(3)                                  All risk hull insurance on the Aircraft, including hull war risk coverage as required by Northwest.

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(b)                                 Prior to the commencement of Regional Airline Services under this Agreement and at least annually thereafter, certificates of insurance in a form satisfactory to Northwest shall be delivered to Northwest evidencing compliance with the insurance terms of this Agreement.  All of the above insurance shall be written through an insurance company or companies reasonably satisfactory to Northwest, and the certificates of insurance shall be of a type that unconditionally obligates the insurer to notify Northwest in writing at least thirty (30) days (or such lesser period as may be available for war peril coverage) in advance of the effective date in the event of any material change in or cancellation of such insurance.  The policies of insurance required by paragraphs (2) and (3) of Section 9.03(a) shall provide coverage for events which occur during the policy period, are continuing in nature and not on a claims made basis, and shall include endorsements that provide:

(1)                                  That the Underwriters acknowledge that the indemnification and hold harmless provisions of this Agreement are insured under Mesaba’s blanket contractual liability coverage.

(2)                                  That Northwest, its officers, agents and employees are named as additional insureds thereunder.

(3)                                  That the insurance is primary with respect to the matters within such coverage, irrespective of any insurance carried by Northwest.

(4)                                  That with respect to the interest of Northwest, the insurance shall not be invalidated by any breach of warranty by Mesaba.

(5)                                  That provide a severability of interest/cross liability endorsement.

(6)                                  That the insurer shall waive its subrogation rights against Northwest, its officers, agents and employees.

(7)                                  That any waiver of rights of subrogation against other parties by Mesaba will not affect the coverage provided with respect to Northwest.

The parties acknowledge and agree that endorsements (2) through (7) above are only applicable in the event Mesaba obtains liability insurance coverage that is not part of Northwest’s aviation insurance placement.

(c)                                  In the event the United States government reimburses Mesaba or its Affiliates for excess insurance costs incurred as a result of the September 11, 2001 terrorist attacks or other such occurrences, Mesaba will promptly remit to Northwest any such reimbursement (including any applicable Margin Payment) that is in excess of Mesaba’s actual additional insurance costs incurred as a result of such event.  Northwest acknowledges that Mesaba’s obligation to remit such reimbursement is not triggered until Mesaba has achieved a cost-neutral position with respect to excess insurance costs.

(d)                                 Northwest acknowledges that, to the extent Northwest has the ability to do so, Northwest will use commercially reasonable efforts to allow Mesaba to continue to participate in Northwest’s insurance plan.

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ARTICLE X   

TERM AND TERMINATION

Section 10.01     Term.  This Agreement shall commence on and shall be effective as of August 29, 2005 (the “Effective Date”) and, unless earlier terminated as provided herein, shall continue in effect until May 1, 2015.

Section 10.02     Termination by Either Party.

(a)                                  In the event that Mesaba or Northwest (i) makes a general assignment for the benefit of creditors or becomes insolvent, (ii) files a voluntary petition in bankruptcy, (iii) petitions for or acquiesces in the appointment of any receiver, trustee or similar officer to liquidate or conserve its business or any substantial part of its assets, (iv) commences under the laws of any competent jurisdiction any proceeding involving its insolvency, bankruptcy, reorganization, readjustment of debt, dissolution, liquidation or any other similar proceeding for the relief of financially distressed debtors, (v) becomes the object of any proceeding or action of the type described in (iii) or (iv) above and such proceeding or action remains undismissed or unstayed for a period of at least thirty (30) days, or (vi) is divested of a substantial part of its assets for a period of at least thirty (30) days, then Mesaba (in the event the foregoing occurs with respect to Northwest) or Northwest (in the event the foregoing occurs with respect to Mesaba) may by written notice terminate this Agreement immediately.

(b)                                 Except as otherwise provided in Section 10.03, in the event of a breach of a nonmonetary provision of this Agreement by either party remaining uncured for more than thirty (30) days after the later of (i) receipt of written notification of such Default by the nondefaulting party, or in the case of a breach requiring more than thirty (30) days notice to cure, the defaulting party does not begin and pursue with due diligence a method of cure within thirty (30) days after receipt of written notification specifying in reasonable detail the nature of such Default from the nondefaulting party, or (ii) if there is a Dispute (as such term is defined in Section 11.12 below) as to whether a breach has occurred, resolution (in accordance with Section 11.12 below) of such Dispute finding a breach to have occurred, then the nondefaulting party may terminate this Agreement at its sole option.

(c)                                  In the event of a breach of a monetary provision of this Agreement by either party and such Default remaining uncured for more than seven (7) days after the later of (i) receipt of written notification specifying in reasonable detail the nature of such Default from the nondefaulting party, or (ii) if there is a Dispute (as such term is defined in Section 11.12 below) as to whether a breach has occurred, resolution (in accordance with Section 11.12 below) of such Dispute finding a breach to have occurred, then the nondefaulting party may terminate this Agreement at its sole option.

Section 10.03     Termination by Northwest.  Notwithstanding the provisions of Section 10.02(b), Northwest shall have the right to terminate this Agreement immediately and at its sole option if:

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(a)                                  Mesaba shall default in the payment of any amount due under any Lease and such default shall continue for more than the period of grace, if any, specified therein and shall not have been waived.

(b)                                 Mesaba shall default with respect to any other terms of any Lease, such default shall continue for more than the period of grace, if any, specified therein and shall not have been waived.

(c)                                  Mesaba shall fail to comply with the provisions of Section 9.03 and, as a result thereof, the insurance required thereunder is not in effect.

(d)                                 Mesaba shall fail to comply with the provisions of Section 6.03.

(e)                                  More than *** of the Aircraft do not operate any Scheduled Flights for more than *** or *** of the Aircraft do not operate any Scheduled Flights for more than ***, other than as a result of (1) an FAA order which grounds all commercial flights of all air carriers or grounds a specific Aircraft type of all air carriers, (2) a scheduling action by Northwest, or (3) Northwest’s inability to perform its obligations under this Agreement as a result of a strike by Northwest employees.

(f)                                    Mesaba’s FAA or DOT Certification is for any reason suspended or revoked or otherwise not in full force and effect so as to permit Mesaba to perform the Regional Airline Services required under this Agreement.

(g)                                 A Mesaba Change of Control shall have occurred.

(h)                                 Mesaba or its Affiliate shall commence operating an aircraft type which causes Northwest to be in violation of its collective bargaining agreement with its pilots.

(i)                                     The person selected to replace ▇▇▇▇ ▇▇▇▇▇▇▇▇ as President of Mesaba and any successor President of Mesaba, or the person selected to replace ▇▇▇▇ ▇▇▇▇▇ as President and Chief Executive Officer of ▇▇▇▇ Holdings, Inc. and any successor Chief Executive Officer and President of ▇▇▇▇ Holdings, Inc., shall not be reasonably acceptable to Northwest.

(j)                                     With respect to any Aircraft, such Aircraft shall have been removed from Mesaba’s fleet pursuant to the terms of Section 3.02(a)(ii) or (iii) hereof.  In such case, this Agreement shall be terminable by Northwest at its sole option only with respect to such Aircraft.

(k)                                  ▇▇▇▇ Holdings, Inc. breaches the Agreement entered into by Northwest and ▇▇▇▇ Holdings, Inc. as of August 29, 2005 as amended from time to time.

ARTICLE XI   

MISCELLANEOUS

Section 11.01     Limitation on Performance.  The obligation of either Northwest or Mesaba to perform under the terms of this Agreement shall be limited or modified

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by, and neither carrier shall be deemed to be in default hereunder as a result of any of the following causes:

Acts of God or the public enemy, civil war, insurrections or riots; fires, floods, explosions, embargoes, earthquakes or serious accidents, epidemics, or quarantine restrictions; any act of government, governmental priorities, allocations, orders or Governmental Regulations affecting materials or facilities, inability after due and timely diligence to procure materials, accessories, equipment or parts; or due to any other cause to the extent it is beyond that carrier’s practical control or not occasioned by that carrier’s fault or negligence.

A labor strike involving Northwest’s employees, or a cessation, slow-down or interruption of work, or any other labor disturbance that materially impacts Mesaba’s ability to operate Regional Airline Services.

Section 11.02     Mutual Cooperation.  Northwest and Mesaba shall use their reasonable best efforts to cooperate with each other in performing their respective obligations under this Agreement.

Section 11.03     Representations and Warranties.  Except as expressly set forth herein, neither Northwest nor Mesaba shall make any representations or warranties, expressed or implied, under or in connection with this Agreement.

Section 11.04     Assignment.  This Agreement may not be assigned by any party without the prior written consent of the other party.

Section 11.05     Governing Law.  This Agreement shall be governed in accordance with the laws of the State of Minnesota, notwithstanding the choice of law provisions thereof.

Section 11.06     Interline and Other Agreements.  Northwest agrees, to the extent it has the right to do so, to permit Mesaba to avail itself of all its rights, privileges and amenities pursuant to its interline agreements and all industry trade or other agreements between Northwest and any other air carriers. Northwest shall take all action and execute such documents as may be necessary to enable Mesaba to avail itself of the maximum benefits afforded by such agreements.  Subject to Northwest’s prior written approval, Mesaba may enter interline agreements with air carriers other than those air carriers covered by the two preceding sentences.

Section 11.07     Notices.  All notices given hereunder shall be given in writing and shall be delivered in person or deposited in the United States mail, certified or registered mail, return receipt requested, with adequate postage prepaid, or given by Mesaba courier, telex, facsimile, or other expedient written means, addressed as follows:

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or to such other address as the respective parties hereto shall designate by notice in writing to the other party.  Notices shall be deemed received and given on the date of delivery or the date of refusal of delivery as shown by the return receipt.

Section 11.08     Parties.  Except as provided to the contrary herein, this Agreement, and the rights and obligations created hereunder, shall be binding upon and inure to the benefit of the respective parties hereto and their respective successors and permitted assigns.

Section 11.09     Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one agreement.

Section 11.10     Severability.  If any term of this Agreement shall be judicially determined to be illegal, invalid or unenforceable at law or in equity, it shall be deemed to be void and of no force and effect to the extent necessary to bring such term within the provisions of any such applicable law or laws, and such terms as so modified and the balance of the terms of this Agreement shall remain enforceable.

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Section 11.11     Captions, Section Headings and Table of Contents.  Captions, section headings and the Table of Contents used herein are for convenience only and are not a part of this Agreement and shall not be used in construing it.

Section 11.12     Dispute Resolution; Availability of Equitable Remedies; Procedures.

(a)                                  Representatives.  Except as otherwise provided herein, if any dispute arises under or relates to this Agreement (a “Dispute”), at the written request of any party, each party will appoint a designated representative (the “Representative”) to meet for the purpose of resolving the dispute.  The Representatives will meet at a mutually agreeable place within ten (10) days after a party makes a written request to the other for such a meeting.  The Representatives will honor reasonable requests to exchange information related to the Dispute and will make a good faith effort to negotiate a resolution to the Dispute.  Negotiations shall continue until the Dispute is resolved or until a party informs the others in writing that negotiations will not result in a mutually acceptable resolution and an arbitrator should be appointed.

(b)                                 Arbitration.  If the Dispute is not resolved pursuant to Section 11.12(a), the Dispute (including any question arising as to whether or not any Dispute falls within the terms of this Section 11.12 or the selection of arbitrators) shall be settled by arbitration in Minneapolis, Minnesota in accordance with the CPR Rules for Non-Administrative Arbitration of Business Disputes by one arbitrator.  The arbitrator shall be appointed by the parties as provided by CPR Rule 5, Selection of Arbitrators.  The arbitration procedure shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16, and the award rendered by the arbitrator shall be final and binding on the parties and may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, no party shall be required to submit to arbitration unless all parties necessary for complete relief have been joined or consent to participate.

(c)                                  Discovery.  Each party shall have discovery rights as provided by the Federal Rules of Civil Procedure; provided, however, that all such discovery shall be commenced and concluded within ninety (90) days of the initiation of arbitration.

(d)                                 Expeditious Proceedings.  It is the intent of the parties that any arbitration shall be concluded as quickly as reasonably practicable.  Unless the parties otherwise agree, once commenced, the hearing on the disputed matters shall be held four (4) days a week until concluded, with each hearing date to begin at 9:00 a.m. and to conclude at 5:00 p.m.  The arbitrator shall use all reasonable efforts to issue the final award or awards within a period of fifteen (15) business days after closure of the proceedings.  Failure of the arbitrator to meet the time limits of this Section 11.12(d) shall not be a basis for challenging the award.

(e)                                  Arbitration Costs.  If the party asserting a claim is awarded 50% or more of the claimed amount, then that party shall be the prevailing party and shall be entitled to receive all of its reasonable legal fees and costs associated with the dispute.  If the asserting party receives less than 50% of the claimed amount, then the other party shall be the prevailing party and shall be entitled to receive all of its reasonable legal fees and costs associated with the Dispute.  In the event the parties cross-claim against one another, the arbitrator shall allocate

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costs amongst the parties based upon amounts paid pursuant to the final awards (i.e., those paying 30% of all awards shall pay 30% of all costs).

(f)                                    Enforcement of Awards.  Each party agrees that any legal proceeding instituted to enforce an arbitration award hereunder will be brought in a court of competent jurisdiction (either state or federal) in the venue of the arbitration set forth in Section 11.12(b) and hereby submits to personal jurisdiction therein and irrevocably waives any objection as to venue therein, and further agrees not to plead or claim in any such court that any such proceeding has been brought in an inconvenient forum.

(g)                                 Equitable Relief.  Nothing herein shall be construed to prevent any party from seeking and, assuming appropriate legal standards are met, obtaining equitable relief in any court of competent jurisdiction to restrain or prohibit any breach or threatened breach of any covenant of the parties set forth in this Agreement or any document executed in connection herewith, whether or not the parties have first sought to resolve the dispute through negotiation, mediation or arbitration pursuant to this Section 11.12.

Section 11.13     Exhibits.  The Exhibits attached hereto are intended to be an integral part of this Agreement and are incorporated into the Agreement by reference for all purposes.

Section 11.14     Integration and Entire Agreement.  This Agreement (including the Exhibits), the Agreement entered into by Northwest and ▇▇▇▇ Holdings, Inc. as of August 29, 2005 and the ancillary documents entered into in connection therewith are intended by the parties as a complete statement of the entire agreement and understanding of the parties with respect to the subject matter hereof and all matters between the parties related to the subject matter herein and therein set forth.  This Agreement may only be amended or modified by a written agreement between Mesaba, on the one hand, and Northwest, on the other, which specifically references this Agreement and expressly provides for such amendment.

Section 11.15     Relationship of Parties.  Nothing in this Agreement shall be interpreted or construed as establishing between the parties a partnership, joint venture or other similar arrangement.

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Section 11.16     Termination of Prior Agreements.  The parties agree that the RJ Agreement and the Saab Agreement are terminated as of the Effective Date; provided, however, the parties agree that their respective indemnification and payment obligations arising under the RJ Agreement and the Saab Agreement with respect to services performed prior to the Effective Date shall continue in effect in accordance with the terms of such Agreements, and either party may exercise its rights under the respective indemnification and payment provisions of the RJ Agreement or the Saab Agreement, as the case may be, in order to cause the other party to comply with the terms of such agreements.

IN WITNESS WHEREOF, Northwest and Mesaba have executed this Agreement as of the date first set forth above.

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EXHIBIT A-1

AIRCRAFT LEASE FORM

SUBLEASE AGREEMENT
[NW 2005        ]

Dated as of

[        ], 2005

Between

NORTHWEST AIRLINES, INC.,
                     Sublessor

AND

MESABA AVIATION, INC.,
                      Sublessee

One Bombardier Inc. Canadair Regional Jet Model CL-600-2B19 Aircraft

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TABLE OF CONTENTS TO SUBLEASE AGREEMENT [NW 2005         ]

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EXHIBITS

▇▇-▇

SUBLEASE AGREEMENT

[NW 2005       ]

This SUBLEASE AGREEMENT [NW 2005         ], dated as of [        ], 2005, between NORTHWEST AIRLINES, INC., a corporation organized and existing pursuant to the laws of the State of Minnesota (“Sublessor”), and MESABA AVIATION, INC., a corporation organized and existing pursuant to the laws of the State of Minnesota (“Sublessee”);

W I T N E S S E T H:

WHEREAS, Sublessor has agreed to sublease the Aircraft to Sublessee, Sublessee has agreed to enter into this Sublease for use by Sublessee in its operations in accordance with the Airline Services Agreement and for no other purpose, and the parties hereto intend this Sublease to be an operating lease; and

WHEREAS, Sublessor is providing a valuable financial accommodation to Sublessee by making the Aircraft available to Sublessee pursuant to this Sublease Agreement, and Sublessor is entering into this Sublease solely to provide the Aircraft to Sublessee for use in its operations in accordance with the Airline Services Agreement; and

NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, Sublessee and Sublessor intending to be legally bound agree as follows:

SECTION 1.  Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for all purposes of this Sublease Agreement [NW 2005         ] and shall be equally applicable to both the singular and the plural forms of the terms herein defined:

“Acceptance Certificate” has the meaning specified in the Participation Agreement. “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person.  For the purposes of this definition, “control” (including “controlled by” and “under common control with”) shall mean 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 or by contract or otherwise.  For the avoidance of doubt, Sublessor and its Affiliates are not Affiliates of Sublessee.

“After-Tax Basis” means an amount, which, after deduction of all Federal, state, local and foreign taxes required to be paid by or on behalf of the recipient in respect of the receipt or realization of such amount, is equal to the payment

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required under the provisions of the Sublessee Documents that requires payments to be made on an After-Tax Basis.

“Aircraft” means the Airframe to be delivered and subleased hereunder together with the two Engines initially subleased hereunder (or any engine substituted for any of such Engines pursuant to the terms hereof), whether or not any of such initial or substituted Engines may from time to time be installed on such Airframe or may be installed on any other airframe or on any other aircraft, and when the context permits the Aircraft Documentation.

“Aircraft Documentation” has the meaning specified in Exhibit D hereto.

“Airframe” means: (i) the Bombardier Inc. Canadair Regional Jet Model CL-600-2B19 aircraft (except Engines or engines from time to time installed thereon) specified in the initial Sublease Supplement, which aircraft shall be subleased by Sublessor to Sublessee hereunder and under such Sublease Supplement; and (ii) any and all Parts (A) so long as the same shall be incorporated or installed in or attached to such aircraft (except Engines or engines from time to time installed thereon), or (B) so long as title thereto shall remain vested in the Owner in accordance with the terms of Section 8 after removal from such aircraft (except Engines or engines from time to time installed thereon).

“Airline Services Agreement” means the Airline Services Agreement dated as of August 29, 2005 between Sublessor and Sublessee, as modified, amended or supplemented from time to time pursuant to the terms thereof.

“APU” has the meaning specified in Exhibit D hereto.

“APU Manufacturer” means Honeywell Corporation.

“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended, or any subsequent legislation that amends, supplements or supersedes such provisions.

“Base Rate” means the rate of interest announced publicly by Citibank, N.A. in New York, New York from time to time as its base rate.

“Basic Rent” means, for the Term, the rent payable for the Aircraft pursuant to Section 3(b).

“Basic Shop Visit” means, with respect to any Engine or the APU, any shop visit, as defined by the Engine Manufacturer or the APU Manufacturer, as the case may be, that is based on an approved program of condition monitoring and trend monitoring of performance deterioration that results in an Engine or the APU, as the case may be, being restored to full performance standard.

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“Business Day” means any day other than a Saturday or Sunday or a day on which commercial banks are required or authorized to close in the City of New York, New York; Salt Lake City, Utah or Minneapolis, Minnesota.

“‘C’ Check” means a “C” Check, as such term is defined in the Maintenance Program relating to the Aircraft that meets the requirements of a “C” Check as defined in the Bombardier Inc. Maintenance Requirement Manual.

“Certificate Holder” means Certificate Holder as defined in the Trust Indenture.  “Certificated Air Carrier” means a Citizen of the United States holding a carrier operating certificate issued by the Secretary of Transportation pursuant to Chapter 447 of Title 49, United States Code, for aircraft capable of carrying ten or more individuals or 6,000 pounds or more of cargo or that otherwise is certified or registered to the extent required to fall within the purview of 11 U.S.C. Section 1110 or any analogous successor provision of the Bankruptcy Code.

“Citizen of the United States” has the meaning specified in Section 40102(a)(15) of Title 49 of the United States Code or any similar legislation of the United States of America enacted in substitution or replacement therefor.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commencement Date” has the meaning specified in Sublease Supplement No. 1.

“Consent and Agreement” has the meaning specified in the Head Lease.

“Default” means any event which with the giving of notice or the lapse of time or both would become an Event of Default.

“Delivery Date” has the meaning specified in the Head Lease.

“Dollars” and “$” means the lawful currency of the United States of America.

