1
EXHIBIT 4.12
--------------------------------------------------------------------------------
INTERCREDITOR AGREEMENT
Dated as of
December 23, 1997
AMONG
FIRST SECURITY BANK, NATIONAL ASSOCIATION
not in its individual capacity
but solely as Trustee under the
United Airlines 1997-1A Pass Through Trust,
United Airlines 1997-1B Pass Through Trust,
United Airlines 1997-1C Pass Through Trust
and
United Airlines 1997-1D Pass Through Trust
KREDITANSTALT FUR WIEDERAUFBAU,
as Class A Primary Liquidity Provider
and
Class B Primary Liquidity Provider,
CREDIT SUISSE FINANCIAL PRODUCTS,
as Class A Above-Cap Liquidity Provider
and
Class B Above-Cap Liquidity Provider
AND
FIRST SECURITY BANK, NATIONAL ASSOCIATION
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and Trustee
--------------------------------------------------------------------------------
2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
Section 2.1 Agreement to Terms of Subordination; Payments
from Monies Received Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.2 Trust Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.3 Deposits to the Collection Account
and Special Payments Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.4 Distributions of Special Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.5 Designated Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.6 Controlling Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
Section 3.1 Written Notice of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.2 Distribution of Amounts on Deposit in the Collection Account . . . . . . . . . . . . . . . . . . . . 33
Section 3.3 Distribution of Amounts on Deposit Following a Triggering Event . . . . . . . . . . . . . . . . . . 35
Section 3.4 Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.5 Payments to the Trustee and the Primary Liquidity Providers . . . . . . . . . . . . . . . . . . . . 37
Section 3.6 Liquidity Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IV
EXERCISE OF REMEDIES
Section 4.1 Directions from the Controlling Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.2 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4.3 Discontinuance of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4.4 Right of Certificateholders to Receive Payments Not to Be Impaired . . . . . . . . . . . . . . . . . 47
Section 4.5 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
i
3
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
Section 5.1 Notice of Indenture Default or Triggering Event . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.3 No Duties Except as Specified in Intercreditor Agreement . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.4 Notice from the Liquidity Providers and Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VI
THE SUBORDINATION AGENT
Section 6.1 Acceptance of Trusts and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.2 Absence of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.3 No Representations or Warranties as to Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.4 No Segregation of Monies; No Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.5 Reliance; Agents; Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.6 Capacity in Which Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.7 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.8 May Become Certificateholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.9 Subordination Agent Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.10 Money to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VII
[Reserved]
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
Section 8.1 Replacement of Subordination Agent; Appointment of Successor . . . . . . . . . . . . . . . . . . . . 51
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
Section 9.1 Amendments, Waivers, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 9.2 Subordination Agent Protected. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.3 Effect of Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.4 Copy to Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ii
4
ARTICLE X
MISCELLANEOUS
Section 10.1 Termination of Intercreditor Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.2 Intercreditor Agreement for Benefit of Trustee, Liquidity Providers
and Subordination Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.5 No Oral Modifications or Continuing Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.8 Counterpart Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.9 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 10.11 Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Indemnity . . . . . . . . . . . . . . . 57
Section 10.12 Obligations of CSFP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Schedule 1 Indentures
Schedule 2 Note Purchase Agreement
iii
5
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT, dated as of December 23, 1997, among
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association
("FSB"), not in its individual capacity but solely as Trustee of each Trust
(each as defined below), KREDITANSTALT FUR WIEDERAUFBAU, a corporation
organized under the public law of the Federal Republic of Germany ("KfW"), as
the primary liquidity provider, Credit Suisse Financial Products ("CSFP"), an
unlimited company incorporated in England and an authorized institution under
the Banking Act of 1987 of the United Kingdom, as the above-cap liquidity
provider, and FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity except as expressly set forth herein, but solely as Subordination
Agent hereunder (in such capacity, together with any successor appointed
pursuant to Article VIII, the "Subordination Agent").
