**EXHIBIT 10.21**

 

**PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION IN A CONFIDENTAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  THE SYMBOL “[***]” IN THIS EXHIBIT INDICATESTHAT INFORMATION HAS BEEN OMITTED.  IN SECTION 1.1- DEFINED TERMS, CERTAIN DEFINED TERMSWERE MOVED TO THE END OF SECTION 1.1 TO PRESERVE THE CONFIDENTIALITY OFTHE OMITTED INFORMATION.**

 

**CREDIT AGREEMENT**

 

Dated as of July 30,2003

 

Among

 

**FRONTIER AIRLINES, INC.,**

 

as Borrower,

 

**THE LENDERS PARTY HERETO**

 

and

 

**[***]**

 

asAdministrative Agent

 

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**TABLE OF CONTENTS**

 
| ARTICLE I DEFINITIONS AND ACCOUNTING TERMS                               |   |
|-------------------------------------------------------------------------------|--------|
| SECTION 1.1.   Certain  Defined Terms                          |   |
| SECTION 1.2.   Terms Defined  in Mortgage                      |   |
| SECTION 1.3.   Computation  of Time Periods                    |   |
| SECTION 1.4.   Accounting Terms                                |   |
|                                                                          |   |
| ARTICLE II AMOUNTS AND TERMS OF THE LOAN                                 |   |
| SECTION 2.1.   The Loan                                        |   |
| SECTION 2.2.   Making the Loan                                 |   |
| SECTION 2.3.    Fees                                           |   |
| SECTION 2.4.   Use of Proceeds                                 |   |
| SECTION 2.5.   Repayment                                       |   |
| SECTION 2.6.   Interest                                        |   |
| SECTION 2.7.   Interest Rate  and Period Determination         |   |
| SECTION 2.8.   Prepayments                                     |   |
| SECTION 2.9.   Increased Costs                                 |   |
| SECTION 2.10.   Illegality                                     |   |
| SECTION 2.11.   Payments and  Computations                     |   |
| SECTION 2.12.   Taxes                                          |   |
| SECTION 2.13.   Sharing of  Payments, Etc                      |   |
| SECTION 2.14.   Lender Cooperation                             |   |
| SECTION 2.15.   [***] Lenders                                  |   |
|                                                                          |   |
| ARTICLE III CONDITIONS TO MAKING THE LOAN                                |   |
| SECTION 3.1.   Conditions  Precedent to the Loan               |   |
|                                                                          |   |
| ARTICLE IV REPRESENTATIONS AND WARRANTIES                                |   |
| SECTION 4.1.    Representations and Warranties of the Borrower |   |
|                                                                          |   |
| ARTICLE V COVENANTS OF THE BORROWER                                      |   |
| SECTION 5.1.   Affirmative  Covenants                          |   |
| SECTION 5.2.   Compliance  with Mortgage                       |   |
| SECTION 5.3.   Maintenance  of Office                          |   |
| SECTION 5.4.   Negative Covenants                              |   |
| SECTION 5.5.   Cape Town  Convention                           |   |
|                                                                          |   |
| ARTICLE VI EVENTS OF DEFAULT                                             |   |
| SECTION 6.1.   Events of Default                               |   |
|                                                                          |   |
| ARTICLE VII THE AGENTS                                                   |   |
| SECTION 7.1.   Authorization  and Action                       |   |
| SECTION 7.2.   Each Agent’s  Reliance, Etc.               |   |
| SECTION 7.3.   The Agents  and Their Affiliates                |   |
| SECTION 7.4.   Lender Credit  Decision                         |   |

 

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| SECTION 7.5.   Indemnification                                           |   |
|-----------------------------------------------------------------------------------------|--------|
| SECTION 7.6.   Successor Agent                                           |   |
|                                                                                    |   |
| ARTICLE VIII MISCELLANEOUS                                                         |   |
| SECTION 8.1.   Amendments, Etc.                                          |   |
| SECTION 8.2.   Notices, Etc.                                             |   |
| SECTION 8.3.   No Waiver; Remedies                                       |   |
| SECTION 8.4.   Costs and Expenses                                        |   |
| SECTION 8.5.   Right of Setoff                                           |   |
| SECTION 8.6.   Binding Effect                                            |   |
| SECTION 8.7.   Assignments  and Participations                           |   |
| SECTION 8.8.   Confidentiality                                           |   |
| SECTION 8.9.   Certain  Agreements and Representations of Lenders        |   |
| SECTION 8.10.   GOVERNING LAW                                            |   |
| SECTION 8.11.   Execution in  Counterparts; Prevalence of Loan Documents |   |
| SECTION 8.12.   Jurisdiction, Etc.                                       |   |
| SECTION 8.13.   WAIVER OF  JURY TRIAL                                    |   |
| SECTION 8.14.   Severability                                             |   |
| SECTION 8.15.   Headings                                                 |   |

 

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**Schedules**

 
| Schedule I  | -      | Lending Office of Initial Lender                                                     |
|------------------|--------|--------------------------------------------------------------------------------------|
|             |   |                                                                                 |
| Schedule II | -      | Principal Payment Schedule                                                           |
|             |   |                                                                                 |
| **Exhibits**     |   |                                                                                 |
|             |   |                                                                                 |
| Exhibit A   | -      | Form of Promissory Note                                                         |
|             |   |                                                                                 |
| Exhibit B   | -      | Form of Notice of Loan                                                          |
|             |   |                                                                                 |
| Exhibit C   | -      | Form of Assignment and Acceptance                                               |
|             |   |                                                                                 |
| Exhibit D-1 | -      | Form of Opinion of David Sislowski, Esq., General Counsel  of the Borrower |
|             |   |                                                                                 |
| Exhibit D-2 | -      | Form of Opinion of [***], Special Counsel for the Borrower                      |
|             |   |                                                                                 |
| Exhibit D-3 | -      | Form of Opinion of [***], Special Aviation Counsel                              |

 

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CREDITAGREEMENT

 

Dated as of July 30,2003

 

FRONTIERAIRLINES, INC., a Colorado corporation (the “Borrower”), the lender orlenders party to this Agreement from time to time (each, a “Lender”) and[***], as Administrative Agent (as hereinafter defined) for the Lendershereunder agree as follows:

 

WHEREAS, theBorrower and [***], have entered into the Airbus Purchase Agreement, whichcovers, among other matters, the sale by [***] and the purchase by the Borrowerof certain Airbus A318 Aircraft.

 

WHEREAS, [***]has agreed to provide debt financing pursuant to the Term Sheet, to theBorrower to finance the purchase of the first four (4) Airbus A318Aircraft firmly ordered under the Airbus Purchase Agreement on the terms andsubject to the conditions set forth in the Term Sheet.

 

WHEREAS, onthe basis of the foregoing and subject to the terms and conditions of thisAgreement, the Initial Lender is prepared to make the Loan in the amount of theFinanced Purchase Price Amount for the Aircraft.

 

NOW THEREFORE,in consideration of the mutual agreements herein contained, the parties heretoin such capacity agree as follows:

 

ARTICLE IDEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.1.  Certain Defined Terms.  As used in this Agreement, the followingterms shall have the following meanings (such meanings to be equally applicableto both the singular and plural forms of the terms defined):

 

“AdministrativeAgent” means [***] or such other agents as may from time to time becomeparty hereto in such capacity pursuant to Section 7.6.

 

“Affiliate”means, as to any Person, any other Person that, directly or indirectly,controls, is controlled by or is under common control with such Person or is adirector or officer of such Person. For purposes of this definition, (i) theterm “control” (including the terms “controlling,” “controlled by” and “undercommon control with”) of a Person means the possession, direct or indirect, ofthe power to vote 5% or more of the Voting Stock of such Person or to direct orcause the direction of the management and policies of such Person, whetherthrough the ownership of Voting Stock, by contract or otherwise and (ii) neither(x) the shareholders of [***] from time to time nor (y) [***] (or any of itsAffiliates) shall be deemed to be an Affiliate of [***] for any purposehereunder.

 

“Agent”or “Agents” means, individually or collectively, as the case may be, theAdministrative Agent and the Collateral Agent under (and as defined in) theMortgage.

 

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“AirbusA318 Aircraft” means an Airbus model A318 aircraft delivered or to bedelivered, as the context may require, pursuant to the Airbus PurchaseAgreement.

 

 “Airbus Purchase Agreement” means thatcertain Airbus A318/A319 Purchase Agreement dated as of March 10, 2000between [***] and the Borrower as originally executed and as modified, amendedor supplemented in accordance with the terms thereof.

 

“Aircraft”means the Airframe, together with two Engines delivered in connection therewithor any Replacement Engines substituted for any of said Engines, whether or notany of such initial or substitute Engines may from time to time be installed onsuch Airframe or may be installed on any other airframe or any other aircraft,as further specified in the Mortgage.

 

“Airframe”means (A) the Airbus A318-111 Aircraft (excluding the Engines or enginesfrom time to time installed thereon) further identified in the Mortgage and (B) anyand all Parts (other than Engines or engines) so long as the same shall beincorporated or installed in or attached to such Airframe.

 

“AlternateRate” has the meaning specified in Section 2.7(b).

 

“ApplicableMargin” means [***].

 

“Assignmentand Acceptance” means an assignment and acceptance entered into by a Lenderand an Eligible Assignee, and accepted by the Administrative Agent, insubstantially the form of Exhibit C hereto, entered into pursuant to andin accordance with the provisions of Section 8.7 hereof.

 

“Board”means the Board of Governors of the Federal Reserve System of the United States(or any successor).

 

“Business Day” means (i) for all purposes other than as coveredby clauses (ii) and (iii) below, any day except Saturday, Sunday and any daywhich shall be in New York, New York, [***] or Denver, Colorado a legal holidayor a day on which banking institutions are authorized or required by law orother government action to close, (ii) where used in relation to payments, anyday on which banks are open for business in New York, New York, and (iii) whereused in relation to Eurodollar Rate determination, any day on which banks areopen for business in London.

 

“CancellationDate” means the date of termination in whole of the unused Commitment underand pursuant to the Term Sheet and as provided in Section 6.1.

 

“CertificatedAir Carrier” means a Citizen of the United States holding a carrieroperating certificate issued by the Secretary of Transportation pursuant toChapter 447 of Title 49, United States Code, for aircraft capable of carryingten or more individuals or 6,000 pounds or more of cargo.

 

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“Citizen ofthe United States” has the meaning specified in Section 40102(a)(15)of Title 49 of the United States Code.

 

“Commitment”means the commitment of [***] to provide financial accommodations to theBorrower as set forth in the Term Sheet.

 

“ConfidentialInformation” means the Loan Documents and any information that the Borrowerfurnishes to the Agent or any Lender in writing designated as confidential, butdoes not include any such information (i) that is or becomes generallyavailable to the public or (ii) that is or becomes available to the Agentor such Lender from a source other than the Borrower, unless the Agent orLender has the actual knowledge (without being obligated to conduct anyinvestigation) that such information has been made available by such source inbreach of a confidentiality agreement which such source is bound by withrespect to such information.

 

“Consolidated”refers to the consolidation of accounts in accordance with GAAP.

 

“Convention”means the Convention on International Interests in Mobile Equipment and theProtocol to the Convention on Matters Specific to Aircraft Equipment signed inCape Town on 16 November 2001.

 

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

 

“EligibleAssignee” has the meaning specified in Section 8.7.

 

“Engine”means (A) each of the two CFM International model CFM56 engines installedon the Aircraft at the time of delivery to the Borrower of the Aircraft, asfurther specified in the Mortgage, whether or not from time to time installedon the Aircraft or installed on any other aircraft and (B) any ReplacementEngine that may from time to time be substituted for such engine; together, ineach case, with any and all Parts incorporated or installed in or attachedthereto.

 

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

 

“EurodollarRate” means, with respect to the Loan, the rate per annum (rounded to thenearest 1/100 of 1%) equal to the quotation that appears on Page 3750 ofthe Telerate screen (or otherwise on such screen or on such other screen, page orservice as may replace the Telerate screen) as of 11:00 A.M., London time,two Business Days prior to the beginning of the applicable Interest Period asthe rate for dollar deposits to be delivered on the first day of such InterestPeriod and maintained for such Interest Period. In the event that such rate does not so appear on the Telerate Screen(or otherwise as aforesaid), the “Eurodollar Rate” for purposes of thisdefinition shall be the arithmetic average (rounded to the nearest 1/100 of 1%)of the offered quotation to first-class banks in the interbank Eurodollarmarket by each Reference Bank in London for dollar deposits 

 

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with maturities comparable to the applicable Interest Period determinedas of 11:00 A.M. (London time) on the date which is two Business Daysprior to the commencement of such Interest Period.  If any one or more of the Reference Banksshall not furnish such timely information to the Administrative Agent for thepurpose of determining any such interest rate, the Administrative Agent shalldetermine such interest rate on the basis of timely information furnished bythe remaining Reference Bank or Reference Banks.  

 

“Events ofDefault” has the meaning specified in Section 6.1.

 

“FAA”means the United States Federal Aviation Administration, and any agency orinstrumentality of the United States government succeeding to its functions.

 

“FederalAviation Act” means Title 49 of the United States Code, as amended, or anysuccessor or substitute provisions.

 

“FederalBankruptcy Code” means the Bankruptcy Act of Title 11 of the United StatesCode, as amended from time to time, and any successor provisions thereof.

 

“FinancedPurchase Price Amount” means [***]

 

“GAAP”means generally accepted accounting principles in the United States, as ineffect from time to time and consistently applied.

 

“GovernmentalAuthority” means any nation or government, any state or other politicalsubdivision thereof and any entity exercising executive, legislative, judicial,regulatory or administrative functions of or pertaining to government.

 

“InflightEquipment” has the meaning specified in the Mortgage.

 

“InitialLender” means [***], as the initial lender under this Agreement.

 

“InterestPayment Date” has the meaning specified in Section 2.6.

 

“InterestPeriod” means the period commencing on (and including) the date of the Loanand ending on (but excluding) the date three months after such date and,thereafter, each subsequent period commencing on (and including) the last dayof the immediately preceding Interest Period and ending on (but excluding) thedate three months after such date; provided, however, that:

 

(i)                                     wheneverthe last day of any Interest Period would otherwise occur on a day other than aBusiness Day, the last day of such Interest Period shall be extended to occuron the next succeeding Business Day, provided, however, that, ifsuch extension would cause the last day of such Interest Period to occur in thenext following calendar month, the last day of such Interest Period shall occuron the next preceding Business Day; and

 

(ii)                                  wheneverthe first day of any Interest Period occurs on a day of a calendar month forwhich there is no numerically corresponding day in the 

 

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calendar month that succeeds such calendarmonth by the number of months equal to the number of months in such InterestPeriod, such Interest Period shall end on the last Business Day of suchsucceeding calendar month.

