Exhibit 4.25
July 31, 2000
AFE Trust
c/o Wilmington Trust Company
▇▇▇▇▇▇ Square North
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The purpose of this letter agreement (this "Confirmation") is to confirm
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the terms and conditions of the Transaction entered into between us on the trade
date specified below (the "Transaction"). This Confirmation constitutes a
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separate and independent "Confirmation" as referred to in the Master Agreement
specified below, secured by the Owned Aircraft identified below. The 1992 ISDA
Master Agreement (the "Master Agreement") between United Air Lines, Inc.
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("United") and AFE Trust ("AFE"), together with the Schedule and appendices
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thereto, all as annexed to this Confirmation, supplements, forms a part of and
is incorporated by reference into this Confirmation.
1. Definitions. The definitions and provisions contained in the 1991
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ISDA Definitions and the 1998 Supplement thereto as published by the
International Swaps and Derivatives Association, Inc. (the "Definitions") are
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incorporated into this Confirmation. In the event of any inconsistency between
the Definitions and this Confirmation, this Confirmation will govern.
References herein to a "Transaction" shall be deemed to refer to a "Swap
Transaction" for purposes of the Definitions.
This Confirmation will be governed by and construed in accordance with
the laws of the State of New York without reference to choice of law principles.
The parties expressly acknowledge that, in reliance on the other
party's entering into the Transaction evidenced by this Confirmation, each party
has made (or refrained from making) substantial financial commitments and has
taken (or refrained from taking) other material actions.
2. Summary of Transaction Terms: The terms of the particular Transaction
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to which this Confirmation relates are as follows:
Owned Aircraft: N_____
Owned Aircraft Indenture: Trust Indenture and Mortgage ([_________]) dated as
of July 31, 2000 between United Air Lines, Inc. as
Owner and State Street Bank and Trust Company of
Connecticut, National Association, as Indenture
Trustee
Principal Notional Amount: See Appendix I to the Schedule to the Master
Agreement.
Trade Date: July 31, 2000
Effective Date: July 31, 2000
Termination Date: July 1, 2011, subject to adjustment in accordance
with the Modified Following Business Day Convention
(or, if later, the date the Principal Notional
Amount of each instrument listed in Appendix 1 to
the Schedule to the Master Agreement is reduced to
zero in accordance with the terms thereof).
Calculation Agent: As set forth in the Schedule to the Master
Agreement.
Fixed Rate Payer: United
Fixed Rate
Payer Payment Dates: The Periodic Swap Payment Dates as defined in Part
4, clause (a)(viii), of the Schedule to the Master
Agreement on which the Periodic Payment Amount is a
negative number
Fixed Rate: The Applicable Fixed Rate as defined the definition
of "Periodic Swap Payment Formula" in Part 4, clause
(a)(ix), of the Schedule to the Master Agreement
Fixed Rate Day Count
Fraction: Number of days in a 360-day year of twelve 30-day
months
Floating Rate Payer: AFE
Floating Rate Payer
Payment Dates: The Periodic Swap Payment Dates as defined in Part
4, clause (a)(viii), of the Schedule to the Master
Agreement on which the Periodic Payment Amount is a
positive number
Floating Rate for initial
Calculation Period: 7.9625% (including the Spread)
Floating Rate Option: The Eurodollar Rate as defined in the final
paragraph of Part 4, clause (a), of the Schedule to
the Master Agreement
Designated Maturity: 6 month
Spread: Plus 0.90%
Floating Rate
Day Count
Fraction: Actual/360
Reset Dates: The first day of each Calculation Period subsequent
to the Effective Date
Business Days: New York
Business Day Convention: Modified Following Business Day
3. Account Details.
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Payments to Party A
Account for payments in USD: Bank: State Street Bank and Trust Company, as AFE Indenture
Trustee
Boston, Massachusetts
ABA #: ▇▇▇-▇▇▇-▇▇▇
Attention: Corporate Trust Department/▇▇▇▇ ▇▇▇▇▇▇▇
Account #: 9903-9901
Reference: UNITED 2000-1 EETC
Payments to Party B:
Account for payments in USD: Bank: Banc One
One Banc ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA #: ▇▇▇-▇▇▇-▇▇▇
Attention: United Airlines Special Account
Account #: 51-67795
Reference: UNITED 2000-1 EETC
(4) Payment Obligation. If on any Periodic Swap Payment Date, the Periodic
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Payment Amount for such date is a positive amount, the Floating Rate Payer
shall pay the amount thereof to the Fixed Rate Payer, and if on any such
date, the Periodic Payment Amount is a negative amount, the Fixed Rate
Payer shall pay the absolute amount thereof to the Floating Rate Payer,
except, as set forth in paragraph 5 below, the obligation of the Floating
Rate Payer to make any such payment is limited to monies available to the
Floating Rate Payer for distribution to the Fixed Rate Payer under Article
3 of the AFE Indenture (as defined in the final paragraph of Part 4, clause
(a), of the Schedule to the Master Agreement).
(5) Limitation of Liability. The obligations of Party A under this
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Confirmation, and in respect of the Transaction evidenced hereby,
including, without limitation, its obligation to make any Periodic Swap
Payment or Final Periodic Payment, are expressly limited to the extent of
the funds, if any, made available for such payment to Party A under, and in
accordance with, the priorities of payments set forth in Article 3 of the
AFE Indenture, and any difference between the amount of any Party A payment
calculated in accordance with this Confirmation and any such amount
available on the date for payment shall not constitute a claim against, or
obligation of, Party A. Party B acknowledges that no claim shall arise
against Party A for any such difference. No recourse under any obligation,
covenant or agreement of Party A contained in this Confirmation shall be
had against any incorporator, stockholder, agent, affiliate, officer,
employee or trustee of Party A, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any
statute or otherwise; it being expressly agreed and understood that the
agreements of Party A contained in this Confirmation are solely trust
obligations of Party A and that no personal liability whatsoever shall
attach to or be incurred by the incorporators, stockholders, agents,
affiliates, officers, employees or trustees of Party A, as such, or any of
them, under or by reason of any of the obligations, covenants or agreements
of Party A contained in this Confirmation and that any and all personal
liability of every such incorporator, stockholder, agent, affiliate,
officer, employee or trustee of Party A for breaches by Party A of any such
obligation, covenant or agreement, which liability may arise either at
common law or at equity, by statute or constitution, or otherwise, is
hereby expressly waived as a condition of and in consideration for the
execution of this Confirmation; provided, however, that nothing in this
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paragraph (5) shall relieve any of the foregoing persons from any liability
which any such person may otherwise have for his/her or its gross
negligence or willful misconduct.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Very truly yours,
United Air Lines, Inc.
By: __________________________
Name:
Title:
Accepted and Agreed as of the date first written above:
AFE Trust
By: Wilmington Trust Company, not in its individual capacity, but solely in its
capacity as trustee under the Trust Agreement, dated as of June 9, 2000, between
United Air Lines, Inc. and Wilmington Trust Company.
By:
Name:
Title:
(Local Currency--Single Jurisdiction)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
United Air Lines, Inc. and AFE Trust
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have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:--
1. Interpretation
(a) Definitions. The terms defined in Section 12 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than by
payment), such delivery will be made for receipt on the due date in the
manner customary for the relevant obligation unless otherwise specified in
the relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing,
(2) the condition precedent that no Early Termination Date in respect of
the relevant Transaction has occurred or been effectively designated and
(3) each other applicable condition precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii) above
will not, or will cease to, apply to such Transactions from such date). This
election may be made separately for different groups of Transactions and will
apply separately to each pairing of branches or offices through which the
parties make and receive payments or deliveries.
