EXECUTION
COPY

    


    SECOND
AMENDED AND RESTATED INVESTMENT AGREEMENT

     

    dated as
of August 13, 2009

     

    among

     

    REPUBLIC
AIRWAYS HOLDINGS INC.

     

    FRONTIER
AIRLINES HOLDINGS, INC.,

     

    FRONTIER
AIRLINES, INC.

     

    and

     

    LYNX
AVIATION, INC.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    TABLE
OF CONTENTS 

      
        

      

    

    
      


    

    
      
        
          	 
      	
                  Page

                
	 
      	 
      
	
                  ARTICLE
      1

                	 
      
	
                  Definitions

                	 
      
	 
      	 
      
	
                  Section
      1.01.  Definitions

                	
                  2

                
	
                  Section
      1.02.  Other
      Definitional and Interpretative Provisions

                	
                  12

                
	 
      	 
      
	
                  ARTICLE
      2

                	 
      
	
                  Issuance
      And Purchase Of Common Shares

                	 
      
	 
      	 
      
	
                  Section
      2.01.  Issuance and
      Purchase of Common Shares

                	
                  13

                
	
                  Section
      2.02.  Closing

                	
                  13

                
	 
      	 
      
	
                  ARTICLE
      3

                	 
      
	
                  Representations
      And Warranties Of The Companies

                	 
      
	 
      	 
      
	
                  Section
      3.01.  Bankruptcy Court
      Orders

                	
                  14

                
	
                  Section
      3.02.  Capitalization;
      Securities

                	
                  14

                
	
                  Section
      3.03.  Financial
      Advisors and Brokers

                	
                  15

                
	
                  Section
      3.04.  Controls

                	
                  15

                
	
                  Section
      3.05.  Aircraft

                	
                  15

                
	
                  Section
      3.06.  Certificated Air
      Carrier

                	
                  16

                
	
                  Section
      3.07.  Slots
      and Gate Interests

                	
                  16

                
	
                  Section
      3.08.  Foreign
      Corrupt Practices Act

                	
                  16

                
	
                  Section
      3.09.  Corporate
      Existence; Compliance with Law

                	
                  17

                
	
                  Section
      3.10.  Corporate Power,
      Authorization, Enforceable Obligations.

                	
                  18

                
	
                  Section
      3.11.  Financial
      Statements and Reports

                	
                  18

                
	
                  Section
      3.12.  Absence
      of Certain Changes or Events

                	
                  19

                
	
                  Section
      3.13.  Ownership of
      Property; Real Estate; Liens

                	
                  19

                
	
                  Section
      3.14.  Labor
      Matters

                	
                  20

                
	
                  Section
      3.15.  Ventures,
      Subsidiaries and Affiliates; Outstanding Equity Securities and
      Indebtedness

                	
                  20

                
	
                  Section
      3.16.  Taxes.

                	
                  20

                
	
                  Section
      3.17.  ERISA

                	
                  23

                
	
                  Section
      3.18.  No
      Litigation

                	
                  25

                
	
                  Section
      3.19.  Intellectual
      Property

                	
                  25

                
	
                  Section
      3.20.  Environmental
      Matters

                	
                  27

                
	
                  Section
      3.21.  Insurance

                	
                  27

                
	
                  Section
      3.22.  Contracts

                	
                  28

                
	
                  Section
      3.23.  Exemption from
      Registration

                	
                  29

                


        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      
        	
                ARTICLE
      4

              	 
      
	
                Representations
      And Warranties Of The Investor

              	 
      
	 
      	 
      
	
                Section
      4.01.  Organization

              	
                29

              
	
                Section
      4.02.  Authorization of
      Agreements

              	
                29

              
	
                Section
      4.03.  Consents; No
      Conflicts

              	
                29

              
	
                Section
      4.04.  Financial
      Advisors and Brokers

              	
                30

              
	
                Section
      4.05.  Ownership of
      Equity Securities; Purpose of Investment

              	
                30

              
	
                Section
      4.06.  Citizenship

              	
                30

              
	
                Section
      4.07.  Financing

              	
                30

              
	 
      	 
      
	
                ARTICLE
      5

              	 
      
	
                Pre-closing
      Covenants

              	 
      
	 
      	 
      
	
                Section
      5.01.  Interim
      Operations

              	
                31

              
	
                Section
      5.02.  Bankruptcy
      Filings, Covenants and Agreements

              	
                31

              
	
                Section
      5.03.  No
      Solicitation of Alternative Transactions

              	
                32

              
	
                Section
      5.04.  Accounting
      Policies

              	
                34

              
	
                Section
      5.05.  Postpetition
      Transactions and Settlements

              	
                34

              
	
                Section
      5.06.  Taxes

              	
                34

              
	
                Section
      5.07.  Flight
      Operations

              	
                34

              
	
                Section
      5.08.  Notice
      of Incidents and Accidents

              	
                34

              
	
                Section
      5.09.  Aircraft
      Maintenance Programs

              	
                34

              
	
                Section
      5.10.  No
      Title IV Liability

              	
                34

              
	
                Section
      5.11.  Claims

              	
                35

              
	
                Section
      5.12.  Proceeds to
      General Unsecured Creditors

              	
                35

              
	
                Section
      5.13.  Investor Voting
      Commitment

              	
                35

              
	 
      	 
      
	
                ARTICLE
      6

              	 
      
	
                Additional
      Covenants

              	 
      
	 
      	 
      
	
                Section
      6.01.  Information
      Rights and Access

              	
                35

              
	
                Section
      6.02.  Company
      Reports; Financial Statements

              	
                36

              
	
                Section
      6.03.  Publicity

              	
                37

              
	
                Section
      6.04.  Tax
      Contests

              	
                37

              
	
                Section
      6.05.  Investor
      Financing

              	
                37

              
	
                Section
      6.06.  Transaction Court
      Documents

              	
                37

              
	
                Section
      6.07.  Director and
      Officer Liability and Indemnification

              	
                38

              
	 
      	 
      
	
                ARTICLE
      7

              	 
      
	
                Conditions

              	 
      
	 
      	 
      
	
                Section
      7.01.  Conditions to
      Both the Investor’s and the Company’s Obligations

              	
                40

              
	
                Section
      7.02.  Conditions to the
      Investor’s Obligations

              	
                40

              
	
                Section
      7.03.  Conditions to the
      Company’s Obligations

              	
                42

              


      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      
        
          
            	
                    ARTICLE
      8

                  	 
      
	
                    Termination

                  	 
      
	 
      	 
      
	
                    Section
      8.01.  Termination of
      Agreement

                  	
                    44

                  
	
                    Section
      8.02.  Effect
      of Termination

                  	
                    45

                  
	 
      	 
      
	
                    ARTICLE
      9

                  	 
      
	
                    Miscellaneous

                  	 
      
	 
      	 
      
	
                    Section
      9.01.  Collective
      Bargaining Agreements

                  	
                    47

                  
	
                    Section
      9.02.  Survival of
      Representations and Warranties

                  	
                    47

                  
	
                    Section
      9.03.  Specific
      Performance

                  	
                    48

                  
	
                    Section
      9.04.  Notices

                  	
                    48

                  
	
                    Section
      9.05.  Entire
      Agreement; Amendment

                  	
                    49

                  
	
                    Section
      9.06.  Counterparts

                  	
                    49

                  
	
                    Section
      9.07.  Governing Law;
      Jurisdiction

                  	
                    49

                  
	
                    Section
      9.08.  Successors and
      Assigns

                  	
                    50

                  
	
                    Section
      9.09.  No
      Third-Party Beneficiaries

                  	
                    50

                  
	
                    Section
      9.10.  Binding
      Effect

                  	
                    50

                  
	
                    Section
      9.11.  Company
      Disclosure Schedules

                  	
                    50

                  
	 	 


          

        

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  EXHIBIT
      A

                                	
                                  Form
      of Investment Agreement and Bidding Procedures Order

                                
	
                                  EXHIBIT
      B

                                	
                                  Company
      Disclosure Schedules

                                
	
                                  EXHIBIT
      C

                                	
                                  Investor
      Disclosure Schedules

                                
	
                                  EXHIBIT
      D

                                	
                                  Form
      of Disclosure Statement

                                
	 
      	 
      
	
                                  Schedule
      1.01(b)

                                	
                                  Knowledge
      Group

                                
	
                                  Schedule
      5.06

                                	
                                  Taxes

                                
	
                                  Schedule
      5.10

                                	
                                  Multiemployer
      Plan Liabilities and Obligations

                                
	
                                  Schedule
      6.07

                                	
                                  D&O
      Insurance Premium

                                
	
                                  Schedule  7.02(g)

                                	
                                  Regulatory
      Approvals

                                


                        

                      

                    

                  

                

              

            

          

        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    SECOND
AMENDED AND RESTATED INVESTMENT AGREEMENT

     

    THIS
SECOND AMENDED AND RESTATED INVESTMENT AGREEMENT (together with all exhibits and
schedules hereto and as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof, the “Agreement”), dated as of
August 13, 2009, by and among Republic Airways Holdings Inc., a Delaware
corporation (the “Investor”), Frontier Airlines
Holdings, Inc., a Delaware corporation (the “Company”), Frontier Airlines,
Inc., a Colorado corporation (“Frontier Airlines”), and Lynx
Aviation, Inc., a Colorado corporation (“Lynx,” and, together with the
Company and Frontier Airlines, the “Companies”), and their
respective successors, including, as the context may require, on or after the
Effective Date, as reorganized pursuant to the Bankruptcy Code.

     

    WITNESSETH:

     

    WHEREAS,
on April 10, 2008, the Companies filed voluntary petitions commencing cases (the
“Cases”) under Chapter
11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the
United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy
Court”);

     

    WHEREAS,
the Companies have continued in the possession of their assets and in the
management of their businesses pursuant to Sections 1107(a) and 1108 of the
Bankruptcy Code;

     

    WHEREAS,
pursuant to the Plan (as defined below), the Company intends to cancel the
existing outstanding Equity Securities of the Company upon the Effective Date
(as defined below) and issue a number of common shares of the Company (the
“Common Shares”),
representing 100% of the total equity capital of the Company on a Fully Diluted
Basis (as defined below) to the Investor (the “Investment”) in exchange for
the Investment Price (as defined below) and the Investor’s relinquishment of the
Republic Distribution (as defined below) for the benefit of the holders of
Allowed General Unsecured Claims (as such term is defined in the Plan) other
than the Investor and its Affiliates (as defined below);

     

    WHEREAS,
the parties entered into an Investment Agreement, dated as of June 22, 2009
(the “Original
Agreement”), in connection with the Investment;

     

    WHEREAS,
the parties amended and restated the Original Agreement on July 8, 2009 (the
“Amended and Restated
Investment Agreement”);

     

    WHEREAS,
on July 14, 2009, the Bankruptcy Court entered that certain Order (i) Approving
and Authorizing Debtors To Perform Under Investment Agreement, (ii) Approving
Procedures for Consideration of Other Investment Proposals, (iii) Scheduling
Proposal Deadlines and an Auction and (iv) Approving Form and Manner of Notice
Thereof [Docket No. 921] (the “Investment Agreement and Bidding
Procedures Order”) setting forth the procedures for parties other than
Republic to submit alternative proposals to invest in or acquire the
Companies;


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    WHEREAS,
in accordance with the Investment Agreement and Bidding Procedures Order, on
August 13, 2009, an auction (the “Auction”) was conducted, at
which the Companies, in consultation with the Creditors’ Committee (as defined
below), considered the proposals made by the Investor and the other Qualified
Investor (as that term is defined in the Investment Agreement and Bidding
Procedures Order);

     

    WHEREAS,
the parties desire to amend and restate the Amended and Restated Agreement in
its entirety to reflect certain binding commitments made by the Investor at the
Auction to improve the terms and conditions of the Amended and Restated
Agreement;

     

    WHEREAS,
the parties intend that the transactions contemplated hereby will be implemented
by, and take effect on the Effective Date (or such other time as provided in
Section 2.02), subject to the satisfaction of the conditions set forth herein;
and

     

    WHEREAS,
the Company and the Investor desire to make certain representations, warranties,
covenants and agreements in connection with the transactions contemplated
herein;

     

    NOW,
THEREFORE, in consideration of the premises and the mutual representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows, in the case of the Companies, subject to Bankruptcy Court approval
of this Second Amended and Restated Investment Agreement:

     

    ARTICLE
1

    Definitions

     

    Section
1.01.  Definitions.  As
used in this Agreement, the following terms shall have the meanings set forth
below:

     

    “Affiliate” means, with respect
to any specified Person, a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the specified Person, where “control” (including the terms “controlling,”
“controlled by” and “under common control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract, or otherwise; provided, however, that when
used with respect to the Company, “Affiliate” shall not include the Investor or
any Affiliate of the Investor.

     

    “Agreement” has the meaning set
forth in the preamble hereto.

     

    “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.


    
      
         


      

      
        2

        
          

        

      

      
         


      

    

     

    “Alternative Transaction” means
(a) a merger or other business combination or similar transaction, (b) any sale
of assets or other disposition of assets pursuant to Section 363 of the
Bankruptcy Code or pursuant to a plan of reorganization, in either case that
would be materially inconsistent with the Investment or the transactions
contemplated herein, (c) any sale of Equity Securities of any of the Companies
or (d) any Stand Alone Plan.  For the avoidance of doubt, any
transaction expressly permitted under this Agreement or any transaction to which
the Investor, in its sole discretion, consents shall not be an Alternative
Transaction.

     

    “Approvals” has the meaning set
forth in Section 7.02(g) hereof.

     

    “Auction Termination Date” has
the meaning set forth in Section 5.02.

     

    “Bankruptcy Code” has the
meaning set forth in the recitals hereto.

     

    “Bankruptcy Court” has the
meaning set forth in the recitals hereto.

     

    “Board” means the board of
directors of the Company (including, with respect to periods following the
Effective Date, the reorganized Company).

     

    “Books and Records” means any
books and records of each of the Companies relating to period prior to the
Closing.

     

    “Business Day” means any day
other than a Saturday, Sunday or a day on which banking institutions of the
State of New York are authorized by law or executive order to
close.

     

    “Business Plan” is the business
plan of the Company identified as version 5.4a, dated as of June 3, 2009,
and delivered to the Investor prior to the date hereof.

     

    “By-Laws” means the by-laws of
the Company, as amended from time to time (including, with respect to periods
following the Effective Date, the by-laws of the reorganized
Company).

     

    “Cases” has the meaning set
forth in the recitals hereto.

     

    “Certificated Air Carrier”
means a Person holding a certificate of public convenience and necessity issued
pursuant to Chapter 411 of Title 49 and an air carrier operating certificate
issued under Part 121 of the FAR pursuant to Chapter 447 of Title 49, in each
case issued by the Secretary of Transportation, 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.

     

    “Certificate of Incorporation”
means the Certificate of Incorporation of the Company, as amended from time to
time (including, in each case, with respect to periods following the Effective
Date, of the reorganized Company).

     

    “Chapter 11” means Chapter 11
of the Bankruptcy Code.


    
      
         


      

      
        3

        
          

        

      

      
         


      

    

     

    “Common Shares” has the meaning
set forth in the recitals hereto.

     

    “Closing” means the closing of
the sale and purchase of the Common Shares pursuant to Section 2.01
hereof.

     

    “Closing Date” has the meaning
set forth in Section 2.02(a) hereof.

     

    “Companies” has the meaning set
forth in the preamble hereto.

     

    “Company” has the meaning set
forth in the preamble hereto.

     

    “Company Aircraft” has the
meaning set forth in Section 3.05(a) hereof.

     

    “Company Disclosure Schedules”
has the meaning set forth in Article 3.

     

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

     

    “Confirmation Order” has the
meaning set forth in the definition of “Effective Date” herein.

     

    “Contracts” means all contracts
now owned or hereafter acquired by any of the Companies, in any event, including
all contracts, undertakings, or agreements in or under which any of the
Companies may now or hereafter have any right, title or interest.

     

    “Creditors’ Committee” means
the statutory committee of unsecured creditors appointed in the Cases pursuant
to Section 1102 of the Bankruptcy Code.

     

    “DIP Credit Agreement” means
the Senior Secured Superpriority Debtor-in-Possession Credit Agreement, dated as
of April 1, 2009, among the Companies, the Investor and the other lenders and
agents from time to time party thereto, after giving effect to all amendments,
waivers, supplements, modifications and any substitutions therefor.

     

    “DIP Facility” means the
Companies’ debtor-in-possession term loan facility provided under the DIP Credit
Agreement, as the same may exist from time to time while the Cases are
pending.

     

    “Disclosure Statement” means a
disclosure statement with respect to the Plan, substantially in the form of
Exhibit D hereto or otherwise reasonably satisfactory in form and substance to
the Investor, subject to Section 6.06 hereof.

     

    “DOT” means the United States
Department of Transportation and any successor thereto.

     

    “D&O Insurance” has the
meaning set forth in Section 6.07(b) hereof.


    
      
         


      

      
        4

        
          

        

      

      
         


      

    

     

    “Effective Date” means the
effective date of the Plan; provided that unless the Investor agrees otherwise,
in no event shall the Effective Date occur (a) earlier than the date that the
Bankruptcy Court approves and enters the order, in form and substance
satisfactory to the Investor in its sole discretion, subject to Section 6.06
hereof, confirming the Plan (the “Confirmation Order”), (b)
while the Confirmation Order is stayed or after it has been vacated or
overturned, (c) before all Approvals are obtained and have become final, and
(d) before all applicable waiting periods imposed by Law in connection with
the transactions contemplated by the Transaction Documents have expired or have
been terminated.

     

    “Employee Plans” has the
meaning ascribed to it in Section 3.17(a).

