exhibit10_56a.htm


     

    Exhibit
10.56(a)


      
        
          

          

        

        


      

      


      AMENDED
AND RESTATED SECURED SUPER-PRIORITY

      DEBTOR
IN POSSESSION CREDIT AGREEMENT

      


      DATED
AS OF APRIL 1, 2009

      


      among

      


      FRONTIER
AIRLINES HOLDINGS, INC.,

      a
Debtor and Debtor in Possession,

      


      as
a Borrower,

      


      FRONTIER
AIRLINES, INC.,

      a
Debtor and Debtor in Possession,

      


      as
a Borrower,

      


      LYNX
AVIATION, INC.,

      a
Debtor and Debtor in Possession,

      


      as
a Borrower,

      


      


      THE
LENDERS SIGNATORY HERETO FROM TIME TO TIME,

      as
Lenders,

      


      and

      


      WELLS
FARGO BANK NORTHWEST, NATIONAL ASSOCIATION

      as
Administrative Agent

      


      
        


        


      


      
        
          
            


             

          

           


        

        
           


          
            

          

        

        
           


        

      


      TABLE OF
CONTENTS

       

      
      

       

      
        	1.	AMOUNT AND TERMS OF
      CREDIT


      

       

      
      

      
      

      
        	
              	1.1	Credit Facilities.	 
	
                 

              	1.2	
                Prepayments. 

              	
                 

              
	 	1.3	
                Priority and Application of
      Payments. 

              	 
	 	1.4	Use of Proceeds.	 
	 	1.5	
                Interest and Applicable
      Margins. 

              	 
	 	1.6	
                Commitment Fees. 

              	 
	 	1.7	
                Receipt of
    Payments. 

              	 
	 	1.8	
                Loan Account and
      Accounting. 

              	 
	 	1.9	
                Indemnity. 

              	 
	 	1.10	
                Access. 

              	 
	 	1.11	
                Taxes. 

              	 
	 	1.12	
                Capital Adequacy; Increased Costs;
      Illegality. 

              	 


      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

       

      
        	
                2.

              	
                CONDITIONS
    PRECEDENT 

              	
                 

              
	 	 	 


      

      
        	
              	
                2.1

              	
                Conditions Precedent to
      Effectiveness. 

              	
                 

              


      

       

      
        	
                3.

              	
                REPRESENTATIONS AND
      WARRANTIES 

              	
                 

              
	 	 	 


      

      
        	
                 

              	
                3.1

              	
                Corporate Existence; Compliance with
      Law. 

              	
                 

              


      

      
        	
                 

              	
                3.2

              	
                Executive Offices, Collateral
      Locations, FEIN. 

              	
                 

              


      

      
        	
                 

              	
                3.3

              	
                Corporate Power, Authorization,
      Enforceable Obligations.

              


      

      
        	
                 

              	
                3.4

              	
                Financial Statements, Projections and
      Reports. 

              	
                 

              


      

      
        	
                 

              	
                3.5

              	
                Material Adverse Effect; Burdensome
      Restrictions; Default. 

              	
                 

              


      

      
        	
                 

              	
                3.6

              	
                Ownership of Property; Real Estate;
      Liens. 

              	
                 

              


      

      
        	
                 

              	
                3.7

              	
                Labor Matters. 

              	
                 

              


      

      
        	
                 

              	
                3.8

              	
                Ventures, Subsidiaries and Affiliates;
      Outstanding Stock and Indebtedness. 

              	
                 

              


      

      
        	
                 

              	
                3.9

              	
                Government
      Regulation. 

              	
                 

              


      

      
        	
                 

              	
                3.10

              	
                Margin
    Regulations. 

              	
                 

              


      

      
        	
                 

              	
                3.11

              	
                Taxes. 

              	
                 

              


      

      
        	
                 

              	
                3.12

              	
                ERISA. 

              	
                 

              


      

      
        	
                 

              	
                3.13

              	
                No Litigation. 

              	
                 

              


      

      
        	
                 

              	
                3.14

              	
                Intellectual
      Property. 

              	
                 

              


      

      
        	
                 

              	
                3.15

              	
                Full Disclosure. 

              	
                 

              


      

      
        	
                 

              	
                3.16

              	
                Environmental
      Matters. 

              	
                 

              


      

      
        	
                 

              	
                3.17

              	
                Insurance. 

              	
                 

              


      

      
        	
                 

              	
                3.18

              	
                Use of Proceeds. 

              	
                 

              


      

      
        	
                 

              	
                3.19

              	
                Deposit. 

              	
                 

              


      

      
        	
                
                

              	
                3.20

              	
                Compliance With Industry
      Standards. 

              	
                 

              


      

      
        	
                 

              	
                3.21

              	
                Secured, Super-Priority
      Obligations. 

              	
                 

              


      

      
        	
                 

              	
                3.22

              	
                Certificated Air
      Carrier. 

              	
                 

              


      

      
        	
                 

              	
                3.23

              	
                Slots and Gate
      Interests. 

              	
                 

              


      

      
        	
                 

              	
                3.24

              	
                Section 1110
    Assets. 

              	
                 

              


      

      
        	
              	
                3.25

              	
                Patriot Act. 

              	
                 

              
	 	3.26	
                Cross
Collateralization.

              	 


      

      
      

       

      
        	
                4.

              	
                FINANCIAL STATEMENTS AND
      INFORMATION 

              	
                 

              
	 	 	 


      

      
        	
                 

              	
                4.1

              	
                Reports and
    Notices. 

              	
                 

              


      

      
        	
                 

              	
                4.2

              	
                Communication with
      Accountants. 

              	
                 

              


      

       

      
        	
                5.

              	
                AFFIRMATIVE
    COVENANTS 

              	
                 

              
	 	 	 


      

      
        	
                 

              	
                5.1

              	
                Maintenance of Existence and Conduct of
      Business. 

              	
                 

              


      

      
        	
                 

              	
                5.2

              	
                Payment of Taxes. 

              	
                 

              


      

      
        	
                 

              	
                5.3

              	
                Books and
Records. 

              	
                 

              


      

      
        	
                 

              	
                5.4

              	
                Insurance. 

              	
                 

              


      

      
        	
                 

              	
                5.5

              	
                Compliance with
    Laws. 

              	
                 

              


      

      
        	
                 

              	
                5.6

              	
                Intellectual
      Property. 

              	
                 

              


      

      
        	
                 

              	
                5.7

              	
                Environmental
      Matters. 

              	
                 

              


      

      
        	
                 

              	
                5.8

              	
                Further
    Assurances. 

              	
                 

              


      

      
        	
                 

              	
                5.9

              	
                Additional Collateral
      Documents. 

              	
                 

              


      

      
        	
                 

              	
                5.10

              	
                [Intentionally
      Omitted]. 

              	
                 

              


      

      
        	
                 

              	
                5.11

              	
                Slot Utilization. 

              	
                 

              
	 	5.12	
                ERISA/Labor Matters.

              	 


      

      
      

      
        	
                 

              	
                5.13

              	
                Maintenance of Liens and
      Collateral. 

              	
                 

              


      

      
        	
                 

              	
                5.14

              	
                Use of Proceeds. 

              	
                 

              


      

      
        	
                 

              	
                5.15

              	
                Cash Management
      Systems. 

              	
                 

              


      

      
        	
                 

              	
                5.16

              	
                Access. 

              	
                 

              


      

       

      
        	
                6.

              	
                NEGATIVE
COVENANTS 

              	
                 

              
	 	 	 


      

      
        	
                 

              	
                6.1

              	
                Mergers. 

              	
                 

              


      

      
        	
                 

              	
                6.2

              	
                Investments. 

              	
                 

              


      

      
        	
                 

              	
                6.3

              	
                Indebtedness. 

              	
                 

              


      

      
        	
                 

              	
                6.4

              	
                Affiliate
      Transactions. 

              	
                 

              


      

      
        	
                 

              	
                6.5

              	
                Capital Structure and
      Business. 

              	
                 

              


      

      
        	
                 

              	
                6.6

              	
                Guaranteed
      Indebtedness. 

              	
                 

              


      

      
        	
                 

              	
                6.7

              	
                Liens. 

              	
                 

              


      

      
        	
                 

              	
                6.8

              	
                Sale of Stock and
      Assets. 

              	
                 

              


      

      
        	
                 

              	
                6.9

              	
                Financial
    Covenants. 

              	
                 

              


      

      
        	
                 

              	
                6.10

              	
                Hazardous
    Materials. 

              	
                 

              


      

      
        	
                 

              	
                6.11

              	
                Sale-Leasebacks. 

              	
                 

              


      

      
        	
                 

              	
                6.12

              	
                Restricted
    Payments. 

              	
                 

              


      

      
        	
                 

              	
                6.13

              	
                Change of Corporate Name or Location;
      Change of Fiscal Year. 

              	
                 

              


      

      
        	
                 

              	
                6.14

              	
                Limitation on Negative Pledge
      Clauses. 

              	
                 

              


      

      
        	
                 

              	
                6.15

              	
                No Speculative
      Transactions. 

              	
                 

              


      

      
        	
                 

              	
                6.16

              	
                Real Estate Purchases and
      Leases. 

              	
                 

              


      

      
        	
                 

              	
                6.17

              	
                Subsidiaries. 

              	
                 

              


      

      
        	
                 

              	
                6.18

              	
                Material
    Contracts. 

              	
                 

              


      

       

      
        	
                7.

              	
                TERM 

              	
                 

              
	 	 	 


      

      
        	
                 

              	
                7.1

              	
                Termination. 

              	
                 

              


      

      
        	
                 

              	
                7.2

              	
                Survival of Obligations Upon
      Termination of Financing Arrangements. 

              	
                 

              


      

       

      
        	
                8.

              	
                EVENTS OF DEFAULT; RIGHTS AND
      REMEDIES 

              	
                 

              
	 	 	 


      

      
        	
                 

              	
                8.1

              	
                Events of
Default. 

              	
                 

              


      

      
        	
                 

              	
                8.2

              	
                Remedies. 

              	
                 

              


      

      
        	
                 

              	
                8.3

              	
                Waivers by
    Borrowers. 

              	
                 

              


      

      
        	
                 

              	
                8.4

              	
                Liquidation
    Budget. 

              	
                 

              


      

       

      
        	
                9.

              	
                JOINT AND SEVERAL
      LIABILITY 

              	
                 

              
	 	 	 


      

       

      
        	
                10.

              	
                SECURITY 

              	
                 

              
	 	 	 


      

      
        	
                 

              	
                10.1

              	
                Security. 

              	
                 

              


      

      
        	
                 

              	
                10.2

              	
                Perfection of Security
      Interests. 

              	
                 

              


      

      
        	
                 

              	
                10.3

              	
                Rights of Lenders; Limitations on
      Lenders’ Obligations.

              


      

      
        	
                 

              	
                10.4

              	
                Covenants of the Borrowers with Respect
      to Collateral.

              


      

      
        	
                 

              	
                10.5

              	
                Performance by Administrative Agent of
      the Borrowers’ Obligations. 

              	
                 

              


      

      
        	
                 

              	
                10.6

              	
                Limitation on the Administrative
      Agent’s duty in Respect of Collateral. 

              	
                 

              


      

      
        	
                 

              	
                10.7

              	
                Remedies; Rights Upon
      Default. 

              	
                 

              


      

      
        	
                 

              	
                10.8

              	
                The Administrative Agent’s Appointment
      as Attorney-in-Fact. 

              	
                 

              


      

      
        	
                 

              	
                10.9

              	
                Release of
      Collateral. 

              	
                 

              


      

       

      
        	
                11.

              	
                ASSIGNMENT AND PARTICIPATIONS;
      APPOINTMENT OF ADMINISTRATIVE AGENT 

              	
                 

              
	 	 	 


      

      
        	
                 

              	
                11.1

              	
                Assignment and
      Participations. 

              	
                 

              


      

      
        	
                 

              	
                11.2

              	
                Appointment of Administrative
      Agent 

              	
                 

              


      

      
        	
                 

              	
                11.3

              	
                Rights as a Bank. 

              	
                 

              


      

      
        	
                 

              	
                11.4

              	
                Exculpatory
      Provisions. 

              	
                 

              


      

      
        	
                 

              	
                11.5

              	
                Reliance by Administrative
      Agent. 

              	
                 

              


      

      
        	
                 

              	
                11.6

              	
                Delegation of
    Duties. 

              	
                 

              


      

      
        	
                 

              	
                11.7

              	
                Resignation of Administrative
      Agent. 

              	
                 

              


      

      
        	
                 

              	
                11.8

              	
                Non-Reliance on Administrative Agent
      and Other Lenders. 

              	
                 

              


      

      
        	
              	
                11.9

              	
                Collateral and Guaranty
      Matters. 

              	
                 

              
	 	11.10	
                Indemnification.

              	 


      

      
      

       

      
        	
                12.

              	
                SUCCESSORS AND
      ASSIGNS 

              	
                 

              
	 	 	 


      

      
        	
                 

              	
                12.1

              	
                Successors and
      Assigns. 

              	
                 

              


      

       

      
        	
                13.

              	
                MISCELLANEOUS 

              	
                 

              
	 	 	 


      

      
        	
                 

              	
                13.1

              	
                Complete Agreement; Modification of
      Agreement. 

              	
                 

              


      

      
        	
                 

              	
                13.2

              	
                Amendments and
      Waivers. 

              	
                 

              


      

      
        	
                 

              	
                13.3

              	
                Fees and
Expenses. 

              	
                 

              


      

      
        	
                 

              	
                13.4

              	
                No Waiver. 

              	
                 

              


      

      
        	
                 

              	
                13.5

              	
                Remedies. 

              	
                 

              


      

      
        	
                 

              	
                13.6

              	
                Severability. 

              	
                 

              


      

      
        	
                 

              	
                13.7

              	
                Conflict of
Terms. 

              	
                 

              


      

      
        	
                 

              	
                13.8

              	
                Confidentiality. 

              	
                 

              


      

      
        	
              	
                13.9

              	
                GOVERNING LAW. 

              	
                 

              
	 	13.10	
                Notices.

              	 
	 	13.11	
                Section Titles.

              	 
	 	13.12	
                Counterparts.

              	 
	 	13.13	
                WAIVER OF JURY TRIAL.

              	 
	 	13.14	
                [Reserved]

              	 
	 	13.15	
                Advice of Counsel.

              	 
	 	13.16	
                No Strict Construction.

              	 
	 	13.17	
                Patriot Act.

              	 


      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      
      

      


      


      INDEX OF
APPENDICES

      


      
        	
                Annex
      A (Recitals)

              	
                -
      Definitions

              
	
                Annex
      B (Section 5.15)

              	
                -
      Cash Management System

              
	
                Annex
      C (Section 2.1(c))

              	
                -
      Closing Checklist

              
	
                Annex
      D (Section 4.1)

              	
                -
      Financial Statements and Projections – Reporting

              
	
                Annex
      E (Section 6.9)

              	
                -
      Financial Covenants

              
	
                Annex
      F (Section 13.10)

              	
                -
      Notice Addresses

              
	
                Annex
      G (Definitions)

              	
                -
      Commitments

              
	 
      	 
      	 
      
	 
      	
                Disclosure
      Schedule 3.1

              	
                -
      Type of Entity; State of Organization

              
	 
      	
                Disclosure
      Schedule 3.2

              	
                -
      Corporate Information and Collateral Locations

              
	 
      	
                Disclosure
      Schedule 3.6

              	
                -
      Real Estate and Leases

              
	 
      	
                Disclosure
      Schedule 3.7

              	
                -
      Labor Matters

              
	 
      	
                Disclosure
      Schedule 3.8

              	
                -
      Ventures, Subsidiaries and Affiliates; Outstanding
Stock

              
	 
      	
                Disclosure
      Schedule 3.11

              	
                -
      Tax Matters

              
	 
      	
                Disclosure
      Schedule 3.12(a)

              	
                -
      ERISA Plans

              
	 
      	
                Disclosure
      Schedule 3.14

              	
                -
      Intellectual Property

              
	 
      	
                Disclosure
      Schedule 3.16

              	
                -
      Environmental Matters

              
	 
      	
                Disclosure
      Schedule 3.17

              	
                -
      Insurance

              
	 
      	
                Disclosure
      Schedule 3.19

              	
                -
      Deposit and Disbursement Accounts

              
	 
      	
                Disclosure
      Schedule 3.21

              	
                -
      Existing Liens

              
	 
      	
                Disclosure
      Schedule 3.23

              	
                -
      Slots

              
	 
      	
                Disclosure
      Schedule 3.24

              	
                -
      Section 1110 Assets

              
	 
      	
                Disclosure
      Schedule 3.26

              	
                -
      Cross – Collateralization

              
	 
      	
                Disclosure
      Schedule 6.2

              	
                -
      Existing Investments

              
	 
      	
                Disclosure
      Schedule 6.3

              	
                -
      Existing Indebtedness

              
	 
      	
                Disclosure
      Schedule 6.7

              	
                -
      Existing Liens

              
	 
      	
                Disclosure
      Schedule 6.14

              	
                -
      Negative Pledge Clauses

              
	 
      	
                Disclosure
      Schedule 10.1

              	
                -
      Commercial Tort Claims

              
	 
      	
                Disclosure
      Schedule 10.4

              	
                -
      Pledged Collateral

              
	 
      	 
      	 
      
	 
      	
                Exhibit
      A

              	
                -
      Form of Note

              
	 
      	
                Exhibit
      B

              	
                -
      Form of Pledge Amendment

              
	 
      	
                Exhibit
      C

              	
                -
      Form of Copyright Security Agreements

              
	 
      	
                Exhibit
      D

              	
                -
      Form of Trademark Security
Agreements

              


      

      



      
        
          
             

          

           


        

        
           


          
            

          

        

        
           


        

      


      This
AMENDED AND RESTATED SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT
AGREEMENT (this “Agreement”), dated as of April
1, 2009, among Frontier Airlines Holdings, Inc., a Delaware corporation (in its
individual capacity, “Frontier
Holdings,” and in its capacity as agent on behalf of the Borrowers,
“Borrower Agent”),
Frontier Airlines, Inc., a Colorado corporation (“Frontier Airlines”), and Lynx
Aviation, Inc., a Colorado corporation (“Lynx,” and, together with
Frontier Holdings and Frontier Airlines, the “Borrowers” or the “Borrower”), each as a debtor
and debtor in possession under chapter 11 of the Bankruptcy Code; Wells Fargo
Bank Northwest, National Association, acting in its capacity as administrative
agent and collateral agent for the Lenders (as defined below) (in such capacity,
the “Administrative
Agent”); and the Lenders signatory hereto from time to time.

      


      RECITALS

      


      WHEREAS,
on April 10, 2008, (the “Petition Date”), each of the
Borrowers filed voluntary petitions for relief (collectively, the “Cases”) under chapter 11 of
the Bankruptcy Code with the United States Bankruptcy Court for the Southern
District of New York (the “Bankruptcy Court”);
and

      


      WHEREAS,
the Borrowers are continuing to operate their respective businesses and manage
their respective properties as debtors and debtors in possession under sections
1107(a) and 1108 of the Bankruptcy Code; and

      


      WHEREAS,
certain of the parties hereto have previously entered into a Secured
Super-Priority Debtor in Possession Credit Agreement dated as of August 4, 2008,
as amended pursuant to Amendment No. 1 thereto dated November 15, 2008 (the
“Existing DIP Credit
Agreement”); and

      


      WHEREAS,
the parties hereto have agreed to amend and restate the Existing DIP Credit
Agreement in its entirety to read as set forth below; and

      


      WHEREAS,
capitalized terms used in this Agreement shall have the meanings ascribed to
them in Annex A and, for purposes of this Agreement and the other Loan
Documents, the rules of construction set forth in Annex A shall govern. All
Annexes, Schedules, Exhibits and other attachments (collectively, “Appendices”) hereto, or
expressly identified in this Agreement, are incorporated herein by reference,
and taken together with this Agreement, shall constitute but a single agreement.
These Recitals shall be construed as part of this Agreement.

      


      NOW,
THEREFORE, in consideration of the premises and the mutual covenants hereinafter
contained, and for other good and valuable consideration, the parties hereto
agree as follows:

      


      1. AMOUNT
AND TERMS OF CREDIT

       

      1.1 Credit
Facilities.

       

          (a) Loan.

       

              (i) Subject
to the terms and conditions hereof, on the Effective Date, after giving effect
to the last paragraph of Section 2.1, (x) term loans in an aggregate amount of
$12,500,000 owed to the Continuing Lender that are outstanding under the
Existing DIP Credit Agreement shall continue to remain outstanding hereunder
(the “Existing
Loans”) and (y) each Lender agrees to make to the Borrowers, jointly
and severally, term loans (collectively, the “New Loan” or the “New Loans” and, together with
the Existing Loans, the “Loan” or the “Loans”) in an amount equal to
the excess of such Lender’s Commitment over the amount of such Lender’s Existing
Loans. The Loans shall be evidenced by promissory notes substantially in the
form of Exhibit A (each a “Note” and collectively the
“Notes”). Each Note
shall represent the joint and several obligation of each Borrower to pay the
amount of the applicable Lender’s Loan, together with interest thereon as
prescribed in Section 1.5. Notwithstanding anything to the contrary contained
herein or in any other Loan Document, the Commitments shall terminate upon the
funding of the New Loan pursuant to Section 2.1

       

              (ii) The
aggregate outstanding principal balance of the Loan shall be due and payable in
full in immediately available funds on the Maturity Date, if not sooner paid in
full. No payment with respect to the Loan may be reborrowed.

       

              (iii) Each
payment of principal with respect to the Loan shall be paid to the
Administrative Agent for the ratable benefit of each Lender, ratably in
proportion to each such Lender’s respective Commitment.

       

      1.2 Prepayments.

       

          (a) Voluntary
Prepayments. Borrowers may at any time on at least three (3) Business
Days prior written notice to the Administrative Agent, voluntarily prepay the
Loans; provided that (i) any such prepayment shall be in a minimum amount of
$2,500,000 and integral multiples of $2,500,000 in excess of such
amount; and (ii) any such prepayment shall be applied pursuant to Section
1.3;

       

          (b) Mandatory
Prepayments.

       

      (i) Upon the
issuance by any Borrower of any of its Stock to any Person other than another
Borrower (or the receipt of any capital contribution by any Borrower from any
Person other than another Borrower), the Borrowers shall prepay an aggregate
principal amount of Loans equal to 100% of all Net Cash Proceeds received
therefrom immediately upon receipt thereof by any Borrower.

       

      (ii) Immediately
upon the receipt by any Borrower of any Net Cash Proceeds from any Asset Sale,
the Borrowers shall prepay an aggregate principal amount of Loans equal to 100%
of such Net Cash Proceeds, provided, however, that (A) sales of Subject Assets
shall be subject to the terms in the immediately succeeding clauses (iii) and
(iv); (B) with respect to Asset Sales (other than Subject Assets which are
addressed in clause (iii) and (iv) below) permitted pursuant to clauses (c),
(d), (e), (f), (g), (i) (except as set forth in clause (v) below), (j), or
(k) of Section 6.8 hereof, the Borrowers shall not be required to make any
prepayment of Loans with any Net Cash Proceeds received from such Asset Sales;
(C) with respect to Asset Sales permitted by Section 6.8(a) (other than Subject
Assets which are addressed in clause (iii) and (iv) below), the Borrowers shall
not be required to make prepayments of Loans with any Net Cash Proceeds received
from such Asset Sales unless and until the gross proceeds from such Asset Sales,
in the aggregate, exceed $2,000,000 (measured from the Closing Date); and
(D) with respect to Asset Sales permitted by Section 6.8(b) (other than
Subject Assets which are addressed in clause (iii) and (iv) below), the
Borrowers shall not be required to make prepayments of Loans with any Net Cash
Proceeds received from such Asset Sales unless and until the gross proceeds from
such Asset Sales, in the aggregate, exceed $3,000,000 (measured from the Closing
Date).

       

              (iii) Upon the
sale of any Subject Asset (excluding Subject Assets consisting of spare parts
(which are addressed in clause (iv) below)), Borrowers shall prepay an aggregate
principal amount of Loans equal to 75% of the Net Cash Proceeds of such
Subject Asset; provided that, the
Borrowers shall not be required to make prepayments of Loans with any Net Cash
Proceeds received from the sales of A318 aircraft permitted by Section 6.8(n)
except to the extent the Net Cash Proceeds of such Asset Sales, in the
aggregate, exceed $1,200,000.

       

              (iv) Upon the
sale of any spare part or any rotable or expendable that either (x) is outside
the ordinary course of business or (y) generates Net Cash Proceeds in an
aggregate amount in any month in excess of $100,000, Borrowers shall prepay an
aggregate principal amount of Loans equal to 75% of such Net Cash
Proceeds.

       

              (v) Upon the
sale-leaseback, synthetic lease or similar transaction with respect to Q400
engines permitted by Section 6.8(i) and the proviso to Section 6.8, the
Borrowers shall prepay an aggregate principal amount of Loans equal to 50% of
the Net Cash Proceeds of such Asset Sales.

       

              (vi) Immediately
upon the receipt by any Borrower of any Net Cash Proceeds from any Property Loss
Event, the Borrowers shall prepay an aggregate principal amount of Loans equal
to 100% of such Net Cash Proceeds.

       

          (c) No
Implied Consent. Nothing in this Section 1.2 shall be construed to constitute
the Administrative Agent’s or Lender’s consent to any transaction that is not
permitted by other provisions of this Agreement or the other Loan
Documents.

       

      1.3 Priority and Application of
Payments.

       

      The
Borrowers hereby irrevocably waive the right to direct the application of any
and all payments received from or on behalf of any Borrower, and the Borrowers
and the Lenders hereby irrevocably agree that the Administrative Agent shall
have the continuing exclusive right to apply any and all such payments against
the Obligations as follows: first, to Fees and reimbursable expenses of the
Administrative Agent then due and payable pursuant to any of the Loan Documents;
second, to interest then due and payable on the Loan; third, to prepay the
remaining principal amount of the Loan, until the Loan shall have been paid in
full; and fourth, to all other Obligations then due and payable to the Lenders.
All payments and prepayments shall be applied ratably to the portion thereof
held by each Lender as determined by its Pro Rata Share.

      


      1.4 Use of
Proceeds.

       

      The
Borrowers shall utilize the proceeds of the Loans to repay certain of the
amounts outstanding under the Existing DIP Credit Agreement as contemplated by
Section 2.1(g) and to provide general working capital and to pay ordinary
operating costs and expenses of the Borrowers to the extent, and only to the
extent, such costs and expenses are consistent in all material respects with the
Projections and permitted by the Bankruptcy Code or the Bankruptcy
Court.

      


      1.5 Interest and Applicable
Margins.

       

          (a) (i)  Subject
to clause (e) below, the Borrowers may, at their option (an “Interest Election”) elect to
pay interest on the Loans on each Interest Payment Date (i) entirely in cash
(“Cash Interest”) or
(ii) entirely by increasing the outstanding principal amount of the Loans on the
relevant Interest Payment Date by the amount of interest accrued from the
effective date of any such Interest Election until such Interest Payment Date
(“PIK
Interest”).  The Borrowers must make an Interest Election by
delivering a notice to the Administrative Agent no later than 5 Business Days
prior to the effective date of any Interest Election, which notice shall specify
(x) whether such Interest Election is made under clause (i) or (ii) of this
Section 1.5(a) and (y) the effective date of such Interest
Election.  An Interest Election shall remain in effect until the
earlier of (A) the delivery by the Borrowers of a new Interest Election and (B)
the Maturity Date. In the event no Interest Election is made, interest on the
Loans shall be PIK Interest.

       

          (b) Subject
to clause (e) below, Loans shall bear interest from the Effective Date at a rate
per annum equal to (i) in the case of Cash Interest, 13.00% per annum and (ii)
in the case of PIK Interest, 15.00% per annum.  Cash Interest on each
Loan shall be payable on each Interest Payment Date.  PIK Interest on
each Loan shall be payable by increasing the outstanding principal amount of the
Loans by the amount of PIK Interest on each Interest Payment Date. Any interest
so added to the principal amount of the Loans shall bear interest as provided in
this Section 1.5 from the date on which such interest has been so added. The
obligation of the  Borrowers to pay PIK Interest shall be
automatically evidenced by this Agreement or, if applicable, any Notes
issued pursuant to this Agreement.  Unless the context otherwise
requires, for all purposes hereof, references to “principal amount” of the Loans
refers to the face amount of the Loans and not the gross proceeds funded
hereunder and includes any PIK Interest so capitalized and added to the
principal amount of the Loans from the date on which such interest has been so
added.

       

          (c) If any
payment on any Loan becomes due and payable on a day other than a Business Day,
the maturity thereof will be extended to the next succeeding Business Day and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.

       

          (d) All
computations of interest shall be made by the Administrative Agent on the basis
of a 365/366 day year, in each case for the actual number of days occurring in
the period for which such interest is payable.

       

          (e) So long
as (i) an Event of Default has occurred and is continuing under Section 8.1(a),
(f), (h), (l), (m) or (n) or (ii) any other Event of Default has occurred and is
continuing and the Administrative Agent shall have given written notice to the
Borrowers, the Loans and all other outstanding Obligations shall bear interest
at 2.00% per annum above the rate otherwise applicable to the Loans (the “Default Rate”). Interest at
the Default Rate shall accrue from the initial date of such Event of Default
until that Event of Default is cured or waived and shall be payable in cash on
each Interest Payment Date.

       

      1.6
Commitmemt Fees.

                     

      The
Borrowers shall pay to the Administrative Agent for the benefit of each Lender
in accordance with its Pro Rata Share a commitment fee (the “Commitment Fee”) equal to
$1,000,000, earned and payable on the Effective Date.

       

      1.7 Receipt of
Payments.

       

      The
Borrowers shall make each payment under this Agreement not later than 2:00 p.m.
(New York City time) on the day when due in immediately available funds in
Dollars to any account specified in writing by Administrative Agent to
Borrowers. For purposes of computing interest as of any date, all payments shall
be deemed received on the Business Day on which immediately available funds
therefor are received in the Collection Account prior to 2:00 p.m. New York
City time. Payments received after 2:00 p.m. New York City time on any
Business Day or on a day that is not a Business Day shall be deemed to have been
received on the following Business Day.

       

      1.8 Loan Account and
Accounting.

       

      The
Administrative Agent shall maintain a loan account (the “Loan Account”) on its books to
record the Loan, all payments made by the Borrowers with respect to such Loan,
and all other debits and credits as provided in this Agreement with respect to
such Loan or any other Obligations with respect to such Loan. All entries in the
Loan Account shall be made in accordance with the Administrative Agent’s
customary accounting practices as in effect from time to time. The balance in
the Loan Account, as recorded on the Administrative Agent’s most recent printout
or other written statement, shall, absent manifest error, be presumptive
evidence of the amounts due and owing to the Administrative Agent and the
Lenders by the Borrowers; provided, that any failure to so record or any error
in so recording shall not limit or otherwise affect the Borrowers’ duty to pay
the Obligations with respect to the Loan. The Administrative Agent shall render
to the Borrower Agent a monthly accounting of transactions with respect to each
Loan setting forth the balance of the Loan Account for the immediately preceding
month. Each Lender may rely on the Loan Account as evidence of the amount of
Obligations with respect to the Loan from time to time owing to it. Unless the
Borrowers notify the Administrative Agent in writing of any objection to any
such accounting (specifically describing the basis for such objection), within
thirty (30) days after the date thereof, each and every such accounting shall be
presumptive evidence of all matters reflected therein. Only those items
expressly objected to in such notice shall be deemed to be disputed by the
Borrowers.

      


      1.9 Indemnity.

       

      Each
Borrower shall, commencing on the Closing Date, jointly and severally indemnify
and hold harmless each of the Administrative Agent, Lenders and their respective
Affiliates, and each such Person’s respective officers, directors, employees,
attorneys, agents and representatives (each, an “Indemnified Person”), from and
against any and all suits, actions, proceedings, claims, damages, losses,
liabilities and expenses (including reasonable attorneys’ fees and disbursements
and other costs of investigation or defense, including those incurred upon any
appeal) that may be instituted or asserted against or incurred by any such
Indemnified Person as the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents and the
administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including any and all Environmental Liabilities
and legal costs and expenses arising out of or incurred in connection with
disputes between or among any parties to any of the Loan Documents, and
associated with Electronic Transmissions or E-Systems as well as failures caused
by the Borrowers’ equipment, software, services or otherwise used in connection
therewith (collectively, “Indemnified Liabilities”);
provided, that no such Borrower shall be liable for any indemnification to an
Indemnified Person to the extent that any such suit, action, proceeding, claim,
damage, loss, liability or expense results from that Indemnified Person’s gross
negligence, bad faith or willful misconduct as finally determined by a court of
competent jurisdiction. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO
ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY, SPECIAL OR CONSEQUENTIAL
DAMAGES THAT MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED,
SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER
TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

      


      1.10 Access.

       

      Each
Borrower shall, during normal business hours, from time to time upon two (2)
Business Days prior notice to the Borrower Agent as frequently as the
Administrative Agent reasonably determines to be appropriate at the Borrowers’
sole cost and expense: (i) provide the Administrative Agent and any of its
officers, employees and agents access to its officers and employees, and with
prior notice and the opportunity to be present, advisors of each Borrower, (ii)
permit the Administrative Agent, and any of its officers, employees and agents,
to inspect, audit and make extracts from any Borrower’s Books and Records
(subject to requirements under any confidentiality agreements, if applicable)
and (iii) permit the Administrative Agent, and any of its officers, employees
and agents, to have access to properties, facilities and to the Collateral and
to inspect, audit, review, evaluate, conduct field examinations and make test
verifications and counts of the Accounts, Inventory and other Collateral of any
Borrower; provided, that (x) so long as no Event of Default has occurred and is
continuing, such access and inspections referred to in clauses (i) through (iii)
above shall not be permitted more frequently than twice in any Fiscal Year and
(y) during the existence of any Event of Default, Administrative Agent shall
have all rights of access described above at any time and without having to give
any notice to any Person. The Borrowers shall make available to the
Administrative Agent and its counsel reasonably promptly originals or copies of
all Books and Records (subject to requirements under any confidentiality
agreements, if applicable) of any Borrower that the Administrative Agent may
reasonably request. The Borrowers shall deliver any document or instrument
necessary for the Administrative Agent, as it may from time to time request, to
obtain records from any service bureau or other Person that maintains records
for any Borrower and shall maintain supporting documentation on media, including
computer tapes and discs owned by the Borrowers. 

      


      1.11 Taxes.

       

          (a) Any and
all payments by the Borrowers hereunder or under the Notes shall be made, in
accordance with this Section 1.11, free and clear of and without deduction for
any and all present or future Taxes. If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under the
Notes, (i) unless such Taxes are imposed as the result of a determination that
an applicable Certificate of Exemption (as defined in Section 1.11(c)) did not
entitle a Foreign Person (as defined in Section 1.11(c)) to an exemption from
such Taxes at the time such Foreign Person became a Lender hereunder, the sum
payable shall be increased as much as shall be necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 1.11) the Administrative Agent or Lenders, as
applicable, receive an amount equal to the sum they would have received had no
such deductions been made, (ii) such Borrower shall make such deductions, and
(iii) such Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law. As promptly as reasonably
practicable after any such payment of Taxes, the Borrowers shall furnish to the
Administrative Agent the original or a certified copy of a receipt evidencing
payment thereof.

       

          (b) The
Borrowers shall, jointly and severally, indemnify and, within ten (10) days of
demand therefor, pay the Administrative Agent and each Lender for the full
amount of Taxes paid by the Administrative Agent or such Lender, as appropriate,
with respect to payments received from any Borrower hereunder and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally asserted unless
such Taxes are imposed as the result of a determination that establishes that an
applicable Certificate of Exemption did not in fact entitle a Foreign Person to
an exemption from such Taxes at the time such Foreign Person became a Lender
hereunder.

