Leon Simson TONKON TORP LLP - colpedia.wikispaces.comcolpedia.wikispaces.com/file/view/CAM.2ndDisclosureStatement.1.pdf/... · TONKON TORP LLP 888 SW Fifth Avenue. Suite 1600 Portland,

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Tonkon Torp LLP 888 SW Fifth Avenue, Suite 1600

Portland, Oregon 97204 503-221-1440

Page 1 of 47 - DEBTOR'S SECOND AMENDED DISCLOSURE STATEMENT (Dated April 14, 2008)

Leon Simson, OSB No. 75342 (Lead Attorney) Direct Dial: (503) 802-2067 Facsimile: (503) 972-3067 E-Mail: [email protected]

Albert N. Kennedy, OSB No. 82142 Direct Dial: (503) 802-2013 Facsimile: (503) 972-3713 E-Mail: [email protected]

Timothy J. Conway, OSB No. 85175 Direct Dial: (503) 802-2027 Facsimile: (503) 972-3727 E-Mail: [email protected]

TONKON TORP LLP 888 SW Fifth Avenue. Suite 1600 Portland, OR 97204

Attorneys for Debtor

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF OREGON

In re: Columbia Aircraft Manufacturing Corporation, Debtor.

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Case No. 07-33850-elp11 DEBTOR'S SECOND AMENDED DISCLOSURE STATEMENT (Dated April 14, 2008)

I. INTRODUCTION AND SUMMARY

A. INTRODUCTION

On September 24, 2007 (the "Petition Date"), Columbia Aircraft

Manufacturing Corporation ("Debtor" or the "Company”) filed a voluntary petition under

Chapter 11 of Title 11 of the United States Bankruptcy Code (the "Bankruptcy Code"). On

April 14, 2008, Debtor filed this Second Amended Disclosure Statement (the "Disclosure

Statement") and this Second Amended Plan of Liquidation (the "Plan") with the United

States Bankruptcy Court for the District of Oregon (the "Bankruptcy Court"). A copy of the

Plan is attached hereto as Exhibit 1.

This Disclosure Statement is being provided to you by Debtor to enable you to

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make an informed judgment about the Plan. This Disclosure Statement has been prepared to

disclose information that in Debtor's opinion is material, important and helpful to evaluate

the Plan. Among other things, this Disclosure Statement describes the manner in which

Claims and Interests will be treated. This Disclosure Statement summarizes the Plan,

explains how the Plan will be implemented, outlines the risks of and alternatives to the Plan,

and outlines the procedures involved in confirmation of the Plan. The description of the Plan

contained in this Disclosure Statement is intended as a summary only and is qualified in its

entirety by reference to the Plan itself. If any inconsistency exists between the Plan and this

Disclosure Statement, the terms of the Plan are controlling. You are urged to review the Plan

and, if applicable, consult with your own counsel about the Plan and its impact on your legal

rights before voting on the Plan.

Capitalized terms used but not defined in this Disclosure Statement shall have

the meanings assigned to such terms in the Plan or the Bankruptcy Code. Factual

information contained in this Disclosure Statement is the representation of Debtor only and

not of its attorneys or accountants. The information has been obtained from the books and

records of Debtor as well as other sources deemed reliable. Debtor has prepared the

information contained herein in good faith, based on information available to Debtor. The

information herein concerning the Plan has not been subject to a verified audit. No

representation concerning Debtor or the Plan is authorized by Debtor other than as set forth

in this Disclosure Statement.

The statements contained in this Disclosure Statement are made as of the date

hereof, unless another time is specified herein, and the delivery of this Disclosure Statement

shall not imply that there has been no change in the facts set forth herein since the date of this

Disclosure Statement and the date the material relied on in preparation of this Disclosure

Statement was compiled.

This Disclosure Statement may not be relied on for any purpose other than to

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determine how to vote on the Plan. Nothing contained herein shall constitute an admission of

any fact or liability by any party, or be admissible in any proceeding involving Debtor or any

other party, or be deemed advice on the tax or other legal effects of the Plan on the holders of

Claims or Interests.

This Disclosure Statement has been approved by Order of the Bankruptcy

Court as containing information of a kind and in sufficient detail to enable a hypothetical

reasonable investor typical of holders of Claims or Interests of relevant classes to make an

informed judgment concerning the Plan. The Bankruptcy Court's approval of this Disclosure

Statement, however, does not constitute a recommendation by the Bankruptcy Court either

for or against the Plan.

The Bankruptcy Court has scheduled a hearing on confirmation of the Plan to

commence on May 28, 2008 at 9:30 a.m. Pacific Time. That hearing will be held at the

United States Bankruptcy Court for the District of Oregon, 1001 SW Fifth Avenue, Eighth

Floor, Portland, Oregon 97204, before the Honorable Elizabeth L. Perris. The hearing on

confirmation may be adjourned from time to time by the Bankruptcy Court without further

notice except for an announcement made at the hearing on any adjournment thereof.

A ballot has been enclosed with this Disclosure Statement for use in voting on

the Plan. In order to be tabulated for purposes of determining whether the Plan has been

accepted or rejected, ballots must be received at the address indicated on the ballot no later

than 4:00 p.m. on May 21, 2008. Debtor believes that confirmation of the Plan is in the best

interests of the holders of Claims and urges you to accept the Plan.

B. SUMMARY OF THE PLAN

A copy of the Plan is attached hereto as Exhibit 1 and discussed in detail later

in this Disclosure Statement. The following description of the Plan is intended as a summary

only and is qualified in its entirety by reference to the Plan. Debtor urges each holder of a

Claim to carefully review the Plan, together with this Disclosure Statement, before voting on

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the Plan.

The Plan is a liquidating plan. During the Chapter 11 Case Debtor sold

substantially all of its operating assets to Cessna Aircraft Company ("Cessna"). Debtor has

additional assets consisting of, among other things, accounts receivable, pre-paid expenses

and deposits, and litigation and preference claims. Debtor will continue its efforts to convert

those assets to cash pending conformation of the Plan. Upon the Effective Date of the Plan,

the remaining assets will be transferred to the Liquidating Trust which will be established

pursuant to the Plan. Thereafter the Liquidating Trust will liquidate those assets and will

distribute cash to the Beneficiaries of the Trust, as more specifically described below.

Creditors will be paid in the order of priority required by the Bankruptcy

Code. Secured Creditors will be paid from the proceeds of their collateral. Administrative

Expense Claims and Priority Claims including the Allowed Claims for the value of any

goods received by Debtor within 20 days before the date of commencement of this

Chapter 11 Case where the goods were sold to Debtor in the ordinary course of business in

accordance with 11 U.S.C. § 503(b)(9), are expected to be paid in full, unless there is a

continuing dispute with Garmin International, Inc. ("Garmin"). Creditors who hold claims

arising from product warranties issued by Debtor, as well as Creditors who have claims

arising from the E-VADE system which was, or was supposed to be, installed on Debtor’s

aircraft will receive compensation from Cessna as more particularly described below. Small

Unsecured Creditors (defined as holders of Unsecured Claims that are equal to or less than

$2,500 and holders of Unsecured Claims who file a written election to reduce their

Unsecured Claims to $2,500) will receive a one-time distribution of 10% of their Claims on

or before 60 days after the later of the Effective Date or the date their Claim is allowed.

General Unsecured Creditors will receive Pro Rata distributions of the remaining funds as

and when sufficient funds are available to make meaningful distributions. Debtor estimates

that holders of general Unsecured Claims will receive a distribution of approximately 5%

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plus the net recoveries from the various litigation and preference claims discussed in more

detail below. The amount and timing of the payments to the holders of general Unsecured

Claims will depend on approval of the proposed settlement of the Secured Claim of Garmin,

as described below.

All unexpired leases and executory contracts will be rejected by Debtor as of

the Effective Date of the Plan, unless such leases or executory contracts have been previously

assumed and assigned, or rejected, or a motion seeking their assumption and assignment has

been filed before the Confirmation Date or as otherwise provided in the Confirmation Order.

II. VOTING PROCEDURES AND CONFIRMATION OF PLAN

A. BALLOTS AND VOTING DEADLINE

A ballot to be used for voting to accept or reject the Plan is enclosed with each

copy of this Disclosure Statement mailed to all Creditors. After carefully reviewing this

Disclosure Statement and its exhibits, including the Plan, please indicate your acceptance or

rejection of the Plan by voting in favor or against the Plan on the enclosed ballot as directed

below.

The Bankruptcy Court has directed that, to be counted for voting purposes,

ballots for the acceptance or rejection of the Plan must be received no later than 4:00 p.m.

Pacific time, on May 21, 2008 by Debtor at the following address:

Tonkon Torp LLP, Attention: Timothy J. Conway 1600 Pioneer Tower 888 SW Fifth Avenue Portland, OR 97204-2099

or via facsimile transmission to Timothy J. Conway at (503) 972-3727.

Holders of each Claim that was scheduled by Debtor or with respect to which

a Proof of Claim has been filed will receive ballots and are permitted to vote based on the

amount of the Proof of Claim, except as discussed below. If no Proof of Claim has been

filed, then the vote will be based on the amount scheduled by Debtor in its Schedules. The

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Bankruptcy Code provides that such votes will be counted unless the Claim has been

disputed, disallowed, disqualified or suspended prior to computation of the vote on the Plan.

A Claim to which an objection has been filed is not allowed to vote unless and until the

Bankruptcy Court rules on the objection. Holders of disputed Claims who have settled their

dispute with Debtor are entitled to vote the settled amount of their Claim. The Bankruptcy

Code provides that the Bankruptcy Court may, if requested to do so by the holder of such

Claim, estimate or temporarily allow a disputed Claim for the purposes of voting on the Plan.

If a person holds Claims in more than one Class entitled to vote on the Plan,

such person will be entitled to complete and return a ballot for each Class. If you do not

receive a ballot or if a ballot is damaged or lost, please contact:

Tonkon Torp LLP Attention: Laura Lindberg 1600 Pioneer Tower 888 SW Fifth Avenue Portland, OR 97204-2099 Telephone number: (503) 802-2128

When a ballot is signed and returned without further instruction regarding

acceptance or rejection of the Plan, the signed ballot shall be counted as a vote accepting the

Plan. When a ballot is returned indicating acceptance or rejection of the Plan but is unsigned,

the unsigned ballot will not be included in any calculation to determine whether parties

entitled to vote on the Plan have voted to accept or reject the Plan. When a ballot is returned

without indicating the amount of the Claim, the amount shall be as set forth on Debtor's

Schedules or any Proof of Claim filed with respect to such Claim.

B. PARTIES ENTITLED TO VOTE

Pursuant to Section 1126 of the Bankruptcy Code, each Class of impaired

Claims or Interests that is not deemed to reject the Plan is entitled to vote to accept or reject

the Plan. Any holder of an Allowed Claim that is in an impaired Class under the Plan, and

whose Class is not deemed to reject the Plan, is entitled to vote. A Class is "impaired" unless

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the legal, equitable and contractual rights of the holders of Claims in that Class are left

unaltered by the Plan or if the Plan reinstates the Claims held by members of such Class by

(1) curing any defaults, (2) reinstating the maturity of such Claim, (3) compensating the

holder of such Claim for damages that result from the reasonable reliance on any contractual

provision of law that allows acceleration of such Claim, and (4) otherwise leaving unaltered

any legal, equitable or contractual right of which the Claim entitles the holder of such Claim.

Because of their favorable treatment, Classes that are not impaired are conclusively

presumed to accept the Plan. Accordingly, it is not necessary to solicit votes from the

holders of Claims in Classes that are not impaired.

Classes of Claims or Interests that will not receive or retain any money or

property under a Plan on account of such Claims or Interests are deemed, as a matter of law

under Section 1126(g) of the Bankruptcy Code, to have rejected the Plan and are likewise not

entitled to vote on the Plan. Class 10, which consists of the holders of the equity Interests in

the Debtor, will have their Interests cancelled and receive nothing under the Plan. Therefore,

the holders of Interests are deemed to have rejected Debtor's Plan.

Under Debtor's Plan, Classes 1 through 4 are not impaired and therefore are

deemed to have accepted the Plan. Classes 5 through 10 are impaired under the Plan.

Persons holding Claims in Classes 5 through 9 are entitled to vote to accept or reject the Plan,

while Class 10 is deemed to have rejected the Plan.

C. VOTES REQUIRED FOR CLASS ACCEPTANCE OF THE PLAN

As a condition to confirmation, the Bankruptcy Code requires that each

impaired Class of Claims or Interests accept the Plan, subject to the exceptions described

below in the section entitled "Cram Down of the Plan." At least one impaired Class of

Claims must accept the Plan in order for the Plan to be confirmed.

For a Class of Claims to accept the Plan, Section 1126 of the Bankruptcy

Code requires acceptance by Creditors that hold at least two-thirds in dollar amount and a

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majority in number of the Allowed Claims of such Class, in both cases counting only those

Claims actually voting to accept or reject the Plan. The holders of Claims who fail to vote

are not counted as either accepting or rejecting the Plan. If the Plan is confirmed, the Plan

will be binding with respect to all holders of Claims and Interests in each Class, including

Classes and members of Classes that did not vote or that voted to reject the Plan.

D. "CRAM DOWN" OF THE PLAN

If the Plan is not accepted by all of the impaired Classes of Claims and

Interests for Debtor, the Plan may still be confirmed by the Bankruptcy Court pursuant to

Section 1129(b) of the Bankruptcy Code's "Cram Down" provision if the Plan has been

accepted by at least one Impaired Class of Claims, without counting the acceptances of any

Insiders of Debtor, and the Bankruptcy Court determines, among other things, that the Plan

"does not discriminate unfairly" and is "fair and equitable" with respect to each non-

accepting Impaired Class of Claims or Interests.

E. CONFIRMATION HEARING

The Bankruptcy Court has scheduled a hearing on confirmation of the Plan to

commence on May 28, 2008, at 9:30 a.m. Pacific time. The Confirmation Hearing will be

held at the United States Bankruptcy Court for the District of Oregon, Courtroom 1, 1001

SW Fifth Avenue, Portland, Oregon, before the Honorable Elizabeth L. Perris, United States

Bankruptcy Judge. At the hearing, the Bankruptcy Court will consider whether the Plan

satisfies the various requirements of the Bankruptcy Code, including whether it is feasible

and whether it is in the best interest of the Creditors of Debtor. Prior to the hearing, Debtor

will submit a report to the Bankruptcy Court concerning the votes for acceptance or rejection

of the Plan by the persons entitled to vote thereon.

Section 1128(b) of the Bankruptcy Code provides that any party in interest

may object to confirmation of the Plan. Any objections to confirmation of the Plan must be

made in writing and filed with the Bankruptcy Court and received by counsel for Debtor no

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later than May 21, 2008, by 4:00 p.m. Pacific time. Unless an objection to confirmation is

timely filed and received, it will not be considered by the Bankruptcy Court.

III. COMPANY BACKGROUND AND GENERAL COMPANY INFORMATION

A. DEBTOR

Debtor was a designer, developer and manufacturer of all-composite, four-

seat, single-engine piston aircraft headquartered in Bend, Oregon. The business was initially

founded in 1995 as a limited liability company called Pacific Aviation Composites USA

L.L.C. ("PAC"). PAC was equally owned by Composite Technologies Research Malaysia

("CTRM"), a Malaysian subsidiary of the Minister of Finance (Incorporated) Malaysia

("MOF"), a part of the Government of Malaysia, and Lima Development, Inc., an Oregon

corporation. In 2000, The Lancair Company was formed. Shortly thereafter, PAC was

merged into The Lancair Company, with the latter as the surviving entity. In 2005 The

Lancair Company changed its name to Columbia Aircraft Manufacturing Corporation.

As of the Petition Date, the MOF owned 91.7% of Debtor's shares. CTRM

owned 6.6% of Debtor's shares. Lima Development, Inc., an entity controlled by Lance

Neibauer, the founder of The Lancair Company, owned 1.7% of the outstanding shares.

Mark Cahill owned the balance, which was less than .1%. Prior to the Petition Date, Lima

Development, Inc. and Mr. Cahill submitted repurchase notices to the Company pursuant to a

Put Option Agreement requesting that the Company repurchase their shares. The Company

was prohibited by Oregon statute from repurchasing their shares.

B. GENERAL BACKGROUND AND HISTORY

Debtor sought to be the first company to design, certify, manufacture, sell and

service a four-seat, all composite aircraft. In 1998, Debtor received the FAR 23 certification

for the Columbia 300, which was the first certification received for a single-engine piston

aircraft in the United States in approximately 20 years. Limited production of certified

aircraft began in 1999. In 2000, the MOF agreed to directly provide a capital infusion and

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full scale production began.

Debtor was chronically short of funds and raised money from time to time by

selling preferred stock and borrowing money. In the summer of 2002, Debtor was almost

completely out of cash and reduced operations to a skeleton crew. In late 2002, the MOF

agreed, among other things, to purchase shares of Debtor's stock for $32 million, to buy out

the unaffiliated holders of preferred stock, and to purchase one-half of the shares owned by

Lima Development, Inc. and by Mr. Cahill. The transaction closed in January of 2003, and

the MOF became the majority shareholder. As part of the transaction, Bing Lantis became

President and Chief Executive Officer of Debtor, and Mr. Neibauer became Chief Technical

Officer.

In March 2003, Debtor received certification of the Columbia 350, an all

electric version of the Columbia 300. One year later, the piston driven turbo-charged

Columbia 400 was certified. During the first ten months of 2005, Columbia generated record

deliveries and revenues and saw its first month of profitable operations. Unit deliveries in

2005 increased 49% to 112 from 75 in 2004, and revenues increased 66% to $54.6 million

from $32.8 million in the prior year.

The growth in production and sales required increased capital. Thus, in 2005

the MOF purchased additional stock for an additional $35 million. Building on the success

achieved in 2005, Debtor put in place the infrastructure to permit production and delivery of

as many as 247 aircraft in 2006, or approximately five per week. Despite the setbacks

described below, during 2006, the Company delivered a total of 156 aircraft, representing an

increase of nearly 40% over 2005, accounting for approximately 5.7% of the 2,750 single-

engine, piston-driven airplanes delivered during 2006, according to the General Aviation

Manufacturers Association. Revenues increased to approximately $90 million. However,

the increased sales and revenues fell far short of projections and were insufficient to avoid a

large operating loss because of the problems discussed below.

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The Company decided to upgrade its avionics system with a state-of-the-art

package from Garmin, the G1000. The Company entered into an agreement with Garmin

whereby Garmin was to produce the avionics system which was to be certified for use in the

Company's aircraft by July 2005. The Company organized its manufacturing operations so

that it would stop producing Avidyne-equipped aircraft and begin selling Garmin-equipped

aircraft no later than November 2005, and the Company stopped producing Avidyne-

equipped aircraft. However, the certification process for the system was delayed resulting in

the Company not being able to deliver certified aircraft and unable to generate revenue

during the last two months of 2005 and the first quarter of 2006.

As might be expected, the inability to deliver aircraft after October 2005

created a financial crisis. Garmin agreed to loan the Debtor $17 million, and when the

certification efforts were further delayed, another $7 million. Upon certification of the

G1000 for the Columbia 400 on March 31, 2006, Debtor quickly delivered 52 aircraft from

April 1, 2006 to June 12, 2006. On June 12, 2006 an unusually severe hailstorm hit the

Company's facilities in Bend, Oregon damaging 66 aircraft. The storm-related repairs

resulted in additional delays in delivering aircraft, and certain customers declined delivery of

the repaired aircraft. The interruption of the Company's sales and production activities

caused by these events combined to produced a significant detrimental impact on the

financial performance and liquidity of Debtor.

Historically, Debtor had been able to sell 100% of its annual production. The

delayed certification of the avionics system, and June hailstorm resulted in the Debtor not

being able to meet either its production or its sales goals. If there had been no delays in

certification and there had not been a hailstorm, the Company would have met its planned

sales goals of delivering as many as 247 aircraft in 2006. The hailstorm was particularly

harmful to the Debtor's operations since there was a large inventory of planes on site when

the storm struck. The damage caused by the hailstorm required Debtor to divert personnel

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and other resources from manufacturing new airplanes to repairing hail-affected airplanes,

and required sales efforts to try and maintain existing orders rather than selling new orders.

Because of this diversion of labor and related issues, the Company could only produce 186

airplanes in 2006. Furthermore, a certain number of customers declined to accept hail-

affected aircraft. Some customers “rolled” their orders to new aircraft, while others simply

cancelled their orders. As a result of both the production and sales problems, the Company

was only able to deliver 156 aircraft.

In light of the Company’s financial problems, the board of directors of the

Debtor retained ING Financial Markets LLC ("ING") as its investment banker in November

2006. ING prepared a report in which it observed that the Malaysian government's initial

rationale for investing in the Debtor, which was that the Debtor’s operations would

eventually lead to creating jobs and investment in Malaysia, was not likely to be achieved.

ING also noted that the future growth of Debtor required increases in capacity and product

line extensions which required a substantial commitment of additional capital. ING pointed

out that the strained relationship with the founder and minority shareholder had resulted in

litigation that was consuming considerable time and effort.

ING also noted that the Debtor suffered from a number of structural issues.

One such issue was that the Debtor had high fixed costs that required a high level of aircraft

sales and deliveries to break even. While Debtor's products continued to be well regarded

even with the impact of outside events, customer service issues, a weak dealer network and

the failure to fulfill promises to customers (largely resulting from problems with suppliers'

products) all contributed to a slowing order rate with orders coming in below expectations.

Additionally, cash was tied up in finished aircraft inventory and insurance claims causing

relationships with key suppliers to be stretched due to slow payments. Because of past

failures to meet planned targets, management’s projections of future financial returns lacked

credibility with the board of directors, and changing forecasts created questions about the

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adequacy of financial controls. As a result of the foregoing, ING recommended that Debtor

hire a restructuring or turnaround firm and new legal counsel.

ING suggested several possible courses of action for the board of directors to

consider. After considering a number of alternatives suggested by ING, Debtor's board of

directors elected to attempt to stabilize the business while trying to find a financial or merger

partner. The objective was to have the partner manage the business and fund ongoing cash

needs for operations and development. In the meantime, funding of operations would be

accomplished by maximizing management of working capital, restructuring debt with

Garmin and delaying the amortization on other loans.

To accomplish the plan, on or about February 23, 2007, Debtor retained

Bridge Associates, LLC ("Bridge") to provide assistance in managing the operations and

financial functions of Debtor and implementing the restructuring plan. Carl H. Young, III is

the Bridge managing director responsible for the engagement and serves as Debtor's Chief

Restructuring Officer ("CRO"). Richard Reighard, a managing director of Bridge, served as

Debtor's Interim Chief Financial Officer, and Michael Culver, a Senior Contractor to Bridge,

served as Debtor's Interim Chief Operating Officer. In addition, Debtor hired the law firm of

Kaye Scholer LLP to assist with the restructuring efforts.

Bridge’s efforts were initially focused on preserving cash and stabilizing

operations, as well as bringing accountability to the management of Debtor. To address the

cash issues, workforce reductions and employee furloughs were implemented and production

was reduced to adjust the out-of-balance situation between orders and production and to

develop a healthier backlog. To address organizational issues, and increase the sense of

urgency, a reorganization of executive management was implemented and an interim

management team put in place.

