Document:

exhibit10_56.htm

    

    
      
        

        

      

      
 Exhibit 10.56(a)

    

    
 

    SECURED
SUPER-PRIORITY DEBTOR IN POSSESSION

    CREDIT
AGREEMENT

    
 

    DATED
AS OF AUGUST 4, 2008

    
 

    among

    
 

    FRONTIER
AIRLINES HOLDINGS, INC.,

    a
Debtor and Debtor in Possession,

    
 

    as
a Borrower,

    
 

    FRONTIER
AIRLINES, INC.,

    a
Debtor and Debtor in Possession,

    
 

    as
a Borrower,

    
 

    LYNX
AVIATION, INC.,

    a
Debtor and Debtor in Possession,

    
 

    as
a Borrower,

    
 

    
 

    THE
LENDERS SIGNATORY HERETO FROM TIME TO TIME,

    as
Lenders,

    
 

    and

    
 

    WELLS
FARGO BANK NORTHWEST, NATIONAL ASSOCIATION

    as
Administrative Agent

    
 

    
      
 

      
 

    

    

    
      
        
          
             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    TABLE OF
CONTENTS

    Page

     

    
      	
              1.

            	
              AMOUNT AND
      TERMS OF CREDIT 

            	
               

            

    

    
      	
               
      

            	
              1.1

            	
              Credit
      Facilities. 

            	
               

            

    

    
      	
               
      

            	
              1.2

            	
              Prepayments. 

            	
               

            

    

    
      	
               
      

            	
              1.3

            	
              Priority and
      Application of Payments. 

            	
               

            

    

    
      	
               
      

            	
              1.4

            	
              Use of
      Proceeds. 

            	
               

            

    

    
      	
               
      

            	
              1.5

            	
              Interest and
      Applicable Margins. 

            	
               

            

    

    
      	
               
      

            	
              1.6

            	
              Fees. 

            	
               

            

    

    
      	
               
      

            	
              1.7

            	
              Receipt of
      Payments. 

            	
               

            

    

    
      	
               
      

            	
              1.8

            	
              Loan Account
      and Accounting. 

            	
               

            

    

    
      	
               
      

            	
              1.9

            	
              Indemnity. 

            	
               

            

    

    
      	
               
      

            	
              1.10

            	
              Access. 

            	
               

            

    

    
      	
               
      

            	
              1.11

            	
              Taxes. 

            	
               

            

    

    
      	
               
      

            	
              1.12

            	
              Capital
      Adequacy; Increased Costs; Illegality. 

            	
               

            

    

     

    
      	
              2.

            	
              CONDITIONS
      PRECEDENT 

            	
               

            

    

    
      	
               
      

            	
              2.1

            	
              Stage 1
      Conditions. 

            	
               

            

    

    
      	
               
      

            	
              2.2

            	
              Stage 2
      Conditions. 

            	
               

            

    

    
      	
               
      

            	
              2.3

            	
              Conditions
      to each Borrowing. 

            	
               

            

    

     

    
      	
              3.

            	
              REPRESENTATIONS
      AND WARRANTIES 

            	
               

            

    

    
      	
               
      

            	
              3.1

            	
              Corporate
      Existence; Compliance with Law. 

            	
               

            

    

    
      	
               
      

            	
              3.2

            	
              Executive
      Offices, Collateral Locations, FEIN. 

            	
               

            

    

    
      	
               
      

            	
              3.3

            	
              Corporate
      Power, Authorization, Enforceable Obligations.[INSERT PAGE
      NUMBER]

            

    

    
      	
               
      

            	
              3.4

            	
              Financial
      Statements, Projections and Reports. 

            	
               

            

    

    
      	
               
      

            	
              3.5

            	
              Material
      Adverse Effect; Burdensome Restrictions; Default. 

            	
               

            

    

    
      	
               
      

            	
              3.6

            	
              Ownership of
      Property; Real Estate; Liens. 

            	
               

            

    

    
      	
               
      

            	
              3.7

            	
              Labor
      Matters. 

            	
               

            

    

    
      	
               
      

            	
              3.8

            	
              Ventures,
      Subsidiaries
      and Affiliates; Outstanding Stock and
      Indebtedness. 

            	
               

            

    

    
      	
               
      

            	
              3.9

            	
              Government
      Regulation. 

            	
               

            

    

    
      	
               
      

            	
              3.10

            	
              Margin
      Regulations. 

            	
               

            

    

    
      	
               
      

            	
              3.11

            	
              Taxes. 

            	
               

            

    

    
      	
               
      

            	
              3.12

            	
              ERISA. 

            	
               

            

    

    
      	
               
      

            	
              3.13

            	
              No
      Litigation. 

            	
               

            

    

    
      	
               
      

            	
              3.14

            	
              Intellectual
      Property. 

            	
               

            

    

    
      	
               
      

            	
              3.15

            	
              Full
      Disclosure. 

            	
               

            

    

    
      	
               
      

            	
              3.16

            	
              Environmental
      Matters. 

            	
               

            

    

    
      	
               
      

            	
              3.17

            	
              Insurance. 

            	
               

            

    

    
      	
               
      

            	
              3.18

            	
              Use of
      Proceeds. 

            	
               

            

    

    
      	
               
      

            	
              3.19

            	
              Deposit. 

            	
               

            

    

    
      	
               
      

            	
              3.20

            	
              Compliance
      With Industry Standards. 

            	
               

            

    

    
      	
               
      

            	
              3.21

            	
              Secured,
      Super-Priority Obligations. 

            	
               

            

    

    
      	
               
      

            	
              3.22

            	
              Certificated
      Air Carrier. 

            	
               

            

    

    
      	
               
      

            	
              3.23

            	
              Slots and
      Gate Interests. 

            	
               

            

    

    
      	
               
      

            	
              3.24

            	
              Section 1110
      Assets. 

            	
               

            

    

    
      	
               
      

            	
              3.25

            	
              Patriot
      Act. 

            	
               

            

    

     

    
      	
              4.

            	
              FINANCIAL
      STATEMENTS AND INFORMATION 

            	
               

            

    

    
      	
               
      

            	
              4.1

            	
              Reports
      and Notices. 

            	
               

            

    

    
      	
               
      

            	
              4.2

            	
              Communication
      with Accountants. 

            	
               

            

    

     

    
      	
              5.

            	
              AFFIRMATIVE
      COVENANTS 

            	
               

            

    

    
      	
               
      

            	
              5.1

            	
              Maintenance
      of Existence and Conduct of Business. 

            	
               

            

    

    
      	
               
      

            	
              5.2

            	
              Payment of
      Taxes. 

            	
               

            

    

    
      	
               
      

            	
              5.3

            	
              Books and
      Records. 

            	
               

            

    

    
      	
               
      

            	
              5.4

            	
              Insurance. 

            	
               

            

    

    
      	
               
      

            	
              5.5

            	
              Compliance
      with Laws. 

            	
               

            

    

    
      	
               
      

            	
              5.6

            	
              Intellectual Property. 

            	
               

            

    

    
      	
               
      

            	
              5.7

            	
              Environmental
      Matters. 

            	
               

            

    

    
      	
               
      

            	
              5.8

            	
              Further
      Assurances. 

            	
               

            

    

    
      	
               
      

            	
              5.9

            	
              Additional
      Collateral Documents. 

            	
               

            

    

    
      	
               
      

            	
              5.10

            	
              Labor
      Contracts. 

            	
               

            

    

    
      	
               
      

            	
              5.11

            	
              Slot
      Utilization. 

            	
               

            

    

    
      	
               
      

            	
              5.12

            	
              ERISA/Labor
      Matters. 

            	
               

            

    

    
      	
               
      

            	
              5.13

            	
              Maintenance
      of Liens and Collateral. 

            	
               

            

    

    
      	
               
      

            	
              5.14

            	
              Use
      of Proceeds. 

            	
               

            

    

    
      	
               
      

            	
              5.15

            	
              Cash
      Management Systems. 

            	
               

            

    

    
      	
               
      

            	
              5.16

            	
              Access. 

            	
               

            

    

    
      	
               
      

            	
              5.17

            	
              Fuel
      Hedging. 

            	
               

            

    

     

    
      	
              6.

            	
              NEGATIVE
      COVENANTS 

            	
               

            

    

    
      	
               
      

            	
              6.1

            	
              Mergers. 

            	
               

            

    

    
      	
               
      

            	
              6.2

            	
              Investments;
      Loans and Advances. 

            	
               

            

    

    
      	
               
      

            	
              6.3

            	
              Indebtedness. 

            	
               

            

    

    
      	
               
      

            	
              6.4

            	
              Affiliate
      Transactions. 

            	
               

            

    

    
      	
               
      

            	
              6.5

            	
              Capital
      Structure and Business. 

            	
               

            

    

    
      	
               
      

            	
              6.6

            	
              Guaranteed
      Indebtedness. 

            	
               

            

    

    
      	
               
      

            	
              6.7

            	
              Liens. 

            	
               

            

    

    
      	
               
      

            	
              6.8

            	
              Sale
      of Stock and Assets. 

            	
               

            

    

    
      	
               
      

            	
              6.9

            	
              Financial
      Covenants. 

            	
               

            

    

    
      	
               
      

            	
              6.10

            	
              Hazardous
      Materials. 

            	
               

            

    

    
      	
               
      

            	
              6.11

            	
              Sale-Leasebacks. 

            	
               

            

    

    
      	
               
      

            	
              6.12

            	
              Restricted
      Payments. 

            	
               

            

    

    
      	
               
      

            	
              6.13

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

            	
               

            

    

    
      	
               
      

            	
              6.14

            	
              Limitation
      on Negative Pledge Clauses. 

            	
               

            

    

    
      	
               
      

            	
              6.15

            	
              No
      Speculative Transactions. 

            	
               

            

    

    
      	
               
      

            	
              6.16

            	
              Real
      Estate Purchases and Leases. 

            	
               

            

    

    
      	
               
      

            	
              6.17

            	
              Subsidiaries. 

            	
               

            

    

    
      	
               
      

            	
              6.18

            	
              Material
      Contracts. 

            	
               

            

    

     

    
      	
              7.

            	
              TERM 

            	
               

            

    

    
      	
               
      

            	
              7.1

            	
              Termination. 

            	
               

            

    

    
      	
               
      

            	
              7.2

            	
              Survival of
      Obligations Upon Termination of Financing Arrangements. 

            	
               

            

    

     

    
      	
              8.

            	
              EVENTS OF
      DEFAULT; RIGHTS AND REMEDIES 

            	
               

            

    

    
      	
               
      

            	
              8.1

            	
              Events of
      Default. 

            	
               

            

    

    
      	
               
      

            	
              8.2

            	
              Remedies. 

            	
               

            

    

    
      	
               
      

            	
              8.3

            	
              Waivers by
      Borrowers. 

            	
               

            

    

    
      	
               
      

            	
              8.4

            	
              Liquidation
      Budget. 

            	
               

            

    

     

    
      	
              9.

            	
              JOINT AND
      SEVERAL LIABILITY 

            	
               

            

    

     

    
      	
              10.

            	
              SECURITY 

            	
               

            

    

    
      	
               
      

            	
              10.1

            	
              Security. 

            	
               

            

    

    
      	
               
      

            	
              10.2

            	
              Perfection
      of Security Interests. 

            	
               

            

    

    
      	
               
      

            	
              10.3

            	
              Rights
      of Lenders; Limitations on Lenders’ Obligations. 

            	
               

            

    

    
      	
               
      

            	
              10.4

            	
              Covenants
      of the Borrowers with Respect to
  Collateral.

            

    

    
      	
               
      

            	
              10.5

            	
              Performance
      by Administrative Agent of the
      Borrowers’ Obligations. 

            	
               

            

    

    
      	
               
      

            	
              10.6

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

            	
               

            

    

    
      	
               
      

            	
              10.7

            	
              Remedies;
      Rights
      Upon Default. 

            	
               

            

    

    
      	
               
      

            	
              10.8

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

            	
               

            

    

    
      	
               
      

            	
              10.9

            	
              Release
      of Collateral. 

            	
               

            

    

     

    
      	
              11.

            	
              ASSIGNMENT
      AND PARTICIPATIONS; APPOINTMENT OF ADMINISTRATIVE AGENT 

            	
               

            

    

    
      	
               
      

            	
              11.1

            	
              Assignment
      and Participations. 

            	
               

            

    

    
      	
               
      

            	
              11.2

            	
              Appointment
      of Administrative Agent 

            	
               

            

    

    
      	
                

            	
              11.3

            	
              Rights as a
      Lender 

            	
               

            

    

    
      	
               
      

            	
              11.4

            	
              Exculpatory
      Provisions. 

            	
               

            

    

    
      	
               
      

            	
              11.5

            	
              Reliance by
      Administrative Agent. 

            	
               

            

    

    
      	
               
      

            	
              11.6

            	
              Delegation of
      Duties. 

            	
               

            

    

    
      	
               
      

            	
              11.7

            	
              Resignation
      of Administrative Agent. 

            	
               

            

    

    
      	
               
      

            	
              11.8

            	
              Non-Reliance
      on Administrative Agent and Other Lenders. 

            	
               

            

    

    
      	
               
      

            	
              11.9

            	
              Collateral
      and Guaranty Matters 

            	
               

            
	 	11.10	Indemnification	
               

            

    

    
    

     

    
      	
              12.

            	
              SUCCESSORS
      AND ASSIGNS 

            	
               

            

    

    
      	
               
      

            	
              12.1

            	
              Successors
      and Assigns. 

            	
               

            

    

     

    
      	
              13.

            	
              MISCELLANEOUS 

            	
               

            

    

    
      	
               
      

            	
              13.1

            	
              Complete
      Agreement; Modification of
      Agreement. 

            	
               

            

    

    
      	
               
      

            	
              13.2

            	
              Amendments
      and Waivers. 

            	
               

            

    

    
      	
               
      

            	
              13.3

            	
              Fees and
      Expenses. 

            	
               

            

    

    
      	
               
      

            	
              13.4

            	
              No
      Waiver. 

            	
               

            

    

    
      	
               
      

            	
              13.5

            	
              Remedies. 

            	
               

            

    

    
      	
               
      

            	
              13.6

            	
              Severability. 

            	
               

            

    

    
      	
               
      

            	
              13.7

            	
              Conflict of
      Terms. 

            	
               

            

    

    
      	
               
      

            	
              13.8

            	
              Confidentiality. 

            	
               

            

    

    
 

    
      
        
          
             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    This
SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT AGREEMENT (this “Agreement”),
dated as of August 4, 2008, among Frontier Airlines Holdings, Inc., a Delaware
corporation (in its individual capacity, “Frontier
Holdings,” and in its capacity as agent on behalf of the Borrowers,
“Borrower
Agent”), Frontier Airlines, Inc., a Colorado corporation (“Frontier
Airlines”), and Lynx Aviation, Inc., a Colorado corporation (“Lynx,”
and, together with Frontier Holdings and Frontier Airlines, the “Borrowers”
or the “Borrower”),
each as a debtor and debtor in possession under chapter 11 of the Bankruptcy
Code; Wells Fargo Bank Northwest, National Association, acting in its capacity
as administrative agent and collateral agent for the Lenders (as defined below)
(in such capacity, the “Administrative
Agent”); and the Lenders signatory hereto from time to time.

    
 

    RECITALS

    
 

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

    
 

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

    
 

    WHEREAS,
the Borrowers have requested that the Lenders provide a secured super-priority
loan of up to $75,000,000 in order to fund the continued operation of the
Borrowers’ businesses as debtors and debtors in possession under the Bankruptcy
Code; and

    
 

    WHEREAS,
the Lenders are willing to make available to the Borrowers Postpetition (as
defined below) loans in an amount up to $30,000,000 upon the terms and subject
to the conditions set forth herein, and to consider providing an additional
$45,000,000 as described herein; and

    
 

    WHEREAS,
each of the Borrowers has agreed to secure its obligations to the Administrative
Agent and the Lenders hereunder with, inter alia, security interests in, and
liens on, all of its property and assets, whether real or personal, tangible or
intangible, now existing or hereafter acquired or arising, with certain
exceptions, all as more fully provided herein; and

    
 

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

    
 

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

    

    
      
        
          
            
 

             

          

           

        

        
          -3-

          
            

          

        

        
           

        

      

    

    

    
 

    
 

    1. AMOUNT
AND TERMS OF CREDIT

     

    1.1 Credit
Facilities.

     

    (a) Loan.

     

    (i) Subject
to the terms and conditions hereof, each Lender agrees to make to the Borrowers,
jointly and severally, term loans (collectively, the “Loan” or the “Loans”) in an amount equal to
such Lender’s Pro Rata Share of the following amounts: (i) on the Closing Date,
a term loan in the aggregate principal amount equal to $30,000,000 (the “Stage 1 Loan”), and (ii) in the
sole discretion of the Lenders, on the Stage 2 Closing Date, a term loan in the
aggregate principal amount of up to $45,000,000 (the “Stage 2 Loan”). The Loans
shall be evidenced by promissory notes substantially in the form of Exhibit A
(each a “Note” and
collectively the “Notes”). Each Note shall
represent the joint and several obligation of each Borrower to pay the amount of
the applicable Lender’s Loan, together with interest thereon as prescribed in
Section 1.5. Notwithstanding
anything to the contrary contained herein or in any other Loan Document, the
Commitments shall terminate upon the funding of the Stage 1 Loan pursuant to
Section 2.1.

     

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

     

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

     

    1.2 Prepayments.

     

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

     

    (b) Mandatory
Prepayments.

     

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

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

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

     

    (iii) Upon the
sale of any Subject Asset (excluding Subject Assets consisting of (x) spare
parts (which are addressed in clause (iv) below) and (y) up to eight (8) A319
aircraft), Borrowers shall prepay an aggregate principal amount of Loans equal
to (A) if such Subject Asset is an A319 or A320 aircraft, 50% of the greater of
(y) Net Cash Proceeds of such Subject Asset and (z) the Orderly Liquidation
Value of such Subject Asset; and (B) if such Subject Asset is an A318 aircraft,
50% of the Net Cash Proceeds of such Subject Asset.

     

    (iv) Upon the
sale of any spare part or any rotable or expendable that either (x) is
outside the ordinary course of business or (y) generates Net Cash Proceeds in an
aggregate amount in any month in excess of $100,000, Borrowers shall prepay an
aggregate principal amount of Loans equal to (A) 50% of the greater of (y) Net
Cash Proceeds of such asset and (z) the Orderly Liquidation Value of such
asset.

     

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

     

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

     

    1.3 Priority and Application of
Payments.

     

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

    
 

    
      
        
        

      

      
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    1.4 Use of
Proceeds.

     

    The
Borrowers shall utilize the proceeds of the Loans to provide general working
capital and to pay ordinary operating costs and expenses of the Borrowers to the
extent, and only to the extent, such costs and expenses are consistent in all
material respects with the Projections and permitted by the Bankruptcy Code or
the Bankruptcy Court.

    
 

    1.5 Interest and Applicable
Margins.

     

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

     

    (b) Subject
to clause (e) below, Loans shall bear interest at a rate per annum equal to (i)
in the case of Cash Interest, 14.00% per annum and (ii) in the case of PIK
Interest, 16.00% per annum.  Cash Interest on each Loan shall be
payable on each Interest Payment Date.  PIK Interest on each Loan
shall be payable by increasing the outstanding principal amount of the Loans by
the amount of PIK Interest on each Interest Payment Date. Any interest so added
to the principal amount of the Loans shall bear interest as provided in this
Section 1.5 from the date on which such interest has been so added. The
obligation of the  Borrowers to pay PIK Interest shall be
automatically evidenced by this Agreement or, if applicable, any Notes
issued pursuant to this Agreement.  Unless the context otherwise
requires, for all purposes hereof, references to “principal amount” of the Loans
refers to the face amount of the Loans and not the gross proceeds funded
hereunder and includes any PIK Interest so capitalized and added to the
principal amount of the Loans from the date on which such interest has been so
added.

     

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

     

    
      
        
        

      

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

     

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

     

    1.6 Fees.

     

    (a) The
Borrowers shall pay to the Administrative Agent for the benefit of each Lender
in accordance with its Pro Rata Share a commitment fee (the “Commitment Fee”) equal to
$1,500,000, earned and payable on the Closing Date.

     

    (b) Upon any
voluntary prepayment of the Loans pursuant to Section 1.2(a), the Borrowers
shall pay a prepayment fee (a “Prepayment Fee”) equal to one
percent (1%) of the principal amount (excluding any interest added thereto
pursuant to Section 1.5) of the Loans prepaid.

     

    1.7 Receipt of
Payments.

     

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

     

     

    1.8 Loan Account and
Accounting.

     

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

    
 

    
      
        
        

      

      
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    1.9 Indemnity.

     

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

    
 

    1.10 Access.

     

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

    
 

    
      
        
        

      

      
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    1.11 Taxes.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    1.12 Capital Adequacy; Increased
Costs; Illegality.

     

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

     

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

     

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

     

    
 

    
      
        
        

      

      
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2. CONDITIONS
PRECEDENT

    

     

    2.1 Stage 1 Conditions.

     

    The obligation of each Lender to make the Stage
1 Loan shall not become effective until the date (the “Closing
Date”) on which each of the following conditions precedent (in addition
to the conditions precedent set forth in Section 2.3) is satisfied or provided
for in a manner reasonably satisfactory to the Administrative Agent, or duly
waived in writing in accordance with Section 13.2, whereupon each Lender shall be obligated to
fund its Pro Rata Share of the Stage 1 Loan within 1 Business Day of receipt of
the notice referred to in Section 2.1(h) below.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    2.2 Stage 2
Conditions.

     

    The
Borrowers may, on any date following the date that is 30 days after the funding
of the Stage 1 Loan, by notice in writing to the Administrative Agent and each
Lender, request Stage 2 Loans in an aggregate principal amount of not more than
$45,000,000.  The Lenders may in their sole discretion having regard
to then-current market conditions and the Borrowers’ business, assets,
operations, prospects or financial or other condition and such other matters as
the Lenders may deem relevant in their sole discretion, provide such loans on
such terms and in such amounts as the Lenders determine in their sole
discretion, it being understood that no Lender is under any obligation to
provide or arrange all or any part of the Stage 2 Loan and nothing herein shall
be construed as a commitment from any Lender to provide or arrange all or any
part of the Stage 2 Loan.  In the event that the Lenders agree to
provide the Stage 2 Loan, the funding of such Loans shall be subject to such
conditions as the Lenders may determine in their sole discretion, including
that the Bankruptcy Court shall have entered the Supplemental Order and
such Supplemental Order shall not have been reversed, modified or amended
without the prior written consent of the Administrative Agent and shall not be
stayed as a whole or in part.

     

    2.3 Conditions to each
Borrowing.

     

    Without limitation to Section 2.2 with respect
to any Stage 2 Loans, no Lender shall be obligated to make any Loan hereunder on
or after the Closing Date (including, for the avoidance of doubt, the initial
extension of credit hereunder) unless each of the following conditions precedent
is satisfied or provided for in a manner reasonably satisfactory to the
Administrative Agent, or duly waived in writing in accordance with
Section 13.2.

     

    (a) All
representations and warranties in this Agreement and each other Loan Document
shall be true and correct in all material respects (except to the extent any
representation or warranty is qualified by materiality, Material Adverse Effect
or word of like import, in which case such representation or warranty shall be
true and correct in all respects) as of the date such Loan is advanced to the
Borrowers.

     

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

     

    (c) The
average cost of U.S. Gulf Coast jet aviation fuel, as reported by Platts, over
the thirty (30) days prior to the proposed date of such Loan, is not greater
than $5.00 per gallon.

     

    
      
        
        

      

      
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    3. REPRESENTATIONS
AND WARRANTIES

     

    To induce
the Lenders and the Administrative Agent to enter into this Agreement, the
Borrowers executing this Agreement, jointly and severally, make the following
representations and warranties (on the Closing Date and on the date each loan is
advanced to the Borrowers) to the Administrative Agent and each Lender with
respect to all Borrowers, each and all of which shall survive the execution and
delivery of this Agreement.  Each reference in this Article 3 to
Disclosure Schedules shall mean the Disclosure Schedule delivered on the Closing
Date, as such Schedules may be modified by delivery by the Borrowers of updated
schedules to the Administrative Agent on or prior to the Stage 2 Closing Date,
which updated schedules shall be acceptable to the Administrative Agent in its
sole discretion to the extent any updated information provided on any such
schedule, if not so scheduled, would reasonably be likely to have a Material
Adverse Effect.

    
 

    3.1 Corporate Existence; Compliance with
Law.

     

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

     

    3.2 Executive
Offices, Collateral Locations,
FEIN.

     

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

     

    3.3 Corporate Power,
Authorization, Enforceable Obligations.

     

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

     

    3.4 Financial Statements,
Projections and Reports.

     

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

    
 

    
      
        
        

      

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

     

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

     

    (ii) The
unaudited consolidated balance sheet at June 30, 2008 of the Borrowers and their
Subsidiaries and the related consolidated statements of operations and cash
flows for the three (3) months then ended.

     

    (b) Projections. The
Projections delivered to Lenders prior to the Closing Date have been prepared by
the Borrowers and reflect projections for the period beginning on August 1, 2008
on a month-by-month basis at least through May 29, 2009. The Projections are
based upon the same accounting principles (other than adjustments related to the
impact of the Cases) as those used in the preparation of the financial
statements described above and are based on assumptions believed by the
Borrowers to be reasonable at the time such Projections were delivered in light
of conditions and facts known to the Borrowers as of the date thereof (it being
understood that projections by their nature are inherently uncertain, the
Projections are not a guaranty of future performance, and actual results may
differ materially from the Projections).

     

    3.5 Material Adverse Effect;
Burdensome Restrictions; Default.

     

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

    
 

    3.6 Ownership of Property; Real
Estate; Liens.

     

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

     

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

     

    3.7 Labor
Matters.

     

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

    
 

    
      
        
        

      

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

     

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

    
 

    3.9 Government
Regulation.

     

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

    
 

    3.10 Margin
Regulations.

     

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

    
 

    3.11 Taxes.

     

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

     

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

     

    3.12 ERISA.

     

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

     

    
      
        
        

      

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

     

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

     

    3.13 No
Litigation.

     

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

    
 

    3.14 Intellectual
Property.

     

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

    
 

    3.15 Full
Disclosure.

     

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

    
 

    
      
        
        

      

      
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    3.16 Environmental
Matters.

