Spirit Aviation Holdings - Chapter 11 DIP Terms

DIP Terms

Borrower(s) / Guarantor(s)

• Spirit Airlines, LLC, as Borrower
• Each of the other Debtors, including Spirit Aviation Holdings, Inc., Spirit Finance Cayman 1 Ltd., Spirit Finance Cayman 2 Ltd., Spirit IP Cayman Ltd., and Spirit Loyalty Cayman Ltd., as Guarantors on a joint and several basis

Agent / Lender(s)

• Wilmington Trust, National Association, as DIP Facility Agent (administrative agent and collateral agent)
• Barclays Bank, PLC, as Fronting Lender
• The lenders party thereto, as DIP Lenders (with the Fronting Lender included in the definition of DIP Lenders so long as it is a holder of New Money DIP Loans)

DIP Commitments

• Up to $1.225 billion multi-draw senior secured non-amortizing superpriority priming DIP facility comprising:
  • Up to $475 million in new money term loans, available in four draws:
    • $200 million Initial Draw made available on an interim basis through the Fronting Lender (the "Interim New Money DIP Loans")
    • The undrawn portion (the "Final New Money DIP Loans") available upon entry of the Final Order in three separate draws (the Second, Third, and Fourth Draws), subject to satisfaction of the conditions set forth in the DIP Documents
  • Roll-up of Prepetition Secured Notes Obligations (principal plus accrued and unpaid pre- and postpetition interest, to the extent permitted under section 506(b)) validly tendered in the DIP Syndication, deemed exchanged for term loans on the following ratios to New Money DIP Loans actually funded:
    • Interim Roll-Up: 2:1 to Interim New Money DIP Loans (the "Interim Roll-Up DIP Loans")
    • Second Draw: 2:1 to Final New Money DIP Loans
    • Incremental Second Draw (an additional $25 million or $75 million, as applicable, included within the $475 million aggregate new money amount): 1:1
    • Third Draw: 1.25:1
    • Fourth Draw: 1.25:1
  • The aggregate Roll-Up DIP Loans are capped at the lesser of (i) the total Prepetition Secured Notes P&I Obligations validly tendered in the DIP Syndication and (ii) $750 million

Cash Collateral

• All of the Debtors' cash, wherever located and held, including cash in deposit accounts, that constitutes "cash collateral" of the Secured Parties or DIP Secured Parties within the meaning of section 363(a) of the Bankruptcy Code
• The DIP Lenders have consented to the Debtors' use of Cash Collateral on a consensual basis (to the extent not constituting Revolving Priority Collateral) solely to make payments set forth in the Initial Wind-Down Budget, in accordance with the Approved Wind-Down Budget and the DIP Documents
• Use of Revolving Priority Collateral proceeds requires written agreement with the RCF Administrative Agent (acting at the direction of the requisite RCF Lenders)

Interest Rate

• New Money DIP Loans:
  • Term SOFR + 8.00%, or
  • Base Rate + 7.00%
  • SOFR Floor: 3.0% per annum
• Roll-Up DIP Loans: 0.00% per annum; provided that, if the Prepetition Secured Notes Obligations are determined to be oversecured under section 506(b) of the Bankruptcy Code, the Roll-Up DIP Loans shall instead bear interest retroactively from the applicable borrowing date at the rate applicable to the New Money DIP Loans
• Default Rate Increase: 2.00%

Fees

• Fees applicable to the New Money DIP Loans:
  • Original Issue Discount (OID): 3.00% of the New Money DIP Loans
  • Backstop Premium: 9.00%, payable in kind, on the New Money DIP Loans as such loans are funded
• Payment of all fees payable under the DIP Documents
• Reimbursement, on a joint and several basis, of reasonable and documented fees and out-of-pocket costs and expenses (whether prepetition or postpetition) of:
  • The DIP Facility Agent, including counsel fees of Seward & Kissel LLP
  • The Fronting Lender, including counsel fees of Dentons US LLP
  • The Ad Hoc Committee of Secured Noteholders, including the fees of its advisors

Maturity

• The earliest to occur of:
  • Scheduled Maturity Date: July 14, 2026
  • Substantial consummation of a chapter 11 plan
  • Consummation of a sale of the Debtors' assets pursuant to section 363 of the Bankruptcy Code
  • Dismissal of the Chapter 11 Cases or conversion of any of the Chapter 11 Cases to chapter 7, or appointment of a chapter 11 trustee
• DIP Termination Events include the occurrence of an Event of Default, a material breach of the Final DIP Order (a 'Final DIP Order Breach'), or the occurrence of the Maturity Date, in each case unless waived in writing by, or subject to a written forbearance by, the DIP Facility Agent (at the direction of the Required DIP Lenders)
• Following a DIP Termination Event, the DIP Facility Agent, the Secured Notes Trustee, and (solely in the event of a Final DIP Order Breach adversely impacting the RCF Secured Parties) the RCF Agents may exercise remedies upon at least seven business days' advance written notice (the 'Notice Period'); DIP Secured Parties and Secured Notes Parties may not exercise remedies against Revolving Priority Collateral until the Prepetition RCF Obligations and RCF Adequate Protection Obligations are paid in full