(d) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into) that:--
(a) Basic Representations.
(i) Status. It is duly organised and validly existing under the laws of
the jurisdiction of its organization or incorporation and, if relevant
under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to deliver
this Agreement and any other documentation relating to this Agreement that
it is required by this Agreement to deliver and to perform its obligations
under this Agreement and any obligations it has under any Credit Support
Document to which it is a party and has taken all necessary action to
authorise such execution, delivery and performance;
(iii) No Violation or Conflict. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision of
its constitutional documents, any order or judgment of any court or other
agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in full
force and effect and all conditions of any such consents have been complied
with; and
(v) Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal, valid
and binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganisation, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding in
equity or at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
4. Agreements
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(a) Furnish Specified Information. It will deliver to the other party any
forms, documents or certificates specified in the Schedule or any Confirmation
by the date specified in the Schedule or such Confirmation or, if none is
specified, as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any of the following events constitutes an event of default (an
"Event of Default") with respect to such party:--
(i) Failure to Pay or Deliver. Failure by the party to make, when due,
any payment under this Agreement or delivery under Section 2(a)(i) or 2(d)
required to be made by it if such failure is not remedied on or before the
third Local Business Day after notice of such failure is given to the
party;
(ii) Breach of Agreement. Failure by the party to comply with or perform
any agreement or obligation (other than an obligation to make any payment
under this Agreement or delivery under Section 2(a)(i) or 2(d) or to give
notice of a Termination Event) to be complied with or performed by the
party in accordance with this
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Agreement if such failure is not remedied on or before the thirtieth day
after notice of such failure is given to the party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any
applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support
Document or the failing or ceasing of such Credit Support
Document to be in full force and effect for the purpose of this
Agreement (in either case other than in accordance with its
terms) prior to the satisfaction of all obligations of such party
under each Transaction to which such Credit Support Document
relates without the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) Misrepresentation. A representation made or repeated or deemed to
have been made or repeated by the party or any Credit Support Provider of
such party in this Agreement or any Credit Support Document proves to have
been incorrect or misleading in any material respect when made or repeated
or deemed to have been made or repeated;
(v) Default under Specified Transaction. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party (1)
defaults under a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs a liquidation
of, an acceleration of obligations under, or an early termination of, that
Specified Transaction, (2) defaults, after giving effect to any applicable
notice requirement or grace period, in making any payment or delivery due
on the last payment, delivery or exchange date of, or any payment on early
termination of, a Specified Transaction (or such default continues for at
least three Local Business Days if there is no applicable notice
requirement or grace period) or (3) disaffirms, disclaims, repudiates or
rejects, in whole or in part, a Specified Transaction (or such action is
taken by any person or entity appointed or empowered to operate it or act
on its behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default, event
of default or other similar condition or event (however described) in
respect of such party, any Credit Support Provider of such party or any
applicable Specified Entity of such party under one or more agreements or
instruments relating to Specified Indebtedness of any of them (individually
or collectively) in an aggregate amount of not less than the applicable
Threshold Amount (as specified in the Schedule) which has resulted in such
Specified Indebtedness becoming, or becoming capable at such time of being
declared, due and payable under such agreements or instruments, before it
would otherwise have been due and payable or (2) a default by such party,
such Credit Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof in an
aggregate amount of not less than the applicable Threshold Amount under
such agreements or instruments (after giving effect to any applicable
notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such party or
any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for the
benefit of its creditors; (4) institutes or has instituted
against it a proceeding seeking a
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judgment of insolvency or bankruptcy or any other relief under
any bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its winding-up
or liquidation, and, in the case of any such proceeding or
petition instituted or presented against it, such proceeding or
petition (A) results in a judgment of insolvency or bankruptcy or
the entry of an order for relief or the making of an order for
its winding-up or liquidation or (B) is not dismissed,
discharged, stayed or restrained in each case within 30 days of
the institution or presentation thereof; (5) has a resolution
passed for its winding-up, official management or liquidation
(other than pursuant to a consolidation, amalgamation or merger);
(6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all or
substantially all its assets; (7) has a secured party take
possession of all or substantially all its assets or has a
distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within 30 days thereafter; (8)
causes or is subject to any event with respect to it which, under
the applicable laws of any jurisdiction, has an analogous effect
to any of the events specified in clauses (1) to (7) (inclusive);
or (9) takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the foregoing
acts; or
(viii) Merger Without Assumption. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with or
into, or transfers all or substantially all its assets to, another entity
and, at the time of such consolidation, amalgamation, merger or transfer:--
(1) the resulting, surviving or transferee entity fails to
assume all the obligations of such party or such Credit Support
Provider under this Agreement or any Credit Support Document to
which it or its predecessor was a party by operation of law or
pursuant to an agreement reasonably satisfactory to the other
party to this Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by
such resulting, surviving or transferee entity of its obligations
under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event specified below constitutes an Illegality if the
event is specified in (i) below, and, if specified to be applicable, a Credit
Event Upon Merger if the event is specified pursuant to (ii) below or an
Additional Termination Event if the event is specified pursuant to (iii)
below:--
(i) Illegality. Due to the adoption of, or any change in, any applicable
law after the date on which a Transaction is entered into, or due to the
promulgation of, or any change in, the interpretation by any court,
tribunal or regulatory authority with competent jurisdiction of any
applicable law after such date, it becomes unlawful (other than as a result
of a breach by the party of Section 4(b)) for such party (which will be the
Affected Party):--
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in
respect of such Transaction or to comply with any other material
provision of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party
to perform, any contingent or other obligation which the party
(or such Credit Support Provider) has under any Credit Support
Document relating to such Transaction;
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(ii) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified
in the Schedule as applying to the party, such party ("X"), any Credit
Support Provider of X or any applicable Specified Entity of X consolidates
or amalgamates with, or merges with or into, or transfers all or
substantially all its assets to, another entity and such action does not
constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate, will
be the Affected Party); or
(iii) Additional Termination Event. If any "Additional Termination Event"
is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.
6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying the
nature of that Termination Event and each Affected Transaction and will
also give such other information about that Termination Event as the other
party may reasonably require.
(ii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1)
occurs and there are two Affected Parties, each party will use all
reasonable efforts to reach agreement within 30 days after notice thereof
is given under Section 6(b)(i) on action to avoid that Termination Event.
(iii) Right to Terminate. If:--
(1) an agreement under Section 6(b)(ii) has not been effected
with respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality other than that referred to in Section
6(b)(ii), a Credit Event Upon Merger or an Additional Termination
Event occurs,
either party in the case of an Illegality, any Affected Party in the case
of an Additional Termination Event if there is more than one Affected
Party, or the party which is not the Affected Party in the case of a Credit
Event Upon Merger or an Additional Termination Event if there is only one
Affected Party may, by not more than 20 days notice to the other party and
provided that the relevant Termination Event is then continuing,
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designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all Affected Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under Section
6(a) or (b), the Early Termination Date will occur on the date so
designated, whether or not the relevant Event of Default or Termination
Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termination
Date, no further payments or deliveries under Section 2(a)(i) or 2(d) in
respect of the Terminated Transactions will be required to be made, but
without prejudice to the other provisions of this Agreement. The amount, if
any, payable in respect of an Early Termination Date shall be determined
pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable detail,
such calculations (including all relevant quotations and specifying any
amount payable under Section 6(e)) and (2) giving details of the relevant
account to which any amount payable to it is to be paid. In the absence of
written confirmation from the source of a quotation obtained in determining
a Market Quotation, the records of the party obtaining such quotation will
be conclusive evidence of the existence and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day that
notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event of
Default) and on the day which is two Local Business Days after the day on
which notice of the amount payable is effective (in the case of an Early
Termination Date which is designated as a result of a Termination Event).