After the first initiatives, Bridge addressed cash issues through improved cash

forecasting techniques, matching production levels to orders, reducing excess finished goods,

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deferring of principal payments, aggressive monitoring of deliveries, strict monitoring of

labor costs, supplies and services, and improving consistency of payments to vendors.

A debt restructuring strategy was developed to provide Debtor with breathing

room while other strategic alternatives were pursued. Restructuring negotiations were

initiated with major debt holders to facilitate the overall restructuring of Debtor's balance

sheet.

Organizational and cost issues were addressed by changing the “culture” to

emphasize action and urgency and converting to a metrics driven organization. Additionally,

emphasis was placed on increasing inter-departmental communication and decision making

in addition to open communication sessions with all employees. To improve process flow

and reduce cost, lean enterprise training was implemented.

Supplier quality and cost issues were addressed through improved

communication, development of supplier performance measurements, renewed negotiation of

vendor terms, quantification of potential claims related to supplier service issues and

addressing the lack of supplier accountability for providing unacceptable parts that required

rework. Other operational improvements focused efforts on addressing the high number of

recurring production issues that required rework and implementation of improved labor

tracking and monitoring of utilization.

Customer service issues were addressed through the targeting of major service

issues related to the de-icing system, E-Plates, fuel sender, batteries, warranty payments to

repair facilities and other issues negatively impacting Debtor's reputation. The customer

service group was also reorganized to improve customer response and implement measures

to quantify and track customer service issues.

Debtor's efforts to improve sales involved restructuring the sales group,

improving visibility of future orders, improved monitoring of orders, improved

communication, and payment of past due commissions. Additionally, the sales and

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marketing group aggressively pursued the sale of excess inventory and developed marketing

sales programs to develop new orders to achieve an interim goal of three orders per week.

From March to June of 2007, Debtor experienced an improved order rate.

While orders remained below break-even, improvements in customer service and production

processes provided some reason for optimism that a successful sale or merger could be

accomplished. Despite the improvement in sales and operations, the Debtor remained short

of cash. To generate cash, on or about May 8, 2007, Debtor entered into an Aircraft

Purchase and Sale Agreement with ALC Aircraft Statutory Trust, a Connecticut statutory

trust ("ALC Trust"), and ultimately funded by an affiliate of the Government of Malaysia,

which agreement, provided for the ultimate sale of three Columbia aircraft to the ALC Trust

for a total purchase price of approximately $1,500,000. On or about August 10, 2007, Debtor

entered into an additional Aircraft Purchase and Sale Agreement with the ALC Trust,

whereby the ALC Trust purchased six additional Columbia aircraft for a total purchase price

of $3,100,000.

During this period, the board of directors stepped up efforts to sell the

Company. In May, ING increased marketing activity through issuance of a formal offering

memorandum and follow-up with potential investors in an effort to generate offers and

complete a deal. The Company was also marketed by Debtor and Bridge in an effort to

quickly bring in a new investor as the cash situation remained critical and there were no

obvious sources interested in providing additional funding.

On August 6, 2007, Debtor received notice of a serious supply chain

disruption. The FAA would not permit the industry to deliver aircraft with Garmin GRS77

AHRS units. Debtor therefore had to stop selling aircraft. This exacerbated the cash

problems, and a temporary suspension of production and furlough of over 330 employees

was implemented to conserve cash. The delay was short-lived but had a major impact on

Columbia.

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The AHRS issue and the resulting furlough increased customers' concerns

about the financial strength of Debtor and its viability. Accordingly, orders and production

backlog dropped.

Investor and potential buyer activity with ING and Debtor was high during

this period. However investors and buyers, sensing the impending financial crisis and wary

of ongoing litigation issues, structured proposals that were unacceptable for a variety of

reasons. The best proposal came from Cessna, and a letter of intent was executed in

September 2007.

Ultimately due to the financial condition of Debtor, the board of directors

determined that it was in the best interests of stakeholders to file for bankruptcy protection.

IV. THE CHAPTER 11 CASE

A. THE BANKRUPTCY FILING

Debtor filed a voluntary petition for relief under Chapter 11 of the Bankruptcy

Code on September 24, 2007. The filing was required in order to continue operations.

Debtor was almost entirely out of money, and additional financing was not available except

in the form of a debtor-in-possession loan. The purpose of filing the Chapter 11 was to

preserve the operating value of the Debtor in order to facilitate a sale of the Debtor's assets as

a going concern and to achieve the highest available sales price.

B. "FIRST DAY" AND OTHER OPERATIONAL ORDERS

At the beginning of the Chapter 11 Case, the Bankruptcy Court entered

several orders that Debtor requested for purposes of maintaining ongoing business operations

and to insure that the Chapter 11 filing would not disrupt Debtor's operations. These orders,

among other things, authorized Debtor to pay certain prepetition priority claims and granted

other relief necessary to facilitate Debtor's transition between prepetition and post-petition

business operations. In the first few weeks of the Chapter 11 Case, the Bankruptcy Court

orders authorized, among other things:

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authority to obtain post-petition financing of up to $3 million from

CTRM secured by property of the bankruptcy estate;

the payment to employees of accrued prepetition wages, salaries,

compensation, expenses, benefits and related taxes;

the maintenance of Debtor's bank accounts and operation of its cash

management system substantially as such systems existed before the

Petition Date;

the continuation of utility services during the Chapter 11 Case

including a determination as to the adequate amount of deposits;

provisions for alternative forms of monthly financial reporting to

comply with standards in the industry and Debtor's normal and usual

accounting practices;

authority to use cash collateral in which other prepetition Secured

Creditors held an interest;

the retention of the following professionals to serve on behalf of

Debtor: Tonkon Torp LLP as general and restructuring counsel;

Bridge Associates, LLC as financial consultants and restructuring

officers; and ING Financial Markets LLC as investment bankers.

C. SALE OF BUSINESS ASSETS

1. Sale Process

A primary purpose of the Chapter 11 filing was to facilitate a sale of Debtor's

business assets. As discussed above, shortly prior to the Petition Date, Debtor entered into a

letter of intent with Cessna to acquire certain assets and liabilities of Debtor. Cessna is the

world's leading manufacturer of aviation aircraft and a subsidiary of Textron Inc. Cessna's

offer was the only reasonably acceptable offer the Company received prior to the Petition

Date.

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Shortly after the commencement of the Chapter 11 Case, Debtor filed a

Motion for Approval of Bidding Procedures, Overbid Protection and Break Up Fee, and

Form and Manner of Notice of Bidding Procedures. Meanwhile, Debtor worked diligently

with Cessna towards negotiating a signed Purchase and Sale Agreement ("PSA"). Doing so

was critical for a number of reasons. First, having a signed PSA with a significant industry

player like Cessna added substantial credibility to the Debtor and the proposed sale process.

Once the letter of intent was announced, parties who had either declined to make offers or

express interest in making offers, expressed renewed interest in acquiring the business assets

of the Debtor. In addition, several new parties expressed interest. Second, the price in the

PSA set the floor for bidding. This meant that Debtor was guaranteed to receive a minimum

payment and could potentially receive more from other bidders. Third, the likelihood that

Cessna would buy the assets of the Company and continue its product line and honor

warranties provided significant encouragement to Debtor's customers to complete their

pending purchases of aircraft. This meant the Debtor received badly needed cash to continue

its post-petition operations. Cessna's statements that it intended to maintain the facility in

Bend, Oregon also helped maintain employee morale and loyalty from local and other

suppliers.

On October 26, 2007, Debtor obtained an Order Approving Bidding

Procedures, Overbid Protection, Break Up Fee, and Form and Manner of Notice of Sale

("Bidding Procedures Order") which set forth the rules and procedures for potential bidders

to make competing offers. An auction was set for November 27, 2007. Shortly after entry of

the Bidding Procedures Order, Debtor served and filed its Notice of Intent to Sell Property

Free and Clear of All Liens and Encumbrances under Section 363 of the Bankruptcy Code

and to assume and assign to the prospective successful purchaser those executory contracts

and unexpired leases identified in the prospective purchaser's proposed purchase and sale

agreement.

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2. Settlement with Lima

Prior to the auction of the assets, Debtor had to resolve an issue pertaining to a

license agreement with Lima Development, Inc. ("Lima") The license agreement was

originally entered into in 1995, and amended and restated in 2000 and again in 2002. The

license agreement provided, among other things, that Lima granted Debtor a license to use

certain technology that Lima had developed. The license agreement also gave Lima the right

to use technology that the Company had developed. In addition, Mr. Lance Neibauer, Lima’s

principal, had sued Debtor claiming he was due a severance payment under his employment

agreement. Lima had also filed a complaint against the Debtor seeking an injunction

requiring Debtor to establish and fund a sinking fund required by the Put Option Agreement

between Lima and Mr. Cahill as shareholders and Debtor. Lima also had sued Debtor for

breach of the license agreement asserting that Debtor had failed to pay an annual royalty

payment. Debtor reached an agreement to resolve all disputes and controversies between

Debtor on the one hand and Mr. Neibauer and Lima on the other hand. Pursuant to the

settlement, the employment agreement, Put Option Agreement, and license agreement were

terminated and of no further force and effect as to Debtor, and Debtor acquired all

intellectual property rights relating to the design, manufacture and technical specifications of

Debtor's aircraft. In exchange, Debtor agreed to pay Lima the sum of $400,000 upon closing

of the sale of Debtor's business assets. The Order Approving Settlement was entered on

November 26, 2007.

3. Sale to Cessna

Prior to the due date set by the Bid Procedures Order, Park Electrochemical

Corp. ("Park") submitted a qualified, competing bid. An auction was held on November 27,

2007 with the assets described in the PSA ultimately being sold to Cessna for an initial

purchase price of $26,400,000 (subject to adjustment as set forth in the PSA). The

Bankruptcy Court entered an Order (i) Authorizing and Approving Asset Purchase

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Agreement By and Between Cessna Aircraft Company and Debtor; (ii) Authorizing and

Approving Sale of Substantially All Assets of Debtor Free and Clear of Interests;

(iii) Authorizing and Approving the Assumption and Assignment of Certain Executory

Contracts and Unexpired Leases; and (iv) Granting Certain Related Relief ("Sale Order").

The sale of the assets in accordance with the Sale Order and PSA closed on

December 4, 2007. Pursuant to the PSA, Cessna was to pay Debtor $15.9 million minus the

inventory adjustment from the $12.5 million in the PSA. Because the impending Cessna

transaction inspired confidence in Debtor's customers, Debtor was able to close more sales.

This had the effect of reducing the inventory sold to Cessna. However, it also meant that

Debtor had more cash, and had a lower balance on its debtor-in-possession credit facility.

At closing, Cessna paid Columbia $13,630,459 in cash. Cessna also assumed

certain warranty and E-VADE liabilities owing to customers. The amount of these liabilities

was estimated at $8.5 million in the PSA. Cessna was also obligated to pay up to the first

$2 million of Garmin's secured debt. Furthermore, Cessna agreed to send to all known

owners of Debtor's aircraft who were covered by a warranty from Debtor, a standard

certificate of warranty from Cessna good for the remaining term of the unexpired warranty

from Debtor. The new Cessna warranty replaced the Debtor's unexpired warranty in its

entirety, unless an existing unexpired warranty held by an owner provided greater rights to

such owner, in which case the existing unexpired warranty would apply. Cessna also agreed

to hire most of Debtor's employees and assumed the lease of the manufacturing facility in

Bend, Oregon.

From the proceeds of the closing, Debtor paid $1,626,958.90 to CTRM as

payment on the debtor-in-possession loan; $4,292,739.73 to the Government of Malaysia,

Ministry of Finance on its secured loan; $332,302.59 to Battle Creek State Bank in full

payment of its secured debt; $645,195.33 to 1st Source Bank in full payment of its secured

debt; and the sum of $400,000 to Lima in full payment of the agreed upon settlement amount.

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Pursuant to the Bankruptcy Court's order entered March 7, 2008, Debtor continues to hold

certain proceeds pending a determination of the validity, priority and extent of any security

interest claimed by Garmin.

Throughout the sale process, Debtor advised and consulted with

representatives of the Unsecured Creditors Committee and the Ad Hoc Aircraft Owners

Committee.

D. CREDITORS' COMMITTEES

The U.S. Trustee's office appointed an Official Unsecured Creditors'

Committee pursuant to Sections 1102(a) and (b) of the Bankruptcy Code in this Chapter 11

Case ("Creditors' Committee"). The Creditors' Committee is comprised as follows:

Teledyne Continental Motors, Inc. Mike Irby, CFO, Chair 2039 S. Broad Street Mobile, AL 36615

Composites Universal Group William H. Blair, CFO 10540 SW 133rd Place Beaverton, OR 97008

Oregon Aero, Inc. Mary Iwamoto, Controller 34020 Skyway Drive Scappoose, OR 97056

The Mandala Agency Laury S. Benson, CFO 117 NW Outlook Vista Dr. Bend, OR 97707

Tensolite Company Jesse S. Correia 3000 Columbia House Blvd, #120 Vancouver, WA 98661

Hathaway Management, LLC Bradford R. Smith 3525 NW Dimple Hill Rd. Corvallis, OR 97330

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Garmin International, Inc. Gloria Bracy Garmin AT 2345 Turner Road SE Salem, OR 97302

The Creditors' Committee has retained James Ray Streinz and the firm of

McEwen Gisvold LLP, 1600 Standard Plaza, 1100 SW Sixth Avenue, Portland, OR 97204 as

legal counsel, and Conrad Myers, CPA, CTP of Myers & Co., 6327 SW Capitol Hwy ,

Suite 222, Portland, Oregon 97201, as financial advisor to the Committee.

In addition to the Official Unsecured Creditors' Committee, an unofficial

committee comprised of aircraft owners has participated in the Chapter 11 Case ("Ad Hoc

Aircraft Owners' Committee"). The Ad Hoc Aircraft Owners' Committee has retained Ms.

Tara J. Schleicher and Peter McKittrick of Farleigh Witt, Suite 600 Bank of America

Financial Center, 121 SW Morrison Street, Portland, OR 97204-3192, as their legal counsel.

V. ASSETS AND LIABILITIES

A. ASSETS

Most of Debtor's assets consist of cash proceeds from the sale to Cessna.

Other assets included accounts receivable, return of pre-paids and deposits, and the potential

recoveries from Avoidance Actions and other future litigation. Actual cash on hand as of

December 30, 2007 was $8,461,000. The accounts receivable general ledger balance as of

December 30, 2007 was $275,590. Debtor anticipates that the collectible portion of the

accounts receivable is under $100,000 in view of potential offsets against the accounts

receivable. Garmin has a security interest in the accounts receivable, which will be released

if the proposed settlement agreement with Garmin is approved and consummated.

Debtor anticipates that the net amount of pre-paids and deposits recovered

will be between $300,000 and $900,000 depending to a large extent on issues relating to the

building lease deposit. The deposit, plus the interest earned thereon, is approximately

$500,000. The PSA provided that Cessna acquired the building lease deposit but must remit

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to Columbia the net amount of the deposit returned to Cessna within 24 months of the closing

date of the PSA.

Bridge has been analyzing the Avoidance Actions on behalf of Debtor. While

the analysis is not complete, Bridge estimates that the Debtor will be able to recover

preferences in an amount between $1 million and $2 million. The Debtor does not anticipate

pursuing preference recoveries against vendors who received payments of $5,000 or less

within the preference period.

Debtor has alleged prepetition claims against Garmin for defective products as

well as a delay in providing products, (all of which claims Garmin disputes) claims against

Kelly Aerospace Thermal Systems, LLC ("Kelly") for defective products, and business

interruption insurance claims against Affiliated FM Insurance Company ("FM"). The claims

against Garmin were conveyed to Cessna as part of the PSA; provided however, that the

Debtor retained bankruptcy related claims (such as preferences). The Debtor has reached a

settlement with Garmin, subject to Court approval, as described in Section C below.

Debtor intends to pursue its claims against Kelly with respect to the Kelly E-

VADE de-icing system. The E-VADE de-icing system provided by Kelly has multiple

known defects which Kelly either failed and refused or was unable to repair and there has

been an unacceptable rate of failure on existing installations. Kelly has refused to

acknowledge its responsibility for the inoperable system which has caused Debtor significant

damages. Debtor intends to pursue claims against Kelly for recovery of Debtor's damages

associated with the failed E-VADE de-icing systems. Debtor has not completed its damage

analysis, but will seek damages in excess of $1 million.

Prepetition, Debtor filed claims with its insurance providers for both casualty

losses and business interruption losses resulting from the June 2006 hailstorm. For the policy

period running from April 13, 2006 to April 13, 2007, Debtor was insured by FM. The FM

policy includes coverage for business interruption, with a policy limit of $33,519,095. In

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December 2006, Debtor presented FM with a claim for business interruption losses totaling

$8,333,045. In June 2007, FM presented Debtor with its findings, in which FM valued

Debtor's business interruption loss, net of deductible, at $329,408. Debtor disputes that this

is the full amount of the covered loss. Debtor's business interruption claim was subsequently

amended, and a claim submitted to FM for business interruption losses of $9,359,306. FM

did not respond to Debtor's amended business interruption claim.

Debtor sought and obtained Bankruptcy Court approval to retain and employ

Ball Janik LLP as special counsel to represent Debtor in pursuing its claims for insurance

coverage under the FM policy. On December 10, 2007, the estate filed claims in United

States District Court for the District of Oregon against FM. The early stage of the litigation

makes it difficult to value the claims. Ball Janik is retained on a contingent fee basis that

would be equal to 33.3% of any recoveries received prior to 30 days before the scheduled

trial date, and 40% of any recovery received thereafter, including on appeal. If there is no

recovery on the claims, Debtor's estate will be responsible only for costs incurred in

connection with the litigation. Debtor has agreed to provide Ball Janik up to $600,000 to

fund the costs of this litigation, subject to the approval of Creditors and the Bankruptcy

Court. Debtor anticipates that the Liquidating Trust would continue to employ Ball Janik to

prosecute the claims against FM.

Shortly after the Petition Date, the Debtor inadvertently paid certain

prepetition Unsecured Claims. The total of such payments is approximately $30,000. Debtor

intends either to offset such amounts against distributions to the Creditors who received such

payment, or if the offsets appear to be insufficient to recover such funds, to institute actions

under Section 549 of the Bankruptcy Code.

B. LIABILITIES

1. Secured Claims

Debtor believes that many of the secured claims were paid in full from the

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proceeds of the sale of assets to Cessna. The MOF claims that it has an additional Secured

Claim in the approximate amount of $90,000 for attorney's fees. Any such Claim for

attorney's fees will be subject to further review and require Bankruptcy Court approval.

Garmin has alleged that it has a security interest in various items of collateral,

and Debtor acknowledges that Garmin has a perfected security interest in accounts receivable

resulting from the sale of parts and similar items. Garmin has also stated that it has a

Secured Claim of up to approximately $11 million based on its alleged security interest in

aircraft sold to Cessna. The Debtor and the Committee dispute this claim and contend,

among other things, that Garmin did not properly perfect its security interest in aircraft.

Garmin also claims that it has a security interest in the proceeds of any recovery obtained by

the Debtor resulting from the complaint filed against FM. The Debtor and the Committee

dispute that Garmin has a security interest in the proceeds of the business interruption

insurance claim. Debtor and Garmin have reached a settlement of the dispute pending Court

approval. The terms of the settlement are discussed in Section C. below.

Mr. Gene Wolstenholme holds an amended and restated promissory note and

security agreement in the original sum of $5,426,181. Mr. Wolstenholme’s financing

statement was filed in 2001. In 2003 Mr. Wolstenholme's prior loans to Debtor were

restructured and his preferred stock was converted to debt. Mr. Wolstenholme's security

interest became unperfected when his financing statement lapsed in June 2006. Shortly prior

to the filing of the Bankruptcy Petition, Mr. Wolstenholme filed a new financing statement to

perfect his security interest. Debtor and Mr. Wolstenholme's counsel have stipulated to an

Order Avoiding Mr. Wolstenholme’s lien and providing him with a general Allowed

Unsecured Claim in the amount of $3,628,615.34. The lien will be preserved for the benefit

of the Bankruptcy Estate. The stipulated order is pending approval of the Bankruptcy Court.

2. Unsecured Claims

The proof of claim deadline was January 29, 2008. Debtor has begun the

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process of auditing those proofs of claim that were filed. Although the total amount of

claims filed is approximately $125,000,000, Debtor anticipates that the total amount of

Allowed Unsecured Claims will be approximately $75,000,000.

The difference between the amount of the filed claims and the Debtor’s

estimate of the Unsecured Claims that will ultimately be allowed results from a variety of

issues. However, there are two major components of that difference. First, there have been a

number of tort Claims filed. Approximately $45,000,000 of the $125,000,000 total filed

Claims are attributable to such tort Claims. Debtor believes that it has little, if any, expense

regarding these tort Claims, and in any event, the Debtor has insurance coverage for these

Claims. Second, Columbia Air Services has filed an $8,000,000 Unsecured Claim. Debtor

believes that this Claim is totally without merit, and that the Debtor will prevail in the

currently pending litigation relating to that Claim.

The bulk of the anticipated allowed unsecured obligations will be owed to

entities affiliated with the Government of Malaysia. In addition to the more than $70 million

in equity which these entities paid in, Debtor anticipates that these entities will have

approximately $43 million in general Allowed Unsecured Claims, making them the largest

stakeholder in the case.

Debtor believes that Garmin will have an Unsecured Claim of approximately

$20 million, that Mr. Wolstenholme will have an unsecured claim as described above, and

that trade creditors hold Unsecured Claims of about $4 million.

3. Administrative Expense Claims

Administrative Expense Claims will consist of the Claims of Debtor's

professionals, including its bankruptcy counsel, Tonkon Torp LLP; its investment banker,

ING; and its financial advisor, Bridge, and Moss Adams LLP which has been engaged to

prepare federal and state tax returns and to provide audit services relating to Debtor's 401-K

plan. In addition, Administrative Expense Claims will include Claims of the Creditors'

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Committee's professionals, including its bankruptcy counsel, McEwen Gisvold LLP, and its

financial adviser, Myers & Co.

The amount of Administrative Expense Claims cannot be estimated with

certainty at this point. However, ING has submitted an application for $1,130,000. The

Committee has objected to this application and the Bankruptcy Court has not yet ruled on the

application or objections. The Debtor estimates that Tonkon Torp’s fees from the beginning

of the Bankruptcy Case through the estimated confirmation date of May 31, 2008 will be

approximately $775,000. Debtor believes that Bridge’s unpaid fees through the estimated

Confirmation Date will be $525,000, McEwen Gisvold’s estimated total fees through the

Confirmation Date will be $250,000, Myers & Co.’s estimated total fees will be $125,000,

and Moss Adams’ estimated total fees will be $42,000.

