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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 2, 1997
FRONTIER AIRLINES, INC
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(Exact name of Registrant as specified in its charter)
Colorado 0-24126 84-1256945
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
12015 E. 46th Avenue, Denver, CO 80239
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (303) 371-7400
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5 OTHER EVENTS
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On December 2, 1997, Frontier Airlines, Inc. (the "Company") sold
$5,000,000 principal amount Senior Secured Note (the "Note") to
Wexford Management LLC ("Wexford"). The Note bears interest at a
rate of 10% per annum and is due in a single installment payment on
December 15, 2001. In connection with the sale of the Note, the
Company (a) entered into a General Security Agreement which granted
Wexford a security interest in all of the personal property and
fixtures of the Company; (b) granted Wexford the right to designate up
to two members to the Company's board of directors; (c) issued to
Wexford warrants to purchase 3 million shares of Common Stock of the
Company at a price of $3.00 per share and (d) agreed to grant certain
registration rights with respect to the securities sold to Wexford.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
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(c) Exhibits
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10.1 Senior Secured Promissory Note
10.2 General Security Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FRONTIER AIRLINES, INC.
Date: December 12, 1997 By: /s/ Arthur T. Voss
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Arthur T. Voss, Vice President
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EXHIBITS 10.1
SENIOR SECURED PROMISSORY NOTE
$5,000,000 December 2, 1997
New York, New York
1. Promise to Pay Principal. For value received, Frontier
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Airlines, Inc., a corporation organized under the laws of the State of Colorado
(the "Payor"), hereby unconditionally promises to pay to the order of Wexford
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Management LLC, a Connecticut limited liability company, as Agent (the "Payee"),
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the principal sum of FIVE MILLION DOLLARS in a single installment payable on
December 15, 2001.
2. Interest. The Payor hereby unconditionally promises to pay
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interest on the unpaid principal amount of this Promissory Note for the period
from and including the date hereof to but excluding the date that the principal
of this Promissory Note shall be paid in full, at a rate of 10% per annum.
Notwithstanding the foregoing, the Payor hereby unconditionally promises to pay
interest on any principal or interest payable under this Promissory Note that
shall not be paid in full when due, for the period from and including the due
date of such payment to but excluding the date the same is paid in full, at a
rate of 12% per annum. Accrued interest shall be payable quarterly in arrears
on the last Business Day of each of March, June, September and December of each
year commencing with the last Business Day of December, 1997 and upon the
payment or prepayment of any principal owing under this Promissory Note (but
only on the principal amount so paid or prepaid). Interest payable under this
Promissory Note shall be computed on the basis of a year of 360 days and actual
days elapsed (including the first day but excluding the last day) occurring in
the period for which payable.
3. Manner of Payment. All payments of principal and interest
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under this Promissory Note shall be made in Dollars, in immediately available
funds, to an account specified by the Payee, not later than 2:00 p.m. New York
time on the date on which such payment shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day). All amounts payable under this Promissory Note shall
be paid free and clear of, and without reduction by reason of, any Tax,
deduction, set-off or counter claim whatsoever. The Payee may at any time and
from time to time on five (5) Business Days' notice to the Payor tender the
unpaid principal amount of this Promissory Note (or any portion thereof)
together with accrued interest hereon in payment of the exercise price of the
warrants (the "Warrants") of the Payor on
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and subject to the terms and conditions of the Warrant Agreement (and prior to
the execution and delivery thereof, the Warrant Certificate of the Payor issued
this day to the Payee covering three million shares of common stock of the
Payor).
4. Prepayments. The Payor shall have the right to prepay all or
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any portion (in multiples of $500,000) of the principal amount owing under this
Promissory Note at any time or from time to time, provided that the Payor shall
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give the Payee five (5) Business Days' irrevocable notice of each such
prepayment (and, upon the prepayment date specified in any such notice, the
amount to be prepaid together with accrued interest thereon shall become due and
payable under this Promissory Note).