     

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

     

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

     

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

     

    3.17 Insurance.

     

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

    
 

    3.18 Use of
Proceeds.

     

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

     

    3.19 Deposit.

     

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

    
 

    
      
        
        

      

      
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    3.20 Compliance With Industry
Standards.

     

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

    
 

    3.21 Secured, Super-Priority
Obligations.

     

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

     

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

     

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

     

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

     

    3.22 Certificated Air
Carrier.

     

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

    
 

    3.23 Slots and Gate Interests.

     

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

     

    3.24 Section 1110
Assets.

     

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

     

    3.25 Patriot
Act.

     

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

     

    3.26 Cross
Collateralization.

     

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

     

    
 

    
      
        
        

      

      
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    4. FINANCIAL
STATEMENTS AND INFORMATION

     

    4.1 Reports and
Notices.

     

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

    
 

    4.2 Communication with
Accountants.

     

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

    
 

    5. AFFIRMATIVE
COVENANTS

     

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

    
 

    5.1 Maintenance of Existence and
Conduct of Business.

     

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

    
 

    5.2 Payment of
Taxes.

     

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

     

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

     

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

     

    5.3 Books and
Records.

     

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

    
 

    
      
        
        

      

      
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    5.4 Insurance.

     

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

     

    5.5 Compliance with
Laws.

     

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

    
 

    5.6 Intellectual
Property.

     

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

     

    5.7 Environmental
Matters.

     

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

    
 

    5.8 Further
Assurances.

     

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

    
 

    
      
        
        

      

      
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    5.9 Additional Collateral
Documents.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    5.10 Labor
Contracts.

     

    On or
before November 15, 2008, the Borrowers shall deliver to the Administrative
Agent new or revised collective bargaining agreements or amendments thereto (or
otherwise demonstrate that such new or amended agreements will be effective in
the near term) containing concessions materially consistent with labor cost
reductions reflected in the Projections or have otherwise obtained labor cost
savings reasonably projected to be consistent therewith, and otherwise on terms
(including as to the expiration thereof) reasonably satisfactory to the
Administrative Agent with respect to the following groups: (A) Frontier Airlines
Pilots Association and (B) Teamsters Airline Division representing the Aircraft
Technicians, Ground Service Equipment Technicians and Tool Room
Attendants.

     

    5.11 Slot
Utilization.

     

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

    
 

    5.12 ERISA/Labor
Matters.

     

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

    
 

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    5.13 Maintenance of Liens and
Collateral.

     

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

    
 

    5.14 Use of
Proceeds.

     

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

    
 

    5.15 Cash Management
Systems.

     

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

    
 

    5.16 Access.

     

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

     

    5.17 Fuel
Hedging.

     

    The
Borrowers shall investigate in good faith and, to the extent deemed appropriate
in Borrowers’ commercially reasonable judgment, pursue opportunities to hedge
the risks associated with fluctuations in jet fuel prices, including without
limitation swap and option contracts for West Texas Intermediate Crude Oil, Gulf
Coast Jet A fuel and “crack spread” contracts.  Borrowers shall, upon
reasonable request of the Administrative Agent and subject to any applicable
confidentiality agreement, provide to the Administrative Agent reasonably
detailed reports or other information relating to its current or contemplated
hedging activity and the progress of its investigation into hedging
alternatives.

     

    5.18 Liquidity
Initiatives.

     

    The
Borrowers shall use commercially reasonable efforts to sell or otherwise dispose
of no fewer than five (5) A319 aircraft on a time frame materially consistent
with the Projections, including, to the extent that the aircraft disposition
transactions that are the subject of motions filed with the Bankuptcy Court and
presently scheduled for hearing on August 5, 2008 are not consummated, using
commercially reasonable efforts, as soon as reasonably practicable under the
circumstances and consistent with maximizing the net proceeds from the sales or
dispositions of such aircraft, to identify and consummate alternative
disposition transactions with respect to such five (5) A319
aircraft.

     

    6. NEGATIVE
COVENANTS

     

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

    
 

    6.1 Mergers.

     

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

     

    
      
        
        

      

      
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    6.2 Investments.

     

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

    
 

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    6.3 Indebtedness.

     

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

     

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

     

    (ii) the Loans
and the other Obligations;

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    (viii) Indebtedness
in respect of letters of credit, surety and appeal bonds in an aggregate
outstanding amount not to exceed $2,500,000;

     

    (ix) Indebtedness
constituting a Permitted Refinancing of Indebtedness referred to in clauses (i) or (iii)
above;

     

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

     

    (xi) Indebtedness
secured solely by the Subject Aircraft;

     

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

     

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

     

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

     

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

     

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

     

    6.4 Affiliate
Transactions.

     

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

    
 

    6.5 Capital Structure and
Business.

     

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

    
 

    
      
        
        

      

      
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    6.6 Guaranteed
Indebtedness.

     

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

    
 

    6.7 Liens.

     

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

    (a) Permitted
Encumbrances;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (i) Liens on
cash deposits securing obligations referred to in Section 6.3(a)(viii) that do not constitute Collateral in an
aggregate amount not in excess of $2,500,000;

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    6.8 Sale of Stock and
Assets.

     

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

    
 

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

    
      
        
        

      

      
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    6.9 Financial
Covenants.

     

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

    
 

    6.10 Hazardous
Materials.

     

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

    
 

    6.11 Sale-Leasebacks.

     

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

     

    6.12 Restricted
Payments.

     

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

     

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

     

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

     

    6.14 Limitation
on Negative Pledge Clauses.

     

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

     

    
      
        
        

      

      
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    6.15 No
Speculative Transactions.

     

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

     

    6.16 Real Estate
Purchases and Leases.

     

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

     

    6.17 Subsidiaries.

     

    No
Borrower shall organize or invest in any new Subsidiary.

     

    6.18 Material
Contracts.

     

    Except to the extent otherwise permitted by this
Article 6, no Borrower shall
enter into or assume any contract after the Closing Date that would result in an
obligation (whether contingent or otherwise) of such Borrower in excess of
$5,000,000 without the prior written consent of Administrative Agent except to
the extent consistent in all material respects with the Projections and except
for Permitted Prepetition Payments.

     

    7. TERM

     

    7.1 Termination.

     

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

     

    7.2 Survival of
Obligations Upon Termination of Financing
Arrangements.

     

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

     

    
      
        
        

      

      
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    8. EVENTS
OF DEFAULT; RIGHTS AND REMEDIES

     

    8.1 Events of
Default.

     

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

    
 

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (h) Any
Change of Control occurs.

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    (n) (i) The
Interim Order shall cease to be in full force and effect and the Final Order
shall not have been entered prior to such cessation, (ii) the Final Order shall
not have been entered by the Bankruptcy Court on or before the 45th day
following the entry of the Interim Order, (iii) from and after the date of entry
thereof, the Final Order shall cease to be in full force and effect, (iv) any
Borrower shall fail to comply with the terms of the Orders, or (v) the Orders
shall be amended, supplemented, stayed, reversed, vacated or otherwise modified
(or any of the Borrowers shall apply for authority to do so) in any manner that
affects the rights or duties of the Administrative Agent or the Lenders, in each
case, without the prior written consent of the Administrative
Agent.

     

    8.2 Remedies.

     

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

     

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

     

    8.3 Waivers by
Borrowers.

     

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

     

    8.4 Liquidation
Budget.

     

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

     

    
 

    
      
        
        

      

      
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    9. JOINT
AND SEVERAL LIABILITY

     

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

     

    10. SECURITY

     

    10.1 Security.

     

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

     

    (i) all
Accounts;

     

    (ii) all
Chattel Paper;

     

    (iii) all
Documents;

     

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

     

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

     

    (vi) all
Instruments;

     

    (vii) all
Investment Property;

     

    (viii) all
Vehicles;

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

    
      
        
        

      

      
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    10.2 Perfection of
Security
Interests.

     

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

     

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

     

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

     

    
      
        
        

      

      
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    10.3 Rights of Lenders;
Limitations on Lenders’ Obligations.

     

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

     

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

     

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

     

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

     

    10.4 Covenants of the Borrowers
with Respect to Collateral.

     

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

    
 

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (g) [Reserved].

     

    (h) Pledged
Collateral.

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    10.5 Performance
by Administrative Agent of the Borrowers’ Obligations.

     

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

     

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

     

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

    
 

    10.7 Remedies; Rights Upon
Default.

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

    10.9 Release of
Collateral.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    11. ASSIGNMENT
AND PARTICIPATIONS; APPOINTMENT OF ADMINISTRATIVE AGENT

     

    11.1 Assignment and
Participations.

     

    (a) Right to Assign. Each
Lender may sell, transfer, negotiate or assign all or a portion of its rights
and obligations hereunder (including all or a portion of its Commitments and its
rights and obligations with respect to Loans) to any other Person, provided,
that (x) the Lenders or its Affiliates may not, without the prior written
consent of the Borrower, sell, transfer, negotiate or assign all or any portion
of its rights hereunder to any Person, other than a Lender or an Affiliate of a
Lender, that is an air carrier or an affiliate of an air carrier, and (y) the
aggregate outstanding principal amount (determined as of the effective date of
the applicable Assignment) of the Loans and Commitments subject to any such Sale
shall be an integral multiple of $1,000,000, unless such Sale is made to an
existing Lender or an Affiliate or Approved Fund of any existing Lender, is of
the assignor’s (together with its Affiliates and Approved Funds) entire interest
in such Loan or is made with the prior consent of the Borrowers and the
Administrative Agent.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    11.2 Appointment of
Administrative Agent

     

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

     

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

     

    11.3 Rights as a Bank.

     

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

     

    11.4 Exculpatory
Provisions.

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    11.5 Reliance by Administrative
Agent.

     

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

     

    11.6 Delegation of
Duties.

     

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

     

    11.7 Resignation of
Administrative Agent.

     

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

     

    
      
        
        

      

      
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    11.8 Non-Reliance on
Administrative Agent and Other Lenders.

     

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

     

    11.9 Collateral and Guaranty
Matters.

     

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

     

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

     

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

     

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

     

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

     

    11.10 Indemnification.

     

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

     

    
 

    12. SUCCESSORS
AND ASSIGNS

     

    12.1 Successors and
Assigns.

     

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

    
 

    
      
        
        

      

      
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    13. MISCELLANEOUS

     

    13.1 Complete
Agreement; Modification of Agreement.

     

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

     

    13.2 Amendments and
Waivers.

     

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

     

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

     

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

     

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

    
 

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

     

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

     

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

     

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

     

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

    
 

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

     

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

     

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

     

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

     

    
      
        
        

      

      
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    13.3 Fees and
Expenses.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    13.4 No
Waiver.

     

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

     

    
      
        
        

      

      
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    13.5 Remedies.

     

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

     

    13.6 Severability.

     

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

     

    13.7 Conflict of
Terms.

     

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

     

    13.8 Confidentiality.

     

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

     

    13.9 GOVERNING
LAW.

     

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

    
 

    
      
        
        

      

      
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    13.10 Notices.

     

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

     

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

     

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

     

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

     

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

     

    13.11 Section
Titles.

     

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

    
 

    13.12 Counterparts.

     

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

    
 

    
      
        
        

      

      
        -47-

        
          

        

      

      
        
        

      

    

    13.13 WAIVER OF JURY
TRIAL.

     

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

    
 

    13.14 [Reserved]

     

    
 

    13.15 Advice of
Counsel.

     

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

    
 

    13.16 No Strict
Construction.

     

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

    
 

    13.17 Patriot
Act.

     

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

    
 

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

    
 

    

    
      
        
          
             

             

          

           

        

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

     

     

    
      
        	 	FRONTIER AIRLINES HOLDINGS,
      INC., as a Borrower	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Sean
      E. Menke	 
	 	 	Name:
      Sean E. Menke	 
	 	 	Title:
      CEO/President 	 
	 	 	 	 

      

    

     

     

     

    
 

    

    
      
        
          
             

          

           

        

        
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        	 	LYNX AVIATION, INC.,  as a
      Borrower	 
	 	 	 	 
	
                 

              	
                By:
      

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

      

    

     

     

    

    
 

    

    
      
        
          
             

             

          

           

        

        
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        	 	FRONTIER AIRLINES, INC., as a
      Borrower	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Sean
      E. Menke	 
	 	 	Name:
      Sean E. Menke 	 
	 	 	Title:
      President & CEO 	 
	 	 	 	 

      

    
 

    

    
      
        
          
             

             

          

           

        

        
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        	 	WELLS FARGO BANK NORTHWEST,
      NATIONAL ASSOCIATION,  as Administrative Agent	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/
      Scott Rosevear	 
	 	 	Name:
      Scott Rosevear 	 
	 	 	Title: Vice
      President 	 
	 	 	 	 

      

    

     

    
 

     

    

    
      
        
          
             

             

          

           

        

        
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        	 	REPUBLIC AIRWAYS HOLDINGS,
      INC., as a Lender	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Robert
      H. Cooper	 
	 	 	Name:
      Robert H. Cooper 	 
	 	 	Title:
      EVP/CFO 	 
	 	 	 	 

      

    
 

    

    
      
        
          
             

          

           

        

        
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        	 	CREDIT SUISSE, CAYMAN ISLANDS
      BRANCH, as a Lender	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Michael
      T. Wotanowski	 
	 	 	Name:
      Michael T. Wotanowski	 
	 	 	Title:
      Vice President	 
	 	 	 	 
	 	 	/s/
      Ian Landow	 
	 	 	Vice
      President	 

      

    

    
 

     

    

    
      
        
          
             

             

          

           

        

        
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        	 	AQR CAPITAL, LLC. as a
      Lender	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Bradley
      Asness	 
	 	 	Name:
      Bradley Asness	 
	 	 	Title:
      General Counsel 	 
	 	 	 	 

      

    

    
 

    
      
        	 	CNH PARTNERS, LLC. as a
      Lender	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Bradley
      Asness	 
	 	 	Name:
      Bradley Asness 	 
	 	 	Title:
      General Counsel 	 
	 	 	 	 

      

     

    
 

    

    
      
        
          
             

             

          

           

        

        
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    ANNEX
A

    TO

    CREDIT
AGREEMENT

    
 

    DEFINITIONS

    
 

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

    
      
        
        

      

      
        -56-

        
          

        

      

      
        
        

      

    

    “Agreement” means this
Agreement, as the same may be amended, supplemented, restated or otherwise
modified from time to time.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

    
      
        
        

      

      
        -57-

        
          

        

      

      
        
        

      

    

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

     

    (i) the lesser of (x) Aggregate Cash on Hand on the Carve Out Date and
(y) $18,000,000; plus

     

    (ii) 50% of the amount, if positive, of (x) Aggregate Cash on Hand on
the Carve Out Date minus (y) $18,000,000; plus

     

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

    
 

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

    
      
        
        

      

      
        -58-

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

    
      
        
        

      

      
        -59-

        
          

        

      

      
        
        

      

    

    “Commitment” means (a) as to
any Lender, the commitment of such Lender to make its Pro Rata Share of the
Stage 1 Loan as set forth on Annex G to the Agreement or in the most recent
Assignment Agreement executed by such Lender, and (b) as to all Lenders, the
aggregate commitment of all Lenders to make the Stage 1 Loan as to each of
clauses (a) and (b), as such Commitments may be reduced, amortized or adjusted
from time to time in accordance with the Agreement. After advancing the
aggregate amount of the Commitment, each reference to a Lender’s Commitment
shall refer to that Lender’s Pro Rata Share of the outstanding
Loan.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

    
      
        
        

      

      
        -61-

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

    
 

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

    
      
        
        

      

      
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    “Final Order” means an order
approving or authorizing this Agreement and the other Loan Documents and the
incurrence by the Borrowers hereunder of Postpetition secured and super-priority
Indebtedness, in the form attached hereto as Exhibit F with only such changes as
shall be satisfactory to the Administrative Agent.

     

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

     

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

     

    “First Data” means First Data
Merchant Services Corporation.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

    
      
        
        

      

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

     

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

     

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

     

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

     

    “IATA” means International Air
Transport Association.

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 “Interim Order” means an order,
approving or authorizing this Agreement and the other Loan Documents and the
incurrence by the Borrowers hereunder of Postpetition secured and super-priority
Indebtedness on an interim basis, in the form set forth hereto as Exhibit E with
only such changes as shall be satisfactory to the Administrative
Agent.

     

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

     

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

     

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

    
 

    
      
        
        

      

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

     

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

    
 

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Net Cash Proceeds”
means:

    
 

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

     

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

     

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

     

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

    
 

    
      
        
        

      

      
        -69-

        
          

        

      

      
        
        

      

    

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

     

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

     

    “Orderly Liquidation
Value” means with respect to any aircraft or spare parts, the net orderly
liquidation value of such aircraft or spare parts as set forth in or scheduled
to the Projections, or otherwise specified in writing to the Administrative
Agent prior to the Closing Date.

     

    “Orders” means
(i) prior to the entry of the Final Order, the Interim Order and (ii)
thereafter, the Final Order.

     

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

     

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

     

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

     

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

     

    “PBGC” means
the Pension Benefit Guaranty Corporation.

     

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

    
      
        
        

      

      
        -71-

        
          

        

      

      
        
        

      

    

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

    
 

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

    
 

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

    
 

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

    
 

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

    
 

    “Pledged Entity” means an
issuer of Pledged Collateral.

     

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

     

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

     

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

     

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

     

    “Prepayment Fee” has the
meaning specified in Section 1.6(b).

     

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

     

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

     

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

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

     

    
      
        
        

      

      
        -72-

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

    
      
        
        

      

      
        -73-

        
          

        

      

      
        
        

      

    

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

     

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

    
 “Scheduled Maturity Date” means
April 1, 2009.

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 “SPV” means any special purpose
funding vehicle identified as such in a writing by any Lender to the
Administrative Agent.

     

    “Stage 1
Conditions” means the conditions set forth in Section 2.1 and 2.3.

     

    “Stage 1 Loan”
has the meaning ascribed to it in Section 1.1.

     

    “Stage 2 Closing
Date” means the date that the Stage 2 Loan, if any, is made following
satisfaction of applicable conditions thereto.

     

    “Stage 2 Loan”
has the meaning ascribed to it in Section 1.1.

     

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

     

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

     

    “Subject Aircraft” means the
two (2) A320 aircraft, eleven (11) A319 aircraft, and nine (9) A318
aircraft.

     

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

    
 

    
      
        
        

      

      
        -74-

        
          

        

      

      
        
        

      

    

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

     

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

     

    “Supplemental Order” shall mean
an order approving or authorizing the incurrence by the Borrowers hereunder of
Postpetition secured and super-priority Indebtedness in an amount equal to the
Stage 2 Loans (if any), in form and substance satisfactory to the Administrative
Agent.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    

    
      
        
          
            -75-

             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    ANNEX
B

    TO CREDIT
AGREEMENT

    
 

    CASH
MANAGEMENT SYSTEM

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    

    
      
        
          
            B-1

             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    ANNEX
C

    TO CREDIT
AGREEMENT

    
 

     

    CLOSING
CHECKLIST

     

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

     

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

     

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

     

    3.           Charter and Good
Standing.  For each Borrower, such Person’s (a) charter
and all amendments thereto and (b) good standing certificates in its state of
incorporation, each dated a recent date prior to the Closing Date and certified
by the applicable Secretary of State or other authorized Governmental
Authority.

     

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

     

    5.           Incumbency
Certificates.  For each Borrower, signature and incumbency
certificates of the officers of each such Person executing any of the Loan
Documents, certified as of the Closing Date by such Person’s corporate secretary
or an assistant secretary as being true, accurate, correct and
complete.

     

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

     

    7.           Audited
Financials; Financial Condition.  The Administrative Agent
shall have received not less than two (2) Business Days prior to the Closing
Date the Financial Statements and Projections referred to in Section 3.4, and the Administrative Agent shall be
satisfied, in its sole discretion, with all of the
foregoing.

     

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

     

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

     

    10.           Intellectual
Property Security Agreements.  Duly executed originals of
Trademark Security Agreements, Copyright Security Agreements and Patent Security
Agreements, each signed by each Borrower which owns U.S. registered Trademarks,
Copyrights and/or Patents, as applicable, all in form and substance reasonably
satisfactory to the Administrative Agent, together with all instruments,
documents and agreements executed pursuant thereto.

     

    11.           Cash
Management System; Blocked Account Agreements.  Evidence
satisfactory to Administrative Agent that Cash Management Systems complying with
Annex B to the Agreement have been established and are being maintained in the
manner set forth in such Annex B, together with copies of duly executed
tri-party blocked account and Control Agreements, all as required by Annex
B.

     

     

    

    
      
        
          
            C-1

             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    ANNEX
D

    TO CREDIT
AGREEMENT

    
 

    FINANCIAL
STATEMENTS AND PROJECTIONS — REPORTING

    
 

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

    
 

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

     

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

     

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

     

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

     

    
      
        D-1

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

     

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

     

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

     

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

     

    
 

    

    
      
        
          
            D-2

             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    ANNEX
E

    TO CREDIT
AGREEMENT

    
 

    FINANCIAL
COVENANTS

    
 

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

    
 

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

    
 

    
      	
              
                Fiscal
      Month

              

            	
              
                EBITDAR

              

            
	 
      	 
      
	
              September

            	
              2008

            	
              $11,300,000

            
	
              October

            	
              2008

            	
              $4,500,000

            
	
              November

            	
              2008

            	
              $(3,600,000)

            
	
              December

            	
              2008

            	
              $(8,000,000)

            
	
              January

            	
              2009

            	
              $700,000

            
	
              February

            	
              2009

            	
              $1,100,000

            
	
              March

            	
              2009

            	
              $22,000,000

            

    

    
 

    (b) Contingency
Budget.  In order to ensure that the Carve-Out, if implicated,
will be adequately funded, as of 5:00 p.m. on the first Business Day of
each week, the Borrowers shall have Aggregate Cash on Hand of at least
$15,000,000.

    
 

    Accounting
Terms.

    
 

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

    
 

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

    
 

    
 

    

    
      
        
          
            E-1

             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    ANNEX
F

    TO CREDIT
AGREEMENT

    
 

    NOTICE
ADDRESSES

    
 

    (A)           If
to Administrative Agent, at

    
 

    Wells
Fargo Bank Northwest, National Association

    299 S.
Main Street, 12th
Floor

    Salt Lake
City, UT 84111

    Attention:
Corporate Trust Lease Group

    Telecopier
No.: 801-246-5053

    Telephone
No.: 801-246-5630

     

    with copies
to:

     

    Fulbright &
Jaworski L.L.P.

    666 Fifth
Avenue

    New York,
NY 10103-3198

    Attention:
David A. Rosenzweig

    Telecopier
No.: 212-318-3400

    Telephone
No.: 212-318-3000

    
  

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

    Frontier
Airlines Holdings, Inc.

    7001
Tower Road

    Denver,
CO 80249

    Attention:
Office of the Chief Financial Officer

    Telecopier
No.: 720-374-4379

    Telephone
No.: 720-374-4200

     

    with copies
to:

    
 

    Frontier
Airlines Holdings, Inc.

    7001
Tower Road

    Denver,
CO 80249

    Attention:
Office of the General Counsel

    
 

    Davis
Polk & Wardwell

    450
Lexington Avenue

    New York,
NY 10017

    Attention:
Marshall Huebner

    Telecopier
No.: 212 450 3800

    Telephone
No.: 212 450 4000

    
 

    

    
      
        
          
            F-1

             

          

           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    ANNEX
G

    TO CREDIT
AGREEMENT

    
 

    COMMITMENTS

    
 

    
      	
              Lender

            	
              Commitment

            
	
              Republic
      Airways Holdings Inc.

            	
              $12,500,000

            
	
              Credit
      Suisse, Cayman Islands Branch

            	
              $10,000,000

            
	
              AQR
      Capital, LLC, AQR Absolute Return Master Account, L.P.

            	
              $6,500,000

            
	
              CNH
      Partners, LLC, CNH Diversified Opportunities Master Account,
      L.P.

            	
              $1,000,000

            

    

    
 

    
 

    

    
      
        
          G-1 

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
A

     

    to

     

    CREDIT
AGREEMENT

     

    FORM
OF NOTE

     

    $____,____,_____                                                                                                                                            [___________,
20__

     

    FOR VALUE
RECEIVED, the undersigned, FRONTIER AIRLINES HOLDINGS, INC., a Delaware
corporation (“Holdings”), FRONTIER AIRLINES,
INC., a Colorado corporation (“Frontier”), and LYNX AVIATION,
INC., a Colorado corporation (“Lynx”, and together with
Holdings and Frontier, each a “Borrower” and collectively,
the “Borrowers”) each as
a debtor and debtor-in-possession under chapter 11 of the Bankruptcy Code (as
defined below), jointly and severally, HEREBY PROMISE TO PAY to the order of
[__________] (“Lender”)
at the offices of Wells Fargo Bank Northwest, National Association, a national
banking association, acting in its capacity as Administrative Agent (the “Administrative Agent”), at its
address at 299 S. Main Street, 12th Floor,
Salt Lake City, UT 84111, or at such other place as Administrative Agent may
designate from time to time in writing, in lawful money of the United States of
America and in immediately available funds, the amount of ____________________
DOLLARS AND _____ CENTS ($___,___,___) plus all payments of interest added to
the principal amount hereof pursuant to the terms of the Credit Agreement (as
hereinafter defined).  All capitalized terms used but not otherwise
defined herein have the meanings given to them in the Credit
Agreement.

     

    This Note
is one of the Notes issued pursuant to that certain Secured Super-Priority
Debtor in Possession Credit Agreement dated as of August 4, 2008 by and among
the Borrowers, the Administrative Agent, the Lender and the other Lenders
signatory thereto from time to time (including all Appendices thereto and as
from time to time amended, restated, supplemented or otherwise modified, the
“Credit Agreement”), and
is entitled to the benefit and security of the Credit Agreement and all of the
other Loan Documents referred to therein.  Reference is hereby made to
the Credit Agreement for a statement of all of the terms and conditions under
which the Loans evidenced hereby are made and are to be repaid.  The
principal balance of the Loans, the rates of interest applicable thereto and the
date and amount of each payment made on account of the principal thereof, shall
be recorded by the Administrative Agent on its books; provided that the failure
of the Administrative Agent to make any such recordation shall not affect the
obligations of the Borrowers to make a payment when due of any amount owing
under the Credit Agreement or this Note.