In addition to the Administrative Expense Claims of professionals employed

in the Chapter 11 Case, entities holding Claims for any goods received by Debtor within 20

days before the date of commencement of the Case which had been sold to Debtor in the

ordinary course of business are entitled to an Administrative Expense Claim under

Section 503(b)(9) of the Bankruptcy Code. Debtor is in the process of auditing these Claims

and estimates that the amount will be approximately $450,000. The total estimated amount

of Administrative Expense Claims will be set forth in Debtor's Preconfirmation Report and

memorandum to be filed by Debtor prior to the Confirmation Hearing.

Finally, there is a possibility that if there were an accident involving a

Columbia aircraft which was ordered, built and sold exclusively within the administrative

period, such accident could give rise to an administrative claim. Columbia is not aware of

any such claim. However, Columbia cancelled most of its insurance policies following the

sale to Cessna because of the cost of such policies and may not have coverage in the event of

such claim.

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4. Executory Contracts

The Plan provides that all executory contracts and unexpired leases that have

not previously been assumed and assigned or rejected as of the Effective Date will be

rejected (unless the subject of a motion to assume and assign is then pending). Certain

contracts have already been assumed and assigned to Cessna in accordance with the PSA.

Many others have already been rejected or expired by their terms. All other contracts either

have been or will be rejected by Debtor on or before the Effective Date. Creditors must file

any Claims based upon the rejection of their executory contracts within 30 days of the

Effective Date. Debtor has already included the estimated the amount of the rejection claims

in the amount set forth above for Unsecured Creditors.

C. COLUMBIA'S DISPUTE WITH GARMIN AND THE PROPOSED SETTLEMENT

Debtor and Garmin had several disputes about the validity, extent and priority

of Garmin's alleged secured claim. Debtor filed an adversary proceeding against Garmin

which is pending before this court as Adversary Proceeding 08-03029-elp ("Adversary

Proceeding") to determine the validity and priority of Garmin's Perfected security interest.

Garmin filed a counterclaim in the Adversary Proceeding also seeking a determination of the

validity and priority of its security interest. Garmin has filed a claim in Debtor's bankruptcy

case in the amount of $23,336,298.22 and claims that it has a valid first priority perfected

security interest in certain property of Debtor including but not limited to accounts

receivable, certain aircraft and claims to the proceeds of the business interruption insurance.

The primary question in the Adversary Proceeding is whether Garmin has a

validly perfected security interest in the aircraft Columbia owned on the Petition Date. The

applicable federal law requires that a security interest against aircraft that are registered with

the FAA can only be validly perfected if it is recorded with the FAA. Garmin did not record

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its security interest against Columbia's aircraft with the FAA. However, Garmin argues that

it was not required to do so because certain Columbia aircraft were not "registered".

Garmin also claims that it has a security interest in any proceeds which

Debtor derives from its business interruption insurance claim against FM ("Business

Interruption Claim"). Debtor believes that Garmin is unlikely to prevail on this issue. The

case law is divided on whether a security interest in proceeds of a business interruption claim

can be perfected by filing a UCC-1 financing statement.

Garmin also takes the position that the Plan cannot be confirmed until the

dispute between Garmin and the Debtor has been resolved because its security interest

attaches to all of Columbia's cash.

The Debtor disagrees with Garmin's position and contends that it has

sufficient funds to pay all administrative expenses on the Effective Date, notwithstanding any

resolution of the Garmin claims.

Debtor and Garmin have reached an agreement to resolve all disputes and

differences by and between them, subject to court approval. The basic terms of the

settlement are set forth below. A more detailed explanation of the settlement will be set forth

in a notice of intent to settle and compromise or may be requested from Debtor or Garmin's

counsel. The settlement provides that Garmin will have a valid claim against Debtor in the

total sum of $23,336,298.32 ("Total Claim"). Of the Total Claim, Garmin will have a valid

first priority perfected security interest in accounts receivable and certain aircraft in the

allowed amount of $3 million ("Guaranteed Secured Sum"). In addition, as settlement of

Garmin's claimed security interest in the Business Interruption Claims, Garmin shall receive

15% of the net recovery, as defined in the settlement agreement, from the Business

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Interruption Claims.

Garmin shall receive payment of its Guaranteed Secured Sum via payment

from Debtor of $1 million on or before five (5) business days after court approval of the

settlement. Pursuant to the PSA and the Sale Order, Cessna had previously agreed to pay the

first $2 million owed by Debtor to Garmin on Garmin's secured claims. Debtor will cause

Cessna to pay the remaining $2 million balance of the Guarantee Secured Sum to Garmin. If

Cessna has not paid the $2 million to Garmin on or before the date which is 90 days after

court approval of the settlement agreement, then Debtor shall pay to Garmin the amount of

$2 million dollars less any amounts Cessna has paid to Garmin on account of that claim.

Debtor would then pursue Cessna for recovery of the amounts paid. Payment on the

Business Interruption Claim shall be made on or before five (5) business days after Debtor

receives proceeds from that claim. Garmin shall have an unsecured claim in the amount of

its Total Claim less the sum of $3 million and the amount it receives from its portion of the

Business Interruption Claim. Initially, Garmin's unsecured claim shall be $20,336,298.32.

Until such time as Debtor knows the amount to be paid under the Business Interruption

Claim, all distributions to unsecured creditors, including Garmin's unsecured claim, shall be

calculated as if there is no Business Interruption Claim recoveries. If and when payment is

due to Garmin for the Business Interruption Claim, such payment shall be adjusted to take

into account amounts Garmin has been paid on its unsecured claim.

Upon Court approval of the settlement agreement, Garmin will withdraw from

all active participation in the bankruptcy case except from matters which directly impact

Garmin or the amount of its claim and Garmin will formally withdraw its objections to

payment of administrative expenses and withdraw its motion to convert the bankruptcy case

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to a case under Chapter 7. Garmin will also resign from the Unsecured Creditors'

Committee. Debtor and Garmin will each release each other for any and all other claims

except for payments provided for under the settlement agreement.

VI. DESCRIPTION OF PLAN OF LIQUIDATION

A. UNCLASSIFIED CLAIMS

Administrative Expense Claims and Priority Tax Claims are not classified.

An Administrative Expense Claim is a Claim against Debtor constituting an expense of

administration of the Bankruptcy Case allowed under Section 503(b) of the Bankruptcy Code

including, without limitation, the actual and necessary costs and expenses of preserving the

estate and operating Debtor's businesses during the Case; Claims for the value of goods

received by Debtor within 20 days before the Petition Date sold in the ordinary course of

business; any indebtedness or obligations incurred by Debtor during the pendency of the

Case in connection with the provision of goods or services to Debtor; compensation for legal

and other professional services and reimbursement of expenses; and statutory fees payable to

the United States Trustee.

A "Priority Tax Claim" is a Claim of a governmental unit of the kind entitled

to priority under Section 507(a)(8) of the Bankruptcy Code or that would otherwise be

entitled to priority but for the Secured status of the Claim. It is uncertain at this time if

Debtor owes any amounts with respect to Priority Tax Claims.

Pursuant to the Plan of Liquidation, Administrative Expense Claims and

Priority Tax Claims will be paid in full on the later of the Effective Date or the date on which

any such Administrative Expense Claim or Priority Tax Claim becomes an Allowed Claim.

However, the Administrative Expense Claims representing liabilities incurred in the ordinary

course of business (including amounts owed to vendors and suppliers that have sold goods or

furnished services to Debtor after the Petition Date) if any, will be paid in accordance with

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the terms and conditions of the particular transactions and any other agreements relating

thereto. Debtor will include the amount of such expenses in the report of Administration

Expense Claims to be flied prior to the hearing on confirmation.

B. CLASSIFIED CLAIMS

The following summary of distributions under the Plan to Classified Claims

does not purport to be complete and is subject to, and is qualified in its entirety by reference

to, the Plan attached hereto as Exhibit 1.

1. Class 1 (Other Priority Claims). Class 1 is unimpaired. Each holder of

an Allowed Class 1 Claim will be paid in full in Cash the amount of its Allowed Class 1

Claim, including all interest, costs, fees and charges provided for under any agreement under

which such Claim arose or is otherwise allowed by law, on the later of (a) the Effective Date

or (b) the Allowance Date, unless such holder shall agree, or has agreed, in writing to a

different treatment of such Claim (including any different treatment that may be provided for

in any documentation, agreement, contract, statute, law or regulation creating and governing

such Claim).

2. Class 2 (1st Source Bank). Class 2 is unimpaired. The Allowed

Secured Claim of 1st Source Bank has previously been paid in full.

3. Class 3 (Battle Creek State Bank). Class 3 is unimpaired. The

Allowed Secured Claim of Battle Creek State Bank has previously been paid in full.

4. Class 4 (Government of Malaysia, Minister of Finance (Incorporated)).

Class 4 is unimpaired. To the extent the Allowed Secured Claim of MOF has not previously

been paid in full, the Class 4 Claim shall be paid in full on the later of (a) the Effective Date

or (b) the Allowance Date, unless such holder shall agree, or has agreed, in writing to a

different treatment of such Claim.

5. Class 5 (Garmin International, Inc.). Class 5 is impaired. Garmin

shall have a total Allowed Claim of $23,336,298.32 paid pursuant to the terms of the Court

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approved settlement agreement. The terms of the Court approved settlement agreement are

hereby incorporated by reference in full and made a part of the Plan, and shall control over

the general summary set forth below. In general, Garmin will have a $3 million Allowed

Secured Claim based on a security interest in Debtor's accounts receivable and certain

aircraft, which shall be paid by Debtor in the sum of $1 million and paid by Cessna in the

sum of $2 million. Garmin will have an Allowed Secured Claim pertaining to the Business

Interruption Insurance Claim Debtor has filed against FM to the extent of 15% of the net

recovery as defined in the settlement agreement. The balance of Garmin's Claim shall be an

Allowed Class 9 General Unsecured Claim. The amounts due shall be paid by Debtor or the

Liquidating Trust, depending on whether the Class 5 Claim is resolved before or after the

Effective Date.

6. Class 6 (Aircraft Warranty Holders). Class 6 is impaired. Each holder

of an Allowed Class 6 Claim will be treated as follows:

(a) pursuant to Section 2.3(d) of the PSA all liability for the

amount of Warranty Claims arising from aircraft sold by Debtor prior to December 4, 2007

and not paid by Debtor during the Bankruptcy Case has been assumed by Cessna subject to

the limitation in subparagraph (c) below; and

(b) pursuant to Section 2.3(d) of the PSA, and paragraph 6 of

the Sale Order, Cessna has sent to all known owners of Debtor's aircraft who were covered

by a warranty from Debtor as of December 4, 2007 ("Unexpired Warranty"), a standard

Certificate of Warranty from Cessna good for the remaining term of the Unexpired Warranty

from Debtor. The new Cessna Warranty replaced the Unexpired Warranty in its entirety,

unless an Unexpired Warranty held by an owner provided greater rights to such owner, in

which case the existing Unexpired Warranty continues to apply and shall be honored by

Cessna. Each aircraft owner shall have the right to enforce the provisions of Section 2.3(b)

and (d) of the PSA;

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(c) notwithstanding the foregoing, Cessna did not assume and

has no liability to pay any and all claims for rescission of purchase agreements for aircraft

purchased from Debtor prior to December 4, 2007 including, but not limited to, claims

against Debtor for the return or repurchase of aircraft previously sold by Debtor prior to

December 4, 2007; and

(d) to the extent a Class 6 Claim is not covered by

subsection (a) and (b), the holder of an Allowed Class 6 Claim shall receive, from time to

time, Pro Rata distributions from the Liquidating Trust of Available Cash on par with the

Class 9 Claimants in full satisfaction of their Class 6 Claims.

7. Class 7 (E-VADE De-Icing System). Class 7 is impaired. Each holder

of a Class 7 Claim shall have a claim against Cessna for any liability arising out of or related

to the sales or installation of an E-VADE de-icing system on aircraft sold by Debtor prior to

December 4, 2007 and shall have no further Claim against Debtor. Each Class 7 Claimant

shall have the right to enforce the provision of Section 2.3(c) of the PSA.

8. Class 8 (Small Unsecured Claims). Class 8 is impaired. Class 8

consists of Unsecured Claims that are equal to or less than $2,500 and holders of Unsecured

Claims who file a written election to reduce their Unsecured Claim to $2,500. Each holder of

an Allowed Class 8 Claim will be paid in Cash 10% of the Allowed amount of such Claim

within 60 days following the later of (a) the Effective Date, or (b) the Allowance Date.

9. Class 9 (General Unsecured Claims). Class 9 is impaired. Class 9

consists of General Unsecured Claims not otherwise classified or treated under the Plan.

Each holder of a Class 9 Claim shall receive, from time to time, Pro Rata distributions from

the Liquidating Trust of Available Cash in full satisfaction of their Class 9 Claims. The

estimated amount to be paid to the holder of Class 9 Claims is set forth in Exhibit 2 hereto.

10. Class 10 (Interests). Class 10 is impaired. The Interests of the Class

10 claimants in the Debtor will be cancelled, and the holders of Class 10 Interests will not be

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entitled to any distributions.

C. IMPLEMENTATION OF THE PLAN

The Plan provides that the remaining assets of the Debtor's estate, including

claims the Debtor holds against other parties, will be transferred into a trust, called the

Liquidating Trust, which will liquidate the assets and then distribute cash to the Beneficiaries

of the Trust, who will be all Creditors entitled to receive payment pursuant to the Plan. In the

event Liquidating Trust shall default in the performance of any of its obligations under the

Plan or the Garmin settlement agreement, and shall not have cured such a default within ten

(10) days after receipt of written notice of default from the Creditor to whom the

performance is due, then the affected Creditor may seek an Order from the Bankruptcy Court

to compel such performance.

A copy of the Liquidating Trust Agreement is attached to the Plan and by this

reference incorporated herein. The initial trustee, the "Liquidating Trustee," of the

Liquidating Trust will be Conrad Myers. Mr. Myers will be paid a reasonable fee, which will

initially be based upon his current hourly compensation of $300 per hour. He will be

allowed to employ professionals, primarily accountants from his company and attorneys, to

assist the him in performing his duties.

The Liquidating Trust and the appointment of Mr. Myers were suggestions by

the Committee. The Debtor initially proposed that the Debtor remain in possession of the

assets, and that two of the managers from Bridge be the officers of a reorganized debtor

because of their familiarity with the Debtor’s affairs. The Committee believed that the Trust

provided a better vehicle for protecting the assets of the estate going forward, and that Mr.

Myers, who has served as financial consultant to the Committee during the pendency of this

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Bankruptcy Case, had the trust and confidence of the Unsecured Creditors and the necessary

experience with the Bankruptcy Case. The Debtor agreed to the proposal by Committee as

part of a broader agreement whereby the Committee stated that it would not oppose the

hourly rates or the fees charged by Bridge for the post-petition operations of the Debtor, and

the Debtor agreed not to oppose the hourly rates or fees charged by Myers & Co. for its post-

petition work. The basis for the agreement was that the Bankruptcy Court had already

approved the hourly rates. Therefore, any further objections would primarily be based on the

number of hours worked. It was felt that the attorneys fees involved in pursuing such

objections (which would be charged to the estate) would exceed the likely benefit to the

estate from the objections. Garmin has also agreed to withdraw its objection to the allowance

of administration expenses as part of its settlement of all issues with Debtor. Such

agreements do not prevent other entities or individuals from opposing those fees.

In addition to cash, key assets of the Liquidating Trust will be the two legal

actions described above, against FM and Kelly. Mr. Myers will continue to evaluate whether

or not there are unresolved claims to be asserted against parties who received preferential

payments prior to the bankruptcy filing. In addition, he will be looking for other potential

claims held by the Debtor which may result in a positive return to the Beneficiaries of the

Liquidating Trust.

Although there will not be an Official Unsecured Creditors' Committee after

the Effective Date of the Plan, the Liquidating Trustee plans to consult with the members of

the Creditors' Committee with regards to issues that arise in connection with the Liquidating

Trust. For example, the Liquidating Trustee has agreed to consult with the members of the

Creditors' Committee before settling the FM or the Kelly litigation.

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In addition to the liquidation of the Debtor’s remaining assets, Mr. Myers will

also be responsible for all post-confirmation matters concerning the Debtor, including the

filing of tax returns and other issues related to the dissolution of the Debtor. Mr. Myers will

also complete the examination of the Claims filed in this Case, and institute or continue to

prosecute objections to excessive Claims or Claims which should be disallowed or attempt to

negotiate settlements with the parties holding those Claims.

Mr. Myers will make distributions to the Beneficiaries as the funds are

available, retaining cash necessary to carry out the duties of the Liquidating Trust. Mr.

Myers will file an annual report setting out the status of the claims resolution process,

distributions to holders of Allowed Claims, prosecution of the Rights of Action and other

information regarding activities of the Liquidating Trust. Beneficiaries of the Liquidating

Trust may ask to be put on a special notice list to receive this annual report and all other

notices from the Trustee by sending a written request to Mr. Myers.

The Liquidating Trust Agreement provides that Mr. Myers, as Liquidating

Trustee, will have no liability except for damages arising out of his negligence, willful

misconduct, fraud or breach of fiduciary duty.

The Debtor cannot estimate with certainty how much may be distributed

under the Plan or when distributions may be completed. Distributions to Allowed Class 8

Claims will be made within 60 days following the Effective Date of the Plan. Assuming

approval of the Garmin settlement, Class 9 General Unsecured Creditors will receive an

initial distribution within 90 days following the Effective Date of the Plan with another

distribution 6 months later and annual distributions thereafter until all assets have been

distributed. Distribution to Disputed Claims will be made after resolution of the dispute.

Although Debtor believes that the claims against Kelly and FM will have positive outcomes,

and the attorneys handling the FM case have agreed to work on a contingency fee indicating

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their confidence in the ultimate result, there is no certainty that the litigation will be

successful. It is also impossible at this time to estimate how much the ultimate return to the

Liquidating Trust will be from those cases. As discussed above, if the settlement agreement

with Garmin is approved, Garmin is will be entitled to 15% of the net proceeds of the FM

litigation in satisfaction of Garmin's security interest therein. Based on the settlement with

Garmin, Debtor estimates that general unsecured creditors will receive a distribution of

approximately 5% plus their share of the net recoveries from the various litigation and

preference claims.

D. EFFECT OF CONFIRMATION

1. Binding Effect

The treatment of, and consideration received by, holders of Allowed Claims

and Allowed Interests pursuant to the Plan of Liquidation will be in full satisfaction, of their

respective Claims against or Interests in Debtor. The Confirmation Order shall bind Debtor

and any Creditor, whether or not: (a) a Proof of Claim based on such Creditor’s debt or

liability is Filed or deemed Filed under Section 501 of the Bankruptcy Code; (b) a Claim

based on such debt or liability is Allowed; or (c) the holder of the Claim based on such debt

or liability has accepted the Plan.

2. Transfer of Property, Operation of Business

All property of the estate shall be transferred to the Liquidating Trust on the

Effective Date free and clear of all rights, claims, liens, charges, encumbrances and interests,

except as otherwise specifically provided in the Plan. The Liquidating Trust Agreement will

govern the operations of the Trust going forward, and the business of the Trust will be

restricted to liquidation of the property of the estate.

3. Injunction

Except as otherwise expressly provided in the Plan, all persons who have held,

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hold or may hold Claims, or who may have held, hold or may hold any Interest, are

permanently enjoined from and after the Effective Date from (a) commencing or continuing

in any manner any action or other proceedings of any kind with respect to any Claims or

Interests against Debtor or the Liquidating Trust; (b) enforcing, attaching, collecting or

recovering by any manner or any means any judgment, award, decree or order against Debtor

or the Liquidating Trust; (c) creating, perfecting or enforcing any encumbrances of any kind

against Debtor or Liquidating Trust with respect to any such Claim except as specifically set

forth in the Plan; (d) asserting any setoff, right of subrogation or recoupment of any kind

against any obligation due to Debtor, Liquidating Trust or its property; and (e) proceeding in

any manner in any place whatsoever that does not conform to, does not comply with, or is

inconsistent with the provisions of the Plan or the Confirmation Order. Nothing contained

herein shall be construed to give the Debtor greater protection than provided by Sections 524

and 1141 of the Bankruptcy Code.

4. Modification of the Plan; Revocation or Withdrawal of the Plan

Subject to Section 1127 of the Bankruptcy Code, Debtor reserves the right to

alter, amend or modify the Plan before its substantial consummation so long as the treatment

of holders of Claims and Interests under the Plan are not adversely affected.

5. Retention of Jurisdiction

Notwithstanding the entry of the Confirmation Order or the Effective Date

having occurred, the Bankruptcy Court shall retain exclusive jurisdiction over all matters

arising out of or relating to the Chapter 11 Case, including, but not limited to, the following

matters: (a) to classify the Claim or Interest of any Creditor or stockholder, reexamine

Claims or Interests which have been allowed for voting purposes, and determine any

objections that may be Filed to Claims or Interests; (b) to determine requests for payment of

Claims entitled to priority under Section 507(a)(2) of the Bankruptcy Code, including

compensation and reimbursement of expenses in favor of professionals employed at the

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expense of the Estate; (c) to hear and determine actions to avoid transfers or recover

preferences and all other Right of Action asserted by Debtor or Liquidating Trust pending on

the Effective Date or asserted after the Effective Date; (d) to approve the assumption,

assignment or rejection of an executory contract or an unexpired lease and the allowance of

Claims resulting therefrom; (e) to approve the sale or lease of property free and clear of all

liens and encumbrances in accordance with 11 U.S.C. § 363 if so requested by Liquidating

Trust; (f) to resolve controversies and disputes regarding the interpretation of this Plan; (g) to

implement the provisions of this Plan (including the Garmin settlement agreement) and enter

orders in aid of execution of the Plan or to enforce the Confirmation Order; (h) to adjudicate

adversary proceedings and contested matters pending or hereafter commenced in this

Chapter 11 Case; (i) to enter and implement such orders as may be appropriate in the event

the Confirmation Order is for any reason stayed, revoked, modified or vacated; (j) to hear

and determine any applications to modify the Plan, to cure any defect or omission, or to

reconcile any inconsistency in the Plan or related documents or in any order of the

Bankruptcy Court, including the Confirmation Order; (k) to ensure that distributions to

holders of Allowed Claims are accomplished as provided herein; (l) to hear and determine

any other matters related hereto and not inconsistent with Chapter 11 of the Bankruptcy

Code; and (m) to enter a final decree closing this Chapter 11 Case.

Following the Effective Date, the Bankruptcy Court will retain non-exclusive

jurisdiction of the Chapter 11 Case for the following purposes: (a) to recover all assets of

Debtor and property of the estate, wherever located; (b) to hear and determine any motions or

contested matters involving taxes, tax refunds, tax attributes and tax benefits and similar or

related matters with respect to Debtor or its estate arising prior to the Effective Date or

relating to the period of administration of the Chapter 11 Case, including, without limitation,

matters concerning state, local and federal taxes in accordance with Section 346, 505 and

1146 of the Bankruptcy Code; and (c) to hear any other matter not inconsistent with the

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Bankruptcy Code.