“Engine” means (i) each of the two General Electric Model CF34-3B1 type engines listed by manufacturer’s serial number in the initial Sublease Supplement, whether or not from time to time thereafter installed on the Airframe or installed on any other airframe or on any other aircraft; and (ii) any engine which may from time to time be substituted, pursuant to the terms hereof, for any of such two engines, together in each case with the applicable Aircraft Documentation and any and all Parts normally incorporated or installed in or attached thereto including any and all Parts removed therefrom so long as title thereto shall remain vested in the Owner in accordance with the terms of Section 8 after removal from such Engine; provided, however, that at such time as an engine shall be deemed part of the property subleased hereunder in substitution

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for an Engine pursuant to the applicable provisions hereof, the replaced Engine shall cease to be an Engine hereunder.  The term “Engines” means, as of any date of determination, all Engines then subleased hereunder.

“Engine Manufacturer” means General Electric Aircraft Engines, a division of General Electric Corporation.

“Equity Tax Indemnitee” means any Tax Indemnitee which is the Owner Participant, the Owner Trustee or the Trust Estate, or a successor, assign or Affiliate thereof.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.  Section references to ERISA are to ERISA, as in effect at the date of the Participation Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.

“Event of Default” has the meaning specified in Section 14 hereof.

“Event of Loss” with respect to the Aircraft, Airframe or any Engine means any of the following events with respect to such property: (i) the loss of such property or of the use thereof due to the destruction of or damage to such property which renders repair uneconomic or which renders such property permanently unfit for normal use by Sublessee for any reason whatsoever; (ii) any damage to such property which results in an insurance settlement with respect to such property on the basis of a total loss, or a constructive or compromised total loss; (iii) the theft or disappearance of such property, or the confiscation, condemnation, or seizure of, or requisition of title to, or use of, such property (other than a requisition for use by the United States Government or any agency or instrumentality of any thereof) which in the case of any event referred to in this clause (iii) (other than a requisition of title) shall have resulted in the loss of possession of such property by Sublessee for a period in excess of 180 consecutive days or, in the case of a requisition of title, the requisition of title shall not have been reversed within 90 days from the date of such requisition of title; (iv) as a result of any law, rule, regulation, order or other action by the Federal Aviation Administration, the use of such property in the normal course of the business of air transportation shall have been prohibited for a period of 180 consecutive days, unless Sublessee, prior to the expiration of such 180 day period, shall have undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit the normal use of such property by Sublessee, but in any event if such use shall have been prohibited for a period of two consecutive years, provided that no Event of Loss shall be deemed to have occurred if such prohibition has been applicable to the entire U.S. registered fleet of Bombardier Inc. Canadair Regional Jet Series [200][440] aircraft of Sublessee and Sublessee, prior to the expiration of such two-year period, shall have conformed at least one such aircraft in its fleet to the requirements of any such law, rule, regulation, order or other action and commenced regular commercial use of the same in such

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jurisdiction and shall be diligently carrying forward, in a manner which does not discriminate against the Aircraft in so conforming the Aircraft, all steps which are necessary or desirable to permit the normal use of the Aircraft by Sublessee, provided, further, that, notwithstanding any of the foregoing, such prohibition shall constitute an Event of Loss if such use shall have been prohibited for a period of three consecutive years, if such use shall be prohibited at the expiration of the Term; (v) any divestiture of title to or interest in an Engine treated as an Event of Loss pursuant to Section 7(b) hereof.  An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe.

“Expenses” has the meaning specified in Section 29(c) hereof.

“Expiration Date” means May 1, 2015, or such later date to which the effectiveness of the Airline Services Agreement shall be extended in accordance with its terms, such that this Sublease and the Airline Services Agreement shall be coterminous, provided, however, that in no event shall the “Expiration Date” be a date later than the date of expiration of the term of the Head Lease.

“FAR” means the regulations promulgated under the Federal Aviation Act.

“Federal Aviation Act” means that portion of the United States Code comprising those provisions formerly referred to as the Federal Aviation Act of 1958, as amended, or any subsequent legislation that amends, supplements or supersedes such provisions.

“Federal Aviation Administration” and “FAA” mean the United States Federal Aviation Administration and any agency or instrumentality of the United States government succeeding to their functions.

“Flight Hour” means:  (i) with respect to the Airframe, each hour or part thereof which elapses from the time the wheels of the Airframe leave the ground on take-off and the time when the wheels of the Airframe touch the ground on landing, and (ii) with respect to an Engine or other engine or any Part, including the APU, each hour or part thereof which elapses from the time the wheels of the airframe, whether or not the Airframe leased hereunder, on which such Engine or other engine or Part is installed, leave the ground on take-off and the time when the wheels of such airframe touch the ground on landing.

“Guarantee” has the meaning specified in the Head Lease.

“Guarantor” means Northwest Airlines Corporation, a Delaware corporation.

“Head Lease” means the Lease Agreement [NW 2005         ], dated as of [        ] 2005, between Head Lessor and Sublessor, as lessee thereunder, as the same may be modified, amended or supplemented from time to time.  The term

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“Head Lease” shall also include each Head Lease Supplement entered into pursuant to the applicable terms of such Head Lease Agreement.

“Head Lessor” means the Owner Trustee designated in the Head Lease as the lessor thereunder.

“Head Lessor Liens” means any Lien or disposition of title or interest arising as a result of (i) claims against Head Lessor, ▇▇▇▇▇ Fargo in its individual capacity, or the Owner Participant not related to the transactions contemplated by the Operative Documents, (ii) any act or omission of the Owner Participant, Head Lessor, or ▇▇▇▇▇ Fargo, in its individual capacity, which is not related to the transactions contemplated by the Operative Documents or is in violation of any of the terms of the Operative Documents, (iii) claims against the Owner Participant, Head Lessor, or ▇▇▇▇▇ Fargo, in its individual capacity, with respect to Taxes or Expenses against which Sublessor is not required to indemnify the Owner Participant, Head Lessor or ▇▇▇▇▇ Fargo in its individual capacity, pursuant to the Participation Agreement or the Tax Indemnity Agreement or (iv) claims against Head Lessor or the Owner Participant arising out of any transfer by Head Lessor or the Owner Participant of all or any portion of the respective interests of Head Lessor or the Owner Participant in the Aircraft, the Trust Estate or the Operative Documents other than the transfer of possession of the Aircraft by Head Lessor pursuant to the Head Lease, the transfer pursuant to the Trust Indenture or a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Head Lease or pursuant to the exercise of remedies set forth in Section 15 of the Head Lease; provided, however, that any Lien which is attributable solely to ▇▇▇▇▇ Fargo or the Owner Participant and would otherwise constitute a Head Lessor Lien shall not constitute a Head Lessor Lien so long as (1) the existence of such Lien poses no material risk of the sale, forfeiture or loss of the Aircraft, (2) the existence of such Lien does not interfere in any way with the use, possession or operation of the Aircraft by Sublessee, (3) ▇▇▇▇▇ Fargo or the Owner Participant, as appropriate, is diligently contesting such Lien, and (4) the existence of such Lien does not pose a material threat of interference with the payment of Rent in favor of ▇▇▇▇▇ Fargo or the Owner Participant, as appropriate).

“Indemnitee” means (i) Sublessor, (ii) the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, (iii) the Owner Participant, (iv) the Trust Estate, (v) each Affiliate of the Persons described in clauses (i) through (iv), inclusive, and (vi) the respective directors, officers, employees, agents and servants, successors and permitted assigns of each of the Persons described in clauses (i) through (iv), inclusive.

“Landing Gear” means the landing gear installed on the Airframe on the Delivery Date (or such landing gear as may be substituted therefor after the Delivery Date in accordance with this Lease.

“Landing Gear Overhaul” means any full overhaul of any Landing Gear to full manufacturer specification and operating condition.

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“Lien” means any mortgage, pledge, lien, charge, claim, encumbrance, lease, sublease, sub-sublease or security interest.

“Life Limited Parts” means those parts which have a specific hour, cycle and/or calendar life limit as specified by the Manufacturer.

“Loss Payment Date” has the meaning specified in Section 10(a) hereof.

“Maintenance Program” has the meaning specified in Exhibit D hereto.

“Major Modifications” include, but shall not be limited to (i) changes that alter the fundamental nature of the Aircraft as a passenger and cargo carrying aircraft, or cabin modifications that materially change the interior layout of the Aircraft, (ii) changes to the Aircraft structure or performance of the Aircraft, (iii) changes that adversely affect interchangeability or replaceability of Parts, (iv) substitution of different types of equipment or accessories which are not equivalent in cost, value and/or operational capability to the equipment or accessories being replaced, (v) changes that invalidate or impair any warranty with respect to the Aircraft or any Engine or Part, (vi) changes that adversely affect the eligibility of the Aircraft to obtain an airworthiness certificate from the FAA or (vii) any changes that result in a variation from the original type certificate for the Aircraft, but shall exclude changes pursuant to airworthiness directives.

“Manufacturer” means with respect to the Airframe, and where the context permits, the Aircraft, Bombardier Inc., a Canadian Corporation, and its successors and assigns and, with respect to the Engines, General Electric Company, a New York corporation, and its successors and assigns.

“Minimum Liability Amount” has the meaning specified in Exhibit E hereto.

“Operative Documents” and “Operative Document” means each of the Participation Agreement, the Tax Indemnity Agreement, the Trust Agreement, the Head Lease, this Sublease, the Sublease Supplement covering the Aircraft, the Acceptance Certificate, the Trust Supplement covering the Aircraft, the Purchase Agreement (insofar as it relates to the Aircraft), the Residual Agreement, the Guarantee, the Purchase Agreement Assignment, the Consent and Agreement and the Letter Agreement dated as of [          ], 2005 between Sublessor and Owner Trustee delivered pursuant to Section 4(a)(v)(12) of the Participation Agreement.

“Owner” means (i) Head Lessor (or any permitted assignee or successor thereof) for so long as the Head Lease remains in effect and title to the Aircraft remains vested in Head Lessor pursuant to the terms thereof and (ii) Sublessor (or any permitted assignee or successor thereof) for so long as this Sublease remains in effect and title to the Aircraft remains vested in Sublessor pursuant to the terms hereof.

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“Owner Participant” means the entity executing the Participation Agreement as the Owner Participant, and thereafter any Person to which such entity transfers all of its right, title and interest in and to the Trust Agreement, the Trust Estate and the Participation Agreement, to the extent permitted by Section 8.01 of the Trust Agreement and Section 8 of the Participation Agreement.

“Owner Trustee” means ▇▇▇▇▇ Fargo Bank Northwest, National Association, a national banking association, and any entity appointed as successor Owner Trustee pursuant to Section 9.01 of the Trust Agreement, and references to a predecessor Owner Trustee in its individual capacity by name in the Operative Documents shall include such successor Owner Trustee in its individual capacity from and after such succession.

“Participants” means and includes the Owner Participant.

“Participation Agreement” means that certain Participation Agreement [NW 2005         ], dated as of [        ], 2005, among Sublessor, the Guarantor, the Owner Participant and Owner Trustee, as such Participation Agreement may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

“Parts” means all appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than (a) complete Engines or engines and (b) cargo containers) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine or so long as title thereto shall remain vested in the Owner in accordance with Section 8 after removal therefrom.

“Past Due Rate” means a rate per annum equal to the greater of (a) 5% over the Base Rate and (b) 15%.

“PBH Agreement” means a maintenance agreement which (i) provides shop repair/overhaul of Engines or Parts (including APU and Landing Gear) on a continuous basis at an agreed upon Flight Hour or cycle based rate, (ii) provides unrestricted assignment rights to Sublessor and Sublessor’s future operators of the Aircraft, and (iii) has been approved in writing by Sublessor (including but not limited to specific Sublessor approval of the maintenance provider, rates, payment terms, scope, term, maintenance standard, assignment rights and financial adjustments that are made when an Engine or Part exits such program at termination or expiration of the PBH Agreement relative to such Engine or Part).

“Permitted Lien” means any Lien referred to in clauses (i) through (iii) of Section 6 hereof.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

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“Purchase Agreement” means that certain Purchase Agreement No. PA-0498, dated July 6, 2001, between the Manufacturer and Sublessor relating to the purchase by Sublessor of the Aircraft, as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only insofar as the foregoing relates to the Aircraft.

“Purchase Agreement Assignment” means that certain Purchase Agreement Assignment [NW 2005         ], dated as of [        ], 2005, between Sublessor and Head Lessor, as the same may be amended, supplemented or modified from time to time, with a form of Consent and Agreement to be executed by the Manufacturer attached thereto.

“Rent” means Basic Rent and Supplemental Rent, collectively.

“Stipulated Loss Value” with respect to the Aircraft, as of any date through and including the Expiration Date, means, the amount specified in Exhibit C hereto opposite the Stipulated Loss Value Date with respect to which the amount is determined.

“Stipulated Loss Value Date” means the 1^st calendar day of each calendar month during the Term.

“Structural Inspection” means a Structural Inspection as such term is defined in the Maintenance Program that meets the requirements of a Structural Inspection as defined in the Bombardier Inc. Maintenance Requirement Manual.

“Sublease Agreement”, “this Sublease Agreement”, “this Sublease”, “this Agreement”, “herein”, “hereof”, “hereunder”, “hereby” or other like words mean this Sublease Agreement [NW 2005         ], as originally executed or as modified, amended or supplemented pursuant to the applicable provisions hereof, including, without limitation, supplementation hereof by one or more Sublease Supplements entered into pursuant to the applicable provisions hereof.

“Sublease Period” means each of the consecutive monthly periods throughout the Term beginning on a Sublease Period Date, the first such period commencing on the first Sublease Period Date after the Commencement Date.

“Sublease Period Date” means the 1^st calendar day of each month during the Term.

“Sublease Supplement” means a Sublease Supplement, substantially in the form of Exhibit A hereto, to be entered into between Sublessor and Sublessee on the Commencement Date for the purpose of subleasing the Aircraft under and pursuant to the terms of this Sublease Agreement, and any subsequent Sublease Supplement entered into in accordance with the terms hereof.

“Sublessee” means Mesaba Aviation, Inc. a Minnesota corporation, and its successors and permitted assigns, as sublessee under the Sublease.

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“Sublessee Documents” means the Sublease, the Sublease Supplement covering the Aircraft, the acceptance certificate covering the Aircraft in the form agreed to by Sublessor and Sublessee (herein called the “Sublease Acceptance Certificate”) and the Airline Services Agreement.

“Sublessor Liens” means any Lien affecting or disposition of title or interest affecting or in respect of the Trust Estate, the Aircraft, the Airframe or any Engine arising as a result of (i) claims against or affecting Sublessor not arising from the transactions contemplated by the Participation Agreement, Head Lease and this Sublease, (ii) any act or omission of Sublessor not related to the transactions contemplated by the Participation Agreement, Head Lease and this Sublease, (iii) Taxes imposed against Sublessor which Sublessee has not agreed to indemnify against pursuant to this Sublease, (iv) Taxes imposed against Head Lessor or the Owner Participant which Sublessor has not agreed to indemnify against pursuant to the Participation Agreement or (v) claims against Sublessor arising out of the voluntary transfer of all or any portion of Sublessor’s interest in the Aircraft or in any of the Sublessee Documents other than a transfer pursuant to Sections 5, 8, 10 or 15 hereof, provided, however, that any Lien which is attributable solely to Sublessor and would otherwise constitute a Sublessor Lien hereunder shall not constitute a Sublessor Lien hereunder so long as (1) the existence of such Lien poses no material risk of the sale, forfeiture or loss of the Aircraft, (2) the existence of such Lien does not interfere in any way with the use, possession or operation of the Aircraft by Sublessee, (3) the existence of such Lien does not affect the priority of perfection of, or otherwise jeopardize, the Lien of the Trust Indenture, and (4) Sublessor is diligently contesting such Lien.

“Supplemental Rent” means, without duplication, all amounts, liabilities, indemnities and obligations (other than Basic Rent) which Sublessee assumes or agrees to pay under any Sublessee Document to or on behalf of Sublessor or any other Person hereunder or under any other Sublessee Document.  The parties acknowledge that Supplemental Rent is a general category and, accordingly, agree that any provision of any Sublessee Document which calls for the payment of Supplemental Rent and also calls for the payment of specific items which are includable in Supplemental Rent is not to be interpreted as requiring any double payment.

“Tax Indemnitee” means (i) Sublessor, the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement and the Trust Estate, and (ii) the respective directors, officers, employees, agents and servants of each Person described in clause (i), and (iii) the respective Affiliates, successors and permitted assigns of each of the entities described in the preceding clause (i).

“Tax Indemnity Agreement” means that certain Tax Indemnity Agreement [NW 2005         ], dated as of [        ], 2005, between the Owner Participant and Sublessor, as originally executed or as modified, amended or supplemented pursuant to the applicable provisions thereof.

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“Taxes” means any and all fees (including, without limitation, license, recording, documentation and registration fees), taxes (including, without limitation, income, gross receipts, sales, rental, use, turnover, value added, property (tangible and intangible), excise and stamp taxes), license, levies, imposts, duties, charges, assessments or withholdings of any nature whatsoever, together with any and all penalties, fines, additions to tax and interest thereon (each, individually a “Tax”).

“Term” means the term for which the Aircraft is subleased hereunder pursuant to Section 3(a) hereof commencing on the Commencement Date and ending on the Expiration Date, or such earlier date as this Sublease may be terminated in accordance with the provisions hereof.

“Trust Agreement” means that certain Trust Agreement [NW 2005         ], dated as of [        ], 2005, between the Owner Participant and ▇▇▇▇▇ Fargo Bank Northwest, National Association, in its individual capacity, as originally executed or as modified, amended or supplemented pursuant to the applicable provisions thereof, including, without limitation, supplementation thereof by one or more Trust Supplements entered into pursuant to the applicable provisions thereof.

“Trust Estate” means the Trust Estate as that term is defined in the Trust Agreement.

“▇▇▇▇▇ Fargo” means ▇▇▇▇▇ Fargo Bank Northwest, National Association, a national banking association.

SECTION 2.  Acceptance and Sublease.  (a) Generally.  Sublessor hereby agrees to sublease to Sublessee hereunder, and Sublessee hereby agrees to sublease from Sublessor hereunder, the Aircraft as evidenced by the execution by Sublessor and Sublessee of a Sublease Supplement leasing the Aircraft hereunder.  Sublessee hereby agrees that such acceptance of the Aircraft by Sublessor shall, without further act, irrevocably constitute acceptance by Sublessee of such Aircraft for all purposes of this Sublease.  As provided in Section 25 hereof, the rights of Sublessee hereunder are subject and subordinate to all the terms of the Head Lease, including any amendments or restatements thereto as may occur from time to time, and the parties intend this Sublease to constitute a true lease.

(b) Airline Services Agreement.  Sublessee acknowledges that Sublessor is providing a valuable financial accommodation to Sublessee by entering into the Operative Documents to which it is a party and this Sublease to allow Sublessee to obtain the use of the Aircraft pursuant to the terms of this Sublease.  As a condition to their rights hereunder, Sublessee and Sublessor hereby confirm and ratify the Airline Services Agreement, which is incorporated herein by reference for all purposes, and agree, as a material term of this Sublease and as a material inducement to Sublessor to enter into this Sublease, to fully perform all of their respective obligations under the Airline Services Agreement as a part of this Sublease Agreement as though the same were set forth herein.

SECTION 3.  Term and Rent. (a) Term.  The Term shall commence on the Commencement Date and end on the Expiration Date or such earlier date as this Sublease may be terminated in accordance with the provisions hereof.

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(b) Basic Rent.  Sublessee shall pay Basic Rent with respect to each Sublease Period during the Term on each Sublease Period Date during the Term, in consecutive monthly installments in the amounts as provided in the next sentence.  Each such installment of Basic Rent shall be payable in advance,  shall be equal to the amount specified for each Sublease Period Date specified in Exhibit B hereto, and shall be allocated to the Sublease Period commencing on such Sublease Period Date.  In addition, Sublessee shall pay Basic Rent on the Commencement Date in the amount specified in Exhibit B hereto, which shall be allocated to the period from the Commencement Date to the day prior to the first Sublease Period Date.  If Sublessee shall for any reason whatsoever fail to return the Aircraft on the Expiration Date in the condition specified herein, or return of the Aircraft is not accepted by Sublessor because of Sublessee’s failure to meet the requirements of this Sublease, the obligations of Sublessee provided in this Sublease and in each other Operative Document to which Sublessee is a party, including the obligation to pay Basic Rent, which, after the Expiration Date, shall be on a per diem basis based on a pro rata application of ***% of the Basic Rent due during the last Sublease Period of the Term, shall continue in effect with respect to the Aircraft, and the Term shall be deemed to be extended until return of the Aircraft to Sublessor in accordance with the requirements of this Sublease; provided that nothing in this Section shall be construed as permitting or authorizing Sublessee to fail to meet, or consenting to or waiving any failure by Sublessee to perform, Sublessee’s obligation to return the Aircraft in accordance with the requirements of this Sublease and Sublessor shall be entitled to all of the benefits of, and all of its rights and remedies set forth in, Sections 14 and 15 hereof.

(c) [Intentionally Omitted]

(d) Supplemental Rent.  Sublessee shall pay (or cause to be paid) promptly to Sublessor, or to whomsoever shall be entitled thereto, any and all Supplemental Rent constituting Stipulated Loss Value as the same shall become due and owing and all other amounts of Supplemental Rent within five days after demand or within such other relevant period as may be provided in any Sublessee Document, and in the event of any failure on the part of Sublessee to pay any Supplemental Rent when due, Sublessor shall have all rights, powers and remedies provided for herein or in any other Sublessee Document or by law or equity or otherwise in the case of nonpayment of Basic Rent. Sublessee also will pay to Sublessor, or to whomsoever shall be entitled thereto, on demand, as Supplemental Rent, to the extent permitted by applicable law, interest at the Past Due Rate on any part of any installment of Basic Rent not paid when due for any period for which the same shall be overdue and on any payment of Supplemental Rent not paid when due for the period until the same shall be paid.