     

    Borrowers
promise to pay the principal amount of the indebtedness evidenced hereby in the
amounts and on the dates specified in the Credit Agreement.  Borrowers
shall also promise to pay Interest on the unpaid principal amount hereof until
such principal amount is paid in full at such interest rates and at such times,
and pursuant to such calculations, as are specified in the Credit
Agreement.  The terms of the Credit Agreement are hereby incorporated
herein by reference.

     

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

     

    Upon and
after the occurrence of any Event of Default, this Note may, as provided in the
Credit Agreement, and without demand, notice or legal process of any kind, be
declared due and payable.

     

    Time is
of the essence of this Note.  Demand, presentment, protest and notice
of nonpayment and protest are hereby waived by the Borrowers.

     

    Except as
provided in the Credit Agreement, this Note may not be assigned by the Lender to
any Person.

     

    THIS NOTE
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.

     

    [SIGNATURE
PAGE FOLLOWS]

    

    
      
        
          
            
 

             

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
 

    
      	
              FRONTIER
      AIRLINES HOLDINGS, INC.

            
	
              By:

            	 
      
	
              Name:

            
	
              Title:

            

    

    
 

     

    
 

    
      	
              FRONTIER
      AIRLINES, INC.

            
	
              By:

            	 
      
	
              Name:

            
	
              Title:

            

    

    
 

     

    
 

    
      	
              LYNX
      AVIATION, INC.

            
	
              By:

            	 
      
	
              Name:

            
	
              Title:

            

    

    
 

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
B

     

    FORM
OF PLEDGE AMENDMENT

     

    This
Pledge Amendment, dated ___________, ____ is delivered pursuant to Section 10.4(h)(v) of
the Secured Super-Priority Debtor in Possession Credit Agreement, dated August
4, 2008 (the “Credit
Agreement”), among Frontier Airlines Holdings, Inc., Frontier Airlines,
Inc. and Lynx Aviation, Inc., each as Borrower and debtor and debtor in
possession under Chapter 11 of the Bankruptcy Code, Wells Fargo Bank Northwest,
National Association, as administrative agent and collateral agent for the
Lenders, and the other Lenders signatory thereto from time to
time.  All defined terms herein shall have the meanings ascribed
thereto or incorporated by reference in the Credit Agreement.  The
undersigned hereby certifies that the representations and warranties in Section 3 of the
Credit Agreement are true and correct as to the promissory notes, instruments
and shares pledged pursuant to this Pledge Amendment.  The undersigned
further agrees that this Pledge Amendment may be attached to the Credit
Agreement, and the Pledged Shares and Pledged Indebtedness listed on this Pledge
Amendment shall be and become a part of the Pledged Collateral referred to in
said Credit Agreement and shall secure all Secured Obligations referred to in
said Credit Agreement.

     

    
 

     

    
      	 
      
	
              By:

            	 
      
	
              Name:

            
	
              Title:

            

    

    
 

    
 

    
      	
              Name
      and

              Address
      of Undersigned

            	
              Pledged
      Entity

            	
              Class
      of Stock

            	
              Certificate
      Number(s)

            	
              Number
      of Shares

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

    

    
 

    
      	
              Pledged
      Entity

            	
              Initial

              Principal
      Amount

            	
              Issue
      Date

            	
              Maturity
      Date

            	
              Interest
      Rate

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

    

    
 

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Exhibit
C

    to

    Credit
Agreement

    
 

    FORM OF COPYRIGHT SECURITY
AGREEMENT

    
 

    COPYRIGHT
SECURITY AGREEMENT, dated as of [August] __, 2008, by Frontier Airlines
Holdings, Inc., a Delaware corporation, Frontier Airlines, Inc., a Colorado
corporation, and Lynx Aviation, Inc., a Colorado corporation, (collectively, the
“Grantors”), in
favor of Wells Fargo Bank Northwest, National Association, a national banking
association, in its capacity as Administrative Agent for the Lenders (the
Lenders together with the Administrative Agent, the “Secured
Parties”).

     

    W
I T N E S S E T H:

    
 

    WHEREAS,
pursuant to that certain Secured Super-Priority Debtor in Possession Credit
Agreement, dated as of August 4, 2008, by and among Grantors, Administrative
Agent and the Persons signatory thereto from time to time as Lenders (including
all annexes, exhibits and schedules thereto, as from time to time amended,
restated, supplemented or otherwise modified, the “Credit Agreement”),
Lenders have agreed to make the Loans to the Grantors;

     

    WHEREAS,
Lenders are willing to make the Loans as provided for in the Credit Agreement,
but only upon the condition, among others, that Grantors shall have executed and
delivered to Secured Parties the Credit Agreement; and

     

    WHEREAS,
pursuant to the Credit Agreement, Grantors are required to execute and deliver
to Administrative Agent, for the benefit of Secured Parties, this Copyright
Security Agreement.

     

    NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as
follows:

     

    1 DEFINED
TERMS.  All capitalized terms used but not otherwise defined
herein (including in the preamble hereof) have the meanings given to them in
Annex A to the
Credit Agreement.

     

    2 GRANT OF SECURITY INTEREST
IN COPYRIGHT COLLATERAL.  Grantors hereby grant Administrative
Agent, on behalf of the Secured Parties, a continuing security interest in all
of Grantors’ right, title and interest in, to and under the following, whether
presently existing or hereafter created or acquired (collectively, the “Copyright
Collateral”):

     

    (a) all of
its Copyrights, including but not limited to those referred to on Schedule I
hereto;

     

    (b) all
reissues, continuations or extensions of the foregoing; and

     

    (c) all
products and proceeds of the foregoing, including, without limitation, any claim
by Grantors against third parties for past, present or future infringement or
dilution of any Copyright.

     

    3 CREDIT
AGREEMENT.  The security interests granted pursuant to this
Copyright Security Agreement are granted in conjunction with the security
interests granted to Administrative Agent, on behalf of the Secured Parties,
pursuant to the Credit Agreement.  Grantors hereby acknowledge and
affirm that the rights and remedies of the Secured Parties with respect to the
security interest in the Copyright Collateral made and granted hereby are more
fully set forth in the Credit Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth
herein.

     

    4 CHOICE OF
LAW.  This Copyright Security Agreement shall be construed in
accordance with and governed by the laws of the State of New York, except as
otherwise required by mandatory provisions of law and except to the extent that
remedies provided by the laws of any jurisdiction other than the State of New
York are governed by the laws of such jurisdiction.

     

    [signature
page follows]

    
 

    

    
      
        
          
            
 

             

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    IN
WITNESS WHEREOF, Grantors have caused this Copyright Security Agreement to be
executed and delivered by their duly authorized officer as of the date first set
forth above.

     

    
      	
              FRONTIER
      AIRLINES HOLDINGS, INC., a Delaware corporation

            
	
              By:

            	 
      
	
              Name:Matthew
      R. Henry

            
	
              Title:Vice
      President, Secretary and General
Counsel

            

    

    
 

    
 

    
      	
              LYNX
      AVIATION, INC., a Colorado corporation

            
	
              By:

            	 
      
	
              Name:Matthew
      R. Henry

            
	
              Title:Vice
      President, Secretary and General
Counsel

            

    

    
 

    
 

    
      	
              FRONTIER
      AIRLINES, INC., a Colorado corporation

            
	
              By:

            	 
      
	
              Name:Matthew
      R. Henry

            
	
              Title:Secretary

            

    

    
 

    
 

    
 

    

    
      
        
          
            
 

             

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    ACCEPTED
AND ACKNOWLEDGED BY:

     

    
      	
              WELLS
      FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,

              as
      Administrative Agent

            
	
              By:

            	 
      
	
              Name:

            
	
              Title:

            

    

    
 

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Exhibit
D

     

    to

     

    Credit
Agreement

     

    FORM OF TRADEMARK SECURITY
AGREEMENT

     

    
 

    TRADEMARK
SECURITY AGREEMENT, dated as of [August] __, 2008, by Frontier Airlines
Holdings, Inc., a Delaware corporation, Frontier Airlines, Inc., a Colorado
corporation, and Lynx Aviation, Inc., a Colorado corporation (collectively, the
“Grantors”), in
favor of Wells Fargo Bank Northwest, National Association, a national banking
association, in its capacity as Administrative Agent for the Lenders (the
Lenders together with the Administrative Agent, the “Secured
Parties”).

     

    W
I T N E S S E T H:

     

    
 

    WHEREAS,
pursuant to that certain Secured Super-Priority Debtor in Possession Credit
Agreement dated as of August 4, 2008, by and among Grantors, the Administrative
Agent and the Persons signatory thereto from time to time as Lenders (including
all annexes, exhibits and schedules thereto, as from time to time amended,
restated, supplemented or otherwise modified, the “Credit Agreement”),
Lenders have agreed to make the Loans to the Grantors;

     

    WHEREAS,
Lenders are willing to make the Loans as provided for in the Credit Agreement,
but only upon the condition, among others, that Grantors shall have executed and
delivered to Secured Parties the Credit Agreement; and

     

    WHEREAS,
pursuant to the Credit Agreement, Grantors are required to execute and deliver
to Administrative Agent, for the benefit of Secured Parties, this Trademark
Security Agreement.

     

    NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors hereby agree as
follows:

     

    1. DEFINED
TERMS.  All capitalized terms used but not otherwise defined
herein (including in the preamble hereof) have the meanings given to them in
Annex A to the
Credit Agreement.

     

    2. GRANT OF SECURITY INTEREST
IN TRADEMARK COLLATERAL.  Grantors hereby grant Administrative
Agent, on behalf of the Secured Parties, a continuing security interest in all
of Grantors’ right, title and interest in, to and under the following, whether
presently existing or hereafter created or acquired (collectively, the “Trademark
Collateral”) (provided that no security interest shall be granted in the
United States intent-to-use trademark applications to the extent that, and
solely during the period in which, the grant of a security interest therein
would impair the validity or enforceability of such intent-to-use trademark
applications under applicable federal law):

     

    (a) all of
its Trademarks, including but not limited to, those referred to on Schedule I
hereto;

     

    (b) all
reissues, continuations or extensions of the foregoing;

     

    (c) all
goodwill of the business connected with the use of, and symbolized by, each
Trademark; and

     

    (d) all
products and proceeds of the foregoing, including, without limitation, any claim
by Grantors against third parties for past, present or future (i) infringement
or dilution of any Trademark or (ii) injury to the goodwill associated with any
Trademark.

     

    3. CREDIT
AGREEMENT.  The security interests granted pursuant to this
Trademark Security Agreement are granted in conjunction with the security
interests granted to Administrative Agent, on behalf of the Secured Parties,
pursuant to the Credit Agreement.  Grantors hereby acknowledge and
affirm that the rights and remedies of the Secured Parties with respect to the
security interest in the Trademark Collateral made and granted hereby are more
fully set forth in the Credit Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth
herein.

     

     4. CHOICE OF
LAW.  This Trademark Security Agreement shall be construed in
accordance with and governed by the laws of the State of New York, except as
otherwise required by mandatory provisions of law and except to the extent that
remedies provided by the laws of any jurisdiction other than the State of New
York are governed by the laws of such jurisdiction.

     

    [signature
page follows]

    

    
      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
 

    IN
WITNESS WHEREOF, Grantors have caused this Trademark Security Agreement to be
executed and delivered by their duly authorized officer as of the date first set
forth above.

     

    
      	
              FRONTIER
      AIRLINES HOLDINGS, INC., a Delaware corporation

            
	
              By:

            	 
      
	
              Name:Matthew
      R. Henry

            
	
              Title:Vice
      President, Secretary and General
Counsel

            

    

    
 

    
 

    
      	
              LYNX
      AVIATION, INC., a Colorado corporation

            
	
              By:

            	 
      
	
              Name:Matthew
      R. Henry

            
	
              Title:Vice
      President, Secretary and General
Counsel

            

    

    
 

    
 

    
      	
              FRONTIER
      AIRLINES, INC., a Colorado corporation

            
	
              By:

            	 
      
	
              Name:Matthew
      R. Henry

            
	
              Title:Secretary

            

    

    
 

    
 

    
 

    

    
      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    

    ACCEPTED
AND ACKNOWLEDGED BY:

     

    
      	
              WELLS
      FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,

              as
      Administrative Agent

            
	
              By:

            	 
      
	
              Name:

            
	
              Title:

            

    

     

    

     

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      EXHIBIT
E

       

      UNITED
STATES BANKRUPTCY COURT

      SOUTHERN
DISTRICT OF NEW YORK

      
        	 
      	
                x

              	 
      
	
                 

                In
      re:

                 

                FRONTIER
      AIRLINES

                HOLDINGS,
      INC., et al.,

                 

                Debtors.

                 

              	
                :

                :

                :

                :

                :

                :

                :

                :

              	
                Chapter
      11 Case No.

                 

                08-11298
      (RDD)

                 

                (Jointly
      Administered)

              
	 
      	
                x

              	 
      

      

      

      INTERIM
ORDER (I) AUTHORIZING DEBTORS TO

       

      OBTAIN
POST-PETITION CREDIT FACILITY AND

       

      (II)
SCHEDULING A FINAL HEARING PURSUANT TO

       

      RULE
4001(C) OF THE FEDERAL RULES OF

       

      BANKRUPTCY
PROCEDURE

       

      Upon (i)
the motion (the “Motion”)1 of Frontier Airlines
Holdings, Inc. (“Frontier
Holdings”) and its two subsidiaries that are debtors and debtors in
possession in these cases (collectively, the “Debtors”)2 filed on July 25, 2008 and
(ii) the Notice Regarding Modifications to the Debtors’ Proposed Post-Petition
Credit Facility filed on August 4, 2008 (the “Notice”), each pursuant to
sections 361, 362, 363 and 364 of title 11 of the United States Code, 11 U.S.C.
§§ 101, et seq. (the “Bankruptcy Code”) and Rules
2002, 4001 and 9014 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and each
seeking entry of an interim order (this “Order”) and a final order (the
“Final Order”)
authorizing the Debtors to:

      (a) obtain
post-petition financing in an amount up to $75 million (the “DIP Credit Facility”) pursuant
to section 364 of the Bankruptcy Code by entering into that certain Secured
Super-Priority Debtor-In-Possession Credit Agreement in substantially the form
attached to the Notice, as the same may be amended, supplemented or otherwise
modified from time to time (the “DIP Credit Agreement”) and all
other documents, agreements and instruments to be executed, entered into or
delivered in connection with the DIP Credit Agreement or the DIP Credit Facility
(together with the DIP Credit Agreement, the “DIP Loan Documents”) among the
Debtors, as borrowers, the lenders party thereto (the “DIP Lenders”) and Wells Fargo
Bank Northwest, National Association acting as administrative agent and
collateral agent (in such capacities, the “Administrative Agent”) for the
lenders thereunder (the “DIP
Lenders”) on the terms and subject to the conditions set forth
therein;

       

      (b) borrow up
to $30 million under the DIP Credit Facility on an interim basis;

       

      (c) execute,
deliver and enter into the DIP Loan Documents, comply with each of their
obligations thereunder, and perform such other and further acts as may be
necessary, required or desirable in connection therewith; and

       

      (d) grant
security interests, liens and superpriority claims to the Administrative Agent,
acting on behalf of and for the benefit of itself and the DIP Lenders (including
superpriority claims pursuant to section 364(c)(1) of the Bankruptcy Code and
liens pursuant to sections 364(c)(2) and (3) of the Bankruptcy Code) to secure
amounts owing under the DIP Loan Documents.

       

      Requisite
notice of the Motion and the Notice having been provided in accordance with the
Case Management Order; and a hearing to consider the interim relief requested in
the Motion and the Notice having been held by the Court on August 5, 2008 (the
“Hearing”) to consider
entry of an order authorizing the borrowings under the DIP Loan Documents and
certain other relief, all as set forth in the Motion, the Notice and the DIP
Loan Documents, and upon consideration of the evidence presented or proffered at
the Hearing, and all objections, if any, to the interim relief requested in the
Motion having been withdrawn, resolved or overruled by the Court, and it
appearing to the Court that granting the interim relief requested is necessary
to avoid immediate and irreparable harm to the Debtors pending the Final Hearing
and otherwise is fair and reasonable and in the best interest of the estates of
the Debtors and their creditors and is essential for the continued operation of
the Debtors’ businesses; and after due deliberation and consideration and good
and sufficient cause appearing therefor;

       

       IT
IS HEREBY FOUND AND DETERMINED THAT:

       

      A. On April
10, 2008 (the “Petition
Date”), each of the Debtors filed a voluntary petition under chapter 11
of the Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of New York commencing these cases (the “Cases”).

       

      B. The
Debtors have continued in the management and operation of their businesses and
properties as debtors in possession pursuant to sections 1107 and 1108 of the
Bankruptcy Code. No trustee or examiner has been appointed in the Cases. On
April 24, 2008, the United States Trustee appointed a statutory committee of
unsecured creditors (the “Creditors’ Committee”) in the
Cases.

       

      C. This
Court has core jurisdiction over the Cases, this Motion and the parties and
properties affected hereby pursuant to 28 U.S.C. §§ 157(b) and 1334. Venue is
proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

       

      D. Under the
circumstances, the notice given by the Debtors of the Motion, the Notice and the
Hearing constitutes due and sufficient notice thereof and complies with
Bankruptcy Rule 4001.

       

      E. Good
cause has been shown for the entry of this Order.

       

      F. The
Debtors need access to the DIP Credit Facility to satisfy working capital and
operational needs and to ensure, commensurate with the size of their operations,
an appropriate liquidity cushion. The access of the Debtors to sufficient
working capital and liquidity is vital to the preservation and maintenance of
the going concern values of the Debtors and to a successful reorganization of
the Debtors. If the Debtors do not obtain authorization to borrow under the DIP
Loan Documents, the Debtors may be at risk of irreparable harm.

      G. The
Debtors are unable to obtain adequate post-petition credit on more favorable
terms from sources other than the DIP Lenders under the DIP Loan Documents, and
are unable to obtain adequate unsecured credit allowable under section 503(b)(1)
of the Bankruptcy Code as an administrative expense. The Debtors are also unable
to obtain adequate secured credit allowable under sections 364(c)(1), 364(c)(2)
and 364(c)(3) of the Bankruptcy Code without the Debtors granting to the
Administrative Agent and the DIP Lenders (i) the Superpriority Claims (as
defined below), subject to the Carve Out and the First Data Claim (which claim
shall be pari passu to the Superpriority Claims) and (ii) the DIP Liens (as
defined below), subject to the liens securing the obligations owed to First Data
as described in the First Data Order, the Carve Out (each to the extent provided
in the DIP Credit Agreement) and the other exceptions expressly set forth in the
DIP Loan Documents, in each case under the terms and conditions set forth in
this Order and the DIP Loan Documents.

      H. The terms
of the DIP Credit Facility are fair and reasonable, reflect the Debtors’
exercise of prudent business judgment consistent with their fiduciary duties and
constitute reasonably equivalent value and fair consideration.

       

      I. The DIP
Credit Facility has been negotiated in good faith and at arm’s length between
the Debtors, the Administrative Agent and the DIP Lenders, as applicable, and
all of the Debtors’ obligations and indebtedness arising under, in respect of or
in connection with the DIP Credit Facility and the DIP Loan Documents,
including, without limitation, (i) all loans made to the Debtors pursuant to the
DIP Credit Agreement and (ii) all other “Obligations” (as defined in
the DIP Credit Agreement) (all of the foregoing, collectively, the “DIP Obligations”), shall be
deemed to have been extended by the Administrative Agent and the DIP Lenders and
their affiliates, as applicable, in good faith, as that term is used in section
364(e) of the Bankruptcy Code and in express reliance upon the protections
offered by section 364(e) of the Bankruptcy Code, and shall be entitled to the
full protection of section 364(e) of the Bankruptcy Code in the event that this
Order or any provision hereof is vacated, reversed or modified, on appeal or
otherwise.

       

      J. The
Debtors have requested immediate entry of this Order pursuant to Bankruptcy
Rules 4001(b)(2) and 4001(c)(2). Absent granting the relief sought by this
Order, the Debtors’ estates may well be immediately and irreparably
harmed.

      Consummation
of the DIP Credit Facility in accordance with this Order and the DIP Loan
Documents is therefore in the best interest of the Debtors’
estates.

      Based on
the foregoing, and upon the record made before this Court at the Hearing, and
good and sufficient cause appearing therefor,

       

      IT IS HEREBY ORDERED AND ADJUDGED
THAT:

       

      1. The
Motion, as modified by the Notice, is granted on an interim basis, as set forth
herein.

      Authorization of the DIP
Credit Facility and the DIP Loan Documents.

       

      2. The
Borrowers are hereby authorized to borrow money pursuant to the DIP Credit
Facility up to an aggregate principal or face amount of $30 million (plus
interest, fees and other expenses provided for in the DIP Loan Documents), in
accordance with the terms of this Order and the DIP Loan Documents, which
amounts may be used for all purposes permitted under such loan documents,
including, without limitation, to provide working capital for the Debtors and to
pay interest, fees and expenses in accordance with this Order and the DIP Loan
Documents.

       

      3. The
terms, conditions and covenants of the DIP Credit Agreement and the other DIP
Loan Documents are hereby approved on an interim basis through the date of the
Final Hearing.

       

      4. In
furtherance of the foregoing and without further approval of this Court, each
Debtor is authorized to perform all acts, to make, execute and deliver all
instruments and documents (including, without limitation, the execution or
recordation of security agreements, mortgages and financing statements) and to
pay all fees as required under the DIP Loan Documents, including, without
limitation:

       

      (a) the
execution, delivery and performance of the DIP Credit Agreement and the other
DIP Loan Documents and any exhibits attached thereto, including, without
limitation, the Collateral Documents;

       

      (b) subject
to paragraph 23 hereof, the execution, delivery and performance of any
nonmaterial amendments to the DIP Credit Agreement, in each case in such form as
the Debtors and the Administrative Agent may agree;

       

      (c) the
payment, at closing, of all amounts then required to be paid to the
Administrative Agent and the DIP Lenders under or in connection with the DIP
Facility, including, without limitation, the Commitment Fee (as defined in the
DIP Credit Agreement) in the amount of $1,500,000, plus reasonable and
documented expenses, which the Debtors shall pay to the Administrative Agent at
closing, each to the extent provided for in the DIP Credit
Agreement;

       

      (d) the
payment of the other fees referred to in the DIP Credit Agreement and
reasonable, actual and documented costs and expenses as may be due under the DIP
Loan Documents from time to time, including, without limitation, reasonable,
actual and documented fees and expenses of the professionals retained as
provided for in the DIP Loan Documents; and

       

      (e) the
performance of all other acts required under or in connection with or
contemplated by the DIP Loan Documents.

       

      5. Upon
execution and delivery of each DIP Loan Document, each DIP Loan Document shall
constitute valid and binding obligations of the Debtors, enforceable against
each Debtor party thereto in accordance with their terms. No obligation,
payment, transfer or grant of security under the DIP Loan Documents or this
Order shall be stayed, restrained, voidable, or recoverable under the Bankruptcy
Code or under any applicable law (including, without limitation, under section
502(d) of the Bankruptcy Code) or subject to any defense, reduction, setoff,
recoupment or counterclaim.

       

      Superpriority
Claims.

       

      6. Pursuant
to section 364(c)(1) of the Bankruptcy Code, all of the Obligations shall
constitute allowed claims against the Debtors with priority over any and all
administrative expenses, diminution claims and all other claims against the
Debtors, now existing or hereafter arising, of any kind whatsoever, including,
without limitation, all administrative expenses of the kind specified in
sections 503(b) and 507(b) of the Bankruptcy Code, and over any and all
administrative expenses or other claims arising under sections 105, 326, 328,
330, 331, 503(b), 506(c), 507(a), 507(b), 726, 1113 or 1114 of the Bankruptcy
Code (the “Superpriority
Claims”), whether or not such expenses or claims may become secured by a
judgment lien or other non-consensual lien, levy or attachment, subject only to
the payment of the Carve Out to the extent provided in the DIP Credit Agreement;
provided, however, that the
Superpriority Claims of the Administrative Agent and the DIP Lenders arising
under the DIP Loan Documents shall be pari passu to the
Superpriority Claims of First Data Merchant Services Corporation granted
pursuant to the First Data Order.

       

      7. For
purposes hereof, the “Carve
Out” shall have the meaning given to that term in the DIP Credit
Agreement.

       

      Grant of DIP
Liens.

       

      8. As
security for the DIP Obligations, effective and perfected upon the date of the
entry of this Order and without the necessity of the execution, recordation or
filing by the Debtors or the Administrative Agent or DIP Lenders of mortgages,
security agreements, control agreements, pledge agreements, financing statements
or other similar documents or taking control or possession of any collateral, or
taking any other actions, the following security interests and liens are hereby
granted to the Administrative Agent for its own benefit and the benefit of the
DIP Lenders subject to the Carve Out, the liens securing the obligations owed to
First Data as described in the First Data Order, and the other liens
specifically permitted under the DIP Credit Agreement, in each case to the
extent provided in the DIP Credit Agreement (all such liens and security
interests granted to the Administrative Agent, for its benefit and for the
benefit of the DIP Lenders, pursuant to this Order and the DIP Loan Documents,
the “DIP
Liens”):

       

      (a) First Lien on Unencumbered
Property. Pursuant to section 364(c)(2) of the Bankruptcy Code, a valid,
binding, continuing, enforceable, fully-perfected first priority senior security
interest in and lien upon or pledge of (subject to the Carve Out to the extent
provided in the DIP Credit Agreement) all Collateral (as such term is defined in
the DIP Credit Agreement), including, without limitation, all of the following
property, in each case to the extent not subject to valid, perfected,
nonavoidable and enforceable liens in existence as of the date of closing of the
DIP Credit Facility (the “Closing Date”) or valid liens
in existence as of the Closing Date that are perfected subsequent to such date
to the extent permitted by section 546(b) of the Bankruptcy Code: all of the
Debtors’ existing and after-acquired notes and capital stock, accounts, deposit
accounts, securities accounts, concentration accounts, disbursement accounts,
and all other bank accounts and all deposits therein, goods, money, cash or cash
equivalents, supporting obligations, general intangibles relating to the
foregoing and other rights to payments not otherwise included in the foregoing,
real and personal, tangible and intangible, assets, including, without
limitation, chattel paper, documents, books and records, letter of credit
rights, general intangibles (including payment intangibles), software, aircraft,
instruments, investments, investment property, securities (whether or not
marketable), leased and owned real property, inventory, fixtures, franchise
rights, tradenames, trademarks, copyrights and other intellectual property,
routes, slots, spare parts, airport gate leaseholds and licenses related
thereto, technology equipment, ground service equipment, other furniture and
equipment, commercial tort claims as set forth in the DIP Credit Agreement,
contract rights and all tort claims, insurance claims and other rights to
payments not otherwise included in the foregoing and products of the foregoing
and all accessions to, substitutions and replacements for each of the foregoing
and all proceeds of the foregoing, in each case as specified in the DIP Credit
Agreement and subject to the limitations specified in the DIP Credit Agreement,
excluding the Excluded Collateral and any general intangibles or other rights
arising under any contract, instrument, license or other document if the grant
of a security interest therein would constitute a breach or violation of a valid
and effective restriction in favor of a third party or give rise to any
indemnification obligations or any right to terminate or commence the exercise
of remedies under such restrictions, but only to the extent, and for so long as,
such restriction is not terminated or rendered unenforceable or otherwise deemed
ineffective by any applicable law (collectively, the “DIP Collateral”). “Excluded Collateral” shall
have the meaning given to that term in the DIP Credit Agreement.