5. Indemnity. The Payor agrees to indemnify and hold Payee and
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each officer, director, employee, agent and member of Payee (each, an
"Indemnitee") harmless from and against, on an after-tax basis, all taxes,
duties, levies, imposts, fees, charges and withholdings of any nature, present
or future, now or hereafter imposed by any governmental authority or other
authority asserting the power to tax (collectively, "Taxes") on an Indemnitee,
Payor, the Security, this Promissory Note, the Warrants, the Security Agreement,
the Warrant Agreement, the Registration Rights Agreement, the Letter Agreement
(collectively, "Operative Documents") or the execution, delivery, filing or
recording of any thereof, the payments made pursuant to any Operative Document
or otherwise with respect to or by reason of the transactions contemplated by
the Operative Documents, other than any such Taxes imposed on an Indemnitee that
are net income, franchise, doing business or similar Taxes of such Indemnitee
imposed by jurisdictions in which such Indemnitee is subject to such Taxes by
reason of being organized in or conducting activities in such jurisdiction
(other than (in the case of any such Taxes other than net income taxes) any such
activities which are directly related to the making and performance of this
Promissory Note, the Security Agreement and the other Operative Documents).
6. Security. The principal of and interest on this Promissory
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Note and all other amounts payable hereunder are secured by the Security under,
as defined in, and on the terms and conditions of, the Security Agreement, and
this Promissory Note is entitled to the benefit of the Security Agreement.
Without limiting the generality of the foregoing, this Promissory Note may be
accelerated, and the principal of and interest on the loan evidenced hereby and
all other sums payable hereunder declared (or deemed declared) immediately due
and payable on the terms and conditions specified in the Security Agreement
whereupon the Payor shall pay the same and the Payee may exercise any and all
remedies provided therein or otherwise available to a secured creditor under
applicable law.
7. Representations and Warranties. The Payor hereby represents
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and warrants to the Payee as follows:
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(a) Corporate Existence. The Payor is a corporation duly organized
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and validly existing under the laws of the State of Colorado, has all requisite
corporate power, and has all material governmental licenses, authorizations,
consents and approvals, necessary to own its assets and carry on its business as
now being or as proposed to be conducted and is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified would not
have a material adverse effect on the Payor.
(b) No Breach. None of the execution and delivery of the Security
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Agreement, this Promissory Note, the Warrants, the consummation of the
transactions contemplated by the Operative Documents and compliance with the
terms and provisions hereof and thereof will (a) conflict with or result in a
breach of the articles of incorporation or by-laws of the Payor, or (b) conflict
with or result in a material breach of or require any consent under any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or any agreement or instrument to
which the Payor is a party or by which the Payor is bound or to which the Payor
is subject, or constitute a material default under, or result in the creation of
any Lien under (other than as contemplated by the Security Agreement), any such
agreement or instrument.
(c) Action; Execution and Delivery; Enforceability. The Payor has all
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necessary corporate power and authority to execute, deliver and perform its
obligations under this Promissory Note, the Warrants, the Security Agreement and
each other Operative Document, and execute, deliver and perform its obligations
under this Promissory Note, the Warrants, the Security Agreement and each other
Operative Document; the execution, delivery and performance by the Payor of this
Promissory Note, the Warrants, the Security Agreement and each other Operative
Document have been duly authorized by all necessary corporate action on its
part; and the Security Agreement, this Promissory Note and the Warrants issued
this day have each been duly and validly executed and delivered by the Payor and
constitutes its legal, valid and binding obligation, enforceable against the
Payor in accordance with its terms.
(d) Approvals. No authorizations, approvals or consents of, and no
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filings or registrations with, any governmental or regulatory authority or
agency are necessary for the borrowing of the loan evidenced by, and the
execution, delivery or performance by the Payor of, this Promissory Note, the
Warrants, the Security Agreement or any other Operative Document or for the
validity or enforceability thereof or hereof other than the filing of uniform
commercial code financing statements and recording of security documents to the
extent any of the collateral security constitutes fixtures or an interest in
real property to perfect the security interest created under the Security
Agreement and the filing of a registration statement
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with the U.S. Securities and Exchange Commission pursuant to the terms of the
Registration Rights Agreement.