Carve Out

• Professional Fee Carve Out comprising:
  • Pre-Carve Out Notice Amount: all unpaid U.S. Trustee fees under 28 U.S.C. § 1930(a) plus statutory interest, up to $200,000 in fees and expenses of a chapter 7 trustee, and Allowed Professional Fees of Debtor and Committee Professionals accrued prior to delivery of the Carve Out Trigger Notice
  • Post-Carve Out Notice Amount: up to $18 million for Allowed Professional Fees incurred after delivery of the Carve Out Trigger Notice (plus any success or transaction fees payable to the Debtors' or Creditors' Committee's investment banker or financial advisor)
  • RCF Professional Fee Carve Out Cap: $5 million
• Administrative Claim Carve Out (A) Cap: $150 million, covering amounts deposited into the Utility Deposit Account, the PFC Account, trust fund taxes, and payroll and related withholdings
• Administrative Claim Carve Out (B) Cap: $80 million, covering payroll-related liabilities and amounts that would give rise to personal liability for the Debtors' directors, officers, executives, or other employees with managerial responsibility
• The Debtors' filing of the Wind-Down Motion constitutes delivery of the Carve Out Trigger Notice

Use of Proceeds

• Pay fees and interest under the DIP Facility
• Provide working capital for, and other general corporate purposes of, the Debtors
• Fund the Carve Out
• Pay Adequate Protection Obligations
• Permit the orderly continuation and wind-down of the Debtors' businesses, including funding payroll and other expenses necessary to preserve value during the liquidation process in accordance with the Wind-Down Budget
• Maintain business relationships with vendors, suppliers, customers, and other parties
• Pay the costs of administering the Chapter 11 Cases
• Continued use of Unencumbered Funds and up to $120 million of Encumbered Cash in the Specified Encumbered Accounts prior to the Satisfaction of Replenishment Obligations is also authorized

Credit Bid

• The Collateral Agent, at the direction of the Required DIP Lenders, is authorized to credit bid all or any portion of the Obligations (either directly or through one or more acquisition vehicles), and to purchase all or any portion of the Collateral, at any sale conducted under the Bankruptcy Code (including sections 363, 1123, or 1129) or any other foreclosure or acceptance of collateral in lieu of debt
• Obligations owed to the applicable Secured Parties shall be credit bid on a ratable basis among the DIP Lenders in accordance with the lien priorities set forth in the DIP Orders

Avoidance Actions

• Upon entry of the Final Order, DIP Liens are granted on the proceeds of avoidance actions ("Avoidance Proceeds")
• Avoidance Proceeds (other than "Excluded Avoidance Proceeds" arising from a Challenge to any Secured Notes, Prepetition Secured Notes Liens, and/or Prepetition Secured Notes Obligations) shall not be used to satisfy any Roll-Up DIP Obligations
• Excluded Avoidance Proceeds constitute DIP Collateral subject to DIP Liens securing both the New Money DIP Loans and Roll-Up DIP Loans, are available to satisfy all DIP Obligations, and are not subject to marshaling
• The DIP Facility Agent shall first seek satisfaction of the DIP Obligations from DIP Collateral other than Avoidance Proceeds (excluding Excluded Avoidance Proceeds) and proceeds of commercial tort claims

Challenge Period and Budget

• Challenge Deadline is the earlier of:
  • The date of entry of an order confirming a chapter 11 plan
  • For the Creditors' Committee: 75 days after entry of the Second Interim Adequate Protection Order
  • For other parties in interest: 79 days after the Petition Date
• If, prior to expiration of the Challenge Period, the cases are converted to chapter 7 or a chapter 11 trustee is appointed, the Challenge Period is extended for 60 days solely with respect to such trustee
• Challenge Budget: up to $200,000 in the aggregate of the Owned Aircraft Surplus, other DIP Collateral, Prepetition Collateral (including Cash Collateral), or the DIP Facility may be used by a chapter 11 or chapter 7 trustee or the Creditors' Committee solely to investigate (but not prosecute) Challenges with respect to the Prepetition Liens or Prepetition Secured Obligations (but not claims or liens of the DIP Secured Parties)
• The Creditors' Committee has agreed that $550 million in principal amount (plus interest, if any) of Roll-Up DIP Loans, comprising the $400 million Interim Roll-Up and $150 million of the Final Roll-Up, and the DIP Liens granted with respect thereto, are not subject to any Challenge

Securities and Priorities

• The DIP Facility Agent, for the benefit of the DIP Secured Parties, is granted automatically perfected DIP Liens on all DIP Collateral, including, upon entry of the Final Order, Avoidance Proceeds, subject and subordinate to the Carve Out, Permitted Liens, the Secured Notes Cash Collateral Adequate Protection Liens (until the Satisfaction of Replenishment Obligations), and, with respect to Revolving Priority Collateral, the prepetition and postpetition liens and security interests of the RCF Secured Parties securing the Prepetition RCF Obligations and the RCF Adequate Protection Obligations, with the following priorities:
  • First priority senior liens under section 364(c)(2) on all unencumbered DIP Collateral (other than Revolving Priority Collateral or collateral subject to valid, perfected, non-avoidable liens)
  • Junior liens under section 364(c)(3) on DIP Collateral constituting Revolving Priority Collateral or subject to Permitted Liens
  • Priming senior liens under section 364(d)(1) on the Prepetition Secured Notes Collateral
  • Junior liens on the Owned Aircraft Surplus until the Satisfaction of Replenishment Obligations, after which they convert to first priority senior liens on the Owned Aircraft Surplus
• DIP Obligations constitute allowed superpriority administrative expense claims under section 364(c)(1) against each of the Debtors' estates on a joint and several basis (the "DIP Superpriority Claims"), with priority over all other administrative expense claims and adequate protection claims, subject only to the Carve Out and the relative lien priorities set forth in Exhibit 1