WHEREAS, all capitalized terms used and not otherwise defined
herein shall have the respective meanings referred to in Article I;
WHEREAS, pursuant to each Indenture (i) with respect to the
two Boeing 747-422 aircraft, four Airbus A320-232 aircraft, three Boeing
777-222 aircraft and one Boeing 777-222IGW aircraft owned by United (the "Owned
Aircraft"), United proposes to issue on a recourse basis three series of
Equipment Notes (and, pursuant to the related Indenture, may in the future
issue on a recourse basis a fourth series of Equipment Notes) either to finance
the Owned Aircraft or refinance its current indebtedness originally incurred to
finance the Owned Aircraft and (ii) with respect to the four Boeing 737-322
aircraft that have been leased to United pursuant to the related Lease
(collectively, the "Leased Aircraft"), the related Owner Trustees propose to
issue on a nonrecourse basis four series of Equipment Notes to refinance the
current indebtedness of such Owner Trustees originally incurred to finance the
purchase of the Leased Aircraft;
WHEREAS, pursuant to the Note Purchase Agreement, each Trust
will acquire those Equipment Notes having an interest rate equal to the
interest rate applicable to the Certificates to be issued by such Trust;
WHEREAS, pursuant to each Trust Agreement executed and
delivered from time to time, the Trust created thereby proposes to issue a
single class of Certificates (a "Class"), designated as either Class A
Certificates, Class B Certificates, Class C Certificates or Class D
Certificates, bearing the interest rate and having the final distribution date
described in such Trust Agreement on the terms and subject to the conditions
set forth therein;
WHEREAS, pursuant to the Purchase Agreement, on the Closing
Date the Initial Purchasers propose to purchase the Class A Certificates issued
by the Class A Trust in the aggregate face amount set forth opposite the name
of such Trust on Schedule I thereto;
6
WHEREAS, on the Closing Date (i) pursuant to the Class B
Certificate Purchase Agreement and the Class C Certificate Purchase Agreement,
KfW proposes to purchase the Class B Certificates and the Class C Certificates,
respectively, issued by the related Trust and (ii) pursuant to the Class D
Certificate Purchase Agreement, United proposes to purchase the Class D
Certificates issued by the Class D Trust, in each case in the aggregate amount
set forth therein;
WHEREAS, the Class A Primary Liquidity Provider proposes to
enter into a revolving credit agreement relating to the Class A Certificates,
the Class B Primary Liquidity Provider proposes to enter into a revolving
credit agreement relating to the Class B Certificates, the Class A Above-Cap
Liquidity Provider proposes to enter into irrevocable interest rate cap
agreements relating to the Class A Certificates and the Class B Above-Cap
Liquidity Provider proposes to enter into irrevocable interest rate cap
agreements relating to the Class B Certificates (each, a "Liquidity Facility"),
in each case with the Subordination Agent, as agent for the Trustee of the
Class A Trust or the Class B Trust, as applicable, for the benefit of the
Certificateholders of each such Trust; and
WHEREAS, it is a condition precedent to the obligations of the
Initial Purchasers under the Purchase Agreement that the Subordination Agent,
the Trustee and the Liquidity Providers agree to the terms of subordination set
forth in this Agreement in respect of each Class of Certificates, and the
Subordination Agent, the Trustee and the Liquidity Providers, by entering into
this Agreement, hereby acknowledge and agree to such terms of subordination and
the other provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms used herein that are defined in this Article I
have the meanings assigned to them in this Article I, and include the
plural as well as the singular;
(b) all references in this Agreement to designated
"Articles," "Sections" and other subdivisions are to the designated
Articles, Sections and other subdivisions of this Agreement;
2
7
(c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision; and
(d) the term "including" means "including without
limitation".
"Above-Cap Liquidity Facility" the Class A Above-Cap Liquidity
Facility or the Class B Above-Cap Liquidity Facility, as applicable.
"Above-Cap Liquidity Provider" means the Class A Above-Cap
Liquidity Provider and/or the Class B Above- Cap Liquidity Provider,
as applicable.
"Acceleration" means, with respect to the amounts payable in
respect of the Equipment Notes issued under any Indenture, the
declaration of such amounts to be immediately due and payable.
"Accelerate," "Accelerated" and "Accelerating" have meanings
correlative to the foregoing.
"Additional Payment" means a payment of Make-Whole Amount
and/or Break Amount, if any.