       

          (c) Each
Person organized under the laws of a jurisdiction outside the United States (a
“Foreign Person”) as to
which payments to be made under this Agreement or under the Notes are completely
exempt from United States withholding tax under an applicable statute or tax
treaty shall provide to the Borrower Agent and the Administrative Agent a
properly completed and executed IRS Form W-8ECI or Form W-8BEN or other
applicable form, certificate or document prescribed by the IRS or the United
States certifying as to such Foreign Person’s entitlement to such complete
exemption (a “Certificate of
Exemption”). Any Foreign Person that seeks to become a Lender under this
Agreement shall provide a Certificate of Exemption to the Borrower Agent and the
Administrative Agent prior to becoming a Lender hereunder. No Foreign Person may
become a Lender hereunder if such Foreign Person fails to deliver a Certificate
of Exemption in advance of becoming a Lender. For the avoidance of doubt, (i)
any Sale described in Section 11.1(a) to a Foreign Person shall only become
effective upon delivery by the party to whom such Sale is made to the Borrower
Agent and the Administrative Agent of a Certificate of Exemption, and (ii) any
participant or SPV described in Section 11.1(e) shall not be entitled to any
benefit under Section 1.11 unless such participant or SPV delivers to the
Borrower Agent and the Administrative Agent a Certificate of Exemption. In
addition, any Lender that is not a Foreign Person and that is a partnership or
trust for U.S. federal income tax purposes shall not be entitled to any payment
by the Borrowers pursuant to Section 1.11(b) with respect to any Taxes paid by
such Lender with respect to any Foreign Person that is a partner or owner of an
interest in such Lender unless such Lender had obtained a Certificate of
Exemption from such Foreign Person at the later of the times (i) such Lender
became a Lender hereunder and (ii) such Foreign Person became a partner or owner
of an interest in such Lender.

       

          (d) Each
Lender agrees that, as promptly as reasonably practicable after it becomes aware
of any circumstance that would result in any additional payment by the Borrowers
pursuant to Section 1.11(a) or (b), such Lender shall, to the extent not
inconsistent with such Lender’s internal policies of general application, use
reasonable commercial efforts to mitigate any Taxes that would result in such
payments by the Borrowers. If the Borrowers are required to pay additional
amounts to or for the account of any Lender pursuant to this Section 1.11, then
such Lender (other than an Initial Lender), at the request of the Borrowers and
at the Borrowers’ expense, will change the jurisdiction of its lending office if
such change (i) will eliminate or reduce any such additional payment which may
thereafter accrue and (ii) as determined by such Lender in its sole discretion,
is not otherwise materially disadvantageous to such Lender, provided, that the
mere existence of fees, charges, costs or expenses that the Borrowers have
offered and agreed to pay on behalf of a Lender shall not be deemed to be
disadvantageous to such Lender.

       

      1.12 Capital Adequacy; Increased
Costs; Illegality.

       

          (a) If any
law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender’s capital as a consequence of its obligations hereunder, then the
Borrowers shall from time to time, upon demand by such Lender to the Borrower
Agent (with a copy of such demand to the Administrative Agent) pay to the
Administrative Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to the Borrower Agent and to the Administrative Agent
shall be presumptive evidence of the matters set forth therein.

       

          (b) If, due
to either (i) the introduction of or any change in any law or regulation (or any
change in the interpretation thereof) other than in respect of taxes (including
income taxes) or (ii) the compliance with any guideline or request from any
central bank or other non-tax Governmental Authority (whether or not having the
force of law), in each case occurring after the Closing Date, there shall be any
increase in the cost to any Lender of agreeing to make or making, funding or
maintaining any Loan, then the Borrowers shall from time to time, upon demand by
such Lender to the Borrower Agent (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender additional amounts sufficient to compensate such Lender for such
increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower Agent and to the Administrative Agent by such Lender,
shall be presumptive evidence of the matters set forth therein. Each Lender
agrees that, as promptly as practicable after it becomes aware of any
circumstances referred to above which would result in any such increased cost,
the affected Lender shall, to the extent not inconsistent with such Lender’s
internal policies of general application, use reasonable commercial efforts to
minimize costs and expenses incurred by it and payable to it by the Borrowers
pursuant to this Section 1.12(b).

       

          (c) Failure
on the part of any Lender to demand compensation for any increased costs or
reduction in amounts received or receivable or reduction in return on capital
with respect to any period shall not constitute a waiver of such Lender’s right
to demand compensation with respect to such period or any other period,
provided, that the Borrowers shall not be required to compensate a Lender
pursuant to this Section 1.12 for any increased costs or reductions incurred
more than two hundred seventy (270) days prior to the date that such Lender
notifies the Borrower Agent of the circumstance giving rise to such increased
costs or reductions and of such Lender’s intention to claim compensation
therefor.

       

      


      2. CONDITIONS
PRECEDENT

       

      2.1 Conditions Precedent to
Effectiveness.

       

      The
obligation of each Continuing Lender to continue the Existing Loan and to make
its New Loan shall not become effective until the date (the “Effective Date”) on which each
of the following conditions precedent is satisfied or provided for in a manner
reasonably satisfactory to the Administrative Agent, or duly waived in writing
in accordance with Section 13.2, whereupon each Lender shall be obligated to
fund the New Loan within 1 Business Day of receipt of the notice referred to in
Section 2.1(j) below.

       

          (a) Amended and Restated Credit Agreement. The
Administrative Agent shall have received counterparts of this Agreement duly
executed by each of Borrowers, the Administrative Agent and the
Lenders.

       

          (b) Final DIP Order. The Bankruptcy
Court shall have entered the Final DIP Order, which order shall be in effect and
unstayed as of the Effective Date and which order shall not have been reversed,
modified or amended as a whole or in part without the prior written consent of
the Administrative Agent.

       

          (c) Final Claim
Order.  The Bankruptcy Court shall have entered the Final Claim
Order, which order shall be in effect and unstayed as of the Effective Date and
shall not have been reversed, modified or amended as a whole or in part without
the prior written consent of the Continuing Lenders.

       

          (d) Loan Documents. The
Administrative Agent shall have received such documents, instruments and
agreements listed on Annex C.

       

          (e) Approvals. The
Administrative Agent shall have received (i) satisfactory evidence that the
Borrowers have obtained all required consents and approvals of all Persons,
including all requisite Governmental Authorities, to the execution, delivery,
performance and consummation of this Agreement and the other Loan Documents, or
(ii) an officer’s certificate in form and substance reasonably satisfactory to
the Administrative Agent affirming that no such consents or approvals are
required.

       

          (f) Payment of Fees. The
Borrowers shall have paid to the Administrative Agent the Fees required to
be paid on the Effective Date and shall have reimbursed the Administrative
Agent for all reasonable and documented fees, costs and expenses of closing
presented as of the Effective Date to the extent required by this Agreement
(including, for the avoidance of doubt, the administrative agency fee invoiced
to the Borrowers prior to the date hereof).

       

          (g) Payment of Amounts under
Existing DIP Credit Agreement.  The Borrowers shall have paid
to the Administrative Agent (i) an amount equal to all accrued fees, principal,
interest and other amounts payable to the Departing Lenders under the Existing
DIP Credit Agreement, such that no amount shall remain outstanding for the
account of any Departing Lender under the Existing DIP Credit Agreement and (ii)
an amount equal to all fees and interest accrued under the Existing DIP Credit
Agreement (including PIK Interest accrued from and after the Closing Date, even
if previously converted to principal) and payable to the Continuing
Lender, such that no amount under the Existing DIP Credit Agreement shall
remain outstanding for the account of the Continuing Lender other than the
principal amount of the Existing Loans (which, for the sake of clarity, will be
governed by the terms of this Agreement on and after the Effective
Date).

       

          (h) No Material Adverse
Effect. There has been no Material Adverse Effect since the date of any
Borrower’s Form 10-K or 10-Q most recently filed prior to the Effective Date as
updated by subsequent public filings prior to the Effective Date and other
written materials provided to the Administrative Agent or the Initial Lenders
prior to the Effective Date (including, without limitation, the Projections, and
revenue build and cash flow data delivered prior to the Effective
Date).

       

          (i) Motions and Filings.
The Administrative Agent’s reasonable determination that all motions, orders and
other pleadings or related documents to be filed or submitted to the Bankruptcy
Court in connection with the Loan Documents and the transactions contemplated
thereby shall be consistent with the terms hereof.

       

          (j) Notice of
Borrowing.  The Borrower Agent shall have delivered a notice of
borrowing in form and substance reasonably satisfactory to the Administrative
Agent not later than 4 Business Days following the entry of the Final DIP
Order.

       

          (k) Representations and
Warranties.  All representations and warranties in this
Agreement and each other Loan Document shall be true and correct in all
material respects (except to the extent any representation or warranty is
qualified by materiality, Material Adverse Effect or word of like import, in
which case such representation or warranty shall be true and correct in all
respects) as of the Effective Date except to the extent such representations and
warranties expressly refer to an earlier date, in which case they shall be true
and correct as of such earlier date.

       

          (l) No Default or Event of
Default.  No Default or Event of Default shall have occurred
and be continuing.

       

      On the
Effective Date, without further action by any party to the Existing DIP Credit
Agreement or this Agreement, (i) the Existing DIP Credit Agreement shall be
automatically amended and restated in its entirety to read as this Agreement
reads and each Lender and each Departing Lender (as defined below) shall be
deemed to have consented thereto, (ii) the Commitment of each Lender shall be
the amount set forth opposite the name of such Lender on Annex G hereto, and
(iii) any Lender party to the Existing DIP Credit Agreement but not listed on
Annex G hereto (a “Departing
Lender”) shall cease to be a Lender party to this Agreement and shall
have no further obligations hereunder.  On and after the Effective
Date, the rights and obligations of the parties hereto shall be governed by the
terms hereof.  The rights and obligations of the parties to the
Existing DIP Credit Agreement with respect to the period prior to the Effective
Date shall continue to be governed by the provisions of the Existing DIP Credit
Agreement as in effect prior to the Effective Date.

       

      3. REPRESENTATIONS
AND WARRANTIES

       

      To induce
the Lenders and the Administrative Agent to enter into this Agreement, the
Borrowers executing this Agreement, jointly and severally, make the following
representations and warranties (on the Effective Date) to the Administrative
Agent and each Lender with respect to all Borrowers, each and all of which shall
survive the execution and delivery of this Agreement.  Unless
otherwise expressly set forth herein, each reference in this Article 3 to
Disclosure Schedules shall mean the Disclosure Schedules delivered on the
Effective Date.

      


      3.1 Corporate Existence;
Compliance with
Law.

       

      Each
Borrower (a) is a corporation, limited liability company or limited partnership
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization set forth in Disclosure
Schedule 3.1; (b) is duly qualified to conduct business and is in good standing
in each other jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification, except where the failure to
be so qualified could not reasonably be expected to have a Material Adverse
Effect; (c) has the requisite power and authority to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it operates
under lease and to conduct its business as now conducted or proposed to be
conducted; (d) subject to the specific representations regarding Environmental
Laws, has all licenses, permits, consents or approvals from or by, and has made
all filings with, and has given all notices to, all Governmental Authorities
having jurisdiction, to the extent required for such ownership, operation and
conduct, except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect; (e) is in compliance with its charter and bylaws
or partnership or operating agreement, as applicable; and (f) subject to
specific representations set forth herein regarding ERISA, Environmental Laws,
tax and other laws, is in compliance with all applicable provisions of law,
except to the extent permitted by the Bankruptcy Code or where the failure to
comply, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

      


      3.2 Executive Offices,
Collateral Locations, FEIN.

       

      Each
Borrower’s name (as it appears in official filings in its state of incorporation
or organization), state of incorporation or organization, organization type,
organization number, if any, issued by its state of incorporation or
organization, and the location of each Borrower’s chief executive office,
principal place of business and location and the hangars, terminals, maintenance
facilities, warehouses and premises at which any Collateral is located are set
forth in Disclosure Schedule 3.2, and none of such Collateral has been kept at
any location other than the locations listed on Disclosure Schedule 3.2 within
four (4) months preceding the Effective Date (or since its acquisition if less
than four (4) months prior to the Closing Date). In addition, Disclosure
Schedule 3.2 lists the federal employer identification number of each Borrower.
Each Borrower has only one jurisdiction of existence, incorporation or
organization, as applicable.

      


      3.3 Corporate Power,
Authorization, Enforceable Obligations.

       

      Upon the
entry by the Bankruptcy Court of the Final DIP Order, the execution, delivery
and performance by each Borrower of the Loan Documents to which it is a party
and the creation of all Liens provided for therein: (a) are within such Person’s
power; (b) have been duly authorized by all necessary corporate, limited
liability company or limited partnership action; (c) do not contravene any
provision of such Person’s charter, bylaws or partnership or operating agreement
as applicable; (d) do not violate any law or regulation, or any order or decree
of any court or Governmental Authority; (e) do not conflict with or result in
the breach or termination of, constitute a default under or accelerate or permit
the acceleration of any performance required by, or require any payment to be
made under, any material lease, material agreement, material indebtedness or
other material instrument entered into or assumed by such Person after the
commencement of the Cases to which such Person is a party or by which such
Person or any of its property is bound; (f) do not result in the creation or
imposition of any Lien upon any of the property of such Person other than those
in favor of the Administrative Agent for the benefit of the Lenders, pursuant to
the Loan Documents and the Final DIP Order; and (g) do not require the consent
or approval of any Governmental Authority or any other Person, except (i) those
referred to in Section 2.1(e), all of which will have been duly obtained, made
or complied with prior to the Effective Date and (ii) any consents, notices or
approvals pursuant to the Federal Assignment of Claims Act of 1940 or any
applicable state, county or municipal law restricting the assignment of any
Accounts for which the Account Debtor is the United States government or a
political subdivision thereof or any state, county or municipality or
department, agency or instrumentality thereof. Each of the Loan Documents shall
be duly executed and delivered by each Borrower and each such Loan Document
shall constitute a legal, valid and binding obligation of such Borrower
enforceable against it in accordance with its terms.

      


      3.4 Financial Statements,
Projections and Reports.

       

      Except
for the Projections, all Financial Statements concerning the Borrowers and their
Subsidiaries that are referred to below have been prepared in accordance with
GAAP consistently applied throughout the periods covered (except as disclosed
therein and except, with respect to unaudited Financial Statements, for the
absence of footnotes and normal year-end audit adjustments) and present fairly
in all material respects the consolidated financial position of the Borrowers
and their Subsidiaries as at the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended.

      


          (a) Financial Statements.
The following Financial Statements have been delivered on the
Effective Date:

       

              (i) The
audited consolidated balance sheet at March 31, 2008, of the Borrowers and their
Subsidiaries and the related consolidated statements of operations, stockholders
equity and other comprehensive income (loss) and for the Fiscal Year then ended,
reported on by KPMG LLP.

       

              (ii) The
unaudited consolidated balance sheet at December 31, 2008 of the Borrowers and
their Subsidiaries and the related consolidated statements of operations and
cash flows for the three (3) months then ended.

       

          (b) Projections. The
Projections delivered to Lenders prior to the Effective Date have been prepared
by the Borrowers and reflect projections for the period beginning on March 1,
2009 on a month-by-month basis at least through December 31, 2009. The
Projections are based upon the same accounting principles (other than
adjustments related to the impact of the Cases) as those used in the preparation
of the financial statements described above and are based on assumptions
believed by the Borrowers to be reasonable at the time such Projections were
delivered in light of conditions and facts known to the Borrowers as of the date
thereof (it being understood that projections by their nature are inherently
uncertain, the Projections are not a guaranty of future performance, and actual
results may differ materially from the Projections).

       

      3.5 Material Adverse Effect;
Burdensome Restrictions; Default.

       

      Since
March 31, 2008, (a) no Borrower has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or non
ordinary course forward or long-term commitments that are material and are not
reflected in the Projections delivered to Lenders prior to the Effective Date
and that have not been approved by the Bankruptcy Court pursuant to section 363
of the Bankruptcy Code (to the extent such approval is required by section 363
of the Bankruptcy Code), (b) no contract, lease or other agreement or instrument
has been entered into or assumed by any Borrower or has become binding upon any
Borrower’s assets and no law or regulation applicable to any Borrower has been
adopted that has or could reasonably be expected to have a Material Adverse
Effect and (c) no Borrower is in default and to the best of the Borrowers’
knowledge no third party is in default under any material contract, lease or
other agreement or instrument, that alone or in the aggregate could reasonably
be expected to have a Material Adverse Effect.

      


      3.6 Ownership of Property; Real
Estate; Liens.

       

          (a) Each
Borrower warrants that it has good, marketable, legal and valid title to, or
legal and valid leasehold interests in, all of its personal property
constituting Collateral.

       

          (b) No
Borrower owns any real property. The leases and other agreements listed in
Disclosure Schedule 3.6 constitute all of the Material Real Estate Contracts.
Each Borrower has valid and enforceable leasehold interests in all of its
material leased real estate, excluding any leased Real Estate that is occupied
on a month to month or “at will” basis. True, correct and complete copies of all
Material Real Estate Contracts have been delivered to the Initial Lenders to the
extent reasonably requested by the Initial Lenders (and not previously delivered
to them). None of the properties and assets of any Borrower is subject to any
Liens other than Permitted Liens.

       

      3.7 Labor
Matters.

       

      Except as
set forth on Disclosure Schedule 3.7: (a) no strikes, work stoppages or other
material labor disputes exist, are pending, or to the knowledge of any Borrower,
threatened, against any Borrower, except those that, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect; (b) hours worked by
and payment made to employees of each Borrower to such Borrower’s knowledge,
comply with each federal, state, local or foreign law applicable to such matters
except to the extent that noncompliance could not reasonably be expected to have
a Material Adverse Effect; (c) there is no organizing activity involving any
Borrower pending or, to any Borrower’s knowledge, threatened by any labor union
or group of employees, that, in the aggregate, would reasonably be expected to
have a Material Adverse Effect; (d) there are no representation proceedings
pending or, to any Borrower’s knowledge, threatened with the National Mediation
Board, and no labor organization or group of employees of any Borrower has made
a pending demand for recognition, that, in the aggregate, would reasonably be
expected to have a Material Adverse Effect; and (e) there are no material
complaints or charges against any Borrower pending or, to any Borrower’s
knowledge, threatened to be filed with any Governmental Authority or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by any Borrower of any individual, that,
in the aggregate, would reasonably be expected to have a Material Adverse
Effect.  Disclosure Schedule 3.7 sets forth each domestic collective
bargaining agreement to which any Borrower is a party or to which any Borrower
is otherwise bound, and the Borrowers have delivered true and complete copies of
all such agreements to Administrative Agent.

      


      3.8 Ventures, Subsidiaries and
Affiliates; Outstanding Stock and Indebtedness.

       

      Except as
set forth in Disclosure Schedule 3.8, no Borrower has any Subsidiaries, is
engaged in any joint venture or partnership with any other Person, or is an
Affiliate of any other Person. All of the issued and outstanding Stock of each
Borrower (other than Frontier Holdings) is owned by each of the Stockholders,
fully paid and non-assessable and in the amounts set forth in Disclosure
Schedule 3.8. Except as set forth in Disclosure Schedule 3.8, there are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Borrower may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries. All outstanding Indebtedness and
Guaranteed Indebtedness of each Borrower (except for the Obligations) is
described in Section 6.3 (including Disclosure Schedule 6.3).

      


      3.9 Government
Regulation.

       

      No
Borrower is or, after giving effect to the making of the Loans by Lenders to the
Borrowers and the application of the proceeds thereof, will be required to
register as an “investment company” as such term is defined in the Investment
Company Act of 1940.

      


      3.10 Margin
Regulations.

       

      No
Borrower is engaged, nor will it engage, principally or as one of its important
activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” as such terms
are defined in Regulation U of the Federal Reserve Board as now and from time to
time hereafter in effect (such securities being referred to herein as “Margin Stock”). None of the
proceeds of the Loans or other extensions of credit under this Agreement will be
used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock, for the purpose of reducing or retiring any Indebtedness that was
originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a “purpose credit” within the
meaning of Regulations T, U or X of the Federal Reserve Board.

      


      3.11 Taxes.

       

          (a) Except as
provided on Disclosure Schedule 3.11, all material federal, state, local,
foreign and other tax returns, reports and statements, including information
returns, required by any Governmental Authority to be filed by any Borrower have
been filed with the appropriate Governmental Authority, all such returns,
reports and statements are true and correct in all material respects and,
subject to the automatic stay or their status as pre-petition claims, all
Charges shown to be due and payable on such returns, reports and statements have
been or will be timely paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof, excluding
Charges or other amounts being contested in accordance with Section 5.2(b).
Proper and accurate amounts have been withheld by each Borrower from amounts
paid to its respective employees for all periods in full and complete compliance
in all material respects with all applicable federal, state, local and foreign
laws and such withholdings have been or will be timely paid, subject to the
automatic stay, to the respective Governmental Authorities. Except as provided
on Disclosure Schedule 3.11 and other than pursuant to any lease to which it is
a party, to each Borrower’s knowledge, none of the Borrowers and their
respective predecessors are liable for any Charges: (a) under any agreement
(including any tax sharing agreements) or (b) as a transferee.

       

          (b) No
Borrower has agreed or been requested to make any adjustment under IRC Section
481(a), by reason of a change in accounting method or otherwise, which would
reasonably be expected to have a Material Adverse Effect.

       

      3.12 ERISA.

       

          (a) Disclosure
Schedule 3.12(a) lists as of the Closing Date all Pension Plans and all Retiree
Welfare Plans. Copies of all such listed Plans, together with a copy of the
latest form IRS/DOL 5500-series for each such Plan have been made available to
the Administrative Agent. Except with respect to Multiemployer Plans, each
Qualified Plan has been determined by the IRS to qualify under Section 401 of
the IRC, the trusts created thereunder have been determined to be exempt from
tax under the provisions of Section 501 of the IRC and to the knowledge of any
Borrower, nothing has occurred that would cause the loss of such qualification
or tax-exempt status. Except for noncompliance to the extent permitted under the
Bankruptcy Code, each Plan is in compliance in all material respects both with
its terms and with the applicable provisions of ERISA and the IRC. Each Borrower
and all ERISA Affiliates have made all contributions and paid all amounts due as
required under the terms of the Plan or by either Section 412, 430, 431 or 432
of the IRC or Section 302, 303, 304 or 305 of ERISA prior to the date of
commencement of the Cases.

       

          (b) None of
the Borrowers nor any ERISA Affiliate, nor any predecessor of any such Person
sponsors, maintains or contributes to, or has in the past sponsored, maintained
or contributed to a Title IV Plan, or otherwise has or in the past has had any
liability or obligation with respect of a Title IV Plan that can be enforced
against the Borrower or any ERISA affiliate.  Except as set forth in
Disclosure Schedule 3.12(b) or which would reasonably be expected not to have a
Material Adverse Effect, (i) no ERISA Event has occurred or is reasonably
expected to occur; (ii) there are no pending, or to the knowledge of any
Borrower, threatened, material claims (other than claims for benefits in the
normal course), sanctions, actions or lawsuits, asserted or instituted against
any Plan or any fiduciary or sponsor thereof or any Borrower with respect to any
Plan; and (iii) except in the case of any ESOP, Stock of all Borrowers and their
ERISA Affiliates makes up, in the aggregate, no more than 10% of the fair market
value of the assets of any Plan measured on the basis of fair market value as of
the latest valuation date of any Plan.

       

          (c) With
respect to any Multiemployer Plan, (i) as of the date of this Agreement, neither
any Borrower nor any ERISA Affiliate has made or suffered a “complete
withdrawal” or a “partial withdrawal” (as respectively defined in Sections 4203
and 4205 of ERISA), (ii) as of the date of this Agreement, no event has occurred
that presents a material risk of a partial withdrawal other than in connection
with the commencement of the Cases, (iii) neither any Borrower nor any
ERISA Affiliate has any contingent liability under Section 4204 of ERISA, and,
to the knowledge of any Borrower, no circumstances exist that present a material
risk that any such Multiemployer Plan will go into reorganization, and (iv) as
of the date of this Agreement and as of any date that a Loan is made, neither
any Borrower nor any ERISA Affiliate would incur withdrawal liability in excess
of $1,000,000 in the aggregate if a complete withdrawal by the Borrowers and the
ERISA Affiliates occurred under each Multiemployer Plan as of such
date.  No Multiemployer Plan has incurred an accumulated funding
deficiency, whether or not waived that could reasonably be expected to have a
Material Adverse Effect.  Except as could not reasonably be expected
to have a Material Adverse Effect, no Multiemployer Plan is, or is reasonably
expected to be, in “endangered status” or “critical status” within the meaning
of Section 432 of the IRC.

       

      3.13 No
Litigation.

       

      Other
than the Cases, no action, claim, lawsuit, demand, investigation or proceeding
is now pending or, to the knowledge of any Borrower, threatened against any
Borrower, before any Governmental Authority or before any arbitrator or panel of
arbitrators (collectively, “Litigation”) that,
individually or in the aggregate, (a) challenges any Borrower’s right or power
to enter into or perform any of its obligations under the Loan Documents to
which it is a party, or the validity or enforceability of any Loan Document or
any action taken thereunder or (b) could reasonably be expected to have a
Material Adverse Effect.

      


      3.14 Intellectual
Property.

       

      Each
Borrower owns or has rights to use all Intellectual Property necessary to
continue to conduct its business as now conducted by it or presently proposed to
be conducted by it, and each U.S. registered Patent, U.S. registered Trademark,
U.S. registered Copyright and U.S. License in effect is listed, together with
application or registration numbers, as applicable, in Disclosure Schedule 3.14.
To the knowledge of any Borrower, each Borrower conducts its business and
affairs without infringement of or interference with any Intellectual Property
of any other Person in any material respect. Except as set forth in Disclosure
Schedule 3.14, no Borrower is aware of any infringement claim by any other
Person with respect to any material Intellectual Property.

      


      3.15 Full
Disclosure.

       

      No
information contained in this Agreement, any of the other Loan Documents,
Financial Statements or other written reports from time to time prepared by any
Borrower and delivered hereunder or any written statement prepared by any
Borrower and furnished by or on behalf of any Borrower to the Administrative
Agent or any Lender pursuant to the terms of this Agreement (other than any
Projections) contains or will contain, when taken as a whole, any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made and as of the date when
made. Projections from time to time delivered hereunder are or will be based
upon the estimates and assumptions stated therein, all of which the Borrowers
believed at the time of delivery to be reasonable in light of the conditions and
facts known to any Borrower as of such delivery date (it being understood that
projections by their nature are inherently uncertain, such Projections are not a
guaranty of future performance and actual results may differ materially from
those set forth in such Projections).

      


      3.16 Environmental
Matters.

       

          (a) Except as
set forth in Disclosure Schedule 3.16 or for any matter for which notice has
been given under Section 5.7, and except for any matter that would not
reasonably be expected to result in any Borrower incurring Environmental
Liabilities in excess of $250,000 individually or $1,000,000 in the aggregate
prior to the Maturity Date: (i) no Borrower has caused or suffered to occur any
material Release of Hazardous Materials on, at, in, under, above, to, from or
about any of its owned or material leased real estate (the “Real Estate”); (ii) the
Borrowers are and have been in material compliance with all Environmental Laws;
(iii) the Borrowers have obtained, and are in material compliance with, all
Environmental Permits required by Environmental Laws for the operations of their
respective businesses as presently conducted or as proposed to be conducted,
which compliance includes obtaining, maintaining and complying with required
Environmental Permits and all such Environmental Permits are valid, uncontested
and in good standing; (iv) there are no existing circumstances or conditions,
including any Releases of Hazardous Materials, which is reasonably likely to
result in a material Environmental Liability; (v) there is no unstayed
Litigation arising under or related to any Environmental Laws, Environmental
Permits or Hazardous Material that seeks damages, penalties, fines, costs or
expenses or injunctive relief against, or that alleges criminal misconduct by,
any Borrower; (vi) no notice has been received by any Borrower alleging that any
Borrower has any material Environmental Liability; and (vii) the Borrowers have
provided to the Administrative Agent material written information pertaining to
any Environmental Liabilities of any Borrower.

       

          (b) Each
Borrower hereby acknowledges and agrees that the Administrative Agent (i) is not
now, and has not ever been, in control of any of the Real Estate or any
Borrower’s affairs so as to subject the Administrative Agent to any liability
under Environmental Laws, including CERCLA, and (ii) does not have the capacity
through the provisions of the Loan Documents to influence any Borrower’s conduct
with respect to the ownership, operation or management of any of its Real Estate
or compliance with Environmental Laws or Environmental Permits.

       

          (c) None of
the items set forth on Disclosure Schedule 3.16 either individually or in the
aggregate would be reasonably likely to have a Material Adverse
Effect.

       

      3.17 Insurance.

       

      Disclosure
Schedule 3.17 sets forth a list that is correct and complete in all material
respects that lists the name of insurer, coverage, policy number and term of
each insurance policy (collectively, the “Policies”) to which any of the
Borrowers is a party or by which any of their assets or any of their employees,
officers or directors (in such capacity) are covered by property, fire and
casualty, professional liability, public and product liability, workers’
compensation, extended coverage, business interruption, directors’ and officers’
liability insurance and other forms of insurance provided to any of the
Borrowers in connection with their respective businesses.  All
Postpetition premiums required to be paid with respect to the Policies covering
all periods up to and including the Closing Date have been
paid.  Except as set forth on Disclosure Schedule 3.17 hereto,
all such Policies are in full force and effect.  Except as set forth
on Disclosure Schedule 3.17 hereto, none of the Borrowers has received any
notice of default, cancellation or termination with respect to any provision of
any such Policies, or any notice that the Insurer is unwilling to renew any such
Policy following the currently scheduled expiration of such Policy or intends to
materially modify any term of any such renewed Policy as compared to the
existing Policy.  With respect to its directors’ and officers’
liability insurance policies, none of the Borrowers has failed to give any
notice or present any claim thereunder in due and timely fashion or as required
by any such Policies so as to jeopardize full recovery under such
Policies.  Except as set forth on Disclosure Schedule 3.17 hereto,
none of the Borrowers have any claims pending under the Policies in a stated
amount in excess of $5,000,000.

      


      3.18 Use of
Proceeds.

       

      The
proceeds of the Loans are being used by the Borrowers for the purposes specified
in Section 1.4.

      


      3.19 Deposit.

       

      Disclosure
Schedule 3.19 lists all banks and other financial institutions at which any
Borrower maintains deposit or other accounts in the United States, and such
Schedule correctly identifies the name, address and telephone number of each
depository, the name in which the account is held and the complete account
number therefor.

      


      3.20 Compliance With Industry
Standards.

       

      Each
Borrower maintains its Books and Records, aircraft, engines, spare parts and
other assets and properties that are used in the conduct of its business in
compliance in all material respects with applicable law, including but not
limited to all rules, regulations and standards of the FAA or any other
applicable Aviation Authority.

      


      3.21 Secured, Super-Priority
Obligations.

       

          (a) On and
after the Effective Date, the provisions of the Loan Documents and the Final DIP
Order are effective to create in favor of the Administrative Agent, for the
benefit of the Lenders, legal, valid and perfected Liens on and security
interests (having the priority provided for herein and in the Final DIP Order)
in all right, title and interest of each Borrower in the Collateral, enforceable
against each Borrower that owns an interest in such Collateral, except to the
extent the perfection of such lien would require the recording of a memorandum
of lease or a leasehold mortgage in the applicable real estate
records.

       

          (b) Pursuant
to subsections 364(c)(2) and (3) of the Bankruptcy Code and the Final DIP Order,
all amounts owing by the Borrowers under the Loan will be secured by a first
priority perfected Lien on the Collateral, subject only to (i) valid, perfected,
nonavoidable and enforceable Liens existing as of the Closing Date and listed on
Disclosure Schedule 3.21, (ii) valid liens in existence on the Closing Date
to the extent perfected subsequent to such date as permitted by Section 546(b)
of the Bankruptcy Code and listed on Disclosure Schedule 3.21, (iii) the
Carve-Out and (iv) Permitted Liens permitted pursuant to Section 6.7(a),
6.7(c), 6.7(e), 6.7(f), 6.7(g), 6.7(h), 6.7(i), 6.7(j), 6.7(k),
6.7(m), 6.7(n) or 6.7(o).

       

          (c) Pursuant
to section 364(c)(1) of the Bankruptcy Code and the Final DIP Order, all
obligations of the Borrowers at all times will constitute allowed Super-Priority
Claims in each of the Cases having priority over all administrative expenses of
the kind specified in sections 503(b) or 507(b) of the Bankruptcy Code, subject
only to the Carve Out and the First Data Claim (which claim shall be pari passu
or junior to the Obligations in favor of Administrative Agent).

       

          (d) The Final
DIP Order and the transactions contemplated hereby and thereby, are in full
force and effect and have not been vacated, reversed, modified, amended or
stayed, in each case, without the prior written consent of the Administrative
Agent.

       

      3.22 Certificated Air
Carrier.

       

      Each Air
Carrier is a Certificated Air Carrier and possesses all necessary certificates,
franchises, licenses, permits, rights, designations, authorizations, exemptions,
concessions and consents that are material to the operation of the routes flown
by it and the conduct of its business and operations as currently conducted (the
“Permits”). Each Air
Carrier is a “citizen of the United States” as defined in Section 40102(a)(15)
of Title 49. Neither the DOT nor FAA nor any other Aviation Authority has taken
any action or proposed or, to such Air Carrier’s knowledge, threatened to take
any action, to amend, modify, suspend, revoke, terminate, cancel, or otherwise
affect such Permits, in each case, in a materially adverse manner.

      


      3.23 Slots and Gate
Interests.

       

      Subject
to transfers, exchanges and other dispositions permitted by this Agreement,
Borrowers are utilizing, or causing to be utilized, in all material respects,
the Slots and Gate Interests as required by the applicable Governmental
Authority including each applicable Airport Authority.  Other than
with respect to Slots at New York LaGuardia Airport and except as could not
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, none of the Borrowers has received any notice from any
Governmental Authority, including any Airport Authority, or is aware of any
other event or circumstance, that would be reasonably likely to impair its right
to hold and use Gate Interests or Slots.  With respect to Slots at New
York LaGuardia Airport, none of the Companies has received any notice from any
Governmental Entity, including any Airport Authority, or is aware of any other
event or circumstance, that would be reasonably likely to impair in any material
respect its right to hold and use such Slots.  Each Borrower’s Slots
are described on Disclosure Schedule 3.23.

       

      3.24 Section 1110
Assets.

       

      Each
Borrower’s Section 1110 Assets are described on Disclosure Schedule
3.24.

       

      3.25 Patriot
Act.

       

      To the
extent applicable, each Borrower is in compliance, in all material respects,
with the (i) Trading with the Enemy Act, as amended, and each of the
foreign assets control regulations of the Untied States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (ii) Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA Patriot Act of 2001) (the “Patriot Act”).  No
part of the proceeds of the Loans will be used, directly or indirectly, for any
payments to any governmental official or employee, political party, official of
a political party, candidate for political office, or anyone else acting in an
official capacity, in order to obtain, retain or direct business or obtain any
improper advantage, in violation of the United States Foreign Corrupt Practices
Act of 1977, as amended.

       

      3.26 Cross
Collateralization.

       

      Except as
set forth on Schedule 3.26, no model A319 or A320 Subject Aircraft secures any
purchase money Indebtedness of the Borrowers with respect to, or Indebtedness
for borrowed money of the Borrowers secured by, any model A318 Subject Aircraft
or any aircraft lease obligations of the Borrowers.

       

      4. FINANCIAL
STATEMENTS AND INFORMATION

       

      4.1 Reports and
Notices.

       

      The
Borrowers hereby agree that from and after the Closing Date and until the
Termination Date, they shall deliver to the Administrative Agent and Lenders, as
required, the Financial Statements, notices, Projections and other information
at the times, to the Persons and in the manner set forth in Annex
D.