6. United States Trustee Fees

The Liquidating Trust shall be responsible for timely payment of fees incurred

pursuant to 28 USC § 1930(a)(6) until the case is closed, converted or dismissed. After the

Effective Date, the Liquidating Trust shall serve on the United States Trustee a monthly

financial report for each month, or portion thereof, that the case remains open. The monthly

financial report shall include a statement of all disbursements made during the course of the

month, exclusive of payments required by the Plan.

VII. LIQUIDATION ANALYSIS

A Plan of Liquidation cannot be confirmed unless the Bankruptcy Court finds

that the Plan is in the "best interest of creditors" or holders of Claims against, and Interests

in, the debtor subject to such plan. The best interest test is satisfied if the plan provides each

dissenting or non-voting member of each impaired Class with a recovery not less than the

recovery such member would receive if the debtor was liquidated in a hypothetical case

under Chapter 7 of the Bankruptcy Code by a Chapter 7 Trustee. Debtor believes that the

holders of impaired Claims will not receive less than they would receive under a Chapter 7

liquidation. In applying the "best interest" test, the Bankruptcy Court would ascertain the

hypothetical recovery in a Chapter 7 proceeding to secured Creditors, priority claimants,

general Unsecured Creditors and equity interest holders. The hypothetical Chapter 7

recoveries would then be compared with the distribution offered to each Class of Claims or

Interests under the Plan to determine that the Plan satisfied the "best interest" test set forth in

the Bankruptcy Code.

Debtor has presented its Chapter 11 liquidation analysis in tabular form

attached hereto as Exhibit 2 and incorporated herein by this reference. Underlying the

liquidation analysis are projections and assumptions that are inherently subject to significant

uncertainties and contingencies beyond the control of Debtor's management, and based on

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assumptions with respect to liquidation decisions that may be subject to change.

Accordingly, there can be no assurance that the projected values reflected in the liquidation

analysis will be realized, and actual results could vary materially from those shown on the

liquidation analysis.

Debtor believes that a Chapter 7 liquidation analysis would be substantially

similar to the Chapter 11 analysis in Exhibit 2. The primary difference is that under Section

326(a) of the Bankruptcy Code, a Chapter 7 trustee is entitled to compensation based on a

percentage of all amounts disbursed or turned over to Creditors. Debtor believes that if a

Chapter 7 trustee distributed approximately $8 million to Creditors after the Effective Date,

the Chapter 7 trustee could be entitled to a fee in excess of $240,000. This exceeds the costs

which the Debtor anticipates that the Liquidating Trustee will charge. Furthermore

conversion to Chapter 7 is likely to delay further the wind down of the estate and the

distribution of monies to Creditors. This is because in a Chapter 7 case, additional time will

be required for a Chapter 7 trustee to become familiar with Debtor's financial affairs and

litigation. For these reasons, among others, Debtor believes that conversion to a case under

Chapter 7 would result in (i) incremental, additional costs being borne by the estate above

those the estate would incur under the Plan, (ii) lower distributions being received by

Creditors, and (iii) significant delays in distributions to creditors.

VIII. FEDERAL INCOME TAX CONSEQUENCES

A. INTRODUCTION

A summary description of certain United States federal income tax

consequences of the Plan follows. This description is for informational purposes only and,

owing to a lack of definitive judicial or administrative authority or interpretation, substantial

uncertainties exist with respect to various tax consequences of the Plan discussed below with

respect to any particular Creditor. This disclosure describes only the principal United States

federal income tax consequences of the Plan to the Debtor and the holders of Claims. No

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opinion of counsel has been sought or obtained with respect to any tax consequences of the

Plan. No rulings or determinations of the IRS or any other taxing authorities have been

sought or obtained with respect to any tax consequences of the Plan, and the statements

below are not binding on the IRS or other authorities. No representations are being made to

the Debtor or any holder of a Claim or Interest regarding the particular tax consequences of

the confirmation and consummation of the Plan. No assurance can be given that the IRS

would not assert, or that a court would not sustain, a different position from any discussed

herein. Holders of Claims and Interests are strongly urged to consult their own tax adviser

regarding the United States federal, state, local, and foreign tax consequences of the

transactions described in this Disclosure Statement and in the Plan.

B. INCOME TAX CONSEQUENCES TO DEBTOR

Under the Plan, the Debtor's outstanding indebtedness will be satisfied in

exchange for Cash. The satisfaction of a debt obligation for an amount of Cash less than the

amount of "adjusted issue price" of the debt obligation generally gives rise to cancellation of

indebtedness ("COD") income to the Debtor.

Debtor does not, however, recognize COD income if the debt discharge

occurs in a Title 11 bankruptcy case. Instead, Debtor reduces its tax attributes to the extent

of its COD income in the following order: (a) net operating losses ("NOLs") and NOL carry

forwards; (b) general business credit carry forwards; (c) minimum tax credit carry forwards;

(d) capital loss carry forwards; (e) the tax basis of the Debtor's depreciable and non-

depreciable assets (but not below the amount of its liabilities immediately after the

discharge); and (f) foreign tax credit carry forwards. A debtor may elect to alter the

preceding order of attribute reduction and, instead, first reduce the tax basis of its depreciable

assets.

C. FEDERAL INCOME TAX CONSEQUENCES TO CREDITORS

The following discusses certain United States federal income tax

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consequences of the transactions contemplated by the Plan to Creditors that are in the United

States. The United States federal income tax consequences of the transactions contemplated

by the Plan to Creditors (including the character, timing and amount of income, gain or loss

recognized) will depend on, among other things, (1) whether the Claim and the consideration

received in respect of it are "securities" for federal income tax purposes; (2) the manner in

which a Creditor acquired a Claim; (3) the length of time the Claim has been held;

(4) whether the Claim was acquired at a discount; (5) whether the Creditor has taken a bad

debt deduction with respect to the Claim (or any portion of it) in the current tax year or any

prior tax year; (6) whether the Creditor has previously included in its taxable income accrued

but unpaid interest with respect to the Claim; (7) the holder's method of tax accounting;

(8) whether the Claim is an installment obligation for federal income tax purposes; (9) the

effect of transfers of the Claim to and from the Liquidating Trust; and (10) the effect of any

income earned by the Liquidating Trust. Creditors therefore should consult their own tax

advisers regarding the particular tax consequences to them of the transactions contemplated

by the Plan.

D. IMPORTANCE OF OBTAINING PROFESSIONAL TAX ASSISTANCE

The foregoing discussion is intended only as a summary of certain United

States federal income tax consequences of the Plan and is not a substitute for careful tax

planning with a tax professional. The above discussion is for informational purposes only

and is not tax advice. The tax consequences are in many cases uncertain and may vary upon

a Creditor's particular circumstances. Accordingly, Creditors are strongly urged to consult

their tax advisers about the United States federal, state and local and applicable foreign

income and other tax consequences of the Plan, including with respect to tax reporting and

record keeping requirements. Debtor and Debtor's counsel express no opinion as to the tax

consequences of the Plan or the effect thereof on any Claimant and this Disclosure Statement

is not intended to be, and may not be, used or relied upon by any taxpayer for the purpose of

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avoiding penalties under the federal tax law.

IRS Circular 230 Notice: To comply with U.S. Treasury regulations, be

advised that any U.S. federal tax advice included in this communication (and it is not

intended that any such advice be given in this Disclosure Statement) is not intended or

written to be used, and cannot be used, to avoid any U.S. federal tax penalties or to promote,

market, or recommend to another party any transaction or matter.

IX. ACCEPTANCE AND CONFIRMATION OF THE PLAN

A. CONFIRMATION HEARING

The Bankruptcy Court has scheduled a hearing on confirmation of the Plan on

May 28, 2008 at 9:30 a.m. Pacific Time. The hearing will be held at the United States

Bankruptcy Court for the District of Oregon, 1001 SW Fifth Avenue, Courtroom No. 1,

before the Honorable Elizabeth L. Perris, United States Bankruptcy Judge. At that hearing,

the Bankruptcy Court will consider whether the Plan satisfies the various requirements of the

Bankruptcy Code, including whether it is feasible and whether it is in the best interest of

Creditors and Interest holders of Debtor. Debtor will submit a report to the Bankruptcy

Court prior to the hearing concerning the votes for acceptance or rejection of the Plan by the

parties entitled to vote thereon. Any objection to confirmation of the Plan must be timely

filed as stated in Section II.E. above.

B. REQUIREMENTS OF CONFIRMATION

At the hearing on confirmation, the Bankruptcy Court will determine whether

the provisions of Section 1129 of the Bankruptcy Code have been satisfied. If all of the

provisions of Section 1129 are met, the Bankruptcy Court may enter an order confirming the

Plan. Debtor believes the Plan satisfies all of the requirements of Chapter 11 of the

Bankruptcy Code, that it has complied or will have complied with all of the requirements of

Chapter 11, and that the Plan has been proposed and is made in good faith.

***

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C. CRAM DOWN

As discussed in section II.D above, a Court may confirm a Plan, even if it is

not accepted by all impaired classes if the Plan has been accepted by at least one impaired

class of claims and the Plan meets the cram down requirements set forth in Section 1129(b)

of the Bankruptcy Code. In the event that any impaired Class of Claims does not accept the

Plan, Debtor will request that the Bankruptcy Court confirm the Plan in accordance with

Section 1129(b) of the Bankruptcy Code or otherwise permit Debtor to modify the Plan.

D. ALTERNATIVES TO CONFIRMATION OF THE PLAN

If the Plan is not confirmed, Debtor's Chapter 11 Case may be converted to a

liquidation proceeding under Chapter 7 of the Bankruptcy Code. In a Chapter 7 liquidation,

a Trustee would be appointed or elected with the purpose of liquidating the assets of Debtor.

Proceeds from a Chapter 7 liquidation would be distributed to Creditors and Interest holders

of Debtor in accordance with the priorities set forth in the Bankruptcy Code. Generally,

distributions would not be made until the end of a Chapter 7 case and there would not be any

interim distributions. It could be years before any distributions are made to Creditors in a

Chapter 7 case. Debtor believes the Plan will result in a higher and faster recovery to

Creditors than would result from a Chapter 7 and urges all parties to vote to accept the Plan.

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X. CONCLUSION

Please read this Disclosure Statement and the Plan carefully. After reviewing

all the information and making an informed decision, please vote by using the enclosed

ballot.

DATED this 14th day of April, 2008.

COLUMBIA AIRCRAFT MANUFACTURING CORPORATION By /s/ Leon Simson

Leon Simson, Attorney for Debtor

Submitted by: TONKON TORP LLP By /s/ Leon Simson

Leon Simson, OSB No. 75342 Albert N. Kennedy, OSB No. 82142 Timothy J. Conway, OSB No. 85175 Attorneys for Debtor

034013\00034\809013 V010

EXHIBIT 1 to Debtor's Second Amended Disclosure Statement (see attached)

EXHIBIT 1 to

Debtor's Second Amended Disclosure Statement (Dated April 14, 2008)

See Attached Debtor's First Amended Plan of Liquidation (Dated April 14, 2008).

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TONKON TORP LLP

Attorneys at Law 888 S.W. Fifth, Suite 1600

Portland, Oregon 97204-2099 Telephone (503) 221-1440

Leon Simson, OSB No. 75342 (Lead Attorney) Direct Dial: (503) 802-2067 Facsimile: (503) 972-3067 E-Mail: [email protected]

Albert N. Kennedy, OSB No. 82142 Direct Dial: (503) 802-2013 Facsimile: (503) 972-3713 E-Mail: [email protected]

Timothy J. Conway, OSB No. 85175 Direct Dial: (503) 802-2027 Facsimile: (503) 972-3727 E-Mail: [email protected]

TONKON TORP LLP 888 SW Fifth Avenue. Suite 1600 Portland, OR 97204

Attorneys for Debtor

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF OREGON

In re Columbia Aircraft Manufacturing Corporation, Debtor.

))))))))

Case No. 07-33850-elp11 DEBTOR'S SECOND AMENDED PLAN OF LIQUIDATION (Dated April 14, 2008)

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Page i – DEBTOR'S SECOND AMENDED PLAN OF LIQUIDATION (Dated April 14, 2008) TONKON TORP LLP



TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS................................................................................................1

ARTICLE 2 UNCLASSIFIED CLAIMS............................................................................8

ARTICLE 3 CLASSIFICATION ........................................................................................9

ARTICLE 4 TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS.................10

ARTICLE 5 DISPUTED CLAIMS; OBJECTIONS TO CLAIMS...................................13

ARTICLE 6 IMPLEMENTATION OF THE PLAN ........................................................14

ARTICLE 7 EXECUTORY CONTRACTS AND UNEXPIRED LEASES.....................21

ARTICLE 8 EFFECT OF CONFIRMATION ..................................................................22

ARTICLE 9 MODIFICATION, REVOCATION OR WITHDRAWAL OF THE PLAN ............................................................................................................22

ARTICLE 10 RETENTION OF JURISDICTION..............................................................23

ARTICLE 11 MISCELLANEOUS PROVISIONS.............................................................25

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Page 1 of 28 – DEBTOR'S SECOND AMENDED PLAN OF LIQUIDATION (Dated April 14, 2008) TONKON TORP LLP



Columbia Aircraft Manufacturing Corporation, as debtor and debtor-in-possession,

proposes this Plan of Liquidation ("Plan") pursuant to Section 1121(a) of Title 11 of the

United States Code.

ARTICLE 1

DEFINITIONS

Definitions of certain terms used in this Plan are set forth below. Other terms are

defined in the text of this Plan or the text of the Disclosure Statement. In either case, when a

defined term is used, the first letter of each word in the defined term is capitalized. Terms

used and not defined in this Plan or the Disclosure Statement shall have the meanings given

in the Bankruptcy Code or Bankruptcy Rules or otherwise as the context requires. The

meanings of all terms shall be equally applicable to both the singular and plural, and

masculine and feminine, forms of the terms defined. The words "herein," "hereof," "hereto,"

"hereunder" and others of similar import, refer to the Plan as a whole and not to any

particular section, subsection or clause contained in the Plan. Captions and headings to

articles, sections and exhibits are inserted for convenience of reference only and are not

intended to be part of or to affect the interpretation of the Plan. The rules of construction set

forth in Section 102 of the Bankruptcy Code shall apply. In computing any period of time

prescribed or allowed by the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.

Any capitalized term that is not defined herein but is defined in the Bankruptcy Code shall

have the meaning ascribed to such term in the Bankruptcy Code.

1.1 "Administrative Expense Claim" means any Claim entitled to the priority

afforded by Sections 503(b) and 507(a)(2) of the Bankruptcy Code.

1.2 "Allowance Date" means the date that a Claim is Allowed.

1.3 "Allowed" means, with respect to any Claim, proof of which has been

properly Filed or, if no Proof of Claim was so Filed, which was or hereafter is listed on the

Schedules as liquidated in amount and not disputed or contingent, and, in either case, a Claim

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as to which no objection to the allowance thereof, or motion to estimate for purposes of

allowance, shall have been Filed on or before any applicable period of limitation that may be

fixed by the Bankruptcy Code, the Bankruptcy Rules and/or the Bankruptcy Court, or as to

which any objection, or any motion to estimate for purposes of allowance, shall have been so

Filed, to the extent allowed by a Final Order.

1.4 "Allowed Secured Claim" means an Allowed Claim that is secured by a lien,

security interest or other charge against or interest in property in which the Debtor has an

interest or that is subject to setoff under Section 553 of the Bankruptcy Code, to the extent of

the value (as set forth in the Plan, or if no value is specified, as determined in accordance

with Section 506(a) of the Bankruptcy Code or, if applicable, Section 1111(b) of the

Bankruptcy Code) of the interest of the holder of such Claim in the Debtor's interest in such

property or to the extent of the amount subject to setoff, as the case may be.

1.5 "Allowed Unsecured Claim" means an Allowed Claim that is not an Allowed

Secured Claim, Administrative Expense Claim, Priority Tax Claim or Other Priority Claim.

1.6 "Auction" means the auction of certain of Debtor's assets held on

November 27, 2007 pursuant to the Order Approving Bidding Procedures, Overbid

Protection, Break Up Fee and Form and Manner of Notice of Sale entered October 26, 2007.

1.7 "Auction Proceeds" means the proceeds from the sale of the Auction, together

with any interest accrued thereon, maintained by Debtor for the benefit of Debtor's creditors

and bankruptcy estate.

1.8 "Available Cash" At any particular time means all Cash Proceeds, including

Unclaimed Cash that was originally disbursed by the Liquidating Trust, less Cash Proceeds

then designated as Reserved Funds.

1.9 "Avoidance Actions" means all claims and causes of action of the Debtor or

its estate arising under Chapter 5 of the Bankruptcy Code.

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1.10 "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended

from time to time, set forth in Sections 101 et seq. of Title 11 of the United States Code.

1.11 "Bankruptcy Court" means the United States Bankruptcy Court for the

District of Oregon, or such other court that exercises jurisdiction over this Chapter 11 Case

or any proceeding therein, including the United States District Court for the District of

Oregon, to the extent that the reference to this Chapter 11 Case or any proceeding therein is

withdrawn.

1.12 "Bankruptcy Rules" means, collectively, the Federal Rules of Bankruptcy

Procedure, as amended and promulgated under Section 2075, Title 28, of the United States

Code, and the local rules and standing orders of the Bankruptcy Court.

1.13 “Beneficiaries” means the Class 8 and Class 9 holders of Allowed Unsecured

Claims and any other holders of Claims to be paid after the Effective Date who will or may

receive payment from the Liquidating Trust.

1.14 "Business Day" means a day other than a Saturday, Sunday or other day on

which banks in Portland, Oregon are authorized or required by law to be closed.

1.15 "Cash" means lawful currency of the United States of America.

1.16 "Cash Proceeds" means all cash or cash equivalents held by Liquidating Trust

at any particular time including but not limited to the Auction Proceeds, and the net

proceeds, if any, from Rights of Action.

1.17 "Chapter 11 Case" means the case under Chapter 11 of the Bankruptcy Code

with respect to the Debtor pending in the United States Bankruptcy Court for the District of

Oregon, administered as In re Columbia Aircraft Manufacturing Corporation, Case

No. 07-33850-elp11.

1.18 "Claim" means (a) any right to payment from Debtor arising before the

Effective Date, whether or not such right is reduced to judgment, liquidated, unliquidated,

fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or

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unsecured; or (b) any right to an equitable remedy against Debtor arising before the Effective

Date for breach of performance if such breach gives rise to a right of payment from Debtor,

whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent,

matured, unmatured, disputed, undisputed, secured or unsecured. "Claim" shall exclude any

claim or right to payment of the kind specified in Sections 726(a)(4) and (5) of the

Bankruptcy Code.

1.19 "Class" means one of the classes of Claims defined in Article 3 hereof.

1.20 "Collateral" means any property in which Debtor has an interest that is subject

to a lien or security interest securing the payment of an Allowed Secured Claim.

1.21 "Committee" means the official Unsecured Creditors Committee appointed in

the Chapter 11 case of In re Columbia Aircraft Manufacturing Corporation by the United

States Trustee pursuant to Section 1102 of the Bankruptcy Code, as reconstituted by the

addition or removal of members from time to time.

1.22 "Confirmation Date" means the date on which the Confirmation Order is

entered on the docket by the Clerk of the Bankruptcy Court.

1.23 "Confirmation Order" means the order of the Bankruptcy Court confirming

the Plan in accordance with the provisions of Chapter 11 of the Bankruptcy Code.

1.24 "Creditor" means any entity holding a Claim against Debtor.

1.25 "Debtor" means Columbia Aircraft Manufacturing Corporation, as Debtor and

Debtor-in-Possession in this Chapter 11 Case.

1.26 "Disclosure Statement" means the Debtor's Disclosure Statement as amended,

modified, restated or supplemented from time to time, pertaining to the Plan.

1.27 "Disputed Claim" means a Claim with respect to which a Proof of Claim has

been timely Filed or deemed timely Filed under applicable law (including Scheduled

Amounts), and as to which an objection, timely Filed, has not been withdrawn on or before

the date fixed for filing such objections by order of the Bankruptcy Court, and has not been

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denied by a Final Order. If an objection related to the Allowance of only part of a Claim has

been timely Filed or deemed timely Filed such Claim shall be a Disputed Claim only to the

extent of the objection.

1.28 "Distribution Date" means those dates, subsequent to the Effective Date, on

which Liquidating Trustee, has sufficient Available Cash to make distributions to Creditors

pursuant to the Plan.

1.29 "Effective Date" means the first Business Day after the Confirmation Order

becomes a Final Order.

1.30 "Filed" means filed with the Bankruptcy Court in this Chapter 11 Case or

other court of competent jurisdiction.

1.31 "Final Order" means an order or judgment entered on the docket by the Clerk

of the Bankruptcy Court or any other court exercising jurisdiction over the subject matter and

the parties (a) that has not been reversed, stayed, modified or amended; (b) as to which no

appeal, certiorari proceeding, reargument or other review or rehearing has been requested or

is still pending; and (c) as to which the time for filing a notice of appeal, or petition for

certiorari, or request for reargument or further review or rehearing shall have expired.

1.32 "Holdback Funds" means such amount that the Debtor or the Liquidating

Trust must hold pursuant to the settlement agreement with Garmin. The initial amount of the

Holdback Funds is $3 million.

1.33 "Insider" shall have the meaning ascribed to it by Section 101(31) of the

Bankruptcy Code.

1.34 "Interests" means all rights of the owners of the issued and outstanding shares

of common stock or membership interests in Debtor.

1.35 "Liquidating Trust" means that certain Liquidating Trust created under the

Liquidating Trust Agreement to administer and liquidate the remaining assets of the Debtor,

review and object to, where appropriate, proofs of claim, analyze and pursue the Rights of

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Action, and distribute Available Cash as provided by the Plan.

1.36 "Liquidating Trust Agreement" means that certain Liquidating Trust

Agreement, a copy of which is attached hereto as Exhibit A, whereby the Liquidating Trustee

will administer the Liquidating Trust.

1.37 "Liquidating Trustee" means Conrad Myers, or any successor appointed under

the terms of the Liquidating Trust Agreement.

1.38 "Other Priority Claim" means any Claim for an amount entitled to priority in

right of payment under Section 507(a)(3), (4), (5), (6) or (7) of the Bankruptcy Code.

1.39 "Petition Date" means September 24, 2007, the date on which the petition

commencing this Chapter 11 Case was filed.

1.40 "Plan" means this Plan of Liquidation, as amended, modified, restated or

supplemented from time to time.

1.41 "Potential Rejection Claim" means an undetermined and unliquidated Claim

that would arise from the rejection of an executory contract or unexpired lease to which

Debtor is a party or by which it is bound. Until any particular lease is rejected pursuant to

the Plan or by court order, the amount of the Potential Rejection Claim with respect to such

lease shall be equal to the maximum amount allowable under the formula in

Section 502(b)(6) of the Bankruptcy Code.

1.42 "Priority Tax Claim" means a Claim of a governmental unit of the kind

entitled to priority under Section 507(a)(8) of the Bankruptcy Code or that would otherwise

be entitled to priority but for the secured status of the Claim.

1.43 “Property of the Estate” means property of the estate, as defined in Section

541 of the Bankruptcy Code, remaining after the sale of assets to Cessna Aircraft Company,

including property acquired post-petition.