     

    “Environmental Laws” means all
Laws, now or hereafter in effect, and any applicable judicial or administrative
interpretation thereof, 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 matter or any exposure to any Hazardous
Material.

     

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

     

    “Equity Securities” means
(i) capital stock of, or other equity interests in, any Person,
(ii) securities convertible into or exchangeable for shares of capital
stock, voting securities or other equity interests in such Person or
(iii) options, warrants or other rights to acquire the securities described
in clauses (i) and (ii), whether fixed or contingent, matured or unmatured,
contractual, legal, equitable or otherwise.


    
      
         


      

      
        5

        
          

        

      

      
         


      

    

     

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

     

    “ERISA Affiliate” has the
meaning ascribed to it in Section 3.17(a).

     

    “Exchange Act” means the U.S.
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

     

    “Expenses” mean all reasonable,
actual and documented out-of-pocket fees and expenses in an aggregate amount not
to exceed $350,000 incurred by or on behalf of the Investor in connection with
the due diligence, negotiation, preparation, execution, delivery and court
approval of the Transaction Documents and the transactions contemplated thereby
and in connection with the exercise of any rights and remedies thereunder,
including, but not limited to, reasonable, actual and documented fees and
expenses of its legal counsel and the third-party consultants that are engaged
by the Investor to assist in such  transactions.

     

    “FAA” means the Federal
Aviation Administration of the United States and any successor
thereto.

     

    “FAA Certificate of
Airworthiness” means the certificate of airworthiness issued by the FAA
with respect to the Company Aircraft.

     

    “FAPA CBA” has the meaning
ascribed to it in Section 9.01(a).

     

    “FAR” means the Federal
Aviation Regulations.

     

    “Financial Statements” has the
meaning ascribed to it in Section 3.11(a).

     

    “Foreign Corrupt Practices Act”
has the meaning set forth in Section 3.08(a) hereof.

     

    “Frontier Airlines” has the
meaning set forth in the preamble hereto.

     

    “Fully Diluted Basis” means the
number of shares of Common Stock, without duplication, which are issued and
outstanding or owned or held, as applicable, at the date of determination
(including, on the Closing Date, all shares of Common Stock and other Equity
Interests reserved for issuance under the Plan) plus the number of shares of
Common Stock issuable pursuant to any Equity Securities then outstanding
convertible into or exchangeable or exercisable for (whether or not subject to
contingencies or passage of time, or both) shares of Common Stock.

     

    “GAAP” means U.S. generally
accepted accounting principles as in effect at the relevant time or for the
relevant period.


    
      
         


      

      
        6

        
          

        

      

      
         


      

    

     

    “Gate Interests” shall mean all
of the right, title, privilege, interest, and authority now or hereafter
acquired or held by each Company in connection with the right to use or occupy
holdrooms, jetways and passenger boarding and deplaning space and any related
airport facilities used by each Company for its operations, including ticket
counter space, baggage claim and baggage makeup space, lounge space,
maintenance/hangar facilities, and administrative office space, in any airport
at which such Company conducts scheduled operations.

     

    “Governmental Entity” means any
government or political subdivision or department thereof, any governmental or
regulatory body, commission, board, bureau, agency or instrumentality, or any
court or arbitrator or alternative dispute resolution body, in each case whether
federal, state, local or foreign.

     

    “Hazardous Material” means any
substance, material or waste that is, or the Release of which 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 (PCBs), mold or any
radioactive substance.

     

    “HSR Act” means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations promulgated thereunder.

     

    “IBT CBAs” has the meaning
ascribed to it in Section 9.01(b).

     

    “Initial Approvals” has the
meaning ascribed to it in Section  7.02(g).

     

    “Intellectual Property” means
all material (i) trademarks, service marks, brand names, certification marks,
trade dress, domain names and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of the
foregoing, any extension, modification or renewal of any such registration, (ii)
patents, applications for patents (including divisions, continuations,
continuations in part and renewal applications), and any renewals, extensions or
reissues thereof, in any jurisdiction, (iii) Trade Secrets, (iv) copyright
rights, whether registered or not, and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof, and (v) any similar intellectual property or proprietary
rights.

     

    “Investment” has the meaning
set forth in the recitals hereto.

     

    “Investment Agreement and Bidding
Procedures Motion” means the motion, as amended from time to time, filed
by the Companies in the Bankruptcy Court seeking entry of the Investment
Agreement and Bidding Procedures Order.


    
      
         


      

      
        7

        
          

        

      

      
         


      

    

     

    “Investment Agreement and Bidding
Procedures Order” has the meaning set forth in the recitals.

     

    “Investment Price” has the
meaning set forth in Section 2.01 hereof.

     

    “Investor” has the meaning set
forth in the preamble hereto.

     

    “Investor Disclosure Schedules”
has the meaning set forth in Article 4.

     

    “IRC” means the Internal
Revenue Code of 1986, as amended from time to time.

     

    “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.

     

    “Knowledge” means the knowledge
of the executive officers listed on Schedule 1.01(b) after reasonable
inquiry.

     

    “Law” means any law, treaty,
statute, ordinance, code, principle of common law, rule or regulation of a
Governmental Entity or judgment, decree, order, writ, award, injunction or
determination of an arbitrator or court or other Governmental
Entity.

     

    “Lien” means any mortgage,
pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), charge, or preference, priority or other security interest
or preferential arrangement of any kind or nature whatsoever intended for
security (including any conditional sale or other title retention agreement, any
easement, right of way or other encumbrance on title to real property, and any
financing lease having substantially the same economic effect as any of the
foregoing).

     

    “Loan” has the meaning ascribed
to such term in the DIP Credit Agreement.

     

    “Lynx” has the meaning set
forth in the preamble hereto.

     

    “Material Adverse Effect” means
any event, change, circumstance, effect or other matter that has had or is
reasonably likely to have a material adverse effect on (a) the business,
operations, condition (financial or otherwise) or results of operations of the
Companies, taken as a whole, or (b) the ability of the Companies to consummate
the transactions contemplated by this Agreement; provided that none of the
following, either alone or in combination, shall constitute, or be considered in
determining whether there has been, a Material Adverse Effect: (i) the outbreak
or escalation of war or major hostilities or any act of terrorism, (ii) any
effect resulting from a pandemic or other public health risk, (iii) any effect
resulting from the announcement, pendency or consummation of the transactions
contemplated by this Agreement, (iv) any effect resulting from the designation
by the Investor of the Rejected Contracts or the assumption of other Contracts
not so designated, (v) changes in GAAP or the interpretation thereof, (vi)
changes that generally affect the commercial airline industry in the United
States, (vii) changes in financial markets or general economic conditions
(including prevailing interest rates, exchange rates, commodity prices and fuel
costs (except as otherwise provided herein), (viii) any failure, in and of
itself, of the Companies to meet any published or internally prepared
projections, budgets, plans or forecasts of revenues, earnings or other
financial performance measures or operating statistics (it being understood that
the facts and circumstances underlying any such failure that are not otherwise
excluded from the definition of a “Material Adverse Effect” may be considered in
determining whether there has been a Material Adverse Effect) or (ix) any action
taken or failed to be taken pursuant to or in accordance with this Agreement or
at the request of, or consented in writing to by, the Investor, except, in the
case of clauses (i), (ii), (vi) and (vii), to the extent such events, changes,
circumstances, effects or other matters have a materially disproportionate
effect on the Companies, taken as a whole, relative to other businesses engaged
in the commercial airline industry in the United States.


    
      
         


      

      
        8

        
          

        

      

      
         


      

    

     

    “Material Contract” has the
meaning ascribed to it in Section 3.22(a).

     

    “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 Company is a tenant, sub-tenant, permittee, licensee or
counterparty relating to major facilities required for a Company’s operations,
the loss of which would result in a Material Adverse Effect.

     

    “Multiemployer Plans” has the
meaning ascribed to it in Section 3.17(a).

     

    “Notice” has the meaning
ascribed to it in Section 5.03(b).

     

    “Outstanding Amount” means the
then-current balance of the outstanding principal, interest and other amounts
owed to the Investor in respect of its participation in the DIP Facility,
including all reasonable, actual and documented out-of-pocket expenses incurred
by the Investor in connection therewith to the extent such expenses have not
been advanced or reimbursed by the Companies.

     

    “Permits” has the meaning
ascribed to it in Section 3.06.

     

    “Person” means any individual,
corporation, company, association, partnership, limited liability company, joint
venture, trust, unincorporated organization or Governmental Entity.

     

    “Plan” means a plan of
reorganization substantially in the form attached to the Disclosure Statement or
otherwise consistent with the Term Sheet (including all plan supplements,
exhibits, schedules and plan documents) and in form and substance satisfactory
to the Investor in its sole discretion, subject to Section 6.06
hereof.

     

    “Policy” has the meaning
ascribed to it in Section 3.21.

     

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


    
      
         


      

      
        9

        
          

        

      

      
         


      

    

     

    “Proceeding” means any legal
actions, suits, proceedings, claims or disputes.

     

    “Real Estate” has the meaning
ascribed to it in Section 3.20(a).

     

    “Regulatory Approvals” means,
to the extent necessary in connection with the consummation of the transactions
contemplated by the Transaction Documents, any and all certificates, permits,
licenses, franchises, concessions, grants, consents, approvals, orders,
registrations, authorizations, waivers, exemptions, variances or clearances
from, or filings or registrations with, Governmental Entities (and shall not
include waiting periods under the HSR Act or otherwise imposed by
Law).

     

    “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.

     

    “Relevant Hearing” has the
meaning set forth in Section 6.06(a) hereof.

     

    “Representatives” means, with
respect to any Person, such Person’s officers, directors, employees, agents,
attorneys, accountants, consultants, equity financing partners or financial
advisors or other Person associated with, or acting on behalf of, such
Person.

     

    “Seabury” has the meaning set
forth in Section 3.03 hereof.

     

    “SEC” means the U.S. Securities
and Exchange Commission.

     

    “SEC Report” has the meaning
ascribed to it in Section 3.11(b).

     

    “Securities Act” means the U.S.
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.

     

    “Slots” mean each and every (i)
“slot” as defined in 14 CFR § 93.213(a)(2), as that section may be amended or
re-codified from time to time, including slots at Ronald Reagan Washington
National Airport; (ii) 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,
operating authorizations at New York LaGuardia Airport, as defined in the FAA’s
final order, Operating Limitations at New York LaGuardia Airport, Docket No. FAA
2006-25755-82 dated December 13, 2006, published in the Federal Register at 71
Fed. Reg. 77854 (Dec. 27, 2006)), as such order may be amended or re-codified
from time to time, and in any subsequent order or regulation issued by the FAA,
as such order may be amended or re-codified from time to time, (iii)
authorization granted by a Governmental Entity to conduct a landing or takeoff
during a specific hour or other period at any United States or foreign airport,
and (iv) slot exemption pursuant to 49 U.S.C. §§ 41716 and 41718, as such
statute may be amended or re-codified from time to time, including but not
limited to slot exemptions at New York LaGuardia Airport and Ronald Reagan
Washington National Airport, in each case of the Companies now held or hereafter
acquired (other than “slots” which prior to the date of this Agreement have been
permanently allocated to another air carrier and in which any of the Companies
holds temporary use rights).


    
      
         


      

      
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    “SOX Act” has the meaning
ascribed to it in Section 3.11(b).

     

    “Stand Alone Plan” means any
plan of reorganization or plan of liquidation for which the Investor or an
Affiliate of the Investor is not the sponsor, including without limitation any
such plan for which any of the Companies is the sponsor or there is no
sponsor.

     

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

     

    “Subsidiary” means as to any
Person, any other Person of which more than fifty percent (50%) of the shares of
the voting stock or other voting interests are owned or controlled, or the
ability to select or elect more than fifty percent (50%) of the directors or
similar managers is held, directly or indirectly, by such first Person or one or
more of its Subsidiaries.

     

    “Subsequent Reports” has the
meaning set forth in Section 6.02(a) hereof.

     

    “Successful Investor” means the
Person who makes the highest or otherwise best investment proposal, as
determined in accordance with the Investment Agreement and Bidding Procedures
Order.

     

    “Successful Proposal” means the
highest or otherwise best investment proposal, as determined in accordance with
the Investment Agreement and Bidding Procedures Order.

     

    “Superior Proposal” has the
meaning set forth in Section 5.03(b).

     

    “Tax” (and with correlative
meaning “Taxes” and
“Taxable”) means (1) any
foreign, federal, state or local income, gross receipts, capital, franchise,
import, goods and services, estimated, alternative minimum, add on minimum,
sales, use, transfer, real property gains, registration, value added, excise,
natural resources, severance, stamp, occupation, premium, windfall profit,
environmental, customs, duties, real property, personal property, capital stock,
social security, unemployment, disability, payroll, license, employee or other
withholding, or other tax, of any kind whatsoever, including any interest,
penalties or additions to tax or additional amounts in respect of the foregoing,
(2) any liability for the payment of any amounts of the type described in (1) as
a result of being a member of a consolidated, combined, unitary or aggregate
group for any Taxable period, and (3) any liability for the payment of any
amounts of the type described in (1) or (2) as a result of being a transferee or
successor to any person or as a result of any express or implied obligation to
indemnify any other person.

     

    “Tax Contests” has the meaning
set forth in Section 6.04 hereof.


    
      
         


      

      
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    “Tax Return” means any return,
declaration, report, claim for refund, information return or other document
(including any related or supporting schedule, statement or information) filed
or required to be filed with any taxing authority in connection with the
determination, assessment or collection of any Tax of any party or the
administration of any laws, regulations or administrative requirements relating
to any Tax.

     

    “Termination Fee” has the
meaning set forth in Section 8.02(b) hereof.

     

    “Term Sheet” means the Term
Sheet dated June 5, 2009, between the Companies and the Investor with respect to
a plan of reorganization.

     

    “Title 11” means Title 11 of
the United States Code, as amended and in effect from time to time.

     

    “Title 49” means Title 49 of
the United States Code, as amended and in effect from time to time, and the
regulations promulgated pursuant thereto.

     

    “Transaction Documents” means
this Agreement, the Term Sheet, the Plan, the Investment Agreement and Bidding
Procedures Order and the Confirmation Order.

     

    “Transaction Court Documents”
means the Disclosure Statement, the order approving the Disclosure Statement,
the Plan and the Confirmation Order.

     

    “Treasury Regulation” means the
regulation promulgated under the IRC.

     

    “TWU CBA” has the meaning
ascribed to it in Section 9.01(c).

     

    Section
1.02.  Other
Definitional and Interpretative Provisions.  The words
“hereof”, “herein” and “hereunder” and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  Unless otherwise specified, any
references to a party’s “judgment”, “satisfaction” or words of a similar import
shall mean in such party’s sole judgment.  The captions herein are
included for convenience of reference only and shall be ignored in the
construction or interpretation hereof.  References to Articles,
Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and
Schedules of this Agreement unless otherwise specified.  All Exhibits
and Schedules annexed hereto or referred to herein are hereby incorporated in
and made a part of this Agreement as if set forth in full herein.  Any
capitalized terms used in any Exhibit or Schedule but not otherwise defined
therein, shall have the meaning as defined in this Agreement.  Any
singular term in this Agreement shall be deemed to include the plural, and any
plural term the singular.  Whenever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation”, whether or not they are in fact followed by
those words or words of like import.  “Writing”, “written” and
comparable terms refer to printing, typing and other means of reproducing words
(including electronic media) in a visible form.  References to any
statute shall be deemed to refer to such statute as amended from time to time
and to any rules or regulations promulgated thereunder.  References
from or through any date mean, unless otherwise specified, from and including or
through and including, respectively.  References to “law”, “laws” or
to a particular statute or law shall be deemed also to include any
Law.


    
      
         


      

      
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    ARTICLE
2

    Issuance
And Purchase Of Common Shares

     

    Section
2.01.  Issuance and
Purchase of Common Shares.  Upon the terms and subject to the
conditions set forth in this Agreement, and in reliance upon the representations
and warranties hereinafter set forth, at the Closing, the reorganized Company
will issue, sell and deliver to the Investor, and the Investor will purchase
from the reorganized Company, 1,000 Common Shares, free and clear of all Liens,
other than Liens created by the Investor or permitted by the Investor, and
representing 100% of the total equity capital of the Company on a Fully Diluted
Basis for (i) an aggregate purchase price of One Hundred and Eight Million Seven
Hundred and Fifty Thousand Dollars ($108,750,000) (the “Investment Price”) and (ii)
the relinquishment by the Investor and any of its Affiliates of all rights under
the Plan to any distribution on account of the Investor’s or any of its
Affiliates’ Allowed General Unsecured Claims (as such term is defined in the
Plan) (the “Republic
Distribution”), it being understand that the Republic Distribution shall
be payable to the holders of Allowed General Unsecured Claims, other than the
Investor and its Affiliates, on a pro rata basis.

     

    Section
2.02.  Closing.  (a) Subject to the
satisfaction or, if permissible, waiver of the conditions set forth in Sections
‎7.01, ‎7.02 and ‎7.03 hereof, the
Closing shall take place at the offices of Fulbright & Jaworski L.L.P., 666
Fifth Avenue, New York, New York, at 10:00 a.m., New York City time, on the
third (3rd) Business Day following satisfaction or, if permissible, waiver, of
such conditions (other than those conditions that by their nature are to be
satisfied by actions to be taken at the Closing, but subject to the satisfaction
or waiver of such conditions), or at such other time and place as the parties
may agree (the date on which the Closing occurs, the “Closing Date”); provided that
the Investor and the Company shall use all commercially reasonable efforts to
have the Closing take place on the Effective Date.