(e) Payments in General.  All payments of Rent shall be made directly by Sublessee by wire transfer of immediately available funds prior to 10:30 A.M., New York time, on the date of payment, to Sublessor at its account at USBank, Minneapolis, ABA No. ▇▇▇▇▇▇▇▇▇, for the account of Northwest Airlines, Inc., Account No. *** (or such other account of Sublessor in the continental United States as Sublessor shall direct in a notice to Sublessee at least 10 Business Days prior to the date such payment of Rent is due).  All payments of Supplemental Rent shall be made in Dollars in immediately available funds prior to 10:30 A.M., New York time, on the due date thereof at such office of such other financial institution located

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in the continental United States as the party entitled thereto may so direct at least ten (10) Business Days prior to the due date thereof.

Notwithstanding anything to the contrary contained herein, if any date on which a payment of Rent becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day with the same force and effect as if made on such scheduled date and (provided such payment is made on such next succeeding Business Day) no interest shall accrue on the amount of such payment from and after such scheduled date.

SECTION 4.  Sublessor’s Representations and Warranties.  SUBLESSOR SUBLEASES AND SUBLESSEE TAKES THE AIRCRAFT AND EACH PART THEREOF “AS-IS,” “WHERE-IS.”  NONE OF HEAD LESSOR, SUBLESSOR, NOR ANY PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS AND WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that Sublessor (i) represents and warrants that on the Commencement Date the Aircraft shall be free of Sublessor Liens (including for this purpose Liens which would be Sublessor Liens but for the proviso in the definition of Sublessor Liens) and (ii) agrees that it will not directly or indirectly create, incur, assume or suffer to exist any Sublessor Lien attributable to it on or with respect to the Airframe or any Engine, and it agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Sublessor Lien.  None of the provisions of this Sublease shall be deemed to amend, modify or otherwise affect the representations, warranties or other obligations (express or implied) of the Manufacturer, any subcontractor or supplier of the Manufacturer with respect to the Airframe, the Engines or any Parts, or to release the Manufacturer, or any such subcontractor or supplier, from any such representation, warranty or obligation, or to diminish any right that Sublessee may have with respect to the Airframe, Engines or Parts against the Manufacturer or any such subcontractor or supplier under the Purchase Agreement or otherwise.

SECTION 5.  Return of the Aircraft.  (a)  Condition Upon Return. Upon the termination of this Sublease at the end of the Term or pursuant to Section 15, Sublessee, at its own expense, will return the Aircraft to or at the direction of Sublessor at either Minneapolis/St. ▇▇▇▇ International Airport, St. ▇▇▇▇, Minnesota, or ▇▇▇▇▇ County Metropolitan Airport, Detroit, Michigan, as designated by Sublessor or at such other location in the 48 contiguous states of the United States as may be specified by Sublessor.  At the time of such return, the Aircraft will be registered under the laws of the United States in the name of the Owner or its designee; the Airframe will be fully equipped with the Engines (or other General Electric Model CF34-3B1 type engines satisfactory to Sublessor) duly installed thereon and properly functioning.  Also, at the time of such return, such Airframe and Engines or engines (i) shall be certified as an airworthy aircraft by the Federal Aviation Administration, (ii) shall be free and clear of all Liens

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(other than Sublessor Liens (including for this purpose Liens which would be Sublessor Liens but for the proviso in the definition of Sublessor Liens), Head Lessor Liens (including for this purpose Liens which would be Head Lessor Liens but for the proviso in the definition of Head Lessor Liens) and rights of third parties under pooling, interchange, overhaul, repair or other similar agreements or arrangements, (iii) shall be in as good an operating condition as when delivered by the Manufacturer to Sublessor, ordinary wear and tear excepted, or, in the case of any such engines owned by Sublessee, shall have been approved for substitution by Sublessor, and (iv) shall be in compliance with the return conditions set forth in Exhibit D.

During the last twelve (12) months of the Term, with reasonable notice, Sublessee will cooperate in all reasonable respects with the efforts of Sublessor or Head Lessor to sublease the Aircraft, including, without limitation, permitting prospective sublessees to inspect fully the Aircraft and the records relating thereto, provided, that such cooperation shall not interfere with the operation or maintenance of the Aircraft by Sublessee.  In addition, Sublessee shall notify Sublessor in writing of its plans for meeting the return conditions contained herein prior to commencing the C-Check immediately prior to the C-Check required to be provided by Sublessee upon the return of the Aircraft, and again approximately six months prior to the Expiration Date, and Sublessee shall notify Sublessor in writing at any time within the last twelve (12) months of the Term prior to initiating any significant maintenance or repairs designed to cause the Aircraft to meet the return conditions contained herein.  Sublessor shall have the right to approve or reject Sublessee’s proposed plans for meeting the return conditions contained herein, with such approval not to be unreasonably withheld.

(b) Return of the Engines.  In the event that any engine not owned by Sublessor shall be delivered with the returned Airframe as set forth in paragraph (a) of this Section 5, Sublessee, concurrently with such delivery, will, at no cost to Sublessor or Head Lessor, furnish, or cause to be furnished, to or at the direction of the Owner a full warranty (as to title) ▇▇▇▇ of sale including as to the absence of Liens other than Sublessor Liens (including for this purpose Liens which would be Sublessor Liens but for the proviso in the definition of Sublessor Liens), and Head Lessor Liens (including for this purpose Liens which would be Head Lessor Liens but for the proviso in the definition of Head Lessor Liens) with respect to each such engine, in form and substance satisfactory to the Owner (together with an opinion of counsel to the effect that such full warranty ▇▇▇▇ of sale has been duly authorized and delivered and is enforceable in accordance with its terms and that such engines are free and clear of Liens other than Sublessor Liens (including for this purpose Liens which would be Sublessor Liens but for the proviso in the definition of Sublessor Liens), and Head Lessor Liens (including for this purpose Liens which would be Head Lessor Liens but for the proviso in the definition of Head Lessor Liens)), against receipt from the Owner of a ▇▇▇▇ of sale or other instrument evidencing the transfer, without recourse or warranty (except, if the Owner is Head Lessor, as to the absence of Head Lessor Liens, including for this purpose Liens which would be Head Lessor Liens but for the proviso in the definition of Head Lessor Liens, and if the Owner is Sublessor, as to the absence of Sublessor Liens, including for this purpose Liens which would be Sublessor Liens but for the proviso in the definition of Sublessor Liens) by the Owner, to Sublessee or its designee of all of the Owner’s right, title and interest in and to any Engine constituting part of the Aircraft but not installed on the Airframe at the time of the return of the Airframe.

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(c) Aircraft Documentation.  Upon the return of the Airframe upon any termination of this Sublease in accordance with paragraph (a) of this Section 5, Sublessee shall deliver or cause to be delivered to Sublessor or its designee, in English, current and complete Aircraft Documentation.

(d) Storage Upon Return.  If, at least ten (10) days prior to termination of this Sublease at the end of the Term, Sublessee receives from Sublessor a written request for storage of the Aircraft upon its return hereunder, Sublessee will provide Sublessor, or cause Sublessor to be provided, with free parking facilities for, and unrestricted access to, the Aircraft (maintenance costs and other out-of-pocket costs other than parking fees to be for the account of Sublessor) for a period not exceeding sixty (60) days commencing on the date of such termination, at a location in the continental United States selected by Sublessee used as a location for the parking or storage of aircraft.  Sublessee will maintain insurance for the Aircraft during such period not exceeding sixty (60) days and be reimbursed by Sublessor or its designee for the premiums thereon.

(e) PBH Agreements. If at return of the Aircraft, an Engine or Part (including Landing Gear and APU) is being maintained under a PBH Agreement, Sublessee shall not be required to satisfy minimum maintenance time remaining requirements specified in Exhibit D that are directly and fully covered by such PBH Agreement.

SECTION 6.  Liens.  Sublessee will not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to the Aircraft, title thereto or any interest therein or in this Sublease, except (i) the respective rights of Sublessor and Sublessee as herein provided, the respective rights of Sublessor and Head Lessor as provided in the Head Lease, the rights of Head Lessor as owner of the Aircraft, the Lien of the Trust Indenture, and any other rights existing pursuant to the Operative Documents, (ii) the rights of others under agreements or arrangements to the extent permitted by the terms of Sections 7(b) and 8(b) hereof, (iii) Head Lessor Liens (including for this purpose Liens which would be Head Lessor Liens but for the proviso in the definition of Head Lessor Liens) and Sublessor Liens (including for this purpose Liens which would be Sublessor Liens but for the proviso in the definition of Sublessor Liens) (iv) Liens for taxes of Sublessee either not yet due or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any risk of the sale, forfeiture or loss of the Airframe or any Engine or any interest therein or, so long as any Secured Certificates shall be outstanding, adversely affect the Lien of the Trust Indenture, (v) materialmen’s, mechanics’, workmen’s, repairmen’s, employees’ or other like Liens arising in the ordinary course of Sublessee’s business (including those arising under maintenance agreements entered into in the ordinary course of business) securing obligations that are not overdue for a period of more than thirty (30) days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any risk of the sale, forfeiture or loss of the Airframe or any Engine or any interest therein or, so long as any Secured Certificates shall be outstanding, adversely affect the Lien of the Trust Indenture, (vi) Liens arising out of any judgment or award against Sublessee, unless the judgment secured shall not, within thirty (30) days after the entry thereof, have been discharged, vacated, reversed or execution thereof stayed pending appeal or shall not have been discharged, vacated or reversed within thirty (30) days after the expiration of such stay, and (vii) any other Lien with respect to which Sublessee shall have provided a bond, cash collateral or other security adequate in the sole discretion of Sublessor.  Sublessee will promptly, at its own expense, take (or cause to be taken)

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such actions as may be necessary duly to discharge any such Lien not excepted above if the same shall arise at any time.

SECTION 7.  Registration, Maintenance and Operation; Possession; Insignia.  (a)(I)  Registration and Maintenance.  Sublessee, at its own cost and expense, shall: (i) forthwith upon the delivery thereof hereunder, cause the Aircraft to be duly registered in the name of the Owner and to remain duly registered in the name of Owner under the Federal Aviation Act, provided that Sublessor shall execute and deliver all such documents as Sublessee may reasonably request for the purpose of effecting and continuing such registration, and shall not register the Aircraft or permit the Aircraft to be registered under any laws other than the Federal Aviation Act at any time; (ii) continuously operate, maintain, service, repair and overhaul (or cause to be maintained, serviced, repaired and overhauled) the Aircraft (including, without limitation, the Airframe, Engines and Parts) in compliance with the Maintenance Program and in compliance with all FAA requirements for FAR Part 121 operation and the Manufacturers’ recommended maintenance program so as to keep the Aircraft in as good an operating condition as when delivered by the Manufacturer to Sublessor, ordinary wear and tear excepted, so as to maintain in effect all material Manufacturers’ warranties and guaranties and as may be necessary to enable the airworthiness certification for the Aircraft to be maintained in good standing at all times under the Federal Aviation Act, except when all Bombardier Inc. Canadair Regional Jet Model Series [200][440] aircraft powered by engines of the same type as those with which the Airframe shall be equipped at the time of such grounding and registered in the United States have been grounded by the FAA, and utilizing the same manner and standard of maintenance, service, repair and overhaul used by Sublessee with respect to similar aircraft operated by Sublessee in similar circumstances and without in any case discriminating against the Aircraft by reason of its leased status; provided, however, that in all circumstances the Aircraft shall be maintained by Sublessee in accordance with maintenance standards required by the FAA for FAR Part 121 operation; (iii) maintain or cause to be maintained in English all Aircraft Documentation and all other records, logs and other materials maintained in respect of the Aircraft; and (iv) promptly furnish or cause to be furnished to Sublessor, Head Lessor and the Owner Participant such information as may be required to enable Sublessor, Head Lessor or the Owner Participant to monitor the maintenance status and condition of the Aircraft and to file any reports required to be filed by Sublessor, Head Lessor or the Owner Participant with any governmental authority because of Sublessor’s or the Owner Participant’s interest in or Head Lessor’s ownership of the Aircraft. (II) Operation.  Sublessee will continuously operate the Aircraft in accordance with its FAA approved flight manual which shall comply with all Manufacturer recommendations and requirements for the Aircraft and Engine type.  Sublessee will not maintain, use, service, repair, overhaul or operate the Aircraft in violation of any law or any rule, regulation, order or certificate of any government or governmental authority (domestic or foreign) having jurisdiction, or in violation of any airworthiness certificate, license or registration relating to the Aircraft issued by any such authority, except to the extent Sublessee is contesting in good faith the validity or application of any such law, rule, regulation or order in any reasonable manner which does not adversely affect Sublessor, Head Lessor or the Owner Participant or their respective right, title or interest in the Aircraft and does not involve any risk of sale, forfeiture or loss of the Aircraft or any risk of civil liability or criminal liability being imposed on Sublessor, Head Lessor or the Owner Participant.  Sublessee will not operate the Aircraft (a) in any area excluded from coverage by any insurance required by the terms of Section 11; provided, however, that the failure of Sublessee to comply

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with the provisions of this clause (a) shall not give rise to an Event of Default hereunder where such failure is attributable to causes beyond the reasonable control of Sublessee or to Sublessee’s response to extraordinary circumstances involving an isolated occurrence or isolated series of incidents not in the ordinary course of the regular operations of Sublessee and in each such case Sublessee is taking all reasonable steps to remedy such failure as soon as is reasonably practicable or (b) other than in operations in accordance with the Airline Services Agreement.  Sublessee further agrees not to operate the Aircraft or any Engine outside the United States in any taxable year in a manner that would cause more than 20% of the Basic Rent payable under the Sublease to be treated as derived from sources outside the United States.

(b) Possession.  Sublessee will not, without the prior written consent of Sublessor, in any manner deliver, transfer or relinquish possession of the Airframe or any Engine or install or permit any Engine to be installed on any airframe other than the Airframe or enter into any wet lease; provided that, so long as no Default or Event of Default shall have occurred and be continuing at the time of such delivery, transfer or relinquishment of possession or installation, and so long as Sublessee shall comply with the provisions of Sections 7(a) and 11 hereof, Sublessee may, without the prior written consent of Sublessor:

(i)                                     deliver possession of the Airframe or any Engine to the manufacturer thereof (or for delivery thereto) or to any FAA approved organization (or for delivery thereto) for testing, service, repair, maintenance or overhaul work on the Airframe or Engine or any part of any thereof or for alterations or modifications in or additions to such Airframe or Engine to the extent required or permitted by the terms of Section 8(c) hereof; or

(ii)                                  install an Engine on an airframe leased to Sublessee by Sublessor or any of its Affiliates, provided that (x) such airframe is free and clear of all Liens, except the rights of the parties to the lease covering such airframe, or their assignees, and (y) such lease effectively provides that such Engine shall not become subject to the lien of such lease notwithstanding the installation thereof on such airframe; or

(ii)                                  to the extent permitted by Section 8(b) hereof, subject any appliances, Parts or other equipment owned by Sublessor and removed from the Airframe or any Engine to any pooling arrangement referred to in Section 8(b) hereof.

The rights of any transferee who receives possession by reason of a transfer permitted by this paragraph (b) shall be effectively subject and subordinate to all the terms of this Sublease and the Head Lease, including, without limitation, the covenants contained in Section 7(a) hereof and Sublessor’s rights to repossession pursuant to Section 15 hereof, and Sublessee shall remain primarily liable hereunder for the performance of all of the terms of this Sublease to the same extent as if such transfer had not occurred.  No pooling agreement or other relinquishment of possession of the Airframe or any Engine shall in any way discharge or diminish any of Sublessee’s obligations to Sublessor hereunder or constitute a waiver of Sublessor’s rights or remedies hereunder.  Notwithstanding anything to the contrary contained herein, Sublessee under any and all circumstances may not sublease or sub-sublease, and is

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prohibited from entering into any sublease or sub-sublease with respect to, the Aircraft, the Airframe or any Engine.  Sublessor agrees, subject to the rights of Head Lessor under the Head Lease, for the benefit of Sublessee and for the benefit of any mortgagee or other holder of a security interest in any engine (other than an Engine) owned by Sublessee, any lessor of any engine (other than an Engine) leased to Sublessee and any conditional vendor of any engine (other than an Engine) purchased by Sublessee subject to a conditional sale agreement or any other security agreement, that no interest shall be created hereunder in any engine so owned, leased or purchased and that none of Sublessor, its successors or assigns will acquire or claim, as against Sublessee or any such mortgagee, lessor or conditional vendor or other holder of a security interest or any successor or assignee of any thereof, any right, title or interest in such engine as the result of such engine being installed on the Airframe; provided, however, that such agreement of Sublessor shall not be for the benefit of any lessor or secured party of any airframe (other than the Airframe) leased to Sublessee or purchased by Sublessee subject to a conditional sale or other security agreement or for the benefit of any mortgagee of or any other holder of a security interest in an airframe owned by Sublessee, unless such lessor, conditional vendor, other secured party or mortgagee has expressly agreed (which agreement may be contained in such lease, conditional sale or other security agreement or mortgage) that neither it nor its successors or assigns will acquire, as against Sublessor, any right, title or interest in an Engine as a result of such Engine being installed on such airframe.

(c) Insignia.  On or prior to the Commencement Date, or as soon as practicable thereafter (but in no event later than ten (10) days thereafter), Sublessee 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:

Leased from

▇▇▇▇▇ Fargo Bank Northwest, National Association,
as Owner Trustee,
Lessor

Subleased From

Northwest Airlines Inc.,
Sublessor

and, for so long as the Airframe and each Engine shall be subject to the Lien of the Trust Indenture, bearing the following additional inscription:

(such nameplate to be replaced, if necessary, with a nameplate reflecting the name of any Head Lessor or successor Sublessor, in each case as permitted under the Operative Documents and this Sublease).  Except as above provided, Sublessee will not allow the name of any Person to be placed on the Airframe or on any Engine as a designation that might be interpreted as a claim of

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ownership; provided that nothing contained in this paragraph shall prohibit Sublessee from placing its customary colors and insignia on the Airframe or any Engine.

SECTION 8.  Replacement and Pooling of Parts; Alterations, Modifications and Additions.   (a)  Replacement of Parts.  Sublessee, at its own cost and expense, will promptly replace or cause to be replaced all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever, except as otherwise provided in paragraph (c) of this Section 8 or if the Airframe or an Engine to which a Part relates has suffered an Event of Loss.  In addition, Sublessee may, at its own cost and expense, remove in the ordinary course of maintenance, service, repair, overhaul or testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that Sublessee, except as otherwise provided in paragraph (c) of this Section 8, will, at its own cost and expense, promptly replace such Parts.  All replacement Parts shall be free and clear of all Liens (except for Permitted Liens and pooling arrangements to the extent permitted by paragraph (b) of this Section 8 and except in the case of replacement property temporarily installed on an emergency basis) and shall be serviceable in accordance with the Maintenance Program and FAA requirements for FAR Part 121 operation and shall be in as good operating condition as, and shall have a maintenance status, modification status, value and utility at least equal to, the Parts replaced assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof.  Except as otherwise provided in paragraph (c) of this Section 8, all Parts at any time removed from the Airframe or any Engine shall remain the property of the Owner, no matter where located, until such time as such Parts shall be replaced by Parts which have been incorporated or installed in or attached to the Airframe or such Engine and which meet the requirements for replacement Parts specified above.  Immediately upon any replacement part becoming incorporated or installed in or attached to the Airframe or any Engine as above provided, without further act (subject only to Permitted Liens and any pooling arrangement to the extent permitted by paragraph (b) of this Section 8 and except in the case of replacement property temporarily installed on an emergency basis), (i) title to such replacement Part shall thereupon vest in the Owner, (ii) such replacement Part shall become subject to the Head Lease and this Sublease and be deemed part of the Airframe or such Engine for all purposes hereof to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine, and (iii) title to the replaced Part shall thereupon vest in Sublessee free and clear of all rights of the Owner and Sublessor, and shall no longer be deemed a Part hereunder.

(b) Pooling of Parts.  Only after receiving Sublessor’s written consent thereto, which shall not be unreasonably withheld, any Part removed from the Airframe or any Engine as provided in paragraph (a) of this Section 8 may be subjected by Sublessee to a normal pooling arrangement customary in the airline industry of which Sublessee is a party entered into in the ordinary course of Sublessee’s business; provided that the Part replacing such removed Part shall be incorporated or installed in or attached to such Airframe or Engine in accordance with such paragraph (a) as promptly as practicable after the removal of such removed Part.  In addition, only after receiving Sublessor’s written consent thereto, which shall not be unreasonably withheld, any replacement Part when incorporated or installed in or attached to the Airframe or any Engine in accordance with such paragraph (a) may be owned by any third party subject to such a normal pooling arrangement, provided that Sublessee, at its expense, as promptly

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thereafter as practicable, either (i) causes title to such replacement Part to vest in the Owner in accordance with such paragraph (a) by Sublessee acquiring title thereto for the benefit of, and transferring such title to, the Owner free and clear of all Liens except Permitted Liens (other than pooling arrangements), at which time such temporary replacement part shall become a Part or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Airframe or Engine a further replacement Part owned by Sublessee free and clear of all Liens except Permitted Liens (other than permitted pooling arrangements) and by causing title to such further replacement Part to vest in the Owner in accordance with such paragraph (a).