      


      4.2 Communication with
Accountants.

       

      Each
Borrower authorizes (a) the Administrative Agent and the Initial Lenders and (b)
so long as an Event of Default has occurred and is continuing, each Lender, to
communicate, with prior notice to the Borrower Agent and the Borrowers’
opportunity to be present, directly with its independent registered public
accountants and authorizes and shall instruct those accountants to communicate
to the Administrative Agent and such Lender, with notice to the Borrower Agent,
information relating to any Borrower with respect to the business, results of
operations and financial condition of any Borrower as the Administrative Agent
or such Lender shall reasonably request.

      


      5. AFFIRMATIVE
COVENANTS

       

      Each
Borrower agrees that from and after the Closing Date and until the Termination
Date:

      


      5.1 Maintenance of Existence and
Conduct of Business.

       

      Except as
otherwise required by the Bankruptcy Code, each Borrower shall (a) except as
otherwise permitted by Section 6.1 or Section 6.8, do or cause to be done all
things necessary to preserve and keep in full force and effect its legal
existence, all rights, permits, licenses, approvals and privileges (including
all Permits) necessary in the conduct of its business, and its material rights
and franchises entered into or assumed after the commencement of the Cases, and
(b) at all times maintain, preserve and protect all of its assets and properties
(including all Collateral) used or useful and necessary in the conduct of its
business, and keep the same in good repair, working order and condition in all
material respects (taking into consideration ordinary wear and tear) and from
time to time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices except
as otherwise permitted in the applicable Loan Documents.

      


      5.2 Payment of
Taxes.

       

          (a) Unless
payment thereof is precluded by the Cases and subject to Section 5.2(b), each
Borrower shall pay and discharge or cause to be paid and discharged promptly all
Taxes arising after the Petition Date payable by it, including Taxes imposed
upon it, its income and profits, or any of its operations, its property (real,
personal or mixed) and all Taxes with respect to tax, social security and
unemployment withholding with respect to its employees, before any thereof shall
become past due, except in each case, where the failure to pay or discharge such
Charges would not result in aggregate liabilities in excess of
$500,000.

       

          (b) Each
Borrower may in good faith contest, by appropriate proceedings, the validity or
amount of any Charges, Taxes or claims described in Section 5.2(a); provided,
that (i) adequate reserves with respect to such contest are maintained on the
books of such Borrower, in accordance with GAAP; (ii) no Lien shall be imposed
to secure payment of such Charges, Taxes or claims that is superior to any of
the Liens securing payment of the Obligations and such contest is maintained and
prosecuted continuously and with diligence and operates to suspend collection or
enforcement of such Charges, Taxes and claims (except where the failure to pay
or discharge such Charges would not result in aggregate liabilities or Liens in
excess of $500,000); (iii) none of the Collateral becomes subject to forfeiture
or loss as a result of such contest; and (iv) such Borrower shall promptly pay
or discharge such contested Charges, Taxes or claims and all additional charges,
interest, penalties and expenses and shall deliver to the Administrative Agent
evidence reasonably acceptable to the Administrative Agent of such compliance,
payment or discharge, if such contest is terminated or discontinued adversely to
such Borrower or the conditions set forth in this Section 5.2(b) are no longer
met.

       

          (c) Notwithstanding
the foregoing, this Section 5.2 shall not be construed to require any Borrower
to pay any obligation arising under any agreement with respect to Section 1110
Assets unless such Borrower is authorized by the Bankruptcy Court to make such
payment.

       

      5.3 Books and
Records.

       

      Each
Borrower shall keep adequate Books and Records with respect to its business
activities in which proper entries, reflecting all financial transactions, are
made in accordance with GAAP and on a basis consistent with the Financial
Statements referred to in Section 3.4(a).

      


      5.4 Insurance.

       

      The
Borrowers shall, at their sole cost and expense, maintain with financially sound
and reputable insurance companies that are not Affiliates of the Borrowers
(except with respect to health, medical and workers compensation
self-insurance), insurance or reinsurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
companies of a same or similar size engaged in the same or similar business, of
such types and in such amounts (giving effect to health, medical and workers
compensation self insurance) as are customarily carried under similar
circumstances by such other companies (including, without limitation, casualty
insurance or reinsurance on its aircraft as required by any security agreement
or lease relating thereto or as may otherwise be required under any Section 1110
Agreements). Such policies of insurance as in effect on the Closing Date
are described, collectively, in Disclosure Schedule 3.17.  Except to
the extent that doing so would cause a default under, or otherwise breach or
contravene, any existing agreement to which any Borrower is
party, Borrowers shall use commercially reasonable efforts to (i) name
Administrative Agent, on behalf of Lenders as an additional insured, as its
interests may appear, on each such policy of insurance and (ii) have each
casualty insurance policy contain a loss payable clause or endorsement,
satisfactory in form and substance to Administrative Agent, that names
Administrative Agent, on behalf of the Lenders as the loss payee thereunder and
provides for at least thirty days prior written notice to Administrative Agent
of any modification or cancellation of such policy.

       

      5.5 Compliance with
Laws.

       

      Except as
otherwise permitted by the Bankruptcy Code, each Borrower shall comply with all
federal, state, local and foreign laws and regulations applicable to it,
including labor laws, and Environmental Laws and Environmental Permits, and laws
and regulations of any Aviation Authority applicable to it, except to the extent
that the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect (including, without
limitation, as a result of the loss of any material Permit).

      


      5.6 Intellectual
Property.

       

      Subject
to Section 6.8(g), each Borrower shall own or have rights to use all
Intellectual Property necessary to continue to conduct its business as now
conducted by it or presently proposed to be conducted by it. Each Borrower shall
do or cause to be done all things necessary to preserve and keep in full force
and effect at all times all material registered Patents, Trademarks, trade
names, Copyrights and service marks necessary in the conduct of its business.
Each Borrower shall conduct its business and affairs without infringement of or
interference with any Intellectual Property of any other Person in any material
respect.

      


      5.7 Environmental
Matters.

       

      Except as
otherwise required by the Bankruptcy Code, each Borrower shall and shall cause
each Person within its control to: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions that are necessary to
comply in all material respects with Environmental Laws and Environmental
Permits pertaining to the presence, generation, treatment, storage, use,
disposal, transportation or Release of any Hazardous Material on, at, in, under,
above, to, from or about any of its Real Estate; (c) notify the Administrative
Agent promptly after such Borrower becomes aware of any violation of
Environmental Laws or Environmental Permits or any Release on, at, in, under,
above, to, from or about any Real Estate that is reasonably likely to result in
any Borrower incurring Environmental Liabilities in excess of $250,000
individually or $1,000,000 in the aggregate in a Fiscal Year; and (d) promptly
forward to the Administrative Agent a copy of any order, notice, request for
information or any communication or report received by such Borrower in
connection with any such violation or Release or any other matter relating to
any Environmental Laws or Environmental Permits that could reasonably be
expected to result in any Borrower incurring Environmental Liabilities in excess
of $250,000 individually or $1,000,000 in the aggregate in a Fiscal Year. If the
Administrative Agent at any time has a reasonable basis to believe that there
may be a violation of any Environmental Laws or Environmental Permits by any
Borrower or any Environmental Liability arising thereunder, or a Release of
Hazardous Materials on, at, in, under, above, to, from or about any of its Real
Estate, that, in each case, could reasonably be expected to have a Material
Adverse Effect, then each Borrower shall, upon the Administrative Agent’s
written request (i) cause the performance of such environmental audits including
subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at the Borrowers’ expense, as the Administrative Agent
may from time to time reasonably request, which shall be conducted by reputable
environmental consulting firms reasonably acceptable to the Administrative Agent
and shall be in form and substance reasonably acceptable to the Administrative
Agent, and (ii) permit the Administrative Agent or their representatives to have
access to all Real Estate (subject, in the case of leased Real Estate, to the
terms of the applicable lease or other agreement which governs rights of access
to leased Real Estate) for the purpose of conducting such environmental audits
and testing as the Administrative Agent deems appropriate, including subsurface
sampling of soil and groundwater; provided, that the Administrative Agent shall
use commercially reasonable efforts to cause such audits or testing to be
conducted in a manner that does not unreasonably interfere with the operations
of the relevant Borrower. Borrower shall reimburse the Administrative Agent for
the reasonable costs of such audits and tests and the same will constitute a
part of the Obligations secured hereunder.

      


      5.8 Further
Assurances.

       

      Subject
to Section 5.9(b), each Borrower agrees that it shall, at such Borrower’s
expense and upon the reasonable request of the Administrative Agent, duly
execute and deliver, or cause to be duly executed and delivered, to the
Administrative Agent such further instruments and do and cause to be done such
further acts as may be necessary or reasonably requested by Administrative Agent
to carry out more effectively the provisions and purposes of this Agreement and
each Loan Document.

      


      5.9 Additional
Collateral
Documents.

       

          (a) To the
extent not delivered to the Administrative Agent on or before the Closing Date
(including in respect of after-acquired property, other than real estate and
interests in real estate that are not owned Real Estate), the Borrowers agree to
do promptly each of the following, unless otherwise agreed by the Administrative
Agent:

       

                      (i) deliver
to the Administrative Agent such duly executed supplements and amendments to
this Agreement, in each case in form and substance reasonably satisfactory to
the Administrative Agent and as the Administrative Agent reasonably deems
necessary in order to ensure that each Subsidiary of a Borrower is a Borrower
hereunder;

       

      (ii) deliver
to the Administrative Agent such duly executed supplements and amendments to any
of the Collateral Documents, in each case in form and substance reasonably
satisfactory to the Administrative Agent and as the Administrative Agent
reasonably deems necessary in order to (A) effectively grant to the
Administrative Agent for the benefit of the Lenders, a valid, perfected and
enforceable security interest in all assets, personal property or property
interests that constitute Collateral owned by any Borrower and (B) effectively
grant to the Administrative Agent for the benefit of the Lenders, a valid,
perfected and enforceable security interest in all Stock and debt Securities of
any Borrower (other than Frontier Holdings) and each direct Subsidiary of each
Borrower;

       

      (iii) deliver
to the Administrative Agent all certificates, instruments and other documents
representing all Collateral required to be pledged and delivered under the
Collateral Documents and all other Stock and other debt Securities being pledged
pursuant to the joinders, amendments and supplements executed pursuant to clause
(ii) above;

       

      (iv) if any
Borrower discovers that it owns any fee simple interest in real estate, then
within thirty (30) days of such discovery, execute and deliver to the
Administrative Agent, a mortgage granting the Administrative Agent for the
benefit of the Lenders a valid, perfected and enforceable first priority Lien on
such real estate and, if reasonably required by the Administrative Agent, as
soon as reasonably practicable but in any case within sixty (60) days of such
discovery, environmental audits, mortgage title insurance policy, real property
survey, local counsel opinion(s), supplemental casualty insurance and flood
insurance, and such other documents, instruments or agreements reasonably
requested by the Administrative Agent, in each case, in form and substance
reasonably satisfactory to the Administrative Agent;

       

      (v) upon any
aircraft, engines or spare parts of any Borrower becoming free and clear of
liens, and otherwise ceasing to constitute Excluded Collateral, deliver to the
Administrative Agent a mortgage with respect to such aircraft, engines or spare
parts as applicable, in form and substance reasonably satisfactory to the
Administrative Agent;

       

      (vi) to take
such other actions as the Administrative Agent reasonably deems necessary to
ensure the validity or continuing validity of the obligations of all existing
and future Borrowers pursuant to clause (i) above or to create, maintain,
perfect or protect the security interest required to be granted pursuant to
clause (ii) above, including the filing of financing statements or other
recordations in such jurisdictions as may be required by the Collateral
Documents, the Code, the DOT, the FAA or applicable law, or as may be reasonably
requested by the Administrative Agent; and

       

      (vii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above in connection with the addition
of any Borrower or Collateral acquired after the Closing Date, which opinions
shall be in form and substance consistent with those delivered on the
Closing Date and from counsel reasonably satisfactory to the Administrative
Agent.

       

          (b) Notwithstanding
the foregoing, (i) the Administrative Agent shall not take any security interest
in or require any actions to be taken with respect to (A) prior to the
occurrence of an Event of Default, those assets as to which the
Administrative Agent shall determine, in its reasonable discretion, that the
cost of obtaining such security interest or taking such action are excessive in
relation to the benefit to the Administrative Agent and the Lenders afforded
thereby and (B) any property to the extent that the granting of such a security
interest would constitute a breach or violation of a valid and effective
restriction in place as of the Closing Date in favor of a third party
(including, without limitation, mandatory consent rights; and the parties agree
that the Administrative Agent shall not require any action to be taken with
respect to such consent rights), that would result in the termination of any
Borrower’s interest in such property or give rise to any indemnification
obligations or any rights to terminate or commence the exercise of remedies
under such restrictions but only to the extent and for so long as such
restriction is not terminated or rendered unenforceable or otherwise rendered
ineffective by any applicable law, and (ii) Liens required to be granted
and actions required to be taken pursuant to this Section 5.9 shall all be
subject to exceptions and limitations (including Liens permitted pursuant to
Section 6.7) consistent with those set forth herein as in effect on the Closing
Date and (iii) the Administrative Agent shall not require any Borrower to record
any leasehold mortgage or similar instruments with respect to any leased real
property. Nothing in this Section 5.9(b) shall obligate the Administrative
Agent or any Lender to release its Lien on any Collateral.

       

      5.10 [Intentionally
Omitted].

       

      5.11 Slot
Utilization.

       

      Subject
to transfers, exchanges and other dispositions permitted by this Agreement, each
Air Carrier will utilize (or arrange for utilization by leasing or exchanging
Slots with other air carriers) the Slots in a manner consistent in all material
respects with applicable regulations, rules, laws and contracts in order to
preserve its right to hold and operate the Slots, taking into account any
waivers or other relief granted to any Borrower by the, any other applicable
Governmental Authority or any Airport Authority.

      


      5.12 ERISA/Labor
Matters.

       

      The
Borrowers shall furnish the Administrative Agent (with sufficient copies for
each of Lenders) each of the following:

      


          (a) promptly
and in any event within ten (10) days after any Borrower, any Subsidiary of the
Borrowers or any ERISA Affiliate knows or has reason to know that a request for
a minimum funding waiver under Section 412 of the Code has been filed with
respect to any Multiemployer Plan, a written statement of an officer of any
Borrower describing such waiver request and the action, if any, such Borrower,
its Subsidiaries and ERISA Affiliates propose to take with respect thereto and a
copy of any notice filed with the PBGC or the IRS pertaining
thereto;

       

          (b) promptly
and in any event within three (3) days after any Borrower, any Subsidiary of the
Borrowers or any ERISA Affiliate receives any adverse communication from a
Governmental Authority that could result in an increase to or accelerate the
payment of any liability with respect to a Pension Plan, a copy of such
notice;

       

          (c) simultaneously
with the date that any Borrower (i) commences or terminates negotiations with
any collective bargaining agent for the purpose of materially changing any
collective bargaining agreement; (ii) reaches an agreement with any collective
bargaining agent prior to ratification for the purpose of materially changing
any collective bargaining agreement; (iii) ratifies any agreement
reached with a collective bargaining agent for the purpose of materially
changing any collective bargaining agreement; or (iv) becomes subject to a
“cooling off period” under the auspices of the National Mediation Board,
notification of the commencement or termination of such negotiations, a copy of
such agreement or notice of such ratification or a “cooling off period,” as the
case may be;

       

          (d) promptly
and in any event within five (5) business days after any Borrower or any ERISA
Affiliate knows or has reason to know that any ERISA Event has occurred, a
statement describing such ERISA Event and the action, if any, that such Borrower
or ERISA Affiliate has taken and proposes to take with respect thereto and, on
the date any records, documents or other information must be furnished to the
PBGC or other applicable Governmental Authority with respect to such ERISA
Event, a copy of such records, documents and information; and

       

          (e) promptly
and in any event within five (5) business days after receipt thereof by any
Borrower or any ERISA Affiliate from a sponsor of a Multiemployer Plan, copies
of each notice concerning (i)(A) the imposition of withdrawal liability by such
Multiemployer Plan or (B) the reorganization or termination, within the meaning
of Title IV of ERISA, of any such Multiemployer Plan and (ii) the amount of
liability incurred or that may be incurred by any Borrower or any ERISA
Affiliate in connection with any event described in clause (i).

       

      5.13 Maintenance of Liens and
Collateral.

       

      Each
Borrower, subject to Section 5.9, shall do or cause to be done all things
necessary to preserve and keep in full force and effect at all times the Liens
securing the Obligations as provided in the Loan Documents.

      


      5.14 Use of
Proceeds.

       

      The
proceeds of the Loans will be used by the Borrowers for the purposes specified
in Section 1.4.

      


      5.15 Cash Management
Systems.

       

      Each
Borrower will establish and will maintain until the Termination Date, the Cash
Management Systems as described in Annex B (the “Cash Management
Systems”).

      


      5.16 Access.

       

      Each
Borrower shall provide the Administrative Agent access to its properties and to
the Collateral in accordance with Section 1.10.

      


      6. NEGATIVE
COVENANTS

       

      Each
Borrower agrees that from and after the Closing Date until the Termination
Date:

      


      6.1 Mergers.

       

      No
Borrower shall directly or indirectly, by operation of law or otherwise, merge
or consolidate with any Person or (other than investments permitted by Section
6.2) acquire Stock of any Person.

      


      6.2 Investments.

       

      Except as
otherwise expressly permitted by this Section 6.2, no Borrower shall make or
permit to exist any Investment except (without duplication):

      


          (a) each
Borrower may hold Investments comprised of notes payable, or stock or other
securities issued by Account Debtors to such Borrower pursuant to negotiated
agreements with respect to settlement of such Account Debtor’s Accounts in the
ordinary course of business, consistent with past practices;

       

          (b) each
Borrower may maintain its existing investments in its Subsidiaries as of the
Closing Date summarized on Disclosure Schedule 3.8 or 6.2;

       

          (c) each
Borrower may make investments, subject to Section 5.15, in Permitted
Investments;

       

          (d) each
Borrower may maintain its Investments existing as of the Closing Date summarized
on Disclosure Schedule 6.2;

       

          (e) Investments
may be made by any Borrower in any other Borrower;

       

          (f) each
Borrower may make Investments consisting of (i) currency swap agreements,
currency future or option contracts and other similar agreements designed to
hedge against fluctuations in foreign interest rates and currency values, (ii)
interest rate swap, cap or collar agreements and interest rate future or option
contracts, and (iii) fuel hedges and other derivatives contracts, in each case,
to the extent that such agreement or contract is permitted by Section 6.3
and Section 6.15 and entered into in the ordinary course of business and not for
speculation;

       

          (g) Investments
in fuel consortia in the ordinary course of business consistent with past
practice and consistent with industry practice; and

       

          (h) the
Borrowers may make other Investments in an aggregate amount outstanding at any
one time not to exceed $2,500,000 for all Investments made pursuant to this
clause (h).

       

      6.3 Indebtedness.

       

          (a) Subject
to clause (b) below, no Borrower shall create, incur, assume or permit to exist
any Indebtedness, except (without duplication):

       

              (i) Indebtedness
secured by purchase money security interests and Capital Leases (including in
the form of sale-leaseback, synthetic lease or similar transactions or created
in connection with the restructuring of any lease or financing of Section 1110
Assets which existed on the Closing Date) to the extent such Indebtedness was
incurred (x) in connection with the restructuring of existing leases as provided
in the parenthetical above or finances the acquisition or construction of
aircraft, equipment and real estate, in each case consistent in all
material respects with the Projections or (y) with respect to the acquisition of
up to three Q400 aircraft or any sale-leaseback, synthetic lease or similar
transactions with respect to engines for Q400 aircraft; provided, that with
respect to clause (x) and (y) above, the amount of such Indebtedness does not
exceed 100% of the purchase price or construction cost (including any
capitalized interest and issuance fees) of the subject asset;

       

              (ii) the Loans
and the other Obligations;

       

              (iii) Indebtedness
existing as of the Closing Date described in Disclosure Schedule 6.3 (including,
for the avoidance of doubt, Indebtedness that may be incurred from time to time
under revolving lines of credit referred to on Disclosure Schedule
6.3);

       

              (iv) Indebtedness
consisting of intercompany loans and advances made among the Borrowers, provided,
(i) all such Indebtedness shall be evidenced by promissory notes and all
such notes shall be subject to a first priority Lien in favor of Administrative
Agent and (ii) all such Indebtedness shall be unsecured;

       

              (v) Indebtedness
owed to any Lender (or any of its affiliates) or any other Person in connection
with Investments permitted under Section 6.2(f);

       

              (vi) Indebtedness
in respect of any overdrafts and related liabilities arising from treasury,
depository and cash management services or in connection with any automated
clearing house transfers of funds (but subject to compliance with Section
5.15);

       

              (vii) (i)
Indebtedness to credit card processors in connection with credit card processing
services incurred in the ordinary course of business and consistent with past
practices and (ii) the First Data Claim (which claim shall be pari passu or
junior to the Obligations);

       

              (viii) Indebtedness
in respect of letters of credit, surety and appeal bonds in an aggregate
outstanding amount not to exceed $3,500,000;

       

              (ix) Indebtedness
constituting a Permitted Refinancing of Indebtedness referred to in clauses (i)
or (iii) above (other than Indebtedness in respect of the WestLB
Facility);

       

              (x) unsecured
Indebtedness (including letters of credit) incurred subsequent to the Closing
Date to provide credit support for (x) obligations arising in the ordinary
course of business and consistent with past practices in connection with credit
card processing services and (y) the Indebtedness described in clause (vi)
above;

       

              (xi) Indebtedness
secured solely by the Subject Aircraft;

       

              (xii) other
unsecured Indebtedness incurred subsequent to the Closing Date in an aggregate
amount not to exceed $2,500,000 outstanding at any time;

       

              (xiii) to the
extent such Indebtedness is Guaranteed Indebtedness, Indebtedness permitted by
Section 6.6;

       

              (xiv) Indebtedness
financing the making of deposits or predelivery payments in connection with the
acquisition of aircraft, engines and spare parts, in each case to the extent
such acquisition is consistent with the Projections that is expected to be
financed with Indebtedness permitted pursuant to Section 6.3(a)(i);
and

       

              (xv) Indebtedness
in respect of letters of credit issued to replace letters of credit issued
pursuant the WestLB Facility in an aggregate face amount not to exceed
$12,500,000.

       

          (b) Notwithstanding
the foregoing, under no circumstance shall Lynx create, incur, assume or permit
to exist any Indebtedness other than (i) Indebtedness existing on the Closing
Date and described on Disclosure Schedule 6.3, (ii) unsecured Indebtedness at
all times less than $250,000 in the aggregate outstanding, (iii) Indebtedness
described in Section 6.3(a)(i) with respect to aircraft, engines and spare
parts, (iv) Indebtedness described in Section 6.3(a)(iv) owing to Holdings, (v)
Indebtedness constituting a Permitted Refinancing of Indebtedness referred to in
clauses (i) or (iii) above, (vi) Indebtedness described in clause (a)(ii) and
(vii) Indebtedness arising in the ordinary course of business consistent with
past practices.

       

          (c) No
Borrower shall, directly or indirectly, voluntarily purchase, redeem, defease or
prepay any principal of, premium, if any, interest or other amount in respect of
any Postpetition Indebtedness prior to its scheduled maturity, other than (i)
the Obligations; (ii) Indebtedness secured by a Lien permitted under Section 6.7
if the asset securing such Indebtedness on a first-priority basis has been sold
or otherwise disposed of in accordance with Section 6.8; (iii) Indebtedness
subject to any Permitted Refinancing; (iv) Indebtedness outstanding under the
WestLB Facility upon the termination of such facility in an amount not to
exceed $16,000,000 (which amount includes letters of credit issued under the
WestLB Facility that are replaced with new letters of credit permitted by
Section 6.3(a)(xv)); (v) other Indebtedness not in excess of $1,000,000; (vi)
Indebtedness incurred subsequent to the Closing Date permitted under Section
6.3(a) (other than Indebtedness permitted under Section 6.3(a)(iii) or any
Permitted Refinancing thereof); and (vii) as otherwise permitted in Section
6.12.

       

      6.4 Affiliate
Transactions.

       

      None of
the Borrowers will sell or transfer any property or assets to, or otherwise
engage in any other material transactions with, any of its Affiliates (other
than the other Borrowers), except transactions (a) at prices and on terms and
conditions no less favorable to such Borrower than could be obtained on an arm’s
length basis from unrelated third parties and (b) any dividends, other
distributions or payments permitted by Section 6.12.

      


      6.5 Capital Structure and
Business.

       

      No
Borrower shall amend its charter or bylaws in a manner that would adversely
affect the Administrative Agent or Lenders, or such Borrower’s duty or ability
to repay the Obligations. No Borrower shall engage in any business other than
the businesses currently engaged in by it and businesses that are reasonably
related thereto. No Borrower shall make any changes to its equity capital
structure as in existence on the Closing Date.

      


      6.6 Guaranteed
Indebtedness.

       

      No
Borrower shall create, incur, assume or permit to exist any Guaranteed
Indebtedness, except (without duplication) (a) by endorsement of instruments or
items of payment for deposit to the general account of any Borrower in the
ordinary course of business, (b) Guaranteed Indebtedness incurred for the
benefit of any other Borrower if the primary obligation is expressly permitted
by this Agreement, (c) Guaranteed Indebtedness to the extent constituting
Indebtedness permitted by Section 6.3 and (d) to the extent existing on the
Closing Date as set forth in Disclosure Schedule 6.3.

      


      6.7 Liens.

       

      No
Borrower shall create, incur, assume or permit to exist any Lien on or with
respect to the Collateral or any of its other properties or assets (whether now
owned or hereafter acquired), except for:

          (a) Permitted
Encumbrances;

       

          (b) Liens in
existence as of the Closing Date and summarized on Disclosure Schedule
6.7;

       

          (c) Liens
created after the Closing Date by conditional sale or other title retention
agreements (including Capital Leases) or in connection with purchase money
Indebtedness, in each case, permitted in Section 6.3(a)(i); provided, that (A)
such Liens attach only to the assets (including related leases and subleases
thereof and other assets integral to the use thereof including security deposits
from any sublessee collaterally assigned for the benefit of lessors) subject to
such purchase money debt, (B) such Indebtedness is incurred within one hundred
eighty (180) days following such purchase and does not exceed 100% of the
purchase price of the subject assets and (C) either (x) such Indebtedness does
not exceed $1,000,000 in the aggregate outstanding at any time or (y) such Liens
are created (1) in connection with purchase money Indebtedness financing for the
acquisition of aircraft, engines, spare parts and related equipment, and such
acquisition is consistent with the Projections or (2) with respect to the
acquisition of up to three Q400 aircraft or any sale-leaseback, synthetic lease
or similar transaction with respect to engines for Q400 aircraft;

       

          (d) Liens
securing Indebtedness permitted by Section 6.3(a)(vi);

       

          (e) Liens on
the Excluded Accounts and amounts on deposit therein in favor of the
beneficiaries of the amounts on deposit therein to the extent such Liens secure
obligations owed to such beneficiaries and such obligations are otherwise
permitted pursuant this Agreement;

       

          (f) any
interest or title of a licensor, lessor or sublessor granted to others, but only
to the extent permitted by any of the Collateral Documents;

       

          (g) customary
banker’s Liens on the Exempt Accounts and amounts on deposit therein in favor of
the depositary institutions where such Exempt Accounts are maintained to secure
fees, overdrafts, returned checks, similar obligations;

       

          (h) (i) Liens
in respect of rights of setoff, recoupment and holdback in favor of credit card
processors securing obligations in connection with credit card processing
services incurred in the ordinary course of business and consistent with past
practices and (ii) Liens securing obligations owed to First Data as described in
the First Data Order;

       

          (i) Liens on
cash deposits securing (i) obligations with respect to letters of credit issued
pursuant to (or issued to replace letters of credit issued pursuant to) the
WestLB Facility in an amount not to exceed $13,500,000 and (ii) other
obligations permitted by Section 6.3 in an aggregate amount not in excess of
$3,500,000;

       

          (j) Liens on
cash deposits pledged as collateral for Indebtedness permitted under Section
6.3(a)(v) in connection with Investments permitted under Section
6.2(f);

       

          (k) Liens
securing a Permitted Refinancing of Indebtedness, to the extent such
Indebtedness being refinanced was originally secured in accordance with this
Section 6.7; provided that such Lien does not attach to any additional property
or assets of Borrower or any Subsidiary;

       

          (l) Liens
securing the Loans and the other Obligations;

       

          (m) Liens
created after the Closing Date in connection with operating Leases; provided,
that, such Liens attach only to the assets subject to such Lease (including any
sublease thereof, other assets integral to the use thereof and security deposits
from any sublessee collaterally assigned for the benefit of lessors);


       

          (n) other
Liens so long as the value of the property subject to such Liens, and the
Indebtedness and other obligations secured thereby, do not exceed, in the
aggregate, $500,000; and

       

          (o) Liens
securing Indebtedness permitted by Section 6.3(a)(xiv), to the extent such lien
is solely with respect to the aircraft, engines or spare parts to be purchased
and the purchase contract relating thereto.

       

      6.8 Sale of Stock and
Assets.

       

      No
Borrower shall sell, transfer, convey, assign or otherwise dispose of any of its
properties or other assets, including the Stock of any of its Subsidiaries
(whether in a public or a private offering or otherwise) or any of its Accounts
(any such disposition being an “Asset Sale”), other than the
following (without duplication):

      


          (a) sales and
other dispositions of assets in the ordinary course of business, swaps,
exchanges, interchange or pooling of assets, in the ordinary course of
business ;

       

          (b) sales or
dispositions of surplus, obsolete, negligible or uneconomical assets no longer
used in the business of Borrowers;

       

          (c) sales or
dispositions of Permitted Investments for cash or in exchange for Permitted
Investments (including, for the avoidance of doubt, the sale of auction rate
securities);

       

          (d) dispositions
of Section 1110 Assets (consisting of the return thereof to the party that had
provided financing therefor); provided, that such dispositions, in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect;

       

          (e) sales or
dispositions of Inventory in the ordinary course of business;

       

          (f) sales or
dispositions of other assets in arm’s length transactions at fair market value
in an aggregate amount not to exceed $2,500,000 in the aggregate in any Fiscal
Year;

       

          (g) (i) sale,
disposition, exchange or abandonment of Intellectual Property; provided, that
such abandonment is (A) in the ordinary course of business consistent with past
practices and (B) with respect to Intellectual Property that is not material to
the business of the Borrowers and (ii) licensing or sublicensing of Intellectual
Property in the ordinary course of business consistent with past
practices;

       

          (h) sale,
disposition, exchange, lease or abandonment of Slots (other than the sale,
disposition, lease or abandonment (but not exchange) of Slots at New York
LaGuardia Airport); provided that such sale, disposition, exchange or
abandonment could not reasonably be expected to result in a Material Adverse
Effect;

       

          (i) sale-leaseback,
synthetic lease or similar transactions to the extent not prohibited by Section
6.11;

       

          (j) the
disposition of leasehold or similar interests in Real Estate that is not owned
Real Estate (including Gate Interests), including through assignment, sublease
or lease termination or rejection, as a whole or in part, or the return,
surrender, exchange or abandonment of any property subject thereto to the extent
any such disposition individually or all such dispositions in the aggregate
could not reasonably be expected to result in a Material Adverse
Effect;

       

          (k) rejection
of executory contracts in accordance with an order of the Bankruptcy Court to
the extent such rejections, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect; and

       

          (l) sale or
disposition of Subject Assets, so long such sale is consistent in all
material respects with the Projections;

       

          (m) dispositions
of assets by, or any of the Stock of, Lynx; provided that the proceeds of such
sale are applied as required by Section 1.2(b);

       

          (n) sale,
disposition, exchange, lease or abandonment of up to four (4) A318
aircraft; 

       

      provided
that (i) except for the sale of assets by, or any of the Stock of, Lynx as
permitted by clause (m) above, nothing herein shall permit the disposition of
any material asset owned by Lynx and used by it in the ordinary course of
business other than (A) the sale of Subject Assets consisting of spare parts
pursuant to Section 6.8(l), (B) sales in the ordinary course of business to the
extent otherwise permitted hereunder, (C) sales of rotables to the extent not
generating cash proceeds in excess of $25,000 in any month, (D) any
sale-leaseback, synthetic lease or similar transaction with respect to engines
for Q400 aircraft and (E) other sales of assets with a value not to exceed
$250,000; it being understood that except for the sale of assets by, or any of
the Stock of, Lynx in each case as permitted in clause (m) above, Lynx shall not
be permitted to sell or dispose of aircraft, engines, order positions, operating
certificates or, to the extent the cash proceeds thereof exceed $25,000 in any
month, rotables and (ii) nothing herein shall permit the disposition of any
Slots other than as specifically provided for in clause (h) above or Subject
Aircraft other than as specifically provided for in clause (l) or (n)
above.

      


      6.9 Financial
Covenants.

       

      The
Borrowers shall not breach or fail to comply with any of the Financial
Covenants.

      


      6.10 Hazardous
Materials.

       

      No
Borrower shall cause or knowingly permit a Release of any Hazardous Material on,
at, in, under, above, to, from or about any of the Real Estate where such
Release would (a) violate in any respect any Environmental Laws or Environmental
Permits or (b) otherwise adversely impact the value or marketability of any of
the Real Estate or any of the Collateral, other than in the case of each of
clauses (a) and (b), such violations, Releases or Environmental Liabilities that
could not reasonably be expected to have a Material Adverse Effect.

      


      6.11 Sale-Leasebacks.

       

      No
Borrower shall engage in any sale-leaseback, synthetic lease or similar
transaction involving any of its Gate Interests or Slots or owned assets
(including without limitation, any aircraft), except (i) any sale-leaseback,
synthetic lease or similar transaction permitted by Section 6.3(a)(i), (ii)
any sale-leaseback, synthetic lease or similar transaction involving
Section 1110 Assets (including, for the avoidance of doubt, engines for
Q400 aircraft referred to in Section 6.3(a)(i)) or Subject Assets and (iii) any
sale-leaseback or similar transaction of any owned asset that constitutes a
fixture on, or that is used primarily in the operation of, leased Real Estate,
to the extent that such sale-leaseback occurs in connection with an assignment
or rejection of the lease of such Real Estate followed by a lease-back of all or
a portion of such Real Estate.

      


      6.12 Restricted
Payments.

       

      No
Borrower shall make any Restricted Payment, except (a) payments of principal of
and interest on intercompany loans and advances between the Borrowers to the
extent permitted by Section 6.3, and (b) dividends and distributions by Frontier
to Frontier Holdings.

      


      6.13 Change of Corporate Name or
Location; Change of Fiscal Year.

       

      No
Borrower shall (a) change its name as it appears in official filings in the
state of its incorporation or other organization, (b) change its chief executive
office or principal place of business, (c) change the type of entity that it is,
(d) change its organization identification number, if any, issued by its state
of incorporation or other organization, or (e) change its state of incorporation
or organization, in each case, without at least thirty (30) days prior written
notice to the Administrative Agent; provided, that in the case of clauses (b) or
(e), any such new location shall be in the continental United States. No
Borrower shall change its Fiscal Year.

      


      6.14 Limitation on Negative
Pledge Clauses.

       

      No
Borrower will enter into any agreement (other than the Loan Documents) with any
Person which prohibits or limits the ability of such Borrower to create, incur,
assume or suffer to exist any Lien securing the Obligations upon any of its
properties, assets or revenues, whether now owned or hereafter acquired, other
than agreements that contain (a) prohibitions or limitations existing on the
Closing Date and listed on Disclosure Schedule 6.14, and any extension or
renewal thereof on terms no less favorable to the Borrowers, (b) prohibitions
set forth in the Loan Documents, (c) prohibitions or restrictions imposed by any
agreement relating to secured Indebtedness or other obligations permitted by
this Agreement if such restriction or condition applies only to property secured
or financed by such Indebtedness or other obligations and (d) restrictions
prohibiting Liens contained in agreements relating to the use and occupancy of
airport premises and facilities, operating leases, Capital Leases or Licenses
with respect to properties subject thereto and interests created
therein.

      


      6.15 No Speculative
Transactions.

       

      No
Borrower shall engage in any transaction involving commodity options, futures
contracts or similar transactions, except solely to hedge in the ordinary course
of business.