Such amount will be paid together with (to the extent permitted under
applicable law) interest thereon (before as well as after judgment), from
(and including) the relevant Early Termination Date to (but excluding) the
date such amount is paid, at the Applicable Rate. Such interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) Events of Default. If the Early Termination Date results from an
Event of Default:--
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the Non-
defaulting Party the excess, if a positive number, of (A) the sum
of the Settlement Amount (determined by the Non-defaulting Party)
in respect of the Terminated Transactions and the Unpaid Amounts
owing to the Non-defaulting Party over (B) the Unpaid Amounts
owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement.
7
(3) Second Method and Market Quotation. If the Second Method
and Market Quotation apply, an amount will be payable equal to
(A) the sum of the Settlement Amount (determined by the Non-
defaulting Party) in respect of the Terminated Transactions and
the Unpaid Amounts owing to the Non-defaulting Party less (B) the
Unpaid Amounts owing to the Defaulting Party. If that amount is a
positive number, the Defaulting Party will pay it to the Non-
defaulting Party; if it is a negative number, the Non-defaulting
Party will pay the absolute value of that amount to the
Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply, an amount will be payable equal to the Non-defaulting
Party's Loss in respect of this Agreement. If that amount is a
positive number, the Defaulting Party will pay it to the Non-
defaulting Party; if it is a negative number, the Non-defaulting
Party will pay the absolute value of that amount to the
Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event:--
(1) One Affected Party. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4),
if Loss applies, except that, in either case, references to the
Defaulting Party and to the Nondefaulting Party will be deemed to
be references to the Affected Party and the party which is not
the Affected Party, respectively, and, if Loss applies and fewer
than all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:--
(A) if Market Quotation applies, each party will
determine a Settlement Amount in respect of the
Terminated Transactions, and an amount will be payable
equal to (I) the sum of (a) one-half of the difference
between the Settlement Amount of the party with the
higher Settlement Amount ("X") and the Settlement
Amount of the party with the lower Settlement Amount
("Y") and (b) the Unpaid Amounts owing to X less (II)
the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its
Loss in respect of this Agreement (or, if fewer than
all the Transactions are being terminated, in respect
of all Terminated Transactions) and an amount will be
payable equal to one-half of the difference between the
Loss of the party with the higher Loss ("X") and the
Loss of the party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X;
if it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will be
subject to such adjustments as are appropriate and permitted by law to
reflect any payments or deliveries made by one party to the other under
this Agreement (and retained by such other party) during the period from
the relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies an
amount recoverable under this Section 6(e) is a reasonable pre-estimate of
loss and not a penalty. Such amount is payable for the loss of bargain and
the loss of protection against future risks and except as otherwise
provided in this Agreement neither party will be entitled to recover any
additional damages as a consequence of such losses.
8
7. Transfer
Neither this Agreement nor any interest or obligation in or under this Agreement
may be transferred (whether by way of security or otherwise) by either party
without the prior written consent of the other party, except that:--
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in respect
of it) may be executed and delivered in counterparts (including by
facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable and
may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange of
electronic messages on an electronic messaging system, which in each case
will be sufficient for all purposes to evidence a binding supplement to
this Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
9. Expenses
9
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees,
incurred by such other party by reason of the enforcement and protection of its
rights under this Agreement or any Credit Support Document to which the
Defaulting Party is a party or by reason of the early termination of any
Transaction, including, but not limited to, costs of collection.
10. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date it
is delivered;
(ii) if sent by telex, on the date the recipient's answerback is received;
(iii) if sent by facsimile transmission, on the date that transmission is
received by a responsible employee of the recipient in legible form (it
being agreed that the burden of proving receipt will be on the sender and
will not be met by a transmission report generated by the sender's
facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered
or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
11. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this Agreement
is expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of New
York; and,
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
10
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments ▇▇▇ ▇▇▇▇ or any modification, extension or re-
enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Waiver of Immunities. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
12. Definitions
As used in this Agreement:--
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, all Transactions affected by the occurrence of such
Termination Event and (b) with respect to any other Termination Event, all
Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"Applicable Rate" means:--
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"consent" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
11
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iii).
"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"law" includes any treaty, law, rule or regulation and "lawful" and "unlawful"
will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located, (c) in
relation to any notice or other communication, including notice contemplated
under Section 5(a)(i), in the city specified in the address for notice provided
by the recipient and, in the case of a notice contemplated by Section 2(b), in
the place where the relevant new account is to be located and (d) in relation to
Section 5(a)(v)(2), in the relevant locations for performance with respect to
such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, an amount that party reasonably
determines in good faith to be its total losses and costs (or gain, in which
case expressed as a negative number) in connection with this Agreement or that
Terminated Transaction or group of Terminated Transactions, as the case may be,
including any loss of bargain, cost of funding or, at the election of such party
but without duplication, loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading position
(or any gain resulting from any of them). Loss includes losses and costs (or
gains) in respect of any payment or delivery required to have been made
(assuming satisfaction of each applicable condition precedent) on or before the
relevant Early Termination Date and not made, except, so as to avoid
duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does
not include a party's legal fees and out-of-pocket expenses referred to under
Section 9. A party will determine its Loss as of the relevant Early Termination
Date, or, if that is not reasonably practicable, as of the earliest date
thereafter as is reasonably practicable. A party may (but need not) determine
its Loss by reference to quotations of relevant rates or prices from one or more
leading dealers in the relevant markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference Market-
maker to enter into a transaction (the "Replacement Transaction") that would
have the effect of preserving for such party the economic equivalent of any
payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction
would be subject to such documentation as such party and the Reference Market-
maker may, in good faith, agree. The party making the determination (or its
agent) will request each Reference Market-maker to provide its quotation to the
extent reasonably practicable as of the same day and time (without regard to
different time zones) on or as soon as reasonably practicable after the relevant
Early Termination Date.
12
The day and time as of which those quotations are to be obtained will be
selected in good faith by the party obliged to make a determination under
Section 6(e), and, if each party is so obliged, after consultation with the
other. If more than three quotations are provided, the Market Quotation will be
the arithmetic mean of the quotations, without regard to the quotations having
the highest and lowest values. If exactly three such quotations are provided,
the Market Quotation will be the quotation remaining after disregarding the
highest and lowest quotations. For this purpose, if more than one quotation has
the same highest value or lowest value, then one of such quotations shall be
disregarded. If fewer than three quotations are provided, it will be deemed that
the Market Quotation in respect of such Terminated Transaction or group of
Terminated Transactions cannot be determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Potential Event of Default" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:--
(a) the Market Quotations (whether positive or negative) for each Terminated
Transaction or group of Terminated Transactions for which a Market Quotation is
determined; and
(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
13
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"Termination Event" means an Illegality or, if specified to be applicable, a
Credit Event Upon Merger or an Additional Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market value of that which was (or would have been) required to be
delivered as of the originally scheduled date for delivery, in each case
together with (to the extent permitted under applicable law) interest, in the
currency of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or performed to
(but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to
make the determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the fair market values reasonably determined by both
parties.