Adequate Protection

Prepetition Secured Notes Parties

• Superpriority administrative expense claims under section 507(b) (the "Secured Notes Adequate Protection Claims") in the amount of any Diminution in Value, subject and subordinate to the Carve Out and the DIP Superpriority Claims, pari passu with the RCF Adequate Protection Claims, and senior to all other administrative expense claims
• Replacement and additional liens on the Owned Aircraft Surplus and DIP Collateral (the "Secured Notes Adequate Protection Liens"), subordinate to the Carve Out, the DIP Liens, the RCF Adequate Protection Liens and Prepetition RCF Liens (with respect to Revolving Priority Collateral), and the Secured Notes Permitted Liens
• Secured Notes Cash Collateral Adequate Protection Liens on the net proceeds of the refinancing, sale, or other disposition of the twenty aircraft held for sale identified in Exhibit 2 (the "Owned Aircraft"), after satisfaction in full of any Aircraft Debt secured by such Owned Aircraft
• The Debtors are no longer obligated to pay the Secured Notes Adequate Protection Professional Fees and Expenses except to the extent expressly provided for in the Approved Wind-Down Budget or as otherwise agreed by the Debtors and the Required DIP Lenders

RCF Secured Parties

• Superpriority administrative expense claims under section 507(b) (the "RCF Adequate Protection Claims") in the amount of any Diminution in Value, subject and subordinate to the Carve Out and the DIP Superpriority Claims, pari passu with the Secured Notes Adequate Protection Claims, and senior to all other administrative expense claims
• Replacement and additional liens (the 'RCF Adequate Protection Liens') consisting of (i) liens on all Spare Parts (the 'Spare Parts Collateral'), and (ii) in the amount of any Diminution in Value, liens on the Owned Aircraft Surplus (the 'RCF Secured Parties Cash Collateral Adequate Protection Liens') and all other DIP Collateral
• RCF Adequate Protection Liens on Revolving Priority Collateral are subordinate only to the Professional Fee Carve Out (up to the RCF Professional Fee Carve Out Cap) and the RCF Permitted Liens
• Reporting obligations to the RCF Administrative Agent and its advisors regarding the Debtors' general state of affairs and the Revolving Priority Collateral
• The Debtors are not obligated to pay any RCF Adequate Protection Professional Fees or other professional fees or costs of the RCF Advisors except to the extent paid from Revolving Priority Collateral or its proceeds
• The Debtors are no longer obligated to pay RCF Adequate Protection Payments except to the extent payable under section 506(b) and paid from Revolving Priority Collateral or its proceeds

Waivers

• Upon entry of the Final Order:
  • Section 506(c): No costs or expenses of administration of the Chapter 11 Cases shall be charged against the DIP Collateral, the Prepetition Collateral, the DIP Secured Parties, or the Secured Parties, except to the extent of the Carve Out
  • Section 552(b): The "equities of the case" exception shall not apply with respect to the proceeds, products, offspring, or profits of the Prepetition Collateral, including any Encumbered Cash held in the Encumbered Accounts
  • The equitable doctrine of "marshaling" (or any other similar doctrine) shall not apply to the DIP Collateral or Prepetition Collateral

Permitted Variance

• An unfavorable variance of cumulative operating cash receipts (excluding cash receipts from Specified HFS Aircraft Liquidity Transactions, Recapitalization Transactions, and other transactions described in Section 6.21) of not more than 15%, tested on a rolling four-week basis
• Permitted Wind-Down Variance: an unfavorable variance not in excess of 15% in the aggregate for any calendar month, as compared to the Approved Wind-Down Budget, with respect to Wind Down Costs (including Total Employee Related Disbursements, Total Aircraft Related Disbursements, Total Vendor Related Disbursements, Total Operational and Preservation Disbursements, Total Other Wind Down Disbursements, Professional Fees - Hourly/Monthly, and Professional Fees - IB Restructuring Fees)

HFS DIP Terms

Borrower(s) / Guarantor(s)

• Spirit Airlines, LLC, a Delaware limited liability company, as Borrower
• None, as Guarantors

Agent / Lender(s)

• Wilmington Trust, National Association, as Administrative Agent and Collateral Agent for the HFS DIP Facility
• Barclays Bank PLC, as Fronting Lender, through which the HFS DIP Commitments will be initially provided and funded
• The Fronting Lender (for so long as it holds HFS DIP Loans or HFS DIP Commitments) and the entities set forth in Schedule 1 to the HFS DIP Commitment Letter, as HFS DIP Lenders