      


      6.16 Real Estate Purchases and
Leases.

       

      No
Borrower shall purchase a fee simple ownership interest in real estate. No
Borrower shall modify, amend, extend, cancel, terminate or otherwise change in
any materially adverse manner any term, covenant or condition of any Material
Real Estate Contract unless such modification, amendment, extension,
cancellation, termination or other change, or such new lease, sublease,
usufruct, use agreement or other occupancy or facility agreement could not
reasonably be expected to have a Material Adverse Effect. Nothing contained in
this Section 6.16 shall be deemed to restrict any Borrower’s ability to reject
any agreement for leased real property, in accordance with Section
6.8(j).

      


      6.17 Subsidiaries.

       

      No
Borrower shall organize or invest in any new Subsidiary.

      


      6.18 Material
Contracts.

       

      Except to
the extent otherwise permitted by this Article 6, no Borrower shall enter into
or assume any contract after the Closing Date that would result in an obligation
(whether contingent or otherwise) of such Borrower in excess of $5,000,000
without the prior written consent of Administrative Agent except to the extent
consistent in all material respects with the Projections and except for
Permitted Prepetition Payments; provided that, the
Borrowers shall be permitted to (x) enter into one operating lease with respect
to A320 aircraft for each A318 aircraft sold or otherwise disposed of by any
Borrower pursuant to Section 6.8(n) and (y) enter into contracts to acquire up
to three Q400 aircraft.

      


      7. TERM

       

      7.1 Termination.

       

      The
financing arrangements contemplated hereby shall be in effect until the Maturity
Date, and the Loans and all other Obligations shall be automatically due and
payable in full on such date.

      


      7.2 Survival of Obligations Upon
Termination of Financing Arrangements.

       

      Except as
otherwise expressly provided for in the Loan Documents, no termination or
cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Borrowers or the rights of the Administrative Agent and
the Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Maturity Date. Except as
otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon the Borrowers, and all rights of the Administrative Agent and each
Lender, all as contained in the Loan Documents, shall not terminate or expire,
but rather shall survive any such termination or cancellation and shall continue
in full force and effect until the Termination Date; provided, that the
provisions of Article 13, the payment obligations under Sections 1.11 and 1.12,
and the indemnities contained in the Loan Documents shall survive the
Termination Date.

      


      8. EVENTS
OF DEFAULT; RIGHTS AND REMEDIES

       

      8.1 Events of
Default.

       

      The
occurrence of any one or more of the following events (regardless of the reason
therefor) shall constitute an “Event of Default”
hereunder:

      


          (a) The
Borrowers (i) fail to make any payment of principal of the Loans or interest in
respect thereof when due and payable, or (ii) fail to make any payment of any
other Obligations not covered in clause (i) above within three (3) Business Days
of the date when due and payable.

       

          (b) Any
Borrower fails or neglects to perform, keep or observe any of the provisions of
Sections 1.2, 1.3, 4.1 or Article 6, or any of the provisions set forth in
Annexes B, D or E.

       

          (c) Any
Borrower shall default in the performance of or compliance with any term
contained herein or any of the other Loan Documents, other than any such term
referred to in any other Section of this Section 8.1, and such default
shall not have been remedied or waived within fifteen (15) days after the
earlier of (i) any Responsible Officer of any Borrower becoming actually aware
of such default, and (ii) receipt by the Borrowers of notice from Administrative
Agent or any Lender of such default.

       

          (d) Except
for defaults resulting directly from the commencement of the Cases and defaults
resulting from obligations (other than the Obligations) with respect to which
the Bankruptcy Code prohibits any Borrower from complying or permits a Borrower
not to comply, or arising as a result of an abandonment or rejection of property
in accordance with the Bankruptcy Code and except for any default the existence
of which is disputed in good faith by such Borrower; a default or breach occurs
under (y) the First Data Agreement and First Data exercises any such
material remedies, against any Borrower in connection therewith (including,
without limitation, ceasing to process credit card charges), or (z) any other
agreement, document or instrument to which any Borrower is a party that is not
cured within any applicable grace period therefor, and such default or breach
(i) involves the failure to make any payment when due in respect of any
Postpetition Indebtedness or Guaranteed Indebtedness (other than the
Obligations) of any Borrower in excess of $4,000,000 in the aggregate (including
amounts owing to all creditors under any combined or syndicated credit
arrangements), or (ii) causes, or permits any holder of such Indebtedness or
Guaranteed Indebtedness or a trustee to cause, Postpetition Indebtedness or
Guaranteed Indebtedness or a portion thereof in excess of $4,000,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, or cash collateral to be demanded in respect
thereof, in each case, regardless of whether such default is waived, or such
right is exercised, by such holder or trustee.

       

          (e) Any
representation or warranty herein or in any Loan Document or in any written
statement, report, financial statement or certificate made or delivered to the
Administrative Agent or any Lender by any Borrower is untrue or incorrect in any
material respect (or, to the extent any representation or warranty is qualified
by materiality, Material Adverse Effect or words of like import, such
representation or warranty is untrue and incorrect in any respect), in each
case, as of the date when made or deemed made.

       

          (f) The Loan
Documents and the Final DIP Order shall, for any reason, cease to create a valid
Lien on any of the Collateral purported to be covered thereby or such Lien shall
cease to be a perfected Lien having the priority provided for herein and in the
Final DIP Order, or any Borrower shall so allege in any pleading filed in any
court or any provision of any Loan Document shall, for any reason, cease to be
valid and binding on each Borrower party thereto (or any Borrower shall
challenge the enforceability of any Loan Document or shall assert in writing, or
engage in any action or inaction based on any such assertion, that any
provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms).

       

          (g) A final
unstayed Postpetition judgment or judgments for the payment of money in excess
of $4,000,000 in the aggregate at any time are outstanding against one or more
of the Borrower s (which judgments are not covered by insurance policies as to
which liability has been accepted by the insurance carrier), and the same are
not, within thirty (30) days after the entry thereof, discharged or bonded
pending appeal, or such judgments are not discharged prior to the expiration of
any such stay.

       

          (h) Any
Change of Control occurs.

       

          (i) Any Air
Carrier shall cease to be a Certificated Air Carrier.

       

          (j) In the
case of any Slots or Gate Interests, any applicable Aviation Authority modifies,
suspends, revokes, terminates, cancels or otherwise takes any action that
adversely affects any Borrower’s Permits or any Borrower’s use or occupation or
maintenance of or other interest in such Slots and Gate Interests due to any
Borrower’s failure to abide by applicable law or any contract governing the use
of such Slots and Gate Interests, or any Borrower otherwise ceases to use,
occupy or maintain such Slots and Gate Interests, and with respect to Gate
Interests and any Slot other than a Slot at New York LaGuardia Airport, any
event referred to in this clause (j) could reasonably be expected to have a
Material Adverse Effect.

       

          (k) Any ERISA
Event shall have occurred with respect to one or more Plans, but only to the
extent that such ERISA Event, together with all other ERISA Events that have
occurred, could reasonably be expected to have a Material Adverse
Effect.

       

          (l) Any of
the Cases shall be dismissed (or the Bankruptcy Court shall make a ruling
requiring the dismissal of the Cases) or converted to a case under chapter 7 of
the Bankruptcy Code, or any Borrower shall file any pleading requesting any such
relief; a trustee under chapter 7 or chapter 11 of the Bankruptcy Code, a
responsible officer or an examiner with enlarged powers relating to the
operation of the business (powers beyond those set forth in section 1106(a)(3)
and (4) of the Bankruptcy Code) under section 1106(b) of the Bankruptcy Code
shall be appointed in any of the Cases; or an application shall be filed by any
Borrower for the approval of, or the Court shall enter an order granting, (i)
other than the First Data Claim, any Claim having priority senior to or pari
passu with the claims of the Administrative Agent and the Lenders under the Loan
Documents or, without the prior written consent of the Administrative Agent, any
other claim having priority over any or all administrative expenses of the kind
specified in sections 503(b) or 507(b) of the Bankruptcy Code (other than the
Carve-Out) or (ii) any Lien on the Collateral having a priority senior to or
pari passu with the Liens and security interests granted herein, except as
otherwise expressly provided herein (including for the avoidance of doubt the
Liens securing the obligations owed to First Data as described in the First Data
Order (which Liens shall be pari passu to Liens in favor of Administrative
Agent).

       

          (m) (A) Any
Borrower shall file a motion seeking, or the Bankruptcy Court shall enter, an
order (i) approving any payment (as adequate protection or otherwise) on account
of any Claim against any Borrower arising or deemed to have arisen prior to the
Petition Date, other than a Permitted Prepetition Payment, (ii) granting relief
from the automatic stay applicable under section 362 of the Bankruptcy Code to
any holder of any security interest to permit foreclosure or obtain liens on any
assets that have a value in excess of $2,500,000 (it being understood that
neither the relinquishment by the Borrowers of Section 1110 Assets, nor the
foreclosure of security interests in Section 1110 Assets (or in property in the
possession of the applicable secured party) as to which defaults have not been
cured pursuant to Section 1110 of the Bankruptcy Code, shall be considered to be
included in this paragraph) provided that, if any Borrower would otherwise be
permitted under this Agreement to make a payment to the holder of a security
interest in cash or Cash Equivalents (“Cash Collateral”), and the
obligation to make such payment is secured by such Cash Collateral, then in lieu
of making such payment, such Borrower may direct or authorize such secured party
to, and such secured party may, apply such Cash Collateral to satisfy such
payment obligation (including by way of setoff against or foreclosure on such
Cash Collateral), (iii) except to the extent consistent in all material respects
with the Projections, authorizing the sale of all or a material portion of such
Borrower’s assets (except as specifically provided in Section 6.8(m))
or (iv) except to the extent the disposition of assets upon such
liquidation would be permitted under Section 6.8, approving the implementation
of liquidation under chapter 11 of the Bankruptcy Code in any Case or (B) an
order confirming a Plan of Reorganization shall be entered that does not provide
for payment in full of all monetary Obligations (other than the Excluded
Obligations) upon the effectiveness of such Plan of Reorganization.

       

          (n) (i) The
Final DIP Order or the Final Claim Order shall cease to be in full force
and effect, (ii) any Borrower shall fail to comply with the terms of the Final
DIP Order or the Final Claim Order or (iii) the Final DIP Order or the
Final Claim Order shall be amended, supplemented, stayed, reversed, vacated or
otherwise modified (or any of the Borrowers shall apply for authority to do so)
in any manner that affects the rights or duties of the Administrative Agent or
the Lenders, in each case, without the prior written consent of the
Administrative Agent in the case of the Final DIP Order or the Continuing Lender
in the case of the Final Claim Order.

       

      8.2 Remedies.

       

          (a) If any
Event of Default has occurred and is continuing, without further order of,
application to, or action by, the Bankruptcy Court, the rate of interest
applicable to the Loans shall increase to the Default Rate (subject to Section
1.5(e)).

       

          (b) If any
Event of Default has occurred and is continuing, without further order of,
application to, or action by, the Bankruptcy Court, (i) the Administrative Agent
may (and at the written request of the Requisite Lenders shall) terminate the
Commitments, if any, and/or declare all or any portion of the Obligations,
including all or any portion of any Loan, to be forthwith due and payable, all
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived by the Borrowers; (ii) the Administrative Agent may (and at
the written request of the Requisite Lenders, shall), without notice except as
required by the Final DIP Order, exercise any rights and remedies provided to
the Administrative Agent under the Loan Documents or at law or equity, including
all remedies provided under the Code and (iii) subject solely to any requirement
of the giving of notice by the terms of the Final DIP Order, the automatic stay
provided in section 362 of the Bankruptcy Code shall be deemed automatically
vacated without further action or order of the Bankruptcy Court and the
Administrative Agent and the Lenders shall be entitled to exercise all of their
respective rights and remedies under the Loan Documents, including, without
limitation, all rights and remedies with respect to the Collateral.

       

      8.3 Waivers by
Borrowers.

       

      Except as
otherwise provided for in this Agreement, by applicable law or the Final DIP
Order, each Borrower waives: (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by the
Administrative Agent on which any Borrower may in any way be liable, and hereby
ratifies and confirms whatever the Administrative Agent may do in this regard,
(b) all rights to notice and a hearing prior to the Administrative Agent’s
taking possession or control of, or to the Administrative Agent’s replevy,
attachment or levy upon, the Collateral or any bond or security that might be
required by any court prior to allowing the Administrative Agent to exercise any
of their remedies, and (c) the benefit of all valuation, appraisal, marshaling
and exemption laws.

       

      8.4 Liquidation
Budget.

       

      If, on
the Carve Out Date, there shall be any monetary Obligations (other than Excluded
Obligations) outstanding, the Borrowers shall promptly deliver a wind-down
budget to the Administrative Agent. If the Administrative Agent is not
reasonably satisfied with such budget, it may seek whatever relief it deems
appropriate before the Bankruptcy Court, and all parties reserve all rights with
respect thereto.

       

      


       

      9. JOINT
AND SEVERAL LIABILITY

       

      Each
Borrower agrees that they will be jointly and severally liable for the
Obligations with each other Borrower and that all other obligations of each
Borrower hereunder and under each Loan Document to which more than one Borrower
is a party shall be joint and several among all such Borrowers party hereto or
thereto.  Each Borrower agrees that each other Borrower will have
authority on behalf of all Borrowers to deal with the Administrative Agent and
each Lender as fully and completely as if each was the sole Borrower under this
Agreement, all without notice to the other Borrowers.  Notwithstanding
the foregoing, each Borrower agrees that the Administrative Agent and each
Lender may, at its discretion, (a) require joint instruction from some or all of
the Borrowers before taking action under this Agreement or any other Loan
Document and (b) if the Administrative Agent or any Lender received instructions
from any Borrower that are, in the Administrative Agent’s or such Lender’s
opinion, in conflict with instructions received from any other Borrower, comply
with any of these instructions and/or advise each Borrower of the apparent
conflict and/or take no action as to any of these instructions until it receives
instructions from any or all of the Borrowers that are satisfactory to the
Administrative Agent or such Lender.  Notice provided by the
Administrative Agent or any Lender to any Borrower will be deemed notice to all
Borrowers.  Furthermore, each Borrower authorizes Borrower Agent to
act on its behalf.

       

      10. SECURITY

       

      10.1 Security.

       

      To secure
the prompt and complete payment, performance and observance of all of the
Obligations, in addition to other “Collateral” upon which a Lien is granted
under the other Collateral Documents, each Borrower hereby grants, assigns,
conveys, mortgages, pledges, hypothecates and transfers to Administrative Agent,
for itself and for the benefit of the Lenders, a first priority Lien (subject
only to (i) valid, perfected, nonavoidable and enforceable Liens existing as of
the Closing Date and listed on Disclosure Schedule 3.21, (ii) valid liens in
existence at the Closing Date to the extent perfected thereafter as permitted by
Section 546(b) of the Code, (iii) the Carve-Out and (iv) Permitted Liens
permitted pursuant to Section 6.7(a), (c), (e), (f), (g), (h), (i),
(j), (k), (m), (n) or (o)) in accordance with sections 364(c)(2) and
364(c)(3) of the Bankruptcy Code upon all of the following property now owned or
at any time hereafter acquired by any Borrower or in which such Borrower now has
or at any time in the future may acquire any right, title or interest
(capitalized terms contained in this section, unless the context indicates
otherwise, or unless defined elsewhere herein, have the meanings provided for in
the Code to the extent the same is used or defined therein):

       

              (i) all
Accounts;

       

              (ii) all
Chattel Paper;

       

              (iii) all
Documents;

       

              (iv) all
General Intangibles (including payment intangibles and Software);

       

              (v) all
Goods, Inventory and Equipment, including spare parts and Tooling, and other
personal property, whether tangible or intangible or wherever
located;

       

              (vi) all
Instruments;

       

              (vii) all
Investment Property;

       

              (viii) all
Vehicles;

       

              (ix) all owned
real property (subject to Section 5.9(b));

       

              (x) the
Commercial Tort Claims described on Disclosure Schedule 10.1;

       

              (xi) all
Deposit Accounts of any Borrower, including all Blocked Accounts and all other
bank accounts and all deposits therein;

       

              (xii) all
money, cash or cash equivalents of any Borrower;

       

              (xiii) all
Supporting Obligations and Letter of Credit Rights of any Borrower;

       

              (xiv) to the
extent not otherwise included, all monies and other property of any kind which
is, after the Closing Date, received by such Borrower in connection with
refunds with respect to taxes, assessments and governmental charges imposed on
such Borrower or any of its property or income;

       

              (xv) to the
extent not otherwise included, all causes of action (other than claims of the
Borrowers under Sections 502(d), 544, 545, 547, 548 and 550 of the Bankruptcy
Code) and all monies and other property of any kind received therefrom, and all
monies and other property of any kind recovered by any Borrower;
and

       

              (xvi) all
property of any Borrower held by the Administrative Agent or any other Lender,
including all property of every description, in the possession or custody of or
in transit to the Administrative Agent or such Lender for any purpose, including
safekeeping, collection or pledge, for the account of such Borrower or as to
which such Borrower may have any right or power;

       

              (xvii) to the
extent not otherwise included, all Proceeds of each of the foregoing, tort
claims, insurance claims and other rights to payment not otherwise included in
the foregoing and products of the foregoing and all accessions to, substitutions
and replacements for, and rents and profits of, each of the
foregoing;

       

      provided,
that “Collateral” shall not include (i) the Excluded Collateral provided that if
and when any property shall cease to be Excluded Collateral, such property shall
be deemed at all times from and after the date such property ceased to be
Excluded Collateral to constitute Collateral and (ii) any General Intangibles or
other rights arising under any contract, instrument, license or other document
if the grant of a security interest therein would constitute a breach or
violation of a valid and effective restriction in favor of a third party
(including, without limitation, mandatory consent rights; and the parties agree
that the Administrative Agent shall not require any actions to be taken with
respect to such consent rights) or give rise to any indemnification obligations
or any right to terminate or commence the exercise of remedies under such
restrictions, but only to the extent, and for so long as, in the case of clause
(ii) such restriction is not terminated or rendered unenforceable or otherwise
deemed ineffective by any applicable law.

       

      10.2 Perfection of Security
Interests.

       

          (a) At any
time and from time to time, upon the reasonable request of the Administrative
Agent and at the sole expense of the Borrowers, the Borrowers shall promptly and
duly execute and deliver any and all such further instruments and documents and
take such further actions as the Administrative Agent may deem desirable to
obtain the full benefits of any security interest granted or purported to be
granted by such Borrower hereunder and of the rights and powers herein granted,
including (i) upon the reasonable request of the Administrative Agent, using its
commercially reasonable efforts to secure all consents and approvals necessary
or appropriate for the assignment to or for the benefit of the Administrative
Agent of any License or Contract held by such Borrower and to enforce the
security interests granted hereunder, (ii) unless Administrative Agent shall
otherwise consent in writing (which consent may be revoked), delivering to
Administrative Agent all Collateral consisting of negotiable Documents and
certificated securities (in each case, accompanied by stock powers, allonges or
other instruments of transfer executed in blank) promptly after such Borrower
receives the same, (iii) delivering any requested Chattel Paper or
Instrument to Administrative Agent (in each case accompanied by instruments
of transfer executed in blank), (iv) to the extent required by this Agreement
and not waived by Administrative Agent in writing (which waiver may be revoked)
obtaining authenticated Control Agreements from each issuer of uncertificated
securities, securities intermediary, or commodities intermediary issuing or
holding any financial assets or commodities, in each case constituting
Collateral, to or for any Borrower; provided, that the Administrative Agent
shall not deliver a notice that it is exercising exclusive control over any
financial assets or commodities to any such issuer, securities intermediary or
commodities intermediary unless an Event of Default has occurred and is
continuing, (v) in accordance with and to the extent required by Annex B to this
Agreement, obtaining a blocked account or similar agreement with each bank or
financial institution holding a Deposit Account for such Borrower; provided,
that the Administrative Agent shall not deliver a notice that it is exercising
exclusive control over any Deposit Account to any such bank or financial
institution unless an Event of Default has occurred and is continuing, (vi) for
each Borrower that is or becomes the beneficiary of a letter of credit with
a face amount in excess of $1,000,000 promptly, and in any event within two (2)
Business Days after becoming a beneficiary, notifying Administrative Agent
thereof and thereafter, unless the related Letter of Credit Rights constitute a
Supporting Obligation for which the Administrative Agent’s security interest is
perfected, using its commercially reasonable efforts to cause the issuer and/or
confirmation bank with respect to such Letter of Credit Rights to enter into a
tri-party agreement with the Administrative Agent assigning such Letter of
Credit Rights to the Administrative Agent and directing all payments thereunder
to a Blocked Account, all in form and substance reasonably satisfactory to the
Administrative Agent (vii) taking all steps necessary to grant the
Administrative Agent control of all electronic chattel paper in accordance with
the Code and all “transferable records” as defined in each of the Uniform
Electronic Transactions Act and the Electronic Signatures in Global and National
Commerce Act, (viii) promptly, and in any event within five (5) Business Days
after the same is acquired by it, notifying the Administrative Agent of any
Commercial Tort Claim involving a claim of more than $1,000,000 acquired by it
and if requested by the Administrative Agent, entering into a supplement to this
Agreement, granting to Administrative Agent a Lien in such Commercial Tort
Claim, (ix) maintaining complete and accurate stock records, (x) except as
otherwise provided in clause (vi) hereof, delivering to the Administrative Agent
all documents, certificates and Instruments necessary or desirable to perfect
the Administrative Agent’s Lien on letters of credit on which such Borrower is
named as beneficiary and all acceptances issued in connection therewith and (xi)
taking such other steps as are deemed necessary or desirable to maintain the
Administrative Agent’s security interest in the Collateral.  Nothing
contained in this Section 10.2(a) shall be deemed to require any Borrower to
obtain the consent of any landlord (including, without limitation, any Aviation
Authority) or to obtain or record any memorandum of lease or leasehold mortgage
or similar instrument with respect to any leased real property.

       

          (b) Each
Borrower hereby irrevocably authorizes the Administrative Agent at any time and
from time to time to file in any filing office in any Uniform Commercial Code
jurisdiction any initial financing statements and amendments thereto that (a)
indicate the Collateral (i) as all assets of such Borrower or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the Code in such jurisdiction, or (ii) as
being of an equal or lesser scope or with greater detail, and (b) contain any
other information required by part 5 of Article 9 of the Code for the
sufficiency or filing office acceptance of any financing statement or amendment,
including (i) whether such Borrower is an organization, the type of organization
and any organization identification number issued to such Borrower, and (ii) in
the case of a financing statement filed as a fixture filing, a sufficient
description of real property to which the Collateral relates. Each Borrower
agrees to furnish any such information to the Administrative Agent promptly upon
request. Each Borrower also ratifies its authorization for the Administrative
Agent to have filed in any Uniform Commercial Code jurisdiction any initial
financing statements or amendments thereto if filed prior to the
Closing Date.

       

          (c) Notwithstanding
subsections (a) and (b) of this Section 10.2, or any failure on the part of any
Borrower or the Administrative Agent to take any of the actions set forth in
such subsections, the Liens and security interests granted herein shall be
deemed valid, enforceable and perfected by entry of the Final DIP Order. No
financing statement, notice of lien, mortgage, deed of trust or similar
instrument in any jurisdiction or filing office need be filed or any other
action taken in order to validate and perfect the Liens and security interests
granted by or pursuant to this Agreement or the Final DIP Order.

       

      10.3 Rights of Lenders; Limitations on
Lenders’
Obligations.

       

          (a) Subject
to each Borrower’s rights and duties under the Bankruptcy Code (including
section 365 of the Bankruptcy Code), it is expressly agreed by each Borrower
that, anything herein to the contrary notwithstanding, each such Borrower shall
remain liable under each of its Contracts and each of its Licenses to observe
and perform all the conditions and obligations to be observed and performed by
it thereunder, unless such Borrower determines in its reasonable good faith
judgment that such Contract or License is no longer valuable to such Borrower’s
business, economically or otherwise. Neither the Administrative Agent nor any
Lender shall have any obligation or liability under any Contract or License by
reason of or arising out of this Agreement or the granting herein of a Lien
thereon or the receipt by Administrative Agent or any Lender of any payment
relating to any Contract or License pursuant hereto. Neither Administrative
Agent nor any Lender shall be required or obligated in any manner to
perform or fulfill any of the obligations of any Borrower under or pursuant to
any Contract or License, or to make any payment, or to make any inquiry as to
the nature or the sufficiency of any payment received by it or the sufficiency
of any performance by any party under any Contract or License, or to present or
file any claims, or to take any action to collect or enforce any performance or
the payment of any amounts which may have been assigned to it or to which it may
be entitled at any time or times.

       

          (b) Subject
to Section 10.5 hereof, the Administrative Agent authorizes each Borrower to
collect its Accounts, provided that such collection is performed in accordance
with such Borrower’s customary procedures, and the Administrative Agent may,
upon the occurrence and during the continuation of any Event of Default and
without notice, other than any requirement of notice provided in the Final DIP
Order, limit or terminate said authority at any time.

       

          (c) Subject
to any requirement of notice provided in the Final DIP Order, the Administrative
Agent may at any time after an Event of Default has occurred and is continuing
without prior notice to any Borrower, notify Account Debtors and other Persons
obligated on the Collateral that Administrative Agent has a security interest
therein, and that payments shall be made directly to Administrative Agent.
Subject to any requirement of notice provided in the Final DIP Order, upon the
reasonable request of Administrative Agent, the Borrowers shall so notify
Account Debtors and other Persons obligated on Collateral. Once any such notice
has been given to any Account Debtor or other Person obligated on the
Collateral, the affected Borrower shall not give any contrary instructions to
such Account Debtor or other Person without Administrative Agent’s prior written
consent. Subject to any requirement of notice provided in the Final DIP Order,
upon the occurrence and during the continuation of an Event of Default, the
Administrative Agent may in its own name, or in the name of others, communicate
with such parties to such Accounts, Contracts, Instruments, Investment Property
and Chattel Paper to verify with such Persons to the Administrative Agent’s
reasonable satisfaction the existence, amount and terms of any such Accounts,
Contracts, Instruments, Investment Property or Chattel Paper.

       

          (d) Subject
to any requirement of notice provided in the Final DIP Order, the Administrative
Agent may at any time in the Administrative Agent’s own name, in the name of a
nominee of the Administrative Agent or in the name of any Borrower communicate
(by mail, telephone, facsimile or otherwise) with Account Debtors to verify with
such Persons, to the Administrative Agent’s satisfaction, the existence,
amount, terms of, and any other matter relating to, Accounts and/or payment
intangibles comprising Collateral; provided that unless an Event of Default
shall have occurred and be continuing, the Administrative Agent shall not do any
of the foregoing except during normal business hours and after giving the
Borrower Agent reasonable prior notice and the affected Borrower opportunity to
be present. If an Event of Default shall have occurred and be continuing, each
Borrower, at its own expense, shall cause the independent certified public
accountants then engaged by such Borrower to prepare and deliver to the
Administrative Agent and each Lender at any time and from time to time promptly
upon the Administrative Agent’s written request the following reports with
respect to each Borrower: (i) a reconciliation of all Accounts; (ii) an aging of
all Accounts; (iii) trial balances; and (iv) a test verification of such
Accounts as the Administrative Agent may request. The Administrative Agent may
at any time in its own name, in the name of a nominee of the Administrative
Agent or in the name of any Borrower communicate (by mail, telephone, facsimile
or otherwise) with parties to Contracts and obligors in respect of Instruments
to verify with such Persons, to the Administrative Agent’s satisfaction, the
existence, amount, terms of, and any other matter relating to, Instruments,
Chattel Paper and/or payment intangibles comprising Collateral; provided that
unless an Event of Default shall have occurred and be continuing, the
Administrative Agent shall not do any of the foregoing except during normal
business hours and after giving the Borrower Agent reasonable prior notice and
the affected Borrower opportunity to be present. Each Borrower, at its own
expense, shall deliver to the Administrative Agent the results of each physical
verification, if any, which such Borrower may in its discretion have made, or
caused any other Person to have made on its behalf, of all or any portion of its
Inventory.

       

      10.4 Covenants of the
Borrowers with
Respect to Collateral.

       

      Each
Borrower covenants and agrees with Administrative Agent, for the benefit of the
Lenders, that from and after the date of this Agreement and until the
Termination Date:

       

          (a) Maintenance of
Records. The Borrowers shall keep and maintain, at their own cost and
expense, satisfactory and complete records of the Collateral, including a record
of any and all payments received and any and all credits granted with respect to
the Collateral and all other dealings with the Collateral, in each case in a
manner consistent with past practice. Upon request by the Administrative Agent,
the Borrowers shall mark their books and records pertaining to the Collateral to
evidence this Agreement and the Liens granted hereby. If any Borrower retains
possession of any Chattel Paper or Instruments with the Administrative Agent’s
consent, such Chattel Paper and Instruments shall, if requested by the
Administrative Agent, be marked with the following legend: “This writing and the
obligations evidenced or secured hereby are subject to the security
interest of Wells Fargo Bank Northwest, National Association, as the
Administrative Agent, for the benefit of the Lenders.”

       

          (b) Covenants Regarding Patent,
Trademark and Copyright Collateral.

       

              (i) The
Borrowers shall notify Administrative Agent promptly if any Borrower knows or
has reason to know that any application or registration relating to any material
Patent, Trademark or Copyright (now or hereafter existing) may become abandoned
or dedicated, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding any Borrower’s ownership of any material
Patent, Trademark or Copyright, its right to register the same, or to keep and
maintain the same.

       

              (ii) Promptly
after any Borrower, either itself or through the Administrative Agent, employee,
licensee or designee, files an application for the registration of any Patent,
Trademark or Copyright with the United States Patent and Trademark Office or the
United States Copyright Office, the Borrowers shall give the Administrative
Agent written notice of such filing and, upon request of the Administrative
Agent, such Borrower shall execute and deliver any and all Patent Security
Agreements, Copyright Security Agreements or Trademark Security Agreements as
Administrative Agent may request to evidence Administrative Agent’s Lien on such
Patent, Trademark or Copyright, and the General Intangibles of such
Borrower relating thereto or represented thereby.

       

              (iii) The
Borrowers shall take all actions necessary or requested by the Administrative
Agent to maintain and pursue each application, to obtain the relevant
registration and to maintain the registration of each of the Patents, Trademarks
and Copyrights (now or hereafter existing), including the filing of applications
for renewal, affidavits of use, affidavits of noncontestability and opposition
and interference and cancellation proceedings unless such Borrower reasonably
determines that such Patent, Trademark or Copyright Collateral is in no way
material to the conduct of its business or operations.

       

              (iv) In the
event that any of the Patent, Trademark or Copyright Collateral is infringed
upon, or misappropriated or diluted by a third party, such Borrower shall comply
with Section 10.2(a)(viii) of this Agreement. Such Borrower shall, unless such
Borrower reasonably determines that such Patent, Trademark or Copyright
Collateral is in no way material to the conduct of its business or operations,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and shall
take such other actions as Administrative Agent shall deem appropriate under the
circumstances to protect such Patent, Trademark or Copyright
Collateral.

       

          (c) Further Identification of
Collateral. In addition to any other requirements herein, the Borrowers
will, if so requested by the Administrative Agent, furnish to the Administrative
Agent, as often as the Administrative Agent reasonably requests, statements and
schedules further identifying and describing the Collateral as the
Administrative Agent may reasonably request, all in such detail as the
Administrative Agent may specify.

       

          (d) Notices. The
Borrowers will advise the Administrative Agent promptly, in reasonable detail of
any Lien or claim made or asserted against any of the Collateral other than in
respect of Permitted Liens.

       

          (e) Terminations; Amendments Not
Authorized. Except to the extent permitted by Section 10.4(f), each
Borrower acknowledges that it is not authorized to file any financing statement
or amendment or termination statement with respect to any financing statement
relating to the Collateral and filed pursuant to the terms hereof without the
prior written consent of the Administrative Agent and agrees that it will not do
so without the prior written consent of the Administrative Agent, subject to
such Borrower’s rights under Section 9-509(d)(2) of the Code.

       

          (f) Authorized Terminations and
Subordinations. The Administrative Agent will promptly deliver to the
Borrower Agent for filing or authorize each Borrower to prepare and file
termination statements and releases in respect of any sales, transfers,
conveyances, assignments or other dispositions of Collateral made in accordance
with Section 6.8 of this Agreement.

       

          (g) [Reserved].

       

          (h) Pledged
Collateral.

       

              (i) All
certificates and all promissory notes and instruments evidencing the Pledged
Collateral shall be delivered to and held by or on behalf of the Administrative
Agent, for itself and the benefit of the Lenders, pursuant hereto. All Pledged
Shares shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the
Administrative Agent and all promissory notes or other instruments evidencing
the Pledged Indebtedness shall be endorsed by the applicable
Borrower;

       

              (ii) Without
the prior written consent of the Administrative Agent, no Borrower will sell,
assign, transfer, pledge, or otherwise encumber any of its rights in or to the
Pledged Collateral, or any unpaid dividends, interest or other distributions or
payments with respect to the Pledged Collateral or grant a Lien in the Pledged
Collateral, unless otherwise expressly permitted by this Agreement;

       

              (iii) Each
Borrower will, at its expense, promptly execute, acknowledge and deliver all
such instruments and take all such actions as the Administrative Agent from time
to time may reasonably request in order to ensure to the Administrative Agent
and the Lenders obtain the benefits of the Liens in and to the Pledged
Collateral intended to be created by this Agreement, including the filing of any
necessary Code financing statements, which may be filed by the Administrative
Agent with or (to the extent permitted by law) without the signature of the
relevant Borrower, and will cooperate with the Administrative Agent, at such
Borrower’s expense, in obtaining all necessary approvals and making all
necessary filings under federal, state, local or foreign law in connection with
such Liens or any sale or transfer of the Pledged Collateral;

       

              (iv) Each
Borrower has and will defend the title to the Pledged Collateral and the Liens
of the Administrative Agent in the Pledged Collateral against the claim of any
Person (other than the holder of a Permitted Lien) and will maintain and
preserve such Liens (it being understood that nothing in this clause (iv) will
prevent such Borrower from disposing of Pledged Collateral as otherwise
permitted by Section 6.8); and

       

              (v) Each
Borrower will, upon obtaining ownership of any additional Stock of a Pledged
Entity or promissory notes or instruments representing Pledged Indebtedness or
Stock or promissory notes or instruments otherwise required to be pledged to the
Administrative Agent pursuant to any of the Loan Documents, which Stock, notes
or instruments are not already Pledged Collateral, promptly (and in any event
within five (5) Business Days) deliver to the Administrative Agent a Pledge
Amendment, duly executed by such Borrower, in substantially the form of Exhibit
B hereto (a “Pledge
Amendment”) in respect of any such additional Stock, notes or
instruments, pursuant to which such Borrower shall pledge to the Administrative
Agent all of such additional Stock, notes and instruments; provided that such
Borrower shall be required to do the foregoing with respect to any such
promissory note or instrument only if requested to do so by the Administrative
Agent pursuant to Section 10.2(a)(ii) of this Agreement. Borrower hereby
authorizes Administrative Agent to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Shares and Pledged Indebtedness listed on
any Pledge Amendment delivered to the Administrative Agent shall for all
purposes hereunder be considered Pledged Collateral.

       

      10.5 Performance by
Administrative Agent of the Borrowers’
Obligations.

       

      If any
Borrower fails to perform or comply with any of its agreements contained herein
and the Administrative Agent, as provided for by the terms of this Agreement,
shall itself perform or comply, or otherwise cause performance or compliance,
with such agreement, the expenses of the Administrative Agent incurred in
connection with such performance or compliance, together with interest thereon
at the rate then in effect in respect of the Loan, shall be payable by such
Borrower to the Administrative Agent on demand and shall constitute Obligations
secured by the Collateral. Performance of such Borrower’s obligations as
permitted under this Section 10.5 shall in no way constitute a violation of the
automatic stay provided by section 362 of the Bankruptcy Code and each Borrower
hereby waives applicability thereof. Moreover, the Administrative Agent shall in
no way be responsible for the payment of any costs incurred in connection with
preserving or disposing of Collateral pursuant to section 506(c) of the
Bankruptcy Code and the Collateral may not be charged for the incurrence of any
such cost. Each Borrower, on behalf of itself and it bankruptcy estate, hereby
waives any right it may have to surcharge any of the Collateral for any purpose
whatsoever pursuant to section 506(c) of the Bankruptcy Code.