14
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
United Air Lines, Inc. AFE Trust
------------------------------------ ------------------------------
(Name of Party) (Name of Party)
By: _______________________________ By:_________________________
Name: Name:
Title: Title:
Date: Date:
15
SCHEDULE
to the
MASTER AGREEMENT
(Local Currency - Single Jurisdiction)
between
AFE Trust, a statutory business trust
organized under the laws of Delaware,
together with its successors and assigns
("Party A")
-------
and
United Air Lines, Inc., a Delaware corporation
("Party B")
-------
PART 1
Termination Provisions
----------------------
1.1. "Specified Entity" means in relation to Party A for the purpose of
Section 5(a)(v) Not Applicable
Section 5(a)(vi) Not Applicable
Section 5(a)(vii) Not Applicable
and means in relation to Party B for the purpose of
Section 5(a)(v) Not Applicable
Section 5(a)(vi) Not Applicable
Section 5(a)(vii) Not Applicable
1.2. Except for the events set forth in Section 5(a)(i) and 5(a)(viii)
of the Master Agreement as incorporated in this Confirmation, in the case of
Party B, and Section 5(a)(vii)(4) of the Master Agreement as incorporated in
this Confirmation, in the case of Party A and Party B, the "Events of Default"
set forth in Section 5(a) of the Master Agreement as incorporated in this
Confirmation will not apply to Party A or Party B.
1.3. The "Cross-Default" provisions of Section 5(a)(vi) of the Master
Agreement as incorporated in this Confirmation will not apply to Party A or
Party B.
1.4. The "Illegality" provisions of Section 5(b)(i) of the Master
Agreement as incorporated in this Confirmation and the "Credit Event Upon
Merger" provisions of Section 5(b)(ii) of the Master Agreement as incorporated
in this Confirmation will not apply to Party A or Party B.
1.5. The "Automatic Early Termination" provisions of Section 6(a) of
the Master Agreement as incorporated in this Confirmation will not apply to
Party A or Party B.
1.6. "Payments on Early Termination." Paragraph 6(e) of the Master
Agreement as incorporated in this Confirmation is amended by deleting the
existing provisions thereof and substituting the following:
"Notwithstanding anything to the contrary in this Confirmation, the amount
payable on any early termination of the Transaction evidenced hereby
(other than in respect of an Additional Termination Event relating to a
Leased Aircraft) shall be the sum of the Senior Swap Termination Amount
and Junior Swap Termination Amount set forth on Appendix II to this
Schedule unless prior to the date of the occurrence of the related Early
Termination Date, the Investment Banking Firm, engaged by the Indenture
Trustee on behalf of Party A, is able to obtain a Senior Qualified
Substitute from the proceeds received under the Owned Aircraft Indenture
identified in paragraph 2 "Summary of Transaction Terms" of this
Confirmation in respect of the Senior Swap Termination Amount and/or a
Junior Qualified Substitute from the proceeds received under such Owned
Aircraft Indenture in respect of the Junior Swap Termination Amount and
the respective cost thereof (including for such purpose the fees and
expenses of the Investment Banking Firm incurred in procuring the relevant
Qualified Substitute) is less than or equal to the corresponding scheduled
amounts for the Senior Swap Termination Amount and Junior Swap Termination
Amount, respectively, in which case the amount payable by Party B on early
termination of this Transaction (other than in respect of an Additional
Termination Event relating to a Leased Aircraft) shall be the applicable
Senior Qualified Substitute Purchase Amount and/or Junior Qualified
Substitute Purchase Amount, as the case may be, plus, in either case, the
amount of all other unpaid sums due and payable by Party B under this
Confirmation on or prior to the relevant Early Termination Date. Upon
receipt of any such scheduled amounts and/or Qualified Substitute Purchase
Amounts, Party A shall apply the proceeds thereof to the acquisition of
the applicable Qualified Substitute and/or the funding of the Swap
Substitute Account, as the case may be, all as provided in Section 2.13 of
the AFE Trust Indenture."
Upon any early termination of the Transaction evidenced by this
Confirmation either in whole or in part due to an Additional Termination Event
relating to a Leased Aircraft on a day other than a Periodic Swap Payment Date,
Party A or Party B, as the case may be, shall make the Final Periodic Payment.
Notwithstanding the foregoing, the parties agree that in the event the
Transaction evidenced by this Confirmation is terminated pursuant to Section 6
of the Master Agreement as incorporated in this Confirmation, except to the
extent of any Final Periodic Payment payable by Party A, Party A shall not be
required to make any payments arising out of such termination to Party B.
1.7. Limitations on Conditions Precedent. Notwithstanding Section 2(a)
-----------------------------------
of the Master Agreement as incorporated in this Confirmation, the obligation of
Party B to make each payment or delivery specified in this Confirmation, so long
as it shall remain in effect, shall not be subject to any conditions precedent,
and, without limiting the foregoing, Party B agrees that it will make each such
payment or delivery without offset, counterclaim or defense and whether any
other Event of Default, Potential Event of Default or Termination Event exists
with respect to Party A or otherwise.
1.8. "Additional Termination Event" will apply. Each of the following
shall constitute an Additional Termination Event under this Confirmation:
1.8.1 Leased Aircraft
(x) If an Event of Loss under and as defined in a Lease
in respect of a Leased Aircraft occurs and Party B
does not substitute another aircraft pursuant to
such Lease and, in connection with such
substitution, obtain a Ratings Confirmation, then
the Transaction evidenced by this Confirmation, to
the extent relating to such Lease, shall terminate
in part on the related Early Termination Date,
without any termination payment by either Party A or
Party B under Section 6(e) of the Master Agreement
as incorporated in this Confirmation other than the
Final Periodic Payment to be made hereunder.
(y) If Party B elects an early termination of a Lease
and the related Leased Equipment Notes are prepaid
as a result thereof, then the Transaction evidenced
by this Confirmation, to the extent relating to such
Lease, shall terminate in part on the related Early
Termination Date, without any termination payment by
either Party A or Party B under Section 6(e) of the
Master Agreement as incorporated in this
Confirmation other than the Final Periodic Payment
to be made hereunder.
(z) In the event of a Lease Event of Default under and
as defined in a Lease in respect of a Leased
Aircraft, the Transaction evidenced by this
Confirmation, to the extent relating to such Lease,
shall terminate in part upon the application of the
proceeds of the disposition of the related Leased
Aircraft to the payment of the AFE Trust Notes under
the AFE Indenture (through application of the
payments made on the related Leased Equipment Notes
as a result of such disposition) without any
termination payment by either Party A or Party B
under Section 6(e) of the Master Agreement as
incorporated in this Confirmation other than the
Final Periodic Payment to be made hereunder.
In the event that the Transaction evidenced by this Confirmation is terminated
in part as a result of the events noted above, either Party A or Party B (in the
case of an event described in subclause (x) or (y) above) or Party A (in the
case of an event described in subclause (z) above) may terminate the affected
portion of the Transaction by designating an Early Termination Date with respect
to such affected portion, the terminated portion thereof shall be the
"Terminated Transaction", the Final Periodic Payment, if any, shall become due
and payable, the Principal Notional Amount applicable to this Confirmation
shall be reduced by an amount equal to the portion of the Principal Notional
Amount allocable to the affected Leased Aircraft as specified in Exhibit A to
Appendix I to this Schedule to the Master Agreement as incorporated in this
Confirmation and the Senior Swap Termination Amount and the Junior Swap
Termination Amount applicable to this Confirmation shall be reduced by an amount
equal to the Senior Swap Termination Amount and Junior Swap Termination Amount,
respectively, allocable to the affected Leased Aircraft as specified in Exhibit
A to Appendix II to this Schedule to the Master Agreement as incorporated in
this Confirmation. No such termination shall release Party B from its
obligation to make any payment to Party A under Section 2(a)(i) of the Master
Agreement as incorporated in this Confirmation or other applicable provision of
this Confirmation due on or before the date of such termination.