 

“InternalRevenue Code” means the Internal Revenue Code of 1986, as amended from timeto time.

 

“LeaseAssignment” has the meaning specified in the Mortgage.

 

“LendingOffices” means, with respect to the Initial Lender, the office of suchLender specified on Schedule I hereto, and with respect to any otherLender, means the office of such Lender specified in the Assignment andAcceptance pursuant to which it became a Lender, or such other office of suchLender as such Lender may from time to time specify to the Borrower and theAdministrative Agent.

 

“Lien”means any lien (statutory or otherwise), security interest or other charge orencumbrance of any kind, or any other type of preferential arrangement,including, without limitation, the lien or retained security title of aconditional vendor.

 

“Loan”means the loan made pursuant to this Agreement.

 

“LoanDocuments” means this Agreement, the Notes, the Mortgage, each LeaseAssignment and any other agreement, document or instrument entered into ordelivered pursuant to any of the foregoing.

 

“Manufacturer”means Airbus.

 

“Mortgage”means the Mortgage and Security Agreement, dated as of July 30, 2003,between the Borrower and the Collateral Agent named therein, as originallyexecuted and as supplemented by the Mortgage and Security Agreement Supplement No. 1,as the same may be further amended, modified or supplemented from time to time.

 

“Note”means a promissory note of the Borrower issued in connection with and payableto the order of a Lender, in substantially the form of Exhibit A hereto,evidencing the indebtedness of the Borrower to such Lender resulting from theLoan.

 

“Notice ofLoan” has the meaning specified in Section 2.2.

 

“Obligations”means the Borrower’s obligation to make the due and punctual payment of (i) theprincipal and interest from time to time due on the Loan and the Notes(including interest at the rate specified herein after the occurrence of anEvent of Default, including interest accruing after the maturity of the Loanand interest accruing after the filing of any petition in bankruptcy, or thecommencement of any insolvency, reorganization or like proceeding, relating tothe Borrower, whether or not a claim for post-filing or post-petition interestis allowed in such proceeding), (ii) all sums payable by the Borrowerunder the Mortgage and (iii) all other sums payable by the Borrower to theLenders or the Agent under Sections 2.9, 2.12 and 8.4 of, or elsewhere under,this Agreement.

 

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“Officer’sCertificate” means, as to any company, a certificate signed by theChairman, the Vice Chairman, the President, any Executive Vice President, anyDirector, any Senior Vice President, any Vice President, any Assistant VicePresident, the Treasurer or any Assistant Treasurer, the Secretary, or anyAssistant Secretary of such company.

 

“OtherTaxes” means any and all present or future stamp or documentary taxes orany other excise or property taxes, charges or similar levies arising from anypayment made hereunder or from the execution, delivery or enforcement of, orotherwise with respect to, this Agreement.

 

“Parts”means any and all appliances, parts, instruments, appurtenances, accessories,furnishings, seats, buyer furnished equipment, and other equipment of whatevernature (other than (a) complete Engines or engines and (b) any itemsleased by the Borrower from a third party (including without limitation leasedInflight Equipment)) which may from time to time be incorporated or installedin or attached to any Airframe or any Engine.

 

“PaymentDate” shall have the meaning specified in Section 2.5.

 

“Person”means an individual, partnership, corporation, a business trust, joint stockcompany, trust, unincorporated association, joint venture, governmentalauthority or other entity of whatever nature.

 

 “Principal Payment Date” has themeaning specified in Section 2.5.

 

“ReferenceBanks” means the principal London offices of Credit Lyonnais and Citibank,NA or such other bank or banks as may be appointed by the Administrative Agentin consultation with the Lenders.

 

“Register”has the meaning specified in Section 8.7(c).

 

“RelatedLoan Documents” means the “Loan Documents” as defined in the definitivecredit agreement(s) and mortgage and security agreement(s) for the RelatedObligations.

 

“RelatedObligations” means “Obligations” as defined in the mortgage and securityagreement entered into by the Borrower pursuant to the Term Sheet with respectto the financing of any other Airbus A318 Aircraft thereunder.

 

“RequiredLenders” means Lenders holding not less than 662/3%of the aggregate outstanding principal amount of the Loan.

 

“Requirementof Law” means, as to any Person, any law, treaty, rule or regulationor determination of an arbitrator or a court or other Governmental Authority,in each case applicable to or binding upon such Person or any of its propertyor to which such Person or any of its property is subject.

 

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“SecuredObligations” has the meaning specified in the Mortgage.

 

“Subsidiary”of any Person means any corporation, partnership, joint venture, limitedliability company, trust or estate of which (or in which) more than 50% of (a) theissued and outstanding capital stock having ordinary voting power to elect amajority of the Board of Directors of such corporation (irrespective of whetherat the time capital stock of any other class or classes of such corporationshall or might have voting power upon the occurrence of any contingency), (b) theinterest in the capital or profits of such limited liability company,partnership or joint venture or (c) the beneficial interest in such trustor estate is at the time directly or indirectly owned or controlled by suchPerson, by such Person and one or more of its other Subsidiaries or by one ormore of such Person’s other Subsidiaries.

 

“Taxes”has the meaning specified in Section 2.12.

 

“10-YearLoan” means a Loan with a final maturity date of the tenth anniversary ofthe date the Loan is made.

 

“12-YearLoan” means a Loan with a final maturity date of the twelfth anniversary ofthe date the Loan is made.

 

“Term Sheet”means the Term Sheet for the Financing Support of A318 Aircraft dated May 21,2003, between [***] and the Borrower.

 

“U.C.C.”has the meaning set forth in Section 3.1(d).

 

“VotingStock” means capital stock issued by a corporation, or equivalent interestsin any other Person, the holders of which are ordinarily, in the absence ofcontingencies, entitled to vote for the election of directors (or personsperforming similar functions) of such Person, even if the right so to vote hasbeen suspended by the happening of such a contingency.

 

[***] Adefinition identifying a lender has been redacted from the definitions listedabove.  The redaction is not indicated atin the definition list above since the alphabetical listing of the redactionwould indicate the name of the confidential lender.

 

SECTION 1.2.   Terms Defined in Mortgage. Terms for which meanings are provided inany Mortgage are, unless otherwise defined herein, used in this Agreement withsuch meanings.

 

SECTION 1.3.   Computation of Time Periods.  In this Agreement in the computation ofperiods of time from a specified date to a later specified date, the word “from”means “from and including” and the words “to” and “until” each mean “to butexcluding.”

 

SECTION 1.4.  Accounting Terms.  All accounting terms not specifically definedherein shall be construed in accordance with GAAP.

 

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ARTICLE IIAMOUNTS AND TERMS OF THE LOAN

 

SECTION 2.1.  The Loan. The Initial Lender agrees, subject to the terms and conditionshereinafter set forth, to make the Loan to the Borrower on a Business Dayduring the period from the date hereof until the Cancellation Date in an amountequal to the Financed Purchase Price Amount of the Aircraft.

 

SECTION 2.2.  Making the Loan.  (a)  The Loan shall be made onnotice, given not later than 5:00 P.M. (New York time) on the fourthBusiness Day prior to the date of the proposed Loan, by the Borrower to theAdministrative Agent, which shall give to the Initial Lender prompt noticethereof.  Such notice of the Loan (the “Noticeof Loan”) shall be by telephone, confirmed immediately in writing, ortelecopier or telex, in substantially the form of Exhibit B-1 hereto,specifying therein (i) the requested date of the Loan (the actual date ofthe Loan being the date on which the Loan is made), (ii) the aggregateamount of the Loan, (iii) the date of delivery to the Borrower of theAircraft to secure the Loan, (iv) whether the Loan is to be a 10-Year Loanor a 12-Year Loan, and (v) identifying information for the Aircraft to befinanced.  The Administrative Agentshall, after receipt of such notice and prior to two (2) Business Daysbefore the requested date of the Loan, provide to the Borrower and the InitialLender a schedule containing the Principal Payment Dates for the Loan andthe amount of principal of the Loan to be paid on each such date, which shallbe attached hereto as Schedule II. The Initial Lender shall, before 11:00 A.M. (New York time) on thedate of the Loan, make available for the account of its Lending Office to theAdministrative Agent at the account of the Administrative Agent at CreditLyonnais, 1301 Avenue of the Americas, New York, New York Branch (accountnumber [***], in same day funds, the amount of the Loan.  After the Administrative Agent’s receipt ofsuch funds and upon fulfillment of the applicable conditions set forth in Article III,the Administrative Agent will make such funds available to the Borrower bydirect transfer to [***] at such account as [***] may direct.

 

SECTION 2.3.  Fees. The Borrower agrees to pay to the Administrative Agent an administrativefee in the amount of [***] per annum for the Loan, payable on the date of theborrowing of the Loan and annually on the anniversary of such date until theObligations shall have been satisfied in full.

 

SECTION 2.4.  Use of Proceeds.  The proceeds of the Loan shall be available(and the Borrower agrees that it shall use such proceeds) solely to finance thepurchase of the Aircraft.

 

SECTION 2.5.  Repayment. The Borrower shall repay to the Administrative Agent for the ratableaccount of each Lender the principal amount of the Loan in the monthlyinstallments on the monthly anniversary dates of the date of borrowing of theLoan (each such monthly anniversary date (or quarterly anniversary date to theextent specified by the Administrative Agent as described below) being referredto as a “Payment Date”) in accordance with Schedule II; providedthat the Payment Dates for the Loan may be changed from monthly to quarterly atthe option of the Administrative Agent, in which case the Administrative Agentshall provide to the Borrower and the Lender a revised Schedule IIreflecting such change, the terms 

 

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of which revised Schedule shall be conclusive and binding on theparties hereto, absent manifest error.

 

SECTION 2.6.  Interest. (a)  Scheduled Interest.  The Borrower shall pay interest on the unpaidprincipal amount of the Loan from the date of the Loan until the Loan shall bepaid in full, payable in arrears, on each Payment Date, at an interest rate perannum equal to the sum of (x) the Eurodollar Rate for the then applicableInterest Period plus (y) the Applicable Margin, except as otherwiseprovided in Section 2.6(b), 2.7(b) or 2.10.

 

### (b)                                 DefaultInterest.  Upon the occurrence andduring the continuance of an Event of Default or a Default in the payment ofany principal of the Loan, the Borrower shall pay interest on the unpaidprincipal amount of the Loan, payable upon demand at a rate per annum equal atall times to [***] per annum above the rate per annum that would otherwise berequired to be paid on the Loan pursuant to paragraph (a) above.  In addition, if any interest, fee or otheramount payable hereunder is not paid when due, then, to the fullest extentpermitted by law, the Borrower shall pay interest on such amount from the datesuch amount shall be due until such amount shall be paid in full, payable ondemand, at a rate per annum equal at all times to [***] per annum above therate of interest then applicable on the Loan pursuant to paragraph(a) above.

###  

SECTION 2.7.   Interest Rate and PeriodDetermination.  (a)  Theinterest rate for each Interest Period shall be established by theAdministrative Agent.  The AdministrativeAgent shall give prompt notice to the Borrower and the Lenders of theapplicable interest rate determined by the Administrative Agent from time totime and the rate, if any, furnished by each Reference Bank and used by theAdministrative Agent for the purpose of determining the Eurodollar Rate.

 

### (b)                                 Inthe event that, prior to the first day of any Interest Period, theAdministrative Agent shall have determined, acting reasonably (whichdetermination shall be conclusive and binding upon the Borrower), that, byreason of circumstances affecting the market generally, adequate and reasonablemeans do not exist for ascertaining the Eurodollar Rate for such InterestPeriod, the Administrative Agent shall give telecopy or telephonic noticethereof to the Borrower and the Lenders as soon as practicable thereafter.  In such case, during the next thirty days,the Borrower and the Administrative Agent, in consultation with the Lenders,shall negotiate a mutually satisfactory interest rate to be substituted for theEurodollar Rate.  If a substitutedinterest rate is agreed upon, it shall be effective from the first day of theapplicable Interest Period.  If theBorrower and the Administrative Agent fail to agree upon a substituted interestrate, the applicable interest rate for the Loan shall be equal to the sum of (x)the rate determined in good faith by the Administrative Agent, in consultationwith the Lenders, to be the Lenders’ cost to maintain the Loan plus (y) theApplicable Margin.  The replacementinterest rate determined pursuant to this paragraph (b) (not includingthe Applicable Margin) shall hereinafter be referred to as the “AlternateRate”.

###  

SECTION 2.8.  Prepayments. (a)  The Borrower may, upon at least ten (10) BusinessDays notice to the Administrative Agent stating the proposed date and aggregateprincipal amount of the prepayment (unless the giving of ten Business Daysnotice as aforesaid is not practicable, in which event the Borrower agrees togive such shorter notice as is practicable but in any event not to be less thanfive Business Days), and if such notice is given the Borrower 

 

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shall prepay the outstanding principal amount of the Loan in whole butnot in part (except as otherwise expressly permitted pursuant to Section 2.14hereof), together with accrued interest to the date of such prepayment on theprincipal amount prepaid, and without premium or penalty except to the extentof any costs required to be reimbursed by Borrower pursuant to the applicableprovisions of Section 8.4(b) hereof.  The Loan, if prepaid pursuant to this Section 2.8,may not be reborrowed.

 

### (b)                                 Ifan Event of Loss occurs with respect to the Aircraft, the Borrower shall prepaythe outstanding principal amount of the Loan in whole, together with accruedinterest to the date of such prepayment and all other Obligations then due andpayable; provided that (x) the date of prepayment shall not be later than theearlier of the third Business Day following receipt of insurance proceeds inrespect of the Aircraft or the first Business Day following the 90th day afterthe occurrence of such Event of Loss, (y) the date of such prepayment shall benotified by the Borrower to the Administrative Agent at least five BusinessDays prior thereto and (z) such prepayment shall be without premium orpenalty except to the extent of such costs are required to be reimbursed byBorrower pursuant to the applicable provisions of Section 8.4(b) hereof.  

