AMENDED AND RESTATED SECURED SUPER-PRIORITY DEBTOR IN POSSESSION CREDIT AGREEMENT

 

Exhibit 10.56(a)

AMENDED AND RESTATED SECURED SUPER-PRIORITY

DEBTOR IN POSSESSION CREDIT AGREEMENT

DATED AS OF APRIL 1, 2009

among

FRONTIER AIRLINES HOLDINGS, INC.,

a Debtor and Debtor in Possession,

as a Borrower,

FRONTIER AIRLINES, INC.,

a Debtor and Debtor in Possession,

as a Borrower,

LYNX AVIATION, INC.,

a Debtor and Debtor in Possession,

as a Borrower,

THE LENDERS SIGNATORY HERETO FROM TIME TO TIME,

as Lenders,

and

WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION

as Administrative Agent

 

 

TABLE OF CONTENTS

 

 

 

 

 

 

INDEX OF APPENDICES

 

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

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

1.   AMOUNT AND TERMS OF CREDIT

 

1.1   Credit Facilities .

 

     (a)   Loan .

 

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

 

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

 

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

 

1.2   Prepayments .

 

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

 

     (b)   Mandatory Prepayments .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.3   Priority and Application of Payments .

 

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

 

1.4   Use of Proceeds .

 

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

 

1.5   Interest and Applicable Margins .

 

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

 

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

 

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

 

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

 

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

 

1.6 Commitmemt Fees .

                      

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

 

1.7   Receipt of Payments .

 

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

 

1.8   Loan Account and Accounting .

 

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

 

1.9   Indemnity .

 

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

 

1.10   Access .

 

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

 

1.11   Taxes .

 

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

 

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

 

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

 

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

 

1.12   Capital Adequacy; Increased Costs; Illegality .

 

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

 

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

 

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

 

 

2.   CONDITIONS PRECEDENT

2.1   Conditions Precedent to Effectiveness .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3.   REPRESENTATIONS AND WARRANTIES

 

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

 

3.1   Corporate Existence; Compliance with Law .

 

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

 

3.2   Executive Offices, Collateral Locations, FEIN .

 

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

 

3.3   Corporate Power, Authorization, Enforceable Obligations .

 

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

 

3.4   Financial Statements, Projections and Reports .

 

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

 

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

 

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

 

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

 

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

 

3.5   Material Adverse Effect; Burdensome Restrictions; Default .

 

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

 

3.6   Ownership of Property; Real Estate; Liens .

 

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

 

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

 

3.7   Labor Matters .

 

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

 

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

 

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

 

3.9   Government Regulation .

 

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

 

3.10   Margin Regulations .

 

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

 

3.11   Taxes .

 

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

 

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

 

3.12   ERISA .

 

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

 

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

 

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

 

3.13   No Litigation .

 

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

 

3.14   Intellectual Property .

 

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

 

3.15   Full Disclosure .

 

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

 

3.16   Environmental Matters .

 

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

 

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

 

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

 

3.17   Insurance .

 

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

 

3.18   Use of Proceeds .

 

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

 

3.19   Deposit .

 

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

 

3.20   Compliance With Industry Standards .

 

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

 

3.21   Secured, Super-Priority Obligations .

 

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

 

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

 

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

 

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

 

3.22   Certificated Air Carrier .

 

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

 

3.23   Slots and Gate Interests .

 

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

 

3.24   Section 1110 Assets .

 

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

 

3.25   Patriot Act .

 

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

 

3.26   Cross Collateralization .

 

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

 

4.   FINANCIAL STATEMENTS AND INFORMATION

 

4.1   Reports and Notices .

 

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

 

4.2   Communication with Accountants .

 

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

 

5.   AFFIRMATIVE COVENANTS

 

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

 

5.1   Maintenance of Existence and Conduct of Business .

 

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

 

5.2   Payment of Taxes .

 

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

 

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

 

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

 

5.3   Books and Records .

 

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

 

5.4   Insurance .

 

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

 

5.5   Compliance with Laws .

 

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

 

5.6   Intellectual Property .

 

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

 

5.7   Environmental Matters .

 

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

 

5.8   Further Assurances .

 

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

 

5.9   Additional Collateral Documents .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.10   [Intentionally Omitted] .