     

    
      
        
          
            (b)        At
the Closing, (i) the reorganized Company shall deliver to the Investor
certificates representing the Common Shares to be purchased by, and sold to, the
Investor pursuant to ‎Section 2.01
hereof (registered in the names and in the denominations designated by the
Investor at least two (2) Business Days prior to the Closing Date), together
with the other documents, certificates and opinions to be delivered pursuant to
‎Section 7.01
and ‎Section
7.02 hereof, and (ii) the Investor, in full payment for the Common Shares to be
purchased by, and sold to, the Investor pursuant to ‎Section 2.01
hereof, shall pay to the reorganized Company as provided in ‎Section 2.01
hereof, an aggregate amount equal to the Investment Price provided that the
Investor may, in its sole discretion, credit all or any portion of the
Outstanding Amount against the Investment Price, and shall deliver the
certificate required pursuant to ‎Section 7.03(a)
hereof.  The Investor shall make payment hereunder in immediately
available funds by wire transfer to the account or accounts designated by the
Company, or by such other means as may be agreed between the parties hereto (and
by the Creditors’ Committee, in the case of the payment described in Section
5.12 hereof).  The Company shall make any payment due hereunder in
immediately available funds by wire transfer to the account designated by the
Investor, or by such other means as may be agreed between the parties
hereto.

             

          

        

      

    

    
      
         


      

      
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    ARTICLE
3

    Representations
And Warranties Of The Companies

     

    Except as
set forth in the Company Disclosure Schedules attached hereto as Exhibit B,
the Companies hereby represent and warrant to, and agree with, the Investor as
follows:

     

    Section
3.01.  Bankruptcy
Court Orders.  The Companies shall have complied with the terms
of all orders of the Bankruptcy Court in respect of the Investment, this
Agreement and the Investment Agreement and Bidding Procedures Order upon and
after the entry of any such order, except to the extent that any such failure to
comply is not material to the Investor (or to the Creditors’ Committee, in the
case of the payment described in Section 5.12 hereof).

     

    Section
3.02.  Capitalization;
Securities.  (a) Upon the Closing and after giving effect to
the Confirmation Order, the Plan and the Investment, the authorized capital
stock of the reorganized Company shall consist solely of Common
Shares.  Upon the Closing (after giving effect to the Confirmation
Order, the Plan and the Investment), 1,000 Common Shares, representing 100% of
the total equity capital of the Company on a Fully Diluted Basis, shall be
issued to the Investor.  Upon the Closing Date, all of such Common
Shares to be issued and delivered to the Investor pursuant to the terms hereof
shall have been duly authorized and validly issued, fully paid, nonassessable
and not subject to preemptive or similar rights of third
parties.  Upon the Closing and after giving effect to the Confirmation
Order and the Plan, (i) there shall be no voting trusts, voting agreements,
proxies, first refusal rights, first offer rights, co-sale rights, options,
transfer restrictions or other agreements, instruments or understandings
(whether oral, formal or informal) with respect to the voting, transfer or
disposition of capital stock of the Company or any Subsidiary to which the
Company or any Subsidiary is a party or by which it is bound, or, to the
Knowledge of the Company, among or between any Persons other than the Company or
any Subsidiary (as the case may be), except as set forth in this Agreement, and
(ii) there shall be no options, warrants, stock appreciation rights, restricted
stock units, calls, commitments or agreements of any character to which the
Company or any Subsidiary is a party, or by which the Company or any Subsidiary
is bound, calling for the issuance of shares of capital stock or other Equity
Securities of the Company or any Subsidiary or for settlement in cash based upon
the value of any such Equity Securities, or other arrangement to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
is bound to acquire, at any time or under any circumstance, capital stock of the
Company or any Subsidiary or any such Equity Securities.  The rights,
preferences and privileges of the capital stock of the Company shall be as set
forth in the Certificate of Incorporation of the Company, as amended pursuant to
the Plan and in effect upon the Closing, in the form approved by the
Investor.


    
      
         


      

      
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    Section
3.03.  Financial
Advisors and Brokers.  Except for Seabury Securities LLC and/or
its Affiliates (“Seabury”), or as otherwise set
forth on Schedule ‎3.03(a) hereto, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor of any of the Companies in connection with the Transaction Documents or
the transactions contemplated thereby, and except for Seabury and any Person
listed on Schedule ‎3.03(a), no Person
acting for or on behalf of any of the Companies is entitled to receive any
broker’s, finder’s or similar fee or commission in respect thereof based in any
way on any agreement, arrangement or understanding made by or on behalf of any
of the Companies; provided that “financial
advisors” shall not include any tax, accounting or other similar providers of
financial services to the Companies listed on Schedule 3.03(b).  True
and correct copies of the Company’s agreement with Seabury and all agreements
between any of the Companies, on the one hand, and each Person listed on
Schedule ‎3.03(a) (or any of
their respective Affiliates), on the other, have been delivered to the
Investor.

     

    Section
3.04.  Controls.  Each
of the Companies maintains internal information systems, cash management systems
and other controls sufficient to provide reasonable assurance that material
transactions are executed in accordance with management’s general or specific
authorizations and are recorded in a manner that permits the preparation of
financial statements in accordance with GAAP.

     

    Section
3.05.  Aircraft.  (a)
Schedule ‎3.05(a) hereto
sets forth a list of all aircraft and aircraft engines owned or leased by any of
the Companies as of the date hereof (the “Company Aircraft”), including
a description of the type, aircraft number or engine number, as the case may be,
of each such Company Aircraft and the date the Company or any of its
Subsidiaries placed such Company Aircraft in service or proposes to place such
Company Aircraft in service, which list is true and complete in all material
respects.  All Company Aircraft and spare parts and other assets and
properties that are used by any of the Companies in the conduct of its business
are being maintained in all material respects according to applicable FAA
regulatory standards and the FAA-approved maintenance program of the respective
Companies.  The Companies have implemented maintenance schedules with
respect to their respective Company Aircraft and such spare parts and other
relevant assets that, if complied with, would result in the satisfaction, in all
material respects, of all requirements under all applicable FARs and
airworthiness directives of the FAA, DOT or any other Governmental Entity
required to be complied with in accordance with the FAA-approved maintenance
program of the Companies, and the Companies are in compliance with such
maintenance schedules in all material respects and there is no reason to believe
that they will not satisfy any component of such maintenance schedules on or
prior to the dates specified in such maintenance schedules.

     

    (b)        Each
Company Aircraft has a validly issued, current individual aircraft FAA
Certificate of Airworthiness with respect to such Company Aircraft which
satisfies all requirements for the effectiveness of such FAA Certificate of
Airworthiness.

     

    (c)        Each
Company Aircraft is properly registered on the FAA aircraft
registry.

     

    (d)        None
of the Companies is a party to any interchange or pooling agreements with
respect to its respective Company Aircraft, spare parts, rotables or expendables
that would have an  adverse effect on its creditworthiness or its
ability to operate its business.


    
      
         


      

      
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    (e)        No
Company Aircraft is subleased to or otherwise in the possession of another air
carrier or other Person, other than the Company or any of its Subsidiaries, to
operate such Company Aircraft in air transportation or otherwise.

     

    Section
3.06.  Certificated
Air Carrier.  Each Air Carrier is a Certificated Air Carrier
and possesses all necessary certificates, franchises, licenses, permits, rights,
designations, authorizations, exemptions, concessions, approvals, frequencies,
Slots, 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 that term is defined in Section
40102(a)(15) of Title 49 or successor statute.  Neither the DOT nor
FAA nor any other Governmental Entity has taken any action or to such Air
Carrier’s Knowledge, proposed or 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. Except as set forth in Schedule 3.06,
no written notices of violations of the FARs or of DOT rules, regulations or
requirements have been issued and are pending.

     

    Section
3.07.  Slots and
Gate Interests.  The Companies hold each of the Slots and each
of the Gate Interests pursuant to authority granted by the FAA, other applicable
Governmental Entity or Airport Authority and are in compliance in all material
respects with all of the terms, conditions, and limitations of each rule,
regulation, or requirement of the FAA, DOT, any other applicable Governmental
Entity or Airport Authority applicable thereto and with all applicable
provisions of law, and with respect to Slots, including but not limited to the
applicable Slot use limitations imposed from time to time by statute, regulation
or order, except in each case where non-compliance would not be reasonably
likely to impair the right to hold and use each such Slot or Gate Interest
pursuant to and for the full term of the corresponding authorization or
agreement as such exists on the date hereof.  Subject to any
transfers, exchanges or other dispositions permitted by this Agreement and the
DIP Credit Agreement, the Companies are utilizing or causing to be utilized the
Slots and Gate Interests in all material respects to the extent required to
maintain such rights to each such Slot and Gate Interest by the applicable
Governmental Entity 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 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 its right to hold and use any of the 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 its right to hold and use any such
Slot.  Each Company’s Slots are listed on Schedule
3.07.  Each Company’s Gate Interests are listed on Schedule
3.07.

     

    Section
3.08.  Foreign
Corrupt Practices Act.  Except for such matters as would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect:


    
      
         


      

      
        16

        
          

        

      

      
         


      

    

     

    (a)        The
Companies have developed and implemented a compliance program which includes
corporate policies and procedures that provide reasonable assurance of
compliance with the Foreign Corrupt Practices Act, as amended (the “Foreign Corrupt Practices
Act”).

     

    (b)        In
connection with its compliance with the Foreign Corrupt Practices Act, there are
no adverse or negative past performance evaluations or ratings by the U.S.
Government, or any voluntary disclosures under the Foreign Corrupt Practices
Act, any enforcement actions or threats of enforcement actions, or any facts to
the Knowledge of the Companies that, in each case, could result in any adverse
or negative performance evaluation related to the Foreign Corrupt Practices
Act.

     

    (c)        Neither
the U.S. Government nor any other Person has notified any of the Companies in
writing of any actual or alleged violation or breach of the Foreign Corrupt
Practices Act.

     

    (d)        None
of the Companies has undergone and is undergoing any audit, review, inspection,
investigation, survey or examination of records relating to any of the
Companies’ compliance with the Foreign Corrupt Practice Act, and, to the
Company’s Knowledge, there is no basis for any such audit, review, inspection,
investigation, survey or examination of records.

     

    (e)        The
Companies have not been and are not now under any administrative, civil or
criminal investigation, charge or indictment involving alleged false statements,
false claims or other improprieties relating to any of the Companies’ compliance
with the Foreign Corrupt Practices Act, nor, to the Company’s Knowledge, is
there any basis for any such investigation or indictment.

     

    Section
3.09.  Corporate
Existence; Compliance with Law.  Each Company (a) is a
corporation duly organized, validly existing and in good standing under the Laws
of its respective jurisdiction of incorporation set forth in Schedule ‎3.09; (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 would 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, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect; (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 Entities having jurisdiction, to the
extent required for such ownership, operation and conduct, except where the
failure to do so would not reasonably be expected to have a Material Adverse
Effect, and, except as would not reasonably be expected to have a Material
Adverse Effect, all such licenses, permits, consents or approvals and filings
are in full force and effect; (e) is in compliance with its charter and bylaws;
and (f) subject to the 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 would not reasonably be expected to have a
Material Adverse Effect.  As of the date hereof, each of the Companies
has made available (including by filing publicly by EDGAR with the SEC) to the
Investor a complete and correct copy of the certificates of incorporation and
the bylaws of the Companies, each as amended to date and each of which as made
available is in full force and effect.


    
      
         


      

      
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      Section
3.10.  Corporate
Power, Authorization, Enforceable Obligations. Subject to the entry of
the Confirmation Order and except as contemplated by and provided for under the
Bankruptcy Code, the execution, delivery and performance by each Company of the
Transaction Documents to which it is a party: (a) are within such Person’s
power; (b) have been duly authorized by all necessary corporate action; (c) do
not contravene any provision of such Person’s certificate of incorporation or
bylaws; (d) do not violate any Law; (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 Contract; (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, or
for the benefit, of the Investor, its successors and assigns or another
Successful Investor; (g) do not give rise to any preemptive rights, rights of
first refusal or other similar rights on behalf of any Person under any
applicable Law or any provision of any certificate of incorporation or bylaws or
any agreement or instrument applicable to any of the Companies; and (h) do not
require an Approval of any Governmental Entity or any other Person, except those
referred to on Schedule ‎3.10 and except,
in the case of each of clauses ‎(d) through ‎(h), as would not
reasonably be expected to have a Material Adverse Effect.  Each of the
Transaction Documents to which any of the Companies is a party shall be duly
executed and delivered by such company and each such Transaction Document shall,
when so executed, constitute a legal, valid and binding obligation of such
company enforceable against it in accordance with its terms.

       

    

    Section
3.11.  Financial
Statements and Reports. (a) The audited consolidated balance sheets at
March 31, 2009, March 31, 2008 and March 31, 2007 of the Companies 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 (the “Financial Statements”) have
been delivered (including by filing publicly by EDGAR with the SEC) on or prior
to the date hereof, 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 Companies and their Subsidiaries as
at the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended.


    
      
         


      

      
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    (b)        The
Company (or, where applicable, Frontier Airlines) has made available (including
by filing publicly by EDGAR with the SEC) to the Investor a true and complete
copy of (i) the Annual Report on Form 10-K of the Company (or, where applicable,
Frontier Airlines) for each of the fiscal years ended March 31, 2009, 2008 and
2007; (ii) the Quarterly Report on Form 10-Q of the Company (or, where
applicable, Frontier Airlines) for each of the periods ended June 30, 2008 and
2007, September 30, 2008 and 2007 and December 31, 2008 and 2007; and (iii) each
registration statement, report on Form 8-K, proxy statement, information
statement or other report or statement required to be filed by the Company (or,
where applicable, Frontier Airlines) with the SEC since March 31, 2006 in each
case, in the form (including exhibits and any amendments thereto) filed with the
SEC (collectively, the “SEC
Reports”).  As of their respective dates, the SEC Reports (i)
were timely filed with the SEC; (ii) complied, in all material respects, with
the applicable requirements of the Exchange Act and the Securities Act; and
(iii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  The SEC Reports included or will include all
certificates required to be included therein pursuant to Sections 302 and 906 of
the Sarbanes-Oxley Act of 2002, as amended (the “SOX Act”), and the internal
control report and attestation of the Company’s outside auditors required by
Section 404 of the SOX Act. As of the date of this Agreement, other than the SEC
Reports, none of the Companies has filed or been required to file any other
reports or statements with the SEC since March 31, 2006.

     

    Section
3.12.  Absence of
Certain Changes or Events.  As of the date of this Agreement,
since March 31, 2009, except for the transactions contemplated by the
Transaction Documents or as otherwise disclosed in the SEC Reports or this
Agreement, the Companies, taken as a whole, have in all material respects
conducted their respective businesses in the ordinary course of
business.

     

    Section
3.13.  Ownership of
Property; Real Estate; Liens.  (a) Each Company warrants that
it has good, marketable, legal and valid title to, or legal and valid leasehold
interests in, all of its personal property that is material to the conduct of
its business.  Except as would not reasonably be expected to have a
Material Adverse Effect, no portion of any such personal property, nor any
leased Real Estate has suffered any damage by fire or other casualty loss which
has not heretofore been substantially repaired and restored to its original
condition (ordinary wear and tear excepted).  Except as would not
reasonably be expected to have a Material Adverse Effect, none of the material
properties and assets of any of the Companies is subject to any Liens other than
the Liens contemplated by the Transaction Documents.

     

    (b)        No Company owns any Real
Estate.  As of the date of this Agreement, the leases and other
agreements listed in Schedule 3.13 constitute all of the Material Real Estate
Contracts.  Each Company has valid and enforceable leasehold interests
in all of the real estate leased pursuant to the Material Real Estate Contracts,
excluding any leased Real Estate that is occupied on a month-to-month or
“at-will” basis or which has expired by its terms after the date
hereof.  True, correct and complete copies of all Material Real Estate
Contracts have been delivered or made available to the Investor.  No
Company has received any notice of any, nor to the Knowledge of any of the
Companies, is there any pending, threatened or contemplated, condemnation or
eminent domain proceeding affecting any leased Real Estate or any part thereof
or denial of access to any such leased real property from any current point of
public access, or of any sale or other disposition of any such leased Real
Estate or any part thereof in lieu of condemnation.


    
      
         


      

      
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    Section
3.14.  Labor
Matters.  (a) Except as set forth on Schedule ‎3.14(a), none of
the Companies is a party to or bound by any labor agreement or collective
bargaining agreement respecting the employees in or relating to its
business.  Except as set forth on Schedule ‎3.14(a), none of
the Companies has received any written notification of any efforts to organize
employees in respect of any labor or union organization in or relating to its
business.  Except as set forth in Schedule ‎3.14(a), there is
no unfair labor practice or similar charge or complaint against any of the
Companies relating to its business pending, or to the Knowledge of any of the
Companies, threatened.  Each of the Companies is in compliance in all
respects with all applicable Laws respecting employment practices, term and
conditions of employment, collective bargaining agreements and wages and hours
and is not engaged in any unfair labor practice, except where non-compliance
would not reasonably be expected to result in a Material Adverse
Effect.

     

    (b)        Except
as set forth in Schedule ‎3.14(b), neither
the execution and delivery of the Transaction Documents nor the consummation of
the transactions contemplated thereby will result in the breach of, constitute a
default or a change in control under, or otherwise provide any Person with a
right to terminate, rescind, amend, renegotiate or be released from any labor
agreement or collective bargaining agreement, or any provisions thereof, to
which any of the Companies is a party.

     

    (c)        There
is no strike, work stoppage, lockout or material labor dispute, or to the
Knowledge of any of the Companies, threat thereof by or with respect to any
employee of the Companies, except those that would not reasonably be expected to
have a Material Adverse Effect.