###  

SECTION 2.9.  Increased Costs.  (a)  If the adoption of or any change inany Requirement of Law or in the interpretation or application thereof orcompliance by any Lender with any applicable request or directive (whether ornot having the force of law but, if not having the force of law, is generallyapplied by the Lender to similarly situated borrowers) from any central bank orother Governmental Authority made subsequent to the date hereof:

 

###### (i)                                     shall subject anyLender to any Tax of any kind whatsoever with respect to this Agreement or theLoan made or held by it, or change the basis of taxation of payments to suchLender in respect thereof (except for Taxes covered by Section 2.12 andchanges in the rate of tax on the overall net income of such Lender);

######  

###### (ii)                                  shall impose, modifyor hold applicable any reserve, special deposit, compulsory loan or similarrequirement against assets held by, deposits or other liabilities in or for theaccount of, advances, loans or other extensions of credit by, or any otheracquisition of funds by, any office of such Lender; or

######  

###### (iii)                               shall impose on suchLender any other condition;

######  

and the resultof any of the foregoing is to increase the cost to such Lender, by an amountthat such Lender, acting reasonably, deems to be material, of making, fundingor maintaining the Loan based upon the Eurodollar Rate, or to reduce any amountreceivable hereunder in respect thereof, then, in any such case, the Borrowershall promptly pay such Lender, upon its demand, any additional amountsnecessary to compensate such Lender for such increased cost or reduced amountreceivable.  If any Lender becomesentitled to claim any additional amounts pursuant to this paragraph, it shallpromptly notify the Borrower (with a copy to the Administrative Agent) of theevent by reason of which it has become so entitled.

 

### (b)                                 Withoutduplication of any amount payable by Borrower under § 2.9(a), if anyLender, acting reasonably, shall have determined that the adoption of or anychange in any Requirement of Law regarding capital adequacy or in theinterpretation or application thereof or 

 

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### compliance by such Lender orany corporation controlling such Lender with any request or directive regardingcapital adequacy (whether or not having the force of law but, if not having theforce of law, is generally applied by the Lender to similarly situatedborrowers) from any Governmental Authority made subsequent to the date hereofshall have the effect of reducing the rate of return on such Lender’s or suchcorporation’s capital as a consequence of its obligations hereunder to a levelbelow that which such Lender or such corporation could have achieved but forsuch adoption, change or compliance (taking into consideration such Lender’s orsuch corporation’s policies with respect to capital adequacy) by an amountdeemed by such Lender, acting reasonably, to be material, then from time totime, after submission by such Lender to the Borrower (with a copy to theAdministrative Agent) of a written request therefor, the Borrower shall pay tosuch Lender such additional amount or amounts as will compensate such Lender orsuch corporation for such reduction. 

###  

### (c)                                  Acertificate as to any additional amounts payable pursuant to this Section submittedby any Lender to the Borrower (with a copy to the Administrative Agent) shallbe conclusive in the absence of manifest error. Notwithstanding anything to the contrary in this Section, the Borrowershall not be required to compensate a Lender pursuant to this Section forany amounts incurred more than 180 days prior to the date that such Lendernotifies the Borrower of such Lender’s intention to claim compensationtherefor; provided that, if the circumstances giving rise to such claimhave a retroactive effect, then such 180 day period shall be extended toinclude the period of such retroactive effect.

###  

SECTION 2.10.  Illegality. Notwithstanding any other provision of this Agreement, if any Lender,acting reasonably, shall determine that the introduction after the date of thisAgreement of or any change after the date of this Agreement in or in theinterpretation of any law or regulation makes it unlawful, or any central bankor other governmental authority asserts that it is unlawful, for any Lender orits Lending Office to make, fund, continue or maintain its portion of the Loanbearing interest based upon the Eurodollar Rate as contemplated herein,then:  (i) such Lender shall notifythe Administrative Agent and the Borrower of the same, (ii) such portionof the Loan will convert into a Loan based upon the Alternate Rate (asdetermined pursuant to Section 2.7(c) except that only the affectedLender shall be involved) such that the interest due and payable thereon shallbe the sum of (x) the Applicable Margin and (y) the Alternate Rate ineffect from time to time, and (iii) the obligation of such Lender to make,fund, continue or maintain its portion of the Loan based upon the EurodollarRate shall be suspended until the Administrative Agent shall notify theBorrower and the Lenders that the circumstances causing such suspension nolonger exist.

 

SECTION 2.11.   Payments and Computations.  (a)  The Borrower shall make eachpayment hereunder and under the Notes not later than 11:00 A.M. (New Yorktime) on the day when due in U.S. dollars to the Administrative Agent at CreditLyonnais, New York Branch, 1301 Avenue of the Americas, New York, New York,[***] (or to such other account as shall be designated by the AdministrativeAgent from time to time) in same day funds. The Administrative Agent willpromptly thereafter but in no event later than 3:00 P.M. (New York time)on the date such funds are received by the Administrative Agent from theBorrower cause to be distributed like funds relating to the payment ofprincipal or interest ratably (other than amounts payable pursuant to Section 2.9,2.12 or 8.4(c) and amounts reflecting different prevailing interest rateson the outstanding Loan) to the Lenders for the account of their 

 

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respective Lending Offices, and like funds relating to the payment ofany other amount payable to any Lender to such Lender for the account of itsLending Office, in each case to be applied in accordance with the terms of thisAgreement. Upon its acceptance of an Assignment and Acceptance and recording ofthe information contained therein in the Register pursuant to Section 8.7(d),from and after the effective date specified in such Assignment and Acceptance,the Administrative Agent shall make all payments hereunder and under the Notesin respect of the interest assigned thereby to the Lender assignee thereunder,and the parties to such Assignment and Acceptance shall make all appropriateadjustments in such payments for periods prior to such effective date directlybetween themselves.

 

### (b)                                 TheBorrower hereby authorizes each Lender, if and to the extent any payment owedto such Lender is not made by the Borrower when due hereunder or under any Noteheld by such Lender, to charge from time to time against any or all of theBorrower’s accounts with such Lender any amount so due.

###  

### (c)                                  Allcomputations of interest based on the Eurodollar Rate or the Alternate Rateshall be made by the Administrative Agent on the basis of a year of 360 days,in each case for the actual number of days (including the first day but excludingthe last day) occurring in the Interest Period for which such interest ispayable. Each determination by the Administrative Agent of an interest ratehereunder shall be conclusive and binding for all purposes, absent manifesterror.

###  

### (d)                                 Wheneverany payment hereunder or under the Notes shall be stated to be due on a dayother than a Business Day, such payment shall be made on the next succeedingBusiness Day, and such extension of time shall in such case be included in thecomputation of payment of interest; provided, however, that, ifsuch extension would cause payment of interest on or principal of the Loan ifaccruing interest at the Eurodollar Rate to be made in the next followingcalendar month, such payment shall be made on the immediately precedingBusiness Day.

###  

SECTION 2.12.  Taxes.  (a) All payments made by the Borrower under this Agreement and the Notes shall bemade free and clear of, and without deduction or withholding for or on accountof, any present or future income, stamp or other taxes, levies, imposts,duties, charges, fees, deductions or withholdings, now or hereafter imposed,levied, collected, withheld or assessed by any Governmental Authority or anypolitical subdivision or taxing authority thereof or therein (all such taxes,levies, imposts, duties, charges, fees, deductions and withholdings beinghereinafter called “Taxes”).  Ifany Taxes are required to be withheld from any amounts payable to any Agent orany Lender hereunder or under the Notes, the amounts so payable to such Agentor such Lender shall be increased to the extent necessary to yield to suchAgent or such Lender (after payment of all Taxes) interest or any such otheramounts payable hereunder at the rates or in the amounts specified in thisAgreement and the Notes.  In addition,the Borrower shall pay any Other Taxes to the appropriate taxing authority inaccordance with applicable law.  Wheneverany Taxes or Other Taxes are payable by the Borrower, as promptly as possiblethereafter the Borrower shall send to the Administrative Agent for its ownaccount or for the account of such Lender, as the case may be, a certified copyof an original official receipt received by the Borrower showing paymentthereof.  If the Borrower fails to payany Taxes or Other Taxes which are subject to indemnification hereunder whendue to the appropriate taxing 

 

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authority or fails to remit to the Administrative Agent the requiredreceipts or other required documentary evidence, the Borrower shall indemnifythe Agents and the Lenders for any incremental taxes, interest or penaltiesthat may become payable by each Agent or any Lender as a result of any suchfailure.  The agreements of the Borrowerin this subsection shall survive the termination of this Agreement and theCommitments and the payment of the Notes and all other amounts payablehereunder and under the other Loan Documents.

 

### (b)                                 Notwithstandingany provision to the contrary herein, the Borrower shall have no liability topay or indemnify any Lender, any Agent or any of their respective Affiliateswith respect to any of the following Taxes or Other Taxes:

###  

##### (1)                                  AnyTaxes or Other Taxes to the extent such Taxes or Other Taxes are imposed as aresult of a present, former, or future connection between any Lender or eachAgent or Affiliate thereof and the jurisdiction imposing such Taxes or OtherTaxes (other than a connection arising solely from such Agent, Lender orAffiliate having executed, delivered, performed its obligations, received apayment under or enforced this Agreement or any related document or the Notes)or any political subdivision or taxing authority thereof or therein; or 

#####  

##### (2)                                  AnyTaxes or Other Taxes to the extent imposed as a result of a Lender’s failure (i) tocomply with the requirements of subsection (c) hereunder or (ii) toprovide any other necessary exemption certificates or other requireddocumentation that is required by law, treaty, or regulation as a condition tothe allowance of any reduction in the rate of such Taxes or Other Taxes;provided, however, that in the case of both (i) and (ii) that theLender is legally entitled to comply with such requirements.

#####  

##### (3)                                  AnyTaxes or Other Taxes imposed upon such Lender, Agent or Affiliate based uponits net income, net profits or net gains;

#####  

##### (4)                                  Anyincremental Taxes or Other Taxes imposed upon such Lender as of the date ofsuch transfer (or imposed based on a Requirement of Law enacted prior to thedate of such transfer but effective as of a later date) solely as a result of (i) atransfer by any Lender of its lending office in respect of the Loan other thanas a result of a circumstance contemplated by Sections 2.9, 2.10 or 2.14or otherwise at the request of Borrower or (ii) the gross negligence,willful misconduct or breach of any obligation undertaken by any Lender orAgent hereunder; or

#####  

##### (5)                                  AnyTaxes or Other Taxes the imposition or amount of which is being contested byBorrower on reasonable grounds by appropriate proceedings or, at Borrower’srequest, by any Agent or Lender pursuant to the provision of Section 2.12(f) duringthe period such contest is pending provided, however, that if the Agentor the Lender is required to pay such Taxes or Other Taxes regardless of suchcontest, the Borrower shall pay such Taxes or Other Taxes to the appropriateGovernment Authority and shall be entitled to the refund, if any, received upona successful resolution of such claim.

#####  

### (c)                                  EachLender that is not incorporated under the laws of the United States of Americaor a state thereof agrees that, on or before the first Interest Payment Dateafter the date on which such Lender becomes a Lender hereunder, it will deliverto the Borrower and the Agent two duly completed copies of United StatesInternal Revenue Service (“IRS”) Form W-8BEN 

 

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### or W-8ECI or other applicableform, as the case may be, certifying that it is entitled to receive paymentsunder this Agreement without deduction or withholding of any United StatesFederal income taxes or at a reduced rate. Each such Lender also agrees to deliver to the Borrower and theAdministrative Agent two further copies of the said IRS Form W-8BEN or W-8ECIor other or successor applicable forms or other manner of certification, as thecase may be, on or before the date that any such form expires or becomesobsolete or after the occurrence of any event requiring a change in the mostrecent form previously delivered by it to the Borrower, and such extensions orrenewals thereof as may reasonably be requested by the Borrower or theAdministrative Agent.  Notwithstandingany other provision of this paragraph, a Lender shall not be required todeliver any form pursuant to this paragraph that such Lender is not legallyable to deliver.

###  

### (d)                                 TheBorrower shall duly file IRS Forms 1042 and 1042S or appropriate successorforms annually with respect to all interest payments hereunder as required bythe Code and applicable IRS regulations and procedures and shall provide theAdministrative Agent with copies of the forms so filed.

###  

### (e)                                  Ifthe Administrative Agent or any Lender receives a refund in respect of Taxes orOther Taxes paid by the Borrower, which in the good faith judgment of suchLender is allocable to such payment, it shall promptly pay such refund,together with any other amounts paid by the Borrower in connection with suchrefunded Taxes or Other Taxes, to the Borrower, net of all out-of-pocketexpenses of such Lender incurred in obtaining such refund, provided, however,that the Borrower agrees to promptly return such refund to the AdministrativeAgent or the applicable Lender as the case may be, if it receives notice fromthe Administrative Agent or applicable Lender that such Administrative Agent orLender is required to repay such refund unless such repayment is due to eventsdescribed in (b)(6) hereof.

###  

### (f)                                    Ifa written claim is made against any Lender or either Agent for any Taxes orOther Taxes, such Lender or Agent, as the case may be, shall promptly notifythe Borrower in writing of such claim, and upon written request of Borrowershall, at the Borrower’s sole cost and expense, contest the validity or amountof such claim or permit the Borrower, to contest the validity or amount of suchclaim, provided, however, that the Lender or Agent shall not berequired and Borrower shall not be permitted to contest such claim unless (i) theBorrower shall provide to the Lender an opinion of the Chief Financial Officerof the Borrower reasonably satisfactory to such Lender stating that a reasonablebasis exists to contest such claim, (ii) the Borrower agrees to indemnifythe Lender for any additional taxes, interest, penalties or other expensesincurred as a result of such contest and (iii) the contest of such claimwould not, in the sole judgment, exercised in good faith, of such Lender, bematerially disadvantageous to such Lender. The failure of a Lender or Agent to promptly notify the Borrower of anysuch claim as required above in this clause (f) shall not diminishthe obligations of the Borrower under this Section 2.12 with respect tosuch claim, except to the extent that a contest that would otherwise beavailable in accordance with this clause (f) is precluded as a resultof such failure or to the extent of any penalty that would have been avoidedabsent such failure.