       

      10.6 Limitation on the
Administrative Agent’s duty in Respect of
Collateral.

       

      The
Administrative Agent and each Lender shall use reasonable care with respect to
the Collateral in its possession or under its control. Neither the
Administrative Agent nor any Lender shall have any other duty as to any
Collateral in its possession or control or in the possession or control of any
agent or nominee of the Administrative Agent or such Lender, or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto.

       

      10.7 Remedies; Rights Upon
Default.

       

          (a) In
addition to all other rights and remedies granted to it under the other Loan
Documents and under any other instrument or agreement securing, evidencing or
relating to any of the Secured Obligations, if any Event of Default shall have
occurred and be continuing, the Administrative Agent may exercise all rights and
remedies of a secured party under the Code. Without limiting the generality of
the foregoing, each Borrower expressly agrees that in any such event the
Administrative Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice required by the Final DIP
Order or the notice specified below of time and place of public or private sale)
to or upon such Borrower or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code and other applicable law), may, to the maximum extent
permitted by law, forthwith enter upon the premises of such Borrower where any
Collateral is located through self-help, without judicial process, without first
obtaining a final judgment or giving such Borrower or any other Person notice
and opportunity for a hearing on the Administrative Agent’s claim or action and
may collect, receive, assemble, process, appropriate and realize upon the
Collateral, or any part thereof, and may forthwith sell, lease, license, assign,
give an option or options to purchase, or sell or otherwise dispose of and
deliver said Collateral (or contract to do so), or any part thereof, in one or
more parcels at a public or private sale or sales, at any exchange at such
prices as it may deem acceptable, for cash or on credit or for future delivery
without assumption of any credit risk. The Administrative Agent or any Lender
shall have the right upon any such public sale or sales and, to the extent
permitted by law, upon any such private sale or sales, to purchase for the
benefit of the Lenders, the whole or any part of said Collateral so sold, free
of any right or equity of redemption, which equity of redemption each Borrower
hereby releases. Such sales may be adjourned and continued from time to time
with or without notice. The Administrative Agent shall have the right to conduct
such sales on any Borrower’s premises or elsewhere and shall have the right to
use any Borrower’s premises without charge for such time or times as the
Administrative Agent may deem necessary or advisable. EACH BORROWER HEREBY
IRREVOCABLY CONSTITUTES AND APPOINTS THE ADMINISTRATIVE AGENT AS THE PROXY AND
ATTORNEY-IN-FACT OF SUCH BORROWER WITH RESPECT TO THE PLEDGED COLLATERAL,
INCLUDING THE RIGHT TO VOTE THE PLEDGED SHARES, WITH FULL POWER OF SUBSTITUTION
TO DO SO. THE APPOINTMENT OF THE ADMINISTRATIVE AGENT AS PROXY AND
ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE
TERMINATION DATE. IN ADDITION TO THE RIGHT TO VOTE THE PLEDGED SHARES, THE
APPOINTMENT OF THE ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL
INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES
TO WHICH A HOLDER OF THE PLEDGED SHARES WOULD BE ENTITLED (INCLUDING GIVING OR
WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF
SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE,
AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF
ANY PLEDGED SHARES ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON
(INCLUDING THE ISSUER OF THE PLEDGED SHARES OR ANY OFFICER OR AGENT THEREOF),
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT. NOTWITHSTANDING THE FOREGOING, (X)
THE ADMINISTRATIVE AGENT SHALL NOT HAVE ANY DUTY TO EXERCISE ANY SUCH RIGHT OR
TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY
DELAY IN DOING SO AND (Y) THE ADMINISTRATIVE AGENT SHALL NOT EXERCISE ANY
SUCH RIGHT WITH RESPECT TO ANY REGULATED SUBSIDIARY UNLESS ANY AND ALL
REGULATORY APPROVALS REQUIRED UNDER APPLICABLE LAW SHALL HAVE BEEN
OBTAINED.

       

          (b) If any
Event of Default shall have occurred and be continuing, each Borrower further
agrees, at the Administrative Agent’s request, to assemble the Collateral and
make it available to the Administrative Agent at a place or places designated by
the Administrative Agent, whether at such Borrower’s premises or elsewhere.
Until the Administrative Agent is able to effect a sale, lease, or other
disposition of Collateral, the Administrative Agent shall have the right to hold
or use Collateral, or any part thereof, to the extent that it deems appropriate
for the purpose of preserving Collateral or its value or for any other purpose
deemed appropriate by the Administrative Agent. The Administrative Agent shall
have no obligation to any Borrower to maintain or preserve the rights of such
Borrower as against third parties with respect to Collateral while Collateral is
in the possession of the Administrative Agent. The Administrative Agent may, if
it so elects, seek the appointment of a receiver or keeper to take possession of
Collateral and to enforce any of the Administrative Agent’s remedies (for the
benefit of the Lenders), with respect to such appointment without prior notice
or hearing as to such appointment. The Administrative Agent shall deposit the
net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale to a Blocked Account and such net proceeds shall be applied
in accordance with Section 1.3. To the maximum extent permitted by applicable
law, each Borrower waives all claims, damages, and demands against the
Administrative Agent or any Lender arising out of the repossession, retention or
sale of the Collateral except such as arise solely out of the gross negligence
or willful misconduct of the Administrative Agent or such Lender as finally
determined by a court of competent jurisdiction. Each Borrower agrees that ten
(10) days prior notice by Administrative Agent of the time and place of any
public sale or of the time after which a private sale may take place is
reasonable notification of such matters (it being understood and agreed that,
except any notice required by the Final DIP Order, no such notice need be given
if with respect to portions of the Collateral that are perishable or threaten to
decline speedily in value or is of a type that is customarily sold in a
recognized market). The Borrowers shall remain liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are insufficient to pay
all Secured Obligations, including any attorneys’ fees and other expenses
incurred by the Administrative Agent or any Lender to collect such
deficiency.

       

          (c) Except as
otherwise specifically provided herein, each Borrower hereby waives presentment,
demand, protest or any notice (to the maximum extent permitted by applicable
law) of any kind in connection with this Agreement or any
Collateral.

       

          (d) To the
extent that applicable law imposes duties on the Administrative Agent to
exercise remedies in a commercially reasonable manner, each Borrower
acknowledges and agrees that it is not commercially unreasonable for the
Administrative Agent (i) to fail to incur expenses reasonably deemed significant
by the Administrative Agent to prepare Collateral for disposition or otherwise
to complete raw material or work in process into finished goods or other
finished products for disposition, (ii) to fail to obtain third party consents
for access to Collateral to be disposed of, or to obtain or, if not required by
other law, to fail to obtain governmental or third party consents for the
collection or disposition of Collateral to be collected or disposed of,
(iii) to fail to exercise collection remedies against Account Debtors or other
Persons obligated on Collateral or to remove Liens on or any adverse claims
against Collateral, (iv) to exercise collection remedies against Account Debtors
and other Persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
Persons, whether or not in the same business as the Borrowers, for expressions
of interest in acquiring all or any portion of such Collateral, (vii) to hire
one or more professional auctioneers to assist in the disposition of Collateral,
whether or not the Collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capacity of
doing so, or that match buyers and sellers of assets, (ix) to dispose of assets
in wholesale rather than retail markets, (x) to disclaim disposition warranties,
such as title, possession or quiet enjoyment, (xi) to purchase insurance or
credit enhancements to insure the Administrative Agent against risks of loss,
collection or disposition of Collateral or to provide to the Administrative
Agent a guaranteed return from the collection or disposition of Collateral, or
(xii) to the extent deemed appropriate by the Administrative Agent, to obtain
the services of other brokers, investment bankers, consultants and other
professionals to assist the Administrative Agent in the collection or
disposition of any of the Collateral. Each Borrower acknowledges that the
purpose of this Section 10.7(d) is to provide non-exhaustive indications of what
actions or omissions by the Administrative Agent would not be commercially
unreasonable in the Administrative Agent’s exercise of remedies against the
Collateral and that other actions or omissions by the Administrative Agent shall
not be deemed commercially unreasonable solely on account of not being indicated
in this Section 10.7(d). Without limitation upon the foregoing, nothing
contained in this Section 10.7(d) shall be construed to grant any rights to any
Borrower or to impose any duties on the Administrative Agent that would not have
been granted or imposed by this Agreement or by applicable law in the absence of
this Section 10.7(d).

       

          (e) Neither
the Administrative Agent nor any Lender shall be required to make any demand
upon, or pursue or exhaust any of their rights or remedies against, any
Borrower, any other obligor, guarantor, pledgor or any other Person with respect
to the payment of the Secured Obligations or to pursue or exhaust any of their
rights or remedies with respect to any Collateral therefore or any direct or
indirect guarantee thereof. Neither the Administrative Agent nor the Lenders
shall be required to marshal the Collateral or any guarantee of the Secured
Obligations or to resort to the Collateral or any such guarantee in any
particular order, and all of its and their rights hereunder or under any other
Loan Document shall be cumulative. To the extent it may lawfully do so, each
Borrower absolutely and irrevocably waives and relinquishes the benefit and
advantage of, and covenants not to assert against the Administrative Agent or
any Lender, any valuation, stay, appraisement, extension, redemption or similar
laws and any and all rights or defenses it may have as a surety now or hereafter
existing which, but for this provision, might be applicable to the sale of any
Collateral made under the judgment, order or decree of any court, or privately
under the power of sale conferred by this Agreement, or otherwise.

       

          (f) Upon the
occurrence and during the continuation of an Event of Default, the
Administrative Agent is hereby authorized and empowered to transfer and register
in its name or in the name of its nominee the whole or any part of the
Collateral, to exchange certificates or instruments representing or evidencing
Pledged Collateral for certificates or instruments of smaller or larger
denominations, to exercise the voting and all other rights as a holder with
respect thereto, to collect and receive all cash dividends, interest, principal
and other distributions made thereon, to sell in one or more sales after ten
(10) days notice of the time and place of any public sale or of the time at
which a private sale is to take place (which notice the Borrowers agree is
commercially reasonable) the whole or any part of the Collateral (it being
understood and agreed that, except any notice required by the Final DIP Order,
no such notice need be given with respect to any portions of the Collateral that
are perishable or threaten to decline speedily in value or is of a type that is
customarily sold in a recognized market) and to otherwise act with respect to
the Collateral as though the Administrative Agent was the outright owner
thereof. Any sale shall be made at a public or private sale at the
Administrative Agent’s place of business, or at any place to be named in the
notice of sale, either for cash or upon credit or for future delivery at such
price as the Administrative Agent may deem fair, and the Administrative Agent
may be the purchaser of the whole or any part of the Collateral so sold and hold
the same thereafter in its own right free from any claim of such Borrower or any
right of redemption. Each sale shall be made to the highest bidder, but the
Administrative Agent reserves the right to reject any and all bids at such sale
which, in its discretion, it shall deem inadequate. Demands of performance,
except as otherwise herein specifically provided for, notices of sale,
advertisements and the presence of property at sale are hereby waived and any
sale hereunder may be conducted by an auctioneer or any officer or agent of the
Administrative Agent.

       

          (g) If, at
the original time or times appointed for the sale of the whole or any part of
the Collateral, the highest bid, if there be but one sale, shall be inadequate
to discharge in full all the Secured Obligations, or if the Collateral has been
offered for sale in lots, and if at any of such sales, the highest bid for the
lot offered for sale would indicate to the Administrative Agent, in its
discretion, that the proceeds of the sales of the whole of the Collateral would
be unlikely to be sufficient to discharge all the Secured Obligations, the
Administrative Agent may, on one or more occasions and in its sole discretion,
postpone effectuating any of said sales by public announcement at the time of
sale or the time of previous postponement of sale, and no other notice of such
postponement or postponements of sale need be given, any other notice being
hereby waived; provided, however, that any sale or sales made after such
postponement shall be after ten (10) days notice to the Borrower
Agent.

       

          (h) If, at
any time when the Administrative Agent in its sole discretion determines,
following the occurrence and during the continuance of an Event of Default,
that, in connection with any actual or contemplated exercise of its rights (when
permitted under this Section 10.7(h)) to sell the whole or any part of the
Pledged Collateral hereunder, it is necessary or advisable to effect a public
registration of all or part of the Pledged Collateral pursuant to the Securities
Act of 1933, as amended (or any similar statute then in effect) (the “Act”), such Borrower shall, in
an expeditious manner, cause the Pledged Entities to:

       

          (i) Prepare
and file with the U.S. Securities and Exchange Commission (the “Commission”) a registration
statement with respect to the Pledged Shares and in good faith use commercially
reasonable efforts to cause such registration statement to become and remain
effective;

       

              (ii) Prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply with the
provisions of the Act with respect to the sale or other disposition of the
Pledged Shares covered by such registration statement whenever the
Administrative Agent shall desire to sell or otherwise dispose of the Pledged
Shares;

       

              (iii) Furnish
to the Administrative Agent such numbers of copies of a prospectus and a
preliminary prospectus, in conformity with the requirements of the Act, and such
other documents as the Administrative Agent may request in order to facilitate
the public sale or other disposition of the Pledged Shares by the Administrative
Agent;

       

              (iv) Use
commercially reasonable efforts to register or qualify the Pledged Shares
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions within the United States and Puerto Rico as the
Administrative Agent shall request, and do such other reasonable acts and
things as may be required of it to enable the Administrative Agent to consummate
the public sale or other disposition in such jurisdictions of the Pledged Shares
by the Administrative Agent;

       

              (v) Furnish,
at the request of the Administrative Agent, on the date that shares of the
Pledged Collateral are delivered to the underwriters for sale pursuant to such
registration or, if the security is not being sold through underwriters, on the
date that the registration statement with respect to such Pledged Shares becomes
effective, (A) an opinion, dated such date, of the independent counsel
representing such registrant for the purposes of such registration, addressed to
the underwriters, if any, and in the event the Pledged Shares are not being sold
through underwriters, then to the Administrative Agent, in customary form and
covering matters of the type customarily covered in such legal opinions; and (B)
a comfort letter, dated such date, from the independent certified public
accountants of such registrant, addressed to the underwriters, if any, and in
the event the Pledged Shares are not being sold through underwriters, then to
the Administrative Agent, in a customary form and covering matters of the type
customarily covered by such comfort letters and as the underwriters or the
Administrative Agent shall reasonably request. The opinion of counsel referred
to above shall additionally cover such other legal matters with respect to the
registration in respect of which such opinion is being given as the
Administrative Agent may reasonably request. The letter referred to above from
the independent certified public accountants shall additionally cover such other
financial matters (including information as to the period ending not more than
five (5) Business Days prior to the date of such letter) with respect to the
registration in respect of which such letter is being given as the
Administrative Agent may reasonably request; and

       

              (vi) Otherwise
use commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable but not later than eighteen (18) months after the
effective date of the registration statement, an earnings statement covering the
period of at least twelve (12) months beginning with the first full month after
the effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Act.

       

              (i) All
expenses incurred in complying with Section 10.7(h) hereof, including, without
limitation, all registration and filing fees (including all expenses incident to
filing with the National Association of Securities Dealers, Inc.), printing
expenses, fees and disbursements of counsel for the registrant, the fees and
expenses of counsel for the Administrative Agent, expenses of the independent
certified public accountants (including any special audits incident to or
required by any such registration) and expenses of complying with the securities
or blue sky laws or any jurisdictions, shall be paid by the
Borrowers.

       

          (j) If, at
any time when the Administrative Agent shall determine to exercise its right to
sell the whole or any part of the Pledged Collateral hereunder, such Pledged
Collateral or the part thereof to be sold shall not, for any reason whatsoever,
be effectively registered under the Act, the Administrative Agent may, in its
discretion (subject only to applicable requirements of law), sell such Pledged
Collateral or part thereof by private sale in such manner and under such
circumstances as the Administrative Agent may deem necessary or advisable, but
subject to the other requirements of this Section 10.7, and shall not be
required to effect such registration or to cause the same to be effected.
Without limiting the generality of the foregoing, in any such event, the
Administrative Agent in its discretion (x) may, in accordance with applicable
securities laws, proceed to make such private sale notwithstanding that a
registration statement for the purpose of registering such Pledged Collateral or
part thereof could be or shall have been filed under said Act (or similar
statute), (y) may approach and negotiate with a single possible purchaser to
effect such sale, and (z) may restrict such sale to a purchaser who is an
accredited investor under the Act and who will represent and agree that such
purchaser is purchasing for its own account, for investment and not with a view
to the distribution or sale of such Pledged Collateral or any part thereof. In
addition to a private sale as provided above in this Section 10.7, if any of the
Pledged Collateral shall not be freely distributable to the public without
registration under the Act (or similar statute) at the time of any proposed sale
pursuant to this Section 10.7, then the Administrative Agent shall not be
required to effect such registration or cause the same to be effected but, in
its discretion (subject only to applicable requirements of law), may require
that any sale hereunder (including a sale at auction) be conducted subject to
restrictions:

       

              (i) as to the
financial sophistication and ability of any Person permitted to bid or purchase
at any such sale;

       

              (ii) as to the
content of legends to be placed upon any certificates representing the Pledged
Collateral sold in such sale, including restrictions on future transfer
thereof;

       

              (iii) as to the
representations required to be made by each Person bidding or purchasing at such
sale relating to that Person’s access to financial information about such
Borrower and such Person’s intentions as to the holding of the Pledged
Collateral so sold for investment for its own account and not with a view to the
distribution thereof; and

       

              (iv) as to
such other matters as the Administrative Agent may, in its discretion, deem
necessary or appropriate in order that such sale (notwithstanding any failure so
to register) may be effected in compliance with the Bankruptcy Code and other
laws affecting the enforcement of creditors’ rights and the Act and all
applicable state securities laws.

       

          (k) Each
Borrower recognizes that the Administrative Agent may be unable to effect a
public sale of any or all the Collateral and may be compelled to resort to one
or more private sales thereof. Each Borrower also acknowledges that any such
private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall not be deemed to have been made in a
commercially unreasonable manner solely by virtue of such sale being private.
The Administrative Agent shall be under no obligation to delay a sale of any of
the Pledged Collateral for the period of time necessary to permit the Pledged
Entity to register such securities for public sale under the Act, or under
applicable state securities laws, even if such Borrower and the Pledged Entity
would agree to do so.

       

          (l) Each
Borrower agrees to the maximum extent permitted by applicable law that following
the occurrence and during the continuance of an Event of Default it will not at
any time plead, claim or take the benefit of any appraisal, valuation, stay,
extension, moratorium or redemption law now or hereafter in force in order to
prevent or delay the enforcement of this Agreement, or the absolute sale of the
whole or any part of the Pledged Collateral or the possession thereof by any
purchaser at any sale hereunder, and each Borrower waives the benefit of all
such laws to the extent it lawfully may do so. Each Borrower agrees that it will
not interfere with any right, power and remedy of the Administrative Agent
provided for in this Agreement or now or hereafter existing at law or in
equity or by statute or otherwise, or the exercise or beginning of the exercise
by the Administrative Agent of any one or more of such rights, powers or
remedies. No failure or delay on the part of the Administrative Agent to
exercise any such right, power or remedy and no notice or demand which may be
given to or made upon the Borrowers by the Administrative Agent with respect to
any such remedies shall operate as a waiver thereof, or limit or impair
the Administrative Agent’s right to take any action or to exercise any
power or remedy hereunder, without notice or demand, or prejudice its rights as
against any Borrower in any respect.

       

          (m) Each
Borrower further agrees that a breach of any of the covenants contained in this
Section 10.7 will cause irreparable injury to the Administrative Agent, that the
Administrative Agent shall have no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant contained in
this Section 10.7 shall be specifically enforceable against the Borrowers, and
each Borrower hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense that the
Secured Obligations are not then due and payable in accordance with the
agreements and instruments governing and evidencing such
Obligations.

       

          (n) To the
extent that any rights and remedies under this Section 10.7 would otherwise be
in violation of the automatic stay of section 362 of the Bankruptcy Code, such
stay shall be deemed modified, as set forth in the Final DIP Order, as
applicable, to the extent necessary to permit the Administrative Agent to
exercise such rights and remedies.

       

      10.8 The Administrative
Agent’s Appointment as
Attorney-in-Fact.

       

      Each
Borrower irrevocably appoints the Administrative Agent its true and lawful
attorney, with full power of substitution, in the name of such Borrower, any
Lender or otherwise, for the sole use and benefit of the Lenders, but at the
Borrowers’ expense, to the extent permitted by law to exercise, at any time and
from time to time while an Event of Default shall have occurred and be
continuing, all or any of the following powers with respect to all or any of the
Collateral: (a) to demand, sue for, collect, receive and give acquittance for
any and all monies due or to become due upon or by virtue thereof, (b) to
settle, compromise, compound, prosecute or defend any action or proceeding with
respect thereto, (c) to sell, lease, license or otherwise dispose of the same or
the proceeds or avails thereof, as fully and effectually as if the
Administrative Agent were the absolute owner thereof, and (d) to extend the time
of payment of any or all thereof and to make any allowance or other adjustment
with reference thereto.

       

      10.9 Release of
Collateral.

       

          (a) The Liens
granted pursuant to this Agreement shall automatically terminate, and all the
Collateral shall be automatically released, without further action by the
Administrative Agent and without any further notice or consent to or of any
Lender, on the Termination Date.

       

          (b) Immediately
upon (i) any sale, transfer, conveyance, assignment or other disposition by any
Borrower of any Collateral permitted by this Agreement (or pursuant to a valid
waiver or consent to any transaction otherwise prohibited by this Agreement),
(ii) any Pledged Collateral being cancelled, replaced or repaid in accordance
with the terms of this Agreement, such Collateral shall be automatically
released from the security interest granted pursuant to this Agreement and the
Lien on such Collateral in favor of the Administrative Agent, for itself and for
the benefit of the Lenders, shall automatically terminate (and, if such
Collateral consists of all of the equity interests in Lynx sold pursuant to
Section 6.8(m), Lynx shall be released from its Guaranty) in each case without
further action by the Administrative Agent and without any further notice or
consent to or of any Lender.

       

          (c) At the
request of the Borrower, the Administrative Agent shall, and each of the Secured
Parties hereby authorizes and directs the Administrative Agent (without any
further notice or consent to or of any Secured Party) to, subordinate, as
reasonably requested by the holders of any Lien granted after the
Closing Date and permitted by Section 6.7(c) and any Permitted
Refinancing thereof, any part of the Collateral that is subject to such
Lien.

       

          (d) At the
request of the Borrowers, the Administrative Agent shall, and each of the
Lenders hereby authorizes and directs the Administrative Agent (without further
notice or consent to or of any Lender) to, execute and deliver or file such
termination or partial release statements and take such other actions (including
return of Collateral) as are necessary to terminate, release or subordinate
Liens pursuant to this Section 10.9 promptly upon the effectiveness of any such
termination, release or subordination. The Administrative Agent and the Lenders
hereby acknowledges and agree that the Borrowers may use the Collateral to the
extent permitted under this Agreement.

       

      11. ASSIGNMENT
AND PARTICIPATIONS; APPOINTMENT OF ADMINISTRATIVE AGENT

       

      11.1 Assignment and
Participations.

       

          (a) Right to Assign. Each
Lender may sell, transfer, negotiate or assign all or a portion of its rights
and obligations hereunder (including all or a portion of its Commitments and its
rights and obligations with respect to Loans) to any other Person with the prior
written consent of the Borrower Agent (such consent not to be unreasonably
withheld or delayed); provided, that
the Borrower Agent’s refusal to so consent shall be deemed reasonable if any
Lender seeks to sell, transfer, negotiate or assign all or any portion of
its rights hereunder to any Person, other than a Lender or an Affiliate of a
Lender, that is an air carrier or an affiliate of an air carrier; provided, further, that the
Borrower Agent’s consent shall not be required if (i) the proposed assignee is a
Lender or an Affiliate of a Lender or (ii) an Event of Default has occurred and
is continuing.  The aggregate outstanding principal amount (determined
as of the effective date of the applicable Assignment) of the Loans and
Commitments subject to any such Sale shall be an integral multiple of
$1,000,000, unless such Sale is made to an existing Lender or an Affiliate or
Approved Fund of any existing Lender, is of the assignor’s (together with
its Affiliates and Approved Funds) entire interest in such Loan or is made with
the prior consent of the Borrowers and the Administrative Agent.

       

          (b) Procedure. The
parties to each Sale made in reliance on clause (a) above (other than those
described in clause (e) below) shall execute and deliver to the Administrative
Agent (which shall keep a copy thereof) an Assignment, together with any
existing Note subject to such Sale (or any affidavit of loss therefor acceptable
to the Administrative Agent), any Certificates of Exemption required to be
delivered pursuant to Section 1.11 (which shall also be delivered to the
Borrower Agent) and payment by the assignee of an assignment fee in the amount
of $3,500. Upon receipt of all the foregoing, and conditioned upon such receipt
and upon the Administrative Agent and the Borrower Agent consenting to such
Assignment, from and after the effective date specified in such Assignment, the
Administrative Agent shall record or cause to be recorded in the Loan Account
the information contained in such Assignment.

       

          (c) Effectiveness.
Effective upon the entry of such record in the Loan Account, (i) such assignee
shall become a party hereto and, to the extent that rights and obligations under
the Loan Documents have been assigned to such assignee pursuant to such
Assignment, shall have the rights and obligations of a Lender, (ii) any
applicable Note shall be transferred to such assignee through such entry and
(iii) the assignor thereunder shall, to the extent that rights and obligations
under this Agreement have been assigned by it pursuant to such Assignment,
relinquish its rights (except for those surviving the termination of the
Commitments and the payment in full of the Obligations) and be released from its
obligations under the Loan Documents, other than those relating to events or
circumstances occurring prior to such assignment, and, in the case of an
Assignment covering all or the remaining portion of an assigning Lender’s rights
and obligations under the Loan Documents, such Lender shall cease to be a party
hereto.

       

          (d) Grant of Security
Interests. In addition to the other rights provided in this Section 11.1,
each Lender may grant a security interest in, or otherwise assign as collateral,
any of its rights under this Agreement, whether now owned or hereafter acquired
(including rights to payments of principal or interest on the Loans), to (A) any
federal reserve bank (pursuant to Regulation A of the Federal Reserve Board),
without notice to the Administrative Agent or (B) any holder of, or trustee for
the benefit of the holders of, such Lender’s Securities by notice to the
Administrative Agent; provided, that no such holder or trustee, whether because
of such grant or assignment or any foreclosure thereon (unless such foreclosure
is made through an assignment in accordance with clause (b) above), shall be
entitled to any rights of such Lender hereunder and no such Lender shall be
relieved of any of its obligations hereunder. 

       

          (e) Participants and
SPVs. In addition to the other rights provided in this Section 11.1, each
Lender may, (x) with notice to the Administrative Agent, grant to an SPV the
option to make all or any part of any Loan that such Lender would otherwise be
required to make hereunder (and the exercise of such option by such SPV and the
making of Loans pursuant thereto shall satisfy the obligation of such Lender to
make such Loans hereunder) and such SPV may assign to such Lender the right to
receive payment with respect to any Obligation and (y) without notice to or
consent from the Administrative Agent or the Borrowers, sell participations to
one or more Persons in or to all or a portion of its rights and obligations
under the Loan Documents; provided, that, whether as a result of any term of any
Loan Document or of such grant or participation, (i) no such SPV or participant
shall have a commitment, or be deemed to have made an offer to commit, to make
Loans hereunder, and, except as provided in the applicable option agreement,
none shall be liable for any obligation of such Lender hereunder, (ii) such
Lender’s rights and obligations, and the rights and obligations of the Borrowers
towards such Lender, under any Loan Document shall remain unchanged and each
other party hereto shall continue to deal solely with such Lender, which shall
remain the holder of the Obligations in the Register, except that (A) each such
participant and SPV shall be entitled to the benefit of Section 1.9, Section
1.11 and Section 1.12, but, in the case of Section 1.11, only to the extent the
Borrower Agent and the Administrative Agent receive a Certificate of Exemption
with respect to any such participant or SPV that is a Foreign Person and in each
such case only to the extent of any amount to which such Lender would be
entitled in the absence of any such grant or participation and (B) each such SPV
may receive other payments that would otherwise be made to such Lender with
respect to Loans funded by such SPV to the extent provided in the applicable
option agreement and set forth in a notice provided to the Administrative Agent
by such SPV and such Lender; provided, that in no case (including pursuant to
clause (A) or (B) above) shall an SPV or participant have the right to enforce
any of the terms of any Loan Document, and (iii) the consent of such SPV or
participant shall not be required (either directly, as a restraint on such
Lender’s ability to consent hereunder or otherwise) for any amendments, waivers
or consents with respect to any Loan Document or to exercise or refrain from
exercising any powers or rights such Lender may have under or in respect of the
Loan Documents (including the right to enforce or direct enforcement of the
Obligations), except for those described in clauses (iii)(B) and (iii)(C) of
Section 13.2(a) with respect to amounts, or dates fixed for payment of amounts,
to which such participant or SPV would otherwise be entitled and, in the case of
participants, except for those described in Section 13.2(a)(vii) (or amendments,
consents and waivers with respect to Section 10.9 to release all or
substantially all of the Collateral). No party hereto shall institute against
any SPV grantee of an option pursuant to this clause (d) any bankruptcy,
reorganization, insolvency, liquidation or similar proceeding, prior to the date
that is one year and one day after the payment in full of all outstanding
commercial paper of such SPV; provided, however, that each Lender having
designated an SPV as such agrees to indemnify each Indemnified Person against
any Liability that may be incurred by, or asserted against, such Indemnified
Person as a result of failing to institute such proceeding (including a failure
to get reimbursed by such SPV for any such Liability). The agreement in the
preceding sentence shall survive the termination of the Commitments and the
payment in full of the Obligations.

       

      11.2 Appointment of
Administrative Agent

       

          (a) Each of
the Lenders hereby irrevocably appoints Wells Fargo Bank Northwest, National
Association to act on its behalf as the Administrative Agent hereunder and under
the other Loan Documents and authorizes the Administrative Agent to take such
actions on its behalf and to exercise such powers as are delegated to the
Administrative Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto.  The provisions of
this Article are solely for the benefit of the Administrative Agent and the
Lenders, and the Borrowers shall not have rights as a third party beneficiary of
any of such provisions.

       

          (b) The
Administrative Agent shall also act as the “collateral agent” under the Loan
Documents, and each of the Lenders hereby irrevocably appoints and authorizes
the Administrative Agent to act as the agent of such Lender for purposes of
acquiring, holding and enforcing any and all Liens on Collateral granted by any
of the Borrowers to secure any of the Obligations, together with such powers and
discretion as are reasonably incidental thereto.  In this connection,
the Administrative Agent, as “collateral agent” and any co-agents, sub-agents
and attorneys-in-fact appointed by the Administrative Agent pursuant to Section
11.6 for purposes of holding or enforcing any Lien on the Collateral (or any
portion thereof) granted under the Loan Documents, or for exercising any rights
and remedies hereunder or thereunder at the direction of the Administrative
Agent), shall be entitled to the benefits of all provisions of this Article 11,
as though such co-agents, sub-agents and attorneys-in-fact were the “collateral
agent” under the Loan Documents) as if set forth in full herein with respect
thereto.

       

      11.3 Rights as a Bank.

       

      The
Person serving as the Administrative Agent hereunder and its Affiliates may
accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
the Borrowers or any Subsidiary or other Affiliate thereof as if such Person
were not the Administrative Agent hereunder and without any duty to account
therefor to the Lenders.

       

      11.4 Exculpatory
Provisions.

       

      The
Administrative Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Loan Documents.  Without
limiting the generality of the foregoing, the Administrative Agent:

       

          (a) shall not
be subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing;

       

          (b) shall not
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or
by the other Loan Documents that the Administrative Agent is required to
exercise as directed in writing by the Requisite Lenders (or such other number
or percentage of the Lenders as shall be expressly provided for herein or in the
other Loan Documents), provided that the Administrative Agent shall not be
required to take any action that, in its opinion or the opinion of its counsel,
may expose the Administrative Agent to liability or that is contrary to any Loan
Document or applicable law; and

       

          (c) shall
not, except as expressly set forth herein and in the other Loan Documents, have
any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrowers or any of its Affiliates that is
communicated to or obtained by the Person serving as the Administrative Agent or
any of its Affiliates in any capacity.

       

          (d) The
Administrative Agent shall not be liable for any action taken or not taken by it
(i) with the consent or at the request of the Requisite Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 13.2) or (ii) in the absence of its own
gross negligence or willful misconduct.  The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrowers or
a Lender.

       

          (e) The
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or thereunder or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any
other agreement, instrument or document, or the creation, perfection or priority
of any Lien purported to be created by the Collateral Documents, (v) the value
or the sufficiency of any Collateral, or (v) the satisfaction of any condition
set forth in Article 2 or elsewhere herein, other than to confirm receipt of
items expressly required to be delivered to the Administrative
Agent.

       

      11.5 Reliance by Administrative
Agent.

       

      The
Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed by
it to be genuine and to have been signed, sent or otherwise authenticated by the
proper Person.  The Administrative Agent also may rely upon any
statement made to it orally or by telephone and believed by it to have been made
by the proper Person, and shall not incur any liability for relying
thereon.  In determining compliance with any condition hereunder to
the making of a Loan that by its terms must be fulfilled to the satisfaction of
a Lender, the Administrative Agent may presume that such condition is
satisfactory to such Lender unless the Administrative Agent shall have received
notice to the contrary from such Lender prior to the making of such
Loan.  The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrowers), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or
experts.

       

      11.6 Delegation of
Duties.

       

      The
Administrative Agent may perform any and all of its duties and exercise its
rights and powers hereunder or under any other Loan Document by or through any
one or more sub-agents appointed by the Administrative Agent.  The
Administrative Agent and any such sub-agent may perform any and all of its
duties and exercise its rights and powers by or through their respective Related
Persons.  The exculpatory provisions of this Article shall apply to
any such sub-agent and to the Related Persons of the Administrative Agent and
any such sub-agent, and shall apply to their respective activities in connection
with the syndication of the credit facilities provided for herein as well as
activities as Administrative Agent.

       

      11.7 Resignation of
Administrative Agent.

       

      The
Administrative Agent may at any time give notice of its resignation to the
Lenders and the Borrowers.  Upon receipt of any such notice of
resignation, the Requisite Lenders shall have the right, in consultation with
the Borrowers, to appoint a successor, which shall be a bank with an office in
the United States, or an Affiliate of any such bank with an office in the United
States.  If no such successor shall have been so appointed by the
Requisite Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may on behalf of the Lenders, appoint a successor
Administrative Agent meeting the qualifications set forth above; provided that
if the Administrative Agent shall notify the Borrowers and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (a) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders
under any of the Loan Documents, the retiring Administrative Agent shall
continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (b) all payments, communications and
determinations provided to be made by, to or through the Administrative Agent
shall instead be made by or to each Lender directly, until such time as the
Requisite Lenders appoint a successor Administrative Agent as provided for above
in this Section.  Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring (or
retired) Administrative Agent, and the retiring Administrative Agent shall be
discharged from all of its duties and obligations hereunder or under the other
Loan Documents (if not already discharged therefrom as provided above in this
Section).  The fees payable by the Borrowers to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrowers and such
successor.  After the retiring Administrative Agent’s resignation
hereunder and under the other Loan Documents, the provisions of this Article
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Persons in respect of any actions
taken or omitted to be taken by any of them while the retiring Administrative
Agent was acting as Administrative Agent.

       

      11.8 Non-Reliance on
Administrative Agent and Other Lenders.

       

      Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Persons and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each
Lender also acknowledges that it will, independently and without reliance upon
the Administrative Agent or any other Lender or any of their Related Persons and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.