1.44 "Pro Rata" means the ratio of an Allowed Claim in a particular Class to the

aggregate principal amount of all Allowed Claims in that Class.

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1.45 "Rejection Claim" means a Claim arising from the rejection of an unexpired

lease or executory contract pursuant to this Plan or Final Order of the Bankruptcy Court.

1.46 "Reserved Funds" means, at any particular time, Cash Proceeds equal to the

aggregate of (a) the Cash Proceeds in the Unpaid Claims Reserve Fund; (b) the amount

necessary to pay in full Allowed but unpaid Secured Claims, Priority Tax Claims, Other

Priority Claims, and Administrative Expense Claims; (c) the amount projected by

Liquidating Trust to be necessary to pay in full Liquidating Trust’s costs and expenses in

executing this Plan; and (d) the Holdback Funds. Any Cash Proceeds that are not Reserved

Funds shall be Available Cash.

1.47 "Rights of Action" means any and all claims, demands, rights, actions, causes

of suits, and suits of the debtor or the estate, of any kind or character whatsoever, known or

unknown, suspected or unsuspected, whether arising before, on or after the petition date, in

contract or in tort, at law or in equity or under any theory of law, including, but not limited to

(1) derivative claims, (2) rights of setoff, counterclaim, or recruitment, and claims on

contract and for breeches of duties imposed by law, (3) the right to object to claims of

interest, (4) claims pursuant to § 362 of the Bankruptcy Code, (5) such claims and defenses

as fraud, mistake, duress, and usury, (6) Avoidance Actions and all other claims under

Chapter 5 of the Bankruptcy Code or ORS Chapters 60 and 95, and (7) the pending suits

against Affiliated FM Insurance Company and Kelly Aerospace Thermal Systems, LLC;

with the exception that “Rights of Action” does not include potential claims assigned to

Cessna Aircraft Company in the Purchase Sale Agreement.

1.48 "Schedules" means the Schedules of Assets and Liabilities and the Statement

of Financial Affairs Filed by Debtor pursuant to Section 521 of the Bankruptcy Code, as

amended, modified, restated or supplemented from time to time.

1.49 "Secured Claim" means any Claim against Debtor held by any entity,

including, without limitation, an affiliate or judgment creditor of Debtor, to the extent such

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Claim constitutes a secured Claim under Sections 506(a) or 1111(b) of the Bankruptcy Code.

1.50 "Small Unsecured Claims" means Unsecured Claims that are equal to or less

than $2,500.00 and holders of Unsecured Claims who file a written election to reduce their

Unsecured Claim to $2,500.

1.51 "Unclaimed Cash" means Cash (together with any interest earned thereon)

that is unclaimed by a Creditor following a distribution pursuant to the Plan and includes

Cash attributable to (a) checks that have been returned as undeliverable without a proper

forwarding address, (b) checks that have not been cashed within 90 days after the date such

checks were mailed (whether or not distributed pursuant to the Plan), and (c) checks that

were not mailed or delivered because of the absence of a proper address to which to mail or

deliver such property. Unclaimed Cash is Available Cash because Unclaimed Cash is not

within the Unpaid Claims Reserve Fund and, therefore, is not within the definition of

Reserved Funds. Available Cash is all Cash Proceeds that are not designated as Reserve

Funds.

1.52 "Unpaid Claims Reserve Fund" at any particular time means the aggregate of:

(a) the Cash Proceeds reserved for the benefit of holders of Disputed Claims; (b) the Cash

Proceeds reserved for the benefit of holders of Potential Rejection Claims; and (c) unclaimed

cash proceeds until it becomes Unclaimed Cash.

1.53 "Unsecured Claim" means an unsecured Claim that is not an Administrative

Claim, a Secured Claim, a Tax Claim or an Other Priority Claim.

1.54 "Unsecured Creditor" means a holder of an Allowed Unsecured Claim.

1.55 "Utility Deposits" means deposits with utilities made by Debtor after the

Petition Date pursuant to Section 366(b) of the Bankruptcy Code.

ARTICLE 2

UNCLASSIFIED CLAIMS

2.1 Administrative Expense Claims. Each holder of an Allowed Administrative

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Expense Claim shall be paid in full from Available Cash on the later of (a) the Effective Date

or (b) the Allowance Date, unless such holder shall in writing agree to a different treatment

of such Claim (including, without limitation, any different treatment that may be provided for

in any documentation, statute or regulation governing such Claim); provided, however, that

Administrative Expense Claims representing obligations incurred in the ordinary course of

business by Debtor during this Chapter 11 Case shall be paid by Debtor or Liquidating Trust

in the ordinary course of business and in accordance with any terms and conditions of the

particular transaction and any agreements relating thereto.

2.2 Priority Tax Claims. Each holder of an Allowed Priority Tax Claim shall be

paid by Liquidating Trust the full amount of its Allowed Priority Tax Claim on the Effective

Date or the Allowance Date, whichever is later.

2.3 Bankruptcy Fees. Fees payable by Debtor under 28 USC § 1930, or to the

Clerk of the Bankruptcy Court, will be paid in full in Cash on the Effective Date. Thereafter,

the Liquidating Trust shall continue to pay quarterly fees of the Office of the United States

Trustee and to file quarterly reports with the Office of the United States Trustee until this

case is closed by the Court, dismissed or converted. This requirement is subject to any

amendments to 28 USC § 1930(a)(6) that Congress makes retroactively applicable to

confirmed Chapter 11 cases.

ARTICLE 3

CLASSIFICATION

For purposes of this Plan, Claims (except those treated under Article 2) are classified

as provided below. A Claim is classified in a particular Class only to the extent that such

Claim qualifies within the description of such Class, and is classified in a different Class to

the extent that such Claim qualifies within the description of such different Class.

3.1 Class 1 (Other Priority Claims). Class 1 consists of all Allowed Other Priority

Claims.

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3.2 Class 2 (1st Source Bank). Class 2 consists of the Allowed Secured Claim of

1st Source Bank.

3.3 Class 3 (Battle Creek State Bank). Class 3 consists of the Allowed Secured

Claim of Battle Creek State Bank.

3.4 Class 4 (Government of Malaysia, Minister of Finance, Inc.). Class 4 consists

of Allowed Secured Claim of the Government of Malaysia, Minister of Finance, Inc.

(“MOF”).

3.5 Class 5 (Garmin International, Inc.). Class 5 consists of the Allowed Secured

Claim of Garmin International, Inc.

3.6 Class 6 (Aircraft Warranty Holders). Class 6 consists of all owners of

Debtor's aircraft who have a warranty claim arising from an aircraft or other product sold by

Debtor prior to December 4, 2007, provided, however, that Class 6 does not include Claims

seeking rescission of the sale of an aircraft sold by Debtor or otherwise seeking to return

aircraft sold by Debtor.

3.7 Class 7 (E-VADE De-Icing System). Class 7 consists of all holders of Claims

against Debtor arising out of or related to the sale and/or installation of a Kelly Aerospace

Thermal Systems, LLC E-VADE de-icing system.

3.8 Class 8 (Small Unsecured Claims). Class 8 consists of all Allowed Small

Unsecured Claims.

3.9 Class 9 (General Unsecured Claims). Class 9 consists of all Allowed

Unsecured Claims not otherwise classified and treated under the Plan.

3.10 Class 10 (Interests). Class 10 consists of the Interests held in Debtor.

ARTICLE 4

TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS

1. Class 1 (Other Priority Claims). Class 1 is unimpaired. Each holder of an

Allowed Class 1 Claim will be paid in full in Cash the amount of its Allowed Class 1 Claim,

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including all interest, costs, fees and charges provided for under any agreement under which

such Claim arose or is otherwise allowed by law, on the later of (a) the Effective Date or

(b) the Allowance Date, unless such holder shall agree, or has agreed, in writing to a

different treatment of such Claim (including any different treatment that may be provided for

in any documentation, agreement, contract, statute, law or regulation creating and governing

such Claim).

2. Class 2 (1st Source Bank). Class 2 is unimpaired. The Allowed Secured

Claim of 1st Source Bank has previously been paid in full.

3. Class 3 (Battle Creek State Bank). Class 3 is unimpaired. The Allowed

Secured Claim of Battle Creek State Bank has previously been paid in full.

4. Class 4 (MOF). Class 4 is unimpaired. To the extent the Allowed Secured

Claim of MOF has not previously been paid in full, the Class 4 Claim shall be paid in full on

the later of (a) the Effective Date or (b) the Allowance Date, unless such holder shall agree,

or has agreed, in writing to a different treatment of such Claim. The Holdback Funds may

not be used to pay the Class 4 Claim.

5. Class 5 (Garmin International, Inc.). Class 5 is impaired. Garmin shall have a

total Allowed Claim of $23,336,298.32 paid pursuant to the terms of the Court approved

settlement agreement. The terms of the Court approved settlement agreement are hereby

incorporated by reference in full as a part of this Plan, and shall control over the general

summary set forth below. In general, Garmin will have a $3 million Allowed Secured Claim

based on a security interest in Debtor's accounts receivable and certain aircraft, which shall

be paid by Debtor in the sum of $1 million and paid by Cessna in the sum of $2 million;

provided however, that Debtor shall be obligated to such $2 million if Cessna does not pay

such sum within 90 days after Court approval. Garmin will have an Allowed Secured Claim

pertaining to the Business Interruption Insurance Claim Debtor has filed against FM to the

extent of 15% of the net recovery as defined in the settlement agreement. The balance of

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Garmin's Claim shall be an Allowed Class 9 General Unsecured Claim. The amounts due

shall be paid by Debtor or the Liquidating Trust, depending on whether the Class 5 Claim is

resolved before or after the Effective Date.

6. Class 6 (Aircraft Warranty Holders). Class 6 is impaired. Each holder of an

Allowed Class 6 Claim will be treated as follows:

(a) pursuant to Section 2.3(d) of the PSA all liability for the amount of

Warranty Claims arising from aircraft sold by Debtor prior to December 4, 2007 and not paid

by Debtor during the Bankruptcy Case has been assumed by Cessna subject to the limitations

in subparagraph (c) below; and

(b) pursuant to Section 2.3(d) of the PSA, and paragraph 6 of the Sale

Order, Cessna has sent to all known owners of Debtor's aircraft who were covered by a

warranty from Debtor as of December 4, 2007 ("Unexpired Warranty"), a standard

Certificate of Warranty from Cessna good for the remaining term of the Unexpired Warranty

from Debtor. The new Cessna Warranty replaced the Unexpired Warranty in its entirety,

unless an Unexpired Warranty held by an owner provided greater rights to such owner, in

which case the existing Unexpired Warranty continues to apply and shall be honored by

Cessna. Each aircraft owner shall have the right to enforce the provisions of Section 2.3(b)

and (d) of the PSA;

(c) notwithstanding the foregoing, Cessna did not assume and has no

liability to pay any and all claims for rescission of purchase agreements for aircraft

purchased from Debtor prior to December 4, 2007 including, but not limited to, claims

against Debtor for the return or repurchase of aircraft previously sold by Debtor prior to

December 4, 2007; and

(d) to the extent a Class 6 Claim is not covered by subsection (a) and

(b), the holder of an Allowed Class 6 Claim shall receive, from time to time, Pro Rata

distributions from the Liquidating Trust of Available Cash on par with the Class 9 Claimants

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in full satisfaction of their Class 6 Claims.

7. Class 7 (E-VADE De-Icing System). Class 7 is impaired. Each holder of a

Class 7 Claim shall have a claim against Cessna for any liability arising out of or related to

the sales or installation of an E-VADE de-icing system on aircraft sold by Debtor prior to

December 4, 2007 and shall have no further Claim against Debtor. Each Class 7 Claimant

shall have the right to enforce the provision of Section 2.3(c) of the PSA.

8. Class 8 (Small Unsecured Claims). Class 8 is impaired. Each holder of an

Allowed Class 8 Claim will be paid in Cash 10% of the Allowed amount of such Claim

within 60 days following the later of (a) the Effective Date, or (b) the Allowance Date.

9. Class 9 (General Unsecured Claims). Class 9 is impaired. Each holder of a

Class 9 Claim shall receive Pro Rata distributions from the Liquidating Trust of Available

Cash in full satisfaction of their Class 9 Claims. The estimated amount to be paid to the

holder of Class 9 Claims is set forth in Exhibit 2 hereto.

10. Class 10 (Interests). Class 10 is impaired. The Interests of the Class 10

claimants in the Debtor will be cancelled, and Class 10 Claimants will not be entitled to any

distributions.

ARTICLE 5

DISPUTED CLAIMS; OBJECTIONS TO CLAIMS

5.1 Disputed Claims; Objections to Claims. Only Claims that are Allowed

Claims and not subject to an action described in 11 U.S.C. § 502(d) shall be entitled to

distributions under the Plan. Debtor and the Liquidating Trust reserve the right to contest

and object to any Claims and previously scheduled amounts, including, without limitation,

those Claims and scheduled amounts that are specifically referenced herein, are not listed in

the Schedules, are listed therein as disputed, contingent and/or unliquidated in amount, or are

listed therein at a different amount than the Debtor or Liquidating Trust believes is validly

due and owing. Unless otherwise ordered by the Bankruptcy Court, all objections to Claims

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and scheduled amounts (other than Administrative Expense Claims) shall be filed and served

upon counsel for Debtor, or counsel for the Liquidating Trust (depending on whether served

before or after the Effective Date) and the holder of the Claim objected to on or before the

later of (a) one hundred twenty (120) days after Effective Date or (b) one hundred twenty

(120) days after the date (if any) on which a Proof of Claim is Filed in respect of a Rejection

Claim, whichever is later. The last day for filing Administrative Expense Claims and

objections thereto shall be set pursuant to an order of the Bankruptcy Court. All Disputed

Claims shall be resolved by the Bankruptcy Court, except to the extent that (a) Debtor or the

Liquidating Trust may otherwise elect consistent with the Plan and the Bankruptcy Code or

(b) the Bankruptcy Court may otherwise order.

ARTICLE 6

IMPLEMENTATION OF THE PLAN

6.1 Liquidating Trust

6.1.1 General. On the Effective Date, but after payments to be made by

Debtor on the Effective Date pursuant to this Plan have been made, all of the Property of the

Estate, including Rights of Action, shall be transferred and assigned to the Liquidating Trust,

and the Liquidating Trustee shall administer the trust assets pursuant to this Plan and the

Liquidating Trust Agreement and make distributions as provided in this Plan.

6.1.2 Purpose. The Liquidating Trust shall be established for the primary

purpose of liquidating the trust assets, in accordance with Treasury Regulations Section

301.7701-4 (d), with no objective to continue or engage in the conduct of a trade or business,

except to the extent reasonably necessary to, and consistent with, the liquidating purpose of

the Liquidating Trust. The Liquidating Trust shall be deemed a successor of the Debtor for

the purposes of Bankruptcy Code Section 1145 and with regard to all the Trust’s assets and

shall be bound by all Court approved agreements of the Debtor, including but not limited to,

the Garmin settlement agreement

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6.1.3 Responsibilities of Liquidating Trustee. The Liquidating Trustee

shall, in an expeditious but orderly manner, liquidate and convert to cash the assets of the

Liquidation Trust, make timely distributions and not unduly prolong the duration of the

Liquidation Trust. The Liquidating Trustee shall cause the Liquidating Trust to make all

payments required pursuant to the Plan. The liquidation of the Rights of Action may be

accomplished either through the prosecution, compromise and settlement, abandonment or

dismissal of any or all of the Rights of Action, subject to paragraph 6.1.4 of this Plan. The

Liquidating Trustee shall have the right to pursue or not to pursue any and all Rights of

Action as Trustee determines is in the best interest of the Beneficiaries of the Liquidating

Trust, and consistent with the purposes of the Liquidating Trust, subject to paragraph 6.1.4 of

this Plan, and shall have no liability for the outcome of his or her decision except for any

damages caused by willful misconduct, negligence, fraud, or breach of fiduciary duty. In

addition to the liquidation of the Rights of Action, the Liquidating Trustee will: review

proofs of claim and object and settle claims; have prepared and file all required tax returns

and other governmental reports and pay taxes and all other obligations on behalf of the

Liquidating Trust; provide an annual report to those on the Special Notice List, as provided

below, as to the status of the claims resolution process, distributions on Allowed Claims, and

prosecution of the Rights of Action; serve as representative of the estate; and, carry out such

other responsibilities as may be vested in the Liquidating Trustee pursuant to the Plan, the

Liquidating Trust Agreement or the Bankruptcy Court, or as may be necessary and proper to

carry out the provisions of the Plan

6.1.4 Settlement or Abandonment of Claims. The Liquidating Trustee may

not settle, compromise, dismiss, abandon or not pursue any Rights of Action having a stated

value in excess of $25,000 without giving fifteen days notice and an opportunity for hearing

to the Special Notice List, and, if a timely objection to the proposed settlement is filed,

obtaining a Bankruptcy Court order approving the settlement.

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6.1.5 Cash Proceeds. The right and power of the Liquidating Trustee to

invest Cash Proceeds, shall be limited to the right and power to invest such assets in cash

equivalents such as demand and time deposits; provided however, that the scope of any such

investment shall be limited to include only those investments, or shall be expanded to include

any additional investments, as the case may be, that a Liquidating Trust, within the meaning

of Treasury Regulations Section 301.7701-4(d), may be permitted to hold pursuant to the

Treasury Regulations. The Liquidating Trustee may expend the assets of the Liquidating

Trust as necessary to pay reasonable administrative expenses and satisfy any other liabilities

incurred or assumed by the Liquidating Trust, or make payments and distributions in

accordance with the Plan or the Liquidating Trust Agreement.

6.1.6 Compensation of Liquidating Trustee. The Liquidating Trustee shall

be entitled to receive, as compensation for his or her services hereunder, reasonable fees

based upon customary hourly rates in effect when the services are performed, plus

reimbursement of reasonable out-of-pocket costs and expenses incurred in connection with

performing services under or in connection with this Plan. The Liquidating Trustee shall

also have the authority to compensate himself from time to time without Bankruptcy Court

approval; but only after giving fifteen days notice and an opportunity for hearing to the

Special Notice List, and, if a timely objection to the proposed payment is filed, obtaining a

Bankruptcy Court order approving the payment.

6.1.7 Professionals. The Liquidating Trustee shall have the authority, on

behalf of the Liquidating Trust, to employee attorneys, accountants and other professionals

as determined to be necessary to carry out his or her duties by the Liquidating Trustee. The

Liquidating Trustee shall also have the authority to compensate such professionals from time

to time without Bankruptcy Court approval; but only after giving fifteen days notice and an

opportunity for hearing to the Special Notice List, and, if a timely objection to the proposed

payment is filed, obtaining a Bankruptcy Court order approving the payment.

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6.1.8 Special Notice List. To receive the annual report, all pleadings and

other notices regarding the Liquidating Trust, a Beneficiary shall prepare a written request,

stating in the request the name and number of the chapter 11 case (In re Columbia Aircraft

Manufacturing Corporation, Case No. 07-33850-elp11) and mail a copy to the Liquidating

Trustee at the address set forth in the Liquidating Trust Agreement. The persons and entities

having made such a request for notice are collectively referred to herein as the Special Notice

List. The right to receive notices to be sent to the Special Notice List shall terminate when a

person on the Special Notice List ceases to be a Beneficiary.

6.1.9 Bond. The Liquidating Trustee shall obtain a bond, the cost of which

shall be borne by the Liquidating Trust. The beneficiary of the bond shall be the Liquidating

Trust. The initial amount of the bond shall be no less than 125% of the anticipated maximum

amount of cash to be held by the Liquidating Trust during the term of the bond. Not less

than thirty days after the expiration of each calendar quarter, the Liquidating Trustee shall

deliver to the bond monitor a certificate stating the maximum amount of cash held by the

Liquidating Trust during the prior calendar quarter, the maximum amount of cash the

Liquidating Trustee estimates will be held by the Liquidating Trust during the current

calendar quarter and the next calendar quarter. The bond shall require that the issuer give the

Liquidating Trustee and the bond monitor not less than thirty days notice of expiration or

nonrenewal of the bond. If there exists any default under this paragraph that is not promptly

cured upon notice to the Liquidating Trustee, and in any case before expiration or non

renewal of the bond, the bond monitor shall immediately file a motion for instructions or

other appropriate relief with the Bankruptcy Court. The initial bond monitor shall be

Teledyne Continental Motors, Inc. The bond monitor shall be compensated for all actual

out-of-pocket expenses incurred in connection with its duties as bond monitor, including,

without limitation, all attorneys' fees incurred in connection with the performance of its

obligations hereunder. The bond monitor shall be entitled to reimbursement of all expenses

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within ten (10) days after submission of a request for payment, together with appropriate

documentation, to the Liquidating Trustee.

6.2 Setoffs. The Liquidating Trustee may, but shall not be required to, setoff

against any Claim and the distributions to be made pursuant to the Plan in respect of such

Claim, any claims of any nature whatsoever which the Liquidating Trust may have against

the holder or such Claim, but neither a failure to do so nor the allowance of any Claim

hereunder shall constitute a waiver of release of any such claim the Liquidating Trust may

have against such holder.

6.3 Distribution of Cash Proceeds.

6.3.1. All Cash Proceeds and Reserved Funds shall be paid and distributed

in accordance with this Plan. Within sixty (60) days of the Effective Date, Liquidating

Trustee shall pay holders of Allowed Class 8 Claims. Within ninety (90) days of the

Effective Date, Liquidating Trustee shall distribute all Available Cash to holders of Class 9

Claims and other claimants as provided in the Plan. Within six (6) months after this initial

distribution, the Liquidating Trustee shall again distribute all Available Cash to the holders

of Class 9 Claims and other Creditors. Thereafter, the Liquidating Trustee shall make annual

distributions of any and all Available Cash to the holders of Class 9 Claims and other

Creditors as required by the Plan. The Liquidating Trustee shall have the discretion to make

an earlier distribution of Available Cash in the event that he receives substantial Cash

Proceeds which should be distributed to Creditors prior to the next scheduled distribution

date. The Liquidating Trustee shall not be required to make any distributions to

Beneficiaries in the event the total distribution would be less than $250,000.

6.3.2. Cash reserved for Disputed Claims shall be distributed to holders

thereof as and to the extent the Allowed amounts thereof are determined. However, for

purposes of efficiency, the Liquidating Trustee may pay all allowed claims on a monthly

basis. All Disputed Claims that are Allowed shall be paid within 45 days after the Order

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allowing the claim is Final.

6.3.3. Cash constituting the Reserved Funds shall be redesignated and

distributed in the same manner as Available Cash, after the full payment of obligations and

expenses incurred by Liquidating Trust after the Effective Date immediately following later

of the date on which (a) all Assets have been converted to Cash; (b) all Secured Claims have

been paid in full; (c) all Disputed Claims have been withdrawn or resolved by Final Order;

(d) all Cash Proceeds have been collected and received; (e) all unclaimed distributions to

Creditors have become Unclaimed Cash; (f) all Allowed Priority Tax Claims, Allowed Other

Priority Claims and Allowed Administrative Expense Claims have been paid; and (g) all

expenses and obligations incurred or to be incurred by Liquidating Trust from and after the

Effective Date in executing this Plan have been paid and satisfied.