###  

SECTION 2.13.   Sharing of Payments, Etc.  If any Lender shall obtain any payment(whether voluntary, involuntary, through the exercise of any right of set-off,or otherwise) on account of the Loan (other than amounts due to such Lenderpursuant to 

 

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Section 2.9, 2.12 or 8.4(c) or on account of differing ratesof interest on portions of the Loan) in excess of its ratable share of paymentson account of the Loan obtained by all the Lenders (such Lender, the “OverpaidLender”), such Overpaid Lender shall forthwith (x) notify theAdministrative Agent of such overpayment (and the Administrative Agent shallnotify the other Lenders thereof) and (y) pay to the other Lenders suchamounts in cash as shall be necessary (as calculated by the AdministrativeAgent) to cause such Overpaid Lender to share the excess payment ratably witheach of them, and the Overpaid Lender, upon such payment to each other Lender,shall be deemed to have purchased a participation in such other Lender’s Loansin an amount equal to such payment; provided, however, that ifall or any portion of such excess payment is thereafter recovered from suchOverpaid Lender, such payment to and purchase from each Lender shall berescinded and such Lender shall repay to the Overpaid Lender such payment tothe extent of such recovery together with an amount equal to such Lender’sratable share (according to the proportion of (i) the amount of suchLender’s required repayment to (ii) the total amount so recovered from theOverpaid Lender) of any interest or other amount paid or payable by theOverpaid Lender in respect of the total amount so recovered. The Borroweragrees that any Lender so deemed to have purchased a participation from anotherLender pursuant to this Section 2.13 may, to the fullest extent permittedby law, exercise all its rights to obtain payment (including the right ofset-off) with respect to such participation as fully as if such Lender were thedirect creditor of the Borrower in the amount of such participation.

 

SECTION 2.14.  Lender Cooperation.  (a)  Each Lender agrees that, uponthe occurrence of any event giving rise to the operation of Section 2.9,2.10, 2.12(a) or 2.15 with respect to such Lender, it will, if requestedby the Borrower and at the Borrower’s cost for all of such Lender’sout-of-pocket costs and expenses, use reasonable efforts (subject to overallpolicy considerations of such Lender) to designate another lending office forthe Loan with the objective of avoiding or, if avoidance is not possible,reducing the consequences of such event; provided, that such designationis made on terms that, in the reasonable judgment of such Lender, cause suchLender and its lending office(s) to suffer no economic, legal or regulatorydisadvantage.

 

### (b)                                 Ifany Lender is unable to avoid or reduce, to Borrower’s reasonable satisfaction,the amount payable by Borrower as compensation or indemnification underSections 2.9, 2.10, 2.12(a) or 2.15, the Borrower shall be entitled(but shall not be obligated) to prepay such Obligations as shall then be dueand owing to such Lender in respect of the portion of the Loan owing to it,with accrued interest to the date of prepayment but without premium or penalty.

###  

### (c)                                  Nothingin this Section shall affect or postpone any of the obligations of theBorrower or the rights of any Lender pursuant to Section 2.9, 2.10,2.12(a), 2.15 or elsewhere in the Loan Documents.

###  

SECTION 2.15.  [***] Lenders. The Borrower acknowledges and agrees that [***] or another [***] Lenderor if the Loan is transferred to [***], [***] may obtain the funds necessaryfor it to make or maintain the Loan (in whole or in part) from commercial banksor other institutional lenders who, as a condition to providing such funds, mayrequire an [***] Lender or [***] to enter into covenants substantially similarto those described in Section 2.9. The Borrower agrees to pay on demand,and without duplication of any other amount it is 

 

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required to pay under Section 2.9, to [***] or any other [***]Lender or [***] an amount equal to any amount [***] or any other  [***] Lender or [***] is required to payunder any such covenant as a result of costs so imposed on [***] or another[***] Lender or [***] which are of general application, subject, in each caseto the provisions of Section 2.14 requiring mitigation on the part of therelevant commercial bank or other institutional lender (it being agreed thatthe Borrower shall be entitled to prepay the Loan in connection with a claimunder this Section 2.15 to the extent provided in Section 2.14(b)).  Any such [***] Lender shall provide theBorrower with a statement in reasonable detail of such costs.

 

ARTICLE IIICONDITIONS TO MAKING THE LOAN

 

SECTION 3.1.   Conditions Precedent to theLoan.  The obligation of the InitialLender to make the Loan shall be subject to the following conditions precedent.

 

### (a)                                  TheAdministrative Agent shall have received from the Borrower a duly executedNotice of Loan in accordance with Section 2.2 hereof.

###  

### (b)                                 TheAdministrative Agent shall have received, each dated the date of the Loan, inform and substance satisfactory to the Administrative Agent:

###  

###### (i)                                     one Note to theorder of the Initial Lender evidencing the Loan;

######  

###### (ii)                                  an Officer’sCertificate of the Borrower stating (and such statements shall be true) that:

######  

(x)  the representations and warranties made bythe Borrower and contained in the Loan Documents are correct on and as of thedate of the Loan before and after giving effect to the Loan and to theapplication of the proceeds therefrom, as though made on and as of such date,and

 

(y)  no Default or Event of Default has occurredand is continuing;

 

###### (iii)                               certified copies of theresolutions of the Board of Directors of the Borrower approving the AirbusPurchase Agreement and the financing of the Aircraft purchased thereunder andof all documents evidencing other necessary corporate action and governmentalapprovals, if any, to authorize the execution of such Loan Documents and theperformance of the Borrower’s obligations thereunder;

######  

###### (iv)                              a certificate of theSecretary or an Assistant Secretary of the Borrower certifying the names andtrue signatures of the officers of the Borrower authorized to sign the LoanDocuments and the other documents to be delivered hereunder and thereunder;

######  

###### (v)                                 a favorable opinion ofDavid Sislowski, Esq., General Counsel of the Borrower, substantially inthe form of Exhibit D-1 hereto;

 

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###### (vi)                              a favorable opinion of[***] special counsel for the Borrower, substantially in the form of Exhibit D-2hereto; and

######  

###### (vii)                           a favorable opinion of[***], special aviation counsel for the Administrative Agent, substantially inthe form of Exhibit D-3 hereto and addressed to the Administrative Agentand the Lender.

######  

### (c)                                  Thefollowing documents shall have been duly authorized, executed and delivered bythe respective parties thereto, shall each be reasonably satisfactory in formand substance to the Administrative Agent and shall be in full force and effectand copies (or an excerpt in the case of the purchase agreement described inclause (i) below) shall have been delivered to the Administrative Agentand its counsel:

###  

###### (i)                                     subject to theprior written consent of [***] and the manufacturer, a copy of Clauses 12 and13 of the Airbus Purchase Agreement, certified by an authorized representativeof the Borrower to be true and correct and not to be terminated, amended or waivedby the Borrower in respect of the Aircraft;

######  

###### (ii)                                  a bill of salecovering the Aircraft executed by [***] in favor of the Borrower, dated thedate of delivery of the Aircraft; 

######  

###### (iii)                               a bill of sale for theAircraft on AC Form 8050-2 or such other form as may be approved by theFAA on the date of delivery of the Aircraft executed by [***] in favor of theBorrower and dated such date; and

######  

###### (iv)                              a consent and agreement,relating to the Collateral Agent’s Lien on the Purchase Agreement Rightspursuant to the Mortgage, executed by [***] in favor of the Borrower, dated thedate of delivery of the Aircraft.

######  

### (d)                                 TheAdministrative Agent shall have received a copy of the Mortgage, duly executedby the Borrower, together with:

###  

###### (i)                                     acknowledgmentcopies or stamped receipt copies of proper financing statements, duly filedunder the Uniform Commercial Code (the “U.C.C.”) of all jurisdictionsthat the Administrative Agent may deem necessary or desirable in order toperfect the security interests created by the Mortgage,

######  

###### (ii)                                  evidence of thecompletion of all recordings and filings of or with respect to the Mortgagethat the Administrative Agent may deem necessary or desirable in order toperfect the security interest created by the Mortgage,

######  

###### (iii)                               at the Borrower’s cost,an independent insurance broker’s report (including confirmation of coverage)and certificate(s) of insurance, in form and substance satisfactory to theAdministrative Agent, acting reasonably, as to due compliance with the terms ofsuch Mortgage relating to insurance with respect to the Aircraft, and

 

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###### (iv)                              evidence that all otheractions necessary or, in the reasonable opinion of the Administrative Agent,desirable to perfect and protect the security interests created by the Mortgagehave been taken (including all FAA filings).

######  

### (e)                                  TheBorrower has (subject to the filing of an appropriate bill of sale with theFAA) good title to the Aircraft, free and clear of Liens other than thePermitted Liens.

###  

### (f)                                    TheAircraft shall have been duly certified by the FAA as to type and airworthinessand the Administrative Agent has received a copy of such certification (ordelivery of such copy will occur as soon after the closing as is practicable).

###  

### (g)                                 Noapplicable law or regulation or interpretation thereof by appropriateregulatory authorities shall be in effect which, in the opinion of theAdministrative Agent or its counsel, acting reasonably, would materiallyrestrict, prohibit or make it illegal for the Initial Lender to make the Loanor to realize the benefits of the security afforded by the Mortgage in respectthereof; and no action or proceeding shall have been instituted nor shallgovernment action be threatened before any court or governmental agency, norshall any order, judgment or decree have been issued or proposed to be issuedby any court or governmental agency at the time of the Loan to set aside,restrain, enjoin or prevent the completion and consummation of this Agreementor the transactions contemplated hereby.

###  

### (h)                                 TheAdministrative Agent shall have received payment of the arrangement fee in theamount of 1% of the principal amount of the Loan and of the initialadministrative fee pursuant to Section 2.3, and payment of or arrangementssatisfactory to the Administrative Agent for the payment of all costs andexpenses then required to be paid by the Borrower under Section 8.4.

###  

Promptly uponthe filing of the Mortgage and the Mortgage Supplement (as defined in suchMortgage) and the due registration of the Aircraft, in each case pursuant tothe Federal Aviation Act, the Borrower shall cause [***], special aviationcounsel for the Administrative Agent, to deliver an opinion as to the due andvalid registration of the Aircraft in the name of the Borrower, the duerecording of the Borrower’s FAA bill of sale, the Mortgage and the MortgageSupplement and the lack of filing of any intervening documents with respect tothe Aircraft.

 

ARTICLE IVREPRESENTATIONS AND WARRANTIES

 

SECTION 4.1.   Representations and Warrantiesof the Borrower.  (a)  TheBorrower represents and warrants, on the date of this Agreement, as follows:

 

###### (i)                                     The Borrower is acorporation duly organized, validly existing and in good standing under thelaws of the State of Colorado; is duly qualified to do business as a foreigncorporation in each jurisdiction in which its operations or the nature of itsbusiness requires, other than failures to qualify which would not have amaterial adverse effect on the ability of the Borrower to perform itsobligations under this Agreement; is a 

 

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###### Certificated Air Carrier; maintains its location (as such term isdefined in Article 9 of the Uniform Commercial Code) in Colorado; holdsall licenses, certificates, permits and franchises from the appropriateagencies of the United States and/or all other governmental authorities havingjurisdiction necessary to authorize the Borrower to engage in air transport andto carry on scheduled passenger service as presently conducted; and has thecorporate power and authority to conduct its business as it is presently beingconducted.

######  

###### (ii)                                  The execution,delivery and performance by the Borrower of this Agreement and the consummationof the transactions contemplated hereby, are within the Borrower’s corporatepowers, have been duly authorized by all necessary corporate action, and do notcontravene (1) the Borrower’s articles of incorporation or by-laws or (2) anyRequirement of Law or any contractual restriction binding on or affecting theBorrower and do not result in or require the creation of any lien, securityinterest or other charge or encumbrance (other than pursuant to the Mortgage)upon or with respect to any of its properties.

######  

###### (iii)                               No authorization or approvalor other action by, and no notice to or filing with, any Governmental Authorityor any other third party is required for the due execution, delivery andperformance by the Borrower of this Agreement, except for (1) the orders,permits, waivers, exemptions, authorizations and approvals of the GovernmentalAuthorities having jurisdiction over the Borrower, which orders, permits,waivers, exemptions, authorizations and approvals have been duly obtained andare in full force and effect and (2) any normal periodic and otherreporting requirements under the Federal Aviation Act and the regulationspromulgated thereunder and the applicable rules and regulations of theFAA, in each case to the extent required to be given or obtained only after thedate of this Agreement.

######  

###### (iv)                              This Agreement has beenduly executed and delivered by the Borrower. This Agreement is the legal, valid and binding obligation of theBorrower enforceable against the Borrower in accordance with its terms, exceptas such enforceability may be limited by bankruptcy, insolvency,reorganization, moratorium or similar laws relating to or limiting creditors’rights generally or by equitable principles relating to enforceability.

######  

###### (v)                                 The Consolidatedbalance sheet of the Borrower and its Subsidiaries as at the end of the mostrecent fiscal year of the Borrower for which such balance sheet is available,and the related Consolidated statements of operations and cash flows of theBorrower and its Subsidiaries for such fiscal year, accompanied by an opinionof KPMG LLP, independent public accountants, and the Consolidated balance sheetof the Borrower and its Subsidiaries as at the end of the most recent fiscalquarter of the Borrower (excluding the final fiscal quarter of each fiscalyear) for which such balance sheet is available, and the related Consolidatedstatements of operations and cash flows of the Borrower and its Subsidiariesfor the fiscal period then ended, duly certified by the Chief Financial Officerof the Borrower, copies of which have been furnished to the AdministrativeAgent, fairly present, subject, in the case of said balance sheet as at the endof such fiscal quarter, and said statements of operations and cash flows forsuch fiscal period then ended, to year-end audit adjustments, the Consolidatedfinancial condition of 

 

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###### the Borrower and its Subsidiaries as at such dates and the Consolidatedresults of the operations of the Borrower and its Subsidiaries for the periodended on such dates, all in accordance with GAAP.

######  

###### (vi)                              There is no pending orthreatened action, suit, investigation, litigation or proceeding affecting theBorrower or any of its Subsidiaries before any court, governmental agency orarbitrator that (1) is reasonably likely to have a material adverse effecton (A) the business, condition (financial or otherwise), operations orproperties of the Borrower and its Subsidiaries taken as a whole, (B) therights and remedies of the Administrative Agent or any Lender under thisAgreement or (C) the ability of the Borrower to perform its obligationsunder this Agreement, or (2) purports to affect the legality, validity orenforceability of this Agreement or the consummation of the transactionscontemplated hereby.

######  

###### (vii)                           The Borrower is not engagedin the business of extending credit for the purpose of purchasing or carryingmargin stock (within the meaning of Regulation U issued by the Board ofGovernors of the Federal Reserve System).

######  

### (b)                                 Onthe date of the Loan, the Borrower represents and warrants as set forth in Section 4.1(a) asof such date and as follows:

###  

###### (i)                                     The Borrower hasthe corporate power and authority to own the Aircraft securing the Loan.

######  

###### (ii)                                  The execution,delivery and performance by the Borrower of each Loan Document to which it isor will be a party, and the consummation of the transactions contemplatedthereby, are within the Borrower’s corporate powers, have been duly authorizedby all necessary corporate action, and do not contravene (1) the Borrower’sarticles of incorporation or by-laws or (2) any Requirement of Law or anycontractual restriction binding on or affecting the Borrower and do not resultin or require the creation of any Lien, security interest or other charge orencumbrance (other than pursuant to the Mortgage relating to the Loan) upon orwith respect to any of its properties.