DIP Commitments

• $275 million senior secured non-amortizing debtor-in-possession facility, comprising new money term loans
  • No HFS DIP Lender shall be obligated to make HFS DIP Loans in an amount in excess of its pro rata share of the Aggregate HFS DIP Commitment
  • If there is a borrowing of HFS DIP Loans within the first 30 days after the Closing Date, then any unfunded HFS DIP Commitments that remain in effect on the 30th day after the Closing Date shall automatically terminate
• Amounts repaid or prepaid under the facility may not be reborrowed

Interest Rate

• At the option of the Borrower:
  • Term SOFR for a one-month interest period plus 10.25%, or
  • Base Rate plus 9.25%
• Interest shall be (i) paid in-kind on the last day of each interest period applicable to such HFS DIP Loan and (ii) paid in cash on the Maturity Date or on the date on which such HFS DIP Loan is repaid
• Default Rate Increase: 2.00% per annum in excess of the interest rate set forth above, at the written election of the Required HFS DIP Lenders
• All interest and fees shall be calculated on the basis of a 360-day year for the actual number of days elapsed

Fees

• Put Option Premium: 8.00% of the aggregate principal amount of HFS DIP Commitments, earned by the HFS DIP Lenders upon execution of the HFS DIP Commitment Letter and payable in-kind on the first date on which HFS DIP Loans are borrowed
  • If any HFS Aircraft is sold by the Borrower prior to the funding of any HFS DIP Loans, the Put Option Premium shall be paid in cash from the cash proceeds of such sale, calculated after giving effect to the repayment of the Existing HFS Debt secured by such HFS Aircraft and prior to the application of any excess sale proceeds in accordance with the Wind-Down Plan
• Upfront Payment: 2.00% of all funded HFS DIP Loans, fully earned on the Closing Date and due and payable in cash as and when such HFS DIP Loans are funded
  • In lieu of payment in cash, at the election of the Required HFS DIP Lenders, the HFS DIP Loans may instead take the form of original issue discount
• Agency Fee, as set forth in the Agency Fee Letter between the HFS DIP Agent and the Borrower

Maturity

• The earliest to occur of:
  • The date that is twelve (12) months after the first date on which any HFS DIP Loans are borrowed
  • The date the Bankruptcy Court dismisses the Chapter 11 Cases or orders the conversion of the Chapter 11 Cases to a liquidation pursuant to chapter 7 of the Bankruptcy Code
  • The date of acceleration of all or any portion of the HFS DIP Loans after the occurrence of an Event of Default, by operation of law or otherwise
• Optional prepayments of the HFS DIP Loans shall not be permitted at any time

Use of Proceeds

• Repay outstanding indebtedness (including all accrued and unpaid interest thereon) under the bilateral mortgage facilities (the "Prepetition HFS Facilities") secured by the Aircraft identified on Exhibit A to the HFS Stalking Horse Agreement (the "Existing HFS Debt")
  • To the extent any Existing HFS Debt cannot be repaid substantially concurrently with the borrowing of the related HFS DIP Loans, the proceeds shall be held in a restricted securities account as cash collateral for the HFS DIP Obligations and shall not be used, withdrawn, transferred or otherwise applied for any purpose pending application of such proceeds to repay Existing HFS Debt
  • To the extent there is a legal bar to the repayment of any such Existing HFS Debt, the related HFS DIP Cash Collateral shall be applied to repay HFS DIP Loans as set forth in the HFS DIP Term Sheet
• Pay fees, costs (including breakage costs), and expenses related to the HFS DIP Facility and the repayment and/or termination of the Existing HFS Debt
• Any other use approved in writing by the Required HFS DIP Lenders
• No HFS DIP Collateral or proceeds of the HFS DIP Facility may be used by the Debtors or any other entity to investigate, challenge, object to or contest the validity, security, perfection, priority, extent or enforceability of any amount due under, or the liens or claims granted under or in connection with, the HFS DIP Facility

Credit Bid

• The HFS DIP Secured Parties irrevocably authorize the Collateral Agent (either directly or via one or more acquisition vehicles), at the direction of the Required HFS DIP Lenders, to credit bid all or any portion of the HFS DIP Obligations (including accepting some or all of the Collateral in satisfaction of the HFS DIP Obligations pursuant to a deed in lieu of foreclosure or otherwise) and, in such manner, purchase all or any portion of the Collateral:
  • At any sale conducted under the provisions of the Bankruptcy Code, including under sections 363, 1123 or 1129, or any similar laws in any other jurisdictions to which the Borrower is subject
  • At any other sale or foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Collateral Agent in accordance with any applicable law