     

    Section
3.15.  Ventures,
Subsidiaries and Affiliates; Outstanding Equity Securities and
Indebtedness.  Except as set forth in Schedule ‎3.15, none of the
Companies 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 Common Stock of each of the Companies (other than the Company)
is owned by each of the Stockholders, fully paid and non-assessable and in the
amounts set forth in Schedule ‎3.15.  All
outstanding indebtedness of each Company is listed on Schedule ‎3.15.  Other
than as set forth on Schedule ‎3.15, as of the
date hereof, none of the Companies is obligated, pursuant to any agreement or
instrument applicable to such Company, to purchase any Equity Securities of, or
make any other equity investment in, any Person.

     

    Section
3.16.  Taxes.

     

    (a)        Except
as disclosed in Schedule 3.16(a), the Companies have duly and timely filed with
the appropriate taxing authorities all income Tax Returns and all other material
Tax Returns that were required to be filed by them.  All such Tax
Returns were true, correct and complete in all material respects and have been
completed in accordance with applicable Law.  Except as disclosed in
Schedule 3.16(a), the Companies have timely paid all income Taxes and all other
material Taxes required to be paid by them (whether or not shown on any Tax
Return), other than in those instances in which such Taxes are being contested
in good faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with GAAP in respect of all
such Taxes in the most recent Financial Statements.  The reserves for
Taxes provided in the Books and Records of the Companies have been determined in
accordance with GAAP and will be sufficient for all Taxes of the Companies with
respect to any period for which Tax Returns have not yet been filed or for Taxes
not yet due and owing for any Tax period or portion thereof through and
including the Closing Date.  Except as disclosed in Schedule 3.16(a),
there is no material Tax liability proposed in writing by any taxing authority
for which there is not an adequate reserve in accordance with GAAP in the most
recent Financial Statements.


    
      
         


      

      
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    (b)        Except
as disclosed in Schedule 3.16(b) hereto and other than in connection with any
leases, no audits or investigations relating to any Taxes for which any of the
Companies may be liable are pending or threatened in writing by any taxing
authority.  Except as disclosed in Schedule 3.16(b) hereto, there are
no agreements or applications by any of the Companies for the extension of the
time for filing any federal income Tax Return or other material Tax Return or
paying any federal income Tax or any other material Tax nor have there been any
extensions or waivers of any statutes of limitation for the assessment of any
federal income Taxes or other material Taxes.

     

    (c)        Except
as disclosed in Schedule 3.16(c), to the Knowledge of the Companies after due
inquiry, none of the Companies (i) has an agreement or arrangement with any
person or entity pursuant to which any of the Companies would have a material
obligation with respect to Taxes of another person or entity following the
Closing, (ii) has any material liability for the Taxes of any third party under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign law) as a transferee or successor, by contract or otherwise (other
than entities for which the Company is or was the common parent), (iii) has been
a member of an affiliated group of corporations within the meaning of Section
1504 of the IRC (other than a group the common parent of which is the Company),
and (iv) has filed or been included in a combined, consolidated or unitary
income Tax Return (except for the group of which the Company is the
parent).

     

    (d)        The
Companies have withheld and timely paid all Taxes required to have been withheld
and paid in connection with any amounts paid or owing to, or any options issued
to, any employee, independent contractor, creditor, stockholder, or other third
party.

     

    (e)        No
jurisdiction in which any of the Companies does not file a Tax Return (i) has
asserted in writing that such entity is or may be subject to Tax in that
jurisdiction (including any liability for any Taxes on a “nexus” basis) or (ii)
has sent notices or written communications of any kind requesting information
relating to such entity’s nexus with such jurisdiction.

     

    (f)        None
of Companies has agreed, or will be required, to make any adjustment for any
period after the date of this Agreement pursuant to Section 481(a) of the IRC by
reason of any change in any accounting method made prior to the date
hereof.  There is no application pending with any Governmental Entity
requesting permission for any such change in any accounting method of any of the
Companies, and the Internal Revenue Service has not issued in writing any
pending proposal regarding any such adjustment or change in accounting
method.

     

    (g)        Except
as disclosed in Schedule 3.16(g), none of the Companies owns a single member
limited liability company which is treated as a disregarded entity, is a
stockholder of a “controlled foreign corporation” as defined in Section 957 of
the IRC, or is a stockholder of a “passive foreign investment company” as
defined in Section 1296 of the IRC.


    
      
         


      

      
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    (h)        None
of the Companies has invested in any entity or entered into any arrangement that
is a “tax shelter” within the meaning of Section 6662(d)(2)(C) of the
IRC.  None of the Companies has been a participant in or material
advisor to any transaction that is a “listed transaction” as defined by Treasury
Regulations Section 1.6011-4.

     

    (i)        Except
as disclosed in Schedule 3.16(i) none of the Companies will be required to
include any item of income in, or exclude any item of deduction from, taxable
income for any period (or any portion thereof) ending after the Closing Date as
a result of any deferred intercompany gain or any excess loss account described
in Treasury Regulations under Section 1502 of the IRC (or any corresponding
provision of state, local or foreign Tax law) or closing agreement as described
in Section 7121 of the IRC (or any corresponding or similar provision of state,
local or foreign Tax law) executed on or prior to the Closing
Date.  None of the Companies will be required to include in taxable
income for any period (or any portion thereof) ending after the Closing Date any
material amount of income as a result of any installment sale or other open
transaction disposition made on or prior to the Closing Date or prepaid amount
received on or prior to the Closing Date.

     

    (j)        
None of the assets of any of the Companies directly or indirectly secures any
debt the interest on which is tax-exempt under Section 103(a) of the
IRC.

     

    (k)        Except
as disclosed in Schedule 3.16(k) none of the Companies (i) is a party to a lease
that is treated as a “Section 467 rental agreement” within the meaning of
Section 467(d) of the IRC, (ii) has ever participated in an international
boycott as defined in Section 999 of the IRC, or (iii) is a party to a gain
recognition agreement under Section 367 of the IRC.

     

    (l)        
None of the Companies has distributed to its shareholders or security holders
stock or securities of a controlled corporation, nor has stock or securities of
any of the Companies been distributed, in a transaction to which Section 355 of
the IRC applies in the five (5) years prior to the date of this
Agreement.

     

    (m)       The
Companies have made available to the Investor complete copies of (A) all
material Tax Returns of the Companies relating to Taxable periods ending on or
after March 31, 2004 and (B) any audit reports, examination reports and
statements of deficiencies issued within the last three years relating to any
material amount of Tax due from or with respect to the Companies, its income,
assets or operations.


    
      
         


      

      
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    Section
3.17.  ERISA.
(a) Schedule ‎3.17(a) lists each
Employee Plan.  “Employee Plan” means any
employee benefit plan (within the meaning of Section 3(3) of ERISA, whether or
not subject to ERISA) and any other employment, bonus, incentive, deferred
compensation, stock option or other equity based, severance, termination, change
in control, fringe benefit or other compensatory arrangement, agreement, plan,
program or policy maintained, sponsored or contributed to by any of the
Companies or by any trade or business, whether or not incorporated, that
together with any of the Companies would be deemed a “single employer” under
Section 414 of the IRC (an “ERISA Affiliate”) or to which
any such Person is or has been obligated to contribute or, with respect to which
any such Person has, or may have, any liability or obligation.  Except
as identified on Schedule ‎3.17(a) hereto,
none of the Companies is or, within the preceding six (6) years, has been
obligated to contribute to or has or had any liability, direct or indirect,
under or with respect to, (1) any “multiemployer plan” as defined in Section
3(37) of ERISA (all such identified plans being the “Multiemployer Plans”), or (2)
any single employer defined benefit pension plan (within the meaning of Section
3(2) of ERISA) that is or was subject to Title IV of ERISA.  Except as
set forth on Schedule ‎3.17(a), none of
the Companies has an express or implied commitment (1) to create or incur
liability with respect to or cause to exist any new employee benefit plan,
program, agreement or arrangement other than the Employee Plans or (2) except
for amendments necessary to comply with applicable Law, to modify, change or
terminate any Employee Plan. The Company has furnished to Investor true and
complete copies of the governing documents for each Employee Plan and a copy of
the current employee handbook(s) provided to employees of the Company and its
Subsidiaries and, where applicable with respect to an Employee Plan, true and
complete copies of the most recent summary plan description(s), the two most
recent Form 5500 filings, the two most recent actuarial valuation reports, the
two most recent Forms PBGC-1, and any material filings, correspondence or other
communication with, to or from any Person, including, without limitation, the
plan actuaries or other consultants, the Internal Revenue Service, the Pension
Benefit Guaranty Corporation or the Department of Labor. For purposes of the
preceding sentence, any filing, correspondence or communication relating to a
plan’s funded status shall be deemed to be material.

     

    (b)        Except
as set forth in Schedule ‎3.17(b), neither
the execution and delivery of the Transaction Documents nor the consummation of
the transactions contemplated thereby will accelerate the time of payment,
vesting or funding of, or increase or modify the amount or terms of, any
compensation or benefits that are or may become payable from or by any of the
Companies to or in respect of any current or former executive officer or other
key employee of any such Person.

     

    (c)        All
employer and employee contributions, and material premiums and expenses due and
payable to or in respect of any Employee Plan or required by Law or any Employee
Plan or labor agreement or arrangement have been timely paid, or, if not yet
due, have been fully and adequately accrued as a liability on the Company’s most
recent financial statements included in the SEC Reports in accordance with
applicable Law.


    
      
         


      

      
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    (d)        Except
as set forth on Schedule ‎3.17(d), (i) no
trade or business, whether or not incorporated, is or has been treated as a
single employer together with the Companies for any purpose under ERISA or
Section 414 of the IRC other than the Company’s Subsidiaries, (ii) no liability
under Sections 406, 409, 502(i), 502(l) or Part 6 of Title I, of ERISA or the
penalty or excise tax provisions of the IRC relating to employee benefit plans
or employee compensation has been incurred (directly or indirectly, including as
a result of any indemnification obligation or agreement) by any of the Companies
and is still outstanding, and no event, transaction or condition has occurred or
exists which could reasonably be expected to result in any such liability, and
(iii) no reportable event, within the meaning of Section 4043 of ERISA and the
regulations of the PBGC promulgated thereunder (other than a reportable event as
to which notice is waived) has occurred, or could be reasonably expected to
occur, in connection with the consummation of the transactions contemplated by
the Transaction Documents or otherwise, with respect to any Employee
Plan.  As of the Closing, the Company’s employee stock ownership plan
will not hold any Common Shares or other equity securities of the
Company.  No claims (other than routine claims for benefits) have been
made or, to the Knowledge of the Company, threatened against the Company or any
of its Affiliates or any other persons in connection with the acquisition and/or
holding of such Common Shares or other equity securities under the employee
stock ownership plan.

     

    (e)        Each
Employee Plan has been operated and administered in all material respects in
compliance both with its terms and with all applicable Laws.  Each
Employee Plan that is intended to qualify under Section 401(a) of the IRC has
received a favorable determination from the Internal Revenue Service as to its
qualification or an initial application for a determination letter is pending
with the Internal Revenue Service and, to the Knowledge of the Company or any
Subsidiary, no event or condition has occurred or exists since the date of such
letter that could reasonably be expected to have an adverse effect on the
qualified status of such Employee Plan.  Each Employee Plan may be
unilaterally amended or terminated by the sponsoring employer without penalty
under the terms of such Employee Plan or under ERISA, subject to approval by the
Bankruptcy Court during the pendency of the Cases and the terms of Frontier
Airlines’ collective bargaining agreements referred to in Section 9.01 of this
Agreement.

     

    (f)        No
liability under Title IV of ERISA has been incurred with respect to any Employee
Plan that has not been satisfied in full, and, with respect to any Multiemployer
Plan, no condition exists that presents a material risk to any of the Companies
or any ERISA Affiliate of incurring a liability under such
Title.  Except for Multiemployer Plans, no Employee Plan is subject to
Section 412, 430, 431 or 432 of the IRC or Title IV or Section 302, 303, 304 or
305 of ERISA.  No Multiemployer Plan has incurred an accumulated
funding deficiency, whether or not waived. None of the assets of any of the
Companies or any ERISA Affiliate are subject to any lien arising under ERISA or
Subchapter D of Chapter 1 of the IRC, and no condition exists that presents a
material risk of any such lien arising.

     

    (g)        With
respect to any Multiemployer Plan, (i) as of the date of this Agreement, neither
any of the Companies 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 complete or partial withdrawal other than in
connection with the commencement of the Cases, (iii) neither any of the
Companies nor any ERISA Affiliate has any contingent liability under Section
4204 of ERISA, and, to the Knowledge of the Company, 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 the Closing
Date, neither any of the Companies nor any ERISA Affiliate would or may be
reasonably expected to incur withdrawal liability in excess of $1,000,000 in the
aggregate if a complete withdrawal by the Companies and the ERISA Affiliates
occurred under each Multiemployer Plan as of such date, and (v) as of the
Closing Date, neither any of the Companies nor any ERISA Affiliates will have
incurred withdrawal liability that, together with withdrawal liability incurred
with respect to all other Multiemployer Plans, exceeds $1,000,000 in the
aggregate.  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.

     

    
      
         


      

      
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    (h)        No
payment or benefit paid or provided, or to be paid or provided, to current or
former employees, directors or other service providers of or to any of the
Companies (including, without limitation, pursuant to, or in connection with,
any of the Transaction Documents or any of the transactions contemplated
thereby) will fail to be deductible for federal income tax by reason of Section
280G of the IRC.

     

    (i)        Except
as disclosed on Schedule ‎3.17(i), no
Employee Plan provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or former employees,
directors or other service providers after retirement or other termination of
service (other than (i) coverage mandated by applicable Law, (ii) death benefits
or retirement benefits under any funded “employee pension benefit plan” (as
defined in Section 3(2) of ERISA) that is intended to be a qualified plan within
the meaning of Section 401(a) of the Code, or (iii) deferred compensation
benefits accrued as liabilities in the Company’s most recent financial
statements).  Except as disclosed on Schedule ‎3.17(i), no
Employee Plan is funded through a “welfare benefit fund” as defined in Section
419 of the IRC.  Each Employee Plan that is intended to satisfy the
requirements of Section 501(c)(9) of the Code satisfies such requirements in all
material respects.

     

    (j)        There
are no material claims pending, or, to the Knowledge of any of the Companies,
threatened or anticipated (other than routine claims for benefits) against or
involving any Employee Plan, the assets of any Employee Plan or against any of
the Companies or any ERISA Affiliate with respect to any Employee
Plan.

     

    Section
3.18.  No
Litigation.  As of the date hereof, other than the Cases and
proofs of claim filed in the Cases, no action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the Knowledge of any of the
Companies, threatened against any of the Companies, before any Governmental
Entity or before any arbitrator or panel of arbitrators (collectively, “Litigation”) that,
individually or in the aggregate, (a) challenges any of the Companies’ right or
power to enter into or perform any of its obligations under the Transaction
Documents to which it is a party, or the validity or enforceability of any
Transaction Document or any action taken thereunder or (b) is reasonably likely
to have a Material Adverse Effect.

     

    Section
3.19.  Intellectual
Property.  (a) Except as set forth in Schedule ‎3.19, each Company
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. To the Knowledge of any of the Companies, each Company 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 Schedule ‎3.19, no Company
is aware of any infringement claim by any other Person with respect to any
Intellectual Property.


    
      
         


      

      
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    (b)        Except
as could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect:

     

    (i)       
With respect to each material agreement, permit, consent, order and franchise
relating to the license, development, use or disclosure of any Intellectual
Property to which any of the Companies, now or hereafter, is a party or a
beneficiary (collectively, the “IP Agreements”): (A) such IP
Agreement is valid and binding and in full force and effect; (B) such IP
Agreement will not cease to be valid and binding and in full force and effect on
terms identical to those currently in effect as a result of the rights and
interest granted herein, nor will the grant of such rights and interest
constitute a breach or default under such IP Agreement or otherwise give any
party thereto a right to terminate such IP Agreement; (C) none of the Companies
has received any notice of termination, cancellation or received any notice of a
breach or default under such IP Agreement; (D) none of the Companies has granted
to any other third party any rights, adverse or otherwise, under such IP
Agreement; and (E) none of the Companies and, to the Knowledge of any of the
Companies, no other party to such IP Agreement, is in breach or default thereof,
and, to the Knowledge of any of the Companies, no event has occurred that, with
notice or lapse of time or both, would constitute such a breach or default or
permit termination, modification or acceleration under such IP
Agreement.

     

    (ii)       
The Companies have taken reasonable measures to protect the confidentiality of
all trade secrets and confidential information and know-how, including
confidential processes, schematics, business methods, formulae, drawings,
prototypes, models, designs, customer lists and supplier lists (collectively,
“Trade Secrets”), that
are owned, used or held by the Companies and, to the Knowledge of any of the
Companies, such Trade Secrets have not been used, disclosed to or discovered by
any Person except pursuant to valid and appropriate non-disclosure and/or
license agreements which have not been breached.

     

    (iii)       The
IT Assets of the Companies operate and perform in accordance with their
documentation and functional specifications and otherwise as required by the
Companies for the operation of their respective businesses.  To the
Knowledge of any of the Companies, no Person has gained unauthorized access to
such IT Assets.  The Companies have implemented and maintained for the
three (3) year period immediately preceding the date of this Agreement
reasonable and sufficient backup and disaster recovery technology consistent
with industry practices.


    
      
         


      

      
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      Section
3.20.  Environmental
Matters.  (a) Except as set forth in Schedule ‎3.20 or for any
matter for which notice has been given under ‎Section 9.04, and
except for any matter that would not reasonably be expected to result in a
Material Adverse Effect: (i) no Company has caused or suffered to occur any
material Release of Hazardous Materials on, at, in, under, above, to, from or
about any of its material leased real estate (the “Real Estate”); (ii) the
Companies are and have been in material compliance with all Environmental Laws;
(iii) the Companies 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, which compliance includes
obtaining, maintaining and complying with required Environmental Permits and all
such Environmental Permits are in full force and effect; (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 of the Companies; (vi) no notice has
been received by any of the Companies alleging that any of the Companies has any
material Environmental Liability; and (vii) the Companies have provided to the
Investor copies of all material environmental reports, written reviews and
audits in their possession as of the date hereof relating to the Real Estate and
material written information pertaining to any Environmental Liabilities of any
of the Companies.