       

      (b) Liens Junior to Certain
Other Liens. Pursuant to section 364(c)(3) of the Bankruptcy Code, a
valid, binding, continuing, enforceable, fully-perfected security interest in
and liens upon that portion of the DIP Collateral, whether now existing or
hereafter acquired, that is subject to valid, perfected and unavoidable liens in
existence immediately prior to the Closing Date (or to valid liens in existence
as of the Closing Date that are perfected subsequent to such date to the extent
permitted by section 546(b) of the Bankruptcy Code), subject to the exclusions
expressly set forth in the DIP Loan Documents.

       

      9. Liens Senior to Certain
Other Liens. The DIP Liens shall not be subject or subordinate to (a) any
lien or security interest that is avoided and preserved for the benefit of the
Debtors and their estates under section 551 of the Bankruptcy Code or (b) any
liens arising after the Closing Date, including, without limitation, any liens
or security interests granted in favor of any federal, state, municipal or other
governmental unit, commission, board or court for any liability of the Debtors,
except to the extent expressly permitted by the DIP Loan Documents.

       

      10. All DIP
Collateral will be free and clear of other liens, claims and encumbrances,
except for those liens, claims and encumbrances expressly permitted under the
DIP Loan Documents.

      Section 1110
Issues.

       

      11. No Waiver of Section 1110
Beneficiary Rights. Nothing in this Order (a) shall constitute a waiver,
forbearance or adjudication of the rights of any secured party, lessor or
vendor, or of any agent or controlling party for any such entity (including,
without limitation, any servicer or beneficial owner of any lessor and including
any secured party, lessor or vendor under any aircraft lease or mortgage) (in
each case, an “1110
Beneficiary”) under section 1110 of the Bankruptcy Code; or (b) shall
prejudice, limit, or otherwise affect any rights of any 1110 Beneficiary or
other entity under section 1110 of the Bankruptcy Code, all of which rights are
expressly preserved. To the extent that any liens are granted hereunder in any
Section 1110 Assets (i.e., in situations where
such liens are permitted under the relevant Section 1110 Agreements), such liens
in any Section 1110 Assets shall, to the extent required by the Section 1110
Agreements, be “silent” liens, such that the Administrative Agent and the DIP
Lenders shall not have the right to exercise any remedies with respect thereto
until the obligations under the relevant Section 1110 Agreements have been
satisfied and paid in full.

      Protection of DIP Lenders’
Rights.

       

      12. Neither
the Administrative Agent nor the DIP Lenders shall be subject to (a) the
equitable doctrine of “marshaling” or any other similar doctrine, (b) an
“equities of the case” claim under section 552(b) of the Bankruptcy Code against
any of the Administrative Agent or the DIP Lenders with respect to proceeds,
product, offspring or profits of the DIP Collateral or (c) any other equitable
doctrine that would deny to the Administrative Agent or the DIP Lenders any of
the rights, benefits and protections afforded to them in this Order or in the
DIP Loan Documents.

       

      13. The
automatic stay provisions of section 362 of the Bankruptcy Code are vacated and
modified to the extent necessary to permit the Administrative Agent and the DIP
Lenders, respectively, to exercise, (a) immediately upon the occurrence of an
Event of Default (as defined in the DIP Credit Agreement), the right to
accelerate all Obligations due under the DIP Loan Documents and (b) upon the
occurrence and during the continuance of an Event of Default and after the
giving of five days’ prior written notice to the United States Trustee, counsel
to the Debtors, and counsel to the Creditors’ Committee, all other rights and
remedies under the DIP Loan Documents, this Order, applicable law or in equity,
including the rights and remedies against the DIP Collateral provided for in the
DIP Loan Documents and this Order. In addition, as provided for in the DIP
Credit Agreement, upon the occurrence of an Event of Default (and after the
giving of notice to the extent required by the DIP Credit Agreement), the Loans
and all other Obligations under the DIP Facility shall bear interest at the
Default Rate as of the date on which the Event of Default occurred (or such
notice is given to the extent required by the DIP Credit Agreement), which
interest shall be payable on the terms set forth in the DIP Credit Agreement. In
any hearing regarding any exercise of rights or remedies, the only issue that
may be raised by any party in opposition thereto shall be whether, in fact, an
Event of Default has occurred and is continuing. The Debtors, on behalf of
themselves and their estates, hereby waive their right to seek relief,
including, without limitation, under section 105 of the Bankruptcy Code, to the
extent such relief would in any way impair or restrict the rights and remedies
of the Administrative Agent or the DIP Lenders set forth in this Order or the
DIP Loan Documents, or otherwise available under applicable law or in
equity.

      Perfection of DIP
Liens.

       

      14. The
Administrative Agent is hereby authorized, but not required, to file or record
financing statements, trademark filings, copyright filings, mortgages, notices
of lien or similar instruments in any jurisdiction or take any other action in
order to validate and perfect the DIP Liens. Whether or not the Administrative
Agent on behalf of the DIP Lenders shall, in its sole discretion, choose to file
such financing statements, trademark filings, copyright filings, mortgages,
notices of lien or similar instruments or otherwise perfect or confirm
perfection of the DIP Liens, such liens and security interests shall be deemed
valid, perfected, allowed, enforceable, non-avoidable and not subject to
challenge dispute or subordination, at the time and on the date of entry of this
Order and at all times thereafter. Upon the request of the Administrative Agent,
without any further consent of any party, the Debtors are authorized to take,
execute and deliver such instruments to enable the Administrative Agent to
further validate, perfect, preserve and enforce DIP Liens.

       

      15. A
certified copy of this Order may, in the discretion of the Administrative Agent,
be filed with or recorded in filing or recording offices in addition to or in
lieu of such financing statements, mortgages, notices of lien or similar
instruments, and all filing offices are hereby authorized to accept such
certified copy of this Order for filing and recording.

       

      16. Any
provision of any lease, license, contract or other agreement that requires the
consent or approval of one or more landlords or other parties or the payment of
any fees or obligations to any governmental entity (the “Restricted Agreements”), in
order for any Debtor to pledge, grant, sell, assign, or otherwise transfer any
such Restricted Agreement or leasehold interest or the proceeds thereof, or
other post-petition collateral related thereto (except to the extent such
leasehold interest or Restricted Agreement or other DIP Collateral related
thereto is Excluded Collateral pursuant to the terms of the DIP Credit
Agreement), is hereby deemed to be inconsistent with the applicable provisions
of the Bankruptcy Code. Any such provision shall have no force and effect with
respect to the transactions granting post-petition liens, in such leasehold
interest or the proceeds of any assignment and/or sale thereof by any Debtor, in
favor of the Administrative Agent and the DIP Lenders in accordance with the
terms of the DIP Loan Documents or this Order.

       

      Preservation
of Rights Granted Under the Order.

       

      17. No claim
or lien having a priority superior to or pari passu with those granted
by this Order shall be granted or allowed while any portion of the DIP Credit
Facility or the DIP Obligations remain outstanding, except to the extent
expressly permitted herein or by the DIP Loan Documents.

       

      18. If an
order dismissing any of the Cases under section 1112 of the Bankruptcy Code or
otherwise is at any time entered, such order shall provide (in accordance with
sections 105 and 349 of the Bankruptcy Code) that (i) the Superpriority Claims,
liens, security interests and other rights granted to the Administrative Agent
and the DIP Lenders pursuant to this Order shall continue in full force and
effect and shall maintain their priorities as provided in this Order until all
DIP Obligations shall have been indefeasibly paid and satisfied in full (and
that such Superpriority Claims, liens, security interests and rights shall,
notwithstanding such dismissal, remain binding on all parties in interest) and
(ii) this Court shall retain jurisdiction, notwithstanding such dismissal, for
the purposes of enforcing the claims and security interests referred to in
clause (i) above.

       

      19. If any or
all of the provisions of this Order are hereafter reversed, modified, vacated or
stayed, such reversal, stay, modification or vacation shall not affect (a) the
validity of any DIP Obligations incurred prior to the actual receipt of written
notice by the Administrative Agent and the DIP Lenders, of the effective date of
such reversal, stay, modification or vacation or (b) the validity or
enforceability of any lien or priority authorized or created hereby or pursuant
to the DIP Loan Documents with respect to any DIP Obligations. Notwithstanding
any such reversal, stay, modification or vacation, all DIP Obligations incurred
by the Debtors to the Administrative Agent or the DIP Lenders prior to the
actual receipt of written notice by the Administrative Agent or the DIP Lenders
of the effective date of such reversal, stay, modification or vacation shall be
governed in all respects by the original provisions of this Order, and the
Administrative Agent and the DIP Lenders shall be entitled to all of the rights,
remedies, privileges and benefits granted in section 364(e) of the Bankruptcy
Code, this Order and pursuant to the DIP Loan Documents with respect to such DIP
Obligations.

       

      20. The DIP
Liens, the Superpriority Claims and all other rights and remedies of the
Administrative Agent and the DIP Lenders granted by the provisions of this Order
and the DIP Loan Documents shall survive, and shall not be modified, impaired or
discharged by (a) the entry of an order converting any of the Cases to a case
under chapter 7, dismissing any of the Cases, terminating the joint
administration of these Cases or by any other act or omission, or (b) the entry
of an order confirming a plan of reorganization in any of the Cases. The terms
and provisions of this Order and the DIP Loan Documents shall continue in these
Cases, in any successor cases if these Cases cease to be jointly administered,
or in any superseding chapter 7 cases under the Bankruptcy Code, and the DIP
Liens, the Superpriority Claims and all other rights and remedies, of the
Administrative Agent and the DIP Lenders granted by the provisions of this Order
and the DIP Loan Documents shall continue in full force and effect until the DIP
Obligations are indefeasibly paid in full.

       

      21. Notwithstanding
anything herein to the contrary, the entry of this Order is without prejudice
to, and does not constitute a waiver of, expressly or implicitly, or otherwise
impair (a) any of the rights of the Administrative Agent or any of the DIP
Lenders under the Bankruptcy Code or under non-bankruptcy law, including,
without limitation, the right of the Administrative Agent or any of the DIP
Lenders to (i) request modification of the automatic stay of section 362 of the
Bankruptcy Code, (ii) request dismissal of any of the Cases, conversion of any
of the Cases to cases under chapter 7, or appointment of a chapter 11 trustee or
examiner with expanded powers or (iii) propose, subject to the provisions of
section 1121 of the Bankruptcy Code, a chapter 11 plan or plans or (b) any other
rights, claims or privileges (whether legal, equitable or otherwise) of the
Administrative Agent or any of the DIP Lenders.

       

      22. The
Administrative Agent or DIP Lenders’ failure to seek relief or otherwise
exercise their rights and remedies under the DIP Loan Documents or this Order
shall not constitute a waiver of any of their rights hereunder, thereunder or
otherwise.

       

      23. Amendments to DIP Credit
Facility. The
DIP Credit Agreement or any other DIP Loan Documents may from time to time be
amended by the parties thereto without further order of this Court, in each
case, in such form as the Debtors, the Administrative Agent and the DIP Lenders
(to the extent required) may agree; provided, however that (x)
notice of any such modification or amendment (other than non-material amendments
or waivers) shall be provided to the Creditors’ Committee and the U.S. Trustee,
each of which will have five days from the date of such notice within which to
object in writing; and (y) notice of a modification or amendment that proposes
any change to the definition or treatment of Excluded Collateral or proposes
granting of security interests in additional property in which a party has an
interest shall be provided to any party directly and adversely affected thereby,
and such party shall have 10 days from the date of such notice within which to
object in writing. If an objection is timely provided pursuant to section (x) or
(y) of this paragraph and not resolved on a consensual basis, then the relevant
modification or amendment shall be permitted only pursuant to an order of the
Court.

       

      24. Waiver of Section 506(c)
Claims. Subject only to the Carve-Out (to the extent provided in the DIP
Credit Agreement), no costs or expenses of administration that have or may be
incurred prior to the Cases, in the Cases or in any conversion of any of
Debtors’ Cases to cases under chapter 7 of the Bankruptcy Code shall be charged
against the Administrative Agent or the DIP Lenders, their claims, or the
Collateral pursuant to section 506(c) of the Bankruptcy Code or otherwise
without the prior written consent of the Administrative Agent, and no such
consent shall be implied from any other action, inaction or acquiescence by the
Administrative Agent or the DIP Lenders.

       

      25. Order Governs. In the
event of any inconsistency between the provisions of this Order and the DIP Loan
Documents, the provisions of this Order shall govern, provided, however, that
except to the extent that specific provisions of this Order expressly limit
specific provisions of the DIP Loan Documents, nothing in this Order shall be
construed as limiting any right or remedies of the Administrative Agent or DIP
Lenders or obligations of the Debtors under the DIP Loan Documents. In the event
of any inconsistency between the provisions of this Order and the Final Order
Authorizing Debtors to (i) Continue to Use Existing Cash Management System and
(ii) Maintain Existing Bank Accounts and Business Forms, entered May 2, 2008,
the provisions of this Order shall govern.

       

      26. Binding Effect; Successors
and Assigns. The DIP Loan Documents and the provisions of this Order,
including all findings herein, shall be binding upon all parties in interest in
these Cases, including, without limitation, the Administrative Agent, the DIP
Lenders, the Creditors’ Committee, any other official committees appointed in
these Cases, and the Debtors and their respective successors and assigns
(including any chapter 7 or chapter 11 trustee hereinafter appointed or elected
for the estate of any of the Debtors) and shall inure to the benefit of the
Administrative Agent, the DIP Lenders, and the Debtors and their respective
successors and assigns; provided, however, that the
Administrative Agent and the DIP Lenders shall have no obligation to extend any
DIP Credit Facility to any chapter 7 trustee or similar responsible person
appointed for the estates of the Debtors.

       

      27. No Liability of
Administrative Agent or DIP Lenders. Neither the Administrative Agent nor
any of the DIP Lenders shall be deemed, as a result of having advanced credit to
the Debtors pursuant to the DIP Loan Documents or having lawfully exercised any
rights or remedies thereunder, (a) to be in control of the operations of the
Debtors; (b) to be an “employer” of any of the Debtors’ employees; or (c) to be
acting as “responsible person” or managing agent with respect to the operation
or management of the Debtors.

       

      28. No Discharge of DIP
Loan. The obligations of the Debtors under the DIP Credit Facility and
the DIP Loan Documents shall not be discharged by the entry of any order
confirming a plan of reorganization in the Cases, and the Debtors, with approval
of the Court, hereby waive any such discharge pursuant to section 1141(d)(4) of
the Bankruptcy Code.

       

      29. Qwest Reclamation
Claim. To the extent that any goods referenced in the “Demand for
Reclamation of Goods Sold” dated April 21, 2008 delivered by Qwest
Communications Corporation to the Debtors are subject to a valid reclamation
claim pursuant to section 546(c) of the Bankruptcy Code, the proceeds from any
sale of such goods shall be paid by the Debtors to Qwest Communications
Corporation.

       

      30. No Prejudice with Respect to
Collective Bargaining Agreements. Nothing herein or in any DIP Loan
Documents shall constitute an agreement, admission or acknowledgement by any
union that any concessions with respect to, or any changes to, any collective
bargaining agreement are necessary or appropriate, and all unions (and all other
parties) reserve all rights with respect to all such issues, including without
limitation with respect to any claim (or defense thereto) that the terms of the
DIP Credit Facility do not constitute a valid basis in support of relief under
section 1113 of the Bankruptcy Code. Nothing in this Order relieves the Debtors
of any obligation with respect to the requirements of section 1113 of the
Bankruptcy Code, and this Court retains its full discretion with respect to
consideration of any motion made by the Debtors pursuant to section 1113 of the
Bankruptcy Code.

       

      31. Order Effective
Immediately. This Order shall constitute findings of fact and conclusions
of law and shall take effect immediately upon entry hereof.

      Final
Hearing.

       

      32. The Final
Hearing is scheduled for September 15, 2008 at 10:00 a.m. (prevailing Eastern
time) before this Court; provided that the Final
Hearing may be adjourned or rescheduled from time to time without further
notice, other than by announcement of the adjournment or the rescheduling in
open court or by notice posted on the Debtors’ case information website (www.frontier-restructuring.com).

       

      33. Pursuant
to the Order Establishing Certain Notice, Case Management and Administrative
Procedures entered by the Court on May 2, 2008 (the “Case Management Order”), the
Debtors will serve this Order (which shall constitute adequate notice of the
Final Hearing) on the parties that were given notice of the Interim Hearing, the
Administrative Agent, the Core Parties and the Non-ECF Service Parties (as those
terms are defined in the Case Management Order). Additionally, all parties who
have requested electronic notice of filings in these cases through the Court’s
ECF system will automatically receive this Order no later than the day after its
filing with the Court. Moreover, a copy of this Order will be made available on
the Debtors’ Case Information Website (located at www.frontier-restructuring.com).

       

      34. Any
objections to the relief sought at the Final Hearing must (i) be in writing,
(ii) conform to the requirements of the Case Management order, the Bankruptcy
Code, the Bankruptcy Rules and the Local Rules of the United States Bankruptcy
Court for the Southern District of New York, (iii) set forth the name of the
objector and the nature and amount of the objector’s claims against or interests
in the Debtors’ estates or property, (iv) state the legal and factual basis for
the objection and the specific grounds therefor, (v) be filed with the Court,
One Bowling Green, New York, New York 10004-1408, and (vi) be served upon the
following parties: (A) the Court, One Bowling Green, New York, New York
10004-1408, (B) the Office of the United States Trustee for the Southern
District of New York, 33 Whitehall Street, 21st Floor, New York, New York 10004,
Attn: Alicia M. Leonhard, Esq., (C) the attorneys for the Debtors, Davis Polk
& Wardwell, 450 Lexington Avenue, New York, New York 10017, Attn: Marshall
S. Huebner, Esq., (D) the attorneys for the Creditors’ Committee, Wilmer Cutler
Pickering Hale & Dorr LLP, 399 Park Avenue, New York, New York 10022, Attn:
Andrew N. Goldman, Esq. and James H. Millar, Esq., and (E) the attorneys for the
Administrative Agent, Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New
York, NY 10103, Attn: David A. Rosenzweig, Esq. (collectively, the “Notice Parties”), so as to be
actually received by the
Notice Parties no later than 5:00 p.m. (prevailing Eastern time) on August 29,
2008.

      
        	
                Dated:August 5, 2008

                New
      York, New York

              	 
      
	 
      	
                /s/ Robert D.
      Drain                                                                    

                THE
      HONORABLE ROBERT D. DRAIN

                UNITED
      STATES BANKRUPTCY JUDGE

              

      

      

      

        

      

        
        1  Unless
otherwise defined herein, all capitalized terms shall have the meanings ascribed
to them in the Motion or the Notice, as applicable.

         

      

        
        2  The
Debtors are the following entities: Frontier Holdings; Frontier Airlines, Inc.
(“Frontier”); and Lynx
Aviation, Inc. (“Lynx”).
The employer tax identification numbers and addresses for each of the Debtors
are set forth in the Debtors’ chapter 11 petitions.

         

      

    
      
        
           

        

        
           

          
            

          

        

        
           

          
            Exhibit
F

            to

            Credit
Agreement 

            
 

            FORM OF FINAL
ORDER 

            
 

          

        

      

    

    

    
      	
              UNITED
      STATES BANKRUPTCY COURT

              SOUTHERN
      DISTRICT OF NEW YORK

            
	
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      -

            	
              x

            	 
      
	
               

              In
      re:

               

               

              FRONTIER
      AIRLINES

              HOLDINGS,
      INC., et al.,

               

               

              Debtors.

            	 
      	
              :::::::::

            	
               

               

              Chapter
      11 Case No.

               

              08-11298
      (RDD)

               

              (Jointly
      Administered)

            
	
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      -

            	
              x

            

    

    
 

    ORDER AUTHORIZING DEBTORS TO
OBTAIN

     

    POST-PETITION CREDIT
FACILITY

     

    Upon (i) the motion (the “Motion”)1 of Frontier Airlines Holdings, Inc. (“Frontier
Holdings”) and its two subsidiaries that are debtors and debtors in possession
in these cases (collectively, the “Debtors”)2 filed
on July 25, 2008 and (ii) the Notice Regarding Modifications to the Debtors’
Proposed Post-Petition Credit Facility filed on August 4, 2008 (the “Notice”),
each pursuant to sections 361, 362, 363 and 364 of title 11 of the United States
Code, 11 U.S.C. §§ 101, et seq. (the “Bankruptcy Code”) and Rules 2002,
4001 and 9014 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy
Rules”), and each seeking entry of orders authorizing the Debtors to:

     

    (a) obtain post-petition financing in an
amount up to $75 million (the “DIP Credit Facility”) pursuant to section 364 of
the Bankruptcy Code by entering into that certain Secured Super-Priority
Debtor-In-Possession Credit Agreement in substantially the form attached to the
Notice, as the same may be amended, supplemented or otherwise modified from time
to time (the “DIP Credit Agreement”) and all other documents, agreements and
instruments to be executed, entered into or delivered in connection with the DIP
Credit Agreement or the DIP Credit Facility (together with the DIP Credit
Agreement, the “DIP Loan Documents”) among the Debtors, as borrowers, the
lenders party thereto (the “DIP Lenders”) and Wells Fargo Bank Northwest,
National Association acting as administrative agent and collateral agent (in
such capacities, the “Administrative Agent”) for the lenders thereunder (the
“DIP Lenders”) on the terms and subject to the conditions set forth
therein;

     

    (b) borrow up to $30 million under the DIP
Credit Facility on an interim basis;

     

    (c) execute, deliver and enter into the
DIP Loan Documents, comply with each of their obligations thereunder, and
perform such other and further acts as may be necessary, required or desirable
in connection therewith; and

     

    (d) grant security interests, liens and
superpriority claims to the Administrative Agent, acting on behalf of and for
the benefit of itself and the DIP Lenders (including superpriority claims
pursuant to section 364(c)(1) of the Bankruptcy Code and liens pursuant to
sections 364(c)(2) and (3) of the Bankruptcy Code) to secure amounts owing under
the DIP Loan Documents.

     

    Requisite notice of the Motion and the Notice
having been provided in accordance with the Case Management Order; and an
interim hearing to consider the interim relief requested in the Motion and the
Notice having been held by the Court on August 5, 2008 (the “Interim Hearing”);
and the Court having entered an interim order dated August 5, 2008 (the “Interim
Order”) (i) authorizing the Borrowers to borrow money pursuant to the DIP Credit
Facility up to an aggregate principal or face amount of $30 million (plus
interest, fees and other expenses provided for in the DIP Loan Documents) and
(ii) scheduling a final hearing (the “Final Hearing”) to consider entry of a
final order authorizing the borrowings under the DIP Loan Documents and certain
other relief, all as set forth in the Motion, the Notice and the DIP Loan
Documents; and the Final Hearing having been held by the Court on [September
15], 2008; and upon consideration of the evidence presented or proffered at the
Interim Hearing and the Final Hearing; and all objections, if any, to the final
relief requested in the Motion having been withdrawn, resolved or overruled by
the Court; and it appearing to the Court that granting the final relief
requested is in the best interest of the estates of the Debtors and their
creditors and is essential for the continued operation of the Debtors’
businesses; and after due deliberation and consideration and good and sufficient
cause appearing therefor;

     

    IT IS HEREBY FOUND
AND DETERMINED THAT:

     

    A. On April 10, 2008 (the “Petition
Date”), each of the Debtors filed a voluntary petition under chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court for the Southern District
of New York commencing these cases (the “Cases”).

     

    B. The Debtors have
continued in the management and operation of their businesses and properties as
debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy
Code.  No trustee or examiner has been appointed in the
Cases.  On April 24, 2008, the United States Trustee appointed a
statutory committee of unsecured creditors (the “Creditors’ Committee”) in the
Cases.

     

    C. This Court has core jurisdiction over
the Cases, this Motion and the parties and properties affected hereby pursuant
to 28 U.S.C. §§ 157(b) and 1334.  Venue is proper before this Court
pursuant to 28 U.S.C. §§ 1408 and 1409.

     

    D. Under the circumstances, the notice
given by the Debtors of the Motion, the Notice, the Interim Hearing and the
Final Hearing constitutes due and sufficient notice thereof and complies with
Bankruptcy Rule 4001.

     

    E. Good cause has been shown for the entry
of this Order.

     

    F. The Debtors need access to the DIP
Credit Facility to satisfy working capital and operational needs and to ensure,
commensurate with the size of their operations, an appropriate liquidity
cushion.  The access of the Debtors to sufficient working capital and
liquidity is vital to the preservation and maintenance of the going concern
values of the Debtors and to a successful reorganization of the
Debtors.  If the Debtors do not obtain authorization to borrow under
the DIP Loan Documents, the Debtors may be at risk of irreparable harm.

     

    G. The Debtors are unable to obtain
adequate post-petition credit on more favorable terms from sources other than
the DIP Lenders under the DIP Loan Documents, and are unable to obtain adequate
unsecured credit allowable under section 503(b)(1) of the Bankruptcy Code as an
administrative expense.  The Debtors are also unable to obtain
adequate secured credit allowable under sections 364(c)(1), 364(c)(2) and
364(c)(3) of the Bankruptcy Code without the Debtors granting to the
Administrative Agent and the DIP Lenders (i) the Superpriority Claims (as
defined below), subject to the Carve Out and the First Data Claim (which claim
shall be pari passu to the Superpriority Claims) and (ii) the DIP Liens (as
defined below),subject to the liens securing the obligations owed to First Data
as described in the First Data Order, the Carve Out (each to the extent provided
in the DIP Credit Agreement) and the other exceptions expressly set forth in the
DIP Loan Documents, in each case under the terms and conditions set forth in
this Order and the DIP Loan Documents.