Securities and Priorities

• Effective immediately upon repayment of the Existing HFS Debt, the HFS DIP Facility Agent, for the benefit of the HFS DIP Secured Parties, is granted valid, binding, enforceable, non-avoidable, and automatically and properly perfected liens and security interests (the "HFS DIP Liens") in all HFS DIP Collateral, with the following priorities:
  • Pursuant to section 364(c)(2) of the Bankruptcy Code, valid, binding, continuing, enforceable, fully perfected first priority senior security interests in and liens upon all HFS DIP Collateral
  • Pursuant to section 364(d)(1) of the Bankruptcy Code, valid, binding, continuing, enforceable, fully perfected priming senior security interests in and liens upon the HFS DIP Collateral, solely to the extent the HFS DIP Collateral is subject to any properly perfected, valid, enforceable and unavoidable liens other than those securing the Existing HFS Debt
  • Senior to all security interests in, liens on, or claims against any of the HFS DIP Collateral, including any lien or security interest that is avoided or preserved for the benefit of the Debtors and their estates under section 551 of the Bankruptcy Code
• HFS DIP Collateral consists of all assets of the Borrower that are collateral for any Existing HFS Debt as and when the proceeds of the HFS DIP Loans are applied to repay such Existing HFS Debt in full in cash
• Pursuant to section 364(c)(1) of the Bankruptcy Code, all HFS DIP Obligations shall constitute allowed superpriority administrative expense claims (the "HFS DIP Superpriority Claims"), with priority over any and all other administrative expense claims, adequate protection claims, and all other claims against the Debtors
  • The HFS DIP Superpriority Claims shall not be senior to the DIP Superpriority Claims, the Roll-Up Superpriority Claims, the Secured Notes Adequate Protection Claims and the RCF Adequate Protection Claims, in each case as defined in the Final DIP Order
  • The HFS DIP Liens securing the HFS DIP Superpriority Claims shall be senior in all respects with respect to the HFS DIP Collateral
• The HFS DIP Liens shall not be made pari passu with, or subordinated to, any other liens or security interests (whether currently existing or hereafter created)

Adequate Protection

• Under the Final DIP Order, the Secured Notes Parties and RCF Secured Parties were granted Adequate Protection Liens in the net proceeds of the refinancing, sale or other disposition of the HFS Aircraft after satisfaction in full of the Existing HFS Debt secured by such HFS Aircraft (the "Owned Aircraft Surplus"), junior only to the Carve Out and the DIP Liens (each as defined in the Final DIP Order)
• The proposed HFS DIP Facility does not alter the relative lien priorities set forth in Exhibit 1 of the Final DIP Order, and the Debtors submit that adequate protection considerations are not relevant to the relief sought
• The purpose of the HFS DIP Facility is to facilitate the HFS Aircraft sale process and maximize the net proceeds realized from such sales, which would benefit the holders of Adequate Protection Liens in such net proceeds
• Solely to the extent the HFS Aircraft remain subject to any valid, perfected, and non-avoidable liens following the repayment of the Existing HFS Debt, such liens will be subject and subordinate to the HFS DIP Liens. To the extent any such liens are determined to exist and approval of the HFS DIP Facility requires the Debtors to demonstrate that such liens are adequately protected, the Debtors anticipate demonstrating that adequate protection exists

Waivers

• Section 506(c): No costs or expenses of administration of the Chapter 11 Cases or any future proceeding shall be charged against or recovered from the HFS DIP Collateral, the HFS DIP Facility Agent, or the other HFS DIP Secured Parties pursuant to sections 506(c) or 105(a) of the Bankruptcy Code, or any similar principle of law or equity, without the prior written consent of the HFS DIP Facility Agent and the other HFS DIP Secured Parties
• Release: The Debtors and the Debtors' estates unconditionally, irrevocably, and fully forever release and discharge the HFS DIP Facility Agent, the HFS Fronting Lender, the other HFS DIP Secured Parties, and their related parties (the "Released Parties") from any and all claims, demands, liabilities, causes of action, and obligations existing on the date of the Order, including, without limitation:
  • Any so-called "lender liability" or equitable subordination claims or defenses
  • Any and all claims and causes of action arising under the Bankruptcy Code
  • Any and all claims and causes of action regarding the validity, priority, extent, enforceability, perfection, or avoidability of the liens or claims of the HFS DIP Facility Agent, the HFS Fronting Lender, and the other HFS DIP Secured Parties
• The release shall not release any claims or liabilities against a Released Party that a court of competent jurisdiction pursuant to a final, non-appealable order determines primarily result from the bad faith, fraud, gross negligence, or willful misconduct of such Released Party

HFS DIP Terms

Borrower(s) / Guarantor(s)

• Spirit Airlines, LLC, a Delaware limited liability company, as Borrower (in its capacity as a debtor and debtor in possession)
• None, as Guarantors
• The Chapter 11 Cases were filed by the Borrower, Spirit Aviation Holdings, Inc., and each subsidiary of the Borrower (collectively, the Debtors) in the United States Bankruptcy Court for the Southern District of New York on August 29, 2025

Agent / Lender(s)

• Wilmington Trust, National Association, as Administrative Agent and Collateral Agent (the HFS DIP Facility Agent)
• The financial institutions party thereto (the HFS DIP Commitment Parties), together with the other lenders under the facility, as HFS DIP Lenders, comprising:
  • Arena Capital Advisors, LLC; Ares Management LLC; Citadel Credit Master Fund LLC; Cyrus Capital Partners, L.P.; Empyrean Investments, LLC; Kore Advisors LP; and Philosophy Capital Management LLC, as Commitment Parties
• Barclays Bank PLC, as Fronting Lender
• Counsel:
  • Akin Gump Strauss Hauer & Feld LLP, as counsel to the HFS DIP Lenders
  • Seward & Kissel LLP, as counsel to the HFS DIP Facility Agent
  • Dentons US LLP, as counsel to the Fronting Lender