1.8.2 Owned Aircraft:
(x) If an Event of Loss occurs under and as defined in
the Owned Aircraft Indenture securing, and
identified in paragraph 2 "Summary of Transaction
Terms" of, this Confirmation and Party B does not
substitute another aircraft therefor in accordance
with the provisions of Section 5.01 of such Owned
Aircraft Indenture and obtain a Ratings Confirmation
in connection with such substitution, then the
Transaction evidenced by this Confirmation shall
terminate upon payment in full of the United
Equipment Notes (such term
-3-
having the same meaning herein as such term has in
the Intercreditor Agreement) issued under such Owned
Aircraft Indenture and Party B shall make a
termination payment under Section 6(e) of the Master
Agreement as incorporated in this Confirmation in
the amount specified herein for the related Early
Termination Date.
(y) If Party B elects to prepay and does prepay the
United Equipment Notes issued under the Owned
Aircraft Indenture securing, and identified in
paragraph 2 "Summary of Transaction Terms" of, this
Confirmation and Party B does not secure its
obligations under this Confirmation with another
aircraft pursuant to paragraph (n) of Part 5 of this
Schedule to the Master Agreement as incorporated in
this Confirmation and obtain a Ratings Confirmation
in connection therewith, then the Transaction
evidenced by this Confirmation shall terminate upon
the prepayment in full of such United Equipment
Notes and Party B shall make a termination payment
under Section 6(e) of the Master Agreement as
incorporated in this Confirmation in the amount
specified herein for the related Early Termination
Date.
(z) If an Event of Default occurs under and as defined
in the Owned Aircraft Indenture securing, and
identified in paragraph 2 "Summary of Transaction
Terms" of, this Confirmation, the Transaction
evidenced by this Confirmation shall terminate upon
the disposition of the Owned Aircraft subject to the
lien of such Owned Aircraft Indenture and the
application of the proceeds thereof to the
obligations of Party B secured under such Owned
Aircraft Indenture (including the obligation of
Party B to make the payment on early termination
specified in Section 6(e) of the Master Agreement as
incorporated in this Confirmation by reason
thereof), and upon the application of such proceeds
Party B shall make a termination payment under said
Section 6(e) in the amount specified herein for the
related Early Termination Date.
In the event that the Transaction evidenced by this Confirmation is terminated
as a result of the events noted in this clause (ii), Party B shall be the
"Affected Party" with respect thereto.
PART 2
Agreement to Deliver Documents
------------------------------
For the purpose of Sections 4(a) of the Master Agreement as incorporated in this
Confirmation, each party agrees to deliver the following documents, as
applicable:
Party required
to
deliver Date by which to be
document Form/Document/Certificate delivered
-------- ------------------------- ---------
Party A A certificate of an authorized officer of the party, Upon execution of
certifying the names, true signatures and authority of the this Confirmation
officers of the party signing this Confirmation.
Party B A certificate of an authorized officer of the party, Upon execution of
certifying the names, true signatures and authority of the this Confirmation.
officers of the party signing this Confirmation.
-4-
Party required
to
deliver Date by which to be
document Form/Document/Certificate delivered
-------- ------------------------- ---------
Party A Legal Opinion of Party A. Upon execution of
this Confirmation.
Party B Legal Opinion of Party B. Upon execution of
this Confirmation.
Party B Audited annual consolidated financial statements of Party B, Promptly upon
prepared in accordance with accounting principles that are demand by Party A.
generally accepted in the United States.
PART 3
Miscellaneous
-------------
3.1 Addresses for Notices. For the purpose of Section 10(a) of the
Master Agreement as incorporated in this Confirmation:
Address for notices or communications to Party A:
Address:
c/o Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(For all purposes.)
-5-
Address for notices or communications to Party B:
Address:
If by U.S. Mail
---------------
United Air Lines, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President and Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If by Overnight Courier
-----------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President and Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
3.2 Calculation Agent. The Calculation Agent is Party B, except that
Party A shall be the Calculation Agent for purposes of any payment to be made
under Section 6 of the Master Agreement as incorporated in this Confirmation.
3.3 Credit Support Document.
With respect to Party A: None
With respect to Party B: None.
3.4 Credit Support Provider.
To support Party A: None
To support Party B: None
3.5 Netting of Payments. The netting of payments provision set forth in
-------------------
Section 2(c) of the Master Agreement as incorporated in this Confirmation will
not apply to the Transaction evidenced by this Confirmation.
3.6 "Affiliate" will have the meaning specified in Section 12 of the
---------
Master Agreement as incorporated in this Confirmation.
PART 4
Other Provisions
----------------
4.1 Definitions. The Master Agreement, this Schedule, and the
-----------
Transaction evidenced by this Confirmation incorporate and are subject to the
1991 ISDA Definitions (as supplemented by the 1998 Supplement to the 1991 ISDA
Definitions) (the "Definitions") as published by the International Swaps and
-----------
Derivatives Association, Inc. ("ISDA"), and will be governed in all respects by
----
the Definitions (except that references to "Swap Transactions" in the
Definitions will be deemed to be references to "Transactions"). The Definitions
------------
are incorporated by reference in, and
-6-
made part of, the Master Agreement and this Confirmation as if set forth in full
in this Schedule. In the event of any inconsistency between the provisions of
the Master Agreement and the Definitions, the Master Agreement will prevail. In
the event of any inconsistency between the provisions of this Confirmation and
the Master Agreement or the Definitions, each as incorporated in this
Confirmation, this Confirmation will prevail for the purpose of this
Transaction. This Confirmation evidences and constitutes a separate and
independent Transaction which incorporates the Master Agreement, this Schedule
and the Definitions by reference and each reference to a "Confirmation" shall be
so construed; any provision of the Master Agreement, this Schedule or the
Definitions to the contrary or inconsistent with the foregoing, including
Section 1(c) of the Master Agreement, will not apply.
As used herein, each of the following terms shall have the meanings set
forth below:
(i) "Final Periodic Payment" means, in connection with the reduction in
the Principal Notional Amount of the Transaction evidenced by this
Confirmation due to the occurrence of an Additional Termination
Event relating to Leased Aircraft, the swap payment to be made by
Party A or Party B, as the case may be, on the related Early
Termination Date if and to the extent such date does not coincide
with a Periodic Swap Payment Date shall equal the amount determined
in accordance with the Periodic Swap Payment Formula had such date
been a Periodic Swap Payment Date.
(ii) "Investment Banking Firm" means an independent investment banking
firm of nationally recognized standing engaged by the Indenture
Trustee on behalf of Party A (that is, so long as no event of
default exists under any Owned Aircraft Indenture, any Lease (such
term having the same meaning herein as such term has in the
Intercreditor Agreement) relating to the Leased Aircraft or the 747
Aircraft (such term having the same meaning herein as such term has
in the Intercreditor Agreement), acceptable to Party B)
(iii) "Junior Periodic Swap Payment" means, as of any Periodic Swap
Payment Date, the "Periodic Payment Amount" (as defined in and
calculated pursuant to the definition of "Periodic Swap Payment
Formula") for such date for the Certificates.