(e) Financial Statements. The Payor has heretofore delivered to
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Wexford true and correct copies of its balance sheet and the related statements
of operations and cash flows (which statements are audited and include the
opinion thereon of KPMG Peat Marwick LLP) for the fiscal year ended March 31,
1997 and the unaudited balance sheet and related statements of operations and
cash flows of the Payor as of September 30, 1997. All such financial statements
present fairly, in all material respects, the financial condition of the Payor,
as at said dates and the results of its operations for the fiscal year and 6-
month period ended on said dates (subject, in the case of such financial
statements as of September 30, 1997, to normal year-end audit adjustments), all
in accordance with GAAP (except in the case of any unaudited statement and
summary, which are without footnotes and any cash flow statement) applied on a
consistent basis. There has been no material adverse change with respect to the
financial condition of the Payor since September 30, 1997.
8. Fees and Expenses. The Payor agrees to pay or reimburse the
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Payee for paying: (a) all costs and expenses of the Payee (including, without
limitation, reasonable counsels' fees and expenses) in connection with (i) the
preparation, negotiation, execution and delivery of this Promissory Note, the
Security Agreement and the other Operative Documents and the transactions
contemplated thereby up to a maximum amount of $100,000 and (ii) any default by
the Payor under the Promissory Note and any enforcement or collection
proceedings resulting therefrom; and (b) upon the execution and delivery of this
Promissory Note, a transaction fee in the amount of $100,000.
9. Waiver. No failure on the part of the Payee to exercise and
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no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under this Promissory Note shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
this Promissory Note preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein
and in the Security Agreement are cumulative and not exclusive of any remedies
provided by law.
10. Notices. All notices and other communications in respect of
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this Promissory Note or the other Operative Documents (including, without
limitation, any modifications of, or requests, waivers or consents under, this
Promissory Note or the other Operative Documents) shall be given or made in
writing (including, without limitation, by telecopy) (a) in the case of the
Payor, at the "Address for Notices" specified below its name on the signature
pages hereof and (b) in the case of the Payee, to Wexford Management LLC, 411
West Putnam Avenue, Greenwich, Connecticut 06830, Attn: Joseph Jacobs,
President, fax number: 203-863-7320, and Arthur Amron, General Counsel, fax
number: 203-862-7312, or at such other address for such purpose as shall
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have been most recently specified to the Payor by the Payee; or, as to either
the Payor or the Payee, at such other address as shall be designated by such
party in a notice to the other party. Except as otherwise provided in this
Promissory Note, all such communications shall be deemed to have been duly given
when transmitted by telecopier or personally delivered or, in the case of a
mailed notice, upon receipt, in each case given or addressed as aforesaid.
11. Amendments; Successors; Assignments. This Promissory Note
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may not be amended except by an instrument in writing signed by each of the
Payor and the Payee. This Promissory Note shall be binding upon and inure to
the benefit of the Payor and the Payee and their respective successors and
permitted assigns. The Payor shall not assign any of its rights or obligations
under this Promissory Note without the prior consent of the Payee. The Payee
may at any time and from time to time, without the consent of the Payor, assign
its rights under this Promissory Note to one or more Persons, and, upon the
Payee giving notice of such assignment to the Payor specifying the interest
hereunder being assigned and the Person to which such interest is being
assigned, each reference herein to the Payee shall (solely in respect of the
interest so assigned) constitute a reference to such assignee (as if such
assignee were named herein) rather than the Payee provided that any such
assignment to a Person not affiliated with Payee or to a fund not managed by
Payee shall be in a minimum amount of U.S. $1,000,000 (or if less, the then
unpaid principal amount of this Promissory Note) provided that such assignment
does not violate applicable securities laws. The Payee shall be entitled to
have this Promissory Note subdivided, by exchange of this Promissory Note for
promissory notes of lesser denominations or otherwise, to the extent necessary
to reflect any such assignment provided that such subdivision does not violate
applicable securities laws.
12. Governing Law; Submission to Jurisdiction; Venue. This
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Promissory Note shall be governed by, and construed in accordance with, the laws
of the State of New York. The Payor hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York County for the
purposes of all legal proceedings arising out of or relating to this Promissory
Note, the Warrants, the Security Agreement and the other Operative Documents or
the transactions contemplated hereby. The Payor irrevocably waives, to the
fullest extent permitted by applicable law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. EACH OF THE PAYOR AND THE PAYEE, BY ITS
ACCEPTANCE OF THE BENEFITS OF THIS PROMISSORY NOTE, HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS PROMISSORY NOTE,
THE WARRANTS, THE SECURITY
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AGREEMENT AND THE OTHER OPERATIVE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
13. Definitions. As used herein, the following terms shall have
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the following respective meanings:
"Business Day" shall mean any day on which commercial banks are not
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authorized or required to close in New York City.