"Adjusted Expected Distributions" means, with respect to the
Certificates of any Trust or Trusts of the same Class on any Current
Distribution Date, the sum of (x) accrued and unpaid interest on such
Certificates and (y) the greater of:
(A) the difference between (x) the Pool Balance
of such Certificates as of the preceding
Distribution Date and (y) the Pool Balance of
such Certificates as of the Current
Distribution Date calculated on the basis
that (i) the principal of the Non-Performing
Equipment Notes held in such Trust or Trusts
has been paid in full and such payments have
been distributed to the holders of such
Certificates and (ii) the principal of the
Performing Equipment Notes has been paid when
due (but without giving effect to any
Acceleration of Performing Equipment Notes)
and such payments have been distributed to
the holders of such Certificates; and
(B) the amount of the excess, if any, of (i) the
Pool Balance of such Class of Certificates as
of the preceding Distribution Date, over (ii)
the Aggregate LTV Collateral Amount for such
Class of Certificates for the Current
Distribution Date;
provided, however, that, until the date of the initial LTV
Appraisals, clause (B) shall not apply.
3
8
"Advance" means, with respect to any Primary Liquidity
Facility, any Advance as defined in such Primary Liquidity Facility.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under
common control with such Person. For the purposes of this definition,
"control" means the power, directly or indirectly, to direct or cause
the direction of the management and policies of such Person whether
through the ownership of voting securities or by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Aggregate LTV Collateral Amount" for any Class of
Certificates for any Distribution Date means the sum of the applicable
LTV Collateral Amounts for all Aircraft, minus the Pool Balance for
each Class of Certificates, if any, senior to such Class, after giving
effect to any distribution of principal on such Distribution Date on
such senior Class or Classes.
"Aircraft" means, with respect to each Indenture, the
"Aircraft" referred to therein.
"Appraisal" means a fair market value appraisal (which may be
a "desktop" appraisal) performed by any Appraiser or any other
nationally recognized appraiser on the basis of an arm's-length
transaction between an informed and willing purchaser under no
compulsion to buy and an informed and willing seller under no
compulsion to sell and both having knowledge of all relevant facts.
"Appraised Current Market Value" of any Aircraft means the
lower of the average and the median of the most recent three
Appraisals of such Aircraft.
"Appraisers" means Aircraft Information Services, Inc., BK
Associates, Inc. and AvSolutions Inc.
"Available Amount" means, with respect to any Primary
Liquidity Facility on any drawing date, an amount equal to (a) the
Maximum Commitment Amount of such Primary Liquidity Facility, less (b)
the amount of each LP Interest Drawing honored by the Primary
Liquidity Provider under such Primary Liquidity Facility on or prior
to such date that has not been reimbursed or reinstated as of such
date; provided, however, that, following a Downgrade Drawing or a
Final Drawing under such Primary Liquidity Facility, the Available
Amount of such Primary Liquidity Facility shall be zero.
"Bankruptcy Code" has the meaning assigned to such term in the
definition of "Performing Equipment Note" in this Section 1.1.
"Basic Pass Through Trust Agreement" with respect to any
Trust, means the Pass Through Trust Agreement, dated as of December
23, 1997, between United and FSB,
4
9
as the same may from time to time be supplemented, amended or modified,
but does not include any Trust Supplement.
"Break Amount" shall have the meaning set forth in the
Indentures.
"Business Day" means any day (i) other than a Saturday or
Sunday or a day on which commercial banks are required or authorized
to close in Chicago, Illinois, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
or the city and state in which the Trustee, the Subordination Agent or
any Indenture Trustee maintains its Corporate Trust Office or receives
and disburses funds, and (ii) on which dealings are carried on in the
London interbank market.
"Cash Collateral Account" means the Class A Cash Collateral
Account, the Class A Above-Cap Account, the Class B Cash Collateral
Account or the Class B Above-Cap Account, as applicable.
"Certificate" means a Class A Certificate, a Class B
Certificate, a Class C Certificate or a Class D Certificate, as
applicable.
"Certificateholder" means any holder of one or more
Certificates.
"Class" has the meaning assigned to such term in the
preliminary statements to this Agreement.
"Class A Above-Cap Account" means an Eligible Deposit Account
in the name of the Subordination Agent maintained at an Eligible
Institution, which shall be the Subordination Agent if it shall so
qualify, into which all amounts posted as collateral under the Class A
Above-Cap Liquidity Facility pursuant to Section 3.6(d) shall be
deposited.