       

    

    (b)        Each
Company hereby acknowledges and agrees that the Investor (i) is not now, and has
not ever been, in control of any of the Real Estate or any of the Companies’
affairs so as to subject the Investor to any liability under Environmental Laws,
including CERCLA, and (ii) does not have the capacity through the provisions of
the Transaction Documents or otherwise to influence any of the Companies’
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 Schedule ‎3.20 either
individually or in the aggregate would be reasonably likely to have a Material
Adverse Effect.

     

    Section
3.21.  Insurance.  Schedule
‎3.21 sets
forth a list as of the date of this Agreement that is correct and complete in
all material respects of the name of insurer, coverage, policy number and term
of each material insurance policy (collectively, the “Policies”) to which any of the
Companies 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
Companies 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 date hereof have been
paid.  Except as set forth on Schedule ‎3.21, all such
Policies are in full force and effect and will remain in full force and effect
after the Closing, in accordance with their respective terms.  Except
as set forth on Schedule ‎3.21, none of the
Companies 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 Companies 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 Schedule ‎3.21, none of the
Companies have any claims pending under the Policies in a stated amount in
excess of $5,000,000.


    
      
         


      

      
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    Section
3.22.  Contracts.  (a)
Except as set forth on Schedule ‎3.22(a) or
3.17(a), as of the date hereof, none of the Companies is a party or subject to
any of the following:

     

    (i)         any
Contract, understanding or obligation with respect to severance, termination,
retention or change in control, to pay liabilities or fringe benefits, with any
present or former directors of the Board, officers or employees of any of the
Companies, or any such agreement, understanding or obligation, the assumption of
which has been approved by the Bankruptcy Court or that is a Postpetition
Contract;

     

    (ii)        any
Contract providing for bonuses, pensions, options, deferred compensation,
retirement payments, royalty payments, profit sharing or similar payment or
benefit with respect to any present or former Representative of any of the
Companies, the assumption of which has been approved by the Bankruptcy Court or
that is a Postpetition Contract;

     

    (iii)       any
Contract under which any of the Companies has created, incurred, assumed or
guaranteed indebtedness for borrowed money or that is an outstanding guarantee,
letter of comfort, letter of assurance, keepwell, letter of credit, performance
bond, surety bond, indemnity agreement or other form of assurance or guarantee,
the assumption of which has been approved by the Bankruptcy Court or that is a
Postpetition Contract;

     

    (iv)       any
Contract under which any of the Companies is a lessee or lessor of the
Companies’ aircraft;

     

    (v)        any
Contracts under which any of the Companies has committed to purchasing or
leasing aircraft or aircraft engines; and

     

    
      (vi)       
any Contract required pursuant to Item 601 of Regulation S K under the
Securities Act to be filed as an exhibit to any SEC Report, which has not been
so filed (each of the agreements described in clauses ‎(i) - ‎(vi), a “Material
Contract”).

       

    

    (b)        None
of the Companies is in material breach or material violation of, or in default
under or with respect to, any Material Contract.

     

    (c)        As
of the date of this Agreement, none of the Companies is a party to or is bound
by any non-competition Contract or other Contract the assumption of which has
been approved by the Bankruptcy Court or that is a Postpetition Contract that
(i) purports to limit in any material respect either the type of business in
which the Companies may engage or the manner or locations in which any of them
may so engage in any business, or (ii) other than in the ordinary course of
business, could require the disposition of any material assets or line of
business of any of the Companies.


    
      
         


      

      
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      (d)        A
true and complete copy of each Material Contract to which any of the Companies
is a party has previously been delivered or made available to the Investor
(subject to applicable confidentiality restrictions) and each such contract is a
valid and binding agreement of such Company, as the case may be, and is in full
force and effect, except to the extent any has previously expired in accordance
with its terms.

       

      (e)        As
of the date hereof, since the commencement of the Cases, none of the Companies
has rejected and failed to replace, on terms that are no less favorable to such
Company, any Contract that is necessary to conduct the business of the Companies
in substantially the same manner as presently conducted and as proposed to be
conducted.

       

      Section
3.23.  Exemption
from Registration.  The offering and issuance by the Company of
the Common Shares pursuant to the Plan shall be exempt from registration
pursuant to Section 1145 of the Bankruptcy Code (except with respect to an
entity that is an underwriter as defined in Section 1145(b) of the Bankruptcy
Code) and/or Section 4(2) of the Securities Act, as applicable.

       

      ARTICLE
4

      Representations
And Warranties Of The Investor

       

      Except as
disclosed in the Investor Disclosure Schedules attached hereto as Exhibit C, the
Investor represents and warrants to, and agrees with, the Company as
follows:

       

      Section
4.01.  Organization.  The
Investor is (a) a corporation duly organized, validly existing and in good
standing under the Laws of Delaware and (b) has all requisite power and
authority and all requisite governmental licenses, authorizations, consents and
approvals to execute, deliver and perform its obligations under the Transaction
Documents.

       

      Section
4.02.  Authorization
of Agreements.  The execution, delivery and performance by the
Investor of its obligations under the Transaction Documents, to the extent that
such documents have been delivered as of such date, and the consummation of the
transactions contemplated by the Transaction Documents, are within the
Investor’s corporate powers and have been duly authorized by all necessary
corporate action and do not and will not contravene the terms of its certificate
of incorporation and bylaws.  Each Transaction Document when delivered
will constitute a legal, valid and binding obligation of the Investor,
enforceable against the Investor in accordance with its terms.

       

      Section
4.03.  Consents; No
Conflicts.  No Approval (other than approval by the Bankruptcy
Court) is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, the Investor of this Agreement or any
other Transaction Document, or for the consummation of the transactions
contemplated hereby and thereby, except for such Approvals listed on Schedule
‎4.03
hereto or that
could not, individually or in the aggregate, reasonably be expected to prevent,
enjoin, alter or materially delay the transactions contemplated by this
Agreement or materially impair the ability of the Investor to consummate the
Investment and the transactions contemplated hereby, and all of which have been
duly obtained, taken, given or made and are in full force and effect, except as
indicated on Schedule ‎4.03
hereto.  The execution, delivery and performance by the Investor of
the Transaction Documents to which it is a party do not and will not require any
consent or other action by any Person under or constitute a default under any
provision of any agreement or other instruments binding upon it.

       


      
        
           


        

        
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      Section
4.04.  Financial
Advisors and Brokers.  No Person has acted directly or
indirectly as a broker, finder or financial advisor of the Investor in
connection with the Transaction Documents or the transactions contemplated
thereby, and no Person acting for or on behalf of the Investor is entitled to
receive any broker’s, finder’s or similar fee or commission in respect thereof
based in any way on any agreement, arrangement or understanding made by or on
behalf of the Investor.

       

      Section
4.05.  Ownership of
Equity Securities; Purpose of Investment.  The Investor is
acquiring the Common Shares under this Agreement solely for the purpose of
investment and not with a view to, or for sale in connection with, any
distribution thereof in violation of the Securities Act and applicable state
securities or “blue sky laws”.  The Investor is an “Accredited
Investor” as such term is defined in Regulation D of the Securities
Act.  The Investor has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Common Shares, and the Investor is capable of
bearing the economic risks of such investment, including a complete loss of its
investment in the Common Shares.  The Investor has been given the
opportunity to ask questions of and receive answers from the Companies
concerning the Companies, the Common Shares and other related
matters.  The Investor further represents and warrants to the Company
that it has been furnished with all information it deems necessary or desirable
to evaluate the merits and risks of the acquisition of the Common Shares and
that the Companies have made available to Investor or its agents all documents
and information relating to an investment in the Common Shares requested by or
on behalf of the Investor.  In evaluating the suitability of an
investment in the Common Shares and in making the Investment, the Investor has
not relied upon any representations or warranties of any Person by or on behalf
of any of the Companies other than those representations and warranties that are
expressly set forth in this Agreement or in the DIP Credit Agreement, whether
oral or written.

       

      Section
4.06.  Citizenship.  The
Investor is a “citizen of the United States,” as the term is defined in Section
40102(a)(15) of Title 49 or successor statute.

       

      Section
4.07.  Financing.  The
Investor has sufficient cash, available lines of credit or other sources of
immediately available funds to enable it to make payment of the Investment Price
and any other amounts to be paid by it hereunder to consummate the transactions
contemplated by this Agreement at the Closing.


      
        
           


        

        
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      ARTICLE
5

      Pre-closing
Covenants

       

      Section
5.01.  Interim
Operations.  The Company shall not take or permit any of its
Subsidiaries to take any action or refrain from taking any action that would be
reasonably expected to result in the Company’s failure to comply with any of the
covenants in Article V (Affirmative Covenants) or Article VI (Negative
Covenants) of the DIP Credit Agreement, except for taking any action or
refraining to take any action as expressly required pursuant to the terms of
this Agreement (which the parties agree shall not constitute a failure to comply
with any of the covenants of the DIP Credit Agreement).

       

      Section
5.02.  Bankruptcy
Filings, Covenants and Agreements.  (a) Until August 17, 2009
(the “Auction Termination
Date”), the Companies shall be permitted to solicit inquiries, proposals,
offers and bids from, and negotiate with, any Person regarding a Qualified
Proposal (as defined in the Investment Agreement and Bidding Procedures Order)
solely in accordance with the Investment Agreement and Bidding Procedures Order;
provided, however, that none of
the Companies may enter into, or seek Bankruptcy Court approval of, any
agreement with respect to any such Qualified Proposal (other than a
confidentiality agreement) unless it has been approved as the Successful
Proposal pursuant to the Investment Agreement and Bidding Procedures
Order.  Notwithstanding anything herein to the contrary, in connection
with any proposed acquisition of or investment in any of the Companies, none of
the Companies shall agree to, or seek approval from the Bankruptcy Court for,
any break-up fee, work fee, expense reimbursement or any other benefit or
protection for any Person other than (i) amounts payable to the Investor
hereunder or (ii) amounts payable to any Person that is approved by the
Bankruptcy Court as the Successful Investor.

       

      (b)        If
this Agreement is the Successful Proposal, each of the Companies shall use all
commercially reasonable efforts to (i) obtain the approvals of the Plan by all
classes required to confirm the Plan, and (ii) cause the Confirmation Order to
be entered and the Effective Date to occur no later than December 1,
2009.  Upon request of the Company, the Investor agrees (x) to assist
and cooperate with the Companies in their negotiations with, and solicitation of
approvals from, holders of “claims” and “interests” (as such terms are defined
in the Bankruptcy Code) for the purpose of obtaining the approvals of any
classes required to confirm the Plan and/or (y) to assist the Companies in
obtaining entry of the Confirmation Order.

       

      (c)        The
Company and the Investor shall cooperate with each other and (subject to the
terms of the Investment Agreement and Bidding Procedures Order and the process
contemplated thereby until the Auction Termination Date) shall use (and shall
cause their respective Subsidiaries to use) all commercially reasonable efforts
to take or cause to be taken all actions, and do or cause to be done all things,
necessary, proper or advisable on its part under this Agreement and applicable
Laws to consummate the Investment and the other transactions contemplated by
this Agreement, including preparing and filing all documentation to effect all
necessary notices, reports and other filings and to obtain all consents,
registrations, approvals, permits and authorizations necessary to be obtained
from any third party and/or any Governmental Entity in order to consummate the
Investment or any of the other transactions contemplated by this Agreement in
accordance with the timelines provided in this Agreement.  Subject to
applicable Laws, to the extent reasonably practicable, the parties shall provide
copies in advance, and consult with each other on, all filings made with, or
written materials submitted to, any Governmental Entity in connection with the
Investment and the Transaction Documents.  To the extent permitted by
Law and reasonably practicable, the parties shall make good faith efforts to
coordinate, and to the extent appropriate, jointly prepare written
communications submitted to a Governmental Entity regarding material matters
with respect to the transactions contemplated by this Agreement.  In
exercising the foregoing rights, each of the Company and the Investor shall act
reasonably and as promptly as practicable.  In furtherance and not in
limitation of the foregoing, each of the Investor and the Companies shall make
any required filing pursuant to the HSR Act with respect to the transactions
contemplated hereby as promptly as practicable and in any event within fifteen
(15) Business Days following the Auction Termination Date if this Agreement is
the Successful Proposal and to supply as promptly as reasonably practicable any
additional information and documentary material that may be requested pursuant
to the HSR Act and to take all other actions necessary to cause the expiration
or termination of the applicable waiting periods under the HSR Act as soon as
practicable thereafter.  Each of the Investor and the Companies will
furnish to the other parties such necessary information and reasonable
assistance as such other parties may reasonably request in connection with the
foregoing.


      
        
           


        

        
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      (d)        Each
of the Investor and the Companies further covenant and agree (subject to the
terms of the Investment Agreement and Bidding Procedures Order and the process
contemplated thereby until the Auction Termination Date), with respect to any
threatened or pending preliminary or permanent injunction or other order, decree
or ruling or statute, rule, regulation or executive order that would adversely
affect the ability of the parties hereto to consummate the transactions
contemplated hereby, to respectively use all commercially reasonable efforts to
prevent the entry, enactment or promulgation thereof, as the case may
be.

       

      (e)        Nothing
in this Agreement shall obligate the Investor or any of its Affiliates to take
any action, or agree, (i) to limit in any manner whatsoever or not to exercise
any rights of ownership of any securities, or to divest, dispose of or hold
separate any securities or all or a portion of their respective businesses,
assets or properties or of the business, asset or properties of any of the
Companies, or (ii) to limit in any manner whatsoever the abilities of such
entities (A) to conduct their respective businesses or own such assets or
properties or to conduct the business or own the properties or assets of any of
the Companies or (B) to control their respective businesses or operations or the
business or operations of any of the Companies.

       

      Section
5.03.  No
Solicitation of Alternative Transactions.  (a) If this
Agreement is the Successful Proposal, from and after the Auction Termination
Date, each of the Companies agrees that neither it nor any of its officers or
directors of the Board shall, and that it shall not authorize or permit its
Representatives to, directly or indirectly, initiate, respond to, solicit or
knowingly encourage or facilitate any inquiries or the making of any proposal or
offer with respect to an Alternative Transaction, enter into negotiations in
respect of, take any actions in furtherance of or enter into an Alternative
Transaction.  If this Agreement is the Successful Proposal, each of
the Companies further agrees that it shall not, and that it shall cause its
Representatives not to, directly or indirectly, provide any confidential
information or data to, or engage in any negotiations with, any Person relating
to an Alternative Transaction, or otherwise knowingly encourage or facilitate
any effort or attempt by any Person to make or implement an Alternative
Transaction.

       

      
        
           


        

        
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      (b)       Notwithstanding
‎Section
5.03(a), (i) if the Board determines in good faith, after consultation with
outside legal counsel that the failure to take such action would be inconsistent
with its fiduciary duties, each of the Companies, directly or indirectly through
advisors, agents or other intermediaries, may, upon written notice given to, and
received by, the Investor (the “Notice”), engage in
negotiations or discussions with any Person that has made after the Auction
Termination Date a bona fide, unsolicited written proposal with respect to an
Alternative Transaction that the Board reasonably believes is likely to lead to
a Superior Proposal, and furnish to such Person and its representatives
confidential information or data relating to the Company or any of its
Subsidiaries and (ii) the Company may take any other action that the Bankruptcy
Court or any other court of competent jurisdiction orders such Person to
take.  For purposes of this Agreement, “Superior Proposal” means any
bona fide, unsolicited written proposal with respect to an Alternative
Transaction on terms that the Board determines in good faith by a majority vote,
after considering the advice of its financial advisor and outside legal counsel
and taking into account the economic and other terms and conditions of such
proposal (including the conditions to closing), are more favorable and provide
greater value to the constituents than provided hereunder, which the Board
determines is reasonably likely to be consummated and for which financing, if a
cash transaction (whether in whole or in part), is then fully committed or
reasonably determined to be available by the Board.

       

      (c)        Each
of the Companies agrees that from and after the Auction Termination Date, if
this Agreement is the Successful Proposal, it will cease and cause to be
terminated any existing activities, discussions or negotiations with any Person
with respect to any Alternative Transaction, except as provided in ‎Section
5.03(b).  Upon this Agreement becoming the Successful Proposal, the
Companies will promptly request that each Person that has heretofore executed a
confidentiality agreement in connection with the auction process described in
the Investment Agreement and Bidding Procedures Order destroy all confidential
information furnished prior thereto.  Each of the Companies agrees
that it will take the necessary steps to promptly inform its Representatives of
the obligations undertaken in this ‎Section 5.03‎(c).

       

      (d)        The
Company agrees that from and after the Auction Termination Date, if this
Agreement is the Successful Proposal, it will notify the Investor as promptly as
practicable (and, in any event, within twenty-four (24) hours) if any inquiries,
proposals or offers with respect to any Alternative Transaction are received by,
any such information is requested from, or any such discussions or negotiations
are sought to be initiated or continued with, it or any of its Representatives,
indicating, in connection with such notice, the name of such Person and the
material terms and conditions of any proposal or offer.


      
        
           


        

        
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      Section
5.04.  Accounting
Policies.  No Company shall make any changes with respect to
accounting policies or procedures, except as required by changes in GAAP or by
applicable Law or except as such Company, after consultation with the Investor
and each party’s independent auditors, determines in good faith is
preferable.