(c) Alterations, Modifications and Additions.  Sublessee, at its own expense, will make (or cause to be made) such alterations and modifications in and additions to the Airframe and Engines as may be required from time to time to meet the applicable standards of the FAA or any other governmental authority having jurisdiction regardless of upon whom nominally imposed; provided, however, that Sublessee may, in good faith, contest the validity or application of any such law, rule, regulation or order in any reasonable manner which does not adversely affect Head Lessor, the Owner Participant, Sublessor, or their respective right, title and interest in the Aircraft and does not involve any risk of sale, forfeiture or loss of the Aircraft or any risk of civil liability or criminal liability being imposed on the Owner Participant, Head Lessor, or Sublessor; provided, further, that no appliance, part, instrument, appurtenance, accessory, furnishing or other equipment of whatever nature relating to such alteration, modification or addition may be leased from any Person other than Sublessor.  In addition, Sublessee, at its own expense, may from time to time add further parts or accessories and make such alterations and modifications in and additions to the Airframe or any Engine as Sublessee may deem desirable in the proper conduct of its business, including, without limitation, removal of Parts which Sublessee has determined in its reasonable judgment to be obsolete or no longer suitable or appropriate for use on the Airframe or such Engine (such parts, “Obsolete Parts”); provided that no such alteration, modification or addition shall diminish the value, utility or remaining useful life of the Airframe or such Engine below the value, utility or remaining useful life thereof immediately prior to such alteration, modification or addition, assuming the Airframe or such Engine was then in the condition required to be maintained by the terms of this Sublease, except that the value (but not the utility or remaining useful life) of the Airframe or any Engine may be reduced by the value of Obsolete Parts which shall have been removed so long as the aggregate original cost of all Obsolete Parts which shall have been removed and not replaced pursuant to this Sublease or any other lease between Sublessee and Sublessor (or any affiliate thereof) shall not exceed $***.  Title to all Parts incorporated or installed in or attached or added to the Airframe or an Engine as the result of such alteration, modification or addition (the “Additional Parts”) shall, without further act, vest in the Owner, and the Owner shall not be required under any circumstances under this Sublease to pay directly for any alteration, modification or addition.  Notwithstanding the foregoing sentence, Sublessee may remove or suffer to be removed any Additional Part, provided that such Additional Part (i) is in addition to, and not in replacement of or substitution for, any Part originally incorporated or installed in or attached to the Airframe or any Engine at the time of delivery thereof hereunder or any Part in replacement of, or substitution for, any such Part, (ii) is not required to be incorporated or installed in or attached or added to the Airframe or any Engine pursuant to the terms of Section 7 hereof or the first sentence of this paragraph (c) and (iii) can be removed from the Airframe or such Engine without diminishing or impairing the value, utility or remaining useful life of the Airframe or such Engine.  Upon the removal by Sublessee of any Part as provided above, title

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thereto shall, without further act, vest in Sublessee and such Part shall no longer be deemed part of the Airframe or Engine from which it was removed.  Any Part not removed by Sublessee as above provided prior to the return of the Airframe or Engine to Sublessor hereunder shall remain the property of the Owner.

Sublessee shall not, without Sublessor’s prior written consent, make any Major Modifications, including, without limitation, modifications as to type or manufacture of the avionics, or cabin modifications which change the interior layout, to the Aircraft.

SECTION 9.  Voluntary Termination.  (a)  Termination by Sublessor.  In the event the Head Lease is being terminated, Sublessor shall have the right to elect to terminate this Sublease on any date upon at least two (2) days advance written notice to Sublessee specifying the date on which Sublessor intends to terminate this Sublease in accordance with this Section 9 (the “Voluntary Termination Date”).  On or before the Voluntary Termination Date, Sublessee shall simultaneously pay or cause to be paid to or at the direction of Sublessor in funds of the type specified in Section 3(e) hereof, an amount equal to the sum of all unpaid Basic Rent with respect to the Aircraft due prior to such Voluntary Termination Date, and all unpaid Supplemental Rent due on or prior to the Voluntary Termination Date.

(b) [Intentionally Omitted].

(c) [Intentionally Omitted].

(d) Termination as to Engines.  So long as no Event of Default shall have occurred and be continuing and with the prior written consent of Sublessor, Sublessee shall have the right during the Term, on at least sixty (60) days prior written notice, to terminate this Sublease with respect to any Engine.  In such event, and prior to the date of such termination, Sublessee shall replace such Engine hereunder by complying with the terms of Section 10(b) to the same extent as if an Event of Loss had occurred with respect to such Engine and shall indemnify Sublessor, Head Lessor and the Owner Participant for any adverse tax consequences resulting from such substitution, and Sublessor shall transfer, and shall exercise any such rights as it may have to cause Head Lessor to transfer, such right, title, and interest as Sublessor or Head Lessor, as the case may be, may have to the replaced Engine as provided in Section 5(b).  No termination of this Sublease with respect to any Engine as contemplated by this Section 9(d) shall result in any reduction of Basic Rent.

SECTION 10.  Loss, Destruction, Requisition, etc.  (a)  Event of Loss with Respect to the Aircraft.  Upon the occurrence of an Event of Loss with respect to the Airframe or the Airframe and the Engines and/or engines then installed thereon, Sublessee shall forthwith (and in any event, within five (5) days after such occurrence) give Sublessor and Head Lessor written notice of such Event of Loss.  Not later than the earlier of (x) the Business Day next succeeding the 90th day following the occurrence of such Event of Loss or (y) an earlier Business Day irrevocably specified fifteen (15) days in advance by notice from Sublessee to Sublessor (the “Loss Payment Date”), Sublessee shall pay or cause to be paid to Sublessor (or its designee) in funds of the type specified in Section 3(d) hereof, an amount equal to the Stipulated Loss Value corresponding to the Stipulated Loss Value Date occurring on or immediately following the Loss Payment Date; provided, however, that if a Sublease Period Date shall occur on or prior to the Loss Payment Date with respect to which Stipulated Loss Value is determined, Sublessee shall pay on such Sublease Period Date an amount equal to the Basic Rent

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that would have been due on or prior to such Sublease Period Date if such Event of Loss had not occurred.  At such time as Sublessor shall have received the amounts specified in the preceding sentence, together with all other amounts that then may be due hereunder (including, without limitation, all Basic Rent due before the Stipulated Loss Value Date by reference to which the Stipulated Loss Value is calculated for the Loss Payment Date and all Supplemental Rent then due) (1) the obligation of Sublessee to pay the installments of Basic Rent, Supplemental Rent, Stipulated Loss Value or any other amount shall cease to accrue (but without affecting the provisions of Section 29(b) or 29(c) hereof), (2) except for the provisions of Sections 29(b) and 29(c) of this Sublease (which shall survive), this Sublease shall terminate, (3) Sublessor will transfer, and exercise such rights as it may have to cause Head Lessor to transfer, to or at the direction of Sublessee, without recourse or warranty (except, with respect to Head Lessor, as to the absence of Head Lessor Liens, including for this purpose Liens which would be Head Lessor Liens but for the proviso in the definition of Head Lessor Liens, and, with respect to Sublessor, as to the absence of Sublessor Liens, including for this purpose Liens which would be Sublessor Liens but for the proviso in the definition of Sublessor Liens), all of Head Lessor’s and Sublessor’s, as the case may be, right, title and interest in and to the Airframe and any Engines subject to such Event of Loss, as well as any Engines not subject to such Event of Loss, and will exercise such rights as it may have to cause the Owner to furnish to or at the direction of Sublessee a ▇▇▇▇ of sale in form and substance reasonably satisfactory to Sublessee, evidencing such transfer, and (4) Sublessee will be subrogated to all claims of Sublessor and Head Lessor, if any, against third parties, for damage to or loss of the Airframe and any Engines which were subject to such Event of Loss to the extent of the then insured value of the Aircraft.

If at any time Sublessor shall be permitted to substitute an airframe for the Airframe pursuant to Section 10 of the Head Lease, Sublessor shall have the right, in its sole discretion, to substitute an airframe for the Airframe under this Sublease.

(b) Event of Loss with Respect to an Engine.  Upon the occurrence of an Event of Loss with respect to an Engine under circumstances in which there has not occurred an Event of Loss with respect to the Airframe, Sublessee shall forthwith (and in any event, within five (5) days after such occurrence) give Sublessor and Head Lessor written notice thereof and shall, use its best efforts within forty-five (45) days (and in any event within sixty (60) days) after the occurrence of such Event of Loss, convey or cause to be conveyed to the Owner, as replacement for any Engine with respect to which such Event of Loss occurred, title to another General Electric Model CF34-3B1 type engine satisfactory to Sublessor, free and clear of all Liens (other than Permitted Liens, which engine may upon its transfer to the Owner become subject to any and all Permitted Liens) and having a value, utility and remaining useful life (including taking into account its cycle and life-limited parts and its maintenance condition and modification status) at least equal to the Engine subject to such Event of Loss assuming no Event of Loss had occurred and that such Engine had been maintained in accordance with this Sublease.

Prior to or at the time of any such conveyance, Sublessee, at its own expense, will:

(1)                                  furnish the Owner with a full warranty (as to title) ▇▇▇▇ of sale, in form and substance reasonably satisfactory to the Owner, with respect to such replacement engine,

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(2)                                  cause a Sublease Supplement to be duly executed by Sublessee and to be filed for recording pursuant to the Federal Aviation Act,

(3)                                  furnish Sublessor and Head Lessor with such evidence of compliance with the insurance provisions of Section 11 hereof with respect to such replacement engine as Sublessor may reasonably request,

(4)                                  furnish Sublessor and Head Lessor with an opinion of qualified FAA counsel, as to the due recordation of the Sublease Supplement and the Head Lease Supplement and the Trust Supplement and all other documents or instruments the recordation of which is necessary to perfect and protect the rights of Sublessor and Head Lessor in the replacement engine,

(5)                                  furnish Sublessor and Head Lessor with an opinion of counsel (which shall be chosen by Sublessee and satisfactory to Sublessor and Head Lessor) reasonably satisfactory to Sublessor, Head Lessor and the Owner Trustee to the effect that (A) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited in connection with such substitution conform to the requirements of the Head Lease and this Sublease, (B) the replacement property covered by the Head Lease and this Sublease, the instruments subjecting such replacement engine to the Head Lease and this Sublease, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the right, title, estate and interest of the Owner to such replacement engine, and (C) the full warranty ▇▇▇▇ of sale referred to in clause (1) constitutes an effective instrument for the conveyance of title to the replacement engine,

(6)                                  cause a financing statement or statements with respect to such substituted property to be filed in such place or places as are deemed necessary or advisable by Sublessor or Head Lessor, or their respective counsel, to perfect their respective interests in the replacement engine,

(7)                                  furnish Sublessor and Head Lessor with an opinion of counsel (which shall be counsel chosen by Sublessee and acceptable to Sublessor and Head Lessor) reasonably satisfactory to Sublessor, Head Lessor to the effect that Sublessor and Head Lessor will be entitled to the benefits of Section 1110 of the U.S. Bankruptcy Code with respect to the substitute engine, provided that such opinion need not be delivered to the extent that immediately prior to such substitution the benefits of Section 1110 of the U.S. Bankruptcy Code were not, solely by reason of a change in law or governmental interpretation thereof, available to Sublessor under the Head Lease with respect to the Aircraft,

(8)                                  furnish Sublessor, Head Lessor with an officer’s certificate duly executed by the chairman, vice chairman, president, any execute vice president, any senior vice president, or any vice president of Sublessee stating (A) that the replacement engine has at least an equal maintenance status, modification status,

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value, utility and remaining useful life as the Engine it replaces assuming no Event of Loss had occurred and such Engine had been maintained in the condition required hereunder, (B) each of the conditions specified in this Section 10(b) with respect to such replacement engine have been satisfied and that Sublessee will not be in default, by the making and granting of the request for release and the addition of the replacement engine, in the performance of any of the terms and covenants of this Sublease, (C) a description of the Engine which shall be identified by manufacturer’s serial number, (D) a description of the replacement engine (including the manufacturer’s name and serial number) as consideration for the Engine to be released, (E) that on the date of the Sublease Supplement relating to the replacement engine the Owner will be the legal owner of such replacement engine free and clear of all Liens except Permitted Liens, that such replacement engine will on such date be in good working order and condition and that such replacement engine is substantially the same as or better than the Engine to be released, (F) the maintenance status, modification status, value, utility and remaining useful life of the replacement engine as of the date of such certificate (which shall not be less than the maintenance status, modification status, value, utility and remaining useful life of the Engine to be released (assuming no Event of Loss and that such Engine was in the condition and repair required to be maintained hereunder), (G) that, with respect to the replacement of an Engine pursuant to Section 9(d) hereof, no Event of Default or no Default has occurred which has not been remedied or waived, and (H) that the release of the Engine to be released will not be in contravention of any of the provisions hereof, and

(9)                                  assign (or cause to be assigned) to the Owner the benefit of all manufacturer’s and vendor’s warranties generally available with respect to the substituted property in substantially the same manner and to substantially the same extent as pursuant to the Purchase Agreement Assignment,

Sublessor and will transfer and exercise such rights as it may have to cause the Owner to transfer, to or at the direction of Sublessee without recourse or warranty (except, with respect to Head Lessor, as to absence of Head Lessor Liens, including for this purpose Liens which would be Head Lessor Liens but for the proviso in the definition of Head Lessor Liens or, with respect to Sublessor, as to absence of Sublessor Liens, including for this purpose Liens which would be Sublessor Liens but for the proviso in the definition of Sublessor Liens) all of Sublessor’s and Head Lessor’s respective right, title and interest, if any, in and to (I) the Engine with respect to which such Event of Loss occurred and furnish or exercise such rights it may have to cause the Owner to furnish to or at the direction of Sublessee a ▇▇▇▇ of sale in form and substance reasonably satisfactory to Sublessee, evidencing such transfer and (II) all claims, if any, against third parties, for damage to or loss of the Engine subject to such Event of Loss, and such Engine shall thereupon cease to be the Engine subleased hereunder.  For all purposes hereof, each such replacement engine shall, after such conveyance, be deemed part of the property subleased hereunder, and shall be deemed an “Engine”, as the case may be.  No Event of Loss with respect to an Engine under the circumstances contemplated by the terms of this paragraph (b) shall result in any reduction in Basic Rent.

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(c) Application of Payments from Governmental Authorities for Requisition of Title, etc.  Any payments (other than insurance proceeds the application of which is provided for in Section 11) received at any time by Sublessor or by Sublessee from any governmental authority or other Person with respect to an Event of Loss will be applied as follows:

(1)                                  if payments are received with respect to the Airframe (or the Airframe and any Engine or engines then installed thereon), (A) unless the same are replaced pursuant to the last paragraph of Section 10(a), after reimbursement of Sublessor and Head Lessor for reasonable costs and expenses, so much of such payments remaining as shall not exceed the Stipulated Loss Value required to be paid by Sublessee pursuant to Section 10(a), shall be applied in reduction of Sublessee’s obligation to pay Stipulated Loss Value, if not already paid by Sublessee, or, if already paid by Sublessee, shall be applied to reimburse Sublessee for its payment of Stipulated Loss Value, and following the foregoing application, the balance, if any, of such payments will be paid over to, or retained by Sublessee, provided that Sublessor (or Head Lessor) shall be entitled to so much of the excess, if any, of such payment over Stipulated Loss Value as is attributable to compensation for loss of Sublessor’s (or Head Lessor’s) interest in the Aircraft as distinguished from the loss of use of the Aircraft; or (B) if such property is replaced pursuant to the last paragraph of Section 10(a), such payments shall be paid over to, or retained by, Sublessee; provided that Sublessee shall have fully performed or, concurrently therewith, will fully perform the terms of the last paragraph of Section 10(a) with respect to the Event of Loss for which such payments are made; and

(2)                                  if such payments are received with respect to an Engine under circumstances contemplated by Section 10(b) hereof, so much of such payments remaining after reimbursement of Sublessor and Head Lessor for reasonable costs and expenses shall be paid over to, or retained by, Sublessee, provided that Sublessee shall have fully performed, or concurrently therewith will perform, the terms of Section 10(b) with respect to the Event of Loss for which such payments are made.

(d) Requisition for Use of the Aircraft by the United States Government.  In the event of the requisition for use of the Airframe and the Engines or engines installed on the Airframe during the Term by the United States Government or any instrumentality or agency thereof, Sublessee shall promptly notify Sublessor and Head Lessor of such requisition, and all of Sublessee’s obligations under this Sublease Agreement with respect to the Aircraft shall continue to the same extent as if such requisition had not occurred, provided that if such Airframe and Engines or engines installed thereon are not returned by such government (or instrumentality or agency) prior to the end of the Term, Sublessee shall be obligated to return the Airframe and such Engines or engines to or at the direction of Sublessor pursuant to, and in all other respects in compliance with the provisions of, Section 5 promptly on the date of such return by such government (or instrumentality or agency).  All payments received by Sublessor, Head Lessor or Sublessee from such government (or instrumentality or agency) for the use of such Airframe and Engines or engines during the Term shall be paid over to, or retained by, Sublessee; and all payments received by Sublessor, Head Lessor or Sublessee from such

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government (or instrumentality or agency) for the use of such Airframe and Engines or engines after the end of the Term shall be paid over to, or retained by, Sublessor or Head Lessor.

(e) Requisition for Use of an Engine by the United States Government.  In the event of the requisition for use of an Engine by the United States Government or any agency or instrumentality thereof (other than in the circumstances contemplated by subsection (d)), Sublessee shall replace such Engine hereunder by complying with the terms of Section 10(b) to the same extent as if an Event of Loss had occurred with respect thereto, and, upon compliance with Section 10(b) hereof, any payments received by Sublessor or Sublessee from such government (or instrumentality or agency) with respect to such requisition shall be paid over to, or retained by, Sublessee.

(f) Application of Payments During Existence of Default.

(i)                                     Any amount referred to in this Section 10 which is payable to or retainable by Sublessee shall not be paid to or retained by Sublessee if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing or if the Airline Services Agreement shall have been terminated or canceled or shall have been terminated in accordance with its terms, but shall be held by Sublessor and applied in accordance with Section 28 hereof.  At such time as there shall not be continuing any such Default or Event of Default and the Airline Services Agreement shall not have been terminated or canceled or shall not have terminated in accordance with its terms, such amount shall be paid to Sublessee to the extent not previously applied in accordance with the preceding sentence.

(ii)                                  Any amount referred to in this Section 10 which is payable to or retainable by Sublessee shall not be paid to or retained by Sublessee if at the time of such payment or retention an Event of Default (as such term is defined in the Head Lease) shall have occurred and be continuing, but shall be held by or paid over to or at the direction of Head Lessor as security for the obligations of Sublessor under the Head Lease and, if Head Lessor declares the Head Lease to be in default pursuant to Section 15 of the Head Lease, applied against Sublessor’s obligations thereunder as and when due.  At such time as there shall not be continuing any such Event of Default (as such term is defined in the Head Lease), such amount shall be paid to Sublessee to the extent not previously applied in accordance with the preceding sentence.

SECTION 11.  Insurance.  (a)  Public Liability and Property Damage Insurance.  Sublessee will carry at its expense (i) comprehensive airline third party legal liability insurance or the equivalent (including, without limitation, passenger legal liability) (and including aircraft war risk and hijacking insurance, unless otherwise agreed by Sublessor) insurance and property damage insurance (exclusive of manufacturer’s product liability insurance) with respect to the Aircraft, in an amount, with respect to third party legal liability insurance (including passenger legal liability) other than aircraft war risk and hijacking insurance, not less than the greater of (x) the amount of public liability and property damage insurance from time to time applicable to aircraft owned or operated by Sublessee of the same type as the Aircraft and (y) the Minimum Liability Amount, and with respect to aircraft war risk and hijacking insurance, in an amount not

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less than $*** per occurrence and (ii) cargo liability insurance, in the case of both clause (i) and clause (ii), (A) of the type and covering the same risks as from time to time applicable to aircraft operated by Sublessee of the same type as the Aircraft and (B) which is maintained in effect with insurers of recognized responsibility reasonably acceptable to Sublessor.  Any policies of insurance carried in accordance with this paragraph (a) and any policies taken out in substitution or replacement for any of such policies (A) shall be amended to name Sublessor, Head Lessor in its individual capacity and as owner trustee, and the Owner Participant (but without imposing on any such parties liability to pay the premiums for such insurance) as additional insureds as their respective interests may appear, (B) shall provide that in respect of the respective interests of Sublessor, the Head Lessor and the Owner Participant in such policies the insurance shall not be invalidated by any action or inaction of Sublessee or any other Person and shall insure each of Sublessor, Head Lessor and the Owner Participant regardless of any breach or violation of any warranty, declaration or condition contained in such policies by Sublessee, and (C) shall provide that if the insurers cancel such insurance for any reason whatever or if any change is made in such insurance which adversely affects the interest of Sublessor, Head Lessor or the Owner Participant, or such insurance shall lapse for non-payment of premium, such cancellation, lapse or change shall not be effective as to Sublessor, Head Lessor or the Owner Participant for thirty (30) days (seven (7) days in the case of war risk and allied perils coverage) after issuance to Sublessor, Head Lessor or the Owner Participant, respectively, of written notice by such insurers of such cancellation, lapse or change; provided, however, that if any notice period specified above is not reasonably obtainable, such policies shall provide for as long a period of prior notice as shall then be reasonably obtainable.  Each liability policy (1) shall be primary without right of contribution from any other insurance which is carried by Sublessor, Head Lessor or the Owner Participant, (2) shall expressly provide that all of the provisions thereof, except the limits of liability, shall operate in the same manner as if there were a separate policy covering each insured, and (3) shall waive any right of the insurers to any set-off or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of Sublessor, Head Lessor, in its individual capacity or as owner trustee or the Owner Participant to the extent of any moneys due to Sublessor, Head Lessor or the Owner Participant.