     

    H. The terms of the DIP Credit Facility
are fair and reasonable, reflect the Debtors’ exercise of prudent business
judgment consistent with their fiduciary duties and constitute reasonably
equivalent value and fair consideration.

     

    I. The DIP Credit Facility has been
negotiated in good faith and at arm’s length between the Debtors, the
Administrative Agent and the DIP Lenders, as applicable, and all of the Debtors’
obligations and indebtedness arising under, in respect of or in connection with
the DIP Credit Facility and the DIP Loan Documents, including, without
limitation, (i) all loans made to the Debtors pursuant to the DIP Credit
Agreement and (ii) all other “Obligations” (as defined in the DIP Credit
Agreement) (all of the foregoing, collectively, the “DIP Obligations”), shall be
deemed to have been extended by the Administrative Agent and the DIP Lenders and
their affiliates, as applicable, in good faith, as that term is used in section
364(e) of the Bankruptcy Code and in express reliance upon the protections
offered by section 364(e) of the Bankruptcy Code, and shall be entitled to the
full protection of section 364(e) of the Bankruptcy Code in the event that this
Order or any provision hereof is vacated, reversed or modified, on appeal or
otherwise.

     

    J. Absent granting the relief sought by
this Order, the Debtors’ estates may well be immediately and irreparably
harmed.  Consummation of the DIP Credit Facility in accordance with
this Order and the DIP Loan Documents is therefore in the best interest of the
Debtors’ estates.

    Based on the foregoing, and upon the record
made before this Court at the Interim Hearing and the Final Hearing, and good
and sufficient cause appearing therefor,

     

    IT IS HEREBY
ORDERED AND ADJUDGED THAT:

     

    1. The
Motion, as modified by the Notice, is granted, as set forth
herein.

     

    Authorization
of the DIP Credit Facility and the DIP Loan
Documents.

     

    2. The
Borrowers are hereby authorized to borrow money pursuant to the DIP Credit
Facility up to an aggregate principal or face amount of $30 million (plus
interest, fees and other expenses provided for in the DIP Loan Documents),
inclusive of amounts borrowed under the DIP Credit Facility pursuant to the
Interim Order, in accordance with the terms of this Order and the DIP Loan
Documents, which amounts may be used for all purposes permitted under such loan
documents, including, without limitation, to provide working capital for the
Debtors and to pay interest, fees and expenses in accordance with this Order and
the DIP Loan Documents.

     

    3. The
terms, conditions and covenants of the DIP Credit Agreement and the other DIP
Loan Documents are hereby approved.

     

    4. In
furtherance of the foregoing and without further approval of this Court, each
Debtor is authorized to perform all acts, to make, execute and deliver all
instruments and documents (including, without limitation, the execution or
recordation of security agreements, mortgages and financing statements) and to
pay all fees as required under the DIP Loan Documents, including, without
limitation:

    (a) the
execution, delivery and performance of the DIP Credit Agreement and the other
DIP Loan Documents and any exhibits attached thereto, including, without
limitation, the Collateral Documents;

    (b) subject
to paragraph 23 hereof, the execution, delivery and performance of any
nonmaterial amendments to the DIP Credit Agreement, in each case in such form as
the Debtors and the Administrative Agent may agree;

    (c) the
payment, at closing, of all amounts then required to be paid to the
Administrative Agent and the DIP Lenders under or in connection with the DIP
Facility, including, without limitation, the Commitment Fee (as defined in the
DIP Credit Agreement) in the amount of $1,500,000, plus reasonable and
documented expenses, which the Debtors shall pay to the Administrative Agent at
closing, each to the extent provided for in the DIP Credit
Agreement;

    (d) the
payment of the other fees referred to in the DIP Credit Agreement and
reasonable, actual and documented costs and expenses as may be due under the DIP
Loan Documents from time to time, including, without limitation, reasonable,
actual and documented fees and expenses of the professionals retained as
provided for in the DIP Loan Documents; and

    (e) the
performance of all other acts required under or in connection with or
contemplated by the DIP Loan Documents.

    5. Upon
execution and delivery of each DIP Loan Document, each DIP Loan Document shall
constitute valid and binding obligations of the Debtors, enforceable against
each Debtor party thereto in accordance with their terms.  No
obligation, payment, transfer or grant of security under the DIP Loan Documents
or this Order shall be stayed, restrained, voidable, or recoverable under the
Bankruptcy Code or under any applicable law (including, without limitation,
under section 502(d) of the Bankruptcy Code) or subject to any defense,
reduction, setoff, recoupment or counterclaim.

     

    Superpriority
Claims.

     

    6. Pursuant
to section 364(c)(1) of the Bankruptcy Code, all of the Obligations shall
constitute allowed claims against the Debtors with priority over any and all
administrative expenses, diminution claims and all other claims against the
Debtors, now existing or hereafter arising, of any kind whatsoever, including,
without limitation, all administrative expenses of the kind specified in
sections 503(b) and 507(b) of the Bankruptcy Code, and over any and all
administrative expenses or other claims arising under sections 105, 326, 328,
330, 331, 503(b), 506(c), 507(a), 507(b), 726, 1113 or 1114 of the Bankruptcy
Code (the “Superpriority
Claims”), whether or not such expenses or claims may become secured by a
judgment lien or other non-consensual lien, levy or attachment, subject only to
the payment of the Carve Out to the extent provided in the DIP Credit Agreement;
provided, however, that the
Superpriority Claims of the Administrative Agent and the DIP Lenders arising
under the DIP Loan Documents shall be pari passu to the
Superpriority Claims of First Data Merchant Services Corporation granted
pursuant to the First Data Order.

     

    7. For
purposes hereof, the “Carve
Out” shall have the meaning given to that term in the DIP Credit
Agreement.

     

    Grant of
DIP Liens.

     

    8. As
security for the DIP Obligations, effective and perfected upon the date of the
entry of the Interim Order and without the necessity of the execution,
recordation or filing by the Debtors or the Administrative Agent or DIP Lenders
of mortgages, security agreements, control agreements, pledge agreements,
financing statements or other similar documents or taking control or possession
of any collateral, or taking any other actions, the following security interests
and liens were by the Interim Order and are hereby granted to the Administrative
Agent for its own benefit and the benefit of the DIP Lenders subject to the
Carve Out, the liens securing the obligations owed to First Data as described in
the First Data Order, and the other liens specifically permitted under the DIP
Credit Agreement, in each case to the extent provided in the DIP Credit
Agreement (all such liens and security interests granted to the Administrative
Agent, for its benefit and for the benefit of the DIP Lenders, pursuant to the
Interim Order, this Order and the DIP Loan Documents, the “DIP
Liens”):

     

    (a) First Lien on Unencumbered
Property.  Pursuant to section 364(c)(2) of the Bankruptcy
Code, a valid, binding, continuing, enforceable, fully-perfected first priority
senior security interest in and lien upon or pledge of (subject to the Carve Out
to the extent provided in the DIP Credit Agreement) all Collateral (as such term
is defined in the DIP Credit Agreement), including, without limitation, all of
the following property, in each case to the extent not subject to valid,
perfected, nonavoidable and enforceable liens in existence as of the date of
closing of the DIP Credit Facility (the “Closing Date”) or valid liens
in existence as of the Closing Date that are perfected subsequent to such date
to the extent permitted by section 546(b) of the Bankruptcy Code: all of the
Debtors’ existing and after-acquired notes and capital stock, accounts, deposit
accounts, securities accounts, concentration accounts, disbursement accounts,
and all other bank accounts and all deposits therein, goods,  money,
cash or cash equivalents, supporting obligations, general intangibles relating
to the foregoing and other rights to payments not otherwise included in the
foregoing, real and personal, tangible and intangible, assets, including,
without limitation, chattel paper, documents, books and records, letter of
credit rights, general intangibles (including payment intangibles), software,
aircraft, instruments, investments, investment property, securities (whether or
not marketable), leased and owned real property, inventory, fixtures, franchise
rights, tradenames, trademarks, copyrights and other intellectual property,
routes, slots, spare parts, airport gate leaseholds and licenses related
thereto, technology equipment, ground service equipment, other furniture and
equipment, commercial tort claims as set forth in the DIP Credit Agreement,
contract rights and all tort claims, insurance claims and other rights to
payments not otherwise included in the foregoing and products of the foregoing
and all accessions to, substitutions and replacements for each of the foregoing
and all proceeds of the foregoing, in each case as specified in the DIP Credit
Agreement and subject to the limitations specified in the DIP Credit Agreement,
excluding the Excluded Collateral and any general intangibles or other rights
arising under any contract, instrument, license or other document if the grant
of a security interest therein would constitute a breach or violation of a valid
and effective restriction in favor of a third party or give rise to any
indemnification obligations or any right to terminate or commence the exercise
of remedies under such restrictions, but only to the extent, and for so long as,
such restriction is not terminated or rendered unenforceable or otherwise deemed
ineffective by any applicable law (collectively, the “DIP
Collateral”).  “Excluded Collateral” shall
have the meaning given to that term in the DIP Credit
Agreement.

     

    (b) Liens Junior to Certain
Other Liens.  Pursuant to section 364(c)(3) of the Bankruptcy
Code, a valid, binding, continuing, enforceable, fully-perfected security
interest in and liens upon that portion of the DIP Collateral, whether now
existing or hereafter acquired, that is subject to valid, perfected and
unavoidable liens in existence immediately prior to the Closing Date (or to
valid liens in existence as of the Closing Date that are perfected subsequent to
such date to the extent permitted by section 546(b) of the Bankruptcy Code),
subject to the exclusions expressly set forth in the DIP Loan
Documents.

     

    9. Liens Senior to Certain
Other Liens.  The DIP Liens shall not be subject or subordinate
to (a) any lien or security interest that is avoided and preserved for the
benefit of the Debtors and their estates under section 551 of the Bankruptcy
Code or (b) any liens arising after the Closing Date, including, without
limitation, any liens or security interests granted in favor of any federal,
state, municipal or other governmental unit, commission, board or court for any
liability of the Debtors, except to the extent expressly permitted by the DIP
Loan Documents.

     

    10. All DIP
Collateral will be free and clear of other liens, claims and encumbrances,
except for those liens, claims and encumbrances expressly permitted under the
DIP Loan Documents.

     

    Section
1110 Issues.

     

    11. No Waiver of Section 1110
Beneficiary Rights.  Nothing in this Order (a) shall constitute
a waiver, forbearance or adjudication of the rights of any secured party, lessor
or vendor, or of any agent or controlling party for any such entity (including,
without limitation, any servicer or beneficial owner of any lessor and including
any secured party, lessor or vendor under any aircraft lease or mortgage) (in
each case, an “1110
Beneficiary”) under section 1110 of the Bankruptcy Code; or (b) shall
prejudice, limit, or otherwise affect any rights of any 1110 Beneficiary or
other entity under section 1110 of the Bankruptcy Code, all of which rights are
expressly preserved.  To the extent that any liens are granted
hereunder in any Section 1110 Assets (i.e., in situations where
such liens are permitted under the relevant Section 1110 Agreements), such liens
in any Section 1110 Assets shall, to the extent required by the Section 1110
Agreements, be “silent” liens, such that the Administrative Agent and the DIP
Lenders shall not have the right to exercise any remedies with respect thereto
until the obligations under the relevant Section 1110 Agreements have been
satisfied and paid in full.

     

    Protection
of DIP Lenders’ Rights.

     

    12. Neither
the Administrative Agent nor the DIP Lenders shall be subject to (a) the
equitable doctrine of “marshaling” or any other similar doctrine, (b) an
“equities of the case” claim under section 552(b) of the Bankruptcy Code against
any of the Administrative Agent or the DIP Lenders with respect to proceeds,
product, offspring or profits of the DIP Collateral or (c) any other equitable
doctrine that would deny to the Administrative Agent or the DIP Lenders any of
the rights, benefits and protections afforded to them in this Order or in the
DIP Loan Documents.

     

    13. The
automatic stay provisions of section 362 of the Bankruptcy Code are vacated and
modified to the extent necessary to permit the Administrative Agent and the DIP
Lenders, respectively, to exercise, (a) immediately upon the occurrence of
an Event of Default (as defined in the DIP Credit Agreement), the right to
accelerate all Obligations due under the DIP Loan Documents and (b) upon the
occurrence and during the continuance of an Event of Default and after the
giving of five days’ prior written notice to the United States Trustee, counsel
to the Debtors, and counsel to the Creditors’ Committee, all other rights and
remedies under the DIP Loan Documents, this Order, applicable law or in equity,
including the rights and remedies against the DIP Collateral provided for in the
DIP Loan Documents and this Order.  In addition, as provided for in
the DIP Credit Agreement, upon the occurrence of an Event of Default (and after
the giving of notice to the extent required by the DIP Credit Agreement), the
Loans and all other Obligations under the DIP Facility shall bear interest at
the Default Rate as of the date on which the Event of Default occurred (or such
notice is given to the extent required by the DIP Credit Agreement), which
interest shall be payable on the terms set forth in the DIP Credit
Agreement.  In any hearing regarding any exercise of rights or
remedies, the only issue that may be raised by any party in opposition
thereto  shall be whether, in fact, an Event of Default has occurred
and is continuing.  The Debtors, on behalf of themselves and their
estates, hereby waive their right to seek relief, including, without limitation,
under section 105 of the Bankruptcy Code, to the extent such relief would in any
way impair or restrict the rights and remedies of the Administrative Agent or
the DIP Lenders set forth in this Order or the DIP Loan Documents, or otherwise
available under applicable law or in equity.

     

    Perfection
of DIP Liens.

     

    14. The
Administrative Agent is hereby authorized, but not required, to file or record
financing statements, trademark filings, copyright filings, mortgages, notices
of lien or similar instruments in any jurisdiction or take any other action in
order to validate and perfect the DIP Liens.  Whether or not the
Administrative Agent on behalf of the DIP Lenders shall, in its sole discretion,
choose to file such financing statements, trademark filings, copyright filings,
mortgages, notices of lien or similar instruments or otherwise perfect or
confirm perfection of the DIP Liens, such liens and security interests shall be
deemed valid, perfected, allowed, enforceable, non-avoidable and not subject to
challenge dispute or subordination, at the time and on the date of entry of the
Interim Order and at all times thereafter.  Upon the request of the
Administrative Agent, without any further consent of any party, the Debtors are
authorized to take, execute and deliver such instruments to enable the
Administrative Agent to further validate, perfect, preserve and enforce DIP
Liens.

     

    15. A
certified copy of this Order may, in the discretion of the Administrative Agent,
be filed with or recorded in filing or recording offices in addition to or in
lieu of such financing statements, mortgages, notices of lien or similar
instruments, and all filing offices are hereby authorized to accept such
certified copy of this Order for filing and recording.

     

    16. Any
provision of any lease, license, contract or other agreement that requires the
consent or approval of one or more landlords or other parties or the payment of
any fees or obligations to any governmental entity (the “Restricted Agreements”), in
order for any Debtor to pledge, grant, sell, assign, or otherwise transfer any
such Restricted Agreement or leasehold interest or the proceeds thereof, or
other post-petition collateral related thereto (except to the extent such
leasehold interest or Restricted Agreement or other DIP Collateral related
thereto is Excluded Collateral pursuant to the terms of the DIP Credit
Agreement), is hereby deemed to be inconsistent with the applicable provisions
of the Bankruptcy Code.   Any such provision shall have no force
and effect with respect to the transactions granting post-petition liens, in
such leasehold interest or the proceeds of any assignment and/or sale thereof by
any Debtor, in favor of the Administrative Agent and the DIP Lenders in
accordance with the terms of the DIP Loan Documents or this
Order.

     

    Preservation
of Rights Granted Under the Order.

     

    17. No claim
or lien having a priority superior to or pari passu with those granted
by this Order shall be granted or allowed while any portion of the DIP Credit
Facility or the DIP Obligations remain outstanding, except to the extent
expressly permitted herein or by the DIP Loan Documents.

     

    18. If an
order dismissing any of the Cases under section 1112 of the Bankruptcy Code or
otherwise is at any time entered, such order shall provide (in accordance with
sections 105 and 349 of the Bankruptcy Code) that (i) the Superpriority Claims,
liens, security interests and other rights granted to the Administrative Agent
and the DIP Lenders pursuant to this Order shall continue in full force and
effect and shall maintain their priorities as provided in this Order until all
DIP Obligations shall have been indefeasibly paid and satisfied in full (and
that such Superpriority Claims, liens, security interests and rights shall,
notwithstanding such dismissal, remain binding on all parties in interest) and
(ii) this Court shall retain jurisdiction, notwithstanding such dismissal, for
the purposes of enforcing the claims and security interests referred to in
clause (i) above.

     

    19. If any or
all of the provisions of this Order are hereafter reversed, modified, vacated or
stayed, such reversal, stay, modification or vacation shall not affect
(a) the validity of any DIP Obligations incurred prior to the actual
receipt of written notice by the Administrative Agent and the DIP Lenders, of
the effective date of such reversal, stay, modification or vacation or
(b) the validity or enforceability of any lien or priority authorized or
created hereby or pursuant to the DIP Loan Documents with respect to any DIP
Obligations.  Notwithstanding any such reversal, stay, modification or
vacation, all DIP Obligations incurred by the Debtors to the Administrative
Agent or the DIP Lenders prior to the actual receipt of written notice by the
Administrative Agent or the DIP Lenders of the effective date of such reversal,
stay, modification or vacation shall be governed in all respects by the original
provisions of this Order, and the Administrative Agent and the DIP Lenders shall
be entitled to all of the rights, remedies, privileges and benefits granted in
section 364(e) of the Bankruptcy Code, this Order and pursuant to the DIP Loan
Documents with respect to such DIP Obligations.

     

    20. The DIP
Liens, the Superpriority Claims and all other rights and remedies of the
Administrative Agent and the DIP Lenders granted by the provisions of this Order
and the DIP Loan Documents shall survive, and shall not be modified, impaired or
discharged by (a) the entry of an order converting any of the Cases to a case
under chapter 7, dismissing any of the Cases, terminating the joint
administration of these Cases or by any other act or omission, or (b) the entry
of an order confirming a plan of reorganization in any of the
Cases.  The terms and provisions of this Order and the DIP Loan
Documents shall continue in these Cases, in any successor cases if these Cases
cease to be jointly administered, or in any superseding chapter 7 cases under
the Bankruptcy Code, and the DIP Liens, the Superpriority Claims and all other
rights and remedies, of the Administrative Agent and the DIP Lenders granted by
the provisions of this Order and the DIP Loan Documents shall continue in full
force and effect until the DIP Obligations are indefeasibly paid in
full.

     

    21. Notwithstanding
anything herein to the contrary, the entry of this Order is without prejudice
to, and does not constitute a waiver of, expressly or implicitly, or otherwise
impair (a) any of the rights of the Administrative Agent or any of the DIP
Lenders under the Bankruptcy Code or under non-bankruptcy law, including,
without limitation, the right of the Administrative Agent or any of the DIP
Lenders to (i) request modification of the automatic stay of section 362 of the
Bankruptcy Code, (ii) request dismissal of any of the Cases, conversion of any
of the Cases to cases under chapter 7, or appointment of a chapter 11 trustee or
examiner with expanded powers or (iii) propose, subject to the provisions of
section 1121 of the Bankruptcy Code, a chapter 11 plan or plans or (b) any other
rights, claims or privileges (whether legal, equitable or otherwise) of the
Administrative Agent or any of the DIP Lenders.

    22. The
Administrative Agent or DIP Lenders’ failure to seek relief or otherwise
exercise their rights and remedies under the DIP Loan Documents or this Order
shall not constitute a waiver of any of their rights hereunder, thereunder or
otherwise.

     

    23. Amendments to DIP Credit
Facility.  The DIP Credit
Agreement or any other DIP Loan Documents may from time to time be amended by
the parties thereto without further order of this Court, in each case, in such
form as the Debtors, the Administrative Agent and the DIP Lenders (to the extent
required) may agree; provided,
however that (x) notice of any such modification or amendment (other than
non-material amendments or waivers) shall be provided to the Creditors’
Committee and the U.S. Trustee, each of which will have five days from the date
of such notice within which to object in writing; and (y) notice of a
modification or amendment that proposes any change to the definition or
treatment of Excluded Collateral or proposes granting of security interests in
additional property in which a party has an interest shall be provided to any
party directly and adversely affected thereby, and such party shall have 10 days
from the date of such notice within which to object in writing.  If an
objection is timely provided pursuant to section (x) or (y) of this paragraph
and not resolved on a consensual basis, then the relevant modification or
amendment shall be permitted only pursuant to an order of the
Court.

     

    24. Waiver of Section 506(c)
Claims.  Subject only to the Carve-Out (to the extent provided
in the DIP Credit Agreement), no costs or expenses of administration that have
or may be incurred prior to the Cases, in the Cases or in any conversion of any
of Debtors’ Cases to cases under chapter 7 of the Bankruptcy Code shall be
charged against the Administrative Agent or the DIP Lenders, their claims, or
the Collateral pursuant to section 506(c) of the Bankruptcy Code or otherwise
without the prior written consent of the Administrative Agent, and no such
consent shall be implied from any other action, inaction or acquiescence by the
Administrative Agent or the DIP Lenders.

     

    25. Order
Governs.  In the event of any inconsistency between the
provisions of this Order and the DIP Loan Documents, the provisions of this
Order shall govern, provided, however, that
except to the extent that specific provisions of this Order expressly limit
specific provisions of the DIP Loan Documents, nothing in this Order shall be
construed as limiting any right or remedies of the Administrative Agent or DIP
Lenders or obligations of the Debtors under the DIP Loan
Documents.  In the event of any inconsistency between the provisions
of this Order and the Final Order Authorizing Debtors to (i) Continue to Use
Existing Cash Management System and (ii) Maintain Existing Bank Accounts and
Business Forms, entered May 2, 2008, the provisions of this Order shall
govern.

     

    26. Binding Effect; Successors
and Assigns.  The DIP Loan Documents and the provisions of this
Order, including all findings herein, shall be binding upon all parties in
interest in these Cases, including, without limitation, the Administrative
Agent, the DIP Lenders, the Creditors’ Committee, any other official committees
appointed in these Cases, and the Debtors and their respective successors and
assigns (including any chapter 7 or chapter 11 trustee hereinafter appointed or
elected for the estate of any of the Debtors) and shall inure to the benefit of
the Administrative Agent, the DIP Lenders, and the Debtors and their respective
successors and assigns; provided, however, that the
Administrative Agent and the DIP Lenders shall have no obligation to extend any
DIP Credit Facility to any chapter 7 trustee or similar responsible person
appointed for the estates of the Debtors.

     

    27. No Liability of
Administrative Agent or DIP Lenders.  Neither the
Administrative Agent nor any of the DIP Lenders shall be deemed, as a result of
having advanced credit to the Debtors pursuant to the DIP Loan Documents or
having lawfully exercised any rights or remedies thereunder, (a) to be in
control of the operations of the Debtors; (b) to be an “employer” of any of
the Debtors’ employees; or (c) to be acting as “responsible person” or
managing agent with respect to the operation or management of the
Debtors.

     

    28. No Discharge of DIP
Loan.  The obligations of the Debtors under the DIP Credit
Facility and the DIP Loan Documents shall not be discharged by the entry of any
order confirming a plan of reorganization in the Cases, and the Debtors, with
approval of the Court, hereby waive any such discharge pursuant to section
1141(d)(4) of the Bankruptcy Code.

     

    29. Qwest Reclamation
Claim.  To the extent that any goods referenced in the “Demand
for Reclamation of Goods Sold” dated April 21, 2008 delivered by Qwest
Communications Corporation to the Debtors are subject to a valid reclamation
claim pursuant to section 546(c) of the Bankruptcy Code, the proceeds from any
sale of such goods shall be paid by the Debtors to Qwest Communications
Corporation.

     

    30. No Prejudice with Respect to
Collective Bargaining Agreements.  Nothing herein or in any DIP
Loan Documents shall constitute an agreement, admission or acknowledgement by
any union that any concessions with respect to, or any changes to, any
collective bargaining agreement are necessary or appropriate, and all unions
(and all other parties) reserve all rights with respect to all such issues,
including without limitation with respect to any claim (or defense thereto) that
the terms of the DIP Credit Facility do not constitute a valid basis in support
of relief under section 1113 of the Bankruptcy Code.  Nothing in this
Order relieves the Debtors of any obligation with respect to the requirements of
section 1113 of the Bankruptcy Code, and this Court retains its full discretion
with respect to consideration of any motion made by the Debtors pursuant to
section 1113 of the Bankruptcy Code.

     

    31. Order Effective
Immediately.  This Order shall constitute findings of fact and
conclusions of law and shall take effect immediately upon entry
hereof.

     

    

    
      	
              Dated:

            	
              ____________,
      2008

            	 
      
	 
      	
              New
      York, New York

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              THE
      HONORABLE ROBERT D. DRAIN

              UNITED
      STATES BANKRUPTCY JUDGE

            

    

    

    

    

      

    

     

      1 Unless
otherwise defined herein, all capitalized terms shall have the meanings ascribed
to them in the Motion or the Notice, as applicable.

        

    

    
      2 The
Debtors are the following entities:  Frontier Holdings; Frontier
Airlines, Inc. (“Frontier”);
and Lynx Aviation, Inc. (“Lynx”). 
The employer tax identification numbers and addresses for each of the Debtors
are set forth in the Debtors’ chapter 11
petitions.

       

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

     

     

     

    
 

    Disclosure
Schedules

    

    [intentionally
omitted]

    

     

     

    

    .Exhibit 10.1

                              INVESTMENT AGREEMENT

INVESTMENT  AGREEMENT  (this  "AGREEMENT"),  dated  as of July  29,  2008 by and
between Domark  International,  Inc., a Nevada corporation (the "Company"),  and
Dutchess  Private  Equities Fund,  Ltd., a Cayman Islands  exempted company (the
"Investor").