DIP Commitments

• $275,000,000 aggregate principal amount senior secured, non-amortizing debtor in possession term loan facility, comprising new money term loans
  • Available to be drawn in multiple drawings during the Availability Period
  • Backstopped by the Commitment Parties on a several and not joint basis
  • Initially provided and funded through Barclays Bank PLC, as Fronting Lender, which will subsequently assign the funded loans to the Commitment Parties following each borrowing
• If a borrowing of HFS DIP Loans occurs within the first 30 days after the Closing Date, any unfunded HFS DIP Commitments that remain in effect on the 30th day after the Closing Date automatically terminate
• The HFS DIP Commitments are reduced on a dollar-for-dollar basis at the time of funding and terminate upon the funding of the applicable commitments
• Amounts repaid or prepaid may not be reborrowed

Cash Collateral

• To the extent any Existing HFS Debt cannot be repaid substantially concurrently with the borrowing of the related HFS DIP Loans (the Specified Existing HFS Debt), the portion of the proceeds attributable to such debt is held in a restricted securities account (the HFS DIP Cash Collateral Account) as cash collateral for the HFS DIP Obligations (the HFS DIP Cash Collateral)
• Such proceeds are held until the earlier to occur of:
  • The date on which such Specified Existing HFS Debt can be repaid
  • The date on which the Required HFS DIP Lenders give written notice that the HFS DIP Cash Collateral shall be applied to repay HFS DIP Loans (and all accrued and unpaid interest thereon) on a dollar-for-dollar basis

Interest Rate

• At the option of the Borrower:
  • Term SOFR for a one-month interest period plus 10.25%, or
  • Base Rate plus 9.25%
• Base Rate means the greatest of the Prime Rate, the Federal Funds Rate plus ½ of 1%, and one-month Term SOFR plus 1%; if Term SOFR is less than the Floor, Term SOFR is deemed to be the Floor
• Interest is paid in kind on the last day of each interest period and paid in cash on the Maturity Date or on the date the applicable HFS DIP Loan is repaid
• Calculated on the basis of a 360-day year for the actual number of days elapsed
• Default Rate: following and during the continuance of an Event of Default, at the written election of the Required HFS DIP Lenders, 2.00% per annum in excess of the applicable interest rate

Fees

• Put Option Premium: 8.00% of the aggregate amount of the HFS DIP Facility (the Aggregate HFS DIP Commitments), payable to the HFS DIP Commitment Parties
  • Earned upon execution of the HFS DIP Commitment Letter and fully earned as of the Closing Date
  • Payable in kind in the form of HFS DIP Loans (the Put Option Premium HFS DIP Loans) on the first date on which HFS DIP Loans are borrowed
  • If any HFS Aircraft is sold after the Closing Date but prior to the funding of any HFS DIP Loans, payable in cash from the cash proceeds of such sale, calculated after giving effect to the repayment of the Existing HFS Debt secured by such aircraft and prior to the application of any excess sale proceeds in accordance with the Wind-Down Plan
• Upfront Payment: 2.00% of the funded portion of the HFS DIP Loans, payable to the HFS DIP Lenders
  • Fully earned on the Closing Date and due and payable in cash as and when such portion of the loans is funded
  • In lieu of payment in cash, at the election of the Required HFS DIP Lenders, the HFS DIP Loans may instead take the form of original issue discount
• Agency Fee: as set forth in the HFS DIP Agent Fee Letter between the HFS DIP Agent and the Borrower, payable in accordance with the terms of that letter

Maturity

• The HFS DIP Loans, together with all other HFS DIP Obligations, mature and become due and payable on the earliest to occur of (the Maturity Date):
  • Twelve (12) months after the first date on which HFS DIP Loans are borrowed
  • The date the Bankruptcy Court dismisses the Chapter 11 Cases or orders the conversion of the case of any of the Debtors to a liquidation under chapter 7 of the Bankruptcy Code
  • The date of acceleration of all or any portion of the HFS DIP Loans following an Event of Default, by operation of law or otherwise
• The HFS DIP Facility is available from the Closing Date until the earlier of the Maturity Date and the termination of the facility (the Availability Period)
• Optional prepayments of the HFS DIP Loans are not permitted at any time
• Mandatory prepayments:
  • Upon a Disposition of HFS DIP Collateral or a Casualty Event, within two (2) Business Days of receipt, in an amount equal to 100% of the Net Cash Proceeds realized or received, minus the amount necessary to fund the Wind-Down Plan in accordance with the Approved Wind-Down Budget
  • Upon written direction of the Required HFS DIP Lenders, within one (1) Business Day, in an amount equal to 100% of the HFS DIP Cash Collateral on deposit in the HFS DIP Cash Collateral Account
  • Any amount of HFS DIP Loans so paid or prepaid may not be reborrowed