"Dollars" and "$" shall mean lawful money of the United States of
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America.
"Indemnitee" has the meaning specified in Paragraph 5 of this
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Promissory Note.
"Letter Agreement" means the Letter Agreement of even date herewith
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between the Payor and the Payee relating to the transactions contemplated by the
Warrant Agreement and the Registration Rights Agreement.
"Lien" shall mean, with respect to any Property, any mortgage, lien,
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pledge, charge, security interest or encumbrance of any kind in respect of such
Property.
"Operative Documents" has the meaning specified in Paragraph 5 of this
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Promissory Note.
"Person" shall mean any corporation, partnership, limited liability
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company, association, individual or other juridical entity.
"Property" shall mean any right or interest in or to property of any
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kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Registration Rights Agreement" has the meaning specified in the
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Security Agreement.
"Security" has the meaning specified in the Security Agreement.
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"Security Agreement" shall mean the General Security Agreement dated
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as of the date hereof between the Payor and the Payee.
"Taxes" has the meaning specified in Paragraph 5 of this Promissory
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Note.
"Warrant Agreement" has the meaning specified in the Letter Agreement.
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"Warrant(s)" has the meaning specified in Paragraph 3 of this
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Promissory Note.
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In Witness whereof the Payor has executed and delivered this Promissory
Note to the Payee at the place and on the date set forth above.
FRONTIER AIRLINES, INC.
By______________________________
Name: Samuel D. Addoms
Title: President
Address for Notices:
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12015 East 46th Avenue
Denver, CO 80239
Attention: Arthur T. Voss
General Counsel
Telephone No.: 303-371-7400
Telecopier No.: 303-371-9669
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EXHIBIT 10.2
GENERAL SECURITY AGREEMENT
In consideration of one or more loans or other financial accommodation
made, issued, extended or otherwise held by WEXFORD MANAGEMENT LLC, a
Connecticut limited liability company, and/or any subsidiary or affiliate of, or
fund managed by, Wexford Management LLC, whether as agent or otherwise
(collectively, together with its and their respective successors and assigns,
"Wexford"), FRONTIER AIRLINES, INC., a Colorado corporation ("Frontier"), hereby
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agrees that Wexford shall have the rights, remedies and benefits hereinafter set
forth.
The term "Liabilities" shall include any and all indebtedness,
obligations and liabilities of any kind of Frontier to Wexford, now or hereafter
existing, arising directly between Frontier and Wexford or acquired outright,
conditionally or as collateral security from another by Wexford, absolute or
contingent, joint and/or several, secured or unsecured, due or not due,
contractual or tortious, liquidated or unliquidated, arising by operation of the
law or otherwise, direct or indirect, including, but without limiting the
generality of the foregoing, indebtedness of Frontier to Wexford evidenced by
the Senior Secured Promissory Note of Frontier of even date herewith in the
principal amount of $5,000,000 (the "Senior Secured Note") as well as all
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indebtedness, obligations or liabilities to Wexford of Frontier as a member of
any partnership, syndicate, association or other group, and whether incurred by
Frontier as principal, surety, indorser, guarantor, accommodation party or
otherwise. The term "Security" shall mean all personal property and fixtures of
Frontier whether now or hereafter existing or now owned or hereafter acquired
and wherever located, of every kind and description, tangible or intangible,
including, but not limited to, the balance of every deposit account of Frontier
and all money, goods, instruments, securities, documents, chattel paper,
accounts, contract rights, tradenames and marks (including, without limitation,
the name Frontier Airlines), Frontier's FAA operating certificate issued under
FAR Part 121 and its DOT Form 401, slots, routes, gates, licenses, permits, and
equipment of every type and description, general intangibles, credits, claims,
demands and any other property, rights and interests of Frontier (including,
without limitation, Frontier's leasehold interest in each of the Aircraft,
Engines and Parts identified on Schedule 1 hereto but excluding any property of
the type referred to on Schedule 1 hereto which Frontier is prohibited by law or
existing contract from encumbering or otherwise assigning which Schedule
Frontier hereby covenants to complete and deliver to Wexford on or before
December 10, 1997), and shall include the proceeds, products and accessions of
and to any thereof.