WHEREAS,  the parties desire that,  upon the terms and subject to the conditions
contained  herein,  the  Investor  shall  invest  up to  Fifty  Million  dollars
($50,000,000) to purchase the Company's Common Stock,  $.001 par value per share
(the "Common Stock");

WHEREAS,  such  investments  will be made in  reliance  upon the  provisions  of
Section 4(2) under the Securities Act of 1933, as amended (the "1933 Act"), Rule
506 of  Regulation  D, and the rules  and  regulations  promulgated  thereunder,
and/or upon such other exemption from the registration  requirements of the 1933
Act as may be available with respect to any or all of the  investments in Common
Stock to be made hereunder; and

WHEREAS,  contemporaneously  with the execution and delivery of this  Agreement,
the parties hereto are executing and delivering a Registration  Rights Agreement
substantially in the form attached hereto (the "Registration  Rights Agreement")
pursuant to which the Company has agreed to provide certain  registration rights
under the 1933 Act, and the rules and regulations  promulgated  thereunder,  and
applicable state securities laws.

NOW  THEREFORE,  in  consideration  of the  foregoing  recitals,  which shall be
considered an integral part of this Agreement,  the covenants and agreements set
forth  hereafter,  and other good and  valuable  consideration,  the receipt and
sufficiency of which is hereby acknowledged, the Company and the Investor hereby
agree as follows:

SECTION 1. DEFINITIONS.

         As used in this Agreement, the following terms shall have the following
meanings  specified  or  indicated  below,  and such  meanings  shall be equally
applicable to the singular and plural forms of such defined terms.

     "1933  Act"  shall  have the  meaning  set  forth in the  preamble  of this
agreement.

     "1934 Act" shall mean the  Securities  Exchange  Act of 1934,  as it may be
amended.

     "Affiliate" shall have the meaning specified in Section 5(H), below.

     "Agreement" shall mean this Investment Agreement.

                                       1
<PAGE>
     "Best  Bid"  shall mean the  highest  posted bid price of the Common  Stock
during a given period of time.

     "By-laws" shall have the meaning specified in Section 4(C).

     "Certificate of Incorporation"  shall have the meaning specified in Section
4(C).

     "Closing" shall have the meaning specified in Section 2(G).

     "Closing Date" shall mean no more than seven (7) Trading Days following the
Put Notice Date.

     "Common  Stock"  shall have the meaning  set forth in the  preamble of this
Agreement.

     "Control" or "Controls" shall have the meaning specified in Section 5(H).

     "Effective  Date" shall mean the date the SEC declares  effective under the
1933 Act the Registration Statement covering the Securities.

     "Environmental Laws" shall have the meaning specified in Section 4(M).

     "Equity  Line  Transaction  Documents"  shall  mean  this  Agreement,   the
Registration Rights Agreement.

     "Execution  Date"  shall mean the date  indicated  in the  preamble to this
Agreement.

     "Indemnities" shall have the meaning specified in Section 11.

     "Indemnified Liabilities" shall have the meaning specified in Section 11.

     "Ineffective  Period"  shall mean any period of time that the  Registration
Statement  or  any  Supplemental  Registration  Statement  (as  defined  in  the
Registration  Rights  Agreement  between the  parties)  becomes  ineffective  or
unavailable for use for the sale or resale, as applicable,  of any or all of the
Registrable Securities (as defined in the Registration Rights Agreement) for any
reason (or in the event the prospectus  under either of the above is not current
and deliverable)  during any time period required under the Registration  Rights
Agreement.

     "Investor"  shall  have  the  meaning  indicated  in the  preamble  of this
Agreement.

     "Material Adverse Effect" shall have the meaning specified in Section 4(A).

                                       2
<PAGE>
     "Maximum Common Stock Issuance" shall have the meaning specified in Section
2(H).

     "Open Market Adjustment Amount" shall have the meaning specified in Section
2(I).

     "Open Market Purchase" shall have the meaning specified in Section 2(I)

     "Open Market Share  Purchase"  shall have the meaning  specified in Section
2(I).

     "Open Period" shall mean the period  beginning on and including the Trading
Day immediately  following the Effective Date and ending on the earlier to occur
of (I) the date which is thirty-six (36) months from the Effective Date; or (II)
termination of the Agreement in accordance with Section 9, below.

     "Pricing Period" shall mean the period beginning on the Put Notice Date and
ending on and  including  the date that is five (5) Trading  Days after such Put
Notice Date.

     "Principal  Market"  shall mean the  American  Stock  Exchange,  Inc.,  the
National  Association  of Securities  Dealers,  Inc.  Over-the-Counter  Bulletin
Board,  the  NASDAQ  National  Market  System  or the  NASDAQ  SmallCap  Market,
whichever is the principal market on which the Common Stock is listed.

     "Prospectus"  shall  mean  the  prospectus,   preliminary   prospectus  and
supplemental prospectus used in connection with the Registration Statement.

     "Purchase Amount" shall mean the total amount being paid by the Investor on
a particular Closing Date to purchase the Securities.

     "Purchase Price" shall mean ninety-three percent (93%) of the lowest Volume
Weighted Average Price (VWAP) of the Common Stock during the Pricing Period.

     "Put" shall have the meaning set forth in Section 2(B)(1) hereof.

     "Put Amount" shall have the meaning set forth in Section 2(B)(1) hereof.

     "Put  Notice"  shall  mean a written  notice  sent to the  Investor  by the
Company  stating the Put Amount in U.S.  dollars the Company  intends to sell to
the  Investor  pursuant  to the terms of the  Agreement  and stating the current
number of Shares issued and outstanding on such date.

     "Put  Notice  Date"  shall  mean  the  Trading  Day,  as set  forth  below,
immediately  following  the day on which the  Investor  receives  a Put  Notice,
however a Put Notice  shall be deemed  delivered  on (A) the  Trading  Day it is

                                       3
<PAGE>
received by  facsimile  or  otherwise by the Investor if such notice is received
prior to 9:00 am Eastern Time, or (B) the immediately  succeeding Trading Day if
it is received by facsimile or otherwise after 9:00 am Eastern Time on a Trading
Day. No Put Notice may be deemed delivered on a day that is not a Trading Day.

     "Put Restriction"  shall mean the days between the beginning of the Pricing
Period and Closing Date.  During this time, the Company shall not be entitled to
deliver another Put Notice.

     "Put Shares Due" shall have the meaning specified in Section 2(I).

     "Registration  Period"  shall have the meaning  specified in Section  5(C),
below.

     "Registration  Rights  Agreement"  shall have the  meaning set forth in the
recitals, above.

     "Registration  Statement" means the  registration  statement of the Company
filed under the 1933 Act covering the Common Stock issuable hereunder.

     "Related Party" shall have the meaning specified in Section 5(H).

     "Resolution" shall have the meaning specified in Section 8(E).

     "SEC" shall mean the U.S. Securities & Exchange Commission.

     "SEC Documents" shall have the meaning specified in Section 4(F).

     "Securities"  shall mean the shares of Common Stock issued  pursuant to the
terms of the Agreement.

     "Shares" shall mean the shares of the Company's Common Stock.

     "Subsidiaries" shall have the meaning specified in Section 4(A).

     "Trading  Day"  shall  mean any day on which the  Principal  Market for the
Common Stock is open for trading, from the hours of 9:30 am until 4:00 pm.

SECTION 2. PURCHASE AND SALE OF COMMON STOCK.

(A) PURCHASE AND SALE OF COMMON STOCK.  Subject to the terms and  conditions set
forth herein, the Company shall issue and sell to the Investor, and the Investor
shall purchase from the Company, up to that number of Shares having an aggregate
Purchase Price of Fifty Million dollars ($50,000,000).

(B) DELIVERY OF PUT NOTICES.

                                       4
<PAGE>
(I)  Subject  to the  terms  and  conditions  of  the  Equity  Line  Transaction
Documents, and from time to time during the Open Period, the Company may, in its
sole  discretion,  deliver a Put Notice to the Investor  which states the dollar
amount  (designated  in U.S.  Dollars)  (the "Put  Amount"),  which the  Company
intends to sell to the Investor on a Closing  Date (the  "Put").  The Put Notice
shall be in the form  attached  hereto as Exhibit C and  incorporated  herein by
reference.  The amount that the Company shall be entitled to Put to the Investor
(the "Put Amount") shall be equal to, at the Company's election, either: (A) Two
Hundred  percent  (200%) of the average  daily volume (U.S.  market only) of the
Common Stock for the Ten (10) Trading  Days prior to the  applicable  Put Notice
Date,  multiplied  by the  average  of the three (3) daily  closing  bid  prices
immediately  preceding  the Put Date,  or (B) two and one half  million  dollars
($2,500,000).  During the Open  Period,  the  Company  shall not be  entitled to
submit a Put Notice until after the  previous  Closing has been  completed.  The
Purchase Price for the Common Stock  identified in the Put Notice shall be equal
to ninety-three percent (93%) of the lowest Volume Weighted Average Price (VWAP)
of the Common Stock during the Pricing Period.

(C) INTENTIONALLY OMITTED

(D)  CONDITIONS TO INVESTOR'S  OBLIGATION  TO PURCHASE  SHARES.  Notwithstanding
anything to the contrary in this Agreement, the Company shall not be entitled to
deliver a Put Notice and the  Investor  shall not be  obligated  to purchase any
Shares at a Closing (as defined in Section  2(G))  unless each of the  following
conditions are satisfied:

     (I) a Registration  Statement shall have been declared  effective and shall
remain effective and available for the resale of all the Registrable  Securities
(as defined in the Registration Rights Agreement) at all times until the Closing
with respect to the subject Put Notice;

     (II) at all times  during the period  beginning  on the  related Put Notice
Date and ending on and  including  the related  Closing  Date,  the Common Stock
shall have been listed on the Principal Market and shall not have been suspended
from trading thereon for a period of two (2) consecutive Trading Days during the
Open  Period and the  Company  shall not have been  notified  of any  pending or
threatened  proceeding  or other  action to  suspend  the  trading of the Common
Stock;

     (III) the Company has complied with its obligations and is otherwise not in
breach of or in default under, this Agreement, the Registration Rights Agreement
or any other agreement executed in connection  herewith which has not been cured
prior to delivery of the Investor's Put Notice Date;

     (IV) no  injunction  shall have been issued and remain in force,  or action
commenced by a  governmental  authority  which has not been stayed or abandoned,
prohibiting the purchase or the issuance of the Securities; and

                                       5
<PAGE>
     (V) the  issuance  of the  Securities  will  not  violate  any  shareholder
approval requirements of the Principal Market.

If any of the events  described in clauses (I) through (V) above occurs during a
Pricing  Period,  then the Investor shall have no obligation to purchase the Put
Amount of Common Stock set forth in the applicable Put Notice.

(E) RESERVED

(F) MECHANICS OF PURCHASE OF SHARES BY INVESTOR.  Subject to the satisfaction of
the  conditions set forth in Sections 2(E), 7 and 8, the closing of the purchase
by the  Investor  of Shares (a  "Closing")  shall  occur on the date which is no
later than seven (7) Trading Days following the applicable Put Notice Date (each
a "Closing Date").  Prior to each Closing Date, (I) the Company shall deliver to
the Investor pursuant to this Agreement, certificates representing the Shares to
be  issued  to the  Investor  on such  date  and  registered  in the name of the
Investor;  and (II) the Investor shall deliver to the Company the Purchase Price
to be paid for such Shares,  determined as set forth in Section 2(B). In lieu of
delivering physical  certificates  representing the Securities and provided that
the Company's  transfer  agent then is  participating  in The  Depository  Trust
Company  ("DTC") Fast  Automated  Securities  Transfer  ("FAST")  program,  upon
request of the  Investor,  the  Company  shall use all  commercially  reasonable
efforts to cause its transfer agent to electronically transmit the Securities by
crediting  the  account of the  Investor's  prime  broker (as  specified  by the
Investor  within a  reasonably  in advance of the  Investor's  notice)  with DTC
through its Deposit Withdrawal Agent Commission ("DWAC") system.

The Company  understands  that a delay in the issuance of Securities  beyond the
Closing  Date  could  result  in  economic  damage  to the  Investor.  After the
Effective  Date,  as  compensation  to the Investor  for such loss,  the Company
agrees to make late  payments to the  Investor for late  issuance of  Securities
(delivery of Securities  after the applicable  Closing Date) in accordance  with
the  following  schedule  (where  "No. of Days Late" is defined as the number of
trading days beyond the Closing Date, with the Amounts being cumulative.):

LATE  PAYMENT  FOR  EACH
    NO. OF DAYS LATE                 $10,000 WORTH OF COMMON  STOCK
    ----------------                 -----------------------  -----
          1                                    $  100
          2                                    $  200
          3                                    $  300
          4                                    $  400
          5                                    $  500
          6                                    $  600
          7                                    $  700
          8                                    $  800
          9                                    $  900
          10                                   $1,000
          Over  10                             $1,000 + $200 for each
                                               Business Day late beyond 10 days

                                       6
<PAGE>
The Company shall make any payments  incurred  under this Section in immediately
available  funds upon demand by the  Investor.  Nothing  herein  shall limit the
Investor's right to pursue actual damages for the Company's failure to issue and
deliver the  Securities  to the Investor,  except that such late payments  shall
offset any such actual  damages  incurred by the  Investor,  and any Open Market
Adjustment Amount, as set forth below.

(G) OVERALL LIMIT ON COMMON STOCK ISSUABLE.  Notwithstanding  anything contained
herein to the contrary,  if during the Open Period the Company becomes listed on
an exchange  that limits the number of shares of Common Stock that may be issued
without shareholder approval,  then the number of Shares issuable by the Company
and  purchasable by the Investor,  shall not exceed that number of the shares of
Common Stock that may be issuable  without  shareholder  approval  (the "Maximum
Common Stock Issuance").  If such issuance of shares of Common Stock could cause
a delisting on the  Principal  Market,  then the Maximum  Common Stock  Issuance
shall  first be  approved  by the  Company's  shareholders  in  accordance  with
applicable  law  and  the  By-laws  and  Amended  and  Restated  Certificate  of
Incorporation  of the Company,  if such issuance of shares of Common Stock could
cause a delisting on the Principal Market. The parties understand and agree that
the Company's  failure to seek or obtain such  shareholder  approval shall in no
way adversely affect the validity and due authorization of the issuance and sale
of Securities  or the  Investor's  obligation  in accordance  with the terms and
conditions  hereof to  purchase  a number of Shares in the  aggregate  up to the
Maximum Common Stock Issuance  limitation,  and that such approval pertains only
to the applicability of the Maximum Common Stock Issuance limitation provided in
this Section 2(H).

(H) If, by the third  (3rd)  business  day after the Closing  Date,  the Company
fails to deliver any portion of the shares of the Put to the Investor  (the "Put
Shares  Due") and the  Investor  purchases,  in an open  market  transaction  or
otherwise,  shares of Common Stock  necessary  to make  delivery of shares which
would have been  delivered  if the full amount of the shares to be  delivered to
the  Investor by the  Company  (the "Open  Market  Share  Purchase")  , then the
Company  shall pay to the  Investor,  in  addition  to any other  amounts due to
Investor  pursuant  to the  Put,  and  not in  lieu  thereof,  the  Open  Market
Adjustment Amount (as defined below). The "Open Market Adjustment Amount" is the
amount equal to the excess,  if any, of (x) the Investor's  total purchase price
(including  brokerage  commissions,  if any) for the Open Market Share  Purchase
minus (y) the net proceeds (after brokerage commissions, if any) received by the
Investor  from the sale of the Put Shares Due.  The  Company  shall pay the Open
Market Adjustment  Amount to the Investor in immediately  available funds within
five (5) business days of written demand by the Investor. By way of illustration
and not in  limitation of the  foregoing,  if the Investor  purchases  shares of
Common Stock having a total purchase price (including brokerage  commissions) of
$11,000 to cover an Open Market  Purchase with respect to shares of Common Stock
it sold for net proceeds of $10,000,  the Open Market Purchase Adjustment Amount
which the Company will be required to pay to the Investor will be $1,000.

                                       7
<PAGE>
(I) LIMITATION ON AMOUNT OF OWNERSHIP.  Notwithstanding anything to the contrary
in this  Agreement,  in no event shall the Investor be entitled to purchase that
number of Shares,  which when added to the sum of the number of shares of Common
Stock  beneficially  owned (as such term is defined under Section 13(d) and Rule
13d-3 of the 1934 Act),  by the  Investor,  would  exceed 4.99% of the number of
shares of Common  Stock  outstanding  on the  Closing  Date,  as  determined  in
accordance with Rule 13d-1(j) of the 1934 Act.

SECTION 3. INVESTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS.

The Investor represents and warrants to the Company, and covenants, that:

(A)  SOPHISTICATED  INVESTOR.  The  Investor  has, by reason of its business and
financial experience, such knowledge, sophistication and experience in financial
and business matters and in making investment  decisions of this type that it is
capable  of  (I)  evaluating  the  merits  and  risks  of an  investment  in the
Securities and making an informed investment  decision;  (II) protecting its own
interest;  and  (III)  bearing  the  economic  risk  of such  investment  for an
indefinite period of time.

(B)  AUTHORIZATION;  ENFORCEMENT.  This  Agreement  has been  duly  and  validly
authorized,  executed and delivered on behalf of the Investor and is a valid and
binding agreement of the Investor enforceable against the Investor in accordance
with its terms, subject as to enforceability to general principles of equity and
to applicable bankruptcy,  insolvency,  reorganization,  moratorium, liquidation
and other similar laws relating to, or affecting  generally,  the enforcement of
applicable creditors' rights and remedies.

(C) SECTION 9 OF THE 1934 ACT. During the term of this  Agreement,  the Investor
will  comply  with the  provisions  of Section 9 of the 1934 Act,  and the rules
promulgated thereunder, with respect to transactions involving the Common Stock.
The Investor  agrees not to sell the Company's  stock short,  either directly or
indirectly through its affiliates,  principals or advisors, the Company's common
stock during the term of this Agreement.

(D) ACCREDITED  INVESTOR.  Investor is an "Accredited  Investor" as that term is
defined in Rule 501(a) of Regulation D of the 1933 Act.

(E) NO CONFLICTS.  The execution,  delivery and  performance of the  Transaction
Documents  by  the  Investor  and  the  consummation  by  the  Investor  of  the
transactions  contemplated  hereby and thereby will not result in a violation of
Partnership Agreement or other organizational documents of the Investor.

(F) OPPORTUNITY TO DISCUSS.  The Investor has received all materials relating to
the Company's  business,  finance and  operations  which it has  requested.  The

                                       8
<PAGE>
Investor  has  had an  opportunity  to  discuss  the  business,  management  and
financial affairs of the Company with the Company's management.

(G) INVESTMENT  PURPOSES.  The Investor is purchasing the Securities for its own
account for  investment  purposes and not with a view towards  distribution  and
agrees to resell or otherwise  dispose of the  Securities  solely in  accordance
with the  registration  provisions  of the 1933 Act (or pursuant to an exemption
from such registration provisions).

(H) NO REGISTRATION AS A DEALER. The Investor is not and will not be required to
be  registered  as a  "dealer"  under  the 1934  Act,  either as a result of its
execution and performance of its obligations under this Agreement or otherwise.

(I) GOOD  STANDING.  The  Investor  is a Limited  Partnership,  duly  organized,
validly existing and in good standing in the Cayman Islands.

(J) TAX LIABILITIES.  The Investor understands that it is liable for its own tax
liabilities.

(K) REGULATION M. The Investor will comply with Regulation M under the 1934 Act,
if applicable.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

Except as set forth in the  Schedules  attached  hereto,  or as disclosed on the
Company's SEC  Documents,  the Company  represents  and warrants to the Investor
that:

(A) ORGANIZATION AND QUALIFICATION.  The Company is a corporation duly organized
and validly existing in good standing under the laws of the State of Nevada, and
has the requisite corporate power and authorization to own its properties and to
carry on its business as now being conducted. Both the Company and the companies
it owns or controls  ("Subsidiaries")  are duly qualified to do business and are
in good standing in every jurisdiction in which its ownership of property or the
nature of the  business  conducted  by it makes  such  qualification  necessary,
except to the extent that the failure to be so qualified or be in good  standing
would not have a Material Adverse Effect.  As used in this Agreement,  "Material
Adverse Effect" means any material  adverse effect on the business,  properties,
assets, operations,  results of operations,  financial condition or prospects of
the  Company  and  its  Subsidiaries,  if  any,  taken  as a  whole,  or on  the
transactions  contemplated  hereby or by the  agreements  and  instruments to be
entered  into in  connection  herewith,  or on the  authority  or ability of the
Company to perform its obligations  under the Equity Line Transaction  Documents
(as defined in Section 1 and 4(B), below).

(B) AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.

                                       9
<PAGE>
     (I) The Company has the  requisite  corporate  power and authority to enter
into and perform this Investment Agreement and the Registration Rights Agreement
(collectively,  the  "Equity  Line  Transaction  Documents"),  and to issue  the
Securities in accordance with the terms hereof and thereof.

     (II) The execution and delivery of the Equity Line Transaction Documents by
the Company and the consummation by it of the transactions  contemplated  hereby
and thereby,  including without  limitation the reservation for issuance and the
issuance  of the  Securities  pursuant  to this  Agreement,  have  been duly and
validly authorized by the Company's Board of Directors and no further consent or
authorization  is  required  by the  Company,  its  Board of  Directors,  or its
shareholders.

     (III) The Equity  Line  Transaction  Documents  have been duly and  validly
executed and delivered by the Company.

     (IV) The Equity Line Transaction Documents constitute the valid and binding
obligations of the Company  enforceable  against the Company in accordance  with
their terms,  except as such enforceability may be limited by general principles
of equity or  applicable  bankruptcy,  insolvency,  reorganization,  moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies.

(C)  CAPITALIZATION.  As of the date hereof, the authorized capital stock of the
Company  consists  of  20,000,000  shares of Common  Stock,  $.001 par value per
share,  of  which  as of the date  hereof,  18,750,000  shares  are  issued  and
outstanding;  0 shares of Preferred  Stock  authorized,  none issued,  par value
$.001;  as of July 29, 2008,  and no shares  reserved  for issuance  pursuant to
options,  warrants and other  convertible  securities.  All of such  outstanding
shares have been, or upon issuance  will be,  validly  issued and are fully paid
and non-assessable.

Except as disclosed in the Company's publicly available filings with the SEC:

(I) no shares of the Company's capital stock are subject to preemptive rights or
any other similar rights or any liens or  encumbrances  suffered or permitted by
the Company;  (II) there are no outstanding debt securities;  (III) there are no
outstanding  shares  of  capital  stock,  options,  warrants,  scrip,  rights to
subscribe to, calls or commitments of any character  whatsoever  relating to, or
securities  or rights  convertible  into,  any  shares of  capital  stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements  by which the Company or any of its  Subsidiaries  is or may become
bound to issue  additional  shares of capital stock of the Company or any of its
Subsidiaries  or options,  warrants,  scrip,  rights to  subscribe  to, calls or
commitments  of any  character  whatsoever  relating to, or securities or rights
convertible  into,  any  shares of  capital  stock of the  Company or any of its
Subsidiaries;  (IV) there are no  agreements  or  arrangements  under  which the
Company or any of its  Subsidiaries  is obligated to register the sale of any of

                                       10
<PAGE>
their securities under the 1933 Act (except the Registration  Rights Agreement);
(V)  there  are  no  outstanding  securities  of  the  Company  or  any  of  its
Subsidiaries which contain any redemption or similar  provisions,  and there are
no contracts,  commitments,  understandings or arrangements by which the Company
or any of its  Subsidiaries  is or may become  bound to redeem a security of the
Company or any of its Subsidiaries;  (VI) there are no securities or instruments
containing  anti-dilution  or similar  provisions  that will be triggered by the
issuance of the  Securities  as described in this  Agreement;  (VII) the Company
does not  have  any  stock  appreciation  rights  or  "phantom  stock"  plans or
agreements or any similar plan or  agreement;  and (VIII) there is no dispute as
to the classification of any shares of the Company's capital stock.

     The Company has furnished to the  Investor,  or the Investor has had access
through EDGAR to, true and correct copies of the Company's  Amended and Restated
Certificate of Incorporation,  as in effect on the date hereof (the "Certificate
of  Incorporation"),  and the Company's By-laws, as in effect on the date hereof
(the "By-laws"), and the terms of all securities convertible into or exercisable
for  Common  Stock and the  material  rights of the  holders  thereof in respect
thereto.

(D) ISSUANCE OF SHARES.  The Company has reserved 15 million Shares for issuance
pursuant to this  Agreement,  which have been duly authorized and reserved those
Shares for issuance  (subject to adjustment  pursuant to the Company's  covenant
set forth in Section 5(F) below)  pursuant to this  Agreement.  Upon issuance in
accordance  with this Agreement,  the Securities  will be validly issued,  fully
paid for and  non-assessable  and free from all taxes,  liens and  charges  with
respect  to the issue  thereof.  In the  event the  Company  cannot  register  a
sufficient number of Shares for issuance pursuant to this Agreement, the Company
will use its best  efforts to  authorize  and reserve for issuance the number of
Shares required for the Company to perform its obligations  hereunder as soon as
reasonably practicable.