Application of Payments

• Mandatory payments or prepayments and proceeds of HFS DIP Collateral received by the HFS DIP Agent are applied in the following order of priority:
  • First, to fees, indemnities, and documented out-of-pocket expenses payable to the HFS DIP Agent (limited, as to counsel, to Seward & Kissel LLP), and then to fees, indemnities, and expenses payable to the Commitment Parties and the Fronting Lender (limited, as to counsel, to Dentons US LLP, and including the fees and out-of-pocket costs and expenses of the Ad Hoc Committee of Secured Noteholders Advisors)
  • Second, to accrued and unpaid interest owing to the HFS DIP Lenders (including the Fronting Lender, if applicable)
  • Third, to repay outstanding principal of the HFS DIP Loans
  • Fourth, to all other amounts owing to the HFS DIP Lenders (including the Fronting Lender, if applicable) and the HFS DIP Agent
  • Last, the balance, if any, to the Borrower or as otherwise required by law

Termination Events

• The HFS DIP Obligations accelerate and become immediately due and payable, and the HFS DIP Commitments terminate, upon the earliest to occur of (each an HFS DIP Termination Event):
  • Written notice by the HFS DIP Facility Agent (at the direction of the Required HFS DIP Lenders) of the occurrence of an Event of Default
  • The Debtors' failure to comply in any material respect with any provision of the Order (an HFS DIP Order Breach)
  • The occurrence of the Maturity Date
• Unless waived in writing by, or subject to a written forbearance by, the HFS DIP Facility Agent (at the direction of the Required HFS DIP Lenders)
• Upon a Termination Event and following not less than seven (7) business days' advance written notice (the Notice Period, given via an Enforcement Notice), the HFS DIP Facility Agent and the HFS DIP Secured Parties may exercise rights and remedies against the HFS DIP Collateral, and each HFS DIP Lender's commitment to make HFS DIP Loans will be terminated
• During the Notice Period, the Debtors may not use proceeds of the HFS DIP Facility unless otherwise agreed by the Required HFS DIP Lenders
• At the end of the Notice Period (the HFS DIP Termination Date), absent a contrary court order, the HFS DIP Facility Agent and the HFS DIP Lenders may exercise their remedies without the necessity of seeking relief from the automatic stay

Use of Proceeds

• Repay and satisfy in full the Existing HFS Debt (indebtedness identified by the Required HFS DIP Lenders that is secured by one or more of the HFS Aircraft, including indebtedness under the Prepetition HFS Facility Agreements)
• Pay fees and interest under the HFS DIP Facility, and pay fees, costs (including breakage costs), and expenses related to the HFS DIP Facility and the repayment or termination of the Existing HFS Debt
• Any other use previously approved in writing by the Required HFS DIP Lenders
• No HFS DIP Collateral or proceeds of the HFS DIP Facility may be used to investigate, challenge, object to, or contest the validity, security, perfection, priority, extent, or enforceability of any amount due under, or the liens or claims granted under or in connection with, the HFS DIP Facility

Credit Bid

• The HFS DIP Secured Parties irrevocably authorize the Collateral Agent (either directly or through one or more acquisition vehicles), at the direction of the Required HFS DIP Lenders, to credit bid all or any portion of the HFS DIP Obligations and purchase all or any portion of the Collateral at any sale conducted under the Bankruptcy Code (including under Sections 363, 1123, or 1129) or at any other sale, foreclosure, or acceptance of collateral in lieu of debt
• The HFS DIP Obligations will be credit bid on a ratable basis among the HFS DIP Lenders and in accordance with the lien priorities set forth in the HFS DIP Order

Avoidance Actions

• An "Avoidance Action" means any claim or cause of action arising under chapter 5 of the Bankruptcy Code or any applicable state law adopting the Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act, or similar statute or common law
• The HFS DIP Liens are senior to all security interests, liens, and claims against the HFS DIP Collateral, including any lien or security interest avoided or preserved for the benefit of the Debtors and their estates under section 551 of the Bankruptcy Code
• The HFS DIP Liens are not subject to, junior to, or pari passu with any lien or security interest that is avoided and preserved for the benefit of the Debtors' estates under section 551

Securities and Priorities

• HFS DIP Collateral comprises all assets of the Borrower that are collateral for any Existing HFS Debt (as and when the proceeds of the HFS DIP Loans are applied to repay such Existing HFS Debt in full in cash), including:
  • The HFS Aircraft, including the airframes, engines, and related parts
  • All requisition proceeds and insurance proceeds with respect to the aircraft or any part
  • The HFS DIP Cash Collateral Account
  • All proceeds of the foregoing
  • The HFS DIP Collateral does not include any assets constituting Revolving Priority Collateral (as defined in the Final DIP Order)
• Upon repayment of the Existing HFS Debt, the HFS DIP Facility Agent, for the benefit of the HFS DIP Secured Parties, is granted automatically and properly perfected liens and security interests (the HFS DIP Liens):
  • Pursuant to section 364(c)(2), fully perfected first priority senior liens on all HFS DIP Collateral
  • Pursuant to section 364(d)(1), fully perfected priming senior liens, solely to the extent the HFS DIP Collateral is subject to any properly perfected, valid, enforceable, and unavoidable liens other than those securing the Existing HFS Debt
  • The HFS DIP Liens are not made pari passu with, or subordinated to, any other liens or security interests, and are effective and perfected upon entry of the HFS DIP Order without further action
• Pursuant to section 364(c)(1), all HFS DIP Obligations constitute allowed superpriority administrative expense claims against the Borrower's estate (the HFS DIP Superpriority Claims), with priority over all other administrative expense claims, adequate protection claims, and all other claims
  • Provided that the HFS DIP Superpriority Claims are not senior to the DIP Superpriority Claims, the Roll-Up Superpriority Claims, the Secured Notes Adequate Protection Claims, and the RCF Adequate Protection Claims (each as defined in the Final DIP Order), subject to the relative lien priorities set forth therein
  • Provided further that the HFS DIP Liens securing the HFS DIP Superpriority Claims are senior in all respects with respect to the HFS DIP Collateral