(iv) "Junior Qualified Substitute" means any direct pay letter of
credit, swap (cancellable by Party A only) or other interest rate
hedging instrument, in each case that contains terms that would
make available to Party A the amount of funds that would be
necessary to make the Junior Periodic Swap Payments provided in
this Confirmation assuming a Eurodollar Rate not in excess of 2.96%
per annum from the Early Termination Date to the date of the last
scheduled Junior Periodic Swap Payment as set forth in Appendix I
to this Schedule and which shall be in form and substance
(including, without limitation, as to the assumed Eurodollar Rate),
and from an issuer, acceptable to the Rating Agencies and in
respect of which the Rating Agencies shall have issued a Ratings
Confirmation.
(v) "Junior Qualified Substitute Purchase Amount" means the amount to
be paid to a financial counterparty in order to obtain from such
financial counterparty commitments in the form of a Junior
Qualified Substitute plus the fees of the Investment Banking Firm
----
incurred in procuring the Junior Qualified Substitute.
(vi) "Junior Swap Termination Amount" means the amount, determined in
accordance with Appendix II to this Schedule, to be paid on the
Early Termination Date.
(vii) "Periodic Swap Payment" means, with respect to each Periodic Swap
Payment Date, the sum of the "Periodic Payment Amounts" (as defined
in and calculated pursuant to the definition of "Periodic Swap
Payment Formula") for the Series A-1 AFE Trust Notes, the Series ▇-
▇ AFE Trust Notes, the Series B AFE Trust Notes and the
Certificates for such Periodic Swap Payment Date.
-7-
(viii) "Periodic Swap Payment Date" means each of the dates set forth on
Appendix I to this Schedule, (and, if later, each January 1 and
July 1 thereafter until the Principal Notional Amount for each of
the Series A-1 AFE Trust Notes, the Series A-2 AFE Trust Notes, the
Series B AFE Trust Notes and the Certificates are reduced to zero
in accordance with the provisions thereof), each of which shall
constitute a Period End Date for all purposes of this Confirmation.
(ix) "Periodic Swap Payment Formula" means, for each of the Series A-1
AFE Trust Notes, the Series A-2 AFE Trust Notes, the Series B AFE
Trust Notes and the Certificates then outstanding, the following
formula:
Periodic Payment Amount = (((Eurodollar Rate + 0.90%) x actual
days in Swap Payment Period) - (Applicable Fixed Rate x number
of days in Swap Payment Period calculated on the basis of a
360-day year with twelve 30-day months) x Principal Notional
Amount/360
Where:
"Periodic Payment Amount" means the amount (x) to be paid by
Party A, if the result is positive, or (y) the absolute value
of which is to be paid by Party B, if the result is negative;
provided, however, that the obligation of Party A is limited
to funds available to Party A for distribution to Party B
under Article 3 of the AFE Trust Indenture.
"Applicable Fixed Rate" means 7.783% per annum, in the case of
the Series A-1 AFE Trust Notes, 7.730% per annum, in the case
of the Series A-2 AFE Trust Notes, 8.030% per annum, in the
case of the Series B AFE Trust Notes and 8.140% per annum, in
the case of the Certificates.
(x) "Principal Notional Amount" means, in respect of each of the Series
A-1 AFE Trust Notes, the Series A-2 AFE Trust Notes, the Series B
AFE Trust Notes and the Certificates, as of any Periodic Swap
Payment Date, the amount set forth as the principal notional amount
thereof for the Transaction evidenced by this Confirmation as set
forth in Appendix I to this Schedule, as such principal notional
amount may be adjusted from time to time in accordance with the
terms of this Confirmation.
(xi) "Qualified Substitute" means, with respect to the Transaction
evidenced by this Confirmation, the Senior Qualified Substitute
and/or the Junior Qualified Substitute, as the case may be.
(xii) "Qualified Substitute Purchase Amounts" means the Senior Qualified
Substitute Purchase Amount and/or the Junior Qualified Substitute
Purchase Amount, as the context may require.
(xiii) "Senior Periodic Swap Payment" means, as of any Periodic Swap
Payment Date, the sum of the "Periodic Payment Amounts" (as defined
in and calculated pursuant to the definition of "Periodic Swap
Payment Formula") for the Series A-1 AFE Trust Notes, the Series ▇-
▇ AFE Trust Notes, and the Series B AFE Trust Notes for such date.
(xiv) "Senior Qualified Substitute" means any direct pay letter of
credit, swap (cancellable by Party A only) or other interest rate
hedging instrument, in each case that contains terms that would
make available to Party A the amount of funds that would be
necessary to make the Senior Periodic Swap Payments provided in
this Confirmation assuming a Eurodollar Rate not in excess of 2.96%
per annum from the Early Termination Date to the date of the last
scheduled Senior Periodic Swap Payment as set forth in Appendix I
to this Schedule and which shall be in form and substance
(including, without limitation, as to the assumed Eurodollar Rate),
and from an issuer,
-8-
acceptable to the Rating Agencies and in respect of which the
Rating Agencies shall have issued a Ratings Confirmation.
(xv) "Senior Qualified Substitute Purchase Amount" means the amount to
be paid to a financial counterparty in order to obtain from such
financial counterparty commitments in the form of a Senior
Qualified Substitute plus the fees of the Investment Banking Firm
----
incurred in procuring the Senior Qualified Substitute.
(xvi) "Senior Swap Termination Amount" means the amount, determined in
accordance with Appendix II to this Schedule, to be paid on the
Early Termination Date.
(xvii) "Swap Payment Period" means each Calculation Period.
(xviii) "Termination Currency" means United States Dollars.
(xix) "Transaction" means the "Transaction" under, as defined in and
evidenced by this Confirmation.
Capitalized terms used herein but not otherwise defined herein or in the
Definitions shall have the meanings assigned to them in the Indenture dated as
of July 31, 2000 (the "AFE Indenture"), as amended from time to time, between
-------------
Party A and State Street Bank and Trust Company of Connecticut, National
Association (the "AFE Indenture"), including, without limitation, each of the
-------------
following terms:
"747 Lease Agreement", "AFE Trust Notes", "Certificates", "Eurodollar
Rate", "Indenture Trustee", "Intercreditor Agreement", "Leased Aircraft",
"Leased Aircraft Indenture", "Leased Equipment Notes", "Owned Aircraft",
"Owned Aircraft Indenture", "Rating Agencies", "Ratings Confirmation",
"Series A-1 AFE Trust Notes", "Series A-2 AFE Trust Notes", "Series B AFE
Trust Notes" and "Swap Substitute Account".
4.0.2 Severability. If any term, provision, covenant, or condition of
------------
this Confirmation, or the application thereof to any party or circumstance,
shall be held to be invalid or unenforceable (in whole or in part) for any
reason, the remaining terms, provisions, covenants, and conditions hereof shall
continue in full force and effect as if this Confirmation had been executed with
the invalid or unenforceable portion eliminated, so long as this Confirmation as
so modified continues to express, without material change, the original
intentions of the parties as to the subject matter of this Confirmation and the
deletion of such portion of this Confirmation will not substantially impair the
respective benefits or expectations of the parties to this Confirmation;
provided, however, that this severability provision shall not be applicable if
-------- -------
any provision, as modified by the express provisions of this Schedule to the
Master Agreement, of Section 2, 5, 6, or 11 of the Master Agreement as
incorporated in this Confirmation (or any definition or provision in Section 12
of the Master Agreement as incorporated in this Confirmation to the extent it
relates to, or is used in or in connection with any such Section) shall be so
held to be invalid or unenforceable.