       

      11.9 Collateral and Guaranty
Matters.

       

      Each of
the Lenders irrevocably authorize the Administrative Agent, at its option and in
its discretion,

       

          (a) to
release any Lien on any property granted to or held by the Administrative Agent
under any Loan Document (i) upon the Termination Date, (ii) that is sold or to
be sold as part of or in connection with any sale permitted hereunder or under
any other Loan Document, or (iii) if approved, authorized or ratified in writing
in accordance with Section 13.2;

       

          (b) to
release any Borrower from its obligations hereunder if such Person ceases
to be a Subsidiary as a result of a transaction permitted hereunder;
and

       

          (c) subordinate
any Lien on any property granted to or held by the Administrative Agent under
any Loan Document to the holder of any Permitted Lien to the extent expressly
permitted hereunder.

       

      Upon
request by the Administrative Agent at any time, the Requisite Lenders will
confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property, or to release
any Borrower from its obligations hereunder pursuant to this 11.9.  In
each case as specified in this 11.9, the Administrative Agent will, at the
Borrowers’ expense, execute and deliver to the applicable Loan Party such
documents as such Loan Party may reasonably request to evidence the release of
such item of Collateral from the assignment and security interest granted under
the Loan Documents or to subordinate its interest in such item, or to release
any Borrower from its obligations hereunder, in each case in accordance with the
terms of the Loan Documents and this Section 11.9

       

      11.10 Indemnification.

       

      Lenders
agree to indemnify the Administrative Agent (to the extent not reimbursed by
Borrowers and without limiting the Obligations of Borrowers hereunder), ratably
according to their respective Pro Rata Shares, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any other Loan Document or any
action taken or omitted to be taken by the Administrative Agent in connection
therewith; provided, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent’s gross
negligence or willful misconduct. Without limiting the foregoing, each Lender
agrees to reimburse the Administrative Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including reasonable counsel fees)
incurred by the Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and each
other Loan Document, to the extent that the Administrative Agent is not
reimbursed for such expenses by Borrowers.

       

      12. SUCCESSORS
AND ASSIGNS

       

      12.1 Successors and
Assigns.

       

      This
Agreement and the other Loan Documents shall be binding on and shall inure to
the benefit of each Borrower, the Administrative Agent, the Lenders and their
respective successors and assigns (including, in the case of any Borrower, a
debtor-in-possession on behalf of such Borrower), except as otherwise provided
herein or therein. No Borrower may assign, transfer, hypothecate or otherwise
convey its rights, benefits, obligations or duties hereunder or under any of the
other Loan Documents without the prior express written consent of the
Administrative Agent and the Lenders. Any such purported assignment, transfer,
hypothecation or other conveyance by any Borrower without the prior express
written consent of the Administrative Agent and Lenders shall be void. The terms
and provisions of this Agreement are for the purpose of defining the relative
rights and obligations of each Borrower, the Administrative Agent and Lenders
with respect to the transactions contemplated hereby and no Person shall be a
third party beneficiary of any of the terms and provisions of this Agreement or
any of the other Loan Documents.

       

      13. MISCELLANEOUS

       

      13.1 Complete Agreement;
Modification of Agreement.

       

      The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in Section 13.2. Any letter of interest, commitment letter, fee letter
or confidentiality agreement, if any, between any Borrower and the
Administrative Agent or any Lender or any of their respective Affiliates,
predating this Agreement and relating to a financing of substantially similar
form, purpose or effect shall be superseded by this Agreement.

       

      13.2 Amendments and
Waivers.

       

          (a) Except as
otherwise expressly provided in this Agreement, the Requisite Lenders (or the
Administrative Agent with the prior written consent of the Requisite Lenders),
on the one hand, and the Borrowers, on the other hand, may from time to time
enter into written amendments, supplements or modifications for the purpose of
adding, deleting or modifying any provision of any Loan Document or changing in
any manner the rights, remedies, obligations and duties of the parties thereto,
and with the written consent of the Requisite Lenders, the Administrative Agent,
on behalf of Lenders, may execute and deliver a written instrument waiving, on
such terms and conditions as may be specified in such instrument, any of the
requirements applicable to any Borrower, as the case may be, party to any Loan
Document, or any Default or Event of Default and its consequences; provided,
that:

       

              (i) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent and the Requisite Lenders affect the rights or duties of
the Administrative Agent under this Agreement or the other Loan Documents;
and

       

              (ii) the
Administrative Agent may, with the consent of the Borrowers and Initial Lenders
holding not less than 51% of the outstanding Loans of all Initial Lenders,
amend, modify or supplement any Loan Document to cure any ambiguity,
typographical error, defect or inconsistency;

       

      provided, further, that no such
amendment, supplement, modification or waiver shall be effective to, without the
prior written consent, in addition to Lenders required above to take such
action, of each Lender directly affected thereby:

       

              (iii) (A)
modify the Commitment of such Lender or subject such Lender to any additional
obligation, (B) extend any scheduled final maturity of any Loan owing to such
Lender, (C) waive or reduce, or postpone or cancel any scheduled date fixed for
the payment of principal of or interest on any such Loan or any fees owing to
such Lender (it being understood that any mandatory prepayment required under
Section 1.2(b) does not constitute any scheduled date fixed for payments), (D)
reduce, or release any Borrower from its obligations to repay, any other
Obligation owed to such Lender or (E) consent to the assignment or transfer by
any Borrower of any of its rights and obligations under this
Agreement;

       

              (iv) amend,
modify or waive any provision of Section 1.2 or 1.3;

       

              (v) subordinate
any of the Obligations or Liens securing the Obligations, except as permitted by
this Agreement; or

       

              (vi) (A)
amend, modify or waive this Section 13.2 or any other provision specifying the
Administrative Agent, Lenders or group of Lenders required for any amendment,
modification or waiver thereof or (B) change the respective percentages
specified in the definition of “Requisite
Lenders”;

       

      provided,
further, that no such amendment, supplement, modification or waiver shall be
effective to, without the prior written consent of all Lenders:

       

              (vii) release
or permit any Borrower to sell or otherwise dispose of all or substantially all
of the Collateral provided for in the Collateral Documents; provided, however,
that no waiver, amendment, supplement or modification shall be required for the
Administrative Agent to take additional Collateral pursuant to any Loan
Document.

       

          (b) Any
waiver, amendment, supplement or modification pursuant to this Section 13.2
shall apply equally to each of Lenders and shall be binding upon Lenders and all
future holders of any of the Loans, the Notes, and all other
Obligations.

       

          (c) To the
extent (a) the consent or vote of any Lender is required, but not obtained (any
such Lender whose consent is not obtained as described in this Section 13.2(c)
being referred to as a “Non-Consenting Lender”) in
connection with any proposed amendment, modification, supplement, waiver or
exercise of remedies (a “Proposed Change”) and (b) the
Administrative Agent shall have consented to such Proposed Change, at the
request of Borrower and with the consent of the Administrative Agent (not to be
unreasonably withheld), any Person reasonably acceptable to such Administrative
Agent (which Person may be any Lender acting as such Administrative Agent and
shall have consented to such Proposed Change) shall have the right (but not the
obligation) to purchase from such Non-Consenting Lender, and such Non-Consenting
Lender shall, upon the request of such Administrative Agent, sell and assign to
such Person all of the applicable Commitments and Loans of such Non-Consenting
Lender for an amount equal to the principal balance of all applicable Loans held
by such Non-Consenting Lender and all accrued and unpaid interest and fees with
respect thereto through the date of such sale and purchase (the “Purchase Amount”); provided,
however, that such sale and purchase (and the corresponding assignment) shall
not be effective until (A) such Administrative Agent shall have received from
such Person an agreement in form and substance satisfactory to such
Administrative Agent whereby such Person shall agree to be bound by the terms
hereof and (B) such Non-Consenting Lender shall have received the Purchase
Amount from such Person. Each Lender agrees that, if it becomes a Non-Consenting
Lender, it shall execute and deliver to the Administrative Agent the Note or
Notes evidencing such Commitments or Loans and an Assignment Agreement to
evidence such sale and assignment; provided, however, that the failure of any
Non-Consenting Lender to deliver such Note or Notes or execute an Assignment
Agreement shall not render such sale and purchase (and the corresponding
assignment) invalid.

       

          (d) Upon the
Termination Date, the Administrative Agent shall deliver to the Borrowers
termination statements, mortgage releases, reconveyances and other documents
necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.

       

      13.3 Fees and
Expenses.

       

      The
Borrowers shall reimburse the Administrative Agent and each Initial Lender for
all reasonable and documented out-of-pocket fees, costs and expenses (including
the reasonable and documented fees and expenses of all of its counsel, advisors,
consultants and auditors) incurred in connection with the negotiation,
preparation and filing and/or recordation of the Loan Documents and incurred by
it in connection with:

       

          (a) any
amendment, modification or waiver of, or consent with respect to, or termination
of, any of the Loan Documents or advice in connection with the administration of
the Loans made pursuant hereto or its rights hereunder or
thereunder;

       

          (b) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
the Administrative Agent, any Lender, any Borrower or any other Person and
whether as a party, witness or otherwise) in any way relating to the Collateral,
any of the Loan Documents or any other agreement to be executed or delivered in
connection herewith or therewith, including any litigation, contest, dispute,
suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against any or all of the Borrowers or
any other Person that may be obligated to the Administrative Agent by virtue of
the Loan Documents, including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided, that
no Person shall be entitled to reimbursement under this clause (b) in respect of any
litigation, contest, dispute, suit, proceeding or action to the extent any of
the foregoing results from such Person’s gross negligence, bad faith or willful
misconduct as finally determined by a court of competent
jurisdiction;

       

          (c) any
attempt to enforce any remedies of the Administrative Agent or any Lender
against any or all of the Borrowers or any other Person that may be obligated to
the Administrative Agent or any Lender by virtue of any of the Loan Documents,
including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Loans during the pendency of one or more Events
of Default; 

       

          (d) any
workout or restructuring of the Loans during the pendency of one or more Events
of Default; and

       

          (e) efforts
to (i) monitor the Loans or any of the other Obligations, (ii) evaluate, observe
or assess any of the Borrowers or their respective affairs, and (iii) verify,
protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise
dispose of any of the Collateral, in each case pursuant to and in accordance
with the terms of the Loan Documents;

       

      including,
as to each of clauses (a) through (e) above, all reasonable and documented
attorneys’ and other professional and service providers’ fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 13.3, all of
which shall be payable, on demand, by the Borrowers to the Administrative Agent
and the Initial Lenders and shall be part of the Obligations; provided however
that the Borrowers’ obligation to reimburse for reasonable and documented
attorneys’ fees pursuant to this Section 13.3 shall be limited to one counsel
for the Administrative Agent and all Initial Lenders collectively. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: reasonable and documented fees, costs and expenses of accountants,
environmental advisors, appraisers, investment bankers, management and other
consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; charges for any E-System; and expenses for travel,
lodging and food paid or incurred in connection with the performance of such
legal or other advisory services.

      


      13.4 No
Waiver.

       

      The
Administrative Agent’s or any Lender’s failure, at any time or times, to require
strict performance by the Borrowers of any provision of this Agreement or any
other Loan Document shall not waive, affect or diminish any right of the
Administrative Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 13.2, none of the undertakings,
agreements, warranties, covenants and representations of any Borrower contained
in this Agreement or any of the other Loan Documents and no Default or Event of
Default by any Borrower shall be deemed to have been suspended or waived by the
Administrative Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
the Administrative Agent and the applicable required Lenders and directed to the
Borrowers specifying such suspension or waiver.

      


      13.5 Remedies.

       

      The
Administrative Agent’s and Lenders’ rights and remedies under this Agreement
shall be cumulative and nonexclusive of any other rights and remedies that the
Administrative Agent or any Lender may have under any other agreement, including
the other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.

      


      13.6 Severability.

       

      Wherever
possible, each provision of this Agreement and the other Loan Documents shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement or any other Loan Document shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement or such other Loan Document.

      


      13.7 Conflict of
Terms.

       

      Except as
otherwise provided in this Agreement or any of the other Loan Documents by
specific reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement conflicts with any provision in any of the
other Loan Documents, the provision contained in this Agreement shall govern and
control.

      


      13.8 Confidentiality.

       

      The
Administrative Agent and Lender agree to use commercially reasonable efforts
(equivalent to the efforts the Administrative Agent or Lender applies to
maintain the confidentiality of its own confidential information) to maintain as
confidential all confidential information provided to them by the Borrowers and
designated as confidential for a period of two (2) years following receipt
thereof, except that the Administrative Agent and Lender may disclose such
information (a) to Persons employed or engaged by the Administrative Agent or
Lender; (b) to any bona fide assignee or participant or potential assignee or
participant that has agreed to comply with the covenant contained in this
Section 13.8 (and any such bona fide assignee or participant or potential
assignee or participant may disclose such information to Persons employed or
engaged by them as described in clause (a) above); (c) as required or requested
by any Governmental Authority or reasonably believed by the Administrative Agent
or Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of the Administrative
Agent’s or Lender’s counsel, is required by law; (e) in connection with the
exercise of any right or remedy under the Loan Documents or in connection with
any Litigation to which the Administrative Agent or Lender is a party related to
the Loan Documents or the Loans or other Obligations thereunder; (f) that ceases
to be confidential through no fault of the Administrative Agent or Lender; (g)
to its affiliates and its and their directors, officers, employees, advisors,
representatives or agents, and (h) to ratings agencies.

      


      13.9 GOVERNING
LAW.

       

      EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN
DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA. EACH BORROWER HEREBY CONSENTS AND AGREES THAT UNITED STATES
BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK SHALL HAVE NON-EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE BORROWERS,
THE ADMINISTRATIVE AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT THE ADMINISTRATIVE
AGENT, LENDERS AND THE BORROWERS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY AND;
PROVIDED, FURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE ADMINISTRATIVE AGENT. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND EACH BORROWER HEREBY WAIVES ANY OBJECTION THAT SUCH BORROWER MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE
OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWER AGENT AT THE
ADDRESS SET FORTH IN ANNEX F OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF THE BORROWER AGENT’S ACTUAL RECEIPT THEREOF
OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE
PREPAID.

      


      13.10 Notices.

       

          (a) Except as
otherwise provided herein, whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties by any other parties, or
whenever any of the parties desires to give or serve upon any other parties any
communication with respect to this Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in writing and
shall be deemed to have been validly served, given or delivered (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the
United States Mail, registered or certified mail, return receipt requested, with
proper postage prepaid, (b) upon transmission, when sent by telecopy or other
similar facsimile transmission (with such telecopy or facsimile promptly
confirmed by delivery of a copy by personal delivery or United States Mail as
otherwise provided in this Section 13.10); (c) one (1) Business Day after
deposit with a reputable overnight courier with all charges prepaid or (d) when
delivered, if hand-delivered by messenger, all of which shall be addressed to
the party to be notified and sent to the address or facsimile number indicated
in Annex F or to such other address (or facsimile number) as may be substituted
by notice given as herein provided. The giving of any notice required hereunder
may be waived in writing by the party entitled to receive such notice. Failure
or delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to any Person (other than the Borrowers,
Borrower Agent, Lenders or the Administrative Agent) designated in Annex F to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other
communication.

       

          (b) Subject
to the provisions of Section 13.10(a), each of the Administrative Agent, the
Borrowers, the Lenders, and each of their Related Persons is authorized (but not
required) to transmit, post or otherwise make or communicate, in its sole
discretion, Electronic Transmissions in connection with any Loan Document and
the transactions contemplated therein; provided, that notices to any Borrower
shall not be made by any posting to an Internet or extranet based site or other
equivalent service but may be made by e-mail or E-fax, if available, so long as
such notices are also sent in accordance with Section 13.10(a). Each Borrower
and each Lender hereby acknowledges and agrees that the use of Electronic
Transmissions is not necessarily secure and that there are risks associated with
such use, including risks of interception, disclosure and abuse and each
indicates it assumes and accepts such risks by hereby authorizing the
transmission of Electronic Transmissions.

       

          (c) Subject
to the provisions of Section 13.10(a), (i)(A) no posting to any E-System shall
be denied legal effect merely because it is made electronically, (B) each E
Signature on any such posting shall be deemed sufficient to satisfy any
requirement for a “signature” and (C) each such posting shall be deemed
sufficient to satisfy any requirement for a “writing”, in each case including
pursuant to any Loan Document, any applicable provision of any Uniform
Commercial Code, the federal Uniform Electronic Transactions Act, the Electronic
Signatures in Global and National Commerce Act and any substantive or procedural
Requirement of Law governing such subject matter, (ii) each such posting that is
not readily capable of bearing either a signature or a reproduction of a
signature may be signed, and shall be deemed signed, by attaching to, or
logically associating with such posting, an E-Signature, upon which each Lender
and each Borrower may rely and assume the authenticity thereof, (iii) each such
posting containing a signature, a reproduction of a signature or an E-Signature
shall, for all intents and purposes, have the same effect and weight as a signed
paper original and (iv) each party hereto or beneficiary hereto agrees not to
contest the validity or enforceability of any posting on any E-System or
E-Signature on any such posting under the provisions of any applicable
Requirement of Law requiring certain documents to be in writing or signed;
provided, however, that nothing herein shall limit such party’s or beneficiary’s
right to contest whether any posting to any E-System or E-Signature has been
altered after transmission.

       

          (d) All uses
of an E-System shall be governed by and subject to, in addition to this Section
13.10, separate terms and conditions posted or referenced in such E-System and
related contractual obligations executed by the Lenders and the Borrowers in
connection with the use of such E-System.

       

          (e) ALL
E-SYSTEMS AND ELECTRONIC TRANSMISSIONS SHALL BE PROVIDED “AS IS” AND “AS
AVAILABLE”. NONE OF THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PERSONS
WARRANTS THE ACCURACY, ADEQUACY OR COMPLETENESS OF ANY E-SYSTEMS OR ELECTRONIC
TRANSMISSION AND DISCLAIMS ALL LIABILITY FOR ERRORS OR OMISSIONS THEREIN. NO
WARRANTY OF ANY KIND IS MADE BY THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED
PERSONS IN CONNECTION WITH ANY E SYSTEMS OR ELECTRONIC COMMUNICATION, INCLUDING
ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS. The Borrowers agree that the Administrative Agent has no responsibility
for maintaining or providing any equipment, software, services or any testing
required in connection with any Electronic Transmission or otherwise required
for any E-System.

       

      13.11 Section
Titles.

       

      The
Section titles and Table of Contents contained in this Agreement are and shall
be without substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto.

      


      13.12 Counterparts.

       

      This
Agreement may be executed in any number of separate counterparts, each of which
shall collectively and separately constitute one agreement.

      


      13.13 WAIVER OF JURY
TRIAL.

       

      THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, AMONG THE ADMINISTRATIVE AGENT, LENDERS AND ANY BORROWER ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR THE TRANSACTIONS RELATED THERETO.

      


      13.14 [Reserved]

       

      


      13.15 Advice of
Counsel.

       

      Each of
the parties represents to each other party hereto that it has discussed this
Agreement and, specifically, the provisions of Sections 13.9 and 13.13, with its
counsel.

      


      13.16 No Strict
Construction.

       

      The
parties hereto have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this
Agreement.

      


      13.17 Patriot
Act.

       

      Each
Lender and Administrative Agent (for itself and not on behalf of any Lender)
hereby notifies each Borrower that pursuant to the requirements of the Patriot
Act, it is required to obtain, verify and record information that identifies
each Borrower, which information includes the name and address of such Borrower
and other information that will allow such Lender or Administrative Agent, as
applicable, to identify such Borrower in accordance with the Patriot
Act.

      


      [The
remainder of this page is intentionally left blank.]


      
        
          
            


             

          

           


        

        
           


          
            

          

        

        
           


        

      


       

      IN
WITNESS WHEREOF, this Agreement has been duly executed as of the date first
written above.

       

       

      
        
          	 	FRONTIER AIRLINES HOLDINGS,
      INC., as a Borrower	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Ted
      Christie	 
	 	 	Name:
      Ted Christie 	 
	 	 	Title:
      CFO/Senior Vice President Finance	 
	 	 	 	 


        

      

       

       

      



      
        
          
             

             

          

           


        

        
           


          
            

          

        

        
           


        

      


       

       

       

       

       

      
        
          	 	LYNX AVIATION, INC., as a
      Borrower	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Matthew
      R. Henry	 
	 	 	Name:
      Matthew R. Henry 	 
	 	 	Title:
      Corporate Secretary	 
	 	 	 	 


        

      

       

       

      
 


      
        
          
             

             

          

           


        

        
           


          
            

          

        

        
           


        

      


       

       

       

       

       

       

       

      
        
          	 	FRONTIER AIRLINES, INC., as a
      Borrower	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Ted
      Christie	 
	 	 	Name:
      Ted Christie	 
	 	 	Title: CFO/Senior
      Vice President Finance 	 
	 	 	 	 


        

      

       

       

      


      



      
        
          
             

             

          

           


        

        
           


          
            

          

        

        
           


        

      


       

       

       

      
        
          	 	WELLS FARGO BANK NORTHWEST,
      NATIONAL ASSOCIATION, as Administrative Agent	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Michael
      Arsenault	 
	 	 	Name:
      Michael Arsenault 	 
	 	 	Title:
      Assistant Vice President	 
	 	 	 	 


        

      

       

       

       

       

      
        
          
             

          

           


        

        
           


          
            

          

        

        
           


        

      


       

       

       

      
        
          	 	REPUBLIC AIRWAYS HOLDINGS,
      INC., as a Continuing Lender	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Robert
      H. Cooper	 
	 	 	Name:
      Robert Cooper 	 
	 	 	Title:
      Executive Vice President/CFO	 
	 	 	 	 


        

      

       

       

       

      


      
        
          
            
               

               

            

             


          

          
             


            
              

            

          

          
             


          

        

      

       

       

       

       

      Each of the undersigned Departing Lenders acknowledges and agrees to
the provisions set forth in the last paragraph of Section 2.1.

       

       

       

      


      
        
          	 	CREDIT SUISSE, CAYMAN ISLANDS
      BRANCH, as a Departing Lender	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Ian
      Landow	 
	 	 	Name:
      Ian Landow 	 
	 	 	Title:
      Authorized Signatory 	 
	 	 	 	 


        

      

       

       

       

      
        
          	 	 	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Douglas
      DiBella	 
	 	 	Name:
      Douglas DiBella 	 
	 	 	Title: Vice
      President 	 
	 	 	 	 


        

      

      
 

      



      
        
          
             

          

           


        

        
           


          
            

          

        

        
           


        

      


       

      
 

       

      
        
          	 	AQR CAPITAL, LLC, as a
      Departing Lender	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Bradley
      D. Asness	 
	 	 	Name:
      Bradley D. Asness 	 
	 	 	Title:
      Principal & General Counsel 	 
	 	 	AQR
      Capital Management, LLC	 


        

      

       

       

       

      


      
        
          	 	

                  CNH
      PARTNERS, LLC, as a Departing Lender

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Bradley
      D. Asness	 
	 	 	Name:
      Bradley d. Asness 	 
	 	 	Title:
      General Counsel	 
	 	 	CNH
      Partners, LLC	 


        

      

       

      
 

      



      
        
          
             

             

          

           


        

        
           


          
            

          

        

        
           


        

      


      ANNEX
A

      TO

      CREDIT
AGREEMENT

      


      DEFINITIONS

      


      Capitalized
terms used in the Loan Documents shall have (unless otherwise provided elsewhere
in the Loan Documents) the following respective meanings and all references to
Sections, Exhibits, Schedules or Annexes in the following definitions shall
refer to Sections, Exhibits, Schedules or Annexes of or to the
Agreement:

      


      “Account Debtor” means any
Person who may become obligated to any Borrower under, with respect to, or on
account of, an Account, Chattel Paper or General Intangibles (including a
payment intangible).

      


      “Accounts” means all
“accounts,” as such term is defined in the Code, now owned or hereafter acquired
by any Borrower, including (a) all accounts receivable, other receivables, book
debts and other forms of obligations (other than forms of obligations evidenced
by Chattel Paper or Instruments), (including any such obligations that may be
characterized as an account or contract right under the Code), (b) all of each
Borrower’s rights in, to and under all purchase orders or receipts for goods or
services, (c) all of each Borrower’s rights to any goods represented by any of
the foregoing (including unpaid sellers’ rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods), (d) all healthcare insurance receivables, and (e) all
collateral security of any kind, now or hereafter in existence, given by any
Account Debtor or other Person with respect to any of the
foregoing.

      


      “Act” has the meaning ascribed
to it in Section 10.7(h).

      


      “Administrative Agent” has the
meaning ascribed to it in the Preamble.

      


      “Affiliate” means, with respect
to any Person, (a) each Person that, directly or indirectly, owns or controls,
whether beneficially, or as a trustee, guardian or other fiduciary, 20% or more
of the Stock having ordinary voting power in the election of directors of such
Person, (b) each Person that controls, is controlled by or is under common
control with such Person, and (c) each of such Person’s joint venturers and
partners who are Affiliates under clause (a) hereof. For the purposes of this
definition, “control” of
a Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise; provided, that the
term “Affiliate,” when used with reference to a Borrower, shall specifically
exclude the Administrative Agent and each Lender.

      


      “Aggregate Cash On Hand” means
the amount of cash and Cash Equivalents of the Borrowers that may be classified,
in accordance with GAAP, as “unrestricted” on the consolidated balance sheets of
the Borrowers.

      


      “Agreement” means the Existing
DIP Credit Agreement, as amended by this Agreement, and as the same may be
further amended, supplemented, restated or otherwise modified from time to
time.

      


      “Air Carrier” means each of
Frontier Airlines and Lynx.

      


      “Airport Authority” means any
city or any public or private board or other body or organization chartered or
otherwise established for the purpose of administering, operating or managing
airports or related facilities, which in each case is an owner, administrator,
operator or manager of one or more airports or related facilities.

      


      “Appendices” has the meaning
ascribed to it in the recitals to the Agreement.

      


      “Approved Fund” means, with
respect to any Lender, any Person (other than a natural Person) that (a) is or
will be engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business and (b) is advised or managed by (i) such Lender, (ii) any Affiliate of
such Lender or (iii) any Person (other than an individual) or any Affiliate of
any Person (other than an individual) that administers or manages such
Lender.

      


      “Asset Sale” has the meaning
ascribed to it in Section 6.8.

      


      “Assignment” means an
assignment and assumption agreement substantially in the form published by the
Loan Syndications and Trading Association or another form reasonably acceptable
to the Administrative Agent.

      


      “Aviation Authority” means any
nation or government or national or governmental authority of any nation, state,
province or other political subdivision thereof, and any agency, department,
regulator, airport authority, air navigation authority or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government in respect of the regulation of
commercial aviation or the registration, airworthiness or operation of civil
aircraft and having jurisdiction over the Borrowers including, without
limitation, the FAA and DOT.

      


      “Avoidance Actions” shall mean
the Borrowers’ claims and causes of action arising under Sections 502(d), 544,
545, 547, 548 or 550 of the Bankruptcy Code or any other avoidance action under
the Bankruptcy Code; provided, that “Avoidance Actions” shall not include any
Proceeds of such property.

      


      “Bankruptcy Code” means the
provisions of Title 11 of the United States Code, 11 U.S.C. Sections 101 et
seq.

      


      “Bankruptcy Court” has the
meaning ascribed to it in the Preamble or shall mean any other court having
competent jurisdiction over the Cases.

      


      “Blocked Account” means any
account of any Borrower that is subject to a Blocked Account Agreement or a
Control Agreement pursuant to Annex C.

      


      “Blocked Account Agreement”
means a control agreement, in form and substance satisfactory to the
Administrative Agent, among any Borrower, the Administrative Agent for the
benefit of the Lenders and the applicable bank or financial institution. Any
Blocked Account Agreement substantially in the form of any Blocked Account
Agreement in effect on the Closing Date shall be deemed to be satisfactory to
the Administrative Agent.

      


      “Books and Records” means books
and records of the Borrowers, including financial, corporate, operations and
sales books, records, books of account, sales and purchase records, lists of
suppliers and customers, formulae, business reports, plans and projections and
all other documents, logs, surveys, plans, files, records, assessments,
correspondence, and other data and information, financial or otherwise, and all
aircraft manuals, log books and other documents and records, including all data
and information stored on computer-related or other electronic
media.

      


      “Borrower” or “Borrower” has the meaning
ascribed thereto in the preamble to the Agreement.

      


      “Borrower Agent” has the
meaning ascribed thereto in the preamble to the Agreement.

      


      “Budget” has the meaning
ascribed to it in Section (c) of Annex D.

      


      “Business Day” means any day
that is not a Saturday, a Sunday or a day on which banks are required or
permitted to be closed in the State of New York.

      


      “Capital Lease” means, with
respect to any Person, any lease of any property (whether real, personal or
mixed) by such Person as lessee that, in accordance with GAAP, would be required
to be classified and accounted for as a capital lease on a balance sheet of such
Person.

      


      “Capital Lease Obligation”
means, with respect to any Capital Lease of any Person, the amount of the
obligation of the lessee thereunder that, in accordance with GAAP, would appear
on a balance sheet of such lessee in respect of such Capital Lease.

      


      “Carve-Out” means an amount,
that shall not be subject to liens, rights or claims of the Administrative
Agent, the Lenders or First Data, equal to:

      


              (i) the lesser of (x)
Aggregate Cash on Hand on the Carve Out Date and (y) $13,000,000; plus

      


              (ii) 50% of the
amount, if positive, of (x) Aggregate Cash on Hand on the Carve Out Date minus (y) $13,000,000; plus

      


              (iii) following the
receipt by the Administrative Agent and the Lenders of an amount equal to the
aggregate outstanding principal amount of the Loans outstanding hereunder
(excluding any interest added thereto pursuant to Section 1.5), 20% of the
proceeds of any Collateral other than the Collateral owned by Lynx, such that,
until all the monetary Obligations (other than the Excluded Obligations) have
been paid in full, the sharing shall be 20% in respect of the Carve-Out and 40%
to each of (x) First Data and (y) the Administrative Agent and the
Lenders.

      


      which
funds shall be used to satisfy (i) any unpaid fees of the U.S. Trustee or the
Clerk of the Bankruptcy Court pursuant to 28 U.S.C. § 1930(a), (ii) any fees and
expenses incurred by any trustee under section 726(b) of the Bankruptcy Code,
(iii) the aggregate allowed unpaid fees and expenses payable under sections 330
and 331 of the Bankruptcy Code to professional persons retained pursuant to an
order of the Bankruptcy Court by any Borrower or any Committee and (iv) all
other expenses related to a wind-down of the Borrowers’ estates, such as rent,
salaries, utilities and debt service on owned aircraft until they can be
sold.  In the event the Carve-Out is reduced by any amount during an
Event of Default, upon the effectiveness of any cure or waiver of such Event of
Default pursuant to the terms of this Agreement, the Carve-Out shall be
increased by such amount.

      


      “Carve Out Date” means the
earlier to occur of (i) the termination of the Commitments and/or acceleration
of the Obligations pursuant to Section 8.2(b) and (ii) the date on which
Frontier voluntarily ceases all flight operations.

      


      “Cases” has the meaning
ascribed to it in the Preamble.

      


      “Cash Collateral” has the
meaning ascribed to it in Section 8.1(m).

      


      “Cash Equivalents” means
Permitted Investments and such other cash and cash equivalents acceptable to the
Administrative Agent.

      


      “Cash Interest” has the meaning
ascribed to it in Section 1.5(a).

      


      “Cash Management Systems” has
the meaning ascribed to it in Section 5.15.

      


      “CEO Event” means Sean Menke no
longer being the President and Chief Executive Officer of Frontier
Holdings.

      


      “CERCLA” means the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. Sections 9601 et seq.).

      


      “Certificate of Exemption” has
the meaning ascribed to it in Section 1.11(c).

      


      “Certificated Air Carrier”
means a Person holding an air carrier operating certificate issued pursuant to
Chapter 447 of Title 49, for aircraft capable of carrying ten or more
individuals or 6,000 pounds or more of cargo, or that is otherwise certified or
registered to the extent required to fall within the purview of Section 1110 of
the Bankruptcy Code.

      


      “Change of Control” means that
(i) during any period of twelve consecutive calendar months, individuals who at
the beginning of such period constituted the board of directors of any Borrower
(together with any new directors whose election by the board of directors of
such Borrower or whose nomination for election by the Stockholders of such
Borrower was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason, other than death or disability, to constitute a majority of the
directors then in office or (ii) Frontier Holdings shall fail to own 100% of the
issued and outstanding Stock of Frontier Airlines or, except to the extent
permitted by Section 6.8(m), Lynx.

      


      “Charges” means all federal,
state, county, city, municipal, local, foreign or other governmental taxes
(including taxes owed to the PBGC at the time due and payable), levies,
assessments, charges, liens, claims or encumbrances (including interest and
penalties relating thereto) upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any
Borrower, (d) any Borrower’s ownership or use of any properties or other assets,
or (e) any other aspect of any Borrower’s business.

      


      “Chattel Paper” means any
“chattel paper,” as such term is defined in the Code, including electronic
chattel paper, now owned or hereafter acquired by any Borrower, wherever
located.

      


      “Claim” has the meaning
ascribed to such term in Section 101(5) of the Bankruptcy Code.

      


      “Closing Date” means August 4,
2008.

      


      “Code” means the Uniform
Commercial Code as the same may, from time to time, be enacted and in effect in
the State of New York; provided, that to the extent that the Code is used to
define any term herein or in any Loan Document and such term is defined
differently in different Articles or Divisions of the Code, the definition of
such term contained in Article or Division 9 shall govern; provided, further,
that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection or priority of, or remedies with respect to, the
Administrative Agent’s or any Lender’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term “Code” shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for
purposes of the provisions thereof relating to such attachment, perfection,
priority or remedies and for purposes of definitions related to such
provisions.

      


      “Collateral” means all property
and interests in property and proceeds thereof now owned or hereafter acquired
by any Borrower in or upon which a Lien is granted under this Agreement or any
Collateral Documents.

      


      “Collateral Documents” means
this Agreement and all agreements entered into guaranteeing payment of, or
granting a Lien upon property as security for payment of, the
Obligations.

      


      “Commercial Tort Claim” means
any “commercial tort claim,” as such term is defined in the Code, now owned or
hereafter acquired by any Borrower.

      


      “Commission” has the meaning
ascribed to it in Section 10.7(h).

      


      “Commitment” means (a) as to
any Lender, the commitment of such Lender to make its Pro Rata Share of the Loan
as set forth on Annex G to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders, the aggregate
commitment of all Lenders to make the Loan as to each of clauses (a) and (b), as
such Commitments may be reduced, amortized or adjusted from time to time in
accordance with the Agreement. After advancing the aggregate amount of the
Commitment, each reference to a Lender’s Commitment shall refer to that Lender’s
Pro Rata Share of the outstanding Loan.

      


      “Commitment Fee” has the
meaning ascribed to it in Section 1.6(a).

      


      “Committee” means the official
statutory committee of unsecured creditors approved in the Cases pursuant to
section 1102 of the Bankruptcy Code.

      


      “Committee Documents” has the
meaning ascribed to it in clause (j) of Annex D.

      


      “Compliance Certificate” has
the meaning ascribed to it in clause (b) of Annex D.

      


      “Computer Software” means all
computer software and databases (including, without limitation, source code,
object code and all related documentation).

      


      “Continuing Lender” means each
Lender party hereto on the Effective Date that is not a Departing
Lender.

      


      “Contracts” means all
“contracts,” as such term is defined in the Code, now owned or hereafter
acquired by any Borrower, in any event, including all contracts, undertakings,
or agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which any Borrower may now or hereafter have any right,
title or interest, including any agreement relating to the terms of payment or
the terms of performance of any Account.

