-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OTbXwNKzAQWHAuZxrkqJjGOJqeWcCi6rcb4+Rj1hac2mcgYurEua7nUBLOVPGjIX c//0Av1uUz+BJqCYn6DVAw== 0000927356-97-001468.txt : 19971216 0000927356-97-001468.hdr.sgml : 19971216 ACCESSION NUMBER: 0000927356-97-001468 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971202 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971212 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRONTIER AIRLINES INC /CO/ CENTRAL INDEX KEY: 0000921929 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 841256945 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-24126 FILM NUMBER: 97737312 BUSINESS ADDRESS: STREET 1: 12015 EAST 46TH AVE CITY: DENVER STATE: CO ZIP: 80239 BUSINESS PHONE: 3033717400 8-K 1 FORM 8-K FOR FRONTIER AIRLINES, INC. 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 - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Colorado 0-24126 84-1256945 -------- ------- ---------- (State or other (Commission (I.R.S. Employer jurisdiction File Number) Identification No.) of incorporation) 12015 E. 46th Avenue, Denver, CO 80239 -------------------------------- ----- (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (303) 371-7400 -------------- Not Applicable -------------- (Former name or former address, if changed since last report) ITEM 5 OTHER EVENTS - ------ ------------ 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 - ------ ------------------------------------------------------------------ (c) Exhibits -------- 10.1 Senior Secured Promissory Note 10.2 General Security Agreement 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 ---------------------------------------- Arthur T. Voss, Vice President EX-10.1 2 SENIOR SECURED PROMISSORY NOTE 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 ------------------------ 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 ----- Management LLC, a Connecticut limited liability company, as Agent (the "Payee"), ----- 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 -------- 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 ----------------- 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 -------- 1 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 ----------- 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 -------- 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 --------- 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 -------- 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 ------------------------------ and warrants to the Payee as follows: 2 (a) Corporate Existence. The Payor is a corporation duly organized ------------------- 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 --------- 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 ---------------------------------------------- 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 --------- 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 3 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 -------------------- 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 ----------------- 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 ------ 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 ------- 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 4 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 ----------------------------------- 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 ------------------------------------------------ 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 5 AGREEMENT AND THE OTHER OPERATIVE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY. 13. Definitions. As used herein, the following terms shall have ----------- the following respective meanings: "Business Day" shall mean any day on which commercial banks are not ------------ authorized or required to close in New York City. "Dollars" and "$" shall mean lawful money of the United States of ------- - America. "Indemnitee" has the meaning specified in Paragraph 5 of this ---------- Promissory Note. "Letter Agreement" means the Letter Agreement of even date herewith ---------------- 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, ---- 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 ------------------- Promissory Note. "Person" shall mean any corporation, partnership, limited liability ------ company, association, individual or other juridical entity. "Property" shall mean any right or interest in or to property of any -------- kind whatsoever, whether real, personal or mixed and whether tangible or intangible. "Registration Rights Agreement" has the meaning specified in the ----------------------------- Security Agreement. "Security" has the meaning specified in the Security Agreement. -------- "Security Agreement" shall mean the General Security Agreement dated ------------------ as of the date hereof between the Payor and the Payee. "Taxes" has the meaning specified in Paragraph 5 of this Promissory ----- Note. "Warrant Agreement" has the meaning specified in the Letter Agreement. ----------------- "Warrant(s)" has the meaning specified in Paragraph 3 of this ---------- Promissory Note. 6 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: ------------------- 12015 East 46th Avenue Denver, CO 80239 Attention: Arthur T. Voss General Counsel Telephone No.: 303-371-7400 Telecopier No.: 303-371-9669 7 EX-10.2 3 GENERAL SECURITY AGREEMENT 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 - -------- -------- 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 ------------------- 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. 1 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 2 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, 3 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); 4 (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 5 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. 6 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:_________________________________ 7 -----END PRIVACY-ENHANCED MESSAGE-----