(E) NO CONFLICTS.  The  execution,  delivery and  performance of the Equity Line
Transaction  Documents by the Company and the consummation by the Company of the
transactions  contemplated hereby and thereby will not (I) result in a violation
of  the  Certificate  of   Incorporation,   any  Certificate  of   Designations,
Preferences  and  Rights of any  outstanding  series of  preferred  stock of the
Company or the By-laws;  or (II) conflict with, or constitute a material default
(or an event which with notice or lapse of time or both would  become a material
default)  under,  or  give to  others  any  rights  of  termination,  amendment,
acceleration or cancellation  of, any material  agreement,  contract,  indenture
mortgage,  indebtedness  or  instrument  to  which  the  Company  or  any of its
Subsidiaries is a party, or to the Company's  knowledge result in a violation of
any law, rule,  regulation,  order,  judgment or decree (including United States
federal and state  securities laws and regulations and the rules and regulations
of the Principal  Market or principal  securities  exchange or trading market on

                                       11
<PAGE>
which the Common Stock is traded or listed)  applicable to the Company or any of
its  Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected. Except as disclosed in Schedule 4(e), neither
the Company nor its  Subsidiaries  is in violation of any term of, or in default
under,  the  Certificate of  Incorporation,  any  Certificate  of  Designations,
Preferences  and  Rights of any  outstanding  series of  preferred  stock of the
Company or the By-laws or their organizational charter or by-laws, respectively,
or any  contract,  agreement,  mortgage,  indebtedness,  indenture,  instrument,
judgment,  decree or order or any statute,  rule or regulation applicable to the
Company  or  its  Subsidiaries,   except  for  possible   conflicts,   defaults,
terminations, amendments, accelerations, cancellations and violations that would
not  individually  or in the  aggregate  have or  constitute a Material  Adverse
Effect. The business of the Company and its Subsidiaries is not being conducted,
and shall not be conducted, in violation of any law, statute,  ordinance,  rule,
order or  regulation  of any  governmental  authority or agency,  regulatory  or
self-regulatory  agency, or court,  except for possible violations the sanctions
for which  either  individually  or in the  aggregate  would not have a Material
Adverse  Effect.  Except as  specifically  contemplated by this Agreement and as
required  under  the  1933  Act or any  securities  laws of any  states,  to the
Company's  knowledge,  the  Company  is not  required  to  obtain  any  consent,
authorization,  permit or order of, or make any filing or  registration  (except
the filing of a registration  statement as outlined in the  Registration  Rights
Agreement  between the  Parties)  with,  any court,  governmental  authority  or
agency,  regulatory or self-regulatory  agency or other third party in order for
it to execute,  deliver or perform any of its obligations under, or contemplated
by, the Equity Line Transaction Documents in accordance with the terms hereof or
thereof.   All   consents,   authorizations,   permits,   orders,   filings  and
registrations  which the Company is required to obtain pursuant to the preceding
sentence  have been  obtained or effected on or prior to the date hereof and are
in full force and effect as of the date hereof.  Except as disclosed in Schedule
4(e), the Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.  The Company is not, and will not
be, in  violation  of the listing  requirements  of the  Principal  Market as in
effect on the date hereof and on each of the  Closing  Dates and is not aware of
any facts which would  reasonably  lead to  delisting of the Common Stock by the
Principal Market in the foreseeable future.

(F) SEC DOCUMENTS;  FINANCIAL STATEMENTS. As of the date hereof, the Company has
filed all reports,  schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting  requirements  of the 1934
Act  (all of the  foregoing  filed  prior to the date  hereof  and all  exhibits
included  therein and financial  statements and schedules  thereto and documents
incorporated  by reference  therein  being  hereinafter  referred to as the "SEC
Documents").  The Company has delivered to the Investor or its  representatives,
or they have had access  through  EDGAR to, true and complete  copies of the SEC
Documents.  As of their respective  filing dates, the SEC Documents  complied in
all material  respects with the  requirements  of the 1934 Act and the rules and
regulations of the SEC promulgated  thereunder  applicable to the SEC Documents,

                                       12
<PAGE>
and  none of the SEC  Documents,  at the  time  they  were  filed  with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements  therein,
in light of the circumstances under which they were made, not misleading.  As of
their respective dates, the financial  statements of the Company included in the
SEC  Documents  complied as to form in all  material  respects  with  applicable
accounting  requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally  accepted  accounting  principles,  by a firm  that is a member of the
Public  Companies  Accounting  Oversight Board ("PCAOB")  consistently  applied,
during the periods  involved  (except (I) as may be otherwise  indicated in such
financial  statements  or the notes  thereto,  or (II) in the case of  unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position  of  the  Company  as of the  dates  thereof  and  the  results  of its
operations  and cash flows for the periods then ended  (subject,  in the case of
unaudited  statements,  to normal year-end audit adjustments).  No other written
information provided by or on behalf of the Company to the Investor which is not
included  in the  SEC  Documents,  including,  without  limitation,  information
referred to in Section 4(D) of this Agreement,  contains any untrue statement of
a  material  fact or omits to state  any  material  fact  necessary  to make the
statements  therein,  in the light of the  circumstance  under which they are or
were made, not  misleading.  Neither the Company nor any of its  Subsidiaries or
any of their officers, directors, employees or agents have provided the Investor
with any material,  nonpublic information which was not publicly disclosed prior
to the date  hereof and any  material,  nonpublic  information  provided  to the
Investor by the Company or its Subsidiaries or any of their officers, directors,
employees or agents prior to any Closing Date shall be publicly disclosed by the
Company prior to such Closing Date.

(G)  ABSENCE  OF  CERTAIN  CHANGES.  Except  as  otherwise  set forth in the SEC
Documents,  the Company does not intend to change the business operations of the
Company in any material  way. The Company has not taken any steps,  and does not
currently  expect  to  take  any  steps,  to  seek  protection  pursuant  to any
bankruptcy  law nor does the Company or its  Subsidiaries  have any knowledge or
reason to believe that its creditors intend to initiate  involuntary  bankruptcy
proceedings.

(H) ABSENCE OF LITIGATION AND/OR REGULATORY PROCEEDINGS.  Except as set forth in
the  SEC  Documents,   there  is  no  action,  suit,   proceeding,   inquiry  or
investigation  before  or  by  any  court,  public  board,   government  agency,
self-regulatory  organization  or  body  pending  or,  to the  knowledge  of the
executive officers of Company or any of its Subsidiaries,  threatened against or
affecting the Company, the Common Stock or any of the Company's  Subsidiaries or
any of the  Company's or the  Company's  Subsidiaries'  officers or directors in
their  capacities  as such, in which an adverse  decision  could have a Material
Adverse Effect.

                                       13
<PAGE>
(I)  ACKNOWLEDGMENT   REGARDING  INVESTOR'S  PURCHASE  OF  SHARES.  The  Company
acknowledges and agrees that the Investor is acting solely in the capacity of an
arm's  length  purchaser  with  respect  to the  Transaction  Documents  and the
transactions  contemplated hereby and thereby.  The Company further acknowledges
that the  Investor  is not acting as a  financial  advisor or  fiduciary  of the
Company (or in any similar capacity) with respect to the Equity Line Transaction
Documents and the  transactions  contemplated  hereby and thereby and any advice
given by the  Investor  or any of its  respective  representatives  or agents in
connection  with the Equity  Line  Transaction  Documents  and the  transactions
contemplated  hereby and thereby is merely incidental to the Investor's purchase
of the  Securities,  and is not being  relied  on by the  Company.  The  Company
further represents to the Investor that the Company's decision to enter into the
Equity  Line  Transaction  Documents  has been based  solely on the  independent
evaluation by the Company and its representatives.

(J) NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. Except as
set forth in the SEC  Documents,  as of the date  hereof,  no event,  liability,
development  or  circumstance  has  occurred  or  exists,  or to  the  Company's
knowledge  is  contemplated  to  occur,  with  respect  to  the  Company  or its
Subsidiaries  or  their  respective  business,  properties,  assets,  prospects,
operations or financial condition, that would be required to be disclosed by the
Company under applicable securities laws on a registration  statement filed with
the SEC  relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.

(K)  EMPLOYEE  RELATIONS.  Neither the Company  nor any of its  Subsidiaries  is
involved in any union labor  dispute nor, to the knowledge of the Company or any
of its Subsidiaries, is any such dispute threatened. Neither the Company nor any
of its  Subsidiaries is a party to a collective  bargaining  agreement,  and the
Company and its  Subsidiaries  believe that relations  with their  employees are
good.  No  executive  officer  (as  defined in Rule  501(f) of the 1933 Act) has
notified the Company that such officer intends to leave the Company's  employ or
otherwise terminate such officer's employment with the Company.

(L)  INTELLECTUAL  PROPERTY  RIGHTS.  The  Company and its  Subsidiaries  own or
possess adequate rights or licenses to use all trademarks,  trade names, service
marks,  service mark  registrations,  service  names,  patents,  patent  rights,
copyrights, inventions, licenses, approvals, governmental authorizations,  trade
secrets and rights  necessary  to conduct  their  respective  businesses  as now
conducted.  Except  as set  forth in the SEC  Documents,  none of the  Company's
trademarks,  trade names,  service marks,  service mark  registrations,  service
names, patents,  patent rights,  copyrights,  inventions,  licenses,  approvals,
government  authorizations,  trade secrets or other intellectual property rights
necessary  to conduct its  business as now or as proposed to be  conducted  have
expired or  terminated,  or are expected to expire or  terminate  within two (2)
years from the date of this Agreement.  The Company and its  Subsidiaries do not

                                       14
<PAGE>
have any knowledge of any  infringement  by the Company or its  Subsidiaries  of
trademark,  trade name rights, patents, patent rights,  copyrights,  inventions,
licenses, service names, service marks, service mark registrations, trade secret
or other  similar  rights of others,  or of any such  development  of similar or
identical  trade secrets or technical  information by others and,  except as set
forth in the SEC Documents,  there is no claim,  action or proceeding being made
or brought against, or to the Company's knowledge, being threatened against, the
Company or its Subsidiaries  regarding  trademark,  trade name, patents,  patent
rights,  invention,  copyright,  license,  service names, service marks, service
mark registrations,  trade secret or other infringement; and the Company and its
Subsidiaries are unaware of any facts or circumstances  which might give rise to
any of the foregoing.  The Company and its Subsidiaries have taken  commercially
reasonable  security measures to protect the secrecy,  confidentiality and value
of all of their intellectual properties.

(M)  ENVIRONMENTAL  LAWS.  The  Company  and its  Subsidiaries  (I) are,  to the
knowledge of the management  and directors of the Company and its  Subsidiaries,
in compliance with any and all applicable foreign, federal, state and local laws
and  regulations  relating to the  protection  of human  health and safety,  the
environment  or  hazardous  or  toxic   substances  or  wastes,   pollutants  or
contaminants  ("Environmental  Laws");  (II)  have,  to  the  knowledge  of  the
management and directors of the Company, received all permits, licenses or other
approvals required of them under applicable  Environmental Laws to conduct their
respective  businesses;  and (III) are in  compliance,  to the  knowledge of the
management  and directors of the Company,  with all terms and  conditions of any
such  permit,  license or  approval  where,  in each of the three (3)  foregoing
cases, the failure to so comply would have,  individually or in the aggregate, a
Material Adverse Effect.

(N) TITLE.  The Company and its  Subsidiaries  have good and marketable title to
all  personal  property  owned by them which is material to the  business of the
Company  and its  Subsidiaries,  in each  case  free  and  clear  of all  liens,
encumbrances  and defects  except such as are  described in the SEC Documents or
such as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company or any
of its  Subsidiaries.  Any real property and facilities  held under lease by the
Company or any of its Subsidiaries are held by them under valid,  subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such  property and buildings by the
Company and its Subsidiaries.

(O)  INSURANCE.  Each of the Company's  Subsidiaries  are insured by insurers of
recognized  financial  responsibility  against such losses and risks and in such
amounts as  management  of the  Company  reasonably  believes  to be prudent and
customary  in the  businesses  in which the  Company  and its  Subsidiaries  are
engaged.  Neither the Company nor any of its  Subsidiaries  has been refused any
insurance  coverage  sought or  applied  for and  neither  the  Company  nor its

                                       15
<PAGE>
Subsidiaries  has any  reason to  believe  that it will not be able to renew its
existing  insurance  coverage  as and when such  coverage  expires  or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its
business at a cost that would not have a Material Adverse Effect.

(P) REGULATORY PERMITS.  The Company and its Subsidiaries have in full force and
effect  all  certificates,   approvals,  authorizations  and  permits  from  the
appropriate  federal,   state,  local  or  foreign  regulatory  authorities  and
comparable foreign regulatory agencies, necessary to own, lease or operate their
respective  properties and assets and conduct their respective  businesses,  and
neither  the  Company  nor any  such  Subsidiary  has  received  any  notice  of
proceedings  relating to the revocation or modification of any such certificate,
approval,  authorization  or permit,  except for such  certificates,  approvals,
authorizations  or  permits  which  if not  obtained,  or  such  revocations  or
modifications which, would not have a Material Adverse Effect.

(Q)  INTERNAL  ACCOUNTING  CONTROLS.  The Company  and each of its  Subsidiaries
maintain  a  system  of  internal  accounting  controls  sufficient  to  provide
reasonable  assurance  that (I)  transactions  are executed in  accordance  with
management's general or specific authorizations;  (II) transactions are recorded
as necessary to permit  preparation of financial  statements in conformity  with
generally accepted accounting  principles by a firm with membership to the PCAOB
and to maintain asset  accountability;  (III) access to assets is permitted only
in accordance with management's general or specific authorization;  and (IV) the
recorded  accountability  for assets is  compared  with the  existing  assets at
reasonable  intervals  and  appropriate  action  is taken  with  respect  to any
differences.

(R) NO MATERIALLY  ADVERSE  CONTRACTS,  ETC.  Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment,  decree,  order,  rule or regulation  which in the judgment of the
Company's  officers has or is expected in the future to have a Material  Adverse
Effect.  Neither  the  Company  nor any of its  Subsidiaries  is a party  to any
contract or agreement which in the judgment of the Company's  officers has or is
expected to have a Material Adverse Effect.

(S) TAX STATUS.  The Company and each of its  Subsidiaries has made or filed all
United  States  federal and state income and all other tax returns,  reports and
declarations  required by any  jurisdiction  to which it is subject  (unless and
only to the extent that the Company and each of its  Subsidiaries  has set aside
on its books  provisions  reasonably  adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental  assessments and
charges  that are  material  in amount,  shown or  determined  to be due on such
returns,  reports and  declarations,  except those being contested in good faith
and has set aside on its books provision  reasonably adequate for the payment of
all taxes for periods  subsequent to the periods to which such returns,  reports
or declarations  apply. There are no unpaid taxes in any material amount claimed

                                       16
<PAGE>
to be due by the taxing authority of any  jurisdiction,  and the officers of the
Company know of no basis for any such claim.

(T)  CERTAIN  TRANSACTIONS.  Except as set forth in the SEC  Documents  filed at
least  ten (10) days  prior to the date  hereof  and  except  for  arm's  length
transactions pursuant to which the Company makes payments in the ordinary course
of business  upon terms no less  favorable  than the Company  could  obtain from
disinterested  third parties and other than the grant of stock options disclosed
in the SEC  Documents,  none of the  officers,  directors,  or  employees of the
Company is presently a party to any  transaction  with the Company or any of its
Subsidiaries  (other than for services as  employees,  officers and  directors),
including  any  contract,  agreement  or  other  arrangement  providing  for the
furnishing  of  services  to or by,  providing  for  rental of real or  personal
property to or from,  or  otherwise  requiring  payments to or from any officer,
director or such employee or, to the knowledge of the Company,  any corporation,
partnership,  trust or other entity in which any officer,  director, or any such
employee  has a  substantial  interest  or is an officer,  director,  trustee or
partner.

(U) DILUTIVE EFFECT. The Company understands and acknowledges that the number of
shares of Common Stock issuable upon  purchases  pursuant to this Agreement will
increase in certain circumstances including, but not necessarily limited to, the
circumstance  wherein the trading price of the Common Stock declines  during the
period between the Effective Date and the end of the Open Period.  The Company's
executive officers and directors have studied and fully understand the nature of
the  transactions  contemplated by this Agreement and recognize that they have a
potential  dilutive  effect on the  shareholders  of the  Company.  The Board of
Directors of the Company has concluded, in its good faith business judgment, and
with full  understanding of the implications,  that such issuance is in the best
interests of the Company. The Company specifically acknowledges that, subject to
such  limitations  as are  expressly  set forth in the Equity  Line  Transaction
Documents,  its  obligation  to issue  shares of  Common  Stock  upon  purchases
pursuant to this  Agreement  is absolute  and  unconditional  regardless  of the
dilutive effect that such issuance may have on the ownership  interests of other
shareholders of the Company.

(V) LOCK-UP.  The Company shall cause its  officers,  insiders,  directors,  and
affiliates  or other related  parties  under control of the Company,  to refrain
from selling Common Stock during each Pricing Period.

(W) NO GENERAL SOLICITATION. Neither the Company, nor any of its affiliates, nor
any person acting on its behalf, has engaged in any form of general solicitation
or general  advertising  (within the meaning of Regulation D) in connection with
the  offer  or sale of the  Common  Stock  to be  offered  as set  forth in this
Agreement.

(X) NO BROKERS,  FINDERS OR FINANCIAL ADVISORY FEES OR COMMISSIONS.  No brokers,
finders  or  financial  advisory  fees or  commissions  will be  payable  by the

                                       17
<PAGE>
Company,   its  agents  or  Subsidiaries,   with  respect  to  the  transactions
contemplated by this Agreement, except as otherwise disclosed in this Agreement.

SECTION 5. COVENANTS OF THE COMPANY

(A) BEST EFFORTS.  The Company shall use all commercially  reasonable efforts to
timely satisfy each of the conditions set forth in Section 7 of this Agreement.

(B) BLUE SKY. The Company shall, at its sole cost and expense, on or before each
of the Closing Dates, take such action as the Company shall reasonably determine
is  necessary  to  qualify  the  Securities  for,  or obtain  exemption  for the
Securities  for,  sale to the Investor at each of the Closings  pursuant to this
Agreement under  applicable  securities or "Blue Sky" laws of such states of the
United  States,  as  reasonably  specified by the  Investor,  and shall  provide
evidence of any such action so taken to the  Investor on or prior to the Closing
Date.

(C) REPORTING STATUS.  Until one of the following occurs, the Company shall file
all reports  required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not  terminate  its status,  or take an action or fail to take any
action,  which would terminate its status as a reporting  company under the 1934
Act: (i) this  Agreement  terminates  pursuant to Section 9 and the Investor has
the right to sell all of the Securities  without  restrictions  pursuant to Rule
144(k)  promulgated under the 1933 Act, or such other exemption (ii) the date on
which the  Investor  has sold all the  Securities  and this  Agreement  has been
terminated pursuant to Section 9.

(D) USE OF  PROCEEDS.  The Company  will use the  proceeds  from the sale of the
Shares  (excluding  amounts  paid by the  Company  for fees as set  forth in the
Equity Line  Transaction  Documents) for general  corporate and working  capital
purposes and  acquisitions  or assets,  businesses  or  operations  or for other
purposes that the Board of  Directors,  in its good faith deem to be in the best
interest of the Company.

(E) FINANCIAL  INFORMATION.  During the Open Period,  the Company agrees to make
available  to the  Investor via EDGAR or other  electronic  means the  following
documents and  information  on the forms set forth:  (I) within five (5) Trading
Days after the filing thereof with the SEC, a copy of its Annual Reports on Form
10-KSB,  its Quarterly  Reports on Form 10-QSB,  any Current Reports on Form 8-K
and any  Registration  Statements or amendments  filed pursuant to the 1933 Act;
(II) copies of any notices and other  information made available or given to the
shareholders  of  the  Company  generally,  contemporaneously  with  the  making
available  or giving  thereof  to the  shareholders;  and (III)  within  two (2)
calendar days of filing or delivery thereof, copies of all documents filed with,
and all correspondence sent to, the Principal Market, any securities exchange or

                                       18
<PAGE>
market,  or the National  Association of Securities  Dealers,  Inc., unless such
information is material nonpublic information.

(F) RESERVATION OF SHARES. The Company shall take all action necessary to at all
times have  authorized,  and reserved for the purpose of issuance,  a sufficient
number of shares of Common Stock to provide for the  issuance of the  Securities
to the Investor as required hereunder.  In the event that the Company determines
that it does not have a sufficient  number of authorized  shares of Common Stock
to reserve and keep  available  for issuance as described in this Section  5(F),
the Company shall use all commercially reasonable efforts to increase the number
of  authorized  shares of Common Stock by seeking  shareholder  approval for the
authorization of such additional shares.

(G) LISTING.  The Company shall promptly  secure and maintain the listing of all
of the Registrable  Securities (as defined in the Registration Rights Agreement)
on the  Principal  Market  and  each  other  national  securities  exchange  and
automated  quotation  system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, such listing
of all Registrable  Securities from time to time issuable under the terms of the
Equity  Line  Transaction  Documents.   Neither  the  Company  nor  any  of  its
Subsidiaries shall take any action which would be reasonably  expected to result
in the  delisting  or  suspension  of the Common Stock on the  Principal  Market
(excluding  suspensions  of not more than one (1)  trading  day  resulting  from
business  announcements  by the Company).  The Company shall promptly provide to
the  Investor  copies of any  notices  it  receives  from the  Principal  Market
regarding  the  continued  eligibility  of the Common  Stock for listing on such
automated  quotation  system or securities  exchange.  The Company shall pay all
fees and expenses in  connection  with  satisfying  its  obligations  under this
Section 5(G).

(H) TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall cause each of
its Subsidiaries not to, enter into, amend, modify or supplement,  or permit any
Subsidiary  to  enter  into,  amend,   modify  or  supplement,   any  agreement,
transaction,  commitment  or  arrangement  with  any of its or any  Subsidiary's
officers,  directors,  persons who were officers or directors at any time during
the previous two (2) years,  shareholders who beneficially own 5% or more of the
Common Stock, or Affiliates or with any individual related by blood, marriage or
adoption to any such  individual  or with any entity in which any such entity or
individual  owns a 5% or more  beneficial  interest  (each a  "Related  Party"),
except  for (I)  customary  employment  arrangements  and  benefit  programs  on
reasonable terms, (II) any agreement, transaction,  commitment or arrangement on
an arms-length basis on terms no less favorable than terms which would have been
obtainable  from a  disinterested  third party other than such Related Party, or
(III) any agreement, transaction, commitment or arrangement which is approved by
a majority of the disinterested  directors of the Company.  For purposes hereof,
any  director  who is also an officer of the  Company or any  Subsidiary  of the
Company  shall  not  be a  disinterested  director  with  respect  to  any  such

                                       19
<PAGE>
agreement,  transaction,  commitment or  arrangement.  "Affiliate"  for purposes
hereof  means,  with respect to any person or entity,  another  person or entity
that,  directly  or  indirectly,  (I) has a 5% or more  equity  interest in that
person or  entity,  (II) has 5% or more  common  ownership  with that  person or
entity,  (III)  controls that person or entity,  or (IV) is under common control
with that person or entity.  "Control" or "Controls"  for purposes  hereof means
that a person or entity has the power,  directly  or  indirectly,  to conduct or
govern the policies of another person or entity.

(I) FILING OF FORM 8-K.  On or before the date  which is four (4)  Trading  Days
after the Execution  Date,  the Company shall file a Current  Report on Form 8-K
with the SEC describing the terms of the transaction  contemplated by the Equity
Line Transaction  Documents in the form required by the 1934 Act, if such filing
is required.

(J)  CORPORATE  EXISTENCE.  The Company  shall use all  commercially  reasonable
efforts to preserve and continue the corporate existence of the Company.

(K) NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKE
A PUT. The Company shall promptly notify the Investor upon the occurrence of any
of the  following  events in  respect  of a  Registration  Statement  or related
prospectus  in respect of an  offering  of the  Securities:  (I)  receipt of any
request  for  additional  information  by the SEC or any other  federal or state
governmental  authority  during the period of  effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or related
prospectus;  (II)  the  issuance  by the  SEC  or any  other  federal  or  state
governmental  authority of any stop order  suspending the  effectiveness  of any
Registration  Statement or the initiation of any  proceedings  for that purpose;
(III)  receipt  of  any  notification  with  respect  to the  suspension  of the
qualification or exemption from  qualification of any of the Securities for sale
in any  jurisdiction  or the  initiation  or notice of any  proceeding  for such
purpose;  (IV) the happening of any event that makes any statement  made in such
Registration  Statement or related  prospectus or any document  incorporated  or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration  Statement,  related
prospectus or documents so that,  in the case of a  Registration  Statement,  it
will not contain any untrue  statement  of a material  fact or omit to state any
material fact required to be stated  therein or necessary to make the statements
therein not misleading,  and that in the case of the related prospectus, it will
not  contain  any  untrue  statement  of a  material  fact or omit to state  any
material fact required to be stated  therein or necessary to make the statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading; and (V) the Company's reasonable determination that a post-effective
amendment to the  Registration  Statement would be appropriate,  and the Company
shall  promptly make  available to Investor any such  supplement or amendment to

                                       20
<PAGE>
the related prospectus. The Company shall not deliver to Investor any Put Notice
during the continuation of any of the foregoing events in this Section 5(K).

(L)  REIMBURSEMENT.  If (I) the Investor becomes involved in any capacity in any
action,  proceeding or investigation  brought by any shareholder of the Company,
in  connection  with or as a  result  of the  consummation  of the  transactions
contemplated  by the Equity Line  Transaction  Documents,  or if the Investor is
impleaded in any such action,  proceeding or  investigation by any person (other
than as a result of a breach of the  Investor's  representations  and warranties
set forth in this  Agreement);  or (II) the  Investor  becomes  involved  in any
capacity in any action,  proceeding or investigation  brought by the SEC against
or  involving  the  Company  or  in  connection  with  or  as a  result  of  the
consummation of the  transactions  contemplated  by the Equity Line  Transaction
Documents (other than as a result of a breach of the Investor's  representations
and warranties set forth in this Agreement), or if this Investor is impleaded in
any such action,  proceeding or  investigation  by any person,  then in any such
case, the Company will reimburse the Investor for its reasonable legal and other
expenses  (including the cost of any investigation and preparation)  incurred in
connection  therewith,  as such expenses are incurred.  In addition,  other than
with respect to any matter in which the  Investor is a named party,  the Company
will pay to the Investor the charges, as reasonably  determined by the Investor,
for the time of any officers or  employees of the Investor  devoted to appearing
and preparing to appear as  witnesses,  assisting in  preparation  for hearings,
trials or pretrial  matters,  or otherwise  with respect to inquiries,  hearing,
trials, and other proceedings  relating to the subject matter of this Agreement.
The  reimbursement  obligations  of the Company  under this section  shall be in
addition to any  liability  which the Company may otherwise  have,  shall extend
upon the same terms and  conditions  to any  affiliates of the Investor that are
actually  named in such  action,  proceeding  or  investigation,  and  partners,
directors, agents, employees, attorneys,  accountants,  auditors and controlling
persons (if any),  as the case may be, of Investor and any such  affiliate,  and
shall be binding upon and inure to the benefit of any successors of the Company,
the Investor and any such affiliate and any such person.

(M) TRANSFER AGENT. Upon effectiveness of the Registration Statement, and for so
long as the  Registration  Statement is  effective,  the Company  shall  deliver
instructions  to its transfer  agent to issue  Shares to the  Investor  that are
covered for resale by the Registration Statement free of restrictive legends.

(N)  ACKNOWLEDGEMENT OF TERMS. The Company hereby represents and warrants to the
Investor  that:  (i) it is  voluntarily  entering into this Agreement of its own
freewill,  (ii) it is not entering this Agreement under economic  duress,  (iii)
the terms of this Agreement are reasonable and fair to the Company, and (iv) the
Company  has had  independent  legal  counsel of its own  choosing  review  this
Agreement,  advise the Company with respect to this Agreement, and represent the
Company in connection with this Agreement.