"Class A Above-Cap Liquidity Facility" means, initially, the
ISDA Master Agreement, dated as of December 23, 1997, between the
Subordination Agent, as agent of the Trustee, and the Class A
Above-Cap Liquidity Provider, together with the Schedule, Collateral
Support Annex and Confirmation attached thereto, relating to the Class
A Certificates, and, from and after the replacement of such ISDA
Master Agreement pursuant hereto, the Replacement Above-Cap Liquidity
Facility therefor, if any, in each case as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"Class A Above-Cap Liquidity Provider" means CSFP, together
with any Replacement Above-Cap Liquidity Provider or Replacement
Above-Cap Liquidity Providers that have issued a Replacement Above-Cap
Liquidity Facility to replace the Class A Above-Cap Liquidity Facility
pursuant to Section 3.6(d) or 3.6(e).
5
10
"Class A Cash Collateral Account" means an Eligible Deposit
Account in the name of the Subordination Agent maintained at an
Eligible Institution, which shall be the Subordination Agent if it
shall so qualify, into which all amounts drawn under the Class A
Primary Liquidity Facility pursuant to Section 3.6(c) or 3.6(i) shall
be deposited.
"Class A Certificateholder" means, at any time, any holder of
one or more Class A Certificates.
"Class A Certificates" means the certificates issued by each
Class A Trust, substantially in the form of Exhibit A to the related
Class A Trust Agreement, and authenticated by the Trustee,
representing fractional undivided interests in such Class A Trust, and
any certificates issued in exchange therefor or replacement thereof
pursuant to the terms of such Class A Trust Agreement.
"Class A Primary Liquidity Facility" means, initially, the
Revolving Credit Agreement, dated as of December 23, 1997, between the
Subordination Agent, as agent of the Trustee, and the Class A Primary
Liquidity Provider relating to the Class A Certificates, and, from and
after the replacement of such Revolving Credit Agreement pursuant
hereto, the Replacement Primary Liquidity Facility therefor, if any,
in each case as amended, supplemented or otherwise modified from time
to time in accordance with its terms.
"Class A Primary Liquidity Provider" means KfW, together with
any Replacement Primary Liquidity Provider or Replacement Primary
Liquidity Providers that have issued a Replacement Primary Liquidity
Facility to replace the Class A Primary Liquidity Facility pursuant to
Section 3.6(c) or 3.6(e).
"Class A Trust" means United Airlines 1997-1A Pass Through
Trust created and administered pursuant to the initial Class A Trust
Agreement or any subsequent or additional United Airlines 1997-1A Pass
Through Trust created and administered pursuant to any other Class A
Trust Agreement from time to time in effect.
"Class A Trust Agreement" means (i) the Class A Trust
Supplement, dated as of December 23, 1997, between United and FSB,
together with the Basic Pass Through Trust Agreement, as each may be
amended, supplemented or otherwise modified from time to time in
accordance with its terms and (ii) any subsequent or additional Trust
Supplement which is designated and is to be treated as a Class A Trust
Supplement and which, together with the Basic Pass Through Trust
Agreement, creates a Class A Trust.
"Class A Trust Supplement" shall mean a Trust Supplement
designated under the Basic Pass Through Trust Agreement as a Class A
Trust Agreement.
"Class B Above-Cap Account" means an Eligible Deposit Account
in the name of the Subordination Agent maintained at an Eligible
Institution, which shall be the
6
11
Subordination Agent if it shall so qualify, into which all amounts
posted as collateral under the Class B Above-Cap Liquidity Facility
pursuant to Section 3.6(d) shall be deposited.
"Class B Above-Cap Liquidity Facility" means, initially, the
ISDA Master Agreement, dated as of December 23, 1997, between the
Subordination Agent, as agent of the Trustee, and the Class B
Above-Cap Liquidity Provider, together with the Schedule, Collateral
Support Annex and Confirmation attached thereto, relating to the Class
B Certificates, and, from and after the replacement of such ISDA
Master Agreement pursuant hereto, the Replacement Above-Cap Liquidity
Facility therefor, if any, in each case as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"Class B Above-Cap Liquidity Provider" means CSFP, together
with any Replacement Above-Cap Liquidity Provider or Replacement
Above-Cap Liquidity Providers that have issued a Replacement Above-Cap
Liquidity Facility to replace the Class B Above-Cap Liquidity Facility
pursuant to Section 3.6(d) or 3.6(e).