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As security for the payment and performance in full when due of all
the Liabilities, Frontier hereby grants to Wexford a security interest in, and a
general lien upon, the Security.
At any time and from time to time, upon the demand of Wexford,
Frontier will: (1) deliver and pledge to Wexford as security for the payment
and performance of the Liabilities, endorsed and/or accompanied by such
instruments of assignment and transfer in such form and substance as Wexford may
request, any and all instruments, documents and/or chattel paper as Wexford may
specify in its demand; (2) give, execute, deliver, file and/or record any
notice, statement, instrument, document, agreement or other papers that may be
necessary or desirable, or that Wexford may request, in order to create,
preserve, perfect, or validate any security interest granted pursuant hereto or,
following an Event of Default (as hereinafter defined) to enable Wexford to
exercise and enforce its rights hereunder or with respect to such security
interest; (3) keep and stamp or otherwise mark any and all documents and chattel
paper and its individual books and records relating to inventory, accounts and
contract rights in such manner as Wexford may require; and (4) permit
representatives of Wexford at any time following reasonable advance notice to
Frontier to inspect and make abstracts from Frontier's books and records
pertaining to accounts, contract rights, chattel paper, instruments and
documents. The right is expressly granted to Wexford, at its discretion, to
file one or more financing statements under the Uniform Commercial Code naming
Frontier as debtor and Wexford as secured party and indicating therein the types
or describing the items of Security herein specified. Without the prior written
consent of Wexford, and except for dispositions made and security interests
granted in either case in the ordinary course of its business over Security
having a fair market value of less than $750,000 in the aggregate or, with
respect to any single transaction, $150,000, Frontier will not (i) file or
authorize or permit to be filed in any jurisdiction any such financing or like
statement in which Wexford is not named as the sole secured party or (ii)
dispose of, or grant a security interest in, any of the Security other than a
disposition of current assets in the ordinary course of its business to meet
current liabilities. With respect to the Security, or any part thereof, which at
any time shall come into the possession or custody or under the control of
Wexford or any of its agents, associates or correspondents following the
occurrence and continuance of an Event of Default, the right is expressly
granted to Wexford, at its discretion, to transfer to or register in the name of
itself or its nominee any of the Security, and whether or not so trans ferred
or registered, to receive the income and dividends thereon, including stock
dividends and rights to subscribe, and to hold the same as a part of the
Security and/or apply the same as hereinafter provided; to exchange any of the
Security for other property upon the reorganization, recapitalization or other
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readjustment and in connection therewith to deposit any of the Security with any
committee or depositary upon such terms as it may determine; to vote the
Security so transferred or registered and to exercise or cause its nominee to
exercise all or any powers with respect thereto with the same force and effect
as an absolute owner thereof; all without notice and without liability except to
account for property actually received by it. Upon the occurrence and
continuance of an Event of Default, Wexford shall be deemed to have possession
of any of the Security in transit to or set apart for it or any of its agents,
associates or correspondents.
Upon the occurrence and continuance of an Event of Default, Wexford at
its discretion may, in its name or in the name of Frontier or otherwise, demand,
sue for, collect or receive any money or property at any time payable or
receivable on account of or in exchange for, or make any compromise or
settlement deemed desirable with respect to, any of the Security, but shall be
under no obligation so to do. Wexford may extend the time of payment, arrange
for payment in installments, or otherwise modify the terms of, or release, any
of the Security, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of, Frontier. Wexford shall not be required
to take any steps necessary to preserve any rights against prior parties to any
of the Security. Upon the occurrence of an Event of Default, Frontier shall, at
the request of Wexford, assemble the Security at such place or places as Wexford
designates in its request, and Wexford shall have the rights and remedies with
respect to the Security of a secured party under the New York Uniform Commercial
Code (whether or not the Code is in effect in the jurisdiction where the rights
and remedies are asserted). In addition, with respect to the Security, or any
part thereof, which shall then be or shall thereafter come into the possession
or custody of Wexford or any of its agents, associates or correspondents,
Wexford may upon the acceleration or deemed acceleration of the Liabilities in
whole or in part, sell or cause to be sold in the Borough of Manhattan, New York
City, or elsewhere, in one or more sales or parcels, at such price as Wexford