       

      Section
5.05.  Postpetition
Transactions and Settlements.  Any Postpetition transaction,
settlement agreement, contract or financing (other than settlements of
prepetition claims that do not require monetary payments and de minimis ordinary
course contracts) and any assumption, rejection or renegotiation of a
pre-petition agreement (x) effectuated after the date hereof, (y) that is
not incorporated or reflected in the Business Plan and (z) that involves net
present value payments by the Companies in excess of $3,000,000 in the aggregate
shall be reasonably acceptable to the Investor; provided, however, that
transactions to replace one or more A-318 aircraft with either A-319 or A-320
aircraft shall be deemed to be reasonably acceptable to the Investor so long as
the terms thereof do not change materially and adversely from the terms of such
transactions already consummated by the Company or as otherwise agreed by the
parties.

       

      Section
5.06.  Taxes.  Except
as required by Law, by any currently effective Tax sharing agreement listed on
Schedule 3.16(c) or pursuant to any lease agreement, none of the Companies shall
(i) make any material Tax election or change any currently or previously
effective material Tax election, (ii) take any material position on any material
Tax return filed on or after the date of this Agreement or adopt or change any
accounting method relating to material Taxes that is inconsistent with positions
taken or accounting methods used in preparing or filing such Tax returns in
prior periods, or (iii) except as to matters listed on Schedule 5.06, enter into
any material closing agreement relating to Taxes, settle or consent to any claim
or assessment relating to Taxes, waive the statute of limitations for any such
claim or assessment, or file any amended material Tax Return.

       

      Section
5.07.  Flight
Operations.  The Companies shall conduct their operations in
the ordinary course of business in a manner consistent in all material respects
with the Business Plan, provided that the companies
may add or delete service both on an annual and seasonal basis.

       

      Section
5.08.  Notice of
Incidents and Accidents.  No Company shall fail to notify the
Investor in writing or via electronic mail of any (i) incidents or
accidents that are required to be reported under 49 CFR Part 830 occurring on or
after the date hereof involving any property owned or operated by any of the
Companies or (ii) any accidents occurring after the date hereof involving
any property owned and operated by the Companies, including facilities, hangars,
and other physical property, that resulted or could reasonably be expected to
result in damages or losses in excess of $1,000,000.

       

      Section
5.09.  Aircraft
Maintenance Programs.  Frontier Airlines and Lynx shall use all
commercially reasonable efforts to keep all owned and leased aircraft in such
condition as may be necessary to enable the FAA Certificate of Airworthiness of
such aircraft under the FAA to be maintained in good standing at all
times.

       

      Section
5.10.  No Title IV
Liability.  No Company or any ERISA Affiliate shall incur any
liability or obligation in respect of any plan subject to Title IV of ERISA
except for the Multiemployer Plan liabilities and obligations identified and
described on Schedule 5.10, none of which, individually or in the aggregate,
will or could be reasonably likely to result in a Material Adverse
Effect.


      
        
           


        

        
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      Section
5.11.  Claims.  On
or before June 30, 2009, the Company shall provide the Investor (and the
Creditors’ Committee), (a) the current and projected allowed claims estimate for
each of the classes described in Section I of the Term Sheet and (b) a list of
all of the Company’s material and unexpired real and personal property leases,
executory contracts, secured financings and other agreements, together with an
estimate of known cure amounts, where relevant, and any known and pending
disputes related thereto, in each case broken down by the applicable creditor
where reasonably practicable.

       

      Section
5.12.  Proceeds to
General Unsecured Creditors.  Upon Closing and pursuant to the
Plan and Confirmation Order, the Companies shall set aside in a segregated,
interest bearing account, for the sole benefit of and exclusively for
distribution to, holders of allowed general unsecured claims, cash from the
Investment Price in the amount of Twenty Eight Million Seven Hundred Fifty
Thousand Dollars ($28,750,000).

       

      Section
5.13.  Investor
Voting Commitment.  The Investor agrees that it shall vote in
favor of and otherwise support the Plan contemplated by, and approved in
accordance with the terms of, this Agreement.

       

      ARTICLE
6

      Additional
Covenants

      


      Section
6.01.  Information
Rights and Access.  (a) From and after the date hereof, the
Company shall (and shall cause each of its Subsidiaries, Representatives and
Affiliates to) afford to the Investor, its Affiliates and their respective
Representatives reasonable access, upon reasonable notice during normal business
hours and in such manner as will not unreasonably interfere with the conduct of
the Companies’ respective businesses, to their respective facilities,
properties, books, contracts, commitments, records (including information
regarding any pending or threatened Proceeding to which any of the Companies is,
or reasonably expects to be, a party), key personnel, officers, independent
accountants and legal counsel.  The Company shall use all commercially
reasonable efforts to cause its lessors to cooperate with the Investor, its
Affiliates and their respective Representatives in connection with the
transactions contemplated by this Agreement.

       

      (b)       From
and after the Auction Termination Date, if this Agreement is the Successful
Proposal, the Company shall send or otherwise make available to the Investor,
within two Business Days after each meeting of the Board, all written materials
sent to Board members by, or on behalf of, the Company.


      
        
           


        

        
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      (c)        Notwithstanding
anything to the contrary herein, the Company shall not be required to deliver to
the Investor any information or materials that the Company determines in good
faith, in its sole discretion, (i) are subject to a claim of legal privilege,
(ii) relate to the relationship or agreements between the Investor and any of
the Companies or (iii) would result in a violation of applicable
Law.

       

      (d)       Any
information and materials made available to the Investor and its Representatives
by the Company and its Representatives under this Agreement, including pursuant
to ‎Section
6.01 and ‎Section 6.04, are
to be held by the Investor and its Representatives in strict confidence, in
accordance with the terms of the Mutual Confidentiality and Non-Disclosure
Agreement dated as of April 27, 2009, to which the Investor and the Company
are parties.

       

      (e)        The
Company and the Investor agree that, in the event of any disclosure of
privileged and confidential information by the Companies to the Investor, the
Companies and the Investor have a joint and common interest and accordingly such
disclosure shall not constitute waiver of any applicable privilege or
publication of any confidence.

       

      Section
6.02.  Company
Reports; Financial Statements.  (a) From and after the date
hereof, the Company shall file, in a timely manner, each Annual Report on Form
10-K, Quarterly Report on Form 10-Q and each registration statement, report on
Form 8-K, proxy statement, information statement or other report or statement
with the SEC, as required by the Exchange Act (the “Subsequent
Reports”).  Each Subsequent Report shall, as of the filing
date, (i) comply in all material respects with the applicable requirements of
the Exchange Act and Securities Act, (ii) not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading and (iii) present fairly, in each case
in accordance with GAAP applied on a consistent basis throughout the periods
covered (except as stated therein or in the notes thereto), the financial
position and results of operation of the entity to which it applies as of the
date and for the period set forth therein.

       

      (b)       Each
of the consolidated balance sheets (including the related notes and schedules)
included in or incorporated by reference into the Subsequent Reports shall
fairly present, in all material respects, the consolidated financial position of
the entities to which it applies as of the date thereof, and each of the
consolidated statements of income (or statements of results of operations),
stockholders’ equity and cash flows (including the related notes and schedules)
included in or incorporated by reference into the Subsequent Reports shall
fairly present, in all material respects, the results of operations, retained
earnings and cash flows, as the case may be, of the entities to which it applies
(on a consolidated basis) for the periods or as of the dates, as the case may
be, set forth therein, in each case in accordance with GAAP applied on a
consistent basis throughout the periods covered (except as stated therein or in
the notes thereto) and in compliance with the rules and regulations of the
SEC.


      
        
           


        

        
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      Section
6.03.  Publicity.  Except
as required by Law or by obligations pursuant to any listing agreement with or
requirement of any national securities exchange or national quotation system on
which the Common Stock is listed, admitted to trading or quoted, and except for
announcements in connection with the auction process conducted in accordance
with the Investment Agreement and Bidding Procedures Order, neither the Company
(nor any of its Affiliates) nor the Investor (nor any of its Affiliates) shall,
without the prior written consent of each other party hereto, which consent
shall not be unreasonably withheld or delayed, make any public announcement or
issue any press release with respect to the Term Sheet or the transactions
contemplated by this Agreement.  Prior to making any public disclosure
required by applicable Law or pursuant to any listing agreement with or
requirement of any relevant national exchange or national quotation system, the
disclosing party shall consult with the other parties hereto, to the extent
feasible, as to the content and timing of such public announcement or press
release.

       

      Section
6.04.  Tax
Contests.  The Company shall keep the Investor apprised of any
material Tax audits, examinations, assessments, administrative or court
proceedings, or other disputes with respect to any material Tax matter of any of
the Companies (“Tax
Contests”).  If upon the Auction Termination Date, the Investor
is the Successful Investor, the Company shall thereafter provide the Investor
with copies of all material written materials received from any taxing authority
in respect of any material Tax Contests, shall consult with the Investor in good
faith regarding the conduct of such Tax Contest, and shall consider in good
faith suggestions made by the Investor and its Representatives regarding the
conduct of such Tax Contests.

       

      Section
6.05.  Investor
Financing.  The Investor has, and shall have prior to the
Closing, sufficient cash, available lines of credit or other sources of
immediately available funds to enable it to make payment of the Investment Price
and any other amounts to be paid by it hereunder to consummate the transactions
contemplated by this Agreement at the Closing.

       

      Section
6.06.  Transaction
Court Documents.  (a) (i) The Company shall provide to the
Investor copies of all Transaction Court Documents and all motions, objections,
pleadings, notices, proposed orders and other documents seeking the approval of
the any Transaction Court Document or which are primarily related to the
Transaction Court Documents as soon as reasonably practicable prior to filing
the same with the Bankruptcy Court and (ii) the Investor shall provide to the
Company copies of all motions, objections, pleadings, notices, proposed orders
and other documents that are to be filed by or on behalf of the Investor in the
Cases that are primarily related to the Transaction Court Documents as soon as
reasonably practicable prior to filing the same with the Bankruptcy Court, provided that the obligations
under this ‎Section 6.06(a)
shall not apply to Transaction Court Documents and motions that are the same as
the drafts of such Transaction Court Documents and motions attached as exhibits
hereto (or that include only immaterial changes in such Transaction Court
Documents or motions).  If, after delivering the same to the Investor,
the Company modifies any draft Transaction Court Document in any respect,
including at the hearing scheduled to consider such Transaction Court Document
(such hearing, the “Relevant
Hearing”), the Company shall provide the modified version to the Investor
as soon as reasonably practicable following such modification.


      
        
           


        

        
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      (b)       With
respect to drafts of Transaction Court Documents and motions seeking approval of
the same and any modifications subsequently made to such drafts and delivered to
the Investor pursuant hereto, the Investor shall raise with the Company in
writing  any objections that it might have to such drafts or
modifications as soon as reasonably practicable following receipt of such drafts
or modifications, but in no event later than the Relevant Hearing or the
Company’s intended date of filing the motion, as applicable; provided that if the Investor
has not been given a reasonable amount of time to review and comment on such
drafts or modifications, the Investor may object on the grounds of failure to
provide sufficient time; provided further that if the Investor raises such an
objection or if, after the conclusion of the Relevant Hearing, the Bankruptcy
Court makes any modifications to a Transaction Court Document that were not
discussed or described at the Relevant Hearing, the Investor shall have five (5)
Business Days after the approval or entry of such Transaction Court Document to
raise any objections to such modifications.  So long as the Company
complies with the requirements of this ‎Section 6.06
regarding a given Transaction Court Document, unless the Investor timely raises
an objection to such document as set forth herein (and such objection has not
been resolved to the reasonable satisfaction of Investor), such document shall
be deemed to fulfill the condition precedent to the Investor’s obligation to
make the Investment set forth in ‎Section 7.01(b)
hereof and the Investor shall be deemed to have waived in all respects any
termination right with respect to such document.  Regardless of
whether or not the Investor raises any objection to a given Transaction Court
Document or any modifications thereto in advance of the Relevant Hearing, the
Investor shall be deemed to have waived in all respects any closing condition or
termination right with respect to such document unless a Representative of the
Investor, with decision-making authority, appears at the Relevant Hearing to
provide final approval of such Transaction Court Document and any modifications
thereto made at or prior to such hearing.  Notwithstanding the
foregoing, the Investor shall not be entitled to raise any objections to any
draft Transaction Court Documents and motions that are the same as the draft
Transaction Court Documents and motions attached hereto as exhibits (or that
include only immaterial changes in such Transaction Court Documents or
motions).

       

      (c)       The
Company will also use reasonable efforts to provide to the Investor, in advance
of filing the same with the Court, copies of motions directly related to the
following: (i) credit card processing agreements, (ii) collective bargaining
agreements or ERISA matters, (iii) aircraft sales, (iv) management retention or
(v) any compromise or settlement of a Postpetition claim that would result in a
payment by the Company of more than $500,000.

       

      (d)       Notwithstanding
anything to the contrary in this Agreement, failure to comply with the
requirements of this ‎Section 6.06 shall
not form the basis for any termination of this Agreement by either party or
failure of either party to satisfy the conditions to their obligations under
‎Article
8.

       

      Section
6.07.  Director and
Officer Liability and Indemnification.  The Investor hereby agrees
to do the following:

       

      (a)        Upon
and at all times after the Closing Date, the Certificate of Incorporation shall
contain provisions that require the Company, subject to appropriate procedures,
to indemnify the Company’s former and present directors and executive officers
(each, an “Indemnified
Person”), in each case to the fullest extent permitted by applicable
Law.


      
        
           


        

        
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      (b)       Prior
to the Closing Date, the Company shall or, if the Company is unable to, the
Investor shall, as of the Closing Date, obtain and fully pay the premium for the
non-cancellable extension of the directors’ and officers ’ liability coverage of
the Company’s existing directors’ and officers’ insurance policies and the
Company’s existing fiduciary liability insurance policies (collectively, “D&O Insurance”), in each
case for a claims reporting or discovery period of at least six years from and
after the Closing Date with respect to any claim related to any period or time
at or prior to the Closing Date from an insurance carrier with the same or
better credit rating as the Company’s current insurance carrier with respect to
D&O Insurance with terms, conditions, retentions and limits of liability
that are no less favorable than the coverage provided under the Company’s
existing policies; provided
that the Company shall give the Investor a reasonable opportunity to
participate in the selection of such tail policy and the Company shall give
reasonable and good faith consideration to any comments made by the Investor
with respect thereto.  If the Company or the Investor for any reason
fail to obtain such “tail” insurance policies as of the Closing Date, the
Investor shall continue to maintain in effect, for a period of at least six
years from and after the Closing Date, the D&O Insurance in place as of the
date hereof with the Company’s current insurance carrier or with an insurance
carrier with the same or better credit rating as the Company’s current insurance
carrier with respect to D&O Insurance with terms, conditions, retentions and
limits of liability that are no less favorable than the coverage provided under
the Company’s existing policies as of the date hereof, or the Investor shall
purchase from the Company’s current insurance carrier or from an insurance
carrier with the same or better credit rating as the Company’s current insurance
carrier with respect to D&O Insurance comparable D&O Insurance for such
six-year period with terms, conditions, retentions and limits of liability that
are no less favorable than as provided in the Company’s existing policies as of
the date hereof; provided that in no event
shall the Investor be required to expend for such policies pursuant to this
sentence an annual premium amount in excess of 200% of the amount per annum the
Company paid in their last full fiscal year, which amount is set forth in
Schedule 6.07; and provided
further that if the aggregate premiums of such insurance coverage exceed
such amount, the Investor shall be obligated to obtain a policy with the
greatest coverage available, with respect to matters occurring prior to the
Closing Date, for a cost not exceeding such amount.

       

      (c)        If
the Investor or any of its successors or assigns (i) consolidates with or merges
into any other Person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of the Investor, as the case may be, shall assume the
obligations set forth in this ‎Section
6.07.

       

      (d)       The
rights of each Indemnified Person under this ‎Section 6.07 shall
be in addition to any rights such Person may have under the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries, under
Delaware Law or any other applicable Law or under any agreement of any
Indemnified Person with the Company or any of its Subsidiaries.  These
rights shall survive consummation of the transactions contemplated by this
Agreement and the Transaction Documents, and are intended to benefit, and shall
be enforceable by, each Indemnified Person.


      
        
           


        

        
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      ARTICLE
7

      Conditions

      


      Section
7.01.  Conditions to
Both the Investor’s and the Company’s Obligations.  Both the
obligation of the Investor to make the Investment pursuant to ‎Section 2.01
hereof and the obligation of the Company to issue and sell the Common Shares
pursuant to ‎Section 2.01
hereof at the Closing are subject to satisfaction or waiver of each of the
following conditions precedent:

       

      (a)       Definitive
Documents.  Definitive Transaction Documents necessary to
consummate the transactions contemplated herein shall have been prepared,
negotiated and, to the extent applicable, executed by the parties, and approval
by the Bankruptcy Court of such documents, as necessary, shall have been
obtained.  All Transaction Documents (in form and substance reasonably
satisfactory to both the Investor and the Company), to the extent applicable,
shall have been executed by the parties thereto on or prior to the Effective
Date, shall not have been modified without either of the Investor’s or the
Company’s consent and shall be in effect and the consummation of the
transactions contemplated thereby shall not be stayed, and all conditions to the
obligations of the parties under the Transaction Documents shall have been
satisfied or effectively waived.  All corporate and other proceedings
to be taken by the Investor and the Company in connection with the Transaction
Documents and the transactions contemplated thereby to be completed at the
Closing and documents incident thereto shall have been completed in form and
substance reasonably satisfactory to the Investor and the Company, and the
Investor and the Company shall have received all such counterpart originals or
certified or other copies of the Transaction Documents and such other documents
as it may reasonably request.