######  

###### (iii)                               No authorization orapproval or other action by, and no notice to or filing with, any GovernmentalAuthority or any other third party is required for the due execution, deliveryand performance by the Borrower of any Loan Document to which it is or will bea party, except for (1) the orders, permits, waivers, exemptions,authorizations and approvals of the Governmental Authorities havingjurisdiction over the operation of the Aircraft by the Borrower, which orders,permits, waivers, exemptions, authorizations and approvals have been dulyobtained or will prior to the date of the Loan be duly obtained, and will onthe date of the Loan be in full force and effect and (2) any normalperiodic and other reporting requirements under the Federal Aviation Act andthe regulations promulgated thereunder and the applicable rules andregulations of the FAA, in each case to the extent required to be given orobtained only after the date of the Loan.

 

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###### (iv)                              Except for (1) thefiling for recording pursuant to the Federal Aviation Act of the Mortgage andthe Mortgage Supplement attached thereto and made a part thereof, (2) thefiling of financing statements (and continuation statements at periodicintervals) with respect to the security and other interests created by suchdocuments under the Uniform Commercial Code of Colorado (which financingstatement the Borrower has caused or is in the process of causing to bepresented in due form for filing to the appropriate filing office in Colorado)and (3) the taking of possession by the Collateral Agent of the originalcounterparts of such Mortgage and the Mortgage Supplement, no further action,including any filing or recording of any document (including any financingstatement in respect thereof under Article 9 of the Uniform CommercialCode of any applicable jurisdiction), is necessary or advisable in order toestablish or perfect the Collateral Agent’s security interest in the Aircraft(granted pursuant to the Mortgage and the Mortgage Supplement) as against theBorrower and any third parties in any applicable jurisdictions in the UnitedStates.

######  

###### (v)                                 There has not occurredany event which constitutes a Default or an Event of Default which iscontinuing and there has not occurred any event which constitutes or would,with the passage of time or the giving of notice, or both, constitute an Eventof Loss.

######  

###### (vi)                              This Agreement has been,and each of the other Loan Documents to which the Borrower will be a party whendelivered hereunder will have been, duly executed and delivered by theBorrower. This Agreement is, and each of the Loan Documents to which theBorrower will be a party when delivered hereunder will be, the legal, valid andbinding obligation of the Borrower enforceable against the Borrower inaccordance with their respective terms except as such enforceability may belimited by bankruptcy, insolvency, reorganization, moratorium or similar lawsrelating to or limiting creditors’ rights generally or by equitable principlesrelating to enforceability.

######  

###### (vii)                           There is no pending orthreatened action, suit, investigation, litigation or proceeding affecting theBorrower or any of its Subsidiaries before any court, governmental agency orarbitrator that (1) is reasonably likely to have a material adverse effecton (A) the business, condition (financial or otherwise), operations orproperties of the Borrower and its Subsidiaries taken as a whole, (B) therights and remedies of the Agents or any Lender under the Loan Documents or (C) theability of the Borrower to perform its obligations under the Loan Documents or (2) purportsto affect the legality, validity or enforceability of this Agreement or anyLoan Document or the consummation of the transactions contemplated hereby orthereby.

######  

###### (viii)                        The Borrower has good title tothe Aircraft, free and clear of Liens other than the Permitted Liens.  The Aircraft has been duly certified by theFAA as to type and airworthiness, has been insured by the Borrower inaccordance with the terms of such Mortgage and is in the condition and state ofrepair required under the terms of such Mortgage.

######  

###### (ix)                                The Collateral Agent,as secured party under the Mortgage, is entitled to all of the benefits andprotections of Section 1110 of the Federal Bankruptcy Code with 

 

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###### respect to the Aircraft and the Mortgage, including with respect to itsright to take possession of the Airframe and Engines in the event of a caseunder Chapter 11 of the Federal Bankruptcy Code in which the Borrower is adebtor.

######  

###### (x)                                   Since March 31,2003, there has been no material adverse change in the condition (financial orother), business, assets, properties or prospects of the Borrower.

######  

ARTICLE VCOVENANTS OF THE BORROWER

 

SECTION 5.1.   Affirmative Covenants.  So long as the Loan shall remain unpaid orany Lender shall have any Commitment, the Borrower will:

 

(a)                                  Compliancewith Laws, Etc.  Comply, and causeeach of its Subsidiaries to comply, in all respects, with all applicable laws,rules, regulations and orders other than those the noncompliance with whichwould not have a material adverse effect on the Consolidated business, assets,properties or condition (financial or otherwise) of the Borrower and itsSubsidiaries taken as a whole or on the ability of the Borrower to perform itsobligations under any Loan Document to which it is a party.

 

(b)                                 Paymentof Taxes, Etc.  Pay and discharge,and cause each of its Subsidiaries to pay and discharge, before the same shallbecome delinquent, (i) all taxes, assessments and governmental charges orlevies imposed upon it or upon its property (other than such taxes, assessmentsand governmental charges or levies as are being contested by Borrower onreasonable grounds by appropriate proceedings during the period suchproceedings remain pending and for which adequate reserves have beenestablished in accordance with GAAP) and (ii) all lawful claims that, ifunpaid, might become a Lien upon its property, other than any such tax,assessment and governmental charge or levy or any such lawful claim which, ifunpaid, in the aggregate, would not have a material adverse effect on theConsolidated business, assets, properties or condition (financial or otherwise)of the Borrower and its Subsidiaries taken as a whole or on the ability of theBorrower to perform its obligations under any Loan Document to which it is aparty.

 

(c)                                  Preservationof Corporate Existence Etc.  Exceptas otherwise expressly provided herein, preserve and maintain and cause each ofits Subsidiaries to preserve and maintain, its corporate existence, rights(charter and statutory) and franchises; provided, however, that neither the Borrowernor any of its Subsidiaries shall be required to preserve any right orfranchise if the Board of Directors of the Borrower or such Subsidiary shalldetermine that the preservation thereof is no longer desirable in the conductof the business of the Borrower or such Subsidiary.  Notwithstanding the foregoing, the Borrowershall at all times be a Certificated Air Carrier and the Mortgage shall at alltimes be entitled to all of the benefits and protections of Section 1110of the Federal Bankruptcy Code.

 

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(d)                                 VisitationRights.  At any reasonable time andfrom time to time, permit the Administrative Agent or any of the Lenders or anyagents or representatives thereof, to examine and make copies of and abstractsfrom the records and books of account of, and visit the properties of, theBorrower and any of its Subsidiaries, and to discuss the affairs, finances andaccounts of the Borrower and any of its Subsidiaries with any of their officersor directors and with their independent certified public accountants.

 

(e)                                  Keepingof Books.  Keep, and cause each ofits Subsidiaries to keep, proper books of record and account, in accordancewith GAAP.

 

(f)                                    ReportingRequirements.  Furnish to theLenders:

 

(i)                                     assoon as available, but not later than 90 days after the close of each fiscalyear of the Borrower, an audited balance sheet and related statements of theBorrower at and as of the end of such fiscal year, together with an auditedstatement of income and cash flows of the Borrower for such fiscal year, eachof which shall be prepared in accordance with GAAP and shall be accompanied byan unqualified opinion of a firm of independent public accounts of nationallyrecognized standing that said financial statements fairly present in allmaterial respects the financial condition and results of operation of theBorrower as at the end of, and for, such period in accordance with GAAP;

 

(ii)                                  assoon as available, but not later than 60 days after the close of each of thefirst three quarters of each fiscal year of the Borrower, an unaudited balancesheet of the Borrower at and as of the end of such quarter, together with anunaudited statement of income and cash flows of the Borrower for such quarter,each of which shall be prepared in accordance with GAAP, certified by the ChiefFinancial Officer of the Borrower that said financial statements fairly presentin all material respects the financial condition and results of operation ofthe Borrower as at the end of, and for, such period in accordance with GAAP(subject to normal year-end audit adjustments);

 

(iii)                               onan annual basis, together with the financial statements delivered pursuant tothe preceding paragraph (i), a certificate of the chief financial officer,Treasurer, any Vice President, or other officer of the Borrower elected by theBorrower’s Board of Directors stating that such authorized officer has reviewedthe activities of the Borrower and that, to the best knowledge of suchauthorized officer, there exists as at the relevant date no Default or Event ofDefault hereunder or should a Default or Event of Default exist, setting fortha description of such Default or Event of Default and the relevant measuresbeing taken to cure the same;

 

(iv)                              simultaneouslywith the filing thereof or the mailing thereof to its shareholders, copies ofall such financial statements, SEC Forms 10-K and 10-Q reports, notices ofproxy statements and any other documents as the Borrower shall file with theSecurities and Exchange Commission or mail to its shareholders or to creditorsgenerally;

 

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(v)                                 fromtime to time, such other information as the Administrative Agent or any Lendermay reasonably request; and

 

(vi)                              promptlyafter the occurrence thereof and actual knowledge thereof by a responsibleofficer of the Borrower, notice to the Administrative Agent and the Lenders ofany Default or Event of Default.

 

SECTION 5.2.   Compliance with Mortgage.  Comply with the terms and provisions of theMortgage.

 

SECTION 5.3.   Maintenance of Office.  Maintain an office in the State of Coloradowhere notices, presentations and demands in respect of this Agreement and theother Loan Documents may be made upon it (which office shall be maintained at theaddress specified in Section 8.2 until such time as the Borrower shallhave notified the Administrative Agent of a change of location).

 

SECTION 5.4.  Negative Covenants.  So long as the Loan shall remain unpaid orany Lender shall have any Commitment, the Borrower will not make or permit, orpermit any of its Subsidiaries to make or permit, any change in accountingpolicies or reporting practices, except as required or permitted by GAAP.

 

SECTION 5.5.  Cape Town Convention.  The parties undertake to enter into newtransaction documents, effective from the date the Convention takes effect inthe United States that constitute (an) “international interest(s)” under theConvention.  The new transactiondocuments shall retain the commercial agreements set forth herein modified onlyto ensure that an international interest is constituted and to reflect andenhance the enforceability of the commercial agreements of the parties in thecontext of the Convention.  The partiesintend that the Lender’s current priority position is not prejudiced thereby,and, should there be a risk thereof that the creditor finds unacceptable, thecurrent documents shall remain in force. In that case, an additional international interest shall be created infavor of the Lender and appropriate subordination arrangements shall bemade.  All such international interest(s)shall be registered in the international registry, on that effective date, byone party and the other shall consent thereto. Reasonable costs arising under this clause shall be for the account ofBorrower.

 

ARTICLE VIEVENTS OF DEFAULT

 

SECTION 6.1.  Events of Default.  Each of the following events shall constitutean event of default with respect to the Loan (“Events of Default”)(whether any such event shall be voluntary or involuntary or come about or beeffected by operation of law or pursuant to or in compliance with any judgment,decree or order of any court or any order, rule or regulation of anyadministrative or government body) and each such Event of Default shallcontinue so long as, but only as long as, it shall not have been remedied:

 

(a)                                  (i) theBorrower shall fail to make any payment within two (2) Business Days afterthe same shall have become due of principal of, or interest on, the Loan or any

 

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Note evidencing the Loan; or (ii) theBorrower shall fail to make any payment when the same shall become due of anyother Obligations, and such failure shall continue unremedied for five (5) BusinessDays after the receipt by the Borrower of written notice of such failure fromthe Administrative Agent;

 

(b)                                 theBorrower shall have failed to perform or observe (or cause to be performed andobserved) any other covenant or agreement to be performed or observed by itunder this Agreement, the Mortgage or any other Loan Document, and such failureshall continue unremedied for a period of thirty (30) days after knowledgethereof by a senior officer of the Borrower or, if earlier, receipt by theBorrower of written notice thereof from the Administrative Agent; or

 

(c)                                  anyrepresentation or warranty made by the Borrower herein or in such Mortgage orany document or certificate furnished by the Borrower in connection herewith ortherewith or pursuant hereto or thereto shall prove to have been incorrect inany material respect at the time made, and, if capable of cure is not curedwithin ten (10) Business Days of the actual knowledge thereof by a seniorofficer of the Borrower or, if earlier, receipt by the Borrower of writtennotice thereof from the Administrative Agent; or

 

(d)                                 thecommencement of an involuntary case or other proceeding in respect of theBorrower in an involuntary case under the federal bankruptcy laws, as now orhereafter constituted, or any other applicable federal or state bankruptcy,insolvency or other similar law in the United States or seeking the appointmentof a receiver, liquidator, assignee, custodian, trustee, sequestrator (orsimilar official) of the Borrower or for all or substantially all of itsproperty, or seeking the winding-up or liquidation of its affairs and thecontinuation of any such case or other proceeding undismissed and unstayed fora period of sixty (60) consecutive days or an order, judgment or decree shallbe entered in any proceeding by any court of competent jurisdiction appointing,without the consent of the Borrower, a receiver, trustee or liquidator of theBorrower, or of any substantial part of its property, or sequestering anysubstantial part of the property of the Borrower and any such order, judgmentor decree or appointment or sequestration shall be final or shall remain inforce undismissed, unstayed or unvacated for a period of sixty (60) days afterthe date of entry thereof; or

 

(e)                                  thecommencement by the Borrower of a voluntary case under the Federal bankruptcylaws, as now constituted or hereafter amended, or any other applicable federalor state bankruptcy, insolvency or other similar law in the United States, orthe consent by the Borrower to the appointment of or taking possession by areceiver, liquidator, assignee, trustee, custodian, sequestrator (or othersimilar official) of the Borrower or for all or substantially all of itsproperty, or the making by the Borrower of any assignment for the benefit of creditorsor the Borrower shall take any corporate action to authorize any of theforegoing; or

 

(f)                                    theBorrower shall fail to carry and maintain on or with respect to the Aircraft(or cause to be carried and maintained) insurance required to be maintained inaccordance with the provisions of Section 3.6 of the Mortgage; or

 

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(g)                                 theLien of the Mortgage ceases to be a valid and enforceable, first and priorperfected Lien on the Collateral; or

 

(h)                                 theBorrower fails or ceases to be a Certificated Air Carrier or shall have beensuspended as a Certificated Air Carrier and such suspension shall not be liftedor vacated within thirty (30) days, or if reinstatement of the same cannotreasonably be accomplished within such thirty (30) day period, such furtherperiod, not to exceed ninety (90) days, during which the Borrower is diligentlypursuing such reinstatement, provided that during any such period, but for suchsuspension, no other Event of Default shall have occurred; or

 

(i)                                     theBorrower shall default in the payment when due of any principal of or intereston, or fail to make a scheduled rental payment on, any of its otherindebtedness or any lease obligation; or (ii) any event specified in anynote, agreement, indenture, lease or other document evidencing or relating toany indebtedness or any lease obligation shall occur, and, after giving effectto any applicable notice and/or grace periods, the effect of such default (inthe case of clause (i)) or event (in the case of clause (ii)) is to cause, orto permit the holder or holders of such indebtedness or lease obligation (or atrustee or agent on behalf of such holder or holders) to cause, suchindebtedness or lease obligation to become due or to be terminated, or to beprepaid in full (whether by redemption, purchase, offer to purchase orotherwise), prior to its stated maturity; provided that, (x) theoutstanding amount of such indebtedness, (y) the capitalized amount of suchlease obligation shall, singly or in the aggregate, be in excess of$10,000,000, and (z) in respect of any lease obligations, the event givingrise to any such default is not frivolous or vexatious; or

 

(j)                                     forso long as the Loan is held in whole or in part by a Lender, the maturity of anyRelated Obligations then held in whole or in part by such Lender or itsAffiliates shall have been accelerated; or 

 

(k)                                  forso long as the Loan is held in whole or in part by an  [***] Lender, Borrower shall default underthe Airbus Purchase Agreement or any other contractual or financial obligationbetween the Borrower or its Affiliates, on the one hand, and an [***] Lender orits Affiliates, on the other hand

 

provided,however, that, notwithstanding anything to the contrary contained in Section 6.1(b) or(c), any failure of the Borrower to perform or observe any covenant, condition,agreement or any error in a representation or warranty shall not constitute anEvent of Default if such failure or error is caused solely by reason of anevent that constitutes an Event of Loss affecting the Aircraft so long as theBorrower is continuing to comply with all of the terms of Section 3.5 ofthe Mortgage.