4.0.3. Non-petition. Party B agrees that it will not, prior to the date
------------
following the payment in full of all the Leased Equipment Notes issued pursuant
to the related Leased Aircraft Indentures and the expiration of all applicable
preference periods under the United States Bankruptcy Code or other applicable
law relating to any such payment, acquiesce, petition or otherwise invoke or
cause Party A or any other person or entity to invoke the process of any
governmental authority for the purpose of commencing or sustaining a case
(whether voluntary or involuntary) against Party A under any bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of Party A or any
substantial part of its property or ordering the winding-up or liquidation of
the affairs of Party A.
4.0.4 Limitation of Liability. The obligations of Party A under this
-----------------------
Confirmation, and in respect of the Transaction evidenced hereby, including,
without limitation, its obligation to make any Periodic Swap Payment or Final
Periodic Payment, are expressly limited to the extent of the funds, if any, made
available for such payment to Party A under, and in accordance with, the
priorities of payments set forth in Article 3 of the AFE Indenture, and any
difference between the amount of any Party A payment calculated in accordance
with this Confirmation and any such amount available on the date for payment
shall not constitute a claim against, or obligation of, Party A. Party B
acknowledges
-9-
that no claim shall arise against Party A for any such difference. The
obligations of Party A under this Confirmation, and in respect of the
Transaction evidenced hereby, are solely the obligations of Party A, to the
extent of the funds, if any, made available therefor to Party A under and in
accordance with the priorities of payments set forth in Article 3 of the AFE
Indenture. No recourse under any obligation, covenant or agreement of Party A
contained in this Confirmation shall be had against any incorporator,
stockholder, agent, affiliate, officer, employee or trustee of Party A, as such,
by the enforcement of any assessment or by any legal or equitable proceeding, by
virtue of any statute or otherwise; it being expressly agreed and understood
that the agreements of Party A contained in this Confirmation are solely trust
obligations of Party A and that no personal liability whatsoever shall attach to
or be incurred by the incorporators, stockholders, agents, affiliates, officers,
employees or trustees of Party A, as such, or any of them, under or by reason of
any of the obligations, covenants or agreements of Party A contained in this
Confirmation and that any and all personal liability of every such incorporator,
stockholder, agent, affiliate, officer, employee or trustee of Party A for
breaches by Party A of any such obligation, covenant or agreement, which
liability may arise either at common law or at equity, by statute or
constitution, or otherwise, is hereby expressly waived as a condition of and in
consideration for the execution of this Confirmation; provided, however, that
-------- -------
nothing in this paragraph (d) shall relieve any of the foregoing persons from
any liability which any such person may otherwise have for his/her or its gross
negligence or willful misconduct.
Party B acknowledges and agrees to the distribution of payments under this
Confirmation from Party A in accordance with the priorities of payments
provisions set forth in Article 3 of the AFE Indenture.
4.5 Payments. Notwithstanding anything herein to the contrary, the
--------
parties agree, with respect to this Confirmation and the Transaction evidenced
hereby, that: (x) all payments required to be made by Party A hereunder shall be
made by 1:00 p.m. (Chicago Time) and all payments required to be made by Party B
hereunder shall be made by 11:00 a.m. (Chicago time); (y) all payments required
to be made by Party B under this Confirmation shall be made to State Street Bank
and Trust Company of Connecticut, National Association, not in its individual
capacity, but solely in its capacity as Trustee under the Owned Aircraft
Indenture securing, and identified in paragraph 2 "Summary of Transaction Terms"
of, this Confirmation (and the parties further agree that the making of any such
payment by Party B shall be deemed to satisfy Party B's obligation to make such
payment to Party A under this Confirmation); and (z) all payments required to be
made by Party A under this Confirmation shall be made in accordance with, and as
provided in, the AFE Indenture.
4.6 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND
--------------------
ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDINGS.
4.7 Representations and Warranties. Section 3(a) of the Master
------------------------------
Agreement as incorporated in this Confirmation is amended by adding the
following paragraph (vi):
"(vi) Eligible Swap Participant. It is an "eligible swap
participant" as that term is defined by the United States
Commodity Futures Trading Commission in 17 C.F.R. (S) 35.1(b)(2)
and it has entered into this Confirmation and the Transaction
evidenced hereby in connection with its line of business
(including financial intermediation services) or the financing
of its business; and the material terms of this Confirmation and
Transaction evidenced hereby have been individually tailored and
negotiated."
4.8 No Reliance. This Confirmation and the Transaction evidenced
-----------
hereby have been entered into by each party in reliance only upon its judgment,
in order to accomplish legitimate business needs. Neither party holds itself out
as advising, or any of its employees or agents as having any authority to
advise, the other party as to whether or not it should enter into this
Confirmation and the Transaction evidenced hereby. Neither party is receiving
any compensation from the other party for providing advice in respect of this
Confirmation and the Transaction evidenced hereby, and any such advice provided
to such other party will not form the primary basis for an investment decision
by such other party.
4.9 Consent to Recording. Each party (i) consents to the recording of
--------------------
the telephone conversations of trading and marketing personnel of the parties in
connection with this Confirmation and the Transaction evidenced hereby and (ii)
agrees to obtain any necessary consent of, and give notice of such recording to,
such personnel.
-10-
4.10 Waiver of Contractual Right of Setoff. Notwithstanding any
-------------------------------------
provision of the Master Agreement as incorporated in this Confirmation or any
other existing or future agreement, each party irrevocably waives any and all
contractual rights it may have to set off, net, recoup or otherwise withhold or
suspend or condition payment or performance of any obligation between the two
parties hereunder against any obligations between the two parties under any
other agreements or otherwise.
4.11 Amendments. The Master Agreement is hereby further amended as
----------
follows:
4.11.1 Section 2(b) of the Master Agreement as
incorporated in this Confirmation is hereby
amended by the insertion of the following at
the end thereof after the word "change":
"provided that if such new account shall not
be in the same jurisdiction having the same
power to tax as the original account, the
party not changing its account shall not be
obliged to pay any greater amounts and shall
not receive less as a result of such change
than would have been the case if such change
had not taken place."
4.11.2 Section 2(d) of the Master Agreement as
incorporated in this Confirmation is amended
by adding thereto a new final sentence
reading as follows: "Anything in this Section
2(d) to the contrary notwithstanding, Party A
shall not be obligated to make any payment
under this Section 2(d) to Party B".
4.11.3 Section 6(b)(iii) of the Master Agreement as
incorporated in this Confirmation is hereby
amended by adding the following at the end
thereof: "which day shall coincide in the
case of an Additional Termination Event
described in Part 1 clause (h) of this
Schedule to the Master Agreement as
incorporated in this Confirmation as follows:
(1) in the case of paragraphs (x) and (y) to
sub-clause (i), on the date the relevant
Lease referred to therein terminates, (2) in
the case of paragraph (z) to sub-clause (i),
on the date of the application of the
proceeds referred to therein, (3) in the case
of paragraphs (x) and (y) to sub-clause (ii),
on the date of the payment or prepayment, as
the case may be, of the United Equipment
Notes referred to therein, and (4) in the
case of paragraph (z) to sub-clause (ii), on
the date of the application of the proceeds
referred to therein".
4.11.4 The definition of "Affected Transactions" set forth
in Section 12 of the Master Agreement as
incorporated in this Confirmation is amended
by deleting the existing provision thereof
and substituting the following: '"Affected
Transaction" means the Transaction evidenced
by this Confirmation".