(b) Insurance Against Loss or Damage to the Aircraft.  Sublessee shall maintain in effect at its expense, with insurers of recognized responsibility, all-risk ground and flight aircraft hull insurance covering the Aircraft and all-risk ground and flight coverage of Engines and Parts while temporarily removed from the Aircraft and not replaced by similar components (including, without limitation, war risk and governmental confiscation and expropriation (other than by the government of registry of the Aircraft) and hijacking insurance, unless otherwise agreed by Sublessor); provided that such insurance shall at all times while the Aircraft is subject to this Sublease be for an amount not less than the Stipulated Loss Value for the Aircraft.  Any policies carried in accordance with this paragraph (b) covering the Aircraft and any policies taken out in substitution or replacement for any such policies (i) shall name Sublessor, Head Lessor, in its individual capacity and as owner trustee and the Owner Participant as additional insureds, as their respective interests may appear (but without imposing on any such party liability to pay premiums with respect to such insurance), (ii) shall provide that (A) in the event of a loss involving proceeds in excess of $***, the proceeds in respect of such loss up to an amount equal to the Stipulated Loss Value for the Aircraft shall be payable to or at the direction of Sublessor (except in the case of a loss with respect to an Engine installed on an airframe other than the Airframe, in which case Sublessee shall arrange for any payment of insurance proceeds

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in respect of such loss to be held for the account of Sublessor whether such payment is made to Sublessee or any third party), it being understood and agreed that in the case of any payment to Sublessor or its designee otherwise than in respect of an Event of Loss, Sublessor shall, upon receipt of evidence satisfactory to it that the damage giving rise to such payment shall have been repaired or that such payment shall then be required to pay for repairs then being made, pay, or exercise such rights as it may have to cause to be paid, the amount of such payment to Sublessee or its order and (B) the entire amount of any loss involving proceeds of $*** or less or the amount of any proceeds of any loss in excess of the Stipulated Loss Value for the Aircraft shall be paid to Sublessee or its order unless (x) a Default or an Event of Default shall have occurred and be continuing and the insurers have been notified thereof by Sublessor, Head Lessor or (y) an Event of Default (as such term is defined in the Head Lease) shall have occurred and be continuing and the insurers have been notified thereof by Sublessor, Head Lessor, (iii) shall provide that if the insurers cancel such insurance for any reason whatever, or such insurance lapses for non-payment of premium or if any change is made in the insurance which adversely affects the interest of Sublessor, Head Lessor, or the Owner Participant, such cancellation, lapse or change shall not be effective as to Sublessor, Head Lessor, or the Owner Participant for thirty (30) days (seven (7) days in the case of hull war risk and allied perils coverage) after issuance to Sublessor, Head Lessor or the Owner Participant, respectively, of written notice by such insurers of such cancellation, lapse or change, provided, however, that if any notice period specified above is not reasonably obtainable, such policies shall provide for as long a period of prior notice as shall then be reasonably obtainable, (iv) shall provide that in respect of the respective interests of Sublessor, Head Lessor and the Owner Participant in such policies the insurance shall not be invalidated by any action or inaction of Sublessee or any other Person and shall insure the respective interests of Sublessor, Head Lessor and the Owner Participant, as they appear, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by Sublessee, (v) shall be primary without any right of contribution from any other insurance which is carried by Sublessor, Head Lessor or the Owner Participant, (vi) shall waive any right of subrogation of the insurers against Sublessor, Head Lessor and the Owner Participant, and (vii) shall waive any right of the insurers to set-off or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of Sublessor, Head Lessor, the Owner Participant or Sublessee to the extent of any moneys due to Sublessor or the Owner Participant.  In the case of a loss with respect to an engine (other than an Engine) installed on the Airframe, Sublessor or its designee shall hold any payment to it of any insurance proceeds in respect of such loss for the account of Sublessee or any other third party that is entitled to receive such proceeds.

As between Sublessor and Sublessee, it is agreed that all insurance payments received as the result of the occurrence of an Event of Loss will be applied as follows:

(x)                                   if such payments are received with respect to the Airframe (or the Airframe and the Engines installed thereon), so much of such payments remaining, after reimbursement of Sublessor for reasonable costs and expenses, as shall not exceed the Stipulated Loss Value required to be paid by Sublessee pursuant to Section 10(a) hereof shall be applied in reduction of Sublessee’s obligation to pay such Stipulated Loss Value, if not already paid by Sublessee, or, if already paid by Sublessee, shall be applied to reimburse Sublessee for its payment of such Stipulated Loss Value, and the balance, if any, of such payments

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remaining thereafter will be paid over to, or retained by, Sublessee; and

(y)                                 if such payments are received with respect to an Engine under the circumstances contemplated by Section 10(b) hereof, so much of such payments remaining, after reimbursement of Sublessor and Head Lessor for reasonable costs and expenses, shall be paid over to, or retained by, Sublessee, provided that Sublessee shall have fully performed, or concurrently therewith will fully perform, the terms of Section 10(b) with respect to the Event of Loss for which such payments are made.

As between Sublessor and Sublessee, the insurance payments for any property damage loss to the Airframe or any Engine not constituting an Event of Loss with respect thereto will be applied in payment for repairs or for replacement property in accordance with the terms of Sections 7 and 8, if not already paid for by Sublessee, and any balance (or if already paid for by Sublessee, all such insurance proceeds) remaining after compliance with such Sections with respect to such loss shall be paid to Sublessee.

(c) Reports, etc.  Sublessee will furnish, or cause to be furnished, to Sublessor, Head Lessor and the Owner Participant, on or before the Commencement Date and on or before July 1 in each year thereafter during the Term commencing July, 2006, a report, signed by Aon Risk Services, Inc. or any other independent firm of insurance brokers reasonably acceptable to Sublessor and Head Lessor (the “Insurance Brokers”), describing in reasonable detail the insurance and reinsurance then carried and maintained with respect to the Aircraft and stating the opinion of such firm that the insurance then carried and maintained with respect to the Aircraft complies with the terms hereof; provided, however, that all information contained in the foregoing report shall not be made available by Sublessor, Head Lessor or the Owner Participant to anyone except (A) to prospective and permitted transferees of Sublessor’s, Head Lessor’s, or the Owner Participant’s interest who agree to hold such information confidential, (B) to Sublessor’s, Head Lessor’s, or the Owner Participant’s counsel or independent certified public accountants or independent insurance advisors who agree to hold such information confidential, (C) as may be required by any statute, court or administrative order or decree or governmental ruling or regulation or as may be requested by any regulatory agency or body having authority or (D) as may be necessary for purposes of protecting the interests of any such Person or for the enforcement of this Sublease by Sublessor or the Head Lease by Head Lessor.  Sublessee will cause such Insurance Brokers to agree to advise Sublessor, Head Lessor, and the Owner Participant in writing of any default in the payment of any premium and of any other act or omission on the part of Sublessee of which it has knowledge and which might invalidate or render unenforceable, in whole or in part, any insurance on the Aircraft.  To the extent such agreement is reasonably obtainable, Sublessee will also cause such Insurance Brokers to agree to advise Sublessor, the Head Lessor and the Owner Participant in writing at least thirty (30) days (seven (7) days in the case of war risk and allied perils coverage), prior to the expiration or termination date of any insurance carried and maintained on the Aircraft pursuant to this Section 11.  In addition, Sublessee will also cause such Insurance Brokers to deliver to Sublessor, Head Lessor and the Owner Participant, on or prior to the date of expiration of any insurance policy referenced in a previously delivered certificate of insurance, a new certificate of insurance, substantially in the same form as delivered by Sublessee to such parties on the Commencement Date.  In the event that Sublessee shall fail to maintain or cause to be

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maintained insurance as herein provided, Sublessor or its designee may at its sole option provide such insurance and, in such event, Sublessee shall, upon demand, reimburse Sublessor, as Supplemental Rent, for the cost thereof to Sublessor or such designee, as the case may be, without waiver of any other rights Sublessor or such designee may have; provided, however, that no exercise by Sublessor or such designee of said option shall affect the provisions of this Sublease, including the provisions of Section 14(g) hereof.

(d) Self-Insurance.  Sublessee may not self-insure the risks required to be insured against pursuant to this Section 11; provided, however, that Sublessee may self-insure the risks required to be insured against pursuant to Section 11(a) and (b) hereof solely to the extent of any applicable mandatory minimum per aircraft (or, if applicable, per annum or other period) hull or liability insurance deductible imposed by the aircraft hull or liability insurers.

(e) Additional Insurance by Head Lessor and Sublessor.  Sublessee may at its own expense carry insurance with respect to its interest in the Aircraft in amounts in excess of that required to be maintained by this Section 11; the Owner Participant (either directly or through Head Lessor) or Sublessor may carry for its own account at its sole cost and expense insurance with respect to its interest in the Aircraft, provided that such insurance does not prevent Sublessee from carrying the insurance required or permitted by this Section 11 or adversely affect such insurance or the cost thereof.

(f) Indemnification by Government in Lieu of Insurance.  With Sublessor’s written consent which may be given or withheld in its sole discretion, notwithstanding any provisions of this Section 11 requiring insurance, Sublessee may provide, in lieu of insurance against any risk with respect to the Aircraft, indemnification from, or insurance provided by, the United States Government or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States against such risk in an amount which, when added to the amount of insurance against such risk maintained by Sublessee with respect to the Aircraft (including permitted self-insurance) shall be at least equal to the amount of insurance against such risk otherwise required by this Section 11.

(g) Application of Payments During Existence of Default.

(i)                                     Any amount referred to in paragraph (b) of this Section 11 which is payable to or retainable by Sublessee shall not be paid to or retained by Sublessee if at the time of such payment or retention a Default or an Event of Default shall have occurred and be continuing or if the Airline Services Agreement shall have been terminated or canceled  or shall have terminated in accordance with its terms, but shall be held by Sublessor and applied in accordance with Section 28 hereof.  At such time as there shall not be continuing any such Default or Event of Default and the Airline Services Agreement shall not have been terminated or canceled or shall not have terminated in accordance with its terms, such amount shall be paid to Sublessee to the extent not previously applied in accordance with the preceding sentence.

(ii)                                  Any amount referred to in paragraph (b) of this Section 11 which is payable to or retainable by Sublessee shall not be paid to or retained by Sublessee

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if at the time of such payment or retention an Event of Default (as such term is defined in the Head Lease) shall have occurred and be continuing, but shall be held by or paid over to or at the direction of Head Lessor as security for the obligations of Sublessor under the Head Lease and, if Head Lessor declares the Head Lease to be in default pursuant to Section 15 of the Head Lease, may be applied against Sublessor’s obligations thereunder as and when due.  At such time as there shall not be continuing any such Event of Default (as such term is defined in the Head Lease), such amount shall be paid to Sublessee to the extent not previously applied in accordance with the preceding sentence.

SECTION 12.  Inspection.  At all reasonable times and upon reasonable notice to Sublessee, Head Lessor, the Owner Participant or their respective authorized representatives may each inspect the Aircraft and inspect and make copies (at Head Lessor’s or the Owner Participant’s expense, as the case may be) of the Aircraft Documentation and other manuals, logs, books and records of Sublessee relating to the maintenance of the Aircraft; any such inspection of the Aircraft shall be limited to a visual, walk-around inspection and may include opening any panels, bays or the like; provided that no exercise of such inspection right shall unreasonably interfere with the scheduled operation or maintenance of the Aircraft by, or the business of, Sublessee unless deemed critical by Sublessor.  At all times upon notice to Sublessee, Sublessor or its authorized representative may inspect the Aircraft and inspect and make copies (at its expense) of the Aircraft Documentation and other manuals, logs, books and records of Sublessee relating to the maintenance of the Aircraft; any such inspection may, at Sublessor’s election, include a visual, walk-around inspection, opening any panels, bays or the like, Engine borescope inspections, Engine power assurance runs, ground operation and function checks; provided that no exercise of such inspection right shall unreasonably interfere with the scheduled operation or maintenance of the Aircraft by, or the business of, Sublessee unless deemed critical by Sublessor.  In addition, upon receipt by Sublessee of a written request from the Owner Participant or Sublessor specifying that the Owner Participant or Sublessor desires to have an authorized representative observe the next scheduled “C” Check or, if Sublessee is then maintaining the Aircraft under a fully equalized maintenance program, the next scheduled maintenance visit under such equalized maintenance program to be performed on the Aircraft (or substitute equivalent successor type of maintenance work), Sublessee shall cooperate with the Owner Participant or Sublessor, as the case may be, to enable the Owner Participant’s or Sublessor’s authorized representative to each observe the next scheduled maintenance visit to be performed on the Aircraft, including reasonable advance notification to the Owner Participant, and Sublessor of the time and place of such scheduled maintenance visit; provided that the authorized representative of the Owner Participant shall merely observe such scheduled maintenance visit, shall not interfere with or extend in any manner the conduct or duration of the maintenance visit and shall not be entitled to direct any of the work performed in connection with such visit.  None of Sublessor, Head Lessor or the Owner Participant shall have any duty to make any such inspection nor shall any of them incur any liability or obligation by reason of not making such inspection.

SECTION 13.  Assignment.  Sublessee will not, without the prior express written consent of Sublessor, assign in whole or in part this Sublease or any of its rights or obligations hereunder.  Sublessor may assign in whole or in part, or convey all or any part of its right, title and interest in and to, this Sublease after giving Sublessee ten (10) days notice thereof.  Subject

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to the foregoing, the terms and provisions of this Sublease shall be binding upon and inure to the benefit of Sublessor and Sublessee and their respective successors and permitted assigns.

SECTION 14.  Events of Default.  Each of the following events shall constitute an Event of Default (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) and each such Event of Default shall continue so long as, but only as long as, it shall not have been remedied:

(a)                                  Sublessee shall not have made a payment of Basic Rent or Stipulated Loss Value when the same shall have become due; or

(b)                                 Sublessee shall have failed to make a payment of Supplemental Rent (other than Stipulated Loss Value) after the same shall have become due and such failure shall continue for five (5) days; or

(c)                                  Sublessee shall have failed to perform or observe (or caused to be performed and observed) any covenant or agreement to be performed or observed by it under any Sublessee Document other than the Airline Services Agreement and such failure shall continue unremedied for a period of twenty (20) days after the earlier of (x) receipt by Sublessee of written notice thereof from Sublessor, or (y) insofar as the failure to perform or observe (or caused to be performed and observed) any covenant or agreement relates to any material covenant or agreement, an officer of Sublessee, whose functions and duties would make him familiar with the terms of this Sublease has knowledge; or

(d)                                 any representation or warranty made by Sublessee herein or any document or certificate furnished by Sublessee in connection herewith or therewith or pursuant hereto or thereto, shall prove to have been incorrect in any material respect at the time made and such incorrectness shall not have been cured (to the extent of the adverse impact of such incorrectness on the interests of Sublessor) within ten (10) days after the receipt by Sublessee of a written notice from Sublessor advising Sublessee of the existence of such incorrectness; or

(e)                                  the commencement of an involuntary case or other proceeding in respect of Sublessee in an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law in the United States or seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Sublessee or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of thirty (30) consecutive days or an order, judgment or decree shall be entered in any proceeding by any court of competent jurisdiction appointing, without the consent of Sublessee a receiver, trustee or liquidator of Sublessee or of any substantial part of its property, or sequestering or attaching any substantial part of the property of Sublessee and any such order, judgment or decree or appointment or sequestration shall be final or

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shall remain in force undismissed, unstayed or unvacated for a period of thirty (30) days after the date of entry thereof; or

(f)                                    the commencement by Sublessee of a voluntary case under the federal bankruptcy laws, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy, insolvency or other similar law in the United States, or the consent by Sublessee to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of Sublessee or for all or substantially all of its property, or the making by Sublessee of any assignment for the benefit of creditors, or Sublessee shall enter into any agreement, composition, extension or adjustment with creditors or shall take any corporate action to authorize any of the foregoing; or

(g)                                 Sublessee shall fail to carry and maintain on or with respect to the Aircraft insurance required to be maintained in accordance with the provisions of Section 11 hereof; or

(h)                                 Sublessee shall cease to be a Certificated Air Carrier; or

(i)                                     the attachment or taking possession by a creditor of a material part of, or the levy or enforcement of a distress, execution, sequestration or other process upon any assets, rights or revenues of Sublessee and such attachment or order is not discharged within thirty (30) days; or

(j)                                     any event described in Section 10.02 of the Airline Services Agreement giving Sublessor the ability to terminate the Airline Services Agreement shall have occurred; or

(k)                                  any event described in Section 10.03 of the Airline Services Agreement shall have occurred; or

(l)                                     Sublessee shall have materially breached or shall be in default under any material purchase agreement, service agreement, maintenance agreement or other material agreement with any vendor relating to the Airframe or Engines, including components.

SECTION 15.  Remedies; Automatic Termination.  (a) Remedies. Upon the occurrence of any Event of Default and at any time thereafter so long as the same shall be continuing, Sublessor may, at its option, declare by written notice to Sublessee this Sublease Agreement to be in default (provided that this Sublease shall be deemed to be declared in default without the necessity of such written declaration upon the occurrence of any Event of Default described in Section 14(e) or Section 14(f)); and at any time thereafter, Sublessor may do one or more of the following with respect to all or any part of the Airframe and any or all of the Engines as Sublessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable law then in effect:

(i)                                     upon the written demand of Sublessor and at Sublessee’s expense, cause Sublessee to immediately return the Airframe or any Engine as Sublessor

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may so demand to Sublessor or its order in the manner and condition required by, and otherwise in accordance with all the provisions of, Section 5 as if such Aircraft, Airframe or Engine were being returned at the end of the Term, or Sublessor, acting in its individual capacity or as attorney for Sublessee, at its option, may enter upon the premises where all or any part of the Aircraft, Airframe or any Engine or Part is located and take immediate possession of and remove the same (together with any engine which is not an Engine but which is installed on the Airframe, subject to all the rights of the owner, lessor, lien holder or secured party of such engine, and such engine shall be held for the account of any such owner, lessor, lien holder or secured party or, if owned by Sublessee, may at the option of Sublessor, be exchanged with Sublessee for an Engine in accordance with the provisions of Section 9(d)), without the necessity of first instituting proceedings, or by summary proceedings or otherwise, and Sublessee waives any right it may have under applicable law to a hearing prior to repossession of the Aircraft, Airframe, Engine or Part (and/or, at Sublessor’s option, store the same at Sublessee’s premises until disposal thereof by Sublessor), all without liability accruing to Sublessor for or by reason of such entry or taking of possession or removing whether for the restoration of damage to property caused by such action or otherwise.  Sublessee acknowledges and agrees that its obligations to return the Aircraft in those instances is incontrovertible without prejudice to its right to dispute any amounts, damages, interests or other amounts claimed by Sublessor upon termination of this Sublease and as such this Sublease will be incontrovertible written evidence of such obligation of Sublessee to return the Aircraft which Sublessor will be entitled to enforce via injunctive orders.  Without limiting any other provision of this Sublease or of any other Operative Document, if an Event of Default has occurred and is continuing, Sublessor shall have the right to withhold or set-off against all amounts otherwise payable to Sublessee hereunder or under the Airline Services Agreement or under any other aircraft, engine, spare parts or facility lease or sublease between Sublessor or any Affiliate thereof and Sublessee, all as security for Sublessee’s obligations and liabilities under this Sublease and the other Operative Documents, and to use and apply in whole or in part any or all of such amounts and set-offs to and against such obligations and liabilities of Sublessee, and any such use, application or setoff shall be absolute, final and irrevocable;

(ii)                                  sell the Aircraft, Airframe and/or any Engine at public or private sale, as Sublessor may determine, or otherwise dispose of, hold, use, operate, lease to others or keep idle the Aircraft as Sublessor, in its sole discretion, may determine, all free and clear of any rights of Sublessee and without any duty to account to Sublessee with respect to such action or inaction or for any proceeds with respect thereto, except as hereinafter set forth in this Section 15;

(iii)                               whether or not Sublessor shall have exercised, or shall thereafter at any time exercise, any of its rights under paragraph (a) or paragraph (b) above with respect to the Airframe and/or any Engine, Sublessor, by written notice to Sublessee specifying a payment date which shall be a Sublease Period Date not earlier than ten (10) days from the date of such notice (such specified date, the

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“Termination Date”), may demand that Sublessee pay to Sublessor, and Sublessee shall pay Sublessor, on the Termination Date, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the installments of Basic Rent for the Aircraft due for Sublease Periods commencing on or after the Termination Date), any unpaid Basic Rent due on or prior to the Termination Date plus whichever of the following amounts Sublessor, in its sole discretion, shall specify in such notice (together with interest, if any, on such amount at the Past Due Rate from the Termination Date until the date of actual payment of such amount): (A) an amount equal to the excess, if any, of (I) the Stipulated Loss Value for the Aircraft, computed as of the Termination Date, over (II) the aggregate fair market rental value (computed as hereafter in this Section 15 provided) of such Aircraft for the remainder of the Term, after discounting such aggregate fair market rental value to the present value thereof as of the Termination Date at an annual rate equal to the Base Rate; or (B) an amount equal to the excess, if any, of the Stipulated Loss Value for such Aircraft, computed as of the Termination Date, over (II) the fair market sales value of such Aircraft (computed as hereafter in Section 15 provided) as of the Termination Date;

(iv)                              in the event Sublessor, pursuant to paragraph (b) above, shall have sold or caused a sale of the Airframe and/or any Engine, Sublessor, in lieu of exercising its rights under paragraph (c) above with respect to such Aircraft, may, if it shall so elect, demand that Sublessee pay Sublessor, and Sublessee shall pay to Sublessor, on the date of such sale, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the installments of Basic Rent for the Aircraft due on or after such date), any unpaid Basic Rent with respect to the Aircraft due on or prior to such date plus the amount of any deficiency between (I) the net proceeds of such sale (after deduction of all reasonable costs of sale) and (II) the Stipulated Loss Value of such Aircraft, computed as of the Stipulated Loss Value Date on or immediately preceding the date of such sale together with interest, if any, on the amount of such deficiency, at the Past Due Rate, from the date of such sale to the date of actual payment of such amount; and/or

(v)                                 Sublessor may rescind, terminate or cancel this Sublease Agreement as to the Aircraft, and/or may exercise any other right or remedy which may be available to it under applicable law or proceed by appropriate court action to enforce the terms hereof or to recover damages for breach hereof.