6.3.4. Notwithstanding anything to the contrary, if on any Distribution

Date the Cash due on account of any Allowed Claim is less than $10, Liquidating Trustee

shall deem such Claim or Interest to have been Disallowed and redesignate such Cash as

Available Cash.

6.4 Distribution of Unclaimed Cash. Unclaimed Cash shall be deemed Available

Cash, and the Allowed Claim upon which the Unclaimed Cash was originally distributed

shall be deemed disallowed.

6.5 Timing of Distributions. Notwithstanding anything to the contrary herein:

(a) any distribution required by the Plan to be made on the Effective Date in respect of a

Claim shall be made as soon as practicable after (but in any event within thirty (30) days of)

the later of (i) the Effective Date or (ii) the Allowance Date or date any other conditions to

distribution with respect to such Claim shall have been satisfied; and (b) any distributions

required by the Plan or any instrument or contract issued pursuant to the Plan to be made on

a date subsequent to the Effective Date shall except as provided in Section 6.3.2 be made on

the later of (i) such date or (ii) as soon as practicable after (but in any event within fifteen

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(15) days of) the date on which the pertinent Claim becomes Allowed and any other

conditions to distribution with respect to such Claim shall have been satisfied.

6.6 Saturday, Sunday or Legal Holiday. If any payment or act is required to be

made or performed on a date that is not a Business Day, then the making of such payment or

the performance of such act may be completed on the next succeeding Business Day, but

shall be deemed to have been completed as of the required date.

6.7 Utility Deposits. All utilities holding a utility deposit shall immediately after

the Effective Date return or refund such utility deposit to Liquidating Trust. At the sole

option of Liquidating Trustee, the Liquidating Trust may apply any utility deposit that has

not been refunded to Liquidating Trust in satisfaction of any payments due or to become due

from the Debtor or the Liquidating Trust to a utility holding such a utility deposit.

6.8 Retiree Benefits. On and after the Effective Date, to the extent required by

Section 1129(a)(13) of the Bankruptcy Code, Liquidating Trust shall continue to pay all

retiree benefits, if any, as that term is defined in Section 1114 of the Bankruptcy Code,

maintained or established by the Debtor prior to the Effective Date, without prejudice to

Liquidating Trust's rights under applicable non-bankruptcy law to modify, amend or

terminate the foregoing arrangements.

6.9 Event of Default; Remedy. In the event Liquidating Trust shall default in the

performance of any of its obligations under the Plan or the Garmin settlement agreement, and

shall not have cured such a default within ten (10) days after receipt of written notice of

default from the Creditor to whom the performance is due, then such Creditor may seek an

Order from the Bankruptcy Court to compel such performance. An event of default

occurring with respect to one Claim or Interest shall not be an event of default with respect to

any other Claim or Interest.

6.10 Corporate Action. Upon the Effective Date, all actions contemplated by the

Plan shall be authorized and approved in all respects (subject to the provisions of the Plan),

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including, without limitation, the execution, delivery and performance of all documents and

agreements relating to the Plan. On the Effective Date, the Debtor and Liquidating Trustee

are authorized and directed to execute and deliver the agreements, documents, and

instruments contemplated by the Plan and Disclosure Statement in the name of and on behalf

of the Debtor and Liquidating Trust.

6.11 Final Order. Any requirement in the Plan for a Final Order may be waived by

Debtor or Liquidating Trust; provided, however, that nothing contained herein shall

prejudice the right of any party in interest to seek a stay pending appeal with respect to such

Final Order.

6.12 Winding Up Affairs. On the final Distribution Date, Liquidating Trustee

shall, without the need for any action by or order from the Bankruptcy Court donate any

Cash not distributed pursuant to this plan to a charity selected by the Liquidating Trustee.

ARTICLE 7

EXECUTORY CONTRACTS AND UNEXPIRED LEASES

7.1 Generally. Effective on and as of the Effective Date, all executory contracts

and unexpired leases that exist as of the Effective Date between Debtor and any entity are

hereby specifically rejected, except for any executory contracts and unexpired leases that

have been specifically assumed by Debtor with approval of the Bankruptcy Court on or

before the Effective Date or are assumed as set forth in the Confirmation Order.

7.2 Rejection Claims. Rejection Claims must be Filed no later than thirty (30)

days after the Effective Date. Any such Rejection Claim not filed within such time shall be

forever barred from assertion against Debtor, Liquidating Trust, and their property and

estate. Each Rejection Claim resulting from such rejection shall constitute a Class 8 Claim,

or Class 9 Claim, whichever is applicable.

7.3 Compensation and Benefit Programs. Notwithstanding anything contrary that

may be contained in the Plan, all employee compensation and benefit plans, policies and

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programs of Debtor applicable generally to its employees as in effect on the Effective Date,

including, without limitation, all savings plans, retirement plans, health care plans, disability

plans, severance benefit plans, incentive plans, stock incentive plans and life, accidental

death and dismemberment insurance plans, not previously terminated during the pendency of

the Chapter 11 Case shall be terminated as of the Effective Date.

ARTICLE 8

EFFECT OF CONFIRMATION

8.1 The effect of confirmation shall be as set forth in Section 1141 of the

Bankruptcy Code. Except as otherwise provided in the Plan or in the Confirmation Order,

confirmation of the Plan shall act as a permanent injunction applicable to entities against

(a) the commencement or continuation, including the issuance or employment of process, of

a judicial, administrative, or other action or proceeding against Liquidating Trust that was or

could have been commenced against the Debtor before the entry of the Confirmation Order,

(b) the enforcement against Liquidating Trust or its assets of a judgment obtained before the

Petition Date, and (c) any act to obtain possession of or to exercise control over, or to create,

perfect or enforce a lien upon all or any part of the assets of the Liquidating Trust.

ARTICLE 9

MODIFICATION, REVOCATION OR WITHDRAWAL OF THE PLAN

9.1 Modification of Plan. Debtor may alter, amend or modify the Plan pursuant to

Section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019 at any time prior to the

time the Bankruptcy Court has signed the Confirmation Order. After such time, and prior to

the substantial consummation of the Plan, Debtor or Liquidating Trust may, so long as the

treatment of holders of Claims and Interest under the Plan is not adversely affected, institute

proceedings in Bankruptcy Court to remedy any defect or omission or to reconcile any

inconsistencies in the Plan, Disclosure Statement or Confirmation Order, or other matters as

may be necessary to carry out the purposes and effects of the Plan. Provided, however, that

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prior notice of such proceedings shall be served, if necessary, in accordance with Bankruptcy

Rule 2002.

9.2 Revocation or Withdrawal of Plan.

9.2.1. Right to Revoke. Debtor reserves the right to revoke or withdraw

the Plan at any time prior to the Effective Date.

9.2.2. Effective of Withdrawal or Revocation. If Debtor revokes or

withdraws the Plan prior to the Effective Date, the Plan shall be deemed null and void. In

such event, nothing contained herein shall be deemed to constitute a waiver or release of any

claims by or against Debtor or any other entity, or to prejudice in any manner the rights of

Debtor or any other entity in any further proceedings involving Debtor.

9.2.3. Nonconsensual Confirmation. Debtor shall request that the

Bankruptcy Court confirm the Plan pursuant to Section 1129(b) of the Bankruptcy Code if

the requirements of all provisions of Section 1129(a) of the Bankruptcy Code except

Section 1129(a)(8) are met.

ARTICLE 10

RETENTION OF JURISDICTION

10.1 Retained Jurisdiction. Notwithstanding the entry of the Confirmation Order,

the Court shall retain jurisdiction of this Chapter 11 Case pursuant to and for the purposes set

forth in Section 1127(b) of the Bankruptcy Code and

(a) to classify the Claim or interest of any Creditor or equity holder,

reexamine Claims or Interests which have been allowed for voting purposes, and determine

any objections that may be Filed to Claims or Interests;

(b) to determine requests for payment of Claims entitled to priority under

Section 507(a)(2) of the Bankruptcy Code, including compensation and reimbursement of

expenses in favor of professionals employed at the expense of the estate,

(c) to hear and determine actions to avoid transfers or recover preferences

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and all other Rights of Action asserted by Debtor or Liquidating Trust pending on the

Effective Date or asserted after the Effective Date;

(d) to approve the assumption, assignment or rejection of an executory

contract or an unexpired lease and the allowance of Claims resulting therefrom;

(e) to approve the sale or lease of property free and clear of all liens and

encumbrances in accordance with 11 U.S.C. § 363 if so requested by Debtor or Liquidating

Trust;

(f) to resolve controversies and disputes regarding the interpretation of

this Plan;

(g) to implement the provisions of this Plan and enter orders in aid of

execution of the Plan or to enforce the Confirmation Order;

(h) to adjudicate adversary proceedings and contested matters pending or

hereafter commenced in this Chapter 11 Case;

(i) to enter and implement such orders as may be appropriate in the event

the Confirmation Order is for any reason stayed, revoked, modified or vacated;

(j) to hear and determine any applications to modify the Plan, to cure any

defect or omission, or to reconcile any inconsistency in the Plan or related documents or in

any order of the Bankruptcy Court, including the Confirmation Order;

(k) to insure that distributions to holders of Allowed Claims are

accomplished as provided herein;

(l) to hear and determine any other matters related hereto and not

inconsistent with Chapter 11 of the Bankruptcy Code;

(m) to enter a final decree closing this Chapter 11 proceeding.

10.2 Following the Effective Date, the Bankruptcy Court will retain non-exclusive

jurisdiction of the Chapter 11 Case for the following purposes:

(a) to recover all assets of Debtor or the Liquidating Trust, wherever

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located;

(b) to hear and determine any motions or contested matters involving

taxes, tax refunds, tax attributes and tax benefits and similar or related matters with respect to

Debtor or its estate, arising prior to the Effective Date or relating to the period of

administration of the Chapter 11 Case, including, without limitation, matters concerning

state, local and federal taxes in accordance with Section 346, 505 and 1146 of the

Bankruptcy Code; and

(c) to hear any other matter not inconsistent with the Bankruptcy Code.

10.3 Failure of Bankruptcy Court to Exercise Jurisdiction. If the Bankruptcy Court

abstains from exercising or declines to exercise jurisdiction over any matter arising under,

arising in, or related to the Chapter 11 Case, including the matters set forth in Section 10.1

and 10.2 above, this Article shall not prohibit or limit the exercise of jurisdiction by any

other court having competent jurisdiction with respect to such subject matter.

ARTICLE 11

MISCELLANEOUS PROVISIONS

11.1 Revesting. Except as otherwise expressly provided herein, on the Effective

Date, all property and assets of the estate of Debtor shall revest in Liquidating Trust, free and

clear of all claims, liens encumbrances, charges and other Interests of Creditors arising on or

before the Effective Date.

11.2 Rights of Action. Except as otherwise expressly provided herein, any rights

or causes of action (including, without limitation, any and all Rights of Action) accruing to

Debtor shall become assets of Liquidating Trust. Liquidating Trust may pursue such rights

of action, as appropriate, in accordance with what it determines to be in the best interests of

Creditors consistent with the terms of this Plan.

11.3 Governing Law. Except to the extent the Bankruptcy Code, the Bankruptcy

Rules or other federal laws are applicable, the laws of the State of Oregon shall govern the

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construction and implementation of the Plan, and all rights and obligations arising under the

Plan.

11.4 Withholding and Reporting Requirements. In connection with the Plan and

all instruments issued in connection therewith and distributions thereon, Debtor and

Liquidating Trust shall comply with all withholding, reporting, certification and information

requirements imposed by any federal, state, local or foreign taxing authorities and all

distributions hereunder shall, to the extent applicable, be subject to any such withholding,

reporting, certification and information requirements. Entities entitled to receive

distributions hereunder shall, as a condition to receiving such distributions, provide such

information and take such steps as Liquidating Trust may reasonably require to ensure

compliance with such withholding and reporting requirements, and to enable Liquidating

Trust to obtain the certifications and information as may be necessary or appropriate to

satisfy the provisions of any tax law.

11.5 Time. Unless otherwise specified herein, in computing any period of time

prescribed or allowed by the Plan, the day of the act or event from which the designated

period begins to run shall not be included. The last day of the period so computed shall be

included, unless it is not a Business Day, in which event the period runs until the end of the

next succeeding day which is a Business Day.

11.6 Section 1146(c) Exemption. Pursuant to Section 1146(c) of the Bankruptcy

Code, the issuance, transfer or exchange of any security under the Plan, or the execution,

delivery or recording of an instrument of transfer pursuant to, in implementation of or as

contemplated by the Plan, or the revesting, transfer or sale of any real property of Debtor or

Liquidating Trust pursuant to, in implementation of or as contemplated by the Plan, shall not

be taxed under any state or local law imposing a stamp tax, transfer tax, or similar tax or fee.

Consistent with the foregoing, each recorder of deeds or similar official for any city, county

or governmental unit in which any instrument hereunder is to be recorded shall, pursuant to

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the Confirmation Order, be ordered and directed to accept such instrument without requiring

the payment of any documentary stamp tax, deed stamps, transfer tax, intangible tax or

similar tax.

11.7 Severability. In the event that any provision of the Plan is determined to be

unenforceable, such determination shall not limit or affect the enforceability and operative

effect of any other provisions of the Plan. To the extent that any provision of the Plan would,

by its inclusion in the Plan, prevent or preclude the Bankruptcy Court from entering the

Confirmation Order, the Bankruptcy Court, on the request of Debtor, may modify or amend

such provision, in whole or in part, as necessary to cure any defect or remove any

impediment to the confirmation of the Plan existing by reason of such provision.

11.8 Binding Effect. The provisions of the Plan shall bind Debtor, Liquidating

Trust and all holders of Claims and Interests, and their respective successors, heirs and

assigns.

11.9 Recordable Order. The Confirmation Order shall be deemed to be in

recordable form, and shall be accepted by any recording officer for filing and recording

purposes without further or additional orders, certifications or other supporting documents.

11.10 Notices. Any notice, request or demand required or permitted to be made or

provided to or on Debtor or Liquidating Trust under this Plan shall be in writing and served

by (a) certified mail, return receipt requested; or (b) overnight delivery, with proof of service

and shall be deemed to have been duly given or made when actually delivered or received by

addressee, addressed as follows: if to Liquidating Trust:

Conrad Myers Myers & Co. PMB 221 6327 SW Capitol Highway Portland, OR 97239

Any party listed above may alter the address for receiving notice hereunder by filing

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a notification of such alteration with all other parties and the Bankruptcy Court.

11.11 Plan Controls. In the event and to the extent that any provision of the Plan is

inconsistent with the provisions of the Disclosure Statement, or any other instrument or

agreement contemplated to be executed pursuant to the Plan, the provisions of the Plan shall

control and take precedence.

11.12 Settlement Agreement Controls. In the event and to the extent that any

provision of the Plan is inconsistent with the provisions of the Garmin settlement agreement,

the provisions of the Garmin settlement agreement shall control.

11.13 Effectuating Documents and Further Transactions. Debtor and Liquidating

Trust shall execute, deliver, file or record such contracts, instruments, assignments, and

other agreements or documents, and take or direct such actions, as may be necessary or

appropriate to effectuate and further evidence the terms and conditions of this Plan.

DATED this 14th day of April, 2008. Respectfully submitted: COLUMBIA AIRCRAFT MANUFACTURING CORPORATION By /s/ Leon Simson

Leon Simson, Attorney for Debtor Columbia Aircraft Manufacturing Corporation

Submitted by:

TONKON TORP LLP By /s/ Leon Simson


034013\00034\944757 V001

Page 1 of 20 – LIQUIDATING TRUST AGREEMENT EXHIBIT A

LIQUIDATING TRUST AGREEMENT

This Liquidating Trust Agreement (the "Agreement") is entered into as of ______________, 2008, by and between Columbia Aircraft Manufacturing Corporation, debtor and debtor in possession (the "Debtor" or "Columbia") in that certain Chapter 11 case pending in the Untied States Bankruptcy Court for the District of Oregon (the "Bankruptcy Court") as Case No. 07-33850-elp11 (the "Chapter 11 Case") and Conrad Myers (with any successors, the "Liquidating Trustee"). On September 24, 2007 (the "Petition Date"), the Debtor filed a voluntary petition under Chapter 11 of the Untied States Bankruptcy Code (the "Bankruptcy Code") in the Bankruptcy Court and thereby commenced the Chapter 11 Case. On _____________, 2008, the Court entered an order (the "Confirmation Order") confirming the Debtor's Second Amended Plan of Reorganization under Chapter 11 (dated April 14, 2008). The Second Amended Plan of Reorganization as amended by the Confirmation Order are referred to herein as the “Plan”. The Plan provides, among other things, that on the Effective Date the Debtor's assets shall be transferred and assigned to the liquidating trust created by this Agreement (the "Liquidating Trust") to be administered by the Liquidating Trustee. The Plan contemplates, among other things, that the Liquidating Trustee shall liquidate the Trust Assets and distribute the net proceeds from such liquidation to Holders of the Allowed Class 9 Claims and other creditors, all as described in greater detail in the Plan and this Agreement. The Liquidating Trustee shall also serve as Estate Representative and, in such capacity, shall be responsible for the administration of the Reserves from which the Holders of other Claims which are now disputed will receive payment in respect of such Claims as Allowed. NOW, THEREFORE, in consideration of the premises and agreements contained herein, the parties hereto agree as follows:

SECTION 1

DEFINITIONS

Unless otherwise defined herein, all capitalized terms used in this Agreement shall have the meanings assigned to them in the Plan or in the Bankruptcy Code (as in effect on the date hereof). If there is any discrepancy between a definition herein and a definition in the Plan, the definition in the Plan shall govern.

1.1 "Beneficiaries" means the Class 8 and Class 9 holders of Allowed Unsecured Claims and any other holders of Claims to be paid after the Effective Date who will receive payment from the Liquidating Trust.


1.2 "Estate Representatives" means the Liquidating Trustee acting in the capacity of Estate representative as provided in Section 8 of this Agreement.

1.3 "Rights of Action" means any and all claims, demands, rights, actions, causes of suits, and suits of the debtor or the estate, of any kind or character whatsoever, known or unknown, suspected or unsuspected, whether arising before, on or after the petition date, in contract or in tort, at law or in equity or under any theory of law, including, but not limited to (1) derivative claims, (2) rights of setoff, counterclaim, or recruitment, and claims on contract and for breeches of duties imposed by law, (3) the right to object to claims of interest, (4) claims pursuant to § 362 of the Bankruptcy Code, (5) such claims and defenses as fraud, mistake, duress, and usury, (6) Avoidance Actions and all other claims under Chapter 5 of the Bankruptcy Code or ORS Chapters 60 and 95, and (7) the pending suits against Affiliated FM Insurance Company and Kelly Aerospace Thermal Systems, LLC; with the exception that “Rights of Action” does not include potential claims assigned to Cessna Aircraft Company in the Purchase Sale Agreement.

1.4 “Trust Assets” means the Property of the Estate transferred to the

Liquidating Trustee pursuant to the Plan and this Agreement, and any income, proceeds of the Property of the Estate and any other property acquired by the Liquidating Trust.

SECTION 2

THE LIQUIDATING TRUST

2.1 Creation and Name. There is hereby created the Liquidating Trust which shall be known as the "Columbia Plan Liquidating Trust." 2.2 Declaration of Trust. In order to declare the terms and conditions hereof, and in consideration of the confirmation of the Plan, the Debtor and the Liquidating Trustee have executed this Agreement for the purpose of creating the Liquidating Trust. 2.3 Purpose of Liquidating Trust. The Liquidating Trust is organized for the primary purposes of (a) liquidating the assets transferred to it, in accordance with Treasury Regulation Section 301.7701-4(d), (b) distributing the proceeds thereof with no objective to engage in the conduct of a trade or business, except to the extent reasonably necessary to, and consistent with, the liquidating purpose of the Liquidating Trust, and (c) effecting the distributions contemplated by the Plan and this Agreement. 2.4 Transfer of Property of the Estate. On and as of the Effective Date, but after payments to be made by the Debtor on the Effective Date pursuant to the Plan have been made, the Debtor hereby irrevocably transfers to the Liquidating Trustee all right, title and interest of the Debtor in and to the Property of the Estate, free and clear of all liens and encumbrances except as provided in the Plan or applicable Order of the Court for the benefit and on behalf of the Beneficiaries. Upon the transfer of the Property of the Estate, the Liquidating Trustee shall succeed to all of the Debtors' right, title and interest in the Property of the Estate and the Debtors will have no further interest in or with


respect to the Property of the Estate or this Liquidating Trust. The Liquidating Trust shall be deemed a successor of the Debtor for the purposes of Bankruptcy Code Section 1145 and with regard to all the Trust’s assets. 2.5 Trust Beneficiaries. The beneficiaries of the Liquidating Trust shall be the Beneficiaries. 2.6 Liquidating Trust Beneficial Interests. The beneficial interests in the Liquidating Trust shall be uncertificated. 2.7 Intention of Parties to Establish Liquidating Trust. This Agreement is intended to create a trust, and the trust created hereunder shall be governed and construed in all respects as a trust. 2.8 Investment Company Act. The Liquidating Trust is organized as a liquidating entity in the process of liquidation, and therefore should not be considered, and the Liquidating Trust does not and will not hold himself out as, an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act. 2.9 Taxation. For United States federal income tax purposes, it is intended that the Liquidating Trust be classified as a liquidating trust under Treasury Regulations § 301.7701-4 and as a grantor trust subject to the provisions of Subchapter J, Subpart E of the Code that is owned by its Beneficiaries as grantors. Accordingly, the parties agree that, for Untied States federal income tax purposes, the Debtor and the respective Beneficiaries will treat the formation of the Liquidating Trust as if such Beneficiary had received a distribution of an undivided interest in the assets of the Liquidating Trusts from the Debtor and then contributed such interests to the Liquidating Trusts. The Liquidating Trust is intended to qualify as a "grantor trust" for federal income tax purposes and the Liquidating Trustee shall operate and maintain the Liquidating Trust in compliance with the guidelines for liquidating trusts as set forth in Internal Revenue Service Revenue Procedure 94-45, 1994-2 C.B. 684, and Treasury Regulation Section 1.671-4(a) and all subsequent guidelines regarding liquidating trusts issued by the Internal Revenue Service. The Liquidating Trustee shall treat all trust income as subject to tax on a current basis. The Beneficiaries shall each report their share of the net income of the Liquidating Trust and pay any tax owing thereon on a current basis.

SECTION 3

RIGHTS OF BENEFICIARIES

3.1 Rights of Beneficiaries. Each Beneficiary will be entitled to participate in the rights due to a Beneficiary hereunder. Each Beneficiary shall take and hold its uncertificated beneficial interest subject to all of the terms and provisions of this Agreement and the Plan. The interest of a Beneficiary of the Liquidating Trust is in all respects personal property, and upon the death, insolvency or incapacity of an individual


Beneficiary, such Beneficiary's interest shall pass to the legal representative of such Beneficiary and such death, insolvency or incapacity shall not terminate or affect the validity of this Agreement. A Beneficiary shall have no title to, right to, possession of, management of, or control of, the Trust Assets except as expressly provided in this Agreement or the Plan. Title to all the Trust Assets shall be vested in the Liquidating Trustee, and the sole interest of the Beneficiaries shall be the rights and benefits given to such persons under this Agreement.