4.12 Acknowledgment. Party B hereby acknowledges the assignment by
--------------
Party A of its rights, but not its obligations, under this Confirmation to the
Indenture Trustee pursuant to the AFE Indenture and expressly agrees that the
Indenture Trustee may exercise the rights of Party A under this Confirmation, to
the same extent as if a party to this Confirmation, on the terms specified in
the AFE Indenture.
4.13 Obligation of Party A regarding Additional Early Terminations.
-------------------------------------------------------------
With respect to the Transaction evidenced by this Confirmation, upon the
occurrence of an event resulting in an Additional Early Termination with respect
to the Owned Aircraft securing the Transaction evidenced by this Confirmation,
the Indenture Trustee on behalf of Party A shall engage the Investment Banking
Firm and shall instruct the Investment Banking Firm to use commercially
reasonable efforts to promptly procure a Senior Qualified Substitute and/or a
Junior Qualified Substitute, but only to the extent that the Qualified
Substitute Purchase Amounts are less than or equal to the Senior Swap
Termination Amount and/or the Junior Swap Termination Amount, as applicable. In
no event shall Party A be obligated to pay any fees or other amounts arising in
connection with procuring Qualified Substitutes to the Investment Banking Firm
if the Investment Banking Firm fails to so procure Qualified Substitutes in
accordance with the preceding sentence.
-11-
4.14 Substitution of Aircraft Collateral. In the event that Party B
-----------------------------------
elects to prepay the United Equipment Notes issued under the Owned Aircraft
Indenture securing, and identified in paragraph 2 "Summary of Transaction Terms"
of, this Confirmation, Party B may, prior to such prepayment, and in lieu of
making a termination payment as provided in Section 6(e) of the Master Agreement
as incorporated in this Confirmation, elect to secure its obligations under this
Confirmation and the Transaction evidenced hereby by granting to the Indenture
Trustee, on behalf of Party A, a security interest on and mortgage over an
aircraft owned by Party B, of a value and subject to such encumbrances as may be
acceptable to the Rating Agencies, pursuant to a mortgage containing covenants,
terms, priority of payment provisions (to the extent other encumbrances exist in
respect of such aircraft) and conditions substantially similar to the Owned
Aircraft Indenture, and in any event acceptable to the Rating Agencies, and in
connection therewith, and as a condition to the effectiveness of any such
election, Party B shall have obtained a Ratings Confirmation.
4.15 Supplemental Payment. With respect to this Confirmation and the
--------------------
Transaction evidenced hereby, in addition to any other amounts payable under
this Confirmation, Party B shall pay to Party A on or before January 2, 2001,
the Supplemental Payment Amount determined in accordance with the following
formula, which amount may not be netted against any amount due and owing from
Party A to Party B:
Supplemental Payment Amount = (Supplemental Payment Period x 7.9625% per
annum x Supplemental Payment Notional Balance) / 360.
Where:
"Supplemental Payment Period" means the actual number of days from
and including July 31, 2000 to, but excluding, the date of the payment of
the Supplemental Payment Amount.
"Supplemental Payment Notional Balance" means $43,160.94.
(p) Survival of Obligations. The "Survival of Obligations" provision
-----------------------
of Section 8(c) of the Master Agreement as incorporated in this Confirmation
will not apply.
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Appendix I
----------
Principal Notional Amount
-------------------------
The Principal Notional Amount as of any Periodic Swap Payment Date for each of
the Series A-1 AFE Trust Notes, the Series A-2 AFE Trust Notes, the Series B AFE
Trust Notes and the Certificates is the product of the amount set forth below
opposite such date for such instrument and ___% (the "Allocation Percentage"):
--------------------------------------------------------------------------------------------------
Periodic Swap Series A-1 AFE Series A-2 AFE Series B AFE
------------- -------------- -------------- ------------
Payment Date(1) Trust Notes(2)(3) Trust Notes(2)(3) Trust Notes(2)(3) Certificates(2)(3)
------------ ----------- ----------------- ----------------- ------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
(5) Subject to Modified Following Business Day Convention
(6) Computed as of the Effective Date on the basis of the scheduled aggregate
outstanding principal amounts of the Series A-1, Series A-2 and Series B
AFE Trust Notes and the aggregate scheduled pool balance of the
Certificates, in each instance, as of the relevant Periodic Swap Payment
Date, except that if as of any date of determination thereof, any of the
amounts shown above for such date are less than the corresponding actual
outstanding amount of the related Series of AFE Trust Notes or
Certificates, as the case may be, as of such date, the Principal Notional
Amount of the affected Series of AFE Trust Notes or Certificates, as the
case may be, for such date shall be such actual outstanding amount
thereof.
(7) In the event the Leased Equipment Notes in respect of any Leased Aircraft
are prepaid as a result of the termination of the released Lease, the
Principal Notional Amounts set forth above shall be reduced by the
redemption amounts for such Leased Aircraft as set forth in Exhibit A to
this Appendix I.
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Exhibit A
For each of Leased Aircraft N_______, _______, _______ and _______
-------------------------------------------------------------------------------------------
Periodic Swap Series A-1 AFE Series A-2 AFE Series B AFE
Payment Date(1) Trust Notes Trust Notes Trust Notes Certificates
------------ ----------- ----------- ----------- ------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-14-
For each of Leased Aircraft N_____ and N______
-----------------------------------------------------------------------------------------
Periodic Swap Series A-1 AFE Series A-2 AFE Series B AFE
Payment Date Trust Notes Trust Notes Trust Notes Certificates
------------ ----------- ----------- ----------- ------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-15-
Appendix II
-----------
The Senior Swap Termination Amount, Junior Swap Termination Amount and Swap
Termination as of any Periodic Swap Payment Date equals the product of the
amount set forth below opposite such date and the Allocation Percentage, as
follows:
-------------------------------------------------------------------------------------------
Periodic Swap Senior Swap Junior Swap Swap Termination
Payment Date(1) Termination Amount(2)(3) Termination Amount(2)(3) Amount(2)(3)
------------ ------------------ ------------------ -------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
(1) Subject to Modified Following Business Day Convention
(2) Computed as of the Effective Date on the basis of the scheduled
outstanding principal amount of the Series A-1, Series A-2 and Series B
AFE Trust Notes plus the pool balance of the Certificates, except that if
as of any date of determination thereof, the actual amount of such
aggregate outstanding principal amount plus pool balance exceeds the
scheduled amounts therefor as set forth in Appendix I to this Schedule,
the Senior Swap Termination Amount and/or Junior Swap Termination Amount
as of such date of determination shall be the respective amount thereof as
shown therefor as of the preceding Periodic Swap Payment Date or Effective
Date as the case may be.
(3) In the event the Leased Equipment Notes in respect of any Leased Aircraft
are prepaid as a result of the termination of the related lease, the
Senior Swap Termination Amounts and Junior Swap Termination Amounts set
forth above shall be reduced by the reduction amounts for such Leased
Aircraft as set forth in Exhibit A to this Appendix II.
-16-
Exhibit A
For each of Leased Aircraft N______, ______, ______ and ________
--------------------------------------------------------------------------------------------
Periodic Swap Senior Swap Junior Swap Swap Termination
Payment Date(1) Termination Amount(2)(3) Termination Amount(2)(3) Amount(2)(3)
------------ ------------------ ------------------ ------
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
-17-
For each of Leased Aircraft N____, and N_____
-------------------------------------------------------------------------------------------------
Periodic Swap Senior Swap Junior Swap Swap Termination
Payment Date(1) Termination Amount(2)(3) Termination Amount(2)(3) Amount(2)(3)
------------ ------------------ ------------------ ------
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
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