                                       21
<PAGE>
SECTION 6. INTENTIONALLY OMITTED

SECTION 7. CONDITIONS OF THE COMPANY'S OBLIGATION TO SELL.

The obligation  hereunder of the Company to issue and sell the Securities to the
Investor is further subject to the satisfaction, at or before each Closing Date,
of each of the following  conditions set forth below.  These  conditions are for
the  Company's  sole benefit and may be waived by the Company at any time in its
sole discretion.

(A) The Investor shall have executed this Agreement and the Registration  Rights
Agreement and delivered the same to the Company.

(B) The Investor  shall have delivered to the Company the Purchase Price for the
Securities being purchased by the Investor between the end of the Pricing Period
and the Closing Date via a Put Settlement  Sheet (hereto attached as Exhibit D).
After receipt of  confirmation  of delivery of such  Securities to the Investor,
the Investor,  by wire transfer of immediately  available  funds pursuant to the
wire instructions  provided by the Company will disburse the funds  constituting
the Purchase Amount.

(C) No statute, rule, regulation,  executive order, decree, ruling or injunction
shall  have been  enacted,  entered,  promulgated  or  endorsed  by any court or
governmental   authority  of  competent   jurisdiction   which   prohibits   the
consummation of any of the transactions contemplated by this Agreement.

SECTION 8. FURTHER CONDITIONS OF THE INVESTOR'S OBLIGATION TO PURCHASE.

The  obligation of the Investor  hereunder to purchase  Shares is subject to the
satisfaction,  on or  before  each  Closing  Date,  of  each  of  the  following
conditions set forth below.

(A) The Company  shall have executed the Equity Line  Transaction  Documents and
delivered the same to the Investor.

(B) The Common Stock shall be authorized  for quotation on the Principal  Market
and trading in the Common Stock shall not have been  suspended by the  Principal
Market or the SEC,  at any time  beginning  on the date  hereof and  through and
including the respective  Closing Date  (excluding  suspensions of not more than
one (1)  Trading Day  resulting  from  business  announcements  by the  Company,
provided that such suspensions occur prior to the Company's  delivery of the Put
Notice related to such Closing).

(C) The  representations and warranties of the Company shall be true and correct
as of the date when made and as of the applicable Closing Date as though made at
that time and the Company shall have performed,  satisfied and complied with the

                                       22
<PAGE>
covenants,  agreements  and conditions  required by the Equity Line  Transaction
Documents  to be  performed,  satisfied  or  complied  with by the Company on or
before such Closing Date.  The Investor may request an update as of such Closing
Date regarding the representation contained in Section 4(C) above.

(D)  The  Company  shall  have  executed  and  delivered  to  the  Investor  the
certificates  representing,  or have executed electronic book-entry transfer of,
the  Securities  (in such  denominations  as the Investor  shall  request) being
purchased by the Investor at such Closing.

(E) The  Board of  Directors  of the  Company  shall  have  adopted  resolutions
consistent with Section 4(B)(II) above (the  "Resolutions") and such Resolutions
shall not have been amended or rescinded prior to such Closing Date.

(F) Reserved

(G) No statute, rule, regulation,  executive order, decree, ruling or injunction
shall  have been  enacted,  entered,  promulgated  or  endorsed  by any court or
governmental   authority  of  competent   jurisdiction   which   prohibits   the
consummation of any of the transactions contemplated by this Agreement.

(H) The  Registration  Statement  shall be effective on each Closing Date and no
stop order suspending the  effectiveness of the Registration  statement shall be
in  effect  or to the  Company's  knowledge  shall  be  pending  or  threatened.
Furthermore, on each Closing Date (I) neither the Company nor the Investor shall
have  received  notice  that the SEC has issued or intends to issue a stop order
with  respect  to such  Registration  Statement  or that the SEC  otherwise  has
suspended or withdrawn the effectiveness of such Registration Statement,  either
temporarily  or  permanently,  or intends or has threatened to do so (unless the
SEC's concerns have been addressed and Investor is reasonably satisfied that the
SEC no longer is considering or intends to take such action),  and (II) no other
suspension of the use or withdrawal of the  effectiveness  of such  Registration
Statement or related prospectus shall exist.

(I)  At  the  time  of  each  Closing,  the  Registration  Statement  (including
information or documents  incorporated by reference  therein) and any amendments
or supplements thereto shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the  statements  therein  not  misleading  or which  would  require  public
disclosure or an update supplement to the prospectus.

(J) If  applicable,  the  shareholders  of the Company  shall have  approved the
issuance  of any  Shares in excess  of the  Maximum  Common  Stock  Issuance  in
accordance  with Section  2(H) or the Company  shall have  obtained  appropriate
approval pursuant to the requirements of Delaware law and the Company's Articles
of Incorporation and By-laws.

                                       23
<PAGE>
(K) The  conditions  to such  Closing set forth in Section  2(E) shall have been
satisfied on or before such Closing Date.

(L) The Company  shall have  certified  to the  Investor the number of Shares of
Common  Stock  outstanding  when a Put  Notice  is  given to the  Investor.  The
Company's  delivery of a Put Notice to the Investor  constitutes  the  Company's
certification of the existence of the necessary number of shares of Common Stock
reserved for issuance.

SECTION 9. TERMINATION. This Agreement shall terminate upon any of the following
events:

     (I) when the Investor has purchased an aggregate of Fifty  Million  dollars
($50,000,000) in the Common Stock of the Company pursuant to this Agreement; or,

     (II) on the date which is thirty-six  (36) months after the Effective Date;
or,

     (III)  upon  written  notice of the  Company to the  Investor.  Any and all
shares,  or penalties,  if any, due under this  Agreement  shall be  immediately
payable and due upon termination of the Line.

SECTION 10.  SUSPENSION

This Agreement  shall be suspended upon any of the following  events,  and shall
remain suspended until such event is rectified:

     (I) the trading of the Common Stock is suspended by the SEC, the  Principal
Market or the NASD for a period of two (2)  consecutive  Trading Days during the
Open Period; or,

     (II) The Common Stock ceases to be registered  under the 1934 Act or listed
or traded on the Principal Market. Immediately upon the occurrence of one of the
above-described  events,  the Company shall send written notice of such event to
the Investor.

SECTION 11. INDEMNIFICATION.

In consideration of the parties mutual  obligations set forth in the Transaction
Documents, each of the parties (in such capacity, an "Indemnitor") shall defend,
protect,  indemnify  and hold  harmless  the other and all of the other  party's
shareholders,  officers,  directors,  employees, counsel, and direct or indirect
investors  and any of the  foregoing  person's  agents or other  representatives
(including,   without   limitation,   those  retained  in  connection  with  the
transactions contemplated by this Agreement)  (collectively,  the "Indemnitees")
from and against any and all actions,  causes of action, suits, claims,  losses,

                                       24
<PAGE>
costs,  penalties,  fees,  liabilities and damages,  and reasonable  expenses in
connection therewith  (irrespective of whether any such Indemnitee is a party to
the  action  for which  indemnification  hereunder  is  sought),  and  including
reasonable  attorneys' fees and disbursements  (the "Indemnified  Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (I)
any  misrepresentation  or breach of any  representation or warranty made by the
Indemnitor or any other certificate,  instrument or document contemplated hereby
or thereby;  (II) any breach of any  covenant,  agreement or  obligation  of the
Indemnitor  contained  in the Equity  Line  Transaction  Documents  or any other
certificate, instrument or document contemplated hereby or thereby; or (III) any
cause of action,  suit or claim  brought or made  against such  Indemnitee  by a
third  party and  arising  out of or  resulting  from the  execution,  delivery,
performance or enforcement of the Equity Line Transaction Documents or any other
certificate,  instrument  or document  contemplated  hereby or  thereby,  except
insofar as any such misrepresentation,  breach or any untrue statement,  alleged
untrue  statement,  omission or alleged omission is made in reliance upon and in
conformity  with  information  furnished  to  Indemnitor  which is  specifically
intended  for  use  in  the  preparation  of any  such  Registration  Statement,
preliminary  prospectus,  prospectus  or amendments  to the  prospectus.  To the
extent that the foregoing undertaking by the Indemnitor may be unenforceable for
any reason,  the Indemnitor  shall make the maximum  contribution to the payment
and  satisfaction  of each of the Indemnified  Liabilities  which is permissible
under  applicable  law. The indemnity  provisions  contained  herein shall be in
addition to any cause of action or similar  rights  Indemnitor may have, and any
liabilities the Indemnitor or the Indemnitees may be subject to.

SECTION 12. GOVERNING LAW; DISPUTES SUBMITTED TO ARBITRATION.

All disputes  arising under this agreement  shall be governed by and interpreted
in accordance with the laws of the Commonwealth of Massachusetts, without regard
to principles of conflict of laws. The parties to this agreement will submit all
disputes  arising under this agreement to  arbitration in Boston,  Massachusetts
before a single arbitrator of the American Arbitration  Association ("AAA"). The
arbitrator  shall be  selected  by  application  of the rules of the AAA,  or by
mutual  agreement  of the  parties,  except  that  such  arbitrator  shall be an
attorney admitted to practice law in the Commonwealth of Massachusetts. No party
to this  agreement  will  challenge  the  jurisdiction  or venue  provisions  as
provided  in this  section.  No  party  to this  agreement  will  challenge  the
jurisdiction or venue provisions as provided in this section.  Nothing contained
herein shall prevent the party from obtaining an injunction.

(B) LEGAL FEES;  AND  MISCELLANEOUS  FEES.  Except as otherwise set forth in the
Equity Line Transaction Documents, each party shall pay the fees and expenses of
its advisers,  counsel, the accountants and other experts, if any, and all other
expenses  incurred  by such  party  incident  to the  negotiation,  preparation,
execution,  delivery and performance of this Agreement.  Any attorneys' fees and
expenses  incurred by either the Company or the Investor in connection  with the

                                       25
<PAGE>
preparation,  negotiation,  execution  and  delivery of any  amendments  to this
Agreement or relating to the  enforcement of the rights of any party,  after the
occurrence of any breach of the terms of this  Agreement by another party or any
default by another party in respect of the transactions  contemplated hereunder,
shall be paid on  demand  by the  party  which  breached  the  Agreement  and/or
defaulted,  as the case may be. The Company  shall pay all stamp and other taxes
and duties levied in connection with the issuance of any Securities.

(C)  COUNTERPARTS.  This  Agreement  may be  executed  in two or more  identical
counterparts,  all of which shall be considered  one and the same  agreement and
shall  become  effective  when  counterparts  have been signed by each party and
delivered  to the other  party;  provided  that a facsimile  signature  shall be
considered  due execution  and shall be binding upon the signatory  thereto with
the same force and effect as if the signature were an original signature.

(D)  HEADINGS;   SINGULAR/PLURAL.   The  headings  of  this  Agreement  are  for
convenience   of   reference   and  shall  not  form  part  of,  or  affect  the
interpretation  of,  this  Agreement.  Whenever  required by the context of this
Agreement, the singular shall include the plural and masculine shall include the
feminine.

(E)  SEVERABILITY.  If any  provision  of this  Agreement  shall be  invalid  or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction  or the  validity  or  enforceability  of  any  provision  of  this
Agreement in any other jurisdiction.

(F) ENTIRE AGREEMENT;  AMENDMENTS. This Agreement is the FINAL AGREEMENT between
the Company and the Investor with respect to the terms and  conditions set forth
herein,  and, the terms of this Agreement may not be contradicted by evidence of
prior,  contemporaneous,  or  subsequent  oral  agreements  of the  Parties.  No
provision  of this  Agreement  may be  amended  other than by an  instrument  in
writing signed by the Company and the Investor,  and no provision  hereof may be
waived other than by an instrument  in writing  signed by the party against whom
enforcement is sought. The execution and delivery of the Equity Line Transaction
Documents shall not alter the force and effect of any other  agreements  between
the Parties, and the obligations under those agreements.

(G)  NOTICES.  Any notices or other  communications  required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been  delivered  (I) upon receipt,  when  delivered  personally;  (II) upon
receipt,  when sent by  facsimile  (provided  confirmation  of  transmission  is
mechanically or electronically generated and kept on file by the sending party);
or (III)  one (1) day  after  deposit  with a  nationally  recognized  overnight
delivery  service,  in each case properly  addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:

                                       26
<PAGE>
IF TO THE COMPANY:

DOMARK INTERNATIONAL, INC.
1809 East Broadway #125
Oviedo, FL 32765
Telephone: (757)-572-9241

IF TO THE INVESTOR:

Dutchess Private Equities Fund, Ltd.,
50 Commonwealth Avenue, Suite 2
Boston, MA 02116
Telephone: 617-301-4700
Facsimile: 617-249-0947

Each party shall provide five (5) days prior  written  notice to the other party
of any change in address or facsimile number.

(H) NO ASSIGNMENT. This Agreement may not be assigned.

(I) NO THIRD PARTY BENEFICIARIES.  This Agreement is intended for the benefit of
the parties  hereto and is not for the benefit of, nor may any provision  hereof
be enforced by, any other person,  except that the Company acknowledges that the
rights of the Investor may be enforced by its general partner.

(J) SURVIVAL. The representations and warranties of the Company and the Investor
contained  in  Sections  2 and 3, the  agreements  and  covenants  set  forth in
Sections 4 and 5, and the  indemnification  provisions  set forth in Section 11,
shall survive each of the Closings and the termination of this Agreement.

(K)  PUBLICITY.  The Company and the Investor  shall  consult with each other in
issuing any press releases or otherwise making public statements with respect to
the  transactions  contemplated  hereby and no party  shall issue any such press
release or otherwise make any such public statement without the prior consent of
the other party,  which consent shall not be  unreasonably  withheld or delayed,
except that no prior consent shall be required if such disclosure is required by
law, in which such case the disclosing  party shall provide the other party with
prior  notice of such  public  statement.  Notwithstanding  the  foregoing,  the
Company shall not publicly  disclose the name of the Investor  without the prior
consent of the  Investor,  except to the extent  required by law.  The  Investor
acknowledges  that this Agreement and all or part of the Equity Line Transaction
Documents  may be deemed to be "material  contracts"  as that term is defined by
Item  601(b)(10)  of  Regulation  S-B,  and that the  Company may  therefore  be
required  to  file  such  documents  as  exhibits  to  reports  or  registration

                                       27
<PAGE>
statements filed under the 1933 Act or the 1934 Act. The Investor further agrees
that the status of such documents and materials as material  contracts  shall be
determined solely by the Company, in consultation with its counsel.

(L) FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and
performed,  all such further acts and things,  and shall execute and deliver all
such other  agreements,  certificates,  instruments and documents,  as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

(M) PLACEMENT  AGENT. The Company agrees to pay a registered  broker dealer,  to
act as placement  agent,  if so required by the S.E.C.,  a percentage of the Put
Amount on each draw toward the fee as outlined in the Placement Agent Agreement.
The Investor  shall have no obligation  with respect to any fees or with respect
to any claims made by or on behalf of other  persons or  entities  for fees of a
type  contemplated  in this  Section  that  may be due in  connection  with  the
transactions  contemplated by the Equity Line Transaction Documents. The Company
shall  indemnify  and hold  harmless the Investor,  their  employees,  officers,
directors,  agents,  and partners,  and their  respective  affiliates,  from and
against all claims,  losses,  damages, costs (including the costs of preparation
and  attorney's  fees) and  expenses  incurred in respect of any such claimed or
existing fees, as such fees and expenses are incurred.

(N) NO STRICT  CONSTRUCTION.  The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,  and no
rules of strict  construction  will be applied against any party, as the parties
mutually  agree  that each has had a full and fair  opportunity  to review  this
Agreement and seek the advice of counsel on it.

(O) REMEDIES.  The Investor shall have all rights and remedies set forth in this
Agreement  and the  Registration  Rights  Agreement  and all rights and remedies
which such holders  have been  granted at any time under any other  agreement or
contract and all of the rights which the Investor has by law. Any person  having
any rights under any  provision of this  Agreement  shall be entitled to enforce
such rights specifically (without posting a bond or other security),  to recover
damages by reason of any default or breach of any  provision of this  Agreement,
including the recovery of reasonable  attorneys fees and costs,  and to exercise
all other rights granted by law.

(P)  PAYMENT  SET  ASIDE.  To the  extent  that the  Company  makes a payment or
payments to the Investor hereunder or under the Registration Rights Agreement or
the Investor enforces or exercises its rights hereunder or thereunder,  and such
payment or payments or the proceeds of such  enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside,  recovered from, disgorged by or are required to be refunded,  repaid
or otherwise  restored to the Company,  a trustee,  receiver or any other person

                                       28
<PAGE>
under any law  (including,  without  limitation,  any  bankruptcy  law, state or
federal law, common law or equitable cause of action), then to the extent of any
such  restoration  the  obligation  or part  thereof  originally  intended to be
satisfied  shall be revived  and  continued  in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.

(Q) PRICING OF COMMON STOCK.  For purposes of this  Agreement,  the bid price of
the Common Stock shall be as reported on Bloomberg.

SECTION 13. NON-DISCLOSURE OF NON-PUBLIC INFORMATION.

(a) The Company shall not disclose non-public  information to the Investor,  its
advisors, or its representatives.

(b) Nothing herein shall require the Company to disclose non-public  information
to the Investor or its advisors or  representatives,  and the Company represents
that it  does  not  disseminate  non-public  information  to any  investors  who
purchase  stock in the  Company in a public  offering,  to money  managers or to
securities analysts,  provided, however, that notwithstanding anything herein to
the contrary, the Company will, as hereinabove provided,  immediately notify the
advisors and representatives of the Investor and, if any,  underwriters,  of any
event or the existence of any  circumstance  (without any obligation to disclose
the specific  event or  circumstance)  of which it becomes  aware,  constituting
non-public  information (whether or not requested of the Company specifically or
generally  during  the course of due  diligence  by such  persons or  entities),
which, if not disclosed in the prospectus included in the Registration Statement
would  cause such  prospectus  to include a material  misstatement  or to omit a
material  fact  required to be stated  therein in order to make the  statements,
therein,  in light of the circumstances in which they were made, not misleading.
Nothing  contained  in this  Section  13 shall be  construed  to mean  that such
persons or entities other than the Investor  (without the written consent of the
Investor  prior to disclosure  of such  information)  may not obtain  non-public
information  in the course of conducting  due  diligence in accordance  with the
terms of this  Agreement  and nothing  herein shall  prevent any such persons or
entities  from  notifying  the Company of their  opinion  that based on such due
diligence by such persons or entities,  that the Registration Statement contains
an untrue  statement of material  fact or omits a material  fact  required to be
stated  in the  Registration  Statement  or  necessary  to make  the  statements
contained  therein,  in light of the  circumstances in which they were made, not
misleading.

ARTICLE 14 ACKNOWLEDGEMENTS OF THE PARTIES.

Notwithstanding  anything in this Agreement to the contrary,  the parties hereto
hereby  acknowledge  and  agree  to the  following:  (i) the  Investor  makes no
representations  or  covenants  that  it  will  not  engage  in  trading  in the
securities  of the  Company,  other  than the  Investor  will not sell short the
Company's  common  stock at any time  during  this  Agreement;  (ii) the Company
shall,  by 8:30 a.m.  Boston Time on the trading day  following the date hereof,

                                       29
<PAGE>
file a  current  report  on  Form  8-K  disclosing  the  material  terms  of the
transactions  contemplated  hereby  and in the  other  Equity  Line  Transaction
Documents;  (iii) the Company has not and shall not provide material  non-public
information  to the  Investor  unless  prior  thereto  the  Investor  shall have
executed  a written  agreement  regarding  the  confidentiality  and use of such
information;  and (iv) the Company  understands  and confirms  that the Investor
will be relying on the  acknowledgements  set forth in clauses (i) through (iii)
above if the Investor effects any transactions in the securities of the Company.

                                       30
<PAGE>
SIGNATURE PAGE OF INVESTMENT AGREEMENT

Your  signature on this  Signature  Page evidences your agreement to be bound by
the terms and conditions of the Investment Agreement and the Registration Rights
Agreement as of the date first written above.

The undersigned  signatory hereby certifies that he has read and understands the
Investment  Agreement,  and the representations  made by the undersigned in this
Investment Agreement are true and accurate, and agrees to be bound by its terms.

DUTCHESS PRIVATE EQUITIES FUND, LTD.

By: /s/ Douglas H. Leighton
   ------------------------------------
   Douglas H. Leighton, Director

DOMARK INTERNATIONAL, INC.

By: /s/ R. Thomas Kidd
   ------------------------------------
   R. Thomas Kidd, CEO

                                       31
<PAGE>
LIST OF EXHIBITS

EXHIBIT  A Registration  Rights  Agreement
EXHIBIT  B Opinion  of  Company's  Counsel
EXHIBIT  C Put  Notice
EXHIBIT  D Put  Settlement  Sheet

                                       32
<PAGE>
LIST OF SCHEDULES

SCHEDULE 4(A) SUBSIDIARIES

                                       33
<PAGE>
EXHIBIT A

                                       34
<PAGE>
EXHIBIT B

FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
                                                                Date: __________
[TRANSFER AGENT]

     Re: Domark International, Inc.

Ladies and Gentlemen:

     We are counsel to Domark  International,  Inc., a Nevada  corporation  (the
"Company"),  and have  represented  the Company in connection  with that certain
Investment Agreement (the "Investment  Agreement") entered into by and among the
Company and  _________________________  (the  "Investor")  pursuant to which the
Company  has  agreed to issue to the  Investor  shares of the  Company's  common
stock,  $.001  par  value  per  share  (the  "Common  Stock")  on the  terms and
conditions  set forth in the  Investment  Agreement.  Pursuant to the Investment
Agreement,  the Company also has entered into a  Registration  Rights  Agreement
with the Investor (the "Registration  Rights  Agreement")  pursuant to which the
Company agreed,  among other things, to register the Registrable  Securities (as
defined in the Registration  Rights  Agreement),  including the shares of Common
Stock issued or issuable under the Investment Agreement under the Securities Act
of 1933,  as  amended  (the  "1933  Act").  In  connection  with  the  Company's
obligations under the Registration Rights Agreement,  on ____________ ___, 2006,
the  Company  filed  a   Registration   Statement  on  Form  S-  ___  (File  No.
333-________)  (the  "Registration  Statement") with the Securities and Exchange
Commission (the "SEC") relating to the  Registrable  Securities  which names the
Investor as a selling shareholder thereunder.

     In connection with the foregoing, we advise you that [a member of the SEC's
staff has advised us by  telephone  that the SEC has entered an order  declaring
the Registration  Statement  effective] [the  Registration  Statement has become
effective] under the 1933 Act at [enter the time of effectiveness] on [enter the
date of  effectiveness]  and to the  best  of our  knowledge,  after  telephonic
inquiry  of  a  member  of  the  SEC's  staff,  no  stop  order  suspending  its
effectiveness  has been issued and no  proceedings  for that purpose are pending
before,  or threatened by, the SEC and the Registrable  Securities are available
for resale under the 1933 Act pursuant to the Registration Statement.

                                             Very truly yours,

                                             [Company Counsel]

                                       35
<PAGE>
EXHIBIT C

Date:

RE: Put Notice Number __

Dear Mr. Leighton,

*    This is to inform you that as of today, Domark International, Inc, a Nevada
     corporation (the  "Company"),  hereby elects to exercise its right pursuant
     to the Investment Agreement to require Dutchess Private Equities Fund, Ltd.
     to purchase shares of its common stock. The Company hereby certifies that:

The amount of this put is $__________.

The Pricing Period runs from ________ until _______.

The current number of shares issued and outstanding as of the Company are:

[GRAPHIC OMITTED]

The number of shares currently available for issuance on the SB-2 for the Equity
Line are:

                _______________________________________________

Regards,

----------------------------------------------
R. Thomas Kidd, CEO Domark International, Inc.

                                       36
<PAGE>
EXHIBIT D
PUT SETTLEMENT SHEET

Date:

Dear Mr. Kidd,

Pursuant to the Put given by Domark  International,  Inc.,  to Dutchess  Private
Equities Fund, Ltd. on _________________  200_, we are now submitting the amount
of common shares for you to issue to Dutchess.

Please have a certificate  bearing no  restrictive  legend  totaling  __________
shares issued to Dutchess Private  Equities Fund, Ltd.  immediately and send via
DWAC to the following account:

XXXXXX

If not DWAC eligible, please send FedEx Priority Overnight to:

XXXXXX

Once  these  shares  are  received  by us, we will  have the funds  wired to the
Company.

Regards,

Douglas H. Leighton

                                       37
<PAGE>
DATE. . . . . . . . . . . . . . . . . . . . .  PRICE

Date of Day 1 . . . . . . . . . . . . . . . .  Closing VWAP of Day 1
Date of Day 2 . . . . . . . . . . . . . . . .  Closing VWAP of Day 2
Date of Day 3 . . . . . . . . . . . . . . . .  Closing VWAP of Day 3
Date of Day 4 . . . . . . . . . . . . . . . .  Closing VWAP of Day 4
Date of Day 5 . . . . . . . . . . . . . . . .  Closing VWAP of Day 5

LOWEST VOLUME WEIGHTED AVERAGE PRICE (VWAP) IN PRICING PERIOD

                                             ------------

PUT AMOUNT
                                             ------------

AMOUNT WIRED TO COMPANY
                                             ------------

PURCHASE PRICE (93)% (NINETY-THREE PERCENT))
                                             ------------

AMOUNT OF SHARES DUE
                                             ------------

The undersigned has completed this Put as of this ___th day of _________, 200_.

DOMARK INTERNATIONAL, INC.

------------------------------

R. THOMAS KIDD, CEO

                                       38
<PAGE>
SCHEDULE 4(C) CAPITALIZATION

As set forth in paragraph 4(c)

                                       39
<PAGE>
SCHEDULE 4(E) CONFLICTS

                                       40
<PAGE>
SCHEDULE 4(G) MATERIAL CHANGES

                                       41
<PAGE>
SCHEDULE 4(H) LITIGATION

                                       42
<PAGE>
SCHEDULE 4(L) INTELLECTUAL PROPERTY

No exceptions

                                       43
<PAGE>
SCHEDULE 4(N) LIENS

                                       44
<PAGE>
SCHEDULE 4(T) CERTAIN TRANSACTIONS

                                       45

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