 

Upon theoccurrence of any Event of Default, the Administrative Agent (i) shall atthe request, or may with the consent, of the Required Lenders, by notice to theBorrower, declare the Commitment to be terminated, whereupon the same shallforthwith terminate, and/or (ii) shall at the request, or may with theconsent, of the Required Lenders, by notice to the Borrower, declare the Loanand all the Notes, all interest thereon and all other amounts payable underthis 

 

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Agreement inconnection with the Loan to be forthwith due and payable and/or the Commitmentterminated, whereupon the Loan and Notes, all such interest and all suchamounts shall become and be forthwith due and payable, without presentment,demand, protest or further notice of any kind, all of which are herebyexpressly waived by the Borrower and the Commitment shall be terminated; provided,however, that in the event of an actual or deemed entry of an order forrelief with respect to the Borrower under the Federal Bankruptcy Code, (A) theCommitment shall automatically be terminated and (B) all Notes, all suchinterest and all such amounts shall automatically become and be due andpayable, without presentment, demand, protest or any notice of any kind, all ofwhich are hereby expressly waived by the Borrower.  In addition, upon the occurrence of an Eventof Default, the Agents shall be entitled to exercise all rights, residing inpowers provided in the Mortgage or by applicable law. 

 

ARTICLE VIITHE AGENTS

 

SECTION 7.1.   Authorization and Action.  Each Lender hereby appoints and authorizeseach Agent to take such action as agent on its behalf and to exercise suchpowers and discretion under the Loan Documents as are expressly delegated tosuch Agent by the terms thereof, together with such powers and discretion asare reasonably incidental thereto.  EachAgent shall have no duties or responsibilities except those expressly set forthin this Agreement and any other Loan Document. As to any matters not expressly provided for by the Loan Documents(including, without limitation, enforcement or collection of the Notes), eachAgent shall not be required to exercise any discretion or take any action, butshall be required to act or to refrain from acting (and shall be fullyprotected in so acting or refraining from acting) upon the instructions of theRequired Lenders, and such instructions shall be binding upon all Lenders andall holders of Notes; provided, however, that no Agent shall berequired to take any action that exposes such Agent to personal liability orthat is contrary to this Agreement or applicable law or is not within thepowers and discretion expressly delegated to such Agent pursuant to the LoanDocuments.  Each Agent agrees to give toeach Lender prompt notice of each notice received by it from the Borrowerpursuant to the terms of this Agreement.

 

SECTION 7.2.   Each Agent’s Reliance, Etc.  Neither Agent nor such Agent’s directors,officers, agents or employees shall be liable for any action taken or omittedto be taken by it or them under or in connection with the Loan Documents,except for its or their own gross negligence or willful misconduct. Withoutlimitation of the generality of the foregoing, each Agent:  (i) may treat the payee of any Note asthe holder thereof until the Administrative Agent receives and accepts anAssignment and Acceptance entered into by the Lender that is the payee of suchNote, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.7;(ii) may consult with legal counsel (including counsel for the Borrower),independent public accountants and other experts selected by it and shall notbe liable for any action taken or omitted to be taken in good faith by it inaccordance with the advice of such counsel, accountants or experts; (iii) makesno warranty or representation to any Lender and shall not be responsible to anyLender for any statements, warranties or representations (whether written ororal) made in or in connection with the Loan Documents; (iv) shall nothave any duty to ascertain or to inquire as to the performance or observance ofany of the terms, covenants or conditions of the Loan 

 

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Documents on the part of the Borrower or to inspect the property(including the books and records and the Airbus A318 Aircraft) of the Borrower;(v) shall not be responsible to any Lender for the due execution,legality, validity, enforceability, genuineness, sufficiency or value of, orthe perfection or priority of any Lien or security interest created orpurported to be created under or in connection with, the Loan Documents or anyother instrument or document furnished pursuant thereto; and (vi) shallincur no liability under or in respect of the Loan Documents by acting upon anynotice, consent, certificate or other instrument or writing (which may be bytelecopier, telegram or telex) believed by it to be genuine and signed or sentby the proper party or parties.

 

SECTION 7.3.   The Agents and Their Affiliates.  Each Agent (or an Affiliate of such Agent)shall have the same rights and powers under the Loan Documents as any otherLender and may exercise the same as though it were not an Agent, and the term “Lender”or “Lenders” shall, as the context requires, include each Agent in itsindividual capacity.  Each Agent and itsAffiliates may accept deposits from, lend money to, act as trustee underindentures of, accept investment banking engagements from and generally engagein any kind of business with, the Borrower, any of its Subsidiaries and anyPerson who may do business with or own securities of the Borrower or any suchSubsidiary, all as if such Agent were not an Agent and without any duty toaccount therefor to the Lenders.

 

SECTION 7.4.   Lender Credit Decision.  Each Lender acknowledges that it has,independently and without reliance upon the Agent or any other Lender and basedon the financial statements referred to in Section 4.1(a)(v) and suchother documents and information as it has deemed appropriate, made its owncredit analysis and decision to enter into this Agreement. Each Lender also acknowledgesthat it will, independently and without reliance upon any Agent or any otherLender and based on such documents and information as it shall deem appropriateat the time, continue to make its own credit decisions in taking or not takingaction under this Agreement.

 

SECTION 7.5.  Indemnification.  The Lenders agree to indemnify each Agent andsuch Agent’s directors, officers, agents or employees (to the extent notreimbursed by the Borrower), ratably according to the respective principalamounts of the Notes then held by each such Lender, from and against any andall liabilities, obligations, losses, damages, penalties, actions, judgments,suits, costs, expenses or disbursements of any kind or nature whatsoever thatmay be imposed on, incurred by, or asserted against such Agent in any wayrelating to or arising out of the Loan Documents or any action taken or omittedby such Agent under the Loan Documents, provided that no Lender shall beliable for any portion of such liabilities, obligations, losses, damages,penalties, actions, judgments, suits, costs, expenses or disbursementsresulting from an Agent’s gross negligence or willful misconduct. Withoutlimitation of the foregoing, each Lender agrees to reimburse each Agentpromptly upon demand for its ratable share of any out-of-pocket expenses(including counsel fees) incurred by such Agent in connection with thepreparation, execution, delivery, administration, modification, amendment orenforcement (whether through negotiations, legal proceedings or otherwise) of,or legal advice in respect of rights or responsibilities under, the LoanDocuments, to the extent that such Agent is not reimbursed for such expenses bythe Borrower.

 

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SECTION 7.6.  Successor Agent.  Subject to the appointment and acceptance ofa successor agent as provided below, either Agent may resign at any time bygiving written notice thereof to the Lenders and the Borrower and may beremoved at any time with or without cause by the Required Lenders.  Upon any such resignation or removal, or theearlier written request of such Agent to resign addressed as aforesaid, theRequired Lenders shall have the right to appoint a successor Agent.  If no successor Agent shall have been so appointedby the Required Lenders, and shall have accepted such appointment, within 30days after the retiring Agent’s giving of notice of resignation or the RequiredLenders’ removal of the retiring Agent, then the retiring Agent may, on behalfof the Lenders, appoint a successor Agent, which may be ACL.  Upon the acceptance of any appointment as anAgent by a successor Agent, such successor Agent shall thereupon succeed to andbecome vested with all the rights, powers, discretion, privileges and duties ofthe retiring Agent, and the retiring Agent shall be discharged from its dutiesand obligations under the Loan Documents. After any retiring Agent’s resignation or removal hereunder as an Agent,the provisions of this Article VII (including, without limitation, Section 7.5)shall inure to the retiring Agent’s benefit as to any actions taken or omittedto be taken by it while it was an Agent under the Loan Documents.  

 

ARTICLE VIII

 

# MISCELLANEOUS

 

SECTION 8.1.  Amendments, Etc.  No amendment or waiver of any provision ofthis Agreement or the Notes or the other Loan Documents, nor consent to anydeparture by the Borrower therefrom, shall in any event be effective unless thesame shall be in writing and signed by the Required Lenders, and then suchwaiver or consent shall (except as otherwise expressly agreed, in writing, bysuch Required Lenders) be effective only in the specific instance and for thespecific purpose for which given; provided, however, that noamendment, waiver or consent shall, unless in writing and signed by all theLenders (or, in the case of clauses (b) and (c) below, by the holderof each Note affected thereby), do any of the following: (a) reduce theprincipal of, or interest on, the Loan or the Notes or any other amountshereunder, (b) postpone any date fixed for any payment of principal of, orinterest on, the Loan or the Notes or any other amounts payable hereunder, (c) changethe aggregate unpaid principal amount of the Loan or the Notes, or the numberof Lenders, that shall be required for the Lenders or any of them to take anyaction hereunder, (d) release any material portion of any Collateral; or (e) amendthis Section 8.1; and providedfurther that no amendment,waiver or consent shall, unless in writing and signed by the Lenders requiredabove to take such action and by the Agent, affect the rights or duties of theAgent under this Agreement or any Note.

 

SECTION 8.2.  Notices, Etc. All notices, requests and demands to or upon the respective partieshereto to be effective shall be in writing (including by telecopy), and, unlessotherwise expressly provided herein, shall be deemed to have been duly given ormade when delivered, or three Business Days after being deposited in the mail,postage prepaid, or, in the case of telecopy notice, when confirmation ofreceipt is received by the sender, addressed (a) in the case of theBorrower and the Agents, as follows and (b) in the case of any Lenderother than the Initial Lender, the Assignment and Acceptance pursuant to whichsuch Lender becomes a 

 

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party hereto or (c) in the case of any party, to such otheraddress as such party may hereafter notify to the other parties hereto:

 

| The  Borrower: |   | Frontier Airlines, Inc.        |
|----------------|--------|--------------------------------|
|           |   | Frontier Center One            |
|           |   | 7001 Tower Road                |
|           |   | Denver, Colorado 80249-7312    |
|           |   | Attention: General Counsel     |
|           |   | Telecopy: (720) 374-4379       |
|           |   | Telephone: (720) 374-4542      |
|           |   |                           |
|           |   | Each Agent and Initial Lender: |
|           |   | [***]                          |

 

providedthat any notice, request or demand to or upon the any Agent or any Lenderpursuant to Article II, III or VII shall not be effective untilreceived.  Delivery by telecopier of anexecuted counterpart of any amendment or waiver of any provision of thisAgreement or the Notes or of any Exhibit hereto to be executed anddelivered hereunder shall be effective as delivery of a manually executedcounterpart thereof.

 

SECTION 8.3.  No Waiver; Remedies.  No failure on the part of any Lender or anyAgent to exercise, and no delay in exercising, any right under any Loan Documentshall operate as a waiver thereof; nor shall any single or partial exercise ofany such right preclude any other or further exercise thereof or the exerciseof any other right. The remedies herein provided are cumulative and notexclusive of any remedies provided by law.

 

SECTION 8.4.  Costs and Expenses.  (a)  The Borrower agrees (i) topay or reimburse the Initial Lender and each Agent for all its reasonableout-of-pocket costs and expenses incurred in connection with the preparation,negotiation and execution of, and any amendment, supplement or modification to,this Agreement and the other Loan Documents and any other documents prepared inconnection herewith or therewith, and the consummation and administration ofthe transactions contemplated hereby and thereby, including the reasonable feesand disbursements of counsel to such Agent and filing and recording fees andexpenses and (ii) to pay or reimburse each Lender and each Agent for allits costs and expenses incurred in connection with the enforcement orpreservation of any rights under this Agreement, the other Loan Documents andany such other documents, including the fees and disbursements of counsel(including the allocated fees and expenses of in-house counsel) to each Lenderand of counsel to such Agent.

 

### (b)                                 TheBorrower agrees to indemnify each Lender for, and to hold each Lender harmlessfrom, any loss or expense that such Lender may sustain or incur as aconsequence of (a) default by the Borrower in making a borrowing of theLoan after the Borrower has given a notice requesting the same in accordancewith the provisions of this Agreement, (b) default by the Borrower inmaking any prepayment of the Loan if based upon the Eurodollar Rate after theBorrower has given a notice thereof in accordance with the provisions of thisAgreement or (c) the making of a prepayment of the Loan if based upon theEurodollar Rate on a day that is not the last day of an Interest Period withrespect thereto.  A certificate as to 

 

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### any amounts payable pursuant tothis Section 8.4(b) submitted to the Borrower by any Lender shall beconclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and thepayment of the Loan and all other amounts payable hereunder.

###  

### (c)                                  Withoutprejudice to the survival of any other agreement of the Borrower hereunder, theagreements and obligations of the Borrower contained in Sections 2.9, 2.10,2.12, 2.13 and 8.4 shall survive the payment in full of principal, interest andall other amounts payable hereunder and under the Notes.