      


      “Control Agreement” means an
agreement, in form and substance satisfactory to the Administrative Agent,
between the Administrative Agent and (i) the issuer of uncertificated securities
with respect to uncertificated securities in the name of any Borrower, (ii) a
securities intermediary with respect to securities, whether certificated or
uncertificated, securities entitlements and other financial assets held in a
securities account in the name of any Borrower, (iii) a futures commission
merchant or clearinghouse, as applicable, with respect to commodity accounts and
commodity contracts held by any Borrower, whereby, among other things, the
issuer, securities intermediary or futures commission merchant limits any
security interest in the applicable financial assets in a manner reasonably
satisfactory to the Administrative Agent, acknowledges the Lien of
Administrative Agent for the benefit of the Lenders on such financial assets,
and agrees to follow the instructions or entitlement orders of the
Administrative Agent without further consent by the affected Borrower. Any
Control Agreement substantially in the form of any Control Agreement (or Blocked
Account Agreement) in effect on the Effective Date shall be deemed to be
satisfactory to the Administrative Agent.

      


      “Copyright License” means any
and all rights now owned or hereafter acquired by any Borrower under any written
agreement granting any right to use any Copyright or Copyright
registration.

      


      “Copyright Security Agreements”
means the Copyright Security Agreements made in favor of Administrative Agent
for the benefit of the Lenders, by each applicable Borrower substantially in the
form of Exhibit C hereto.

      


      “Copyrights” means all of the
following now owned or hereafter adopted or acquired by any Borrower: (a) all
copyrights and General Intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and applications
in the United States Copyright Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof, and (b) all reissues, extensions or renewals
thereof.

      


      “Court Documents” has the
meaning ascribed to it in clause (i) on Annex D.

      


      “Default” means any event that,
with the passage of time or notice or both, would, unless cured or waived,
become an Event of Default.

      


      “Default Rate” has the meaning
ascribed to it in Section 1.5(e).

      


      “Departing Lender” has the
meaning specified in Section 2.1.

      


      “Deposit Accounts” means all
“deposit accounts” as such term is defined in the Code, now or hereafter held in
the name of any Borrower.

      


      “Documents” means any
“documents,” as such term is defined in the Code, now owned or hereafter
acquired by any Borrower, wherever located.

      


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

      


      “DOT” shall mean the United
States Department of Transportation or any analogous successor
agency.

      


      “Effective Date” has the
meaning specified in Section 2.1.

      


      “E-Fax” means any system used
to receive or transmit faxes electronically.

      


      “E-Signature” means the process
of attaching to or logically associating with an Electronic Transmission an
electronic symbol, encryption, digital signature or process (including the name
or an abbreviation of the name of the party transmitting the Electronic
Transmission) with the intent to sign, authenticate or accept such Electronic
Transmission.

      


      “E-System” means any electronic
system, including Intralinks(R) and any other Internet or extranet-based site,
whether such electronic system is owned, operated or hosted by the
Administrative Agent, any of its Related Persons or any other Person, providing
for access to data protected by passcodes or other security system.

      


      “EBITDAR” means, with respect
to any Person for any fiscal period, without duplication, an amount equal to (a)
consolidated net income of such Person for such period, determined in accordance
with GAAP, minus (b) the sum of (i) income tax credits, (ii) interest income,
(iii) gain from extraordinary items for such period, (iv) any aggregate net gain
during such period arising from the sale, exchange or other disposition of
capital assets by such Person (including any fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the disposition of fixed
assets and all securities) (a “Capital Asset Sale”), and (v)
any other non-cash gains that have been added in determining consolidated net
income, in each case to the extent included in the calculation of consolidated
net income of such Person for such period in accordance with GAAP, but without
duplication, plus (c) the sum of (i) any provision for income taxes, (ii)
Interest Expense, (iii) loss from extraordinary items for such period, (iv)
depreciation and amortization for such period, (v) amortized debt discount for
such period, (vi) the amount of any deduction to consolidated net income as the
result of any grant to any employee of such Person of any Stock, (vii)
depreciation, amortization and aircraft rent expense for such period, in each
case to the extent included in the calculation of consolidated net income of
such Person for such period in accordance with GAAP, (viii) any aggregate net
loss during such period arising from a Capital Asset Sale, (ix) all other
non-cash charges for such period, (x) costs and expenses, including fees,
incurred directly in connection with the consummation of the transactions
contemplated under the Loan Documents to the extent included in the calculation
of consolidated net income and (xi) expenses incurred with respect to the
Chapter 11 reorganization as set forth on Frontier Holdings’ consolidated
statement of income for such period, including (A) professional and other fees,
(B) key employee retention program payments, (C) financing fees, (D) severance
costs and (E) any litigation expenses incurred during or in connection with the
Cases. For purposes of this definition, the following items shall be excluded in
determining consolidated net income of a Person: (1) the income (or deficit) of
any other Person accrued prior to the date it became a Subsidiary of, or was
merged or consolidated into, such Person or any of such Person’s Subsidiaries;
(2) the income (or deficit) of any other Person (other than a Subsidiary) in
which such Person has an ownership interest, except to the extent any such
income has actually been received by such Person in the form of cash dividends
or distributions; (3) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of income
accrued during such period; (4) any write-up of any asset; (5) any net gain from
the collection of the proceeds of life insurance policies; (6) any net gain
arising from the acquisition of any securities, or the extinguishment, under
GAAP, of any Indebtedness, of such Person; (7) in the case of a successor to
such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets; and (8) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over the
cost to such Person of the investment in such Subsidiary.

      


      “Electronic Transmission” means
each notice, request, instruction, demand, report, authorization, agreement,
document, file, information and any other communication transmitted, posted or
otherwise made or communicated by e-mail, E-Fax, Internet or extranet-based site
or any other equivalent electronic service, whether owned, operated or hosted by
the Administrative Agent, any Affiliate of the Administrative Agent or any other
Person.

      


      “Environmental Laws” means all
applicable federal, state, local and foreign laws, statutes, ordinances, codes,
principles of common law, rules, standards and regulations, now or hereafter in
effect, and any applicable judicial or administrative interpretation thereof,
including any applicable judicial or administrative order, consent decree, order
or judgment, imposing liability or standards of conduct for or relating to the
regulation and protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include CERCLA; the Hazardous Materials Transportation Act of
1994 (49 U.S.C. Sections 5101 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Sections 136 et seq.); the Resource Conservation and
Recovery Act (42 U.S.C. Sections 6901 et seq.); the Toxic Substances Control Act
(15 U.S.C. Sections 2601 et seq.); the Clean Air Act (42 U.S.C. Sections 7401 et
seq.); the Clean Water Act (33 U.S.C. Sections 1251 et seq.); the Occupational
Safety and Health Act (29 U.S.C. Sections 651 et seq.); and the Safe Drinking
Water Act (42 U.S.C. Sections 300(f) et seq.), and any and all regulations
promulgated thereunder, and all analogous state, local and foreign counterparts
or equivalents and any transfer of ownership notification or approval
statutes.

      


      “Environmental Liabilities”
means, with respect to any Person, all liabilities, obligations,
responsibilities, response, remedial and removal costs, investigation and
feasibility study costs, capital costs, operation and maintenance costs, losses,
damages, punitive damages, property damages, natural resource damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, Environmental Laws or
Environmental Permits, in each case, in connection with, or otherwise related
to, any Release or threatened Release or presence of a Hazardous Material
(whether on, at, in, under, from or about or in the vicinity of any real or
personal property) or any environmental or Hazardous Material exposure
matter.

      


      “Environmental Permits” means
all permits, licenses, authorizations, certificates, approvals or registrations
required by any Governmental Authority under any Environmental
Laws.

      


      “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to time, and any
regulations promulgated thereunder.

      


      “ERISA Affiliate” means, with
respect to any Borrower, any trade or business (whether or not incorporated)
that, together with such Borrower, are treated as a single employer within the
meaning of Sections 414(b), (c), (m) or (o) of the IRC.

      


      “ERISA Event” means, with
respect to any Borrower or any ERISA Affiliate, (a) the complete or partial
withdrawal of any Borrower or any ERISA Affiliate from any Multiemployer Plan;
(b) the institution of proceedings to terminate a Multiemployer Plan by the
PBGC; (c) the failure by any Borrower or ERISA Affiliate to make when due
required contributions to a Multiemployer Plan; (d) any other event or condition
that would reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Multiemployer Plan or for the imposition of liability under Section 4212(c) of
ERISA; (e) the termination of a Multiemployer Plan under Section 4041A of ERISA
or the reorganization or insolvency of a Multiemployer Plan under Section 4241
or 4245 of ERISA; (f) the loss of a Qualified Plan’s qualification or tax exempt
status; (g) any Multiemployer Plan being, or being reasonably expected to be, in
“endangered status” or “critical status” within the meaning of Section 432 of
the IRC; or (h) the imposition of a Lien (or the occurrence of conditions
presenting a material risk of the imposition of a Lien) on the assets of any
Borrower or ERISA Affiliate arising under ERISA or Subchapter D of Chapter 1 of
the IRC.

      


      “Escrow Accounts” shall mean
accounts of the Borrowers or any Subsidiary, solely to the extent any such
accounts hold funds set aside by the Borrowers or any Subsidiary to manage the
collection and payment of amounts collected, withheld or incurred by the
Borrowers or such Subsidiary for the benefit of third parties relating to: (a)
federal income tax withholding and backup withholding tax, employment taxes,
transportation excise taxes and security related charges; (b) any and all state
and local income tax withholding, employment taxes and related charges and fees
and similar taxes, charges and fees, including, but not limited to, state and
local payroll withholding taxes, unemployment and supplemental unemployment
taxes, disability taxes, workman’s or workers’ compensation charges and related
charges and fees; (c) state and local taxes imposed on overall gross receipts,
sales and use taxes, fuel excise taxes and hotel occupancy taxes; (d) passenger
facility fees and charges collected on behalf of and owed to various
administrators, institutions, authorities, agencies and entities; (e) other
similar federal, state or local taxes, charges and fees (including without
limitation any amount required to be withheld or collected under applicable
law); (f) voluntary and/or other non-statutorily required employee payroll
deductions, whether authorized by the employee, imposed by court order, agreed
to pursuant to collective bargaining arrangement or otherwise, including (i)
employee contributions made for the purpose of participating in any
employer-sponsored retirement plan as described and defined in Section 401(k) of
the IRC (including repayment of any 401(k) related loans made to the employee
but excluding any funds matched and/or contributed by the employer on behalf of
any employee), (ii) employee payments made for the purpose of participating in
any employer-sponsored medical, dental or related health plan, (iii) employee
payments made for the purpose of satisfying periodic union dues, (iv) employee
payments made for the purpose of purchasing life, accident, disability or other
insurance, (v) employee payments made for the purpose of participating in any
employer-sponsored cafeteria plan as described and defined in Section 125 of the
IRC, (vi) employee-directed donations to charitable organizations and (vii)
levys, garnishments and other attachments on employee compensation (as described
in Sections 6305 and 6331 of the IRC, in Section 4913 of Title 10 of D.C.A. or
in any analogous provision of other applicable federal, state or local law)
collected on behalf of any Governmental Authority or any other Person authorized
to receive funds of the type described in this clause (f).

      


      “ESOP” means a Pension Plan
that is intended to satisfy the requirements of 4975(e)(7) of the
IRC.

      


      “Event of Default” has the
meaning ascribed to it in Section 8.1.

      


      “Excluded Accounts” shall mean
(i) the Escrow Accounts, (ii) Restricted Accounts, and (iii) accounts located
outside the United States; provided that the aggregate amount held in all such
accounts referred to in this clause (iii) at any time does not exceed
$350,000.

      


      “Excluded Collateral” means,
collectively, (i) Excluded Accounts (other than the Borrowers’ rights to receive
any excess funds remaining in the Escrow Accounts following the payment in full
of the taxes, fees and charges payable from such Escrow Accounts and other than
the Borrowers’ rights to receive any excess funds remaining in the Restricted
Accounts), (ii) Excluded Equipment, (iii) Section 1110 Assets or Section 1110
Agreements to the extent that the Borrowers are prohibited from granting liens
thereon or assignments thereof under the terms of any Section 1110 Agreement in
effect at the Closing Date; provided, that any Proceeds of Section 1110 Assets
shall not be Excluded Collateral to the extent that the Borrowers are entitled
to such Proceeds (after payment of obligations secured or otherwise required to
be paid from Proceeds of such Section 1110 Assets)), (iv) any asset subject to
the restrictions on Liens set forth in Section 5.9(b), (v) Avoidance Actions,
(vi) to the extent the Administrative Agent has otherwise consented in writing,
any asset excluded as Collateral (other than any Proceeds thereof that any
Borrower is entitled to receive after payment of obligations secured by or
otherwise required to be paid from such proceeds) in any other Collateral
Documents, (vii) any goods referenced in the “Demand for Reclamation of Goods
Sold” dated April 21, 2008 and delivered by Qwest Communications Corporation and
any Proceeds from the sale of any such goods, but only to the extent that such
goods are subject to a valid reclamation claim pursuant to Section 546(c) of the
Bankruptcy Code and (viii) all intent-to-use trademark applications to the
extent that, and solely during the period in which, the grant of a security
interest therein would impair the validity or enforceability of such
intent-to-use trademark applications under the applicable federal
law.

      


      “Excluded Equipment” means
Equipment to the extent the granting of a security interest in such Equipment
would constitute a breach or violation of a valid and effective restriction in
favor of a third party or give rise to any indemnification obligations or any
right to terminate or commence the exercise of remedies under such restrictions,
in each case, to the extent not subject to the automatic stay and only to the
extent, and for so long as, such restriction is not terminated or rendered
unenforceable or otherwise deemed ineffective by the Code or any other
applicable law; provided, that “Excluded Equipment” shall not include Proceeds,
substitutions or replacements of Excluded Equipment (unless such Proceeds,
substitutions or replacements would constitute Excluded
Equipment),.

      


      “Excluded Obligations” means
contingent indemnification and expense reimbursement obligations.

      


      “Exempt Accounts” has the
meaning ascribed to it in clause (a) on Annex B.

      


      “Existing DIP Credit Agreement”
means the Secured Super-Priority Debtor in Possession Credit Agreement dated as
of August 4, 2008 among the Borrowers, the lenders parties thereto and the
Administrative Agent, as amended up to the Effective Date.

      “FAA” means the Federal
Aviation Administration of the United States of America, and any successor
Governmental Authority.

      


      “Federal Reserve Board” means
the Board of Governors of the Federal Reserve System.

      


      “Fees” means any and all fees
payable to the Administrative Agent or any Lender pursuant to the Agreement or
any of the other Loan Documents, including the Commitment Fee.

      


      “Final Claim Order” means an
order approving the terms of a settlement allowing Republic Airlines Inc.’s
pre-petition, non-priority, unsecured claims against Frontier and Frontier
Holdings in the amount of $150,000,000 in the aggregate, in the form filed with
the Bankruptcy Court on March 5, 2009 with only such changes as shall be
satisfactory to the Borrowers and Republic Airlines Inc.

      


      “Final DIP Order” means an
order approving or authorizing this Agreement and the other Loan Documents and
the incurrence by the Borrowers hereunder of Postpetition secured and
super-priority Indebtedness, in the form filed with the Bankruptcy Court on
March 5, 2009 with only such changes as shall be satisfactory to the
Administrative Agent.

      


      “Financial Covenants” means the
financial covenants set forth in Annex E.

      


      “Financial Statements” means
the consolidated and consolidating income statements, statements of cash flows
and balance sheets of Borrower delivered in accordance with Section 3.4 and
Annex D.

      


      “First Data” means First Data
Merchant Services Corporation.

      


      “First Data Agreement” means
the letter agreement dated July 9, 2008 from First Data to Borrower
Agent.

      


      “First Data Claim” means the
Super-Priority Claim of First Data granted pursuant to the First Data Order
which such claim shall be pari passu or junior to the Obligations in favor of
Administrative Agent.

      


      “First Data Order” means the
Order Authorizing the Debtors to Perform Under Letter Agreement with Sovereign
Bank and First Data Merchant Services Corporation and Merchant Services Bankcard
Agreement with Sovereign Bank and First Data Merchant Services Corporation as
Amended Thereby entered by the Bankruptcy Court on July 10, 2008.

      


      “Fiscal Month” means any of the
monthly accounting periods of the Borrowers.

      


      “Fiscal Quarter” means any of
the quarterly accounting periods of the Borrowers, ending on March 31, June 30,
September 30 and December 31 of each year.

      


      “Fiscal Year” means any of the
annual accounting periods of the Borrowers ending on March 31 of each
year.

      


      “Fixtures” means all “fixtures”
as such term is defined in the Code, now owned or hereafter acquired by any
Borrower.

      


      “Foreign Person” has the
meaning ascribed to it in Section 1.11(c).

      


      “Frontier Airlines” has the
meaning ascribed thereto in the preamble to the Agreement.

      


      “Frontier Holdings” has the
meaning ascribed thereto in the preamble to the Agreement.

      


      “GAAP” means generally accepted
accounting principles in the United States of America, consistently
applied.

      


      “Gate Interests” shall mean all
of the right, title, privilege, interest, and authority now or hereafter
acquired or held by each Borrower in connection with the right to use or occupy
holdroom and passenger boarding and deplaning space (including, without
limitation, hardstand positions) at any airport terminal located in the United
States at which such Borrower conducts scheduled operations.

      


      “General Intangibles” means
“general intangibles,” as such term is defined in the Code, now owned or
hereafter acquired by any Borrower, including all right, title and interest that
such Borrower may now or hereafter have in or under any Contract, all payment
intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents, and all
applications therefor and reissues, extensions or renewals thereof, rights in
Intellectual Property, interests in partnerships, joint ventures and other
business associations, licenses, permits, copyrights, trade secrets, proprietary
or confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, Software,
databases, data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including the goodwill associated with any
Trademark or Trademark License), all rights and claims in or under insurance
policies (including insurance for fire, damage, loss and casualty, whether
covering personal property, real property, tangible rights or intangible rights,
all liability, life, key man and business interruption insurance, and all
unearned premiums), uncertificated securities, choses in action, rights to
receive tax refunds and other payments, rights to receive dividends,
distributions, cash, Instruments and other property in respect of or in exchange
for pledged Stock and Investment Property, rights of indemnification, all Books
and Records, correspondence, credit files, invoices and other papers, including
without limitation all tapes, cards, computer runs and other papers and
documents in the possession or under the control of such Borrower or any
computer bureau or service company from time to time acting for such
Borrower.

      


      “Governmental Authority” means
any nation or government, any state or other political subdivision thereof, and
any agency, department or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including but not limited to, any Aviation Authority.

      


      “Guaranteed Indebtedness”
means, as to any Person, any obligation of such Person guaranteeing, providing
comfort or otherwise supporting any Indebtedness (“primary obligation”) of any
other Person (the “primary obligor”) in any manner, including any obligation or
arrangement of such Person to (a) purchase or repurchase any such primary
obligation, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (c) purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, (d) protect the beneficiary of such arrangement from
loss (other than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed
to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is incurred and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect
thereof.

      


      “Hazardous Material” means any
substance, material or waste that is regulated by, or forms the basis of
liability now or hereafter under, any Environmental Laws, including any material
or substance that is (a) defined as a “solid waste,” “hazardous waste,”
“hazardous material,” “hazardous substance,” “extremely hazardous waste,”
“restricted hazardous waste,” “pollutant,” “contaminant,” “hazardous
constituent,” “special waste,” “toxic substance” or other similar term or phrase
under any Environmental Laws, or (b) petroleum or any fraction or by-product
thereof, asbestos, polychlorinated biphenyls (PCB’s), or any radioactive
substance.

      


      “IATA” means International Air
Transport Association.

      


      “Indebtedness” means, with
respect to any Person, without duplication (a) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property payment for
which is deferred six (6) months or more, but excluding obligations to trade
creditors incurred in the ordinary course of business that are not overdue by
more than six (6) months unless being contested in good faith, (b) all
reimbursement and other obligations with respect to letters of credit, bankers’
acceptances and surety bonds, whether or not matured, (c) all obligations
evidenced by notes, bonds, debentures or similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations and the capitalized amount of remaining lease or
similar payments under all synthetic leases that would appear on the balance
sheet of such Person in accordance with GAAP if such synthetic leases were
accounted for as a Capital Lease, (f) all obligations of such Person under
commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, (i) the
Obligations, and (j) Guaranteed Indebtedness but excluding any claims arising
upon the rejection of unexpired leases and other executory
contracts.

      


      “Indemnified Liabilities” has
the meaning ascribed to it in Section 1.9.

      


      “Indemnified Person” has the
meaning ascribed to it in Section 1.9.

      


      “Initial Lenders” means the
Continuing Lenders party hereto on the date hereof, for so long as such
Continuing Lenders continue to be Continuing Lenders hereunder.

      


      “Instruments” means all
“instruments,” as such term is defined in the Code, now owned or hereafter
acquired by any Borrower, wherever located, and, in any event, including all
promissory notes and other evidences of indebtedness, other than instruments
that constitute, or are a part of a group of writings that constitute, Chattel
Paper.

      


      “Intellectual Property” means
any and all Licenses, Patents, Copyrights, Trademarks, and the goodwill
associated with such Trademarks, and technology.

      


      “Interest Election” has the
meaning ascribed to it in Section 1.5(a).

      


      “Interest Expense” means, with
respect to any Person for any fiscal period, interest expense (whether cash or
non-cash) of such Person determined in accordance with GAAP for the relevant
period ended on such date.

      


      “Interest Payment Date” means
the last Business Day of each March, June, September and December to occur while
any Loan is outstanding; provided, that, in addition to the foregoing, each of
(x) the date upon which all of the Commitments have been terminated and the
Loans have been paid in full and (y) the Maturity Date shall also constitute an
Interest Payment Date with respect to any interest that has then accrued under
the Agreement.

      


      “Inventory” means any
“inventory,” as such term is defined in the Code, now owned or hereafter
acquired by any Borrower, wherever located, and in any event including
inventory, merchandise, goods and other personal property that are held by or on
behalf of any Borrower for sale or lease or are furnished or are to be furnished
under a contract of service, or that constitute raw materials, work in process,
finished goods, returned goods, supplies or materials of any kind, nature or
description used or consumed or to be used or consumed in such Borrower’s
business or in the processing, production, packaging, promotion, delivery or
shipping of the same, including all supplies and embedded Software.

      


      “Investment” means (i) any
direct or indirect purchase or other acquisition by any Borrower of, or of a
beneficial interest in, any of the Stock of any other Person (other than a
Borrower); (ii) any direct or indirect redemption, retirement, purchase or
other acquisition for value, by any Borrower from any Person (other than a
Borrower), of any Stock of such Person; and (iii) any direct or indirect
loan, advance or capital contribution by any Borrower to any other Person (other
than a Borrower). The amount of any Investment shall be the original cost of
such Investment plus the cost of all additions thereto, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment (other than reductions for return on capital as
repayment of Indebtedness and the like). The term “Investment” shall not include
deposits or reserves to secure the performance of leases or the making of
deposits or predelivery payments described in Section 6.3(a)(xiv).

      


      “Investment Property” means all
“investment property” as such term is defined in the Code now owned or hereafter
acquired by any Borrower, wherever located, including (i) all securities,
whether certificated or uncertificated, including stocks, bonds, interests in
limited liability companies, partnership interests, treasuries, certificates of
deposit, and mutual fund shares; (ii) all securities entitlements of any
Borrower, including the rights of such Borrower to any securities account and
the financial assets held by a securities intermediary in such securities
account and any free credit balance or other money owing by any securities
intermediary with respect to that account; (iii) all securities accounts of any
Borrower; (iv) all commodity contracts of any Borrower; and (v) all commodity
accounts held by any Borrower.

      


      “IT Assets” means computers,
Computer Software, firmware, middleware, servers, workstations, routers, hubs,
switches, data communications lines and all other information technology
equipment and elements and all associated documentation.

      


      “IRC” means the Internal
Revenue Code of 1986, as amended, and all regulations promulgated
thereunder.

      


      “IRS” means the Internal
Revenue Service of the United States of America.

      


      “Lenders” means the Continuing
Lenders named on the signature pages of the Agreement and, if any such Lender
shall decide to assign all or any portion of the Obligations in accordance with
Section 11.1(a), such term shall include any assignee of such
Lender.

      


      “Liabilities” means all claims,
actions, suits, judgments, damages, losses, liability, obligations,
responsibilities, fines, penalties, sanctions, costs, fees, taxes, commissions,
charges, disbursements and expenses, in each case of any kind or nature
(including interest accrued thereon or as a result thereto and fees, charges and
disbursements of financial, legal and other advisors and consultants), whether
joint or several, whether or not indirect, contingent, consequential, actual,
punitive, treble or otherwise.

      


      “License” means any Copyright
License, Patent License, Trademark License or other similar license of rights or
interests now held or hereafter acquired by any Borrower.

      


      “Lien” means any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien,
charge, claim, security interest, easement or encumbrance, or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any capital lease or conditional sale agreement,
and any financing lease having substantially the same economic effect as any of
the foregoing).

      


      “Litigation” has the meaning
ascribed to it in Section 3.13.

      


      “Loan” means any loan made by
any Lender pursuant to this Agreement.

      


      “Loan Account” has the meaning
ascribed to it in Section 1.8.

      


      “Loan Documents” means the
Agreement, the Notes, the Collateral Documents and all other agreements,
instruments, documents and certificates executed and delivered to, or in favor
of, the Administrative Agent or any Lender in connection with the Agreement and
the transactions contemplated hereby and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, and all other written
agreements whether heretofore, now or hereafter executed by or on behalf of any
Borrower and delivered to the Administrative Agent or any Lender in connection
with the Agreement or the transactions contemplated thereby.  Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to the
Agreement or such Loan Document as the same may be in effect at any and all
times such reference becomes operative.

      


      “Lynx” has the meaning ascribed
thereto in the preamble to the Agreement.

      


      “Margin Stock” has the meaning
ascribed to it in Section 3.10.

      


      “Material Adverse Effect” means
a material adverse effect on (i) the business, assets, operations, prospects or
financial or other condition of the Borrowers individually or taken as a whole
(other than the commencement of the Cases and events customarily leading up to
and following the commencement of the Cases or otherwise reflected in the
Projections and other written materials provided to the Administrative Agent or
the Initial Lenders prior to the Effective Date), (ii) the ability of the
Borrowers to pay the Obligations, or (iii) the Administrative Agent’s or any
Lender’s rights and remedies under the Agreement and the other Loan Documents;
provided, that any change in the cost of U.S. Gulf Coast jet aviation fuel at
any time shall, in and of itself, not be deemed to constitute a Material Adverse
Effect.

      


      “Material Real Estate
Contracts” means (for purposes of the Agreement only) any lease,
usufruct, use agreement, license, permit or other occupancy or facility use
agreement under which a Borrower is a tenant or counterparty, that relates to
major facilities required for a Borrower’s operations, the loss of the lease,
usufruct, use agreement, license, permit or other occupancy or facility use
agreement with respect thereto could reasonably be expected to result in a
Material Adverse Effect.

      


      “Maturity Date” means the
earliest of (a) Scheduled Maturity Date, (b) the effective date of a Plan of
Reorganization and (c) the date of termination of Lenders’ obligations to permit
existing Loans to remain outstanding pursuant to Section 8.2(b).

      


      “Moody’s” means Moody’s
Investors Service, Inc.

      


      “Multiemployer Plan” means a
“multiemployer plan” as defined in Section 4001(a)(3) of ERISA, and to which any
Borrower or ERISA Affiliate is making, is obligated to make or has made or been
obligated to make, contributions on behalf of participants who are or were
employed by any of them, or with respect to which any Borrower or ERISA
Affiliate otherwise has, or has had, any liability or obligation that can be
enforced against the Borrower or any ERISA affiliate.

      


      “Net Cash Proceeds”
means:

      


          (a) with
respect to any Asset Sale, the sum of cash and Cash Equivalents received in
connection with such Asset Sale if in excess of $100,000, net of (1) the
reasonable cash costs of sale, assignment or other disposition, (2) taxes paid
or reasonably estimated to be payable as a result thereof, (3) reserves
provided, to the extent required by GAAP, against any liabilities that are
directly attributed to such Asset Sale (provided that upon release of such
reserves, the amount so release will be considered to be Net Cash Proceeds) and
(4) any amount required to be paid or prepaid on Indebtedness or other
obligations (other than the Obligations) secured by the assets subject to such
Asset Sale, or otherwise required to be repaid as a result of such Asset Sale to
the extent actually repaid;

       

          (b) with
respect to the issuance of any capital stock or other Stock by any Borrower, the
sum of the cash and Cash Equivalents received in connection with such issuance
net of the underwriting discounts and commissions, and other out-of-pocket
expenses, incurred by such Loan Party in connection with such issuance;
and

       

          (c) with
respect to any Property Loss Event, the sum of cash and Cash Equivalents
received in connection with such Property Loss Event net of (i) the cost of
collection, adjustment or settlement of any claims by any Borrower in respect
thereof, (ii) any amount required to be paid or prepaid on Indebtedness or
other obligations (other than the Obligations) secured by the assets subject to
such Property Loss Event, or otherwise required to be repaid as a result of such
Property Loss Event to the extent actually repaid or (iii) to the extent the
asset subject to such Property Loss Event does not constitute Collateral, the
amount permitted to be reinvested in the asset the subject of such Property Loss
Event or any replacement asset by the terms of any agreement governing
Indebtedness or other obligations (other than the Obligations) secured by the
assets subject to such Property Loss Event to the extent actually
invested.

       

      “New Loan” has the meaning
assigned to it in Section 1.1(a)(i).

      


      “Non-Stayed Order” means an
order of the Bankruptcy Court which is in full force and effect, as to which no
stay has been entered and which has not been reversed, modified, vacated or
overturned as a whole or in part.

      


      “Note” has the meaning assigned
to it in Section 1.1(a).

      


      “Obligations” means all loans,
advances, debts, liabilities and obligations of every nature for the performance
of covenants, tasks or duties or for payment of monetary amounts (whether or not
such performance is then required or contingent, or such amounts are liquidated
or determinable) owing by any Borrower to the Administrative Agent or any
Lender, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by any note, agreement, or
other instrument, arising under the Agreement or any of the other Loan
Documents. This term includes all principal, interest (including all interest
that accrues after the commencement of any case or proceeding by or against any
Borrower in bankruptcy, whether or not allowed in such case or proceeding),
Fees, expenses, attorneys’ fees and any other sum chargeable to any Borrower
under the Agreement or any of the other Loan Documents.

      


      “Patent License” means rights
under any written agreement now owned or hereafter acquired by any Borrower
granting any right with respect to any invention on which a Patent is in
existence.

      


      “Patent Security Agreements”
means the Patent Security Agreements made in favor of Administrative Agent for
the benefit of the Lenders by each applicable Borrower.

      


      “Patents” means all of the
following in which any Borrower now holds or hereafter acquires any interest:
(a) all letters patent of the United States or any other country, all
registrations and recordings thereof, and all applications for letters patent of
the United States or of any other country, including registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State or any other country,
and (b) all reissues, continuations, continuations-in-part or extensions
thereof.

      


      “Patriot Act” has the meaning
ascribed to it in Section 3.25.

      


      “PBGC” means the Pension
Benefit Guaranty Corporation.

      


      “Pension Plan” means a Plan
which is an “employee pension benefit plan” described in Section 3(2) of
ERISA.

      


      “Permits” has the meaning
ascribed to it in Section 3.22.

      


      “Permitted Encumbrances” means
the following encumbrances: (a) Liens for taxes or assessments or other
governmental Charges not yet due and payable or which are being contested in
accordance with Section 5.2(b); (b) pledges or deposits of money securing
statutory obligations under workmen’s compensation, unemployment insurance,
social security or public liability laws or similar legislation (excluding Liens
under ERISA); (c) pledges or deposits of money securing bids, tenders, contracts
(other than contracts for the payment of money) or leases (other than leases of
aircraft) to which any Borrower is a party as lessee made in the ordinary course
of business; (d) workers’, mechanics’ or similar liens arising in the ordinary
course of business, so long as such Liens are inchoate and unperfected and
attach only to Tooling, Fixtures and/or real estate or being contested in
accordance with Section 5.2(b); (e) carriers’, warehousemen’s, suppliers’ or
other similar possessory liens arising in the ordinary course of business so
long as such Liens are inchoate and unperfected and attach only to Inventory or
being contested in accordance with Section 5.2(b); (f) deposits securing, or in
lieu of, surety, appeal or customs bonds in proceedings to which any Borrower is
a party; (g) any attachment or judgment lien not constituting an Event of
Default under Section 8.1(h); (h) zoning restrictions, easements, licenses, or
other restrictions on the use of any real estate or interests of any Borrower in
real estate or other minor irregularities in title (including leasehold title)
thereto, so long as the same do not materially impair the use or the value of
any parcel of owned Real Estate; (i) presently existing or hereafter created
Liens in favor of the Administrative Agent for the benefit of the Lenders; (j)
statutory and common law landlords’ liens under, and contractual liens granted
to a landlord pursuant to, leases to which any Borrower is a party; (k) (i)
leases, subleases, licenses, permits and similar use rights, entered into with
respect to the owned Real Estate, that are by their express terms subject and
subordinate to the Administrative Agent’s Liens, for the benefit of the Lenders,
in the owned Real Estate, and do not, in the aggregate, materially detract from
the value of the any parcel of owned Real Estate and (ii) leases, subleases,
licenses, permits and similar use rights, entered into in the ordinary course of
business with respect to any leased real estate, to the extent they are not
prohibited by the Collateral Documents and would not have a Material Adverse
Effect and would not materially and adversely affect the Administrative Agent’s
Liens, for the benefit of the Lenders, in Collateral stored or located at such
location; (l) with respect to Real Estate, other defects and encumbrances as may
be approved by the Administrative Agent, (m) liens imposed by applicable law on
the assets of any Borrower located at an airport for the benefit of an Aviation
Authority and listed on Disclosure Schedule 6.7; (n) subject, with respect to
Blocked Accounts, to the Blocked Account Agreements, Liens in favor of
depositary banks (including set-off rights) arising as a matter of law and (o)
encumbrances and Liens of types consistent with those described in the other
clauses of this definition that are permitted under the terms of existing
financing arrangements with respect to Section 1110 Assets listed on Disclosure
Schedule 6.7.

      


      “Permitted Investments” means
Investments made in accordance with the Final Order Authorizing Continued Use of
Existing Investment Policy entered by the Bankruptcy Court on May 2,
2008.

      


      “Permitted Liens” means (i)
Liens granted by the Borrowers to the Administrative Agent for the benefit of
the Lenders under the Collateral Documents and (ii) any other Liens permitted to
be created or assumed or to exist pursuant to Section 6.7 of this
Agreement.

      


      “Permitted Prepetition Payment”
means a payment (as adequate protection or otherwise) on account of any Claim
against any Borrower arising or deemed to have arisen prior to the Petition
Date, which payments (i) are made through the exercise of set-off rights or the
application of cash collateral securing such prepetition obligation, (ii) made
pursuant to Section 1110 Agreements (including, for the avoidance of doubt, the
WestLB Facility) or (iii) do not exceed $5,000,000 in the
aggregate.

      


      “Permitted Refinancing” means,
with respect to any Person, any modification, refinancing, refunding, renewal,
extension or replacement (collectively, a “refinancing”) of any Indebtedness of
such Person; provided, that (a) the principal amount (or accreted value, if
applicable) thereof does not exceed 100% (or, to the extent no payment of
principal thereof (except upon acceleration) is required on or prior to the
Scheduled Maturity Date, 105%) of the principal amount (or accreted value, if
applicable) of the Indebtedness so refinanced, except by an amount equal to the
unpaid accrued interest and premium thereon; (b) such refinancing has a final
maturity date equal to or later than the final maturity of the Indebtedness
being refinanced, (c) such refinancing does not reduce the weighted average life
to maturity of the Indebtedness being refinanced, and (d) if the Indebtedness
being refinanced is subordinated in right of payment to the Obligations, such
refinancing is subordinated in right of payment to the Obligations on terms at
least as favorable to Lenders as those contained in the documentation governing
the Indebtedness being refinanced.