may deem best, and for cash or on credit or for future delivery, without
assumption of any credit risk, all or any of the Security, at any broker's board
or at public or private sale, without demand of performance or notice of inten
tion to sell or of time or place of sale (except such notice as is required by
applicable statute and cannot be waived), and Wexford or anyone else may be the
purchaser of any or all of the Security so sold and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
equity of redemption, of Frontier, any such demand, notice or right and equity
being hereby expressly waived and released. Frontier will pay to Wexford all
expenses (including expense for legal services of every kind) of, or incidental
to, the enforcement of any of the provisions hereof or of any of the
Liabilities, or any actual or attempted sale, or any exchange, enforcement,
collection,
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compromise or settlement of any of the Security or receipt of the proceeds
thereof, and for the care of the Security and defending or asserting the rights
and claims of Wexford in respect thereof, by litigation or otherwise, including
expense of insurance; and all such expenses shall be indebtedness within the
terms of this agreement. Wexford, at any time, at its option, may apply the net
cash receipts from the Security to the payment of principal of and/or interest
on any of the Liabilities, whether or not then due. Notwithstanding that
Wexford, whether in its own behalf and/or in behalf of another or others, may
continue to hold Security and regardless of the value thereof, Frontier shall be
and remain liable for the payment in full, principal and interest, of any
balance of the Liabilities and expenses at any time unpaid.
Each of the following events shall constitute an "Event of Default",
whether any such event shall be voluntary or in voluntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any administra
tive or governmental body:
(a) Frontier shall fail to pay when due the outstanding principal
balance of the Senior Secured Note (or any other promissory note
hereinafter issued by Frontier to Wexford); or
(b) Frontier shall fail to pay interest under the Senior Secured Note
(or any other promissory note hereinafter issued by Frontier to Wexford)
for a period of five days after the same shall become due and payable; or
(c) Any representation, warranty or certification made by Frontier
herein or in the Senior Secured Note (or any other promissory note
hereinafter issued by Frontier to Wexford) or in any other Operative
Document (as defined in the Senior Secured Note) or in any other agreement
now or hereafter in effect between Frontier and Wexford shall prove to have
been incorrect in any material respect when made or deemed made; or
(d) Frontier shall fail to perform or observe any term, covenant or
agreement set forth herein, in the Senior Secured Note (or any other
promissory note hereinafter issued by Frontier to Wexford) or any other
Operative Document or in any other agreement now or hereafter in effect
between Frontier and Wexford, and such failure shall remain unremedied for
a period of 10 days after written notice of such failure shall have been
given to Frontier by Wexford (or such longer period, if any, as may be
applicable and provided for in such other Operative Document);
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(e) Frontier shall default in the payment when due (after taking into
account applicable grace periods) of any principal of or interest or
premium on any of its unsecured or secured indebtedness (including
capitalized lease obligations) or lease obligations relating to aircraft or
aircraft engines or parts, or any payment default that permits (or other
defaults that result in) the acceleration of the maturity of any such
indebtedness or obligation, aggregating in the case of all such
indebtedness and obligations not paid or permitted to be or actually
accelerated taken as a whole, equal to or exceeding $500,000; or
(f) Any final judgment or judgments for the payment of money shall be
entered against Frontier or any of its subsidiaries in an aggregate
uninsured amount (including deductibles and/or retentions) equal to or
exceeding $1,000,000 which have not been bonded, stayed pending appeal or
otherwise or satisfied for a period of 60 days or more; or
(g) If an order for relief shall be entered in respect of Frontier by
a court having jurisdiction in the premises in an involuntary case under
the Federal bankruptcy laws as now or hereafter in effect; or if Frontier
shall consent to the appointment of a custodian, receiver, trustee or
liquidator of itself or of a substantial part of its property; or if
Frontier is not paying, or shall admit in writing its inability to pay, its
debts generally as they come due or shall make a general assignment for the
benefit of creditors; or if Frontier shall file, or its Board of Directors
shall direct the filing of a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization in a proceeding
under any bankruptcy laws (as now or hereafter in effect) or an answer
admitting the material allegations of a petition filed against the frontier
in any such proceeding; or if Frontier shall file, or its Board of
Directors shall direct Frontier to seek relief by voluntary petition,
answer or consent, under the provisions of any other or future bankruptcy
or other similar law providing for the reorganization or winding-up of