3.2 Limit on Transfer of Interests of Beneficiaries.

(a) The interest of a Beneficiary in the Liquidating Trust shall be transferable, upon reasonable notice to, and subject to any reasonable limitations that may be placed thereon by, the Liquidating Trustee. The Liquidating Trustee shall cause to be kept a register (the "Register") in which the Liquidating Trustee shall at all times maintain the names, addresses, and interests of the Beneficiaries; provided, however, that the Liquidating Trustee need not recognize as valid any transfer (nor make any distribution to any transferee) and will give notice to such Beneficiary that no transfer has been recognized in the event the Liquidating Trustee reasonably believes that such transfer (or the distribution to such transferee) may constitute a violation of applicable laws or might cause the Liquidating Trust to be required to register beneficial interests under the Securities Exchange Act of 1934, as amended. (b) Prior to any transfer, assignment, hypothecation, pledge, exchange or conveyance of a beneficial interest in the Liquidating Trust (each, a "Transfer"), the transferring Beneficiary shall submit to the Liquidating Trustee a duly endorsed assignment of the beneficial interest to the transferree (in a form reasonably acceptable to the Liquidating Trustee) together with the service charge, if any, to be specified by the Liquidating Trustee pursuant to this subsection (b). No such Transfer shall be effective until, and the transferee shall succeed to the rights of a Beneficiary only upon, final acceptance and registration of the Transfer by the Liquidating Trustee in the Register. Prior to the registration of any Transfer by a Beneficiary, the Liquidating Trustee shall treat the Person or Entity in whose name the beneficial interest is registered as the owner for all purposes, and the Liquidating Trustee shall not be affected by notice to the contrary. When a request to register the Transfer of a beneficial interest is presented to the Liquidating Trustee, the Liquidating Trustee shall register the Transfer as requested if the requirements for Transfers hereunder are met. The Liquidating Trustee shall charge a service charge in an amount sufficient to cover the expenses of the Liquidating Trustee and his agents and any tax or governmental charge that may be imposed on any Transfer of a beneficial interest. Failure of any Beneficiary to comply with these provisions shall void any Transfer of the related beneficial interest and the proposed transferee shall have no rights under this Agreement. Upon the Transfer of a transferring Beneficiary's entire beneficial interest in the Liquidating Trust as evidenced by the Register, such transferring Beneficiary shall have no further right, title or interest in the Trust Assets or the Liquidating Trust.


3.3 No Legal Title in Beneficiaries. No Beneficiary shall have legal title to any part of the Trust Assets. No transfer by operation of law or otherwise, of the right, title and interest of any Beneficiary in and to the Trust Assets or the Liquidating Trust shall operate to terminate this Liquidating Trust or entitle any successor or transferee of such Beneficiary to an accounting or to the transfer to it of legal title to any part of the Trust Assets. 3.4 Special Notice List. Each Beneficiary has the right to receive all reports prepared by the Liquidating Trustee, all pleadings and other notices regarding the Liquidating Trust. To receive such information the Beneficiary shall prepare a written request, stating in the request the name and number of the chapter 11 case (In re Columbia Aircraft Manufacturing Corporation, Case No. 07-33850-elp11) and mail a copy to the Liquidating Trustee at the address set forth in Section 11 of this Agreement. The persons and entities having made such a request for notice are collectively referred to herein as the Special Notice List. The right to receive notices to be sent to the Special Notice List shall terminate when a person on the Special Notice List ceases to be a Beneficiary.

SECTION 4

THE LIQUIDATING TRUSTEE

4.1 Liquidating Trustee's Acceptance. The Liquidating Trustee accepts his appointment as trustee of the Liquidating Trust and agrees to serve in such capacity, subject to the terms and conditions set forth in this Agreement, effective on the Effective Date. In connection with and in furtherance of the purposes of the Liquidating Trust, the Liquidating Trustee hereby expressly accepts the transfer of the Trust Assets in accordance with the provisions of the Plan and the Confirmation Order and will make all payments required pursuant to the Plan and the Confirmation Order. 4.2 Claims Administration Responsibility. Without limiting the right of any other party in interest to object to Claims, the Liquidating Trustee, as Estate Representative shall be responsible for administering, objecting to, and resolving any and all remaining Claims including disputed Secured Claims, Administrative Claims, Priority Claims and Class 9 Claims, and shall be entitled to assert any and all defenses and setoff and recoupment rights, provided, however, that the Liquidating Trustee shall be bound by the Plan, and all prior resolutions of Claims including but not limited to the settlement with Garmin International, Inc. 4.3 Vesting of Trust Assets. On the Effective Date, but after payments to be made by the Debtor on the Effective Date pursuant to the Plan have been made, all Property of the Estate shall vest in the Liquidating Trust, and the Liquidating Trustee shall administer the Trust Assets and make distributions as provided in the Plan and this Agreement.


4.4 Liquidating Trustee's Bond. At all times the Liquidating Trustee holds Trust Assets consisting of cash or cash equivalents he shall maintain a fidelity bond covering acts of him and, if the Liquidating Trustee has any trust employees, also covering acts of such employees, in a form and with a surety or sureties reasonably acceptable to the U.S. Trustee in an amount no less than 125% of such cash and cash equivalents. Not less than thirty days after the expiration of each calendar quarter, the Liquidating Trustee shall deliver to the bond monitor a certificate stating the maximum amount of cash and cash equivalents held by the Liquidating Trust during the prior calendar quarter, the maximum amount of cash and cash equivalents the Liquidating Trustee estimates will be held by the Liquidating Trust during the current calendar quarter and the next calendar quarter, and a recommendation as to the proper amount of the bond.

SECTION 5

LIQUIDATION AND DISTRIBUTION OF TRUST ASSETS 5.1 Liquidation of Trust Assets. The Liquidating Trustee shall take such steps as he deems necessary or appropriate to reduce the Trust Assets to cash in order to make the distributions required under the Plan. The Liquidating Trustee's actions with respect to the disposition of the Trust Assets shall be reasonably expeditious and orderly; provided, however, that such actions shall be taken in a manner so as to reasonably maximize the value of the Trust Assets. 5.2 Establishment of Reserve. The Liquidating Trustee shall establish a reserve fund in an amount equal to the aggregate of the formula amount set forth in the Plan, including (a) the amount necessary to pay in full Allowed but unpaid Secured Claims, Priority Tax Claims, Other Priority Claims, and Administrative Expense Claims; (b) the amount reserved for the benefit of holders of Disputed Claims; (c) the amount reserved for the benefit of holders of Potential Rejection Claims; (d) the amount necessary to pay unpaid Class 8 Claims; (e) the amount projected by Liquidating Trust to be necessary to pay in full Liquidating Trustee’s costs and expenses in completing his duties under this Agreement and in the Plan; and (f) the Holdback Funds. As unpaid Claims are paid, the reserve shall be reduced by the corresponding amount. As Disputed Claims and Potential Rejection Claims are resolved and paid, the reserve shall be reduced by the amount reserved for such Claims. 5.3 Distribution of Trust Assets. Except as otherwise provided herein or the Plan, the Liquidating Trustee shall distribute the Trust Assets as follows: first, to pay any taxes and administrative expenses of the Liquidating Trust, including the compensation and expenses of the Liquidating Trustee; third, to pay to holders of Allowed Administrative Claims, and Allowed Priority Claims, and those Disputed Claims as they are resolved; and fourth, to pay the Beneficiaries as required by the Plan. 5.4 Timing of Distributions. Payments to Allowed Secured Claims, Allowed Administrative Claims, and Allowed Priority Claims, will be made as provided under the Plan and shall be made as promptly as possible after the Effective Date; provided,


however, that the Liquidating Trustee may pay Allowed Disputed Claims on a monthly basis in the calendar month after the claims are finally Allowed rather than immediately upon resolution. All Disputed Claims that are Allowed shall be paid within forty-five (45) days after the Order Allowing the Claim is Final. Other Beneficiaries shall be paid as follows: (a) within sixty (60) days of the Effective Date, Liquidating Trustee shall pay the holders of Class 8 Claims, except any Class 8 Claims that are Disputed, as provided in the Plan; (b) within ninety (90) days of the Effective Date, Liquidating Trustee shall distribute all Available Cash to holders of Class 9 Claims and other Creditors as provided in the Plan; (c) within six (6) months after this initial distribution, the Liquidating Trustee shall again distribute all Available Cash to the holders of Class 9 Claims and other Creditors; and (d) thereafter, the Liquidating Trustee shall make annual distributions of any and all Available Cash to the holders of Class 9 Claims and other Creditors as required by the Plan. The Liquidating Trustee shall have the discretion to make an earlier distribution of Available Cash in the event that he receives substantial Cash Proceeds which should be distributed to Creditors prior to the next scheduled distribution date. Further, the Liquidating Trustee shall not be required to make any distributions to Beneficiaries in the event that the total distribution would be less than $250,000. The Liquidating Trustee will make continuing efforts to convert the Trust Assets to cash, make timely distributions and not unduly prolong the duration of the Liquidating Trust.

SECTION 6

RIGHTS OF ACTION

6.1 Standing to Sue. The Liquidating Trustee shall have the sole authority and standing to bring all Rights of Action, including without limitation: (a) all claims and causes of action of the Debtor or the Estate under any applicable law which were not transferred to Cessna: (b) claims and causes of action under Chapter 5 of the Bankruptcy Code or ORS Chapters 60 or 95; (c) action for recovery of dividends and other capital distributions paid during the six year period preceding the Debtor's bankruptcy filing, pursuant to ORS Chapter 60; (d) action for recovery of dividends and other capital distributions paid during the four-year period preceding the Debtor's bankruptcy, pursuant to ORS Chapter 95; and (e) any other claim against any other person identified by the Liquidating Trustee. 6.2 Power to Pursue and Compromise. The Liquidating Trustee shall have the power and authority, in his discretion, to compromise, adjust, arbitrate, sue on or defend,


abandon, or otherwise resolve or settle, in accordance with the terms hereof and the Plan, the Rights of Action, as the Liquidating Trustee shall deem advisable. 6.3 Approval of Settlements. The Liquidating Trustee may not settle, compromise, dismiss, abandon or not pursue any Rights of Action where the amount sought in the Liquidating Trustee's demand or complaint exceeds $25,000 without giving fifteen (15) days notice and opportunity for hearing to the Special Notice List, and if a timely objection is lodged, obtaining a Bankruptcy Court Order approving the settlement.

SECTION 7

GENERAL POWERS, RIGHTS AND OBLIGATIONS OF THE LIQUIDATING

TRUSTEE

7.1 Legal Title. The Liquidating Trustee shall hold legal title to the Trust Assets, except that the Liquidating Trustee may cause legal title or evidence of title to any of the Trust Assets to be held by any nominee or person, on such terms, in such manner and with such power as the Liquidating Trustee may determine advisable. Following transfer to the Liquidating Trustee, the Debtor shall have no interest in or with respect to the Trust Assets. The Trust Assets shall be held for payment and distribution in accordance with the Plan and this Agreement.

7.2 General Powers.

(a) Fiduciary Capacity of Liquidating Trustee. The Liquidating Trustee's powers are exercisable solely in a fiduciary capacity consistent with, and in furtherance of the purposes of, the Liquidating Trust and not otherwise. Except as otherwise provided in this Agreement or the Plan, and subject to the retained jurisdiction of the Court as provided for in the Plan, but without prior or further authorization, the Liquidating Trustee may control and exercise authority over the Trust Assets, and over the acquisition, management and disposition thereof to the same extent as if the Liquidating Trustee were the sole owner of the Trust Assets in his own right, but shall for all purposes hereunder be acting in the capacity as Liquidating Trustee and not individually. No person dealing with the Liquidating Trust shall be obligated to inquire into the Liquidating Trustee's authority in connection with the acquisition, management or disposition of the Trust Assets. (b) Powers. In connection with the administration of the Trust Assets, the Liquidating Trustee, except as otherwise expressly limited in this Agreement, the Plan, or the Confirmation Order, shall have, all the rights, powers and duties set forth in this Agreement and available under applicable law for accomplishing the purposes of the Liquidating Trust. The Liquidating Trustee is hereby authorized to file with any governmental authorities any documents necessary or helpful to establish the Liquidating Trust. In addition to any powers conferred by any other provision of this Agreement, the Liquidating Trustee shall have the power and responsibility to take all actions necessary


or advisable to effectuate the purposes of the Liquidating Trust, including, by way of illustration but without limitation, the power and authority to: (1) receive, manage, invest, supervise, protect and liquidate Trust Assets, and release, convey or assign any right, title or interest in or about the Trust Assets or any portion thereof, and if deemed in the best interest of the Liquidating Trust by the Liquidating Trustee, abandon, Trust Assets; (2) withdraw, make distributions and pay taxes and other obligations owed by the Liquidating Trust from funds held by the Liquidating Trustee and/or the Liquidating Trust in accordance with this Agreement and the Plan; (3) execute, obtain, deliver, file and record such contracts, instruments, bonds (including any bond to cover the actions of the Liquidating Trustee), releases, indentures, certificates, and other agreements or documents, and take such actions, as may be reasonably necessary or appropriate to effectuate and implement the terms and conditions of the Plan and this Agreement; (4) calculate and implement distributions o the Trust Assets to Beneficiaries in a manner consistent with the Plan and this Agreement; (5) vote any claim or interest held by the Liquidating Trust in a case under the Bankruptcy Code and receive any distribution therefrom for the benefit of the Liquidating Trust; (6) protect and enforce the rights to the Trust Assets vested in the Liquidating Trust by this Agreement by any method deemed appropriate, including, without limitation, by judicial proceedings or pursuant to any applicable bankruptcy, insolvency, moratorium or similar law or general principles of equity; (7) determine and satisfy any and all liabilities created, incurred or assumed by the Liquidating Trust; (8) file federal, state and local tax and information returns with respect to the Liquidating Trust and pay any taxes properly payable by the Liquidating Trust, and apply for any rulings or determinations deemed necessary or appropriate by the Liquidating Trustee; (9) pay all reasonable expenses and make all other payments relating to the Trust Assets; (10) obtain insurance coverage with respect to the liabilities and obligations of the Liquidating Trustee and the Liquidating Trust (in the form of an errors and omission policy, fiduciary policy or otherwise);


(11) obtain insurance coverage with respect to Trust Assets; (12) retain and pay such third parties as the Liquidating Trustee may deem necessary or appropriate to assist the Liquidating Trustee in carrying out the powers and duties under this Agreement, without liability for any action taken or omission made because of such delegation except as provided herein; (13) invest any moneys held as part of the Trust Assets in accordance with Section 7.3 (b) of this Agreement; (14) pay all fees payable pursuant to Section 1930 of chapter 123 of title 28 of the United States Code until such time as the Bankruptcy Court enters a final decree closing the Debtor's Chapter 11 Case; (15) borrow funds on behalf of, and solely as a liability of, the Liquidating Trust (which loans may be secured by the Trust Assets, but shall be without recourse to the Liquidating Trustee in his individual capacity) as are necessary to enable the Liquidating Trustee, as determined in his sole discretion, to discharge his powers and duties as Liquidating Trustee under this Agreement, including without limitation funding the costs and expenses of prosecuting the Rights of Action and any other litigation by the Liquidating Trustee; and (16) exercise such other powers as may be vested in or assumed by the Liquidating Trust or the Liquidating Trustee pursuant to the Plan or Orders or as may be necessary to carry out the provisions of the Plan.

7.3 Limitation of Liquidating Trustee's Authority.

(a) The Liquidating Trustee shall not and is not authorized to engage in any trade or business using the Trust Assets or any proceeds therefrom except to the extent reasonably necessary to, and consistent with, the liquidating and distributing purposes of the Liquidating Trust, and shall take such actions consistent with the expeditious but orderly liquidation and distribution of the Trust Assets as if required by applicable law and consistent with the treatment of the Liquidating Trust as a liquidating trust under Treasury Regulation section 301.7701-4(d), and such actions permitted herein; provided, however, that the Liquidating Trustee may not hold Trust Assets on behalf of the Liquidating Trust that consist of listed stocks or securities. (b) The right and power of the Liquidating Trustee to invest Trust Assets, the proceeds thereof, and any income earned by the Liquidating Trust, consistent with the obligations of a trustee under Section 345 of the Bankruptcy Code, shall be limited to the right and power to invest such Trust Assets in demand and time deposits, such as short-term certificates of deposit, in banks or other savings institutions, or other temporary liquid investments, such as Treasury bills ("Permitted Investments"). The scope of Permitted Investments shall be limited in include only those investments, or


shall be expanded to include any additional investments, as the case may be, in which a liquidating trust, within the meaning of Treasury Regulation section 301.7701-4, may invest in, pursuant to the Treasury Regulations or any modifications in the IRS guidelines, whether set forth in IRS rulings, other IRS pronouncements or otherwise; provided, however, that the Liquidating Trustee may expend the Trust Assets (i) as reasonably necessary to meet contingent liabilities and to maintain the value of the Trust Assets during liquidation and/or prior to their distribution, (ii) to pay reasonable administrative expenses which have been incurred (including, but not limited to, any taxes imposed on the Liquidating Trust or reasonable fees and expenses in connection with litigation), and (iii) to satisfy other liabilities incurred or assumed by the Liquidating Trust (or to which the Trust Assets are otherwise subject) in accordance with the Plan or this Agreement. Any Permitted Investment made as provided for herein must have a maturity date not in excess of six (6) months from the date of the acquisition of the Permitted Investment. The Trust Assets, until distributed or paid as provided in this Agreement and in the Plan, shall be held in trust and segregated in accordance with the Plan. The Liquidating Trustee shall deposit all cash comprising Trust Assets in interest-bearing accounts maintained with a domestic bank or other financial institution having a shareholder's equity or equivalent capital of not less than Five Hundred Million Dollars (a "Qualified Institution"). The Liquidating Trustee shall not be liable for interest or obligated to produce income on any money received by the Liquidating Trust hereunder and held for distribution or payment to the Beneficiaries, except as such interest or other income shall actually be received by the Liquidating Trustee. The Liquidating Trustee shall not be liable in any way for any loss or other liability arising from any investment, or the sale or other disposition of any investment, made in accordance with this Section, except for any such loss or liability arising from the Liquidating Trustee's negligence, breach of fiduciary duty, gross negligence, willful misconduct or fraud. 7.4 Retention of Attorneys, Accountants and Other Professionals. Except as otherwise provided in this Agreement or the Plan, and subject to the retained jurisdiction of the Bankruptcy Court as provided for in the Plan, the Liquidating Trustee may retain professionals, including, but not limited to, attorneys, accountants, disbursing agents, experts, advisors, consultants, investigators, appraisers or auctioneers as he may deem necessary, in his sole discretion, to aid in the performance of his responsibilities pursuant to the terms of this Agreement and the Plan. Such retained professionals (with the exception of professionals who are employed or retained by Myers and Co.) shall prepare monthly statements and serve such statements on the Liquidating Trustee. The Liquidating Trustee shall send copies of the statements to the Special Notice List, along with notice that he plans to pay such statements (in full or in part) unless an objection is filed. In the event the Liquidating Trustee objects to the reasonableness of such fees and expenses or any Beneficiary objects to the reasonableness of such fees and expenses within 15 days after service of the statement and Liquidating Trustee’s notice, any unresolved dispute relating to the objection shall be submitted to the Bankruptcy Court for determination. Absent timely objection, such statements shall be paid monthly. 7.5 Compensation of Liquidating Trustee. The Liquidating Trustee shall be authorized to receive payment of reasonable compensation from the Trust Assets for


services rendered and expenses incurred in fulfilling his duties pursuant to this Agreement. The Liquidating Trustee shall receive compensation on an hourly basis at his standard rates in effect from time to time (which as of the date of this Agreement is $300), which shall be deemed to be reasonable, and shall be paid monthly. The Liquidating Trustee will employ professionals from Myers & Co. to assist him. Those professionals will receive compensation on an hourly basis at their standard rates in effect from time to time (which as of the date of this Agreement are $200). The Liquidating Trustee shall send copies of the monthly statements from Myers & Co. to the Special Notice List, along with notice that he plans to pay such statements unless an objection is filed. In the event any Beneficiary objects to the reasonableness of such fees and expenses within 15 days after service of the statement and Liquidating Trustee’s notice, any unresolved dispute relating to the objection shall be submitted to the Bankruptcy Court for determination. Absent timely objection, such statements shall be paid monthly. Compensation and reimbursement of expenses of the Liquidating Trustee shall be paid out of Trust Assets. 7.6 Standard of Care; Exculpation; Indemnification. The Liquidating Trustee and the Liquidating Trustee's professionals and representatives shall be and hereby are exculpated by all persons, including without limitation, the Beneficiaries (or successors of such entities) and other parties in interest, from any and all claims, causes of action and other assertions of liability arising out of the discharge of the powers and duties conferred upon such Liquidating Trustee by the Plan, this Agreement or any Order except for actions or omissions to act that are determined by Final Order of the Bankruptcy Court to be due to negligence, breach of fiduciary duty, gross negligence, willful misconduct or fraud. No Beneficiary or other party in interests will have or be permitted to pursue any claim or cause of action against the Liquidating Trustee, the Liquidating Trust or the professionals or representatives of either the Liquidating Trustee or the Liquidating Trust for making payments in accordance with or implementing the provisions of the Plan. The Liquidating Trust, but not any Beneficiary, shall indemnify, defend and hold harmless the Liquidating Trustee and the Liquidating Trustee's professionals or representatives from and against any and all claims, causes of action, liabilities, obligations, losses, damages or reasonable expenses (including reasonable attorneys' fees and expenses) arising in connection with or in any manner relating to the discharge of any powers and duties conferred upon the Liquidating Trustee or any such professional or representative by, or the performance of the services of the Liquidating Trustee or any such professional or representative under, this Agreement, the Plan or any Order, including, without limitation, any liability or reimbursement obligation of the Liquidating Trustee under any bond obtained by the Liquidating Trustee in connection with such services, other than and only to the extent determined by a Final Order of the Bankruptcy Court to be due to such parties' negligence, breach of fiduciary duty, gross negligence, willful misconduct or fraud, to the fullest extent permitted by applicable law; provided, that nothing in this Agreement shall preclude actions by the Liquidating Trustee against any professionals engaged by him as Liquidating Trustee for negligence or professional malpractice. Any action taken or omitted to be taken with the express approval of the Bankruptcy Court will conclusively be deemed not to constitute negligence, breach of fiduciary duty, gross negligence, willful misconduct or fraud.