       

      (b)       Transaction Court
Documents.  Subject to ‎Section 6.06, the
Bankruptcy Court shall have confirmed the Plan, approved the Disclosure
Statement and entered all orders included in the Transaction Court Documents,
each of which orders shall not have been subsequently modified without the
Investor’s and the Company’s prior written consent, reversed or vacated, and
each such Transaction Court Document shall be in effect and not be
stayed.

       

      (c)       Effective
Date.  The Effective Date shall have occurred.

       

      (d)       Compliance with Laws, No Adverse
Action or Decision.  Since the date hereof, (i) no Law shall
have been promulgated, enacted or entered that restrains, enjoins, prevents,
materially delays, prohibits or otherwise makes illegal the performance of any
of the Transaction Documents with respect to the transactions contemplated
thereby to be completed at the Closing; and (ii) no preliminary or permanent
injunction or other order by any Governmental Entity that restrains, enjoins,
prevents, delays, prohibits or otherwise makes illegal the performance of any of
the Transaction Documents shall have been issued and remain in
effect.

       

      Section
7.02.  Conditions to
the Investor’s Obligations.  The obligations of the Investor to
make the Investment pursuant to ‎Section 2.01
hereof is subject to satisfaction or waiver of each of the following conditions
precedent:

       

      
        
           


        

        
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      (a)       Representations and Warranties;
Covenants.  The representations and warranties of the Company
set forth in ‎Article 3 herein
(without giving effect to any Material Adverse Effect, materiality or similar
qualifier contained therein) shall be true and correct on and as of the date
hereof and at the time immediately prior to the Closing (except where such
representation and warranty speaks by its terms of “at Closing,” in which case
it shall be true and correct as of the time of Closing) as if made on the
Closing Date (except where such representation and warranty speaks by its terms
of a different date, in which case it shall be true and correct as of such
date), with only such exceptions as have not had and could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.  The Company shall have performed in all material respects all
obligations and complied with all agreements, undertakings, covenants and
conditions required to be performed by it hereunder at or prior to the Closing,
and the Company shall have delivered to the Investor at the Closing a
certificate dated the Closing Date and signed by an officer of the Company to
the effect that the conditions set forth in this ‎Section 7.02‎(a) have been
satisfied.

       

      (b)       Certificate of Incorporation and
By-Laws.  The Certificate of Incorporation and By-Laws, as
provided for in the Plan, shall contain the terms contemplated hereby, and the
Certificate of Incorporation shall have been filed with and accepted by the
Secretary of State of the State of Delaware.  As of the Closing Date,
the Company shall have made available to the Investor a complete and correct
copy of the certificates of incorporation and the by-laws or comparable
governing instruments of each of the Companies, in full force and effect as of
the Closing Date.

       

      (c)       Foreign
Ownership.  The Company shall be in compliance with the
applicable Laws and requirements regarding foreign ownership or control of U.S.
air carriers, except to the extent that any failure to be in compliance is in
any way attributable to the Investor or any transferee of Investor or any
actions by the Investor.

       

      (d)       Litigation.  There shall
be no (i) threatened or pending Postpetition suit, action, investigation,
inquiry or other proceeding by or before any court of competent jurisdiction
(excluding the Cases or any Proceedings thereunder, and any matter that
represents a prepetition claim that will be discharged by the Bankruptcy Court
in the Cases) or (ii) Proceedings instituted by any Governmental Entity that
remain pending and seek to restrain, enjoin, prevent, delay, prohibit or
otherwise make illegal the performance of any of the Transaction Documents,
except , in the case of clauses (i) and (ii), as have not had and could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

       

      (e)       Consents Under
Agreements.  The Company shall have obtained the consent or approval
of each Person whose consent or approval shall be required under any Material
Contract to which the Company or any of its Subsidiaries is a party in
connection with the transactions contemplated by this Agreement, except for (i)
Material Contracts as to which consent or approval is unnecessary under Section
365 of the Bankruptcy Code, (ii) Material Contracts with a party that received
actual, written notice in the Cases and failed to object to the treatment of
such contract thereunder prior to the Effective Date and (iii) Material
Contracts for which the failure to obtain such consent or approval has not had
and could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.


      
        
           


        

        
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      (f)        Confirmation
Order.  Subject to ‎Section 6.06, the
Confirmation Order shall have been entered by the Bankruptcy Court, shall be
unstayed and, once entered, shall not have been modified without the Investor’s
prior written consent.

       

      (g)       Consents and
Approvals.  The Company shall have received (i) all approvals,
clearances, consents and authorizations set forth on Schedule ‎7.02(g) required
to be obtained from the DOT and FAA for the consummation of the Investment and
the other transactions contemplated hereby, which approvals, clearances,
consents and authorizations have not been stayed or vacated and (ii) all other
Regulatory Approvals (other than waiting periods imposed by applicable Law as
referred to later in this paragraph) set forth on Schedule ‎7.02(g), which
shall have become final and unappealable, and (iii) all other material
approvals, permits, authorizations, exemptions, consents, licenses and
agreements from other third parties that are necessary to permit the
transactions contemplated hereby and to permit the reorganized Company to carry
on its business after such transactions in a manner not materially inconsistent
with the manner in which it was carried on prior to the Effective Date (together
with the Regulatory Approvals (the approvals described in clauses (i), (ii) and
(iii), the “Approvals”),
which Approvals shall not contain any condition or restriction that, in the
Investor’s reasonable judgment, materially impairs the reorganized Company’s
ability to carry on its business or materially restricts any business activity
of the Investor or the Companies.  Notwithstanding the foregoing, the
parties recognize that the DOT or FAA may issue temporary or interim approvals
or exemptions (the “Initial
Approvals”) that allow the consummation of the Investment and that may
require subsequent additional approvals.  Such Initial Approvals shall
be sufficient to fulfill the requirements of this Section ‎7.02(g) as to that
corresponding Approval, but not with respect to any other
Approvals.  For the avoidance of doubt, the Investor confirms that any
approval, clearance, consent or authorization under the HSR Act has been
received or otherwise satisfied.

       

      (h)       No Material Adverse
Effect.  Since August 13, 2009, no event, circumstance or
matter shall have occurred or arisen that has had, or would reasonably be
expected to have, a Material Adverse Effect

       

      Section
7.03.  Conditions to
the Company’s Obligations.  The obligation of the Company to
issue and sell the Common Stock pursuant to ‎Section 2.01
hereof at the Closing is subject to satisfaction or waiver of each of the
following conditions precedent:

       

      (a)       Representations and Warranties;
Covenants.  The representations and warranties of the Investor
set forth in ‎Article 4 hereof
(without giving effect to any Material Adverse Effect, materiality or similar
qualifier) shall have been true and correct in all respects, on and as of the
date hereof and at the time immediately prior to the Closing (except where such
representation and warranty speaks by its terms of “at Closing,” in which case
it shall be true and correct as of the time of Closing) as if made on the
Closing Date (except where such representation and warranty speaks by its terms
as of a different date, in which case it shall be true and correct as of such
date), except to the extent that such inaccuracies have not had, and would not,
individually or in the aggregate, reasonably be expected to prevent or
materially delay or impede the Investor’s ability to consummate the
Investment.  The Investor shall have performed in all material
respects all obligations and complied with all agreements, undertakings,
covenants and conditions required to be performed by it at or prior to the
Closing, and the Investor shall have delivered to the Company at the Closing a
certificate dated the Closing Date and signed on behalf of an officer of the
Investor to the effect that the conditions set forth in this ‎Section 7.03‎(a) have been
satisfied.


      
        
           


        

        
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      (b)       Compliance with Laws; No Adverse
Action or Decision.  Since the date hereof, (i) no Law shall
have been promulgated, enacted or entered that restrains, enjoins, prevents,
materially delays, prohibits or otherwise makes illegal the performance of any
of the Transaction Documents with respect to the transactions contemplated
thereby to be completed at the Closing; (ii) no preliminary or permanent
injunction or other order by any Governmental Entity that restrains, enjoins,
prevents, delays, prohibits or otherwise makes illegal the performance of any of
the Transaction Documents shall have been issued and remain in effect, except
for such injunctions that, if obtained, could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
reorganized Company; and (iii) no Governmental Entity shall have instituted any
Proceeding that seeks to restrain, enjoin, prevent, delay, prohibit or otherwise
make illegal the performance of any of the Transaction Documents, except for any
Proceedings, which have a significant possibility of being brought to a
conclusion which would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on the reorganized Companies.

       

      (c)       Consents and
Approvals.  The Company shall have received the Approvals,
which Approvals shall not contain any condition or restriction that, in the
Investor’s reasonable judgment, materially impairs the reorganized Company’s
ability to carry on its business or materially restricts any business activity
of the Investor or the Companies.  Any Initial Approval shall be
sufficient to fulfill the requirements of this Section 7.03(c) as to the
corresponding Approval, but not with respect to any other
Approvals.

       

      (d)       Citizenship.  The
Company shall have received a certificate from the Investor certifying that the
Investor is a “citizen of the United States,” as the term is used in Section
40102(a)(15) of Title 49 and is in compliance with applicable United States law
with respect to foreign ownership requirements of U.S. air
carriers.

       

      (e)       DIP Credit
Agreement.  The DIP Credit Agreement shall not have been
terminated by the Investor as a result of an Event of Default (as defined in the
DIP Credit Agreement), and there shall have been no material breach of the DIP
Credit Agreement by the Investor that is continuing.

       

      (f)        Confirmation
Order.  The Confirmation Order shall have been entered by the
Bankruptcy Court, shall be unstayed and, once entered, shall not have been
modified without the Company’s prior written consent.


      
        
           


        

        
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      ARTICLE
8

      Termination

      


      Section
8.01.  Termination
of Agreement.  Subject to ‎Section 6.06 and
‎Section 8.02
hereof, this Agreement may be terminated by notice in writing at any time prior
to the Closing by:

       

      (a)        the
Investor or the Company, if a Person, other than the Investor or an Affiliate of
the Investor, is approved by the Bankruptcy Court as the Successful Investor or
the Companies otherwise proceed with an Alternative Transaction;

       

      (b)       the
Company, if (i) there shall have been a material breach by the Investor of ‎Section 5.02, (ii)
there shall have been a material breach by the Investor of any representation,
warranty, covenant or agreement contained in this Agreement which breach would
result in the failure to satisfy any condition set forth in ‎Section 7.01 or
‎Section 7.03
hereof to the Company’s obligations and that has not been cured within ten (10)
days following receipt by the Investor of written notice from the Company of
such breach or if such breach is not capable of being cured or (iii) any
condition set forth in ‎Section 7.01 or
‎Section 7.03
hereof to the Company’s obligations is not capable of being
satisfied;

       

      (c)        the
Investor or the Company, if the Closing shall not have occurred on or before
December 1, 2009; provided that the right to terminate the agreement hereunder
shall not be available to any party whose breach of this Agreement results in
the failure of the Closing to occur prior to such time;

       

      (d)        the
Investor, if (i) there shall have been a material breach by the Companies of
(A) ‎Section 5.02 or
(B) ‎Section
5.03, (ii) there shall have been a material breach by the Company of any
representation, warranty, covenant or agreement contained in this Agreement,
which breach would result in the failure to satisfy any condition set forth in
‎Section 7.01
or ‎Section
7.02 to the Investor’s obligations and that has not been cured within ten (10)
days following receipt by the Company of written notice from the Investor of
such breach or if such breach is not capable of being cured, immediately upon
such breach, or (iii) any condition set forth in ‎Section 7.01 or
‎Section 7.02
to the Investor’s obligations is not capable of being satisfied;

       

      (e)        the
Investor, if the Investment Agreement and Bidding Procedures Order does not
provide that the Auction Termination Date is on or prior to August 17,
2009;

       

      (f)        the
Investor, if (i) the Bankruptcy Court denies the Investment Agreement and
Bidding Procedures Motion, or (ii) the Bankruptcy Court or any court of
competent jurisdiction to which a decision relating to the Cases has been
appealed modifies, in a manner materially adverse to the Investor, the
Investment Agreement and Bidding Procedures Order without the prior written
consent of the Investor, or reverses, vacates or stays such order following its
entry;

       

      (g)        the
Investor, upon termination of the DIP Credit Agreement upon an Event of Default
(as defined in the DIP Credit Agreement);


      
        
           


        

        
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    (h)       the
Investor, if the Cases shall have been converted into Chapter 7 Cases or shall
have been dismissed, or a trustee or examiner with expanded powers relating to
any of the Companies’ business shall have been appointed, prior to the Effective
Date;

     

    (i)        the
Company, if (x) the Board determines in good faith that the Companies cannot
reasonably be expected to have the financial resources that they will need to
conduct their businesses, (y) the Company ceases operations (other than in
connection with a sale of all or substantially all of the assets of the
Companies or a sale of the business of Lynx, in each case in a single
transaction or series of related transactions) and (z) the Company has not
knowingly and intentionally acted in a manner that breached any of its
obligations under this Agreement or the DIP Credit Agreement and would
reasonably be expected to be inconsistent with an intention to proceed with the
Investment on the terms and conditions set forth herein;

     

    (j)        mutual
agreement in writing by the Company and the Investor;

     

    (k)       the
Investor, pursuant to ‎Section
9.11;

     

    (l)        the
Investor, if there shall have been a Material Adverse Effect prior to the
Closing; or

     

    (m)      the
Investor, upon the delivery of the Notice.

     

    In order
for the Investor to terminate this Agreement based on the form or substance of
any document or order (including based on alleged non-conformity with any
requirements in the Transaction Documents or based on reasonable
non-satisfaction by the Investor therewith), the Investor must exercise such
termination right prior to the earlier of (i) the fifth (5th) business day after
the Company delivers to the Investor a proposed substantially final form thereof
and (ii) the court hearing at which such document will be approved or such order
entered; provided that if material changes are subsequently made to such
document or order prior to court approval or entry by the Court thereof, the
Investor shall be provided with such changes and shall have until the conclusion
of the court hearing at which such document will be approved or such order
entered to exercise its rights regarding any such changes.  In order
for the Investor to terminate this Agreement on any other basis, it must do so
on or before the tenth (10th) Business Day after the date on which the Investor
becomes aware of its right to so terminate this Agreement.  If the
Investor does not terminate the Agreement in accordance with the requirements of
the preceding two sentences, the Investor shall be deemed to have waived the
applicable condition(s) and termination rights for purposes of ‎Article 7 and
‎Article
8.

     

    Section
8.02.  Effect of
Termination.  (a) If this Agreement is terminated in accordance
with ‎Section
8.01 hereof and the transactions contemplated hereby are not consummated, this
Agreement shall become null and void and of no further force and effect except
that the terms and provisions of this ‎Section 8.02,
‎Section 6.03
and ‎Article
9 hereof shall remain in full force and effect.  If this Agreement is
terminated under any circumstances described in ‎Section 8.02‎(b) or ‎Section 8.02(c),
the Investor’s sole and exclusive remedy shall be as set forth
therein.  Notwithstanding the foregoing or any other provision of this
Agreement (including ‎Section 8.02(b)
and ‎Section
8.02(c), none of the Company, its Affiliates nor any of their respective
Representatives shall have any liability under this Agreement or any other
Transaction Document (other than amounts payable under the DIP Agreement) if
this Agreement is terminated under any circumstances other than as described in
‎Section
8.02(b) and ‎Section
8.01(c).


    
      
         


      

      
        45

        
          

        

      

      
         


      

    

     

    (b)        Notwithstanding
the foregoing, in the event that (i) the Investor terminates this Agreement
pursuant to ‎Section 8.01(d)(i)
as a result of a knowing, willful and material breach by the Company, ‎Section 8.01(g) as
a result of a knowing, willful and material breach by any of the Companies of
the DIP Credit Agreement, or ‎Section 8.01(h) as
a result of a filing by the Company seeking the conversion, dismissal or
appointment specified therein, (ii) the Investor terminates this Agreement
pursuant to ‎Section
8.01(d)(ii) or ‎8.01(d)(iii) as a
result of a knowing, willful and material failure by the Company to fulfill a
condition to the performance of this Agreement by the Investor resulting in the
termination of this Agreement by the Investor and the completion of an
Alternative Transaction or (iii) the Investor or the Company terminates this
Agreement pursuant to ‎Section 8.01(a) or
‎Section
8.01(m), then the Company shall pay the Investor, by wire transfer of same day
funds, a termination fee of $3,500,000 (the “Termination Fee”) and
reimburse the Investor in full for all accrued and unpaid Expenses; provided
that the Termination Fee and Expenses shall not be payable if the Investor has
breached in any material respect any obligation of the Investor under any
Transaction Document and has not cured such breach within the time periods
referred to in ‎Section
8.01(b)(ii).  The Termination Fee and any Expenses payable pursuant to
this ‎Section
8.02(b) shall be paid upon the earlier of (i) the closing of any
Alternative Transaction, (ii) the dismissal of the Companies’ Cases, or
(iii) the conversion of the Companies Cases to cases under chapter 7 of the
Bankruptcy Code.

     

    (c)        Notwithstanding
the foregoing, in the event that (i) the Investor terminates this Agreement
pursuant to ‎Section
8.01(d)(ii) or ‎Section
8.01(d)(iii) due to (whether independently or together with other allegations of
breach) (A) the Company materially breaching the covenant set forth in ‎Section 5.05, (B)
the Investor terminates this Agreement pursuant to ‎Section 9.11 or
(ii) the Investor terminates this Agreement pursuant to ‎Section 8.01(l),
then the Company shall promptly reimburse the Investor in full for all accrued
and unpaid Expenses but not the Termination Fee; provided that the Expenses
shall not be payable if the Investor has breached in any material respect any
material obligation of the Investor under this Agreement and has not cured such
breach within the time periods referred to in ‎Section
8.01(b)(ii).