corporations or providing for a financial accommodation, composition,
extension or adjustment with its creditors generally; or
(h) If an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of Frontier, a
custodian, receiver, trustee, or liquidator of Frontier or of any
substantial part of its property, or sequestering any substantial part of
the property of Frontier, or granting any other similar relief in respect
of Frontier under the Federal bankruptcy laws or other insolvency laws, and
any such order, judgment or
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decree or appointment or sequestration shall remain in force unstayed,
undismissed or unvacated for a period of 90 days after the date of its
entry; or
(i) If a petition against Frontier in a proceeding under the Federal
bankruptcy laws or other insolvency laws (as now or hereafter in effect)
shall be filed and shall not be withdrawn or dismissed within 90 days, or
if, under the provisions of any law providing for reorganization or
winding-up of corporations that may apply to Frontier, any court of
competent jurisdiction shall assume custody or control of Frontier or of
any substantial part of its prop erty and such custody or control shall
remain in force unrelinquished or unterminated for a period of 90 days; or
Without limiting any other provision of this Agreement, upon the
occurrence and continuance of an Event of Default, Wexford may forthwith
accelerate the Senior Secured Note (and any other promissory note hereinafter
issued by Frontier to Wexford), and upon the occurrence of any Event of Default
referred to in clause (g), (h) or (i) above, the Senior Secured Note (and any
such other promissory note) shall automatically and without further act be
accelerated, and in each and every such case, the principal of and accrued
interest thereon and all other sums payable thereunder or under any other
Operative Document shall thereupon be and become forthwith due and payable, and
Frontier shall immediately pay the same without further notice, demand or
presentment, all of which are hereby waived, and Wexford shall be entitled to
exercise any and all of its rights and remedies hereunder (including, without
limitation, all rights and remedies of a secured creditor under the New York
Uniform Commercial Code) or as may otherwise be available to Wexford under
applicable law.
Wexford may assign, transfer and/or deliver to any transferee of any
of the Liabilities any or all of the Security, and thereafter shall be fully
discharged from all responsibility with respect to the Security so assigned,
transferred and/or delivered. Such transferee shall be vested with all the
powers and rights of Wexford hereunder with respect to such Security, but
Wexford shall retain all rights and powers hereby given with respect to any of
the Security not so assigned or transferred. No delay on the part of Wexford in
exercising any power or right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise of any power or right hereunder preclude
other or further exercise thereof or the exercise of any other power or right.
The rights, remedies and benefits herein expressly specified are cumulative and
not exclusive of any rights, remedies or benefits which Wexford may otherwise
have. Frontier hereby waives presentment, notice of dishonor and protest of all
instruments included in or evidencing the Liabilities or the Security and
(except as otherwise expressly provided herein) any and all other notices and
demands whatsoever, whether or not relating to such instruments.
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This Agreement, including the Schedule attached hereto, the Senior
Secured Note, the Warrants, the Warrant Agreement, the Registration Right
Agreement, and the Letter Agreement constitute the entire contract between the
parties hereto relating to the subject matter hereof as of the date hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof, including without limitation, the
Original Commitment Letter which other than the Sections therein entitled
"Expenses", "Confidentiality" and "Exclusivity" and as otherwise specifically
incorporated by reference herein shall be of no further force and effect.
No provision of this Agreement shall be modified or limited except by
a written instrument signed by Wexford and Frontier and expressly referring
hereto and to the provision so modified or limited. This Agreement shall be
binding upon the assigns or successors of the parties hereto; and shall be
construed according to the laws of the State of New York. Unless the context
otherwise requires, all terms used herein which are defined in the New York
Uniform Commercial Code shall have the meanings therein stated. The provisions
of Section 12 of the Senior Secured Note are hereby incorporated herein by
reference. This Agreement may be executed in counterparts, each of which shall
be deemed an original and all of which shall constitute a single agreement.
New York, December 2, 1997
In Witness whereof, Frontier and Wexford have executed and delivered this
General Security Agreement at the place and on the date set forth above.
FRONTIER AIRLINES, INC.
By:_______________________________________
Name: Samuel D. Addoms
Title: President
WEXFORD MANAGEMENT LLC
By:_______________________________________
Name:__________________________________
Title:_________________________________
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