For the purposes of paragraph (iii) above, the “fair market rental value” or the “fair market sales value” of the Aircraft shall be the rental value or sales value, as the case may be, which would be obtained in an arm’s-length transaction between an informed and willing Sublessee or purchaser, as the case may be, under no compulsion to lease or purchase, as the case may be, and an informed and willing Sublessor or seller in possession under no compulsion to lease or sell, as the case may be, in each case based upon the actual condition and location of the Aircraft, which value shall be determined pursuant to an appraisal prepared and delivered by a nationally recognized firm of independent aircraft appraisers chosen by Sublessor. The cost of such appraisal or appointment shall be borne by Sublessee.

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In addition, Sublessee shall be liable, except as otherwise provided above and without duplication of amounts payable hereunder, for any and all unpaid Rent due hereunder before, after or during the exercise of any of the foregoing remedies and for all reasonable legal fees and other costs and expenses (including fees of the appraisers hereinabove referred to) incurred by Sublessor, Head Lessor and the Owner Participant by reason of the occurrence of any Event of Default or the exercise of Sublessor’s remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Airframe or any Engine in accordance with the terms of Section 5 or in placing such Airframe or Engine in the condition and airworthiness required by such Section.

At any sale of the Aircraft or any part thereof pursuant to this Section 15(a), Sublessor (or Head Lessor or the Owner Participant) may bid for and purchase such property.  Sublessor agrees to give Sublessee at least ten (10) 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 will occur the execution of any contract providing for any private sale.  Except as otherwise expressly provided above, no remedy referred to in this Section 15(a) is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Sublessor at law or in equity; and the exercise or beginning of exercise by Sublessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Sublessor of any or all of such other remedies.  No waiver by Sublessor of any Event of Default shall in any way be, or be construed to be, a waiver of any future or subsequent Event of Default.

(b)                                 Automatic Termination.  If the Airline Services Agreement shall be terminated or canceled or shall terminate in accordance with its terms, except for the provisions of Sections 29(b) and 29(c) of this Sublease (which shall survive) this Sublease shall thereupon terminate forthwith and without notice.  Upon the termination of this Sublease as aforesaid and at any time thereafter, Sublessor may, to the extent permitted by, and subject to compliance with any mandatory requirements of, applicable law then in effect, and at Sublessee’s expense, cause Sublessee to immediately return, and Sublessee shall immediately return, the Aircraft, Airframe or any Engine as Sublessor may so demand to Sublessor or its order in the manner and condition required by, and otherwise in accordance with all the provisions of Section 5 as if such Aircraft, Airframe or Engine were being returned at the end of the Term, or Sublessor, at its option, may enter upon the premises where all or any part of the Aircraft, Airframe or any Engine is located and take immediate possession of and remove the same (together with any engine which is not an Engine but which is installed on the Airframe, subject to all the rights of the owner, lessor, lien holder or secured party of such engine, and such engine shall be held for the account of any such owner, lessor, lien holder or secured party or, if owned by Sublessee, may at the option of Sublessor, be exchanged with Sublessee for an Engine in accordance with the provisions of Section 9(d)), without the necessity of first instituting proceedings, or by summary proceedings or otherwise, and Sublessee waives any right it may have under applicable law to a hearing prior to repossession of the Aircraft, Airframe, Engine or Part (and/or, at Sublessor’s option, store the same in accordance with the provisions of Section 5(d)), all without liability accruing to Sublessor for or by reason of such entry or taking of possession or removing whether for the restoration of damage to property caused by such action or otherwise.  Sublessee acknowledges and agrees that its obligations to return the Aircraft in those instances is incontrovertible without prejudice to its right to dispute any amounts, damages, interests or other amounts claimed by Sublessor upon termination of this Sublease and as such this Sublease will be incontrovertible

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written evidence of such obligation of Sublessee to return the Aircraft which Sublessor will be entitled to enforce via injunctive orders.

In addition, Sublessee shall be liable for any and all unpaid Rent due hereunder before or during the occurrence of the events referred to in the preceding paragraph, and all costs and expenses incurred in connection with the return of the Airframe or any Engine in accordance with the terms of Section 5 or in placing such Airframe or Engine in the condition and airworthiness required by such Section.

SECTION 16.  Sublessee’s Cooperation Concerning Certain Matters.  Forthwith upon the execution and delivery of each Sublease Supplement from time to time required by the terms hereof and upon the execution and delivery of any amendment to this Sublease, Sublessee will cause such Sublease Supplement or amendment to be duly filed and recorded, and maintained of record, in accordance with the applicable laws of the government of registry of the Aircraft.  In addition, Sublessee will promptly and duly execute and deliver to Sublessor such further documents (including the filing of Uniform Commercial Code continuation statements with respect to previously filed financing statements) and assurances and take such further action as may be identified in the annual opinion of counsel required to be furnished pursuant to Section 30(c) and/or as Sublessor may from time to time reasonably request in order more effectively to carry out the intent and purpose of this Sublease and to establish and protect the rights and remedies created or intended to be created in favor of Sublessor, hereunder or in respect thereof, including, without limitation, if requested by Sublessor, at the expense of Sublessee, the execution and delivery of supplements or amendments hereto, each in recordable form, subjecting to this Sublease, any airframe or engine substituted for the Airframe or any Engine pursuant to the terms thereof and the recording or filing of counterparts thereof, in accordance with the laws of such jurisdictions as Sublessor may from time to time deem advisable.  Sublessee agrees to furnish to Sublessor, promptly after execution and delivery of any supplement and amendment hereto, an opinion of counsel reasonably satisfactory to Sublessor as to the due recording or filing of such supplement or amendment.  Commencing in 2006 on or before April 30 of each year during the Term, Sublessee will deliver to Sublessor a certificate of Sublessee, signed by the President, a Vice President or the Chief Financial Officer of Sublessee to the effect that the signer is familiar with or has reviewed the relevant terms of this Sublease and the signer does not have actual knowledge of the existence, as of the date of such certificate, of any condition or event which constitutes a Default or an Event of Default.  Sublessee agrees that if an officer of Sublessee has actual knowledge of the existence of a Default or an Event of Default, then Sublessee shall promptly give to Sublessor notice thereof and such other information relating thereto as Sublessor may reasonably request.  Sublessee will deliver to Sublessor (i) within forty-five (45) days after the end of the first three quarterly periods of each fiscal year of Sublessee, a balance sheet of Sublessee as of the close of such period, together with related statements of financial performance and cash flows for such period and, upon filing with the Securities and Exchange Commission (and in any event no later than sixty (60) days after the end of the first three quarterly periods of each fiscal year of ▇▇▇▇ Holdings, Inc.), the form 10-Q of ▇▇▇▇ Holdings, Inc. for such period; (ii) within one hundred and twenty (120) days after the close of such fiscal year, a balance sheet of Sublessee as of the close of such fiscal year, together with the related statements of financial performance and cash flows for such fiscal year and the form 10-K of ▇▇▇▇ Holdings, Inc. for such period, prepared in the case of clause (i) and (ii) in accordance with generally accepted accounting principles, consistently applied; (iii) within thirty (30) days

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after the end of each calendar quarter, if not previously provided to Sublessor, any Securities and Exchange Commission filings of Sublessee and ▇▇▇▇ Holdings, Inc. during the preceding calendar quarter; (iv) upon filing with the Securities and Exchange Commission (and in any event no later than ninety (90) days after the close of ▇▇▇▇ Holdings, Inc.’s fiscal year), the annual report of ▇▇▇▇ Holdings, Inc. for such fiscal year; and (v) from time to time, such financial statements and other information relating to Sublessee and ▇▇▇▇ Holdings, Inc. as Sublessor may reasonably request.

SECTION 17.  Notices.  All notices required under the terms and provisions hereof shall be by telecopy or other telecommunication means (with such telecopy or other telecommunication means to be confirmed in writing), or if such notice is impracticable, by registered, first-class airmail, with postage prepaid, or by nationally recognized overnight courier service, or by personal delivery of written notice and any such notice shall become effective when received, addressed:

(i)                                     if to Sublessor, at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇), ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Treasurer (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), or to such other address or telecopy number as Sublessor shall from time to time designate in writing to Sublessee,

(ii)                                  if to Sublessee, at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇  ▇▇▇▇▇, Attention: President (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), or to such other address or telecopy number as Sublessee shall from time to time designate in writing to Sublessor, and

(iii)                               if to Head Lessor or the Owner Participant, addressed to Head Lessor or the Owner Participant at such address or telecopy number as Head Lessor or the Owner Participant shall have furnished by notice to Sublessor and to Sublessee, and, until an address is so furnished, addressed to Head Lessor or the Owner Participant at its address or telecopy number set forth in Schedule I to the Participation Agreement.

SECTION 18.  No Set-Off, Counterclaim, etc.  This Sublease is a net lease.  All Rent shall be paid by Sublessee to Sublessor in funds of the type specified in Section 3(d).  Sublessee’s obligation to pay all Rent payable hereunder shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (i) any set-off, counterclaim, recoupment, defense or other right which Sublessee may have against Sublessor, Head Lessor (in its individual capacity or as Owner Trustee under the Trust Agreement), the Owner Participant, or anyone else for any reason whatsoever (whether in connection with the transactions contemplated hereby or any other transactions), including, without limitation, any breach by Sublessor, Head Lessor, or the Owner Participant of their respective warranties, agreements or covenants contained in any of the Operative Documents or Sublessee Documents, each of which rights Sublessee expressly waives, (ii) any defect in the title, registration, airworthiness, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Aircraft, or any interruption or cessation in or prohibition of the use or possession thereof by Sublessee for any reason whatsoever, including, without limitation, any such interruption, cessation or prohibition resulting from the act of any government authority, (iii) any insolvency, bankruptcy, reorganization or similar case or proceedings by or against Sublessee or any other person, or (iv) any other circumstance, happening, or event whatsoever,

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whether or not unforeseen or similar to any of the foregoing.  If for any reason whatsoever this Sublease shall be terminated in whole or in part by operation of law or otherwise except as specifically provided herein, Sublessee nonetheless agrees without limitation of the other rights or remedies of Sublessor hereunder, to pay to Sublessor an amount equal to each Rent payment at the time such payment would have become due and payable in accordance with the terms hereof had this Sublease not been terminated in whole or in part.  Sublessee hereby waives, to the extent permitted by applicable law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, cancel, quit or surrender this Sublease except in accordance with the express terms hereof.

SECTION 19.  No Renewal.  Sublessee shall not have the right to renew this Sublease.

SECTION 20.  Maintenance Program.  Sublessor shall have the right in its sole discretion upon and after return of the Aircraft to utilize the Maintenance Program at no cost to Sublessor and Sublessee hereby agrees that is shall permit Sublessor to utilize the Maintenance Program upon and after return of the Aircraft at no cost to Sublessor.

SECTION 21.  Sublessor’s Right to Perform for Sublessee.  If Sublessee fails to make any payment of Rent required to be made by it hereunder or fails to perform or comply with any of its agreements contained herein, then Sublessor or Head Lessor may itself make such payment or perform or comply with such agreement but shall not be obligated hereunder to do so, and the amount of such payment and the amount of the reasonable expenses of Sublessor or Head Lessor, as the case may be, incurred in connection with such payment or the performance of or compliance with such agreement, as the case may be, together with interest thereon at the Past Due Rate, shall be deemed Supplemental Rent, payable by Sublessee upon demand.

SECTION 22.  [Intentionally Omitted]

SECTION 23.  Service of Process.  Sublessor and Sublessee each hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Sublease, the subject matter hereof or any of the transactions contemplated hereby brought by Sublessor, Head Lessor or the Owner Participant or their successors or assigns.

SECTION 24.  Miscellaneous.  Subject to Section 15(b), any provision of this Sublease 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.  No term or provision of this Sublease may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by Sublessor and Sublessee.  Sublessor, however, shall have the right to amend, supplement or otherwise modify the terms of this Sublease without the consent of Sublessee in the event of any amendment, supplement or other modification of the terms of the Head Lease.  This Sublease shall constitute an agreement of sublease, and nothing contained herein shall be construed as conveying to Sublessee any right, title or interest in the Aircraft except as a sublessee only.  Neither Sublessee nor any Affiliate of Sublessee will file any tax returns in a manner inconsistent with the foregoing fact or with the Owner’s ownership of the Aircraft.  The section and paragraph headings in this Sublease and the table of contents are for convenience of reference only and shall not modify, define, expand or limit any of the terms or

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provisions hereof and all references herein to numbered sections, unless otherwise indicated, are to sections of this Sublease.  The Exhibits attached hereto are intended to be an integral part of this Sublease and are incorporated into this Sublease by reference for all purposes.  THIS SUBLEASE HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.  This Sublease may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.  This Sublease, the Airline Services Agreement, and the Sublease Supplement contain the complete and exclusive statement of the terms and conditions of the entire Aircraft sublease agreement between Sublessor and Sublessee for the Term.  Nothing in this Sublease shall be interpreted or construed as establishing between the parties a partnership, joint venture or other similar arrangement.

SECTION 25.  Subordination.  Notwithstanding any other provision hereof, this Sublease and Sublessee’s rights hereunder shall be subject and subordinate to all the terms of the Head Lease, including, without limitation, the covenants contained in Section 7(a) of the Head Lease and Head Lessor’s rights to repossession of the Aircraft pursuant to Section 15 of the Head Lease and to avoid this Sublease for any reason upon such repossession, and Sublessee shall not be permitted to take any action hereunder not permitted to be taken by Sublessor as “lessee” in the Head Lease.  Sublessee agrees to execute such further documents confirming such subordination of this Sublease as may be reasonably requested by Sublessor.  Sublessee acknowledges receipt of an executed copy of each of the Head Lease, the Participation Agreement, the Tax Indemnity Agreement and the Head Lease Supplement.

SECTION 26.  Covenant of Quiet Enjoyment.  So long as (a) no Event of Default shall have occurred and be continuing and (b) the Airline Services Agreement shall not have been terminated or canceled or shall not have terminated in accordance with its terms, Sublessor shall not interfere with Sublessee’s continued use and operation of, and quiet enjoyment of, the Aircraft.

SECTION 27.  Federal Bankruptcy Code.  It is the intention of the parties that the provisions of 11 U.S.C. Section 1110, or any analogous section of the Federal bankruptcy laws, as amended from time to time, shall be applicable to the interest of Sublessor in the Aircraft and to any right of Sublessor to take possession of the Aircraft in compliance with the provisions of this Sublease, as the same may be amended, modified or supplemented from time to time.

SECTION 28.  Use of Funds.  If a Default or an Event of Default shall have occurred and is continuing, or if a default or an event of default under any other aircraft, engine, spare parts or facility lease or sublease or any other agreement, instrument or document between Sublessor or any Affiliate thereof and Sublessee or any Affiliate thereof shall have occurred and is continuing, Sublessor shall have the right in its sole discretion to apply any funds of Sublessee that it holds including, without limitation, those which are part of Basic Rent and those which are held pursuant to Sections 10(f)(i) and 11(g)(i) hereof, to cure any Default or Event of Default or any default or event of default under any agreement, instrument or document between Sublessor or any Affiliate thereof and Sublessee or any Affiliate thereof; provided, however, that Sublessor shall have no obligation hereunder to apply any such funds. The amount of any such funds so applied and the amount of the reasonable expenses of Sublessor incurred in connection with such

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application, together with interest thereon at the Past Due Rate shall be deemed Supplemental Rent, payable by Sublessee upon demand.

SECTION 29.  Sublessee’s Representations, Warranties and Indemnities.  (c)  In General.  Sublessee represents, warrants and covenants to Sublessor that as of the Commencement Date:

(i)                                     Sublessee is a Certificated Air Carrier and corporation duly organized and validly existing pursuant to the laws of the State of Minnesota; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires, other than failures to qualify which would not have a material adverse effect on the consolidated business, assets, properties or condition (financial or otherwise) of Sublessee and its subsidiaries taken as a whole or on the ability of Sublessee to perform its obligations under the Sublessee Documents; has its jurisdiction of organization (as such term is used in Article 9 of the Uniform Commercial Code) in Minnesota; holds all licenses, certificates, permits and franchises from the appropriate agencies of the United States and/or all other governmental authorities having jurisdiction necessary to conduct its business as presently conducted (other than those licenses, certificates, permits and franchises which, if not obtained, would not have an adverse effect on the consolidated business assets, properties or condition (financial or otherwise) of Sublessee or on the ability of Sublessee to perform its obligations under the Sublessee Documents); and has the corporate power and authority to own or hold under the Sublease its properties wherever located or used and to enter into and perform its obligations under the Sublessee Documents;

(ii)                                  the execution, delivery and performance by Sublessee of the Sublessee Documents to which Sublessee is a party will, on the Commencement Date, have been duly authorized by all necessary corporate action on the part of Sublessee, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Sublessee except such as have been duly obtained or by the Commencement Date will have been duly obtained, and neither the execution or delivery thereof or the consummation by Sublessee of the transactions contemplated thereby nor the compliance by Sublessee with any of the terms and provisions of such agreements contravenes any law, judgment, government rule, regulation or order binding on Sublessee or the certificate of incorporation or by-laws of Sublessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of Sublessee under, any indenture, mortgage, contract or other agreement to which Sublessee is a party or by which it or its properties may be bound or affected;

(iii)                               neither the execution and delivery by Sublessee of the Sublessee Documents to which Sublessee is a party nor the performance by Sublessee of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, any Federal, state or foreign government authority or agency, except for (A) the

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orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Sublessee required to be obtained on or prior to the Commencement Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Commencement Date be in full force and effect, and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Sublessee Documents to the extent required to be given or obtained only after the Commencement Date;

(iv)                              on the Commencement Date the Sublessee Documents to which Sublessee is a party will each constitute legal, valid and binding obligations of Sublessee enforceable against Sublessee in accordance with the terms thereof (except as enforceability may be limited by (A) general principles of equity, (B) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally, (C) applicable laws which may affect the remedies provided therein; which laws, however, do not make the remedies provided therein inadequate for the practical realization of the benefits provided thereby, except that no representation or warranty is made as to the amount of priority of any recovery under any particular circumstances, and (D) in the case of indemnity provisions contained in such documents, as limited by public policy considerations);

(v)                                 there are no pending or, to the best of Sublessee’s knowledge, threatened actions, suits or proceedings before any court, governmental body, arbitration board, tribunal or administrative agency which might adversely affect the business, condition (financial or otherwise), operations or properties of Sublessee or Sublessee’s ability to perform its obligations under the Sublessee Documents to which Sublessee is a party;

(vi)                              except for (A) the filing for recording pursuant to the Federal Aviation Act of the Sublease with the Sublease Supplement covering the Aircraft, and (B) the filing of financing statements (and continuation statements at periodic intervals) with respect to the security and other interests created by such documents under the Uniform Commercial Code, no further action, including any filing or recording of any document (including any financing statement in respect thereof under Article 9 of the Uniform Commercial Code of any applicable jurisdiction), is necessary in order to establish and perfect Sublessor’s interest in the Aircraft as against Sublessee in any applicable jurisdictions in the United States;

(vii)                           there has not occurred any event which constitutes an Event of Default under the Sublease or a default or an event of default under any other aircraft, engine, spare parts or facility lease or sublease or any other agreement, instrument or document between Sublessor or any of its Affiliates and Sublessee (or any event which with the giving of notice or the passage of time or both would constitute an Event of Default under the Sublease or an event of default under any

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other aircraft, engine, spare parts or facility lease or sublease between Sublessor or any of its Affiliates and Sublessee) which is presently continuing;

(viii)                        the Aircraft will be free and clear of all Liens, except Permitted Liens (including, for this purpose, any Lien which would be a Sublessor Lien or Head Lessor Lien but for the proviso to either such definition);

(ix)                                the Aircraft will be duly certified by the FAA as to type and airworthiness, will be insured by Sublessee in accordance with the terms of this Sublease and will be in the condition and state of repair required under the terms of this Sublease;

(x)                                   Sublessor, as sublessor hereunder, will be entitled to the benefits of 11 U.S.C. Section 1110 (or any successor statute containing the material terms of 11 U.S.C. Section 1110) in the event of any reorganization of Sublessee under such Section; and

(xi)                                there has not been any material adverse change in the operations or financial condition of Sublessee since March 31, 2005.