 

5.11   Slot Utilization .

 

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

 

5.12   ERISA/Labor Matters .

 

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

 

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

 

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

 

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

 

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

 

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

 

5.13   Maintenance of Liens and Collateral .

 

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

 

5.14   Use of Proceeds .

 

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

 

5.15   Cash Management Systems .

 

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

 

5.16   Access .

 

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

 

6.   NEGATIVE COVENANTS

 

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

 

6.1   Mergers .

 

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

 

6.2   Investments .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6.3   Indebtedness .

 

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

 

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

 

           (ii)   the Loans and the other Obligations;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

           (xi)   Indebtedness secured solely by the Subject Aircraft;

 

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

 

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

 

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

 

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

 

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

 

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

 

6.4   Affiliate Transactions .

 

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

 

6.5   Capital Structure and Business .

 

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

 

6.6   Guaranteed Indebtedness .

 

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

 

6.7   Liens .

 

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

     (a)   Permitted Encumbrances;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6.8   Sale of Stock and Assets .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6.9   Financial Covenants .

 

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

 

6.10   Hazardous Materials .

 

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

 

6.11   Sale-Leasebacks .

 

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

 

6.12   Restricted Payments .

 

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

 

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

 

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

 

6.14   Limitation on Negative Pledge Clauses .

 

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

 

6.15   No Speculative Transactions .

 

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

 

6.16   Real Estate Purchases and Leases .

 

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

 

6.17   Subsidiaries .

 

No Borrower shall organize or invest in any new Subsidiary.

 

6.18   Material Contracts .

 

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

 

7.   TERM

 

7.1   Termination .

 

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

 

7.2   Survival of Obligations Upon Termination of Financing Arrangements .

 

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

 

8.   EVENTS OF DEFAULT; RIGHTS AND REMEDIES

 

8.1   Events of Default .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

     (h)   Any Change of Control occurs.

 

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

 

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

 

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

 

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

 

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

 

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

 

8.2   Remedies .

 

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

 

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

 

8.3   Waivers by Borrowers .

 

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

 

8.4   Liquidation Budget .

 

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

 

 

 

9.   JOINT AND SEVERAL LIABILITY

 

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

 

10.   SECURITY

 

10.1   Security .

 

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

 

           (i)   all Accounts;

 

           (ii)   all Chattel Paper;

 

           (iii)   all Documents;

 

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

 

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

 

           (vi)   all Instruments;

 

           (vii)   all Investment Property;

 

           (viii)   all Vehicles;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10.2   Perfection of Security Interests .

 

     (a)   At any time and from time to time, upon the reasonable request of the Administrative Agent and at the sole expense of the Borrowers, the Borrowers shall promptly and duly execute and deliver any and all such further instruments and documents and take such further actions as the Administrative Agent may deem desirable to obtain the full benefits of any security interest granted or purported to be granted by such Borrower hereunder and of the rights and powers herein granted, including (i) upon the reasonable request of the Administrative Agent, using its commercially reasonable efforts to secure all consents and approvals necessary or appropriate for the assignment to or for the benefit of the Administrative Agent of any License or Contract held by such Borrower and to enforce the security interests granted hereunder, (ii) unless Administrative Agent shall otherwise consent in writing (which consent may be revoked), delivering to Administrative Agent all Collateral consisting of negotiable Documents and certificated securities (in each case, accompanied by stock powers, allonges or other instruments of transfer executed in blank) promptly after such Borrower receives the same, (iii) delivering any requested Chattel Paper or Instrument to Administrative Agent (in each case accompanied by instruments of transfer executed in blank), (iv) to the extent required by this Agreement and not waived by Administrative Agent in writing (which waiver may be revoked) obtaining authenticated Control Agreements from each issuer of uncertificated securities, securities intermediary, or commodities intermediary issuing or holding any financial assets or commodities, in each case constituting Collateral, to or for any Borrower; provided, that the Administrative Agent shall not deliver a notice that it is exercising exclusive control over any financial assets or commodities to any such issuer, securities intermediary or commodities intermediary unless an Event of Default has occurred and is continuing, (v) in accordance with and to the extent required by Annex B to this Agreement, obtaining a blocked account or similar agreement with each bank or