      


      “Person” means any individual,
sole proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
public benefit corporation, other entity or government (whether federal, state,
county, city, municipal, local, foreign, or otherwise, including any
instrumentality, division, agency, body or department thereof).

      


      “Petition Date” has the meaning
ascribed to it in the Preamble.

      


      “PIK Interest” shall have the
meaning ascribed to it in Section 1.5(a).

      


      “Plan” means, at any time, a
Pension Plan or Retiree Welfare Plan that any Borrower or ERISA Affiliate
maintains or to which such Borrower contributes or has an obligation to
contribute, or with respect to which any Borrower or ERISA Affiliate has any
liability or obligation that can be enforced against the Borrower or any ERISA
Affiliate.

      


      “Plan of Reorganization” means
a plan of reorganization in the Cases under chapter 11 of the Bankruptcy
Code.

      


      “Pledged Collateral” means all
of the following property now owned or at anytime acquired by a Borrower or in
which such Borrower now has or at any time in the future may acquire any right,
title or interest:

      


          (a) the
Pledged Shares and the certificates representing the Pledged Shares, and all
dividends, distributions, cash, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares; and

      


          (b) any
additional shares of stock of a Pledged Entity from time to time acquired by any
Borrower in any manner (which shares shall be deemed to be part of the Pledged
Shares), and the certificates representing such additional shares, and all
dividends, distributions, cash, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such stock; and

      


          (c) the
Pledged Indebtedness and the promissory notes or instruments evidencing the
Pledged Indebtedness, and all interest, cash, instruments and other property and
assets from time to time received, receivable or otherwise distributed in
respect of the Pledged Indebtedness; and

      


          (d) all
additional Indebtedness arising after the Closing Date and owing to any Borrower
and evidenced by promissory notes or other instruments, together with such
promissory notes and instruments, and all interest, cash, instruments and other
property and assets from time to time received, receivable or otherwise
distributed in respect of that Indebtedness.

      


      “Pledged Entity” means an
issuer of Pledged Collateral.

      


      “Pledged Indebtedness” means
the Indebtedness evidenced by promissory notes and instruments listed on Part 2
of Disclosure Schedule 10.4 hereto.

      


      “Pledged Shares” means those
shares listed on Part 1 of Disclosure Schedule 10.4 hereto.

      


      “Policy” has the meaning
ascribed to it in Section 3.17.

      


      “Postpetition” means, when used
with respect to any indebtedness, agreement, instrument, claim, proceeding or
other matter, any indebtedness incurred, agreement or instrument first entered
into or becoming effective, or claim or proceeding that first arose or was first
instituted, or another matter that first occurred, after the commencement of the
Cases.

      


      “Proceeds” means “proceeds,” as
such term is defined in the Code, including (a) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to any Borrower from time to
time with respect to any asset, (b) any and all payments (in any form
whatsoever) made or due and payable to any Borrower from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of such property by any Governmental Authority (or
any Person acting under color of governmental authority), (c) any claim of any
Borrower against third parties (i) for past, present or future infringement of
any Patent or Patent License, or (ii) for past, present or future infringement
or dilution of any Copyright, Copyright License, Trademark or Trademark License,
or for injury to the goodwill associated with any Trademark or Trademark
License, (d) any recoveries by any Borrower against third parties with respect
to any litigation or dispute concerning such property including claims arising
out of the loss or nonconformity of, interference with the use of, defects in,
or infringement of rights in, or damage to, such property, (e) all amounts
collected on, or distributed on account of, other property, including dividends,
interest, distributions and Instruments with respect to Investment Property and
pledged Stock, and (f) any and all other amounts, rights to payment or other
property acquired upon the sale, lease, license, exchange or other disposition
of such property and all rights arising out of such property.

      


      “Projections” means the
Borrowers’ forecasted consolidated balance sheets, profit and loss statements
and cash flow statements, together with formatted profit and loss inputs and
related information, provided to Administrative Agent prior to the Effective
Date in each case consistent with the historical Financial Statements of the
Borrowers (other than adjustments related to the impact of the
Cases).

      


      “Property Loss Event” means (a)
any loss of or damage to property of any Borrower that results in the receipt by
such Person of proceeds of insurance in excess of $1,000,000 for all Property
Loss Events in the aggregate and (b) any taking of property of any Borrower that
results in receipt by such person of a compensation payment in respect thereof
in excess of $1,000,000 for all Property Loss Events in the
aggregate.

      


      “Proposed Change” has the
meaning ascribed to it in Section 13.2(c).

      


      “Pro Rata Share” means with
respect to all matters relating to any Lender, (a) prior to the Commitments
being terminated pursuant to this Agreement, the percentage obtained by dividing
(i) the aggregate Commitments of that Lender by (ii) the aggregate Commitments
of all Lenders as any such percentages may be adjusted by assignments permitted
pursuant to Section 11.1 and (b) after the Commitments have been terminated
pursuant to the terms of this Agreement, the percentage obtained by dividing (i)
the aggregate principal amount of the Loans payable to that Lender by (ii) the
aggregate principal amount of the Loans then outstanding.

      


      “Purchase Amount” has the
meaning ascribed to it in Section 13.2(c).

      


      “Qualified Plan” means a
Pension Plan that is intended to be tax-qualified under Section 401(a) of the
IRC.

      


      “Real Estate” has the meaning
ascribed to it in Section 3.16(a).

      


      “Related Person” means, with
respect to any Person, any Affiliates, officers, employees, agents, directors or
other Persons acting for or in concert with such Person.

      


      “Relationship Bank” has the
meaning ascribed to it in Section (b) of Annex B.

      


      “Release” means any release,
threatened release, spill, emission, leaking, pumping, pouring, emitting,
emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Material in the indoor or outdoor
environment, including the movement of Hazardous Material through or in the air,
soil, surface water, ground water or property.

      


      “Requirement of Law” means,
with respect to any Person, the common law and all federal, state, local and
foreign laws, treaties, rules and regulations, orders, judgments, decrees and
other legal requirements or determinations of any Governmental Authority or
arbitrator, applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.

      


      “Requisite Lenders” means
Lenders having 51% or more of the aggregate outstanding amount of all
Loans.

      


      “Responsible Officer” of a
Person means such Person’s Chief Executive Officer, chief financial officer,
president or treasurer.

      


      “Restricted Accounts” means (i)
the accounts identified as Restricted Accounts on Disclosure Schedule 3.19, (ii)
any deposit account holding cash and cash equivalents subject to Liens permitted
under Section 6.7(h), Section 6.7(i) or Section 6.7(j) or securing surety or
appeal bonds permitted under Section 6.3(a)(viii) and (iii) accounts in which
deposits received from potential purchasers in connection with the sale of any
aircraft, engine or related equipment by any Borrower prior to any such sale
being consummated are placed.

      


      “Restricted Payment” means,
with respect to any Borrower (a) the declaration or payment of any dividend or
the incurrence of any liability to make any other payment or distribution of
cash or other property or assets in respect of Stock; (b) any payment on account
of the purchase, redemption, defeasance, sinking fund or other retirement of
such Borrower’s Stock or any other payment or distribution made in respect
thereof, either directly or indirectly; (c) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
or similar payment and any claim for rescission with respect to, any
Indebtedness subordinated in right of payment to the Obligations; and (d) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire Stock
of such Borrower now or hereafter outstanding.

      


      “Retiree Welfare Plan” means,
at any time, a Plan which is an “employee welfare benefit plan” as described in
Section 3(1) of ERISA that provides for continuing coverage or benefits for any
participant or any beneficiary of a participant after such participant’s
termination of employment, other than continuation coverage provided pursuant to
Section 4980B of the IRC and at the sole expense of the participant or the
beneficiary of the participant.

      


      “S&P” means Standard &
Poor’s Ratings Services, a division of the McGraw-Hill Companies.

      


      “Scheduled Maturity Date” means
December 1, 2009.

      


      “Sell” means, with respect to
any property, to sell, convey, transfer, assign, license, lease or otherwise
dispose of, any interest therein or to permit any Person to acquire any such
interest, including, in each case, through a Sale and Leaseback Transaction or
through a sale, factoring at maturity, collection of or other disposal, with or
without recourse, of any notes or accounts receivable. Conjugated forms thereof
and the noun “Sale” have
correlative meanings.

      


      “Section 1110 Agreement” means
any agreement related to property that qualifies as “equipment,” as such term is
used in Section 1110(a)(3) of the Bankruptcy Code, including, without
limitation, security agreements, mortgages, trusts, leases, conditional sale
agreements or other instruments applicable to such property.

      


      “Section 1110 Assets” shall
mean property that qualifies as “equipment,” as such term is used in Section
1110(a)(3) of the Bankruptcy Code.

      


      “Secured Obligations” means the
Obligations and all other obligations of any Borrower under any Loan Documents
to which it is a party.

      


      “Security” means any Stock,
voting trust certificate, bond, debenture, note or other evidence of
Indebtedness, whether secured, unsecured, convertible or subordinated, or any
certificate of interest, share or participation in, any temporary or interim
certificate for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing, but shall not include any evidence of
the Obligations.

      


      “Slots” shall mean all (i)
“slots” as defined in 14 CFR § 93.213(a)(2), as that section may be amended or
re-codified from time to time, (ii) an operating authorization for a landing or
takeoff operation at a specified time period at any airport in the United States
subject to orders or regulations issued by the FAA (including, but not limited
to, slots at New York LaGuardia, as defined in the Final Order, Operating
Limitations at New York LaGuardia Airport, Docket No. FAA 2006-25755-82 dated
December 13, 2006), as such order may be amended or recodified from time to
time, and in any subsequent scheduling order or regulation issued by the FAA, as
such order may be amended or recodified from time to time, and (iii) an
authorization granted by a Governmental Authority to conduct a landing or
takeoff during a specific hour or other period at any United States or foreign
airport, in each case of the Borrowers now held or hereafter acquired (other
than “slots” which have been permanently allocated to another air carrier and in
which any Borrower holds temporary use rights.)

      


      “Software” shall mean computer
programs whether in source code or object code form, together with all related
documentation.

      


      “Stock” means all shares,
options, warrants, general or limited partnership interests, membership
interests or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including common stock, preferred stock or any other
“equity security” (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Commission under the Securities Exchange Act
of 1934).

      


      “Stockholder” means, with
respect to any Person, each holder of Stock of such Person.

      


      “Subject Aircraft” means the
two (2) A320 aircraft, four (4) A319 aircraft, and nine (9) A318
aircraft.

      


      “Subject Assets” means,
collectively, (i) Subject Aircraft and (ii) spare parts.

      


      “Subsidiary” means, with
respect to any Person, (a) any domestic corporation of which an aggregate of
more than 50% of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether,
at the time, Stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, owned legally or beneficially by such Person
or one or more Subsidiaries of such Person, or with respect to which any such
Person has the right to vote or designate the vote of more than 50% of such
Stock whether by proxy, agreement, operation of law or otherwise, and (b) any
domestic partnership or limited liability company in which such Person and/or
one or more Subsidiaries of such Person shall have an interest (whether in the
form of voting or participation in profits or capital contribution) of more than
50% or of which any such Person is a general partner or may exercise the powers
of a general partner. Unless the context otherwise requires, each reference to a
Subsidiary shall be a reference to a Subsidiary of a Borrower.

      


      “Super-Priority Claim” shall
mean a claim against any Borrower in any of the Cases that is an administrative
expense claim having priority over any or all administrative expenses of the
kind specified in sections 503(b) or 507(b) of the Bankruptcy Code.

      


      “Taxes” means taxes, levies,
imposts, deductions, Charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on or measured by the net income of the
Administrative Agent or a Lender by the jurisdictions under the laws of which
the Administrative Agent and Lenders are organized or conduct business or any
political subdivision thereof.

      


      “Termination Date” means the
date on which (a) the Loan has been repaid in full, (b) all other monetary
Obligations (other than Excluded Obligations) arising under the Loan pursuant to
the Agreement and the other Loan Documents have been completely discharged, and
(c) the Commitment shall have expired or irrevocably been terminated under the
Agreement.

      


      “Title 49” means Title 49 of
the United States Code, which, among other things, recodified and replaced the
Federal Aviation Act of 1958, as amended, and the regulations promulgated
pursuant thereto or any subsequent legislation that amends, supplements, or
supersedes such provisions.

      


      “Title IV Plan” means a Pension
Plan (other than a Multiemployer Plan) that is covered by Title IV of
ERISA.

      


      “Tooling” means tooling
inventory, including but not limited to dies, molds, tooling, casting patterns,
gauges, jigs, racks and stands for engines, cowls, radome and wheels, aircraft
jacks, test benches, test equipment, lathes, welders, grinders, presses, punches
and hoists and other similar items (whether or not completed or fixed or
handheld).

      


      “Trademark License” means
rights under any written agreement now owned or hereafter acquired by any
Borrower granting any right to use any Trademark.

      


      “Trademark Security Agreements”
means the Trademark Security Agreements made in favor of the Administrative
Agent for the benefit of the Lenders by each applicable Borrower substantially
in the form of Exhibit D.

      


      “Trademarks” means all of the
following now owned or hereafter adopted or acquired by any Borrower: (a) all
trademarks, trade names, corporate names, business names, trade styles, service
marks, logos, other source or business identifiers, prints and labels on which
any of the foregoing have appeared or appear, designs and general intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
state or territory thereof, or any other country or any political subdivision
thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill
associated with or symbolized by any of the foregoing.

      


      “Uniform Commercial Code
jurisdiction” means any jurisdiction that has adopted all or
substantially all of Article 9 as contained in the 2000 Official Text of the
Uniform Commercial Code, as recommended by the National Conference of
Commissioners on Uniform State Laws and the American Law Institute, together
with any subsequent amendments or modifications to the Official
Text.

      


      “Vehicles” means all vehicles
covered by a certificate of title law of any state.

      


      “West LB Facility” means the
Credit Agreement dated as of March 31, 2005 among Frontier Airlines, the lenders
party thereto and West LB, AG, New York Branch, as amended.

      


      Rules of
construction with respect to accounting terms used in the Agreement or the other
Loan Documents shall be as set forth in Annex E. All other undefined terms
contained in any of the Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code to the extent the same are
used or defined therein; in the event that any term is defined differently in
different Articles or Divisions of the Code, the definition contained in Article
or Division 9 shall control. Unless otherwise specified, references in the
Agreement or any of the Appendices to a Section, subsection or clause refer to
such Section, subsection or clause as contained in the Agreement. The words
“herein,” “hereof” and “hereunder” and other words of similar import refer to
the Agreement as a whole, including all Annexes, Exhibits and Schedules, as the
same may from time to time be amended, restated, modified or supplemented, and
not to any particular section, subsection or clause contained in the Agreement
or any such Annex, Exhibit or Schedule.

      


      Wherever
from the context it appears appropriate, each term stated in either the singular
or plural shall include the singular and the plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, feminine and
neuter genders. The words “including”, “includes” and “include” shall be deemed
to be followed by the words “without limitation”; the word “or” is not
exclusive; references to Persons include their respective successors and assigns
(to the extent and only to the extent permitted by the Loan Documents) or, in
the case of governmental Persons, Persons succeeding to the relevant functions
of such Persons; and all references to statutes and related regulations shall
include any amendments of the same and any successor statutes and regulations.
Whenever any provision in any Loan Document refers to the knowledge (or an
analogous phrase) of any Borrower, such words are intended to signify that such
Borrower has actual knowledge or awareness of a particular fact or circumstance
or that such Borrower, if it had exercised reasonable diligence, would have
known or been aware of such fact or circumstance.

      


      


      



      
        
          
            A-

             

          

           


        

        
           


          
            

          

        

        
           


        

      


      ANNEX
B

      TO CREDIT
AGREEMENT

      


      CASH
MANAGEMENT SYSTEM

       

      Each
Borrower shall establish and maintain the Cash Management Systems described
below:

       

          (a) Until the
Termination Date, each Borrower shall cause each of its accounts to be Blocked
Accounts; provided, that (i) Excluded Accounts shall not be required to be
Blocked Accounts and (ii) the Borrowers may maintain additional accounts in the
United States that are not Blocked Accounts to the extent the aggregate amount
held in such accounts shall not exceed $35,000 per account and $1,000,000 for
all such accounts (together with the Excluded Accounts, the “Exempt
Accounts”).

       

          (b) The
Borrowers shall only maintain, in their names, deposit accounts at JPMorgan
Chase Bank, N.A., Colorado Business Bank or any bank listed on Disclosure
Schedule 3.19 (such bank, a “Relationship
Bank”).

       

          (c) The
Borrowers shall cause each deposit account (other than Exempt Accounts) to be
subject to a Blocked Account Agreement. The Borrowers shall cause each
investment account (other than any Exempt Account) to be submitted to a Control
Agreement. Each such Blocked Account Agreement and Control Agreement shall be in
form and substance reasonably satisfactory to the Administrative
Agent.

       

          (d) It is
understood and agreed that, notwithstanding anything herein to the contrary,
Blocked Account Agreements and Control Agreements substantially in the same form
as those entered into on the Closing Date will be satisfactory to the
Administrative Agent.

       

          (e) So long
as no Event of Default has occurred and is continuing, Borrower may add or
replace a Relationship Bank; provided, that (i) the Administrative Agent shall
have consented in writing in advance to the addition or replacement of such
Relationship Bank (such consent not to be unreasonably withheld) and
(ii) prior to the time of the opening of an account (other than an Exempt
Account) with such Relationship Bank, the relevant Borrower and such bank shall
have executed and delivered to the Administrative Agent a Blocked Account
Agreement or Control Agreement with respect to such account.

       

          (f) The
Blocked Accounts shall be cash collateral accounts, with all cash, checks and
other similar items of payment in such accounts securing payment of the Loans
and all other Obligations, and in which each applicable Borrower shall have
granted a Lien to the Administrative Agent for the benefit of the Lenders
pursuant to the Agreement and the other Loan Documents.

       

          (g) Administrative
Agent shall not deliver a notice that it is exercising exclusive control over
any Blocked Account or other account subject to a Control Agreement, or
otherwise give instructions or entitlement orders with respect thereto, to any
bank or other financial institution unless an Event of Default has occurred and
is continuing.

       


      
        
          
            B-

             

          

           


        

        
           


          
            

          

        

        
           


        

      


      ANNEX
C

      TO CREDIT
AGREEMENT

      


       

      CLOSING
CHECKLIST

       

      In
addition to, and not in limitation of, the conditions described in Section 2.1
of the Agreement, pursuant to Section 2.1(d), the following items must be
received by the Administrative Agent in form and substance reasonably
satisfactory to the Administrative Agent (it being understood that any document
delivered substantially in the form of the applicable Exhibit hereto shall be
deemed to be in form and substance satisfactory to the Administrative Agent) or
waived in writing by the Administrative Agent on or prior to the Effective Date
(each capitalized term used but not otherwise defined herein shall have the
meaning ascribed thereto in Annex A to the
Agreement):

       

      1.           Appendices.  All
Appendices to the Agreement, in form and substance satisfactory to the
Administrative Agent (it being agreed that Appendices substantially identical to
the Appendices attached to the Agreement on the Closing Date shall be deemed to
be in form and substance satisfactory to the Administrative Agent).

       

      2.           Notes.  Duly
executed originals of the Notes, dated the Effective Date, for each Lender
having requested such a Note prior to the Effective Date.

       

      3.           Charter and Good Standing;
Incumbency.  For each Borrower, (a) a good standing certificate
from its state of incorporation, dated a recent date prior to the Effective Date
and certified by the applicable Secretary of State or other authorized
Governmental Authority and (b) a certificate of such Person’s corporate
secretary or assistant secretary, certifying the continued truth, accuracy and
completeness of the incumbency certificates and the certificates of such Person
relating to its charter, bylaws and amendments thereto, each as provided to the
Lenders on the Closing Date.

       

      4.           Resolutions.  For
each Borrower, resolutions of such Person’s Board of Directors or other
equivalent body or committee thereof approving and authorizing the execution,
delivery and performance of the Loan Documents to which such Person is a party
and the transactions to be consummated in connection therewith, each certified
as of the Effective Date by such Person’s corporate secretary or an assistant
secretary as being in full force and effect without any modification or
amendment.

       

      5.           Officer’s
Certificate.  The Administrative Agent shall have received duly
executed originals of a certificate of the Chief Financial Officer of the
Borrower Agent, dated the Effective Date, stating that, there has been no
Material Adverse Effect since the date of Borrower’s Form 10-K or 10-Q most
recently filed prior to the Effective Date as updated by subsequent public
filings prior to the Effective Date and other written materials provided to the
Administrative Agent prior to the Effective Date (including Projections and
reserve build and cash flow data delivered prior to the Effective
Date).

       

      6.           Projections.  The
Administrative Agent shall have received, not less than two (2) Business Days
prior to the Effective Date, Projections referred to in Section 3.4, and the
Administrative Agent shall be satisfied, in its sole discretion, with such
Projections; provided
that the Projections delivered on or prior to March 17, 2009 shall be deemed to
be satisfactory to the Administrative Agent.

       

      7.           Other
Documents.  Delivery of certain notes, instruments,
certificates, documents and agreements of each Borrower as the Administrative
Agent may request in its discretion exercised reasonably in accordance with
customary business practices for comparable asset-based secured super-priority
debtor in possession transactions.

       

      8.           Security Interests; Filings;
Lien Search Results.  (a) Evidence reasonably satisfactory to
the Administrative Agent that it (for the benefit of the Lenders) has a valid
and perfected first priority security interest in the Collateral (or, if
applicable, subject to the relative priorities set forth in the Collateral
Documents), and that all documents and instruments (including financing
statements under the Code) required by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to perfect the
Lenders’ security interests in the Collateral shall have been filed, registered
or recorded, or shall have been delivered to the Administrative Agent for
filing, registration or recording, and (b) the results of a recent Lien, tax and
judgment search for the period from July 31, 2008 in each relevant jurisdiction,
excluding the FAA registry, with respect to the Borrowers, revealing no Liens on
any of the assets of the Borrowers, other than Liens permitted hereby and other
Liens acceptable to the Administrative Agent.

       

      



      
        
          
             

          

           


        

        
           


          
            

          

        

        
           


        

      


      ANNEX
D

      TO CREDIT
AGREEMENT

      


      FINANCIAL
STATEMENTS AND PROJECTIONS — REPORTING

      


      The
Borrowers shall deliver or cause to be delivered to the Administrative Agent or
to the Administrative Agent and Lenders, as indicated, the
following:

      


          (a) Monthly
Financials.  To the Administrative Agent and Lenders, within
thirty (30) days after the end of the first two Fiscal Months of each Fiscal
Quarter, financial information regarding the Borrowers and their Subsidiaries,
certified by the Chief Financial Officer of the Borrower Agent, consisting of
consolidated (i) unaudited balance sheets as of the close of such Fiscal Month
and the related statements of income and cash flows for that portion of the
Fiscal Year ending as of the close of such Fiscal Month and (ii) unaudited
statements of income and cash flows for such Fiscal Month, setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Projections for such Fiscal Year, all (except for
Projections) prepared in accordance with GAAP (subject to normal quarter-end or
year-end adjustments). Such financial information shall be accompanied by (A) a
statement in reasonable detail (each, a “Compliance Certificate”) showing the
calculations used in determining compliance with each of the Financial Covenants
that is tested on a monthly basis and (B) the certification of the Chief
Financial Officer of the Borrower Agent that (i) such financial information
(except for Projections) presents fairly in all material respects in accordance
with GAAP (subject to normal year-end adjustments) the financial position,
results of operations and statements of cash flows of such Borrower and its
Subsidiaries, on a consolidated or a consolidating basis (as applicable) as at
the end of such Fiscal Month and for that portion of the Fiscal Year then ended,
and (ii) any other information (except for Projections) presented is true,
correct and complete in all material respects and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of
Default has occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default.

       

          (b) Quarterly Financials.  To
Administrative Agent and Lenders, within forty-five (45) days after the end of
the first three Fiscal Quarters of each Fiscal Year, consolidated and
consolidating financial information regarding the Borrower and their
Subsidiaries, certified by the Chief Financial Officer of the Borrower Agent,
consisting of (i) unaudited consolidated balance sheet as of the close of such
Fiscal Quarter and the related statements of income and cash flow for that
portion of the Fiscal Year ending as of the close of such Fiscal Quarter, (ii)
unaudited consolidating balance sheet of Frontier Airlines, Inc. and Lynx
Aviation, Inc., as of the close of such Fiscal Quarter and the related
statements of income and cash flow for that portion of the Fiscal Year
ending as of the close of such Fiscal Quarter, and (iii) unaudited
consolidated statements of income and cash flows for such Fiscal Quarter, in
each case setting forth in comparative form the figures for the corresponding
period in the prior year and the figures contained in the Projections for
such Fiscal Year, all (except for Projections) prepared in accordance with GAAP
(subject to normal year-end adjustments). Such financial information shall be
accompanied by (A) a statement in reasonable detail (each, a “Compliance Certificate”) showing
the calculations used in determining compliance with each of the Financial
Covenants that is tested on the last day of the applicable Fiscal Quarter and
(B) the certification of the Chief Financial Officer of the Borrower Agent that
(i) such financial information (except for Projections) presents fairly in all
material respects in accordance with GAAP (subject to normal year-end
adjustments) the financial position, results of operations and statements of
cash flows of such Borrower and its Subsidiaries, on a consolidated or a
consolidating basis (as applicable) as at the end of such Fiscal Quarter and for
that portion of the Fiscal Year then ended, (ii) any other information (except
for Projections) presented is true, correct and complete in all material
respects and that there was no Default or Event of Default in existence as of
such time or, if a Default or Event of Default has occurred and is continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default. In addition, Borrower shall deliver to Administrative Agent
and Lenders, within forty-five (45) days after the end of each Fiscal Quarter, a
management discussion and analysis for Borrower and its Subsidiaries on a
consolidated basis that includes a comparison of performance for that Fiscal
Quarter to the corresponding period in the prior year.

       

          (c) 13 Week Rolling
Forecasts.  To the Administrative Agent and Lenders, commencing
with the first fiscal month following the Closing Date, as soon as practicable
but no later than the last day of each week, a statement of projected cash
receipts and cash disbursements for each week of the period of thirteen
continuous weeks commencing with the immediately following week, in a form
consistent with the form provided to the Administrative Agent prior to the
Closing Date (the “Budget”).

       

          (d) Annual Audited
Financials.  To the Administrative Agent and Lenders, within
ninety (90) days after the end of each Fiscal Year, consolidated and
consolidating financial information regarding the Borrowers and their
Subsidiaries, consisting of (i) audited consolidated balance sheet as of the
close of such Fiscal Year and the related statements of income and cash flows
for the Fiscal Year then ended, and (ii) unaudited consolidating balance sheets
of Frontier Airlines, Inc. and Lynx Aviation, Inc. as of the close of such
Fiscal Year and the related statements of income and cash flow for the Fiscal
Year then ending, all prepared in accordance with GAAP, in each case, setting
forth in comparative form in each case the figures for the previous Fiscal Year,
which Financial Statements shall be prepared in accordance with GAAP and in the
case of the Financial Statements referred to in (i), certified without
qualification (other than going-concern or like qualification), by KPMG, LLP,
another “Big 4 accounting firm or another independent registered public
accounting firm otherwise reasonably acceptable to the Administrative Agent.
Such Financial Statements shall be accompanied by (1) a statement prepared
in reasonable detail showing the calculations used in determining compliance
with each of the Financial Covenants, (2) the annual letters to such accountants
in connection with their audit examination detailing contingent liabilities and
material litigation matters, and (3) the certification of the Chief Executive
Officer or Chief Financial Officer of the Borrower Agent that all such Financial
Statements present fairly in all material respects in accordance with GAAP the
financial position, results of operations and statements of cash flows of such
Borrower and its Subsidiaries on a consolidated or consolidating basis (as
applicable), as at the end of such Fiscal Year and for the period then ended,
and that there was no Default or Event of Default in existence as of such time
or, if a Default or Event of Default has occurred and is continuing, describing
the nature thereof and all efforts undertaken to cure such Default or Event of
Default.

       

          (e) Management
Letters.  To the Administrative Agent and Lenders, within
forty-five (45) Business Days after receipt thereof by any Borrower, copies of
all management letters, exception reports or similar letters or reports received
by such Borrower from its independent registered public
accountants.

       

          (f) Default
Notices.  To the Administrative Agent and Lenders, as soon as
practicable, and in any event within five (5) Business Days after an executive
officer of any Borrower has actual knowledge of the existence of any Default,
Event of Default or other event that has had a Material Adverse Effect,
telephonic or telecopied notice specifying the nature of such Default or Event
of Default or other event, including the anticipated effect thereof, which
notice, if given telephonically, shall be promptly confirmed in writing on the
next Business Day.

       

          (g) SEC Filings and Press
Releases.  To the Administrative Agent and Lenders, promptly
upon their becoming available, and at a minimum on a quarterly basis, copies of:
(i) all Financial Statements, reports, notices and proxy statements made
publicly available by any Borrower to its security holders; (ii) all regular and
periodic reports and all registration statements and prospectuses, if any, filed
by any Borrower with any securities exchange or with the Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Borrower to the public concerning
material changes or developments in the business of any such
Person.

       

          (h) Litigation.  To
the Administrative Agent and Lenders in writing, promptly upon learning thereof,
notice of any unstayed Postpetition Litigation commenced or threatened against
any Borrower that is not, in such Borrower’s reasonable judgment, covered by
insurance and that (i) seeks damages in excess of $1,000,000, (ii) seeks
injunctive relief that could reasonably be expected to result in costs and/or
liabilities or loss of revenues to Borrowers in excess of $1,000,000, (iii) is
asserted or instituted against any Plan, its fiduciaries or its assets or
against any Borrower or ERISA Affiliate in connection with any Plan, (iv)
alleges criminal misconduct by any Borrower, or (v) alleges the violation of any
law regarding, or seeks remedies in connection with, any Environmental
Liabilities if such Litigation is reasonably likely to result in any Borrower
incurring Environmental Liabilities in excess of $250,000
individually.

       

          (i) Documents Filed with
Bankruptcy Court.  To the Administrative Agent and the Lenders,
copies of all pleadings, motions, applications, judicial information, financial
information and other documents filed by or on behalf of the Debtors with the
Bankruptcy Court or the U.S. Trustee in any Case that are not otherwise made
publicly available by filings on the Electronic Case Filing System for such
Case (the “Court
Documents”); provided, however, that any such Court Documents filed under
seal and/or subject to confidentiality and other restrictions prohibiting
disclosure to the Administrative Agent shall not be provided to Administrative
Agent.

       

          (j) Documents Provided to
Committees.  To the Administrative Agent and the Lenders,
copies of any reports filed in any Case and provided to any creditors’ or other
committee or the U.S. Trustee (“Committee Documents”) that are
not otherwise made publicly available by filings on the Electronic Case Filing
System for such Case; provided, however, that any such Committee Documents filed
under seal and/or subject to confidentiality and other restrictions prohibiting
disclosure to the Administrative Agent shall not be provided to Administrative
Agent.

       

          (k) Weekly
Reports.  To the Administrative Agent and the Lenders,
customary weekly reports concerning the financial and operating results and cash
positions of the Borrowers provided to the Chief Executive Officer and Chief
Financial Officer of Frontier Holdings, each substantially concurrently with
such delivery.

       

          (l) Other
Documents.  To the Administrative Agent and Lenders, such other
financial and other information respecting any Borrower’s business or financial
condition as the Administrative Agent shall, from time to time, reasonably
request.

       

      Documents
required to be delivered pursuant to paragraphs (b), (d) or (g) (to the extent
any such documents are included in materials otherwise filed with the SEC) may
be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date on which the Borrowers give notice to the Lenders that
such documents have been posted to the Borrowers’ Internet site on the Internet
at www.frontierairlines.com, at www.sec.gov/edaux/searches.html or at another
website identified in such notice and accessible to the Lenders without charge;
provided that the Borrowers shall deliver paper copies of such documents to any
Lender that requests the Borrowers to deliver such paper copies.

       

      



      
        
          
            D-

             

          

           


        

        
           


          
            

          

        

        
           


        

      


      ANNEX
E

      TO CREDIT
AGREEMENT

      


      FINANCIAL
COVENANTS

      


      The
Borrowers shall not breach or fail to comply with any of the following financial
covenants, each of which shall be calculated in accordance with GAAP
consistently applied:

      


          (a) Minimum EBITDAR. At
the end of each Fiscal Month set forth below, the amount equal to the sum of
EBITDAR for the 4-month period then ended of the Borrowers and their
Subsidiaries on a consolidated basis shall not be less than the amount set forth
below opposite such Fiscal Month.

      


      
        	
                
                  Fiscal
      Month

                

              	
                
                  EBITDAR

                

              
	
                 

                March
      2009

              	
                 

                $54,200,000

              
	
                April
      2009

              	
                $33,800,000

              
	
                May
      2009

              	
                $43,500,000

              
	
                June
      2009

              	
                $74,700,000

              
	
                July
      2009

              	
                $79,700,000

              
	
                August
      2009

              	
                $94,300,000

              
	
                September
      2009

              	
                $81,800,000

              
	
                October
      2009

              	
                $65,500,000

              
	
                November
      2009

              	
                $41,700,000

              


      

      


      (b) Contingency
Budget.  In order to ensure that the Carve-Out, if implicated,
will be adequately funded, as of 5:00 p.m. on the first Business Day of
each week, the Borrowers shall have Aggregate Cash on Hand of at least
$20,000,000.

      


      Accounting
Terms.

      


          (a) All
accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial ratios
and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed
herein.

      


          (b) If at any
time any change in GAAP or the application thereof would affect the computation
of any financial ratio or requirement set forth in any Loan Document, and either
the Borrowers or the Requisite Lenders shall so request, the Administrative
Agent, the Lenders and the Borrowers shall negotiate in good faith to amend such
ratio or requirement to preserve the original intent thereof in light of such
change in GAAP (subject to the approval of the Requisite Lenders); provided
that, until so amended, (i) such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and (ii) the
Borrowers shall provide to the Administrative Agent and the Lenders financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of such
ratio or requirement made before and after giving effect to such change in
GAAP.

      


      



      
        
          
            E-

             

          

           


        

        
           


          
            

          

        

        
           


        

      


      ANNEX
F

      TO CREDIT
AGREEMENT

      


      NOTICE
ADDRESSES

      


      (A)           If
to Administrative Agent, at

      


      Wells
Fargo Bank Northwest, National Association

      299 S.
Main Street, 12th
Floor

      Salt Lake
City, UT 84111

      Attention:
Corporate Trust Lease Group

      Telecopier
No.: 801-246-5053

      Telephone
No.: 801-246-5630

      


       

      with copies
to:

       

      Fulbright &
Jaworski L.L.P.

      666 Fifth
Avenue

      New York,
NY 10103-3198

      Attention:
David A. Rosenzweig

      Telecopier
No.: 212-318-3400

      Telephone
No.: 212-318-3000

      


      


      (B)           If
to Borrower Agent or any Borrower, at

      Frontier
Airlines Holdings, Inc.

      7001
Tower Road

      Denver,
CO 80249

      Attention:
Office of the Chief Financial Officer

      Telecopier
No.: 720-374-4379

      Telephone
No.: 720-374-4200

       

      with copies
to:

      


      Frontier
Airlines Holdings, Inc.

      7001
Tower Road

      Denver,
CO 80249

      Attention:
Office of the General Counsel

      


      Davis
Polk & Wardwell

      450
Lexington Avenue

      New York,
NY 10017

      Attention:
Marshall Huebner

      Telecopier
No.: 212 450 3800

      Telephone
No.: 212 450 4000

      



      
        
          
            F-

             

          

           


        

        
           


          
            

          

        

        
           


        

      


      ANNEX
G

      TO CREDIT
AGREEMENT

      


      COMMITMENTS

      


      
        	
                Lender

              	
                Commitment

              
	
                Republic
      Airways Holdings Inc.

              	
                $40,000,000

              
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                Total

              	
                $40,000,000

              


      

      


      



      
        
          
            G-