(b)                                 General Tax Indemnity.

(i)                                     Indemnity.  Except as provided in Section 29(b)(ii) hereof, Sublessee shall on an After-Tax Basis pay, protect, save and on written demand shall indemnify and hold harmless any Tax Indemnitee from and against any and all Taxes howsoever imposed against any Tax Indemnitee, Sublessee, Sublessee Person or the Aircraft, the Airframe, any Engine, or any Part thereof or interest therein by any Federal, state or local government or other taxing authority in the United States or by any foreign government or any political subdivision or taxing authority thereof or by any territory or possession of the United States or by any international authority (“Taxing Authority”) upon or in connection with or relating to (A) the construction, financing, refinancing, purchase, acquisition, acceptance, rejection, delivery, nondelivery, transport, ownership, registration, re-registration, insuring, assembly, possession, repossession, operation, location, use, control, condition, maintenance, repair, sale, return, abandonment, installation, storage, redelivery, replacement, leasing, subleasing, modification, rebuilding, importation, exportation, transfer of title, transfer of registration, or other application or disposition of the Aircraft, the Airframe, any Engine, or any Part thereof or any interest in the foregoing, (B) the rentals, receipts or earnings from the Aircraft, the Airframe, any Engine, any Part or any interest in the foregoing, (C) any amount paid or payable pursuant to any Operative Document or Sublessee Document or any document related to any Operative Document or Sublessee Document, (D) the Aircraft, the Airframe, any Engine, any Part or any interest in the foregoing, (E) any or all of the Operative Documents or the Sublessee Documents or the execution, issuance, delivery or registration of, or the performance under any of the Operative Documents or Sublessee Documents and any other documents contemplated hereby or thereby and amendments and

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supplements hereto and thereto or the execution, delivery or performance of any thereof or the issuance, acquisition, modification, holding or subsequent transfer thereof, or (F) the payment of principal of, interest, Make-Whole Amount or other premium on, or (G) otherwise with respect to or in connection with the transactions contemplated by the Operative Documents or the Sublessee Documents.

(ii)                                  Exclusions from General Tax Indemnity.  The provisions of Section 29(b)(i) shall not apply:

(1)                                  with respect to any Equity Tax Indemnitee and Sublessor, to any Income Tax (as defined in Section 29(d) hereof) imposed on such Tax Indemnitee by the United States Federal government, provided, however, that notwithstanding the foregoing, Sublessee will indemnify and hold harmless each Equity Tax Indemnitee and Sublessor for any withholding taxes imposed on or with respect to the payment of principal, interest, Make-Whole Amount and the Sublessor with respect to any withholding tax imposed on any rent payable by Sublessor under the Head Lease, including interest and penalties thereon;

(2)                                  to any Tax to the extent imposed as a result of a voluntary transfer or disposition by a Tax Indemnitee including, without limitation, the revocation of the trust created by the Trust Agreement or a transfer or disposition of all or any portion of its respective equitable or legal ownership or leasehold interest in the Aircraft, any Engine, any Part, the Trust Estate, or any Operative Document or Sublessee Document or any interest in such Tax Indemnitee, unless such transfer or disposition shall occur (A) during the continuance of a Default or Event of Default under the Lease or this Sublease or upon the termination or cancellation of the Airline Services Agreement, (B) in connection with the termination of the Head Lease or Sublease, as the case may be, or the action or direction of Sublessee pursuant to Sections 2, 5 ,6, 7, 8, 9, 10 or 19 of this Sublease or of Sublessor pursuant to Sections 2, 5, 6, 7, 8, 9, 10 or 19 of the Head Lease, as the case may be, or (C) in connection with the substitution or replacement of the Aircraft, any Engine or Part pursuant to Section 10 of the Head Lease;

(3)                                  to Taxes to the extent based on or measured by any fees received by the Owner Trustee in connection with any transaction contemplated by the Operative Documents;

(4)                                  to Taxes to the extent imposed with respect to events occurring or matters arising, after the earlier of (x) the return of physical possession of the Aircraft to Sublessor or its designee pursuant to the terms of this Sublease or (y) the commencement of storage pursuant to Section 5(d) hereof; provided the exclusion set forth in this subparagraph (4) shall not apply to Taxes to the extent such Taxes relate to events,

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periods or matters occurring or arising prior to or simultaneously with such time or arise as a result of amounts payable by Sublessee after such time, or occur during the continuance of a Default or Event of Default under this Sublease;

(5)                                  to any Tax to the extent arising out of or caused by, or to the extent such Tax would not have been incurred but for, (A) the willful misconduct of such Tax Indemnitee or (B) the breach of any representation, covenant or agreement by such Tax Indemnitee in any Operative Document;

(6)                                  with respect to any Tax Indemnitee (other than Sublessor and its Affiliates, successors and assigns and their respective directors, officers, employees, agents and servants) to any Tax to the extent such Tax Indemnitee is not entitled to indemnification pursuant to Section 7(b) of the Participation Agreement.

Nothing contained in Section 29(b)(ii) hereof shall apply to any Tax in the nature of a sales, use, value added, goods and services, transfer, recording, excise or registration Tax imposed on or with respect to the Aircraft, any Engine or any Part or interest therein or title thereto incurred prior to, or on the date of, the execution and delivery of this Sublease.  For the avoidance of doubt, and notwithstanding any provision herein to the contrary, Sublessee agrees to indemnify Sublessor on an After-Tax Basis against, and agrees to hold Sublessor harmless from, any and all payments, indemnities and gross-ups required to be made by Sublessor pursuant to Section 7 of the Participation Agreement.

(iii)                               Calculation of General Tax Indemnity Payments.  Notwithstanding any provision contained in Section 29(b)(ii) hereof, any payment which Sublessee shall be required to make to, or for the account of, any Tax Indemnitee, with respect to any Tax (or any payment made in connection with the payment or contest of any Tax) which is subject to indemnification under this Section 29(b) shall be paid on an After-Tax Basis.  Any calculation of an indemnity payment for an inclusion item, and of any gross-up of an indemnity or reverse indemnity payment, will be on the basis of then-actual Federal, state, and local tax rates applicable to such Tax Indemnitee, and based upon the assumption that the Tax Indemnitee is fully taxable at such tax rates.

If a Tax Indemnitee (other than Sublessor or any of its Affiliates) shall pay any amount to Sublessor pursuant to Section 7(b)(iii) of the Participation Agreement for which Sublessee has previously paid an indemnity under this Section 29, Sublessor shall pay such amount to Sublessee within 15 Business Days after Sublessor has received such amount, after deduction of Sublessor’s reasonable costs and expenses (including any net tax cost) in connection therewith but not in excess of Sublessee’s prior payments with respect to such indemnified Tax.

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Any Taxes that are imposed on any Tax Indemnitee as a result of the disallowance or reduction of any tax benefit (including foreign tax credits) referred to in this subsection as to which Sublessor has made a payment to Sublessee required hereby (or as to which such Sublessor would have made payment but for Section 29(b)(viii) or which benefit was otherwise taken into account in computing Sublessee’s indemnity obligation pursuant to this Section 29(b)) in a taxable year subsequent to the utilization by the Tax Indemnitee, or any amount required to be paid by Sublessor to a Tax Indemnitee pursuant to the penultimate paragraph of Section 7(b)(iii) of the Participation Agreement, shall be treated as a Tax for which Sublessee is obligated to indemnify the relevant Tax Indemnitee or reimburse Sublessor pursuant to the provisions of this Section 29(b), without regard to the exclusions set forth in Section 29(b)(ii) hereof.

(iv)                              General Tax Indemnity – Contests.  With respect to any Tax Indemnitee that is Sublessor or any Affiliate thereof (a “Sublessor Tax Indemnitee”) at Sublessee’s written request and with the written consent of Sublessor, Sublessee shall be entitled to contest any claim with respect to any Tax imposed on such Sublessor Tax Indemnitee other than an Income Tax either in Sublessee’s name or in the name of such Sublessor Tax Indemnitee at Sublessee’s sole cost and expense (a “Sublessee Controlled Contest”) . If Sublessor receives a written claim from any Tax Indemnitee or any Taxing Authority for any Tax for which Sublessee is obligated pursuant to Section 29(b)(i), Sublessor shall notify Sublessee promptly of such claim (it being understood and agreed that failure to provide such notice shall not adversely affect or otherwise prejudice any Tax Indemnitee’s right to an indemnity hereunder except to the extent such failure precludes any contest of such claim).  If the Tax cannot be contested in a Sublessee Controlled Contest for any reason (including, but not limited to the refusal of the Sublessor or other Tax Indemnitee to consent thereto), upon written request from Sublessee received by Sublessor within ten (10) Business Days of such notice Sublessor shall exercise its rights, if any, under Section 7(b)(iv) of the Participation Agreement in good faith (if the Tax Indemnitee is other than a Sublessor Tax Indemnitee) or Sublessor shall contest such claim in good faith (if the Tax Indemnitee is a Sublessor Tax Indemnitee) in each case at Sublessee’s sole cost and expense.  Any such contest shall be at such Tax Indemnitee’s or Sublessor’s control and direction.  In any such contest the Tax Indemnitee or Sublessor, as the case may be, may in its sole discretion select the forum for such contest and determine whether any such contest shall be by (A) resisting payment of such Tax, (B) paying such Tax under protest or (C) paying such Tax and seeking a refund or other repayment thereof.  In no event shall Sublessor be required to contest, or to request a Tax Indemnitee to contest, or Sublessee be permitted to contest, the imposition of any Tax for which Sublessee is obligated pursuant to this Section 29(b) unless (W) no Default or Event of Default shall have occurred and be continuing under the Sublease and no Event of Default (as such term is defined in the Head Lease) shall have occurred and be continuing, (X) Sublessee shall have agreed to pay to Sublessor and to the Tax Indemnitee on demand on an After-Tax Basis all reasonable costs and expenses that Sublessor

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and the Tax Indemnitee may incur in connection with contesting such claim (including, without limitation, all reasonable legal and accounting fees and disbursements), (Y) such action to be taken will not result in a risk of sale, forfeiture or loss of, or the creation of any Lien on, the Aircraft, the Engines or any Part, other than Permitted Liens or a material risk of loss of the Lien of the Trust Indenture or a risk of imposition of criminal penalties, and (Z) if such contest shall be conducted in a manner requiring the payment of the claim, Sublessee shall have paid the amount required directly to the appropriate authority or made an advance of the amount thereof to such Tax Indemnitee on an interest-free basis and agreed to indemnify Sublessor and such Tax Indemnitee on an after-tax basis for any cost or Taxes payable with respect to such advance.  In addition, Sublessee shall not have any right to request Sublessor or any other Tax Indemnitee to contest a claim unless (x) the amount of indemnity payments that Sublessee would be required to make if the contest were unsuccessful is at least $***, (y) prior to commencement of any contest, Sublessee has delivered to Sublessor and, if requested by Sublessor, the Tax Indemnitee a written acknowledgment of Sublessee’s obligation under this Section 29(b) to indemnify such Sublessor and such Tax Indemnitee with respect to the Tax at issue to the extent that the contest is unsuccessful; and (z) Sublessor and the relevant Tax Indemnitee has received an opinion of independent tax counsel selected by Sublessor that concludes that a Reasonable Basis exists with respect to the tax position Sublessee has asserted.  For the purposes of this Section 29(b), the term “Reasonable Basis” shall have the meaning set forth for such term in Formal Opinion 85-352 issued by the Standing Committee on Ethics and Professional Responsibility of the American Bar Association.  Sublessee shall have no right to pursue or appeal or cause any Tax Indemnitee or Sublessor to pursue or appeal an adverse judicial decision without the prior written consent of Sublessor and, if required by Sublessor, the relevant Tax Indemnitee.

If Sublessor receives from any Tax Indemnitee (other than from its Affiliate) a payment with respect to a refund of all or any part of any Tax paid by Sublessee, Sublessor shall pay Sublessee an amount equal to the amount of such payment less any cost and/or expenses, including net tax cost, incurred in respect thereof.

Nothing contained in this Section 29(b)(iv) shall require a Sublessor or a Tax Indemnitee to contest, or permit Sublessee to contest, a claim which such Tax Indemnitee would otherwise be required to contest, if such Tax Indemnitee shall waive payment by Sublessor and Sublessee of any amount that might otherwise be payable by Sublessee under this Section 29(b) or Sublessor under Section 7(b) of the Tax Indemnity Agreement in respect of such claim and any other claim, the contest of which would be precluded.  In addition, for the avoidance of doubt, Sublessee shall have no right to contest or require any other party to contest any Tax imposed on a Tax Indemnitee in a manner or to the extent that is inconsistent with Sublessor’s rights under the Participation Agreement.

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(v)                                 General Tax Indemnity – Reports.  If any report, return or statement is required to be filed with respect to any Tax which is subject to indemnification under this Section 29(b), Sublessee shall timely file the same at its sole expense (except for any such report, return or statement which a Tax Indemnitee has notified Sublessor or Sublessee that such Tax Indemnitee intends to file or which such Tax Indemnitee is required by law to file in its own name).  Sublessee shall either file such report, return or statement so as to show the ownership of the Aircraft in the Owner Trustee or the Owner Participant where appropriate and send a copy of such report, return or statement to Sublessor, the Tax Indemnitee and Owner Trustee or, where Sublessee is not so permitted to file such report, return or statement, it shall notify the Tax Indemnitee and Sublessor of such requirement and prepare and deliver such report, return or statement to the Tax Indemnitee and Sublessor in a manner satisfactory to such Tax Indemnitee and Sublessor within a reasonable time prior to the time such report, return or statement is to be filed.  Sublessee shall hold Sublessor and the Tax Indemnitee harmless on an After-Tax Basis from and against any penalties, interest, fines or additions to Tax caused by the inaccuracy of any report, return or statement prepared and filed by Sublessee on behalf of Sublessor or any other Tax Indemnitee. Sublessee will provide at Sublessee’s expense to Sublessor and the Tax Indemnitee such information maintained in the regular course of Sublessee’s business as Sublessor or any Tax Indemnitee may reasonably request in writing that is reasonably necessary to enable Sublessor or such Tax Indemnitee to comply with their tax filings, audit and litigation requirements.  If Sublessee receives written notice from a Taxing Authority or a Tax Indemnitee or otherwise of a Tax that is imposed upon a Tax Indemnitee but not indemnified against by Sublessee hereunder, Sublessee will promptly forward a copy of such notice to Sublessor and the Tax Indemnitee.  Sublessee shall also provide or cause to be provided to Sublessor, upon request and at Sublessee’s expense, all documents, records and other information that Sublessor is required to provide any Tax Indemnitee under Section 7(b) of the Participation Agreement.

(vi)                              Verification.  At Sublessee’s written request after Sublessee receives computations showing the amount of any indemnity payable by Sublessee pursuant to Section 29(b)(i), Sublessor shall exercise its rights, if any, under Section 7(b)(vi) of the Participation Agreement with respect to verification of such computation.  If Sublessee pays such indemnity in whole or in part before completion of the verification procedure, appropriate adjustments will be made promptly after completion of the verification procedure to take into account any redetermination of the indemnity by the accounting firm.  Any fee and disbursements of the accounting firm payable by Sublessor shall be paid by Sublessee.  Sublessee will have no right under this Section 29(b) to examine any tax return of any Tax Indemnitee or Sublessor.  The sole responsibility of such accounting firm shall be to verify the computations of the amount payable hereunder and the interpretation of this Agreement or any other agreement shall not be within the scope of such accounting firm’s responsibilities.

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(vii)                           General Tax Indemnity – Payment.  Except as provided in Section 29(b)(iv) hereof, Sublessee shall pay any Tax for which it is liable pursuant to Section 29(b)(i) directly to the appropriate taxing authority if legally permissible or upon demand of a Tax Indemnitee or Sublessor shall pay such Tax and any other amounts due hereunder to such Tax Indemnitee or to Sublessor as indicated in such demand within ten (10) Business Days of such demand.  Any such demand for payment from a Tax Indemnitee or Sublessor shall specify in reasonable detail the payment and the facts upon which the right to payment is based.  Sublessor shall request that the Tax Indemnitee promptly forward to Sublessee a copy of any notice, ▇▇▇▇ or advice received by it to the extent concerning any Tax indemnified against hereunder, (provided that the failure of the Sublessor to make such request or the failure of the Tax Indemnitee to forward such notice, ▇▇▇▇ or advice shall not adversely affect the Sublessor’s or Tax Indemnitee’s rights to indemnification hereunder).  Within twenty (20) days after the date of each payment by Sublessee of any Tax indemnified against hereunder, Sublessee shall furnish the appropriate Tax Indemnitee (with a copy to Sublessor) the original or a certified copy of a receipt for Sublessee’s payment of such Tax or such other evidence of payment of such Tax as is reasonably acceptable to such Tax Indemnitee.

(viii)                        Application of Payments During Existence of Default or Event of Default.  Any amount payable to Sublessee pursuant to the terms of this Section 29(b) shall not be paid to or retained by Sublessee if at the time of such payment or retention a Default or Event of Default shall have occurred and be continuing or if any event described in Section 10.02 of the Airline Services Agreement giving Sublessor the ability to terminate the Airline Services Agreement shall have occurred, if any event described in Section 10.03 of the Airline Services Agreement shall have occurred or if the Airline Services Agreement shall have been terminated or cancelled or shall have been terminated in accordance with its terms, but shall be held by Sublessor and applied pursuant to Section 28 hereof.

(ix)                                [Intentionally Omitted].

(x)                                   Inclusions.  If Sublessor is required by any Taxing Authority to include in its income for income tax purposes, or Sublessor receives an opinion from independent tax counsel selected by Sublessor and reasonably acceptable to Sublessee, that Sublessor does not have a Reasonable Basis to exclude from its income for income tax purposes, any amount in respect of, or resulting from (i) any modification, repair, improvement, addition, substitution or replacement of the Aircraft, the Airframe or any Engine or any Part, (ii) any payment of Basic Rent or Supplemental Rent under the Sublease by or on behalf of Sublessee in an amount greater, or at a time earlier, than the amounts or times provided in the Sublease, (iii) any warranty or indemnity payments or refunds attributable to the Aircraft, the Airframe or any Engine received from the manufacturer which was not remitted to, and retained by, Sublessor, (iv) the theft, destruction or other loss of the Aircraft, Airframe or any Engine or any Part; (v) any application of Section

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467(b)(2) to the Sublease; (vi)  any payment of indemnities to a Tax Indemnitee or Indemnitee (other than Sublessor) or fees, expenses or reimbursement to a trustee, agent or other Person pursuant to this Agreement; or (vii) any act or payment by Sublessee not required under the terms of the Sublessee Documents, (herein called a “Sublessor Inclusion”), Sublessee shall pay to Sublessor an amount which, on an After-Tax Basis, shall be equal to the amount of the additional taxes on or measured by gross or net income (plus any and all fines, penalties, additions to tax and interest calculated by reference thereto) payable by Sublessor as a result of such Sublessor Inclusion.

(xi)                                Contests Etc.  The provisions of Section 29(b)(iii) (relating to tax savings) and 29(b)(iv) (relating to contests) of this Agreement shall apply, mutatis mutandis, with respect to any Sublessor Inclusion.

(xii)                             Pass-through of Tax Indemnity Agreement Indemnities.  (1)  Indemnity.  If Sublessor is required to pay Head Lessor or Owner Participant any amount (herein called a “TIA Liability”) pursuant to the Tax Indemnity Agreement, Sublessee shall pay to Sublessor an amount, which, on an After-Tax Basis, shall be equal to such TIA Liability.  Such payment shall be made at least five (5) Business Days prior to the date Sublessor must pay Head Lessor under the Tax Indemnity Agreement.

(2)                                  Exceptions. Sublessee shall not be required to indemnify Sublessor for any TIA Liability to the extent that such TIA Liability would not have occurred but for any of the following:

(y)                                 Sublessor claiming deductions for depreciation of the Aircraft for federal income tax purposes or claiming on any federal income tax return to be the owner of the Aircraft for federal income tax purposes;

(z)                                   the status of Sublessor as a “tax-exempt entity” within the meaning of Section 168(h) of the Code but only if such status is not caused by a Sublessee Person.