7.7 Reliance by Liquidating Trustee. The Liquidating Trustee may rely, and shall be fully protected in acting on, any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order on other instrument or document that it has no reason to believe to be other than genuine and to have been signed or presented other than by the proper party or parties, or in the case of facsimile transmissions, to have been sent other than by the proper party or parties, in each case without obligation to satisfy himself that the same was given in good faith and without responsibility for errors in delivery, transmission or receipt. In the absence of his negligence, breach of fiduciary duty, willful misconduct, gross negligence, willful disregard of his duties or fraud, the Liquidating Trustee may rely as to the truth of statements and correctness of the facts and opinions expressed therein and shall be fully protected in acting thereon. The Liquidating Trustee may consult with legal counsel and shall be fully protected in respect of any action taken or suffered by the Liquidating Trustee in accordance with the written opinion of legal counsel selected by him with due care. The Liquidating Trustee may at any time seek instructions from the Bankruptcy Court concerning the acquisition, management or disposition of the Trust Assets. 7.8 Action Upon Instructions. If in performing the Liquidating Trustee's duties under this Agreement, the Liquidating Trustee is required to decide between alternative courses of action, or the Liquidating Trustee is unsure of the application of any provision of this Agreement or the Plan, then the Liquidating Trustee shall be under no duty to take or refrain from taking such action not inconsistent with this Agreement as the Liquidating Trustee shall deem advisable. The Liquidating Trustee may at any time apply to the Bankruptcy Court for a determination as to the course of action to be taken by the Liquidating Trustee. 7.9 Books and Records. The Liquidating Trustee shall maintain, in respect of the Liquidating Trust estate, the Beneficiaries and all others to receive distributions under this Agreement, books and records relating to the assets and income of the Liquidating Trust and the payment of expenses, and liabilities of and, claims against or assumed by the Liquidating Trust, in such detail and for such period of time as may be necessary to enable it to make full and proper accounting in respect thereof in accordance with Section 7.10 hereof and to comply with applicable provisions of law. Except as provided in Section 7.10 hereof, nothing in this Agreement requires the Liquidating Trustee to file any accounting or seek approval of any court with respect to the administration of the Liquidating Trust or as a condition for making any payment or distribution out of the Trust Assets. The US Trustee shall have the right at any time during regular business hours to inspect such books and records. 7.10 Annual Reports and Notices. Within 120 days after the end of each calendar year (unless the Liquidating Trust was terminated during that calendar year, and in such case, within 120 days after such termination), the Liquidating Trustee shall submit to the Bankruptcy Court (if the Case is still open), the U.S. Trustee and the Special Notice List a written report disclosing transactions for the prior calendar year, including: (i) financial statements of the Liquidating Trust at the end of such calendar


year and the receipts and disbursements of the Liquidating Trustee for the year, and (ii) a description of any action taken by the Liquidating Trustee in the performance of his duties which materially affects the Liquidating Trust. In addition, the Liquidating Trustee shall prepare and mail to each Beneficiary (NOT only those on the Special Notice List) a separate statement for that Beneficiary setting forth the Beneficiary's share of items of income, gain, loss, deduction or credit for tax-reporting purposes. 7.11 Compliance with Securities Laws. The parties intend that the rights or interests of the Beneficiaries arising under this Liquidating Trust shall not be "securities" under applicable laws, but none of the parties hereto represent or warrant that such rights or interests shall not be securities or shall be entitled to exemption from registration under applicable securities laws. If such rights or interests constitute securities, the parties hereto intend for the exemption from registration provided by Section 1145 of the Bankruptcy Code and under applicable securities laws to apply to their issuance under the Plan. The Liquidating Trustee shall file with the Securities Exchange Commission and other applicable federal and state governmental agencies the reports and other documents and take any other actions necessary to comply with federal or state securities laws, including, but not limited to, in the event that the Liquidating Trust becomes subject to the registration requirements of the Exchange Act, causing the Liquidating Trust to register pursuant to, and comply with the applicable reporting requirements of, the Exchange Act and issuing reports to all beneficiaries of such Liquidating Trust in accordance therewith. 7.12 Timely Performance. The Liquidating Trustee will make continuing efforts to prosecute or settle the Rights of Action, make timely distributions, and not unduly prolong the duration of the Liquidating Trust. 7.13 Actions Taken on Other Than Business Day. If any payment or act under the Plan is required to be made or performed on a date that is not a business day, then the making of such payment or the performance of such act may be completed on the next succeeding business day, but shall be deemed to have been completed as of the required date. 7.14 Identification of Trust Beneficiaries. In order to determine the actual names and addresses of Holders of Allowed Secured, Allowed Administrative and Allowed Priority Claims, and the Beneficiaries, the Liquidating Trustee shall be entitled to conclusively rely on the names and address set forth in the Schedules or filed proofs of claim or provided to the Liquidating Trustee by the Debtor; provided, that if there is a discrepancy between the Debtor's schedules and a filed proof of claim to which an objection has not been interposed, the proof of claim shall control. Each payment and distribution by the Liquidating Trustee shall be made in accordance with the Plan, any order of the Bankruptcy Court, and this Agreement. In the event of any inconsistency between the Plan, any order of the Bankruptcy Court, and this Agreement, the terms of the Plan shall govern.


7.15 No Implied Obligations. No other further covenants or obligations shall be implied into this Agreement. The Liquidating Trustee shall not be responsible in any manner whatsoever for the correctness of any recital, statement, representation, or warranty herein, or in any documents or instrument evidencing or otherwise constituting a part of the Trust Assets. 7.16 Unknown Property and Liabilities. The Liquidating Trustee shall be responsible for only that property delivered to it, and shall have no duty to make, nor incur any liability for failing to make, any search for unknown property or for any liabilities. 7.17 Closing of Chapter 11 Cases. When all Claims filed against the Debtor have become Allowed Claims or have been disallowed by Final Order, and all adversary proceedings to be filed on behalf of the Liquidating Trust have been filed, the Liquidating Trustee shall seek authority from the Bankruptcy Court to close the Chapter 11 Case if, in the discretion of the Liquidating Trustee, closing the Case would be more economical and efficient, taking into account the quarterly fees to be paid to the US Trustee and all other duties associated with an open case, than the need to reopen the Case to obtain Court approval as required by this Agreement or the Plan. 7.18 Compliance with Laws. Any and all distributions of Trust Assets and proceeds of borrowings, if any, shall be in compliance with applicable laws, including, but not limited to, applicable federal and state securities law.

7.19 Resignation; Successor Trustee.

(a) Resignation. The Liquidating Trustee may resign as Liquidating Trustee by giving written notice of his resignation to the US Trustee, Teledyne Continental Motors, Inc. and the Special Notice List. The Liquidating Trustee shall continue to serve as trustee for the lessor of (i) 45 days after the date of his notice of resignation, or (ii) until the appointment of a successor Liquidating Trustee shall become effective in accordance with paragraph (c) below. (b) Removal. The Liquidating Trustee may be removed by the Bankruptcy Court for cause, including, without limitation, gross negligence or willful misconduct. (c) Selection of Successor. Upon any resignation or removal of the Liquidating Trustee or any vacancy in such position, a successor Liquidating Trustee may be appointed by the Teledyne Continental Motors, Inc. (a) with the consent of holders of at least 50% of the beneficial interests in the Trust or (b) with the approval of the Bankruptcy Court; provided that in the case of the resignation of the Liquidating Trustee, a Successor Liquidating Trustee must be appointed and approved within 45 days of the date of the notice of such resignation.


(d) Successor Liquidating Trustee. Any successor Liquidating Trustee appointed hereunder shall execute an instrument accepting such appointment, file such acceptance with the Bankruptcy Court and in the Liquidating Trust records and mail a copy to the U.S. Trustee. The successor Liquidating Trustee shall obtain a fidelity bond in the manner and in the amount required by Section 4.4, above. Thereupon, such successor Liquidating Trustee shall, without any further act, become vested with all the estates, properties, rights, powers, trusts and duties of his predecessor trustee with like effects as if originally named herein; provided, however, that a removed or resigning Liquidating Trustee shall, nevertheless, when requested in writing by the successor Liquidating Trustee, execute and deliver an instrument or instruments conveying and transferring to such successor Liquidating Trustee under the Liquidating Trust all the estates, properties, rights, powers and trusts of such predecessor Liquidating Trustee. 7.20 Continuance of Liquidating Trust. The death, dissolution, resignation, incompetency or removal of the Liquidating Trustee shall not operate to terminate the Liquidating Trust created by this Agreement, to revoke any existing agency created under the terms of this Agreement or invalidate any action theretofore taken by the Liquidating Trustee. In the event of resignation or removal, the Liquidating Trustee promptly (a) shall execute and deliver such documents, instruments and other writings as may be ordered by the Bankruptcy Court or requested by a successor Liquidating Trustee to effect the termination of the Liquidating Trustee's capacity under this Agreement and the conveyance of the Trust Assets then held by the Liquidating Trustee to the successor, (b) shall deliver to the Bankruptcy Court or the successor Liquidating Trustee all documents, instruments, records and other writings related to the Liquidating Trust as may be in the possession of the Liquidating Trustee and (c) shall otherwise assist and cooperate in effecting the assumption of his obligations and functions by such successor Liquidating Trustee, and (d) may seek and obtain Bankruptcy Court discharge of obligations and liabilities as the Liquidating Trustee as if the Liquidating Trust were terminated pursuant to Section 10. 7.21 Preservation of Privilege. Any attorney-client privilege, work-product privilege, or other privilege or immunity in effect with respect to any documents or communications (whether written or oral), and any causes of action and other assets transferred to the Liquidating Trust (the "Privileges") shall vest in the Liquidating Trust and his representatives, to the full extend permitted by law. The Debtor shall be deemed to irrevocably transfer to the Liquidating Trustee, as legal successor, all rights of the Debtor and the bankruptcy estate to exercise or waive any Privileges. This transfer is self-executing, provided however, that the Liquidating Trustee and the Debtor are authorized and directed to take any and all necessary actions to effectuate the transfer of such Privileges. 7.22 No Liability for Acts of Predecessor. No successor Liquidating Trustee shall be in any way responsible or liable for the acts or omissions of any predecessor Liquidating Trustee in office prior to the date on which such Person becomes the Liquidating Trustee, nor shall such successor Liquidating Trustee be obligated to inquire into the validity or propriety of any such act or omission unless such successor


Liquidating Trustee expressly assumes such responsibility. Any successor Liquidating Trustee shall be entitled to accept as conclusive any final accounting and statement of Trust Assets furnished to such successor Liquidating Trustee by the predecessor Liquidating Trustee and shall further be responsible only for those Trust Assets properly includable in such statement.

SECTION 8

ESTATE REPRESENTATIVE

8.1 Status of Liquidating Trustee as Estate Representative. The Liquidating Trustee shall be the representative of the Estate within the meaning of Section 1123(b)(3)(B) of the Bankruptcy Code and shall have the rights and powers provided for in the Bankruptcy Code in addition to any rights and powers granted in this Agreement and in the Plan (acting in such capacity, the "Estate Representative"). The Liquidating Trustee shall be a party in interest as to all matters over with the Bankruptcy Court has jurisdiction. 8.2 Compensation as Estate Representative and Retention of Professionals. The compensation of the Liquidating Trustee, as described in Section 7.5 above, shall include his service in his capacity as Estate Representative. Professionals hired by the Liquidating Trustee may also represent him in his capacity as Estate Representative pursuant to the provisions of Section 7.4 above. 8.3 Limited Liability of the Estate Representative. For the avoidance of doubt, the provisions of Sections 7.6, 7.7 and 7.8 above, to the extent applicable, shall include the Liquidating Trustee acting in his capacity as Estate Representative.

SECTION 9

DEBTOR'S DUTY OF COOPERATION AND ASSISTANCE

The Debtor shall use all reasonable efforts to assist the Liquidating Trustee as necessary or appropriate to effectuate the purposes of the Plan and this Agreement and make available all books and records of the Debtor to enable the Liquidating Trustee to perform the Liquidating Trustee's tasks and duties under this Agreement and the Plan. If required, Debtor shall assign to the Liquidating Trustee its rights to information from Cessna.

SECTION 10

TERMINATION

The Liquidating Trustee shall continue until the earlier of (i) termination of the Liquidating Trust as approved by the Bankruptcy Court after the liquidation and distribution of the proceeds of all Trust Assets or (ii) ten (10) years after the Effective


Date. Notwithstanding the foregoing, in the event the Liquidating Trustee shall have been unable after continuing reasonable efforts to complete the liquidation and/or distribution of all Trust Assets in the initial term of the Liquidating Trust or other circumstances require extension, the Liquidating Trustee shall apply to the Bankruptcy Court to extend the term of the Liquidating Trust for such periods as are necessary in the Liquidating Trustee's judgment to accomplish the purposes of the Liquidating Trust, (on notice to the Beneficiaries and such other parties as the Bankruptcy Court directs), provided that each such extension must be approved by the Bankruptcy Court before the beginning of the extended term. The Liquidating Trustee shall at all times endeavor to liquidate and/or distribute the Trust Assets expeditiously, and in no event shall the Liquidating Trustee unduly prolong the duration of the Liquidating Trust. On termination of the Liquidating Trust the Liquidating Trustee shall advise the US Trustee, the Special Notice List and the Bankruptcy Court in writing of his termination. Notwithstanding the foregoing, after the termination of the Liquidating Trust, the Liquidating Trustee may exercise all powers, authorities and discretions herein conferred solely for the purpose of liquidating and winding up the affairs of the Liquidating Trust. On distribution of all Trust Assets, the Liquidating Trustee shall retain the books, records and files that shall have been delivered to or created by the Liquidating Trustee. At the Liquidating Trustee's discretion, all of such records and documents may be destroyed at any time after two years from the distribution of all of the Trust Assets. The Liquidating Trustee may request Bankruptcy Court approval of the final annual report filed pursuant to Section 7.10, and upon court approval, the Liquidating Trustee shall be discharged from all obligations and liabilities to the Liquidating Trust or any Person who has had or may then or thereafter have an interest in the Liquidating Trust for acts or omissions in the Liquidating Trustee's capacity as the Liquidating Trustee or in any other capacity contemplated by this Trust Agreement or the Plan and the surety or sureties on any bond provided by the Liquidating Trustee under this Agreement shall be discharged and exonerated.

SECTION 11

MISCELLANEOUS

11.1 Notices. All notices, requests or other communications required or permitted to be made in accordance with this Agreement shall be in writing and shall be mailed by first-class mail or by overnight delivery service: If to the Liquidating Trustee, at: Conrad Myers Myers & Co. PMB 221 6327 SW Capitol Highway Portland, OR 97239

If to the Debtor, at: Columbia Aircraft Manufacturing Corporation


c/o Leon Simson Tonkon Torp LLP 888 SW Fifth Ave., Suite 1600 Portland, OR 97204

Notices shall be deemed delivered when actually received. 11.2 Effectiveness. This Agreement shall become effective on the Effective Date. 11.3 Counterparts. This Agreement may be executed in one or more counterparts (via facsimile or otherwise), each of which shall be deemed an original but which together shall constitute but one and the same instrument. 11.4 Governing Law. This Agreement shall be governed by construed under and interpreted in accordance with the laws of the State of Oregon. 11.5 Headings. Sections, subheadings and other headings used in this Agreement are for convenience only and shall not affect the construction of this Agreement. 11.6 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions of this Agreement, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable any such provision in any other jurisdiction. 11.7 Amendment and Waiver. This Agreement may be amended from time to time, (a) with respect to non-material amendments or waivers without the consent of the Beneficiaries and (b) with respect to material amendments or waivers, pursuant to an order of the Bankruptcy Court on notice to the Beneficiaries. 11.8 Successors. This Agreement shall bind and inure to the benefit of the parties and their respective successors and assigns. 11.9 Irrevocability. The Liquidating Trust is irrevocable, but is subject to amendment as provided in this Agreement. 11.20 Enforcement and Administration. The Bankruptcy Court shall enforce and administer the provisions of this Agreement as set forth in the Plan.


IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement to be duly executed as of the date first above written. COLUMBIA AIRCRAFT CONRAD MYERS, AS MANUFACTURING CORPORAITON, LIQUIDATING TRUSTEE AS DEBTOR AND DEBTOR-IN-POSSESSION By:___________________________________ ________________________ Name:_________________________________ Title: __________________________________

EXHIBIT 2 to Debtor's Second Amended Disclosure Statement (Dated April 14th, 2008)

Tonkon Torp LLP

888 SW Fifth Avenue, Suite 1600 Portland, Oregon 97204

503-221-1440

Page 1 of 1 - EXHIBIT 2

Cash Available At Confirmation (May31) Estimate (in thousands)

Actual Cash on hand at 12-30-07 8,461

Collection of accounts receivable (net) 65

Return of deposits and prepaids 600

Interest Income through May 31, 2008 119

Professional fees through May 31, 2008 (2,847)

Other admin fees (25)

UST fees (15)

Payment on Garmin's Secured Claim (1,000)

Cash on hand May 31 at confirmation 5,358

Less:

503 b 9 claims (450)

Net Cash available at May 31 4,908

MOF Attorneys Fee Claim (90)

Distribution to Small Unsecured Creditors (22)

Safety reserve (50)

Admin fee reserve for 12 months (180)

Additional Evade Litigation expenses (100)

Additional expenses for FM litigation (600)

Cash at May 31 3,866

Garmin Holdback pending Cessna payment (2,000)

% of distribution to anticipated holders of unsecured claims 5%

Litigation recovery – Evade Unknown

Litigation recovery – FM Unknown

Preference recoveries Approximately $1million to $2 million

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Page 1 of 1 - CERTIFICATE OF SERVICE

CERTIFICATE OF SERVICE

I hereby certify that I served the foregoing DEBTOR'S SECOND AMENDED DISCLOSURE STATEMENT (Dated April 14, 2008) on the parties indicated as "ECF" on the attached List of Interested Parties by electronic means through the Court's Case Management/Electronic Case File system on the date set forth below.

In addition, I served the foregoing on the parties indicated as "Non-ECF" on the attached List of Interested Parties by:

by mailing a copy thereof in a sealed, first-class postage prepaid envelope, addressed to each attorney’s last-known address and depositing in the U.S. mail at Portland, Oregon on the date set forth below;

by causing a copy thereof to be hand-delivered to said attorneys at each attorney’s last-known office address on the date set forth below;

by sending a copy thereof via overnight courier in a sealed, prepaid envelope, addressed to each attorney’s last-known address on the date set forth below; or

by faxing a copy thereof to each attorney at his last-known facsimile number on the date set forth below.

DATED this 14th day of April, 2008.

TONKON TORP LLP By /s/ Leon Simson


034013\00034\809013 V010

034013\00034\783046v002 4/14/2008

LIST OF INTERESTED PARTIES In re Columbia Aircraft Manufacturing Corporation U.S. Bankruptcy Court Case No. 07-33850-elp11

ECF

M. Vivienne Popperl U.S. Trustee's Office 620 SW Main Street, Room 213 Portland, OR 97205-3026 [email protected]

Alex I. Poust Schwabe, Williamson & Wyatt, PC Pacwest Center, Suites 1600-1900 1211 SW Fifth Avenue Portland, OR 97204-3795 [email protected]

Attorneys for Ministry of Finance of Malaysia and Minister of Finance

Robert J. Vanden Bos Vanden Bos & Chapman, LLP Suite 520, The Spalding Building 319 SW Washington Street Portland, OR 97204-2690 [email protected]

Attorneys for Cessna Aircraft Company

Teresa H. Pearson Miller Nash LLP 3500 U.S. Bancorp Tower 111 SW Fifth Avenue Portland, OR 97204-3638 [email protected]

Of Attorneys Garmin International Inc.

Bradley O. Baker Attorney at Law 15545 Village Park Court Lake Oswego, OR 97034 [email protected]

Attorney for Oregon Aero, Inc.

David A. Foraker Greene & Markley, P.C. 1515 SW Fifth Avenue, Suite 600 Portland, OR 97201-5492 [email protected]

Attorney for Lance A. Neibauer, Lima Development Inc.

Jeanette L. Thomas Perkins Coie LLP Tenth Floor 1120 NW Couch Street Portland, OR 97209-4128 [email protected]

Attorneys for Teledyne Continental Motors, Inc.

Jean R. Robertson Calfee, Halter & Griswold LLP 1400 KeyBank Center 800 Superior Avenue Cleveland, OH 44114 [email protected]

Attorneys for Hartzell Propeller, Inc.

James Ray Streinz McEwen Gisvold LLP 1600 Standard Plaza 1100 SW Sixth Avenue Portland, OR 97204 [email protected]

Attorneys for Unsecured Creditors Committee

W. Austin Jowers King & Spaulding LLP 1180 Peachtree St Atlanta, GA 30309 [email protected]

Attorney for Arcapita, Inc.

Tara J. Schleicher Farleigh Wada Witt Suite 600 Bank of America Financial Center 121 SW Morrison Street Portland, OR 97204-3192 [email protected]

Attorneys for Dan Coury, Michael Fisher, Richard Page, Steven I. Peretz and Art Schwalge

Jack J. Cullen Foster Pepper PLLC 1111 Third Avenue, Suite 3400 Seattle, WA 98101-3299 [email protected]

Attorney for Export Bank of Malaysia

Carter M. Mann Foster Pepper PLLC 601 SW Second Ave #1800 Portland, OR 97204-3171 [email protected]

Attorney for Export-Import Bank of Malaysia

Christine A. Kosydar Brandy A. Sargent Stoel Rives LLP 2300 Standard Ins. Center 900 S.W. Fifth Avenue Portland, OR 97204-1268 [email protected] [email protected]

Attorney for ING Financial Markets LLC

Mary Jo Heston Lane Powell LLP 1420 Fifth Avenue, Suite 4100 Seattle, WA 98101-2338 [email protected]

Attorneys for Columbia Air Services, Inc.

Charles F. Hudson Lane Powell LLP 2100 ODS Tower 601 S.W. Second Avenue Portland, OR 97204-3158 [email protected]

Attorneys for Columbia Air Services, Inc.

NON-ECF

REQUESTS FOR NOTICE

S. Paul Sassalos Sr. Corporate Counsel Teledyne Continental Motors, Inc. 1049 Camino Dos Rios Thousand Oaks, CA 91360 [email protected]

Eric Yandell Heltzel, Upjohn, Williams, Yandell, Roth, Smith & Petersen P.C. Fourth Floor Pioneer Trust Building 117 Commercial Street NE P. O. Box 1048 Salem, OR 97308-1048 [email protected]

Lynn R. Stafford Markowitz Herbold Glade & Mehlhaf, PC 3000 PacWest Center 1211 SW Fifth Avenue Portland, OR 97204-3730 [email protected]

Attorney for Lance A. Neibauer, Lima Development Inc.

034013\00034\783046v002 4/14/2008

Michael J. Tennant and John Tennant, Jr. Tennant Developments 532 SW 13th Street, #200 Bend, OR 97702

SECURED CREDITORS

1st Source Bank 650 S Westdale Dr., #212 Wichita, KS 67209 -2572

LENDER

Composites Technology Research (Malaysia) Sdn. Bhd. Attn: Burhanuddin Mohamed T02 3rd Floor 2310 Century Square Jalan Usahawan 63000 Cyberjaya Selanger MALAYSIA [email protected]

COMMITTEE OF UNSECURED CREDITORS

Mike Irby, CFO (Chair) Teledyne Continental Motors, Inc. 2039 S Broad Street Mobile, AL 36615 [email protected]

Chair, Committee of Unsecured Creditors