Frontier Airlines 2004 Annual Report Download - page 16

The initial term of the code - share agreement is until May 31, 2016. At the end of the term, Delta has the right to extend the agreement for an additional five years on the same terms and
conditions. If either we or Chautauqua enter into a merger where we are not the surviving entity or the ultimate beneficial ownership of the surviving entity following a merger is not substantially
similar (i.e., at least 75% common ownership) to the ultimate beneficial ownership of us or Chautauqua prior to the merger (which we refer to as a merger), or if a party acquires more than 49%
of our voting power or outstanding common stock or that of Chautauqua (with limited exceptions) (which we refer to as a change in control), Delta shall have the right to extend the term of the
code- share agreement for an additional ten years beyond the applicable termination date of the agreement.
The agreement may be subject to early termination under various circumstances including:
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if either Delta or we file for bankruptcy, reorganization or similar action (or if any such action is imminent) or if either Delta or we make an assignment for the benefit of creditors;
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if either Delta or we commit a material breach of the code - share agreement, subject to 30 days notice and cure rights; or
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upon the occurrence of an event of force majeure that continues for a period of two or more consecutive months, subject to 30 days prior written notice to the party affected by the
force majeure event.
In addition, Delta may immediately terminate the code - share agreement upon the occurrence of one or more of the following events:
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if there is a change in control of us or Chautauqua;
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if there is a merger involving us or Chautauqua;
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if Delta is unsatisfied with the product quality we are providing 30 days after it has supplied us written notice of its dissatisfaction and has proposed remedial measures;
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if we fail to maintain a specified completion rate with respect to the flights we operate for Delta during a specified period; or
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if our level of safety is not reasonably satisfactory to Delta, subject to 30 days notice and cure period.
In addition, Delta may terminate the code - share agreement at any time, with or without cause, if it provides us 180 days written notice, provided that such notice shall not be given prior
to November 2009. If Delta does choose to eliminate any aircraft at that time, it may not reduce the number of aircraft in service to less than 12 during the 12 - month period following the 180 day
initial notice period unless it completely terminates the agreement. We refer to this as Delta's partial termination right.
If Delta exercises its partial termination right or if we terminate the code - share agreement because of Delta's bankruptcy or insolvency, a breach of the agreement by Delta or because of
an event of force majeure has occurred that continues for at least two consecutive months, we may require Delta to either purchase or sublease any of the terminated aircraft we own at a
specified price or to assume the lease of any aircraft that we lease. If we choose not to exercise this "put" right upon any termination by Delta, Delta has the right to require us to sell or sublease
to them the terminated aircraft we own for a specified amount or to assume the leases of the terminated aircraft that we lease. Delta may also exercise this "call" right if it terminates the code -
share agreement for any of the reasons set forth above.
In general, we have agreed to indemnify Delta and Delta has agreed to indemnify us for any damages caused by any breaches of our respective obligations under the code - share
agreement or caused by our respective actions or inactions under the code - share agreement.
Pursuant to the agreement, Delta must give us notice if it changes the location of the hub from which we fly for them from Orlando and Fort Lauderdale to another location, except that
Delta cannot change the hub location to St. Louis, Memphis, Kansas City, Nashville or any other location within 50 statute miles of St. Louis, Missouri.
Subject to the right of first refusal that Chautauqua granted to American pursuant to its code - share agreement with them, should Chautauqua receive an offer, bid or other expression of
inquiry from a third party to purchase, lease, sublease, encumber or otherwise acquire any interest in, or to operate on behalf of a third party, any aircraft that it owns or leases, which we desire
to accept, Chautauqua has granted to Delta a right of first refusal to acquire the aircraft which Chautauqua desires to dispose of on the same terms as those offered to us by the third party.
At any time that Chautauqua enters into an agreement in principle with a third party for a code - share (or similar) relationship using ERJ - 135 or ERJ - 145 aircraft, other than certain
permitted amendments to our pre - existing code - share agreements, Chautauqua must offer Delta the right, on an all or nothing basis, to amend the code - share agreement to incorporate the terms
of the agreement with a third party. If Delta elects to incorporate the terms of the agreement with the third party, those terms will govern all of the aircraft covered by the code - share agreement.
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