"Class B Cash Collateral Account" means an Eligible Deposit
Account in the name of the Subordination Agent maintained at an
Eligible Institution, which shall be the Subordination Agent if it
shall so qualify, into which all amounts drawn under the Class B
Primary Liquidity Facility pursuant to Section 3.6(c) or 3.6(i) shall
be deposited.
"Class B Certificateholder" means, at any time, any holder of
one or more Class B Certificates.
"Class B Certificate Purchase Agreement" means the Class B
Certificate Purchase Agreement, dated as of December 23, 1997, among
the Trustee, United and KfW, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class B Certificates" means the certificates issued by each
Class B Trust, substantially in the form of Exhibit A to the related
Class B Trust Agreement, and authenticated by the Trustee,
representing fractional undivided interests in such Class B Trust, and
any certificates issued in exchange therefor or replacement thereof
pursuant to the terms of such Class B Trust Agreement.
"Class B Primary Liquidity Facility" means, initially, the
Revolving Credit Agreement, dated as of December 23, 1997, between the
Subordination Agent, as agent of the Trustee, and the Class B Primary
Liquidity Provider relating to the Class B Certificates, and, from and
after the replacement of such Agreement pursuant hereto, the
Replacement Primary Liquidity Facility therefor, if any, in each case
as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
7
12
"Class B Primary Liquidity Provider" means KfW, together with
any Replacement Primary Liquidity Provider or Replacement Primary
Liquidity Providers that have issued a Replacement Primary Liquidity
Facility to replace the Class B Primary Liquidity Facility pursuant to
Section 3.6(c) or 3.6(e).
"Class B Trust" means United Airlines 1997-1B Pass Through
Trust created and administered pursuant to the initial Class B Trust
Agreement or any subsequent or additional United Airlines 1997-1B Pass
Through Trust created and administered pursuant to any other Class B
Trust Agreement from time to time in effect.
"Class B Trust Agreement" means (i) the Class B Trust
Supplement, dated as of December 23, 1997, between United and FSB,
together with the Basic Pass Through Trust Agreement, as each may be
amended, supplemented or otherwise modified from time to time in
accordance with its terms and (ii) any subsequent or additional Trust
Supplement which is designated and is to be treated as a Class B Trust
Supplement and which, together with the Basic Pass Through Trust
Agreement, creates a Class B Trust.
"Class B Trust Supplement" shall mean a Trust Supplement
designated under the Basic Pass Through Trust Agreement as a Class B
Trust Agreement.
"Class C Certificateholder" means, at any time, any holder of
one or more Class C Certificates.
"Class C Certificate Purchase Agreement" means the Class C
Certificate Purchase Agreement, dated as of December 23, 1997, among
the Trustee, United and KfW, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class C Certificates" means the certificates issued by each
Class C Trust, substantially in the form of Exhibit A to the related
Class C Trust Agreement, and authenticated by the Trustee,
representing fractional undivided interests in such Class C Trust, and
any certificates issued in exchange therefor or in replacement thereof
pursuant to the terms of such Class C Trust Agreement.
"Class C Trust" means United Airlines 1997-1C Pass Through
Trust created and administered pursuant to the initial Class C Trust
Agreement or any subsequent or additional United Airlines 1997-1C Pass
Through Trust created and administered pursuant to any other Class C
Trust Agreement from time to time in effect.
"Class C Trust Agreement" means (i) the Class C Trust
Supplement, dated as of December 23, 1997, between United and FSB,
together with the Basic Pass Through Trust Agreement, as each may be
amended, supplemented or otherwise modified from time to time in
accordance with its terms and (ii) any subsequent or additional Trust
8
13
Supplement which is designated and is to be treated as a Class C Trust
Supplement and which, together with the Basic Pass Through Trust
Agreement, creates a Class C Trust.
"Class C Trust Supplement" shall mean a Trust Supplement
designated under the Basic Pass Through Trust Agreement as a Class C
Trust Agreement.
"Class D Certificateholder" means, at any time, any holder of
one or