###  

SECTION 8.5.  Right of Setoff.  Upon the occurrence and during thecontinuance of any Event of Default, each Lender is hereby authorized at anytime and from time to time, to the fullest extent permitted by law, to set offand apply any and all deposits (general or special, time or demand, provisionalor final) at any time held and other indebtedness at any time owing by suchLender to or for the credit or the account of the Borrower against any and allof the obligations of the Borrower now or hereafter existing under any LoanDocument, whether or not such Lender shall have made any demand under such LoanDocument and although such obligations may be unmatured.  Each such Lender agrees promptly to notifythe Borrower after any such setoff and application, provided that thefailure to give such notice shall not affect the validity of such setoff andapplication. The rights of each such Lender under this Section 8.5 are inaddition to other rights and remedies (including, without limitation, otherrights of setoff) that such Lender may have.

 

SECTION 8.6.  Binding Effect. This Agreement shall become effective when it shall have been executedby the Borrower, the Agent and [***], as the initial Lender and thereaftershall be binding upon and inure to the benefit of the Borrower, the Agent andeach Lender and their respective successors and permitted assigns, except thatthe Borrower shall not have the right to assign its rights hereunder or anyinterest herein without the prior written consent of the Lenders.

 

SECTION 8.7.   Assignments and Participations.  (a)  Each Lender may, at any timeafter the Loan is made, assign to one or more Persons all or a portion of itsrights and obligations under the Loan Documents; provided, however,that (i) each such assignment may be of a constant, or of a varying,percentage of all rights and obligations under this Agreement and the otherLoan Documents, and (ii) each such assignment shall be (x) to any [***]Lender or any Affiliate thereof or to [***], or an Affiliate thereof, or (y) toa bank or other financial institution or financial company (each such person,an “Eligible Assignee”).  Theparties to each such assignment shall execute and deliver to the AdministrativeAgent, for its acceptance and recording in the Register, an Assignment andAcceptance together with any Note subject to such assignment.  Upon such execution, delivery, acceptance andrecording from and after the effective date specified in each Assignment andAcceptance, (x) the assignee thereunder shall be a party hereto and, to theextent that rights and obligations hereunder have been assigned to it pursuantto such Assignment and Acceptance, have the rights and obligations of a Lenderhereunder and (y) the Lender assignor thereunder shall, to the extent thatrights and obligations hereunder have been assigned by it pursuant to suchAssignment and Acceptance, relinquish its rights and be released from its obligationsunder the Loan Documents (and, in the case of an Assignment and Acceptancecovering all or the remaining portion of an assigning Lender’s rights andobligations under this Agreement, such Lender shall cease to be a partyhereto).

 

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### (b)                                 Byexecuting and delivering an Assignment and Acceptance, the Lender assignorthereunder and the assignee thereunder confirm to and agree with each other andthe other parties hereto as follows: (i) other than as provided in suchAssignment and Acceptance, such assigning Lender makes no representation orwarranty and assumes no responsibility with respect to any statements,warranties or representations made in or in connection with this Agreement orthe other Loan Documents or the execution, legality, validity, enforceability,genuineness, sufficiency or value of, or the perfection or priority of any lienor security interest created or purported to be created under or in connectionwith, this Agreement or the other Loan Documents or any other instrument ordocument finished. pursuant hereto; (ii) such assigning Lender makes norepresentation or warranty and assumes no responsibility with respect to thefinancial condition of the Borrower or the performance or observance by theBorrower of any of its obligations under this Agreement or the other LoanDocuments or any other instrument or document furnished pursuant hereto; (iii) suchassignee confirms that it has received a copy of this Agreement, together withcopies of the financial statements referred to in Section 4.1(a)(v) andsuch other documents and information as it has deemed appropriate to make itsown credit analysis and decision to enter into such Assignment and Acceptance; (iv) suchassignee will, independently and without reliance upon the Agent, suchassigning Lender or any other Lender and based on such documents andinformation as it shall deem appropriate at the time, continue to make its owncredit decisions in taking or not taking action under this Agreement; (v) suchassignee confirms that it is an Eligible Assignee; (vi) such assigneerepresents and warrants that either (x) no part of the funds to be used by itfor the purchase of a portion of the Loan (or any part thereof) constitutesassets of any “employee benefit plan” as defined in Section 3(3) ofERISA or (y) the proposed assignment will not result in a nonexempt prohibitedtransaction (as defined in Section 4975 of the Internal Revenue Code andERISA); (vii) such assignee appoints and authorizes each Agent to takesuch action as agent on its behalf and to exercise such powers and discretionunder the Loan Documents as are delegated to the Agent by the terms thereof,together with such powers and discretion as are reasonably incidental thereto;and (ix) such assignee agrees, for the benefit of the assigning Lender andBorrower, that it will perform in accordance with their terms all of theobligations that by the terms of this Agreement are required to be performed byit as a Lender.

###  

### (c)                                  TheAdministrative Agent shall maintain at its address referred to in Section 8.2a copy of each Assignment and Acceptance delivered to and accepted by it and aregister for the recordation of the names and addresses of the Lenders and theprincipal amount of the Loan owing to, each Lender from time to time (the “Register”).The entries in the Register shall be conclusive and binding for all purposes,absent manifest error, and the Borrower, the Agent and the Lenders may treateach Person whose name is recorded in the Register as a Lender hereunder forall purposes of this Agreement. The Register shall be available for inspectionby the Borrower or any Lender at any reasonable time and from time to time uponreasonable prior notice.

###  

### (d)                                 Uponits receipt of an Assignment and Acceptance executed by an assigning Lender andan assignee representing that it is an Eligible Assignee, together with anyNote or Notes subject to such assignment, the Administrative Agent shall, ifsuch Assignment and Acceptance has been completed and is in substantially theform of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) recordthe information contained therein in the Register and (iii) give promptnotice thereof to the Borrower. Within five Business Days after its 

 

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### receipt of such notice, theBorrower, at its own expense, shall execute and deliver to the AdministrativeAgent in exchange for any surrendered Notes new Notes to the order of suchEligible Assignee each in an amount equal to the portion of such surrenderedNote assumed by such Eligible Assignee pursuant to such Assignment andAcceptance and, if the assigning Lender has retained a portion of suchsurrendered Note, a new Note to the order of the assigning Lender in an amountequal to such retained portion and such old Note shall be returned to theBorrower marked “cancelled”. Such new Note or Notes shall be dated theeffective date of such Assignment and Acceptance and shall otherwise be insubstantially the form of Exhibit A hereto.

###  

### (e)                                  EachLender may sell participations to one or more Eligible Assignees in or to allor a portion of the Loan owing to it and the Note or Notes held by it; provided,however, that (i) such Lender’s obligations under this Agreement(including, without limitation, its Commitment to the Borrower hereunder) shallremain unchanged, (ii) such Lender shall remain solely responsible to theother parties hereto for the performance of such obligations, (iii) suchLender shall remain the holder of any such Note for all purposes of thisAgreement and the other Loan Documents, (iv) the Borrower, each Agent andthe other Lenders shall continue to deal solely and directly with such Lenderin connection with such Lender’s rights and obligations under this Agreementand the other Loan Documents, (v) no participant under any suchparticipation shall have any right to approve any amendment or waiver of anyprovision of this Agreement or any Note or any other Loan Documents, or anyconsent to any departure by the Borrower therefrom, except to the extent thatsuch amendment, waiver or consent would reduce the principal of, or intereston, the Notes or any other amounts payable hereunder, in each case to theextent subject to such participation, or postpone any date fixed for anypayment of principal of, or interest on, the Notes or any fees or other amountspayable hereunder, in each case to the extent subject to such participation.

###  

### (f)                                    AnyLender may, in connection with any assignment or participation or proposedassignment or participation pursuant to this Section 8.7, disclose to theassignee or participant or proposed assignee or participant, any informationrelating to the Borrower furnished to such Lender by or on behalf of theBorrower; provided that, prior to any such disclosure, the assignee orparticipant or proposed assignee or participant shall agree to preserve theconfidentiality of any Confidential Information relating to the Borrowerreceived by it from such Lender pursuant to a confidentiality agreementcontaining an undertaking as provided in Section 8.8.

###  

### (g)                                 Notwithstandingany other provision set forth in this Agreement, any Lender may at any timecreate a security interest in all or any portion of its rights under thisAgreement (including, without limitation, the Loan owing to it and the Notesheld by it) in favor of any Federal Reserve Bank in accordance with RegulationA of the Board of Governors of the Federal Reserve System.

###  

### (h)                                 TheBorrower agrees to cooperate with any Lender to accommodate the efforts of suchLender to transfer, sell or assign all or any part of its rights andobligations under this Agreement pursuant to this Section 8.7.  Without limiting the generality of theforegoing, the Borrower also agrees to cooperate with the Initial Lender torefinance or sell down its exposure under the Loan, through a securitization ortax enhanced structure or otherwise. Such cooperation may involve dividing the Loan into senior and juniortranches, allocating voting and 

 

33

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### other rights as between thesenior and junior tranches of the Loan (which allocation of voting rights mayinclude changes to the percentage of Lenders required to approve or to takespecified actions) and/or cross-collateralizing the senior and/or juniortranches of the Loan with any other Secured Obligations, and, generally,restructuring the Loan in such manner as the Initial Lender shall determine ingood faith to be necessary or desirable to accomplish such refinancing or selldown; provided that none of the obligations of the Borrower under theLoan Documents shall be increased as a result of any such transaction as of theclosing date of such transaction (or based on a Requirement of Law enactedprior to the closing date of such transaction but effective as of a later date)and the Initial Lender agrees to reimburse the Borrower’s reasonable andadequately documented external legal fees and expenses in respect of any suchtransaction.

###  

### (i)                                     Notwithstandingany other provision hereof, no payment obligation of the Borrower shall beincurred or increased as a result of an assignment or participation by theLender on the closing date of such transaction.

###  

SECTION 8.8.  Confidentiality.  Neither Agent nor any Lender nor the Borrowershall disclose any Confidential Information to any other Person without theconsent of each other, except (a) to the Agent’s or such Lender’sAffiliates and their officers, directors, employees, agents and advisors and,as contemplated by Section 8.7(f), to actual or prospective assignees andparticipants, and then only on a confidential basis, (b) as required byany law, rule or regulation or judicial process and (c) as requestedor required by any state, federal or foreign authority or examiner regulatingbanks or banking.  Notwithstandinganything herein to the contrary, any party subject to confidentialityobligations hereunder or under any other related document (and any employee,representative or other agent of such party) may disclose to any and allpersons, without limitation of any kind, such party’s U.S. federal income taxtreatment and the U.S. federal income tax structure of the transactionscontemplated by this Agreement relating to such party and all materials of anykind (including opinions or other tax analyses) that are provided to itrelating to such tax treatment and tax structure. However, no such party shalldisclose any information relating to such tax treatment or tax structure to theextent nondisclosure is reasonably necessary in order to comply with applicablesecurities laws.

 

SECTION 8.9.   Certain Agreements and Representationsof Lenders.  Each Lender representsand warrants that: (i) such Lender qualifies as an Eligible Assignee; (ii) suchLender will not make the Loan or acquire any interest in the Loan with theassets of any “employee benefit plan” as defined in Section 3(3) ofERISA or of any “plan” within the meaning of Section 4975(e)(I) of theInternal Revenue Code; and (iii) such Lender will acquire the Loan andeach Note for investment and not with a view to resale or distribution (itbeing understood that such Lender may pledge or assign as security its interestin the Loan and each Note issued to it), provided that the disposition of itsproperty shall at all times be and remain within its control, except that suchLender may sell, transfer or otherwise dispose of any Note or any portionthereof or grant participations therein, in a manner which in itself will notrequire registration under the Securities Act of 1933, as amended.

 

SECTION 8.10.  GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED INACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

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SECTION 8.11.   Execution in Counterparts;Prevalence of Loan Documents.  ThisAgreement may be executed in any number of counterparts and by differentparties hereto in separate counterparts, each of which when so executed shallbe deemed to be an original and all of which taken together shall constituteone and the same agreement. Delivery of an executed counterpart of a signature page tothis Agreement by telecopier shall be effective as delivery of a manuallyexecuted counterpart of this Agreement. The provisions of the Loan Documents shall prevail over the Term Sheetin case any provision thereof shall be in conflict.

 

SECTION 8.12.  Jurisdiction, Etc.  (a)  Each of the parties heretohereby irrevocably and unconditionally submits, for itself and its property, tothe nonexclusive jurisdiction of any New York State court or federal court ofthe United States of America, in each case sitting in New York City, in anyaction or proceeding arising out of or relating to the Loan Documents, or forrecognition or enforcement of any judgment, and each of the parties heretohereby irrevocably and unconditionally agrees that all claims in respect of anysuch action or proceeding shall be conclusive and may be enforced in otherjurisdictions by suit on the judgment may be heard and determined in such statecourt or, to the extent permitted by law, in such federal court. Each of theparties hereto agrees that a final judgment in such action or proceeding or inany other manner provided by law. Nothing in this Agreement shall affect anyright that any party may otherwise have to bring any action or proceedingrelating to this Agreement or the Notes in the courts of any jurisdiction.

 

### (b)                                 TheBorrower hereby irrevocably designates, appoints and empowers CorporationService Company, with offices on the date hereof at 1177 Avenue of theAmericas, 17th Floor, New York, New York 10036-2721 as its designee,appointee and agent to receive, accept and acknowledge for and on its behalf,and in respect of its property, service of any and all legal process, summons,notices and documents which may be served in any such action or proceeding. Iffor any reason such designee, appointee and agent shall cease to be availableto act as such, the Borrower agrees to designate a new designee, appointee andagent in New York City on the terms and for the purposes of this provisionsatisfactory to the Administrative Agent under this Agreement. The Borrowerfurther irrevocably consents to the service of process out of any of theaforementioned courts specified in paragraph (a) above in any such actionor proceeding by the mailing of copies there by registered or certified mail,postage prepaid, to the Borrower, such service to become effective 30 daysafter such mailing.  Nothing herein shallaffect the right of the Agent under this Agreement, any Lender or the holder ofany Note to serve process in any other manner permitted by law or to commencelegal proceedings or otherwise proceed against the Borrower in any otherjurisdiction.

###  

### (c)                                  Eachof the parties hereto irrevocably and unconditionally waives, to the fullestextent it may legally and effectively do so, any objection that it may now orhereafter have to the laying of venue of any suit, action or proceeding arisingout of or relating to the Loan Documents in any New York State or federal courtreferred to in Section 8.12(a). Each of the parties hereto hereby irrevocably waives, to the fullestextent permitted by law, the defense of an inconvenient forum to themaintenance of such action or proceeding in any such court.