(3)                                  Tax Saving.  If Head Lessor or the Owner Participant pays an amount to Sublessor pursuant to Section 4(c) of the Tax Indemnity Agreement, for which Sublessee has previously paid an indemnity to Sublessor pursuant to paragraph (1) hereof, Sublessor shall pay such amount to Sublessee within 5 Business Days after Sublessor receives such amount, but not in excess of any payment previously made by Sublessee with respect to such TIA Liability and net of any tax liability incurred by Sublessor with respect to receipt and payment of such amount.

(4)                                  Contest.  If Sublessor receives a written claim for an indemnity pursuant to the Tax Indemnity Agreement for which Sublessee would be required to pay Sublessor an indemnity hereunder, Sublessor

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shall notify Sublessee thereof in writing (but it being understood and agreed that failure of Sublessor to provide such notice to Sublessee shall not adversely affect or otherwise prejudice any Sublessor’s right to an indemnity hereunder).  If requested by Sublessee in writing within ten (10) Business Days before the latest day on which Sublessor may request a contest pursuant to Section 6 of the Tax Indemnity Agreement, Sublessor shall exercise its rights, if any, under Section 6 of the Tax Indemnity Agreement provided that in no event shall Sublessor be required to initiate or continue (or be required to request any other person to initiate or continue) a contest unless: (i) the amount of the obligation on the part of Sublessee to indemnify Sublessor pursuant to subsection (1) hereof shall be at least $***, (ii)  Sublessee agrees to reimburse Sublessor on demand (and complies with such agreement) for all of the Owner Participant’s and Sublessor’s reasonable costs and expenses (including, without limitation, reasonable legal and accounting fees and disbursements) which each may incur in contesting such disallowance, (iii) if Owner Participant elects to contest the disallowance by paying the tax claimed (including interest, penalties or additions to tax) and seeking a refund, Sublessee shall advance to Sublessor on an interest free basis the aggregate amount of taxes, interest, penalties and additions to the tax applicable to such disallowance and agree to indemnify Sublessor and the Owner Participant for any adverse tax consequences resulting from such advance, (iv) such contest would not entail any risk of criminal penalties, (v) with respect to such disallowance, Sublessee shall have furnished Sublessor at Sublessee’s expense, with a written opinion of independent tax counsel selected by Sublessor that a Reasonable Basis exists to contest such disallowance and prior to filing any appeal an opinion that a successful outcome on appeal is more likely than not and have posted a bond or other security for such appeal, (vi) no Default or Event of Default, under any of the Operative Documents by Sublessor or the Airline Services Agreement, has occurred and is continuing, and (vii) Sublessee shall have delivered to Sublessor a written acknowledge of Sublessee’s obligation to indemnify in full Sublessor pursuant to this Agreement to the extent that the contest is not successful. Sublessor shall have no obligation to cause Owner Participant and Owner Participant shall have no obligation to appeal any adverse decision of an appellate court to the United States Supreme Court.

(xiii)                          Minimum Indemnity.  The amount of any indemnity payable by Sublessee to Sublessor pursuant to this Section 29 shall in all events be an amount sufficient to restore Sublessor to the position that Sublessor would be in if the Sublessor Inclusion, TIA Liability or any indemnity otherwise payable pursuant to Section 7 of the Participation Agreement that gave rise to Sublessee’s obligation hereunder had not occurred.

(c)                                  General Indemnity.  Sublessee hereby agrees to indemnify each Indemnitee against, and agrees to protect, defend, save and keep harmless each thereof from (whether or not the transactions contemplated herein or in any of the other Sublessee Documents

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are consummated), any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, out-of-pocket costs, expenses and disbursements (including reasonable legal fees and expenses but excluding internal costs and expenses such as salaries and overhead), of whatsoever kind and nature (collectively called “Expenses”) imposed on, incurred by or asserted against any Indemnitee, in any way relating to or arising out of (A) any of the Operative Documents or the Sublessee Documents or any of the transactions contemplated thereby or the enforcement of any of the terms thereof or any amendment, modification or waiver in respect thereof, (B) the manufacture, purchase, acceptance or rejection of the Aircraft, Airframe or any Engine or Part, (C) the Aircraft (or any portion thereof or any Engine or engine affixed to the Airframe) whether or not arising out of the finance, refinance, ownership, delivery, nondelivery, storage, sublease, possession, use, non-use, operation, maintenance, registration, reregistration, condition, modification, alteration, replacement, repair, substitution, sale, return or other disposition of the Aircraft (or any portion thereof or any Engine or engine or Part affixed to the Airframe) including, without limitation, latent or other defects, whether or not discoverable, strict tort liability, any damage to property or the environment, death of or injury to any person and any claim for patent, trademark or copyright infringement; provided that the foregoing indemnity as to any Indemnitee shall not extend to any Expense to the extent resulting from or arising out of or attributable to one or more of the following: (A) any representation or warranty by such Indemnitee in the Operative Documents being incorrect in any material respect, or (B) the failure by such Indemnitee to perform or observe any agreement, covenant or condition in any of the Operative Documents applicable to it including, without limitation, with respect to the creation or existence of a Sublessor Lien (including for this purpose Liens which would be Sublessor Liens but for the proviso in the definition of Sublessor Liens) attributable to it (except to the extent such failure was caused by the failure of Sublessee to perform any obligation under a Sublessee Document), or (C) the willful misconduct of such Indemnitee, or (D) with respect to any Indemnitee, a disposition by such Indemnitee of all or any part of such Indemnitee’s interest in the Airframe, any Engine or in the Operative Documents other than during the continuance of a Default or an Event of Default under the Sublease, or (E) except to the extent relating to the payment of any Expenses on an After-Tax Basis, any Tax whether or not Sublessee is required to indemnify for such Tax pursuant to Section 29(b) hereof, or (F) except to the extent fairly attributable to acts, omissions or events occurring prior thereto, acts or events which occur with respect to the Airframe or any Engine or Part after the return of physical possession of the Airframe or such Engine or Part to Sublessor pursuant to the terms of the Sublease.  Sublessee further agrees to indemnify Sublessor against, and agrees to protect, defend, save and keep harmless Sublessor from (whether or not the transactions contemplated herein or in any of the other Sublessee Documents are consummated), any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, out-of-pocket costs, expenses and disbursements of whatsoever kind and nature imposed on, incurred by or asserted against Sublessor pursuant to Section 7(c) of the Participation Agreement.

Sublessee further agrees that any payment or indemnity pursuant to this Section 29(c) in respect of any Expenses or other amounts payable by Sublessee pursuant to this Section 29(c) shall be paid on an After-Tax Basis.

If, by reason of any Expense payment made to or for the account of an Indemnitee by Sublessee pursuant to this Section 29(c), such Indemnitee subsequently realizes a tax deduction or credit or any reduction in Taxes not previously taken into account in computing

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such payment, such Indemnitee shall promptly pay to Sublessee, but only if Sublessee shall have made all payments then due and owing to such Indemnitee under the Sublessee Documents, an amount equal to the sum of (I) the actual reduction in Taxes realized by such Indemnitee which is attributable to such deduction or credit, and (II) the actual reduction in Taxes realized by such Indemnitee as a result of any payment made by such Indemnitee pursuant to this sentence; provided, however, that no Indemnitee shall be obligated to make any payment pursuant to this sentence to the extent that the amount of such payment would exceed (i) the aggregate amount of all prior payments by Sublessee to such Indemnitee under this Section 29(c) less (ii) the aggregate amount of all prior payments with respect to such Tax by such Indemnitee to Sublessee pursuant to this sentence, with any excess being carried forward to offset Sublessee’s obligations, if any, to make subsequent payments to such Indemnitee under this Section 29(c).

Nothing in this Section 29(c) shall be construed as a guaranty by Sublessee of the residual value of the Aircraft.

If a claim is made against an Indemnitee involving one or more Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly, upon receiving such notice, give notice of such claim to Sublessee and Sublessor; provided that the failure to provide such notice shall not release Sublessee from any of its obligations to indemnify hereunder, and no payment by Sublessee to an Indemnitee pursuant to this Section 29(c) shall be deemed to constitute a waiver or release of any right or remedy which Sublessee may have against such Indemnitee for any actual damages as a result of the failure by such Indemnitee to give Sublessee such notice.  Sublessee shall be entitled, at its sole cost and expense, acting through counsel acceptable to the respective Indemnitee, (A) so long as Sublessee has agreed in a writing acceptable to such Indemnitee that Sublessee is liable to such Indemnitee for such Expense hereunder, in any judicial or administrative proceeding that involves solely a claim for one or more Expenses, to assume responsibility for and control thereof, (B) so long as Sublessee has agreed in a writing acceptable to such Indemnitee that Sublessee is liable to such Indemnitee for such Expense hereunder, in any judicial or administrative proceeding involving a claim for one or more Expenses and other claims related or unrelated to the transactions contemplated by the Operative Documents, to assume responsibility for and control of such claim for Expenses to the extent that the same may be and is severed from such other claims (and such Indemnitee shall use its reasonable efforts to obtain such severance, provided that Sublessee has requested such severance and agrees to pay the reasonable out-of-pocket costs and expenses (including, without limitation, reasonable counsel fees and disbursements) incurred by such Indemnitee, if any, in connection with such severance), and (C) in any other case, to be consulted by such Indemnitee with respect to judicial proceedings subject to the control of such Indemnitee.  Notwithstanding any of the foregoing to the contrary, Sublessee shall not be entitled to assume responsibility for and control of any such judicial or administrative proceedings (M) while a Default or an Event of Default or an Event of Default (as such term is defined in the Head Lease) or a Default (as such term is defined in the Head Lease) of the type referred to in Section 14(a), 14(b) or 14(e) of the Head Lease shall have occurred and be continuing, (N) if such proceedings will involve a risk of the sale, forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien) on the Aircraft, the Trust Indenture Estate or the Trust Estate or any part thereof, or (O) if such proceeding could in the good faith opinion of such Indemnitee entail any risk of civil liability or criminal liability or present a conflict of interest making separate representation necessary.  The

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affected Indemnitee may participate at its own expense and with its own counsel in any judicial proceeding controlled by Sublessee pursuant to the preceding provisions.

The affected Indemnitee shall supply Sublessee with such information reasonably requested by Sublessee as is necessary or advisable for Sublessee to control or participate in any proceeding to the extent permitted by this Section 29(c).  Unless a Default or an Event of Default shall have occurred and be continuing (in which case the consent of Sublessee shall not be required), such Indemnitee shall not enter into a settlement or other compromise with respect to any Expense without the prior written consent of Sublessee, which consent shall not be unreasonably withheld or delayed, unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Section 29(c).

Sublessee shall supply the affected Indemnitee and Sublessor with such information reasonably requested by such Indemnitee as is necessary or advisable for such Indemnitee to control or participate in any proceeding to the extent permitted by this Section 29(c).

Upon payment in full of any Expense or Tax pursuant to this Section 29, Sublessee, or, if any Expense or Tax has been paid by insurers, the insurers, without any further action, shall be subrogated to any claims the affected Indemnitee may have relating thereto; provided that Sublessee shall not be so subrogated so long as a Default or an Event of Default has occurred and is continuing.  Such Indemnitee agrees to give such further reasonable assurances or agreements and to provide such reasonable cooperation to Sublessee or the insurers to permit Sublessee or the insurers to pursue such claims, if any, to the extent reasonably requested by Sublessee or the insurers.

In the event that Sublessee shall have paid an amount to an Indemnitee pursuant to this Section 29(c), and such Indemnitee subsequently shall be reimbursed in respect of such indemnified amount from any other Person, such Indemnitee shall promptly pay to Sublessee an amount equal to the amount of such reimbursement (but in no event more than such payment from Sublessee) plus any net tax benefit (or minus any net tax detriment) realized by such Indemnitee as a result of any reimbursement received and payment made by such Indemnitee pursuant to this sentence; provided, that Sublessor shall not be obligated to make any payment pursuant to this Section 29(c) to the extent that the amount of such payment would exceed (i) the aggregate amount of all prior payments by Sublessee to Sublessor under this Section 29(c) less (ii) the aggregate amount of all prior payments by Sublessor to Sublessee pursuant to this Section 29(c), with any excess being carried forward to offset Sublessee’s obligations, if any, to make subsequent payments to Sublessor under this Section 29(c); provided, further, that such Indemnitee shall have no obligation to reimburse Sublessee if (i) a Default or an Event of Default or an Event of Default (as such term is defined in the Head Lease) has occurred and is continuing or if the Airline Services Agreement shall have been terminated or canceled or shall have terminated in accordance with its terms or (ii) Sublessee has not paid such Indemnitee all amounts required pursuant to this Section 29(c) and any other amounts then due to such Indemnitee from Sublessee under any of the Operative Documents or Sublessee Documents.

Sublessee’s obligations under the indemnities provided for in this Sublease shall be those of a primary obligor, whether or not the Person indemnified shall also be indemnified

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with respect to the same matter under the terms of any other document or instrument, and the Person seeking indemnification from Sublessee pursuant to any provision of this Sublease may proceed directly against Sublessee without first seeking to enforce any other right of indemnification.

(d)                                 Income Tax.  For purposes of this Section 29, the term “Income Tax” means any Tax based on or measured by net income (other than sales, use, license, rental, ad valorem and value added or property Taxes) (including, without limitation, capital gains taxes, minimum taxes, income taxes collected by withholding and taxes on tax preference items), and interest, additions to tax, penalties, or other charges in respect thereof.

(e)                                  Survival.  Notwithstanding anything to the contrary contained in this Sublease, the provisions of this Section 29 shall survive any termination or expiration of this Sublease.

SECTION 30.  Certain Representations, Warranties and Covenants.  (a)  Sublessor represents and warrants to Sublessee as follows:

(i)                                     Sublessor is a corporation duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the corporate power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under, the Sublessee Documents to which Sublessor is a party;

(ii)                                  the Sublessee Documents to which Sublessor is a party have been duly authorized by all necessary corporate action on the part of Sublessor, do not require any approval not already obtained of stockholders of Sublessor or any approval or consent not already obtained of any trustee or holders of any indebtedness or obligations of Sublessor, and have been duly executed and delivered by Sublessor, and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by Sublessor with any of the terms and provisions thereof, will contravene any United States Federal or state law, judgment, governmental rule, regulation or order applicable to or binding on Sublessor (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to aviation or to the nature of the equipment owned by Sublessor) or contravene or result in any breach of or constitute any default under, or result in the creation of any Lien (other than Liens provided for in the Operative Documents or the Sublessee Documents) upon any property of Sublessor under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which Sublessor is a party or by which it or its properties may be bound or affected; and

(iii)                               each of Sublessee Documents to which Sublessor is a party constitutes a legal, valid and binding obligation of Sublessor enforceable against Sublessor in accordance with the terms thereof (except as may be limited by (A) general principles of equity, (B) applicable bankruptcy, insolvency, fraudulent

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conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally, (C) applicable laws which may affect the remedies provided therein, which laws, however, do not make the remedies provided therein inadequate for the practical realization of the benefits provided thereby, except that no representation or warranty is made as to the amount of priority of any recovery under any particular circumstances, and (D) in the case of indemnity provisions contained in such documents, as limited by public policy considerations).

(b)                                 Sublessee covenants and agrees that it shall at all times be a Certificated Air Carrier.

(c)                                  Sublessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of this Sublease, the Sublease Supplement, and any financing statements or other instruments as are necessary to maintain (or as are reasonably requested by Sublessor) the perfection of any security interest that may be claimed to have been created by this Sublease or will furnish to Sublessor timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable Sublessor to take such action.  Sublessee shall furnish to Sublessor annually after the execution hereof (but not later than March 15^th of each year, commencing with the year 2006) an opinion of Daugherty, Fowler, Peregrin & ▇▇▇▇▇▇, a Professional Corporation and/or other counsel reasonable satisfactory to Sublessor nationally recognized in FAA matters covering such matters with respect to the interests of Sublessor in the Aircraft and the perfection of security interests therein as Sublessor may reasonably request.  Sublessee will notify Sublessor of any change in the location of its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) prior to making such change.

SECTION 31.  Covenants of Sublessee.  Sublessee covenants and agrees with Sublessor as follows:

Sublessee will, at its own cost and expense, cause to be done, executed, acknowledged and delivered all and every such further acts, conveyances and assurances as Sublessor shall reasonably require for accomplishing the purposes of this Sublease and the other Sublessee Documents; provided that any instrument or other document so executed by Sublessee will not expand any obligations or limit any rights of Sublessee in respect of the transactions contemplated by any Sublessee Document.  Sublessee, upon delivery of the Aircraft under this Sublease, shall at all times thereafter cause the same to remain duly registered in the name of Sublessor, except as otherwise required or permitted hereunder or under this Sublease, under the Federal Aviation Act, or shall furnish to Sublessor such information as may be required to enable Sublessor to make application for such registration, and shall promptly furnish to Sublessor such information as may be required (or reasonably requested by Sublessor) to enable Sublessor to timely file any reports required to be filed by Sublessor, as the case may be, as a result of its interest in the Aircraft with any governmental authority.

SECTION 32.  Consent to Jurisdiction.  Each of the parties hereto (A) hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Sublease or any other Operative Document or Sublessee

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Document, the subject matter of any thereof or any of the transactions contemplated hereby or thereby brought by any party or parties thereto, or their successors or assigns, and (B) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Sublease or any other Operative Document or Sublessee Document or the subject matter of any thereof or any of the transactions contemplated hereby or thereby may not be enforced in or by such courts.  Sublessee hereby generally consents to service of process at CT Corporation System, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.

SECTION 33.  Owner for Federal Tax Purposes.  It is hereby agreed among Sublessor and Sublessee that for Federal income tax purposes the Owner will be the owner of the Aircraft and Sublessee will be the sublessee thereof, and each party hereto agrees to characterize this Sublease as a lease for Federal income tax purposes.

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IN WITNESS WHEREOF, Sublessor and Sublessee have each caused this Sublease to be duly executed as of the day and year first above written.

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EXHIBIT A
to
Sublease Agreement
[NW 2005         ]

SUBLEASE SUPPLEMENT No.       
[NW 2005         ]

SUBLEASE SUPPLEMENT NO.     , dated                   , 20      , between NORTHWEST AIRLINES, INC. (“Sublessor”), and MESABA AVIATION, INC. (“Sublessee”).

Sublessor and Sublessee have heretofore entered into that certain Sublease Agreement [NW 2005         ], dated as of                         , 200  , relating to one Bombardier Inc. Canadair Regional Jet Model CL-600-2B19  aircraft (herein called the “Sublease,” and the defined terms therein being hereinafter used with the same meanings).  The Sublease provides for the execution and delivery from time to time of Sublease Supplements for the purpose of subleasing the Airframe and Engines under the Sublease as and when delivered by Sublessor to Sublessee in accordance with the terms thereof.

(1) The Sublease relates to the Airframe and Engines described below, and a counterpart of the Sublease is attached hereto, and made a part hereof, and this Sublease Supplement, together with such attachment, is being filed for recordation on the date hereof with the Federal Aviation Administration as one document.

(2) The Sublease Agreement relates to the Airframe and Engines described below, and a counterpart of the Sublease Agreement, attached and made a part of Sublease Supplement No. 1 dated                               , 20     to the Sublease Agreement, has been recorded by the Federal Aviation Administration on                               , 20    , as one document and assigned Conveyance No.     .

NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, Sublessor and Sublessee hereby agree as follows:

1.                                       Sublessor hereby delivers and subleases to Sublessee under the Sublease and Sublessee hereby accepts and subleases from Sublessor under the Sublease the following described Bombardier Inc. Canadair Regional Jet Model CL-600-2B19 aircraft (the “Aircraft”), which Aircraft as of the date hereof consists of the following components:

Airframe:  FAA Registration No.                   ; manufacturer’s serial no.           ; and

(1)                                  This language for Sublease Supplement No. 1.

(2)                                  This language for other Sublease Supplements.

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Engines:  two (2) General Electric Model CF34-3B1 type engines bearing, respectively, manufacturer’s serial nos.            and              (each of which engines has 750 or more rated takeoff horsepower or the equivalent of such horsepower).

2.                                       The Commencement Date of the Aircraft is the date of this Sublease Supplement set forth in the opening paragraph hereof.  Except as otherwise provided in the Sublease, the Term for the Aircraft shall commence on the Commencement Date and end on the Expiration Date.

3.                                       Sublessee hereby confirms its agreement to pay Sublessor Basic Rent for the Aircraft throughout the Term therefor in accordance with Section 3 of the Sublease.

4.                                       Sublessee hereby confirms to Sublessor that Sublessee has accepted the Aircraft for all purposes hereof and of the Sublease as being airworthy, in good working order and repair and without defect or inherent vice in title, condition, design, operation or fitness for use.

5.                                       All of the terms and provisions of the Sublease are hereby incorporated by reference in this Sublease Supplement to the same extent as if fully set forth herein.

6.                                       This Sublease Supplement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

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IN WITNESS WHEREOF, Sublessor and Sublessee have caused this Sublease Supplement to be duly executed on the day and year first above written.