     

    (d)        The
Company acknowledges that the agreements contained in ‎Section 8.02(b)
and ‎Section
8.02(c) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, the Investor would not enter into this
Agreement; accordingly, if the Company fails to promptly pay any amount due
pursuant to ‎Section 8.02‎(b) or ‎Section 8.02(c),
and, in order to obtain such payment, the Investor commences a suit which
results in a judgment against the Company for the fee, charges or expenses to
which reference is made in ‎Section 8.02(b) or
‎Section
8.02(c), the Company shall pay to the Investor its costs and expenses (including
attorneys’ fees) in connection with such suit, together with interest on the
amount of the fee at the prime rate of Citibank, N.A. in effect on the date such
payment was required to be made.


    
      
         


      

      
        46

        
          

        

      

      
         


      

    

     

    (e)        Subject
to the last sentence of ‎Section 8.02(a),
the Company’s obligations pursuant to this ‎Section 8.02,
including the obligation to pay the Termination Fee, shall survive termination
of this Agreement and shall constitute an allowed administrative expense of the
Companies.

     

    ARTICLE
9

    Miscellaneous

     

    Section
9.01.  Collective
Bargaining Agreements.  (a) Frontier Airlines Pilot
Association.  Subject to the provisions of the Railway Labor
Act, upon the Closing, the Investor will (i) be bound by the current
Collective Bargaining Agreement between Frontier Airlines and the Frontier
Airlines Pilots Association as amended and in effect as of the Closing (the
“FAPA CBA”),
(ii) recognize Frontier Airlines Pilots Association as the representative
of the Frontier Airlines pilots and (iii) assume employment of such pilots
represented by the Frontier Airlines Pilots Association.  Upon and
after the Closing,  the Company shall continue to be responsible for
implementing and carrying out its obligations under the FAPA CBA.

     

    (b)        International Brotherhood of
Teamsters.  Subject to the provisions of the Railway Labor Act,
upon the Closing, the Investor agrees to (i) assume the current Collective
Bargaining Agreement between Frontier Airlines and the International Brother of
Teamsters on behalf of Frontier’s Aircraft Technicians, Ground Service Equipment
Technicians, and Tool Room Attendants, as amended by the November 14, 2008 order
of the Bankruptcy Court pursuant to 11 U.S.C. 1113, and in effect as of the
Closing, (ii) assume the current Collective Bargaining Agreement between
Frontier Airlines and the International Brother of Teamsters on behalf of
Frontier’s Material Specialists, as amended by the November 14, 2008 order of
the Bankruptcy Court pursuant to 11 U.S.C. 1113, and in effect as of the
Closing and (iii) assume the current Collective Bargaining Agreement
between Frontier Airlines and the International Brother of Teamsters on behalf
of Frontier’s Aircraft Appearance Agents and Maintenance Cleaners, as amended
and in effect as of the Closing (the agreements described in clauses (i), (ii)
and (iii), the “IBT
CBAs”).  Upon and after the Closing,  the Company
shall continue to be responsible for implementing and carrying out its
obligations under the IBT CBAs.

     

    (c)        Transport Workers
Union.  Subject to the provisions of the Railway Labor Act,
upon the Closing, the Investor agrees to assume the current Collective
Bargaining Agreement between Frontier Airlines and the Transport Workers Union
of American AFL-CIO on behalf of Frontier Airlines’ Aircraft Dispatchers as
amended and in effect as of the Closing (the “TWU CBA”). Upon and after the
Closing,  the Company shall continue to be responsible for
implementing and carrying out its obligations under the TWU CBA.

     

    Section
9.02.  Survival of
Representations and Warranties.  None of the representations
and warranties contained in this Agreement shall survive the Closing
Date.


    
      
         


      

      
        47

        
          

        

      

      
         


      

    


    Section
9.03.  Specific
Performance.  The parties hereto specifically acknowledge that
monetary damages are not an adequate remedy for violations of this Agreement,
that any party hereto may, in its sole discretion, apply to a court of competent
jurisdiction for specific performance or injunctive or such other relief as such
court may deem just and proper in order to enforce this Agreement or prevent any
violation hereof and, to the extent permitted by applicable Law and to the
extent the party seeking such relief would be entitled on the merits to obtain
such relief, each party waives any objection to the imposition of such
relief.  Any requirements for the securing or posting of any bond with
such remedy are waived.

     

    Section
9.04.  Notices.  All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the date of
receipt and shall be delivered personally, mailed by registered or certified
mail (postage prepaid, return receipt requested), sent by overnight courier or
sent by fax, to the parties at the following addresses or fax numbers (or at
such other address or fax number for a party as shall be specified by like
notice):

     

    
      	
            	
              (i) 

            	
              If
      to the Investor, to:

            


    

     

    c/o
Republic Airways Holdings Inc.

    8909
Purdue Road

    Indianapolis,
IN  46268

    Attention:  Hal
Cooper

    Fax:
(317) 484-4545

     

    With a
copy to:

     

    Fulbright
& Jaworski L.L.P.

    666 Fifth
Avenue

    New York,
NY  10103

    Attention:  David
Rosenzweig, Esq.

    Fax:
(212) 318-3400

     

    
      	
            	
              (ii) 

            	
              If
      to any of the Companies, to:

            


    

     

    Frontier
Airlines Holdings, Inc.

    Frontier
Center One

    7001
Tower Rd.

    Denver,
CO  80249-7312

    Attention:
Matthew R. Henry, Esq.

    Fax:
(720) 374-4379

     

    With a
copy to:

     

    Davis
Polk & Wardwell LLP

    1600 El
Camino Real

    Menlo
Park, CA 94025

    Attention:  Daniel
G. Kelly, Jr., Esq.

    Fax:
(650) 752-2113


    
      
         


      

      
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    Davis
Polk & Wardwell LLP

    450
Lexington Avenue

    New York,
NY 10017

    Attention:
Marshall Huebner, Esq.

    Fax:
(212) 450-5572

    


    Section
9.05.  Entire
Agreement; Amendment.  (a) This Agreement and the documents
described herein (including the Plan) or attached or delivered pursuant hereto
(including, without limitation, the other Transaction Documents) set forth the
entire agreement between the parties hereto with respect to the transactions
contemplated by this Agreement.  Any provision of this Agreement may
only be amended, modified or supplemented in whole or in part at any time by an
agreement in writing among the parties hereto executed in the same manner as
this Agreement.  No failure on the part of any party to exercise, and
no delay in exercising, any right shall operate as waiver thereof, nor shall any
single or partial exercise by either party of any right preclude any other or
future exercise thereof or the exercise of any other right.  No
investigation by a party hereto of any other party hereto prior to or after the
date hereof shall stop or prevent the exercise of any right hereunder or be
deemed to be a waiver of any such right.

     

    (b)        Notwithstanding
anything to the contrary in this Agreement requiring any level of “efforts” or
“cooperation” or otherwise by the Investor or the Company, neither the Investor
nor the Company shall be obligated to agree to any amendment, modification,
revision or waiver of the DIP Credit Agreement or this Agreement (or any portion
or provision thereof).

     

    Section
9.06.  Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed to constitute an original, but all of which together shall constitute one
and the same document.

     

    Section
9.07.  Governing
Law; Jurisdiction.  To the extent not governed by the
Bankruptcy Code, this Agreement shall be governed by, and interpreted in
accordance with, the Laws of the State of New York applicable to contracts made
and to be performed in that State without reference to its conflict of laws
rules.  The parties hereto agree that the appropriate and exclusive
forum for any disputes arising out of this Agreement between the Company and the
Investor shall be the Bankruptcy Court, or if such court will not hear any such
suit, any federal or state court located in New York County, New York, and, the
parties hereto irrevocably consent to the exclusive jurisdiction of such courts,
and agree to comply with all requirements necessary to give such courts
jurisdiction.  The parties hereto further agree that the parties will
not bring suit with respect to any disputes arising out of this Agreement except
as expressly set forth below for the execution or enforcement of judgment, in
any jurisdiction other than the above specified courts.  Each of the
parties hereto irrevocably consents to the service of process in any action or
proceeding hereunder by the mailing of copies thereof by registered or certified
airmail, postage prepaid, to the address specified in ‎Section 9.04
hereof.  The foregoing shall not limit the rights of any party hereto
to serve process in any other manner permitted by the Law or to obtain execution
of judgment in any other jurisdiction.  The parties further agree, to
the extent permitted by Law, that final and non-appealable judgment against any
of them in any action or proceeding contemplated above shall be conclusive and
may be enforced in any other jurisdiction within or outside the United States by
suit on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the fact and the amount of indebtedness.  THE
PARTIES AGREE TO WAIVE ANY AND ALL RIGHTS THAT THEY MAY HAVE TO A JURY TRIAL
WITH RESPECT TO DISPUTES ARISING OUT OF THIS AGREEMENT.


    
      
         


      

      
        49

        
          

        

      

      
         


      

    

     

    Section
9.08.  Successors
and Assigns.  Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
parties hereto and their respective successors and permitted
assigns.  Neither this Agreement nor any rights hereunder shall be
assignable by any party hereto without the prior written consent of the other
parties hereto; provided,
however, that the Investor may assign, without the consent of the other
parties hereto, all or part of its interest in this Agreement and all or part
its rights hereunder to any of its Affiliates; provided, that any such
assignment by the Investor shall not relieve the Investor of any of its
obligations hereunder.  In the case of an assignment to an Affiliate
of the Investor in compliance with the provisions of this ‎Section 9.08, the
term “Investor” shall include, following such assignment, any such Affiliate to
the extent of such assignment and shall mean the assigning Investor and such
Affiliate taken collectively; provided that if such Affiliate ceases to be an
Affiliate of the Investor, the term “Investor” shall no longer include such
Person.

     

    Section
9.09.  No
Third-Party Beneficiaries.  This Agreement is for the sole
benefit of the parties hereto and their respective successors and permitted
assigns and nothing herein, express or implied, is intended or shall confer upon
any other Person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, except that the provisions of
‎Section 6.07
shall inure to the benefit of and be enforceable by the persons described
therein.

     

    Section
9.10.  Binding
Effect.  This Agreement shall not be binding upon the Companies
unless and until the Investment  Agreement and Bidding Procedures
Order shall have been entered.

     

    Section
9.11.  Company
Disclosure Schedules.  (a) The Company may revise the Company
Disclosure Schedules by delivering revised Company Disclosure Schedules to the
Investor not later than ten (10) Business Days prior to the Closing
Date.  Following receipt of such revised Company Disclosure Schedules,
the Investor shall have a right to terminate this Agreement at any time prior to
the date that is five (5) Business Days after its receipt of such revised
Company Disclosure Schedules by delivering written notice of termination to the
Company if the revised or additional disclosures set forth on such revised
Company Disclosure Schedules would reasonably be expected to have a Material
Adverse Effect.  This notice, if given, shall specify the information
forming the basis for the decision to terminate.  The Company shall
have five days after receipt of such notice to review with the Investor the
information forming the basis of the decision to terminate and to attempt to
agree on corrective measures, if any.  If the parties cannot agree on
corrective measures within such five day period, then this Agreement shall
terminate.  If this Agreement is not terminated as permitted by this
Section, the Investor shall be deemed to have accepted such revisions, and the
Company Disclosure Schedules delivered on the date hereof shall be deemed for
all purposes to be superseded by the revised Company Disclosure
Schedules.


    
      
         


      

      
        50

        
          

        

      

      
         


      

    

     

    (b)        The
Company has set forth information in the Company Disclosure Schedules in a
section thereof that corresponds to the section of this Agreement to which it
relates.  A matter set forth in one section of the Company Disclosure
Schedules need not be set forth in any other section so long as its relevance to
such other section of the Company Disclosure Schedules or section of the
Agreement is reasonably apparent on the face of the information disclosed
therein to the Investor.  The parties acknowledge and agree that (i)
the Company Disclosure Schedules to this Agreement may include certain items and
information solely for informational purposes for the convenience of the
Investor and (ii) the disclosure by the Company of any matter in the Company
Disclosure Schedules shall not be deemed to constitute an acknowledgment by the
Company that the matter is required to be disclosed by the terms of this
Agreement or that the matter is material.

     

    [Remainder
of page intentionally left blank]


    
      
         


      

      
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    IN
WITNESS WHEREOF, this Agreement has been executed on behalf of the parties
hereto by their respective duly authorized officers, all as of the date first
above written.

     

    
      
        
          	
                  REPUBLIC
      AIRWAYS HOLDINGS INC.

                
	 
      	 
      
	
                  By:

                	
                  /s/
      Robert H. Cooper

                
	 
      	
                  Name:  Robert
      H. Cooper

                
	 
      	
                  Title:
      Executive Vice President and

                            Chief
      Financial Officer

                


        

      

    

    


    
      
        
          	
                  FRONTIER
      AIRLINES HOLDINGS, INC.

                  FRONTIER
      AIRLINES, INC.

                
	 
      	 
      
	
                  By:

                	
                  /s/
      Edward M. Christie, III

                
	 
      	
                  Name:
      Edward M. Christie, III

                
	 
      	
                  Title:
      Senior Vice President and Chief

                            Financial
      Officer

                


        

      

    

    


    
      
        
          
            
              	
                      LYNX
      AVIATION, INC.

                    
	 
      	 
      
	
                      By:

                    	
                      /s/
      Matthew R. Henry

                    
	 
      	
                      Name:
      Matthew R. Henry

                    
	 
      	
                      Title:
      Corporate
Secretary

                    


            

          

        

      

    


    
      
         


      

      
        52

        
          

        

      

      
         


      

    


    LIST
OF OMITTED SCHEDULES CONTAINED IN THE COMPANY DISCLOSURE SCHEDULES

    


    
      
        
          	
                  Schedule Section

                	 
      	
                  Description

                
	
                  3.03

                	 
      	
                  Financial
      Advisors and Brokers

                
	
                  3.05

                	 
      	
                  Aircraft

                
	
                  3.06

                	 
      	
                  Written
      Notices of Federal Aviation Authority or Department of Transportation
      Violations

                
	
                  3.07

                	 
      	
                  Slots
      and Gate Interests

                
	
                  3.09

                	 
      	
                  Corporate
      Information

                
	
                  3.10

                	 
      	
                  Authorization

                
	
                  3.12

                	 
      	
                  Absence
      of Certain Changes or Events

                
	
                  3.13

                	 
      	
                  Ownership
      of Property; Real Estate; Liens

                
	
                  3.14

                	 
      	
                  Labor
      Matters

                
	
                  3.15

                	 
      	
                  Ventures,
      Subsidiaries and Affiliates; Outstanding Equity Securities and
      Indebtedness

                
	
                  3.16

                	 
      	
                  Tax
      Matters

                
	
                  3.17

                	 
      	
                  ERISA
      Plan

                
	
                  3.18

                	 
      	
                  Litigation

                
	
                  3.19

                	 
      	
                  Intellectual
      Property

                
	
                  3.20

                	 
      	
                  Environmental
      Matters

                
	
                  3.21

                	 
      	
                  Insurance

                
	
                  3.22

                	
                    

                	
                  Contracts

                


        

      

    


    
      
         


      

      
        53

        
          

        

      

      
         


      

    


    [Schedules attached to the Investment
Agreement follow]

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

     

    Schedule
1.01(b)

     

    KNOWLEDGE
GROUP

     

    1.01(b)

     

    The
following list describes the persons in the Knowledge Group of the
Companies:

     

    
      	
              ·

            	
              Sean
      Menke

            


    

     

    
      	
              ·

            	
              Ted
      Christie

            


    

     

    
      	
              ·

            	
              Matt
      Henry

            


    

     

    
      
         


      

      
        55

        
          

        

      

      
         


      

    


    Schedule
5.06

     

    TAXES

     

    
      	
               
      

            	
              ·

            	
              Audit by the City and County of
      Denver of the sales, use and occupational privilege tax returns
      of Frontier Airlines and Lynx Aviation relating to the
      period beginning October 1, 2004 and ending April 10, 2008; opened November 14,
      2007.

            


    


    
      
         


      

      
        56

        
          

        

      

      
         


      

    


    Schedule
5.10

     

    MULTIEMPLOYER
PLAN LIABILITIES

    AND
OBLIGATIONS

    


    There are
no Multiemployer Plan liabilities and obligations which, individually or in the
aggregate, will or could be reasonably likely to result in a Material Adverse
Effect.


    
      
         


      

      
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    Schedule
6.07

     

    D&O
INSURANCE PREMIUM

     

    The
Company has paid $273,197 as annual premium for D&O insurance in the fiscal
year ending March 31, 2009.



    
      
         


      

      
        58

        
          

        

      

      
         


      

    


    Schedule
7.02(g)

     

    REGULATORY
APPROVALS

    


    Approvals,
clearances, consents and authorizations required to be obtained from the DOT,
FAA, and any other Governmental Entity for the consummation of the Investment
and the other transactions contemplated hereby, as follows:

    


    
      	
              ·

            	
              DOT grant of a pendente lite
      exemption regarding the de facto transfer of the certificates and other
      economic authorities held by the
  Companies;

            


    

     

    
      	
              ·

            	
              DOT approval of the de facto
      transfer under Section 41105 of Title 49 of the certificates and other
      economic authorities held by the Companies or a disclaimer of
      jurisdiction, or any other necessary
  transfer;

            


    

     

    
      	
              ·

            	
              DOT determination that Frontier
      Airlines and Lynx remain fit, willing, and able to provide air
      transportation and are citizens of the United
    States;

            


    

     

    
      	
              ·

            	
              TSA authorization as to any
      resulting changes in TSA approved security
  program;

            


    

     

    
      	
              ·

            	
              FAA issuance of air carrier
      certificate and any necessary amendments to Operations
      Specifications.

            


    


    
      
         


      

      
        59