Waivers

• Section 506(c): the Borrower and its estate waive the right to surcharge against the HFS DIP Collateral, and no costs or expenses of administration of the Chapter 11 Cases may be charged against or recovered from the HFS DIP Collateral or the HFS DIP Secured Parties under sections 506(c) or 105(a) without the prior written consent of the HFS DIP Facility Agent and the other HFS DIP Secured Parties
• Release: the Debtors and their estates release the HFS DIP Facility Agent, the HFS Fronting Lender, the other HFS DIP Secured Parties, and the related Released Parties from any and all claims and causes of action, including any "lender liability" or equitable subordination claims, except claims or liabilities that a court of competent jurisdiction determines primarily result from the bad faith, fraud, gross negligence, or willful misconduct of a Released Party
• Until the HFS DIP Obligations are indefeasibly paid in full in cash and all commitments are terminated, the Debtors irrevocably waive the right to seek or consent to:
  • Any modification, stay, vacatur, or amendment of the Order, except as permitted under the HFS DIP Documents and with the prior written consent of the Required HFS DIP Lenders
  • An order converting or dismissing any of the Chapter 11 Cases
  • An order appointing a chapter 11 trustee in any of the Chapter 11 Cases
  • An order appointing an examiner with enlarged powers in any of the Chapter 11 Cases

Events of Default

• Non-payment of principal when due, or of interest or any other amount within three (3) Business Days after it becomes due
• Breach of any negative covenant (Annex G); breach of any other covenant continuing for ten (10) Business Days after the earlier of notice or a Responsible Officer''s actual knowledge
• Cross-default to an Event of Default under the Existing DIP Credit Agreement (with a limited carve-out for Section 8.01(o)(y) defaults unless the Required DIP Lenders thereunder exercise remedies)
• Termination of the Aircraft Sale Agreement
• Invalidity of any material HFS DIP Facility Document, or the Borrower contesting its validity or enforceability
• Dismissal or conversion of any Chapter 11 Case to chapter 7 (or a Debtor filing a motion seeking such relief)
• Approval or granting of any lien on the HFS DIP Collateral pari passu with or senior to the HFS DIP Liens
• Specified stay relief or foreclosure - e.g., a final order permitting foreclosure on assets exceeding $50,000,000 in the aggregate, actions with a Material Adverse Effect, or any exercise of remedies against an HFS Aircraft that would legally bar repayment of the related Existing HFS Debt
• Entry of an order reversing, amending, staying, vacating, or modifying the HFS DIP Order or the HFS Aircraft Sale Order without Required HFS DIP Lender consent; the HFS DIP Order ceasing to create a valid, perfected lien or to be in full force and effect; or a section 506(c) charge against the HFS DIP Collateral
• The Debtors seeking, supporting, or failing to contest in good faith any of the foregoing; or any adverse claim/challenge against the HFS DIP Agent or HFS DIP Lenders, or against the HFS DIP Liens or HFS DIP Obligations

Conditions Precedent

• To the Closing Date (selected): entry of the HFS DIP Order (a final order acceptable to the Required HFS DIP Lenders, and to the HFS DIP Agent as to its own rights), not reversed/stayed/modified, with the Borrower in compliance; advance delivery of related pleadings; no continuing Event of Default or HFS DIP Termination Event; representations and warranties true and correct in all material respects; Borrower power/authority and a secretary''s certificate with authorizing resolutions; payment of HFS DIP Agent, Fronting Lender, and Commitment Party fees and expenses (counsel limited to Seward & Kissel LLP, the HFS DIP Lender Counsel (Akin Gump), and Watson, Farley & Williams LLP); and receipt of FAA, International Registry, and Delaware UCC lien-search results satisfactory to the Required HFS DIP Lenders
• To each Borrowing (selected): Availability Period continuing; delivery of a Committed Loan Notice by 1:00 p.m. New York City time three (3) Business Days prior; HFS DIP Order not reversed/stayed/modified and Borrower in compliance; no continuing Event of Default or Termination Event; representations and warranties true and correct; payment of invoiced fees and expenses; and, for the related Existing HFS Debt, a customary pay-off letter, termination of the existing security interests substantially concurrently with the borrowing, and the HFS DIP Liens constituting first-priority liens on the applicable HFS DIP Collateral