###  

SECTION 8.13.  WAIVER OF JURY TRIAL.  EACH OF THE BORROWER, THE AGENT AND THELENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,PROCEEDING OR COUNTERCLAIM (WHETHER 

 

35

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BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THELOAN DOCUMENTS OR THE ACTIONS OF THE AGENT OR ANY LENDER IN THE NEGOTIATION,ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

 

SECTION 8.14.  Severability. Any provision of this Agreement which is prohibited or unenforceable inany jurisdiction shall, as to such jurisdiction, be ineffective to the extentof such prohibition or unenforceability without invalidating the remainingprovisions hereof, and any such prohibition or unenforceability in anyjurisdiction shall not invalidate or render unenforceable such provision in anyother jurisdiction.

 

SECTION 8.15.  Headings. All headings in this Agreement are for convenience of reference only anddo not constitute a part of this Agreement.

 

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IN WITNESSWHEREOF, the parties hereto have caused this Agreement to be duly executed andto be delivered in New York, New York by their proper and duly authorizedofficers as of the day and year first above written.

 
|   | FRONTIER AIRLINES, INC.                    |
|--------|--------------------------------------------|
|   |                                       |
|   |                                       |
|   | By:                                        |   |
|   |                                       | Name: |
|   |                                       | Title: |
|   |                                       |
|   |                                       |
|   | [***],                                     |
|   | as Administrative Agent and Initial Lender |
|   |                                       |
|   |                                       |
|   | By:                                        |   |
|   |                                       | Name: |
|   |                                       | Title: |

 

----

 

SCHEDULE ITOCREDIT AGREEMENT

 

Lending Office(Initial Lender)

 

[***]

 

----

 

SCHEDULE IITOCREDIT AGREEMENT

 

Original Amortization Schedule

 

MonthlyPayments

 

| **Payment  Date** | ** ** | **Outstanding Principal** | ** ** | **Principal Payments** |
|-------------------|------------|---------------------------|------------|------------------------|
|              |       |                      |       | **(in Dollars)**       |
|              |       |                      |       | ** **             |
|              |       |                      |       | ** **             |
|              |       |                      |       | ** **             |

 

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EXHIBIT A – FORM OF

PROMISSORY NOTE

 

FRONTIER AIRLINES,INC.

PROMISSORY NOTE

 
| U.S [***] |   | Dated:                  ,      |
|-----------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

 

FOR VALUE RECEIVED, the undersigned, FRONTIERAIRLINES, INC., a Colorado corporation (the “Borrower”), HEREBY PROMISESTO PAY to the order of  [***] (the “Lender”) forthe account of its Lending Office (as defined in the Credit Agreement referredto below) the principal sum of TWENTY-FIVE MILLION FIVE HUNDRED THOUSANDDOLLARS (U.S. $25,500,000) (the “Original Amount”) representing the Loanmade to the Borrower pursuant to the Credit Agreement dated as of July 30,2003 between the Borrower, the lenders party thereto and [***], as Administrative Agent(as amended or modified from time to time, the “Credit Agreement”; theterms defined therein being used herein as therein defined).  The Original Amount shall be payable ininstallments in the amounts and on the dates specified in Section 2.5 ofthe Credit Agreement.  Notwithstandingthe foregoing, the final payment made on this Promissory Note shall be in anamount sufficient to discharge in full the unpaid Original Amount and allaccrued and unpaid interest on any amounts due under this Promissory Note.

 

The Borrower promises to pay interest on theunpaid principal amount hereof from the date hereof until such principal amountis paid in full, at such interest rates, and payable at such times, as arespecified in the Credit Agreement.

 

Both principal and interest are payable inlawful money of the United States of America to the Administrative Agent, tothe account specified in Section 2.11 of the Credit Agreement, in same dayfunds.

 

This Promissory Note is one of the Notesreferred to in, and is entitled to the benefits of, the Credit Agreement. TheCredit Agreement, among other things, contains provisions for acceleration ofthe maturity hereof upon the happening of certain stated events and also forprepayments on account of principal hereof prior to the maturity hereof uponthe terms and conditions therein specified. The obligations of the Borrowerunder this Promissory Note and the Credit Agreement are secured by collateral asprovided in the Credit Agreement, in the Mortgage and Security Agreement, datedas of July 21, 2003, executed by the Borrower and pertaining to theAircraft bearing FAA Registration No. N802FR, and in the other CollateralDocuments referred to therein.

 
|   | FRONTIER AIRLINES, INC. |
|--------|-------------------------|
|   |                    |
|   |                    |
|   | By:                     |   |
|   |                    | Title: |   |

 

----

 

EXHIBIT B – FORM OF

NOTICE OF LOAN

 

[***], as Administrative Agent   for the Lenders under to the Credit  Agreement referred to below

 

July     , 2003

 

Attention: Managing Director

 

Ladies and Gentlemen:

 

The undersigned, Frontier Airlines, Inc.,refers to the Credit Agreement, dated as of July 30, 2003 (as amended ormodified from time to time, the “Credit Agreement”, the terms definedtherein being used herein as therein defined), between the undersigned, theLenders party thereto and [***], as Administrative Agent for the Lenders, and hereby givesyou notice, irrevocably, pursuant to Section 2.2 of the Credit Agreementthat the undersigned hereby requests the Loan under the Credit Agreement, andin that connection sets forth below the information relating to the Loan (the “ProposedLoan”) as required by Section 2.2(a) of the Credit Agreement:

 

(i)                                     The Business Day of theProposed Loan is                     .

 

(ii)                                  The aggregate amount of theProposed Loan is $                .

 

(iii)                               The Proposed Loan is to be a[10-Year Loan] [12-Year Loan].

 

(iv)                              The Aircraft related to theProposed Loan is the Airbus model A318 aircraft bearing manufacturer’s serialnumber 1991 and will be delivered to the Borrower on                   .

 

The undersigned hereby certifies that thefollowing statements are true on the date hereof, and will be true on the dateof and after giving effect to the Proposed Loan:

 

(x)  the representations andwarranties made by the Borrower and contained in the Loan Documents are correctin all material respects on and as of the date of the Proposed Loan before andafter giving effect to the Loan and to the application of the proceedstherefrom, as though made on and as of such date, and

 

(y)  no Default or Event ofDefault has occurred and is continuing.

 
|   | Very truly yours,       |
|--------|-------------------------|
|   |                    |
|   | FRONTIER AIRLINES, INC. |
|   |                    |
|   | By:                     |   |
|   |                    | Title: |   |
|   |                    | Date: |   |

 

----

 

EXHIBIT C - FORM OFASSIGNMENT AND ACCEPTANCE

 

Reference is made to the Credit Agreementdated as of July 30, 2003 (as amended or modified from time to time, the “CreditAgreement”) between Frontier Airlines, Inc., a Colorado corporation(the “Borrower”) and [***], as initial Lender and as Administrative Agent for theLenders (the “Administrative Agent”). Terms defined in the Credit Agreement are used herein with the samemeaning.

 

The “Assignor” and the “Assignee” referred toon Schedule I hereto agree as follows:

 

1.               The Assignor hereby sellsand assigns to the Assignee, and the Assignee hereby purchases and assumes fromthe Assignor, an interest in and to the Assignor’s rights and obligations underthe Credit Agreement as of the date hereof equal to the percentage interestspecified on Schedule 1 hereto of all outstanding rights and obligationsunder the Credit Agreement. After giving effect to such sale and assignment,the amount of the Loan owing to the Assignee will be as set forth on Schedule 1hereto.

 

2.               The Assignor (i) representsand warrants that it is the legal and beneficial owner of the interest beingassigned by it hereunder and that such interest is free and clear of anyadverse claim; (ii) makes no representation or warranty and assumes noresponsibility with respect to any statements, warranties or representationsmade in or in connection with the Credit Agreement or the other Loan Documentsor the execution, legality, validity, enforceability, genuineness, sufficiencyor value of, or the perfection or priority of any lien or security interestcreated or purported to be created under or in connection with, the CreditAgreement or the other Loan Documents or any other instrument or documentfurnished pursuant thereto; (iii) makes no representation or warranty andassumes no responsibility with respect to the financial condition of theBorrower or the performance or observance by the Borrower of any of itsobligations under the Credit Agreement or the other Loan Documents or any otherinstrument or document furnished pursuant thereto; and (iv) attaches theNote held by the Assignor and requests that the Administrative Agent exchangesuch Note for a new Note payable to the order of the Assignee in an amountequal to the portion of such Note assumed by the Assignee pursuant hereto or anew Note payable to the order of the Assignee in an amount equal to the portionof such Note assumed by the Assignee pursuant hereto and a new Note payable tothe order of the Assignor in an amount equal to the portion of such Noteretained by the Assignor under the Credit Agreement, respectively, as specifiedon Schedule 1 hereto.

 

3.               The Assignee (i) confirmsthat it has received a copy of the Credit Agreement, together with copies ofthe financial statements referred to in Section 4.1(a)(v) thereof andsuch other documents and information as it has deemed appropriate to make itsown credit analysis and decision to enter into this Assignment and Acceptance; (ii) agreesthat it will, independently and without reliance upon the Agent, the Assignoror any other Lender and based on such documents and information as it shall deemappropriate at the time, continue to make its own credit decisions in taking or

 

C-1

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not taking actionunder the Credit Agreement; (iii) confirms that it is an EligibleAssignee; (iv) represents and warrants that either (x) no part of thefunds to be used by it for the purchase of the Loan (or any part thereof)constitutes assets of any “employee benefit plan” as defined in Section 3(3) ofERISA or (y) the proposed assignment will not result in a non-exempt prohibitedtransaction (as defined in Section 4975 of the Internal Revenue Code andERISA); (v) represents and warrants that it will acquire its Note forinvestment and not with a view to sale or distribution (it being understoodthat the Assignee may pledge or assign as security its interest in the Noteissued to it), provided that the disposition of its property shall atall times be and remain within its control, except that the Assignee may sell,transfer or otherwise dispose of its Note or any portion thereof or grantparticipations therein, in a manner which in itself will not requireregistration under the Securities Act of 1933, as amended; (vi) appointsand authorizes each Agent to take such action as agent on its behalf and toexercise such powers and discretion under the Loan Documents as are delegatedto such Agent by the terms thereof, together with such powers and discretion asare reasonably incidental thereto; (vii) agrees that it will perform inaccordance with their terms all of the obligations that by the terms of theCredit Agreement are required to be performed by it as a Lender; and (viii) attachesany U.S. Internal Revenue Service forms required under Section 2.12 of theCredit Agreement.

 

4.               Following the execution ofthis Assignment and Acceptance, it will be delivered to the AdministrativeAgent for acceptance and recording by the Administrative Agent.  The effective date for this Assignment andAcceptance (the “Effective Date”) shall be the date of acceptance hereofby the Administrative Agent, unless otherwise specified on Schedule 1hereto.

 

5.               Upon such acceptance andrecording by the Administrative Agent, as of the Effective Date, (i) theAssignee shall be a party to the Credit Agreement and, to the extent providedin this Assignment and Acceptance, have the rights and obligations of a Lenderthereunder and (ii) the Assignor shall, to the extent provided in thisAssignment and Acceptance, relinquish its rights and be released from itsobligations under the Credit Agreement.

 

6.               Upon such acceptance andrecording by the Administrative Agent, from and after the Effective Date, theAdministrative Agent shall make all payments under the Credit Agreement and theNotes in respect of the interest assigned hereby (including, without limitation,all payments of principal, interest and other amounts with respect thereto) tothe Assignee.  The Assignor and Assigneeshall make all appropriate adjustments in payments under the Credit Agreementand the Notes for periods prior to the Effective Date directly betweenthemselves.

 

7.               This Assignment andAcceptance shall be governed by, and construed in accordance with, the laws ofthe State of New York.

 

8.               This Assignment andAcceptance may be executed in any number of counterparts and by differentparties hereto in separate counterparts, each of which when so executed shallbe deemed to be an original and all of which taken together shall 

 

C-2

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constitute one andthe same agreement. Delivery of an executed counterpart of Schedule 1 tothis Assignment and Acceptance by telecopier shall be effective as delivery ofa manually executed counterpart of this Assignment and Acceptance.

 

IN WITNESS WHEREOF, the Assignor and theAssignee have caused Schedule 1 to this Assignment and Acceptance to beexecuted by their officers thereunto duly authorized as of the date specifiedthereon.

 

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Schedule 1toAssignment and Acceptance

 

Percentage interest assigned:

 

Aggregate outstanding principal amount ofLoan assigned:

 

Effective Date:

 

| **Note** | ** ** | **Principal Amount of  Note payable to Assignee** | ** ** | **Principal Amount of  Note payable to Assignor** |
|----------|------------|---------------------------------------------------|------------|---------------------------------------------------|
|     |       |                                              |       |                                              |
|     |       |                                              |       |                                              |
|     |       |                                              |       |                                              |

 

 
|   | [NAME OF ASSIGNOR], as Assignor                                                                           |
|--------|-----------------------------------------------------------------------------------------------------------|
|   |                                                                                                      |
|   |                                                                                                      |
|   | By:                                                                                                       |   |
|   |                                                                                                      | Title: |   |
|   |                                                                                                      |
|   |                                                                                                      |
|   | Dated:                  , |
|   |                                                                                                      |
|   |                                                                                                      |
|   | [NAME OF ASSIGNEE], as Assignee                                                                           |
|   |                                                                                                      |
|   |                                                                                                      |
|   | By:                                                                                                       |   |
|   |                                                                                                      | Title: |   |
|   |                                                                                                      |
|   | Lending Office:                                                                                           |
|   | [Address]                                                                                                 |

 

C-4

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Accepted this         day of                   ,        

 

[***], asAdministrative Agent

 
| By:    |   |   |
|--------|--------|--------|
|   | Title: |

 

C-5

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EXHIBIT D-1

 

FORM OF OPINION OF GENERAL COUNSEL OFTHE BORROWER

 

[in the form delivered at closing]

 

D-1-1

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EXHIBIT D-2

 

FORM OF OPINION OF [***],SPECIAL COUNSEL FOR THE BORROWER

 

[in the form delivered at closing]

 

D-2-1

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EXHIBIT D-3

 

FORM OFOPINION OF [***],SPECIAL AVIATION COUNSEL FOR THE AGENT

 

[in the form delivered at closing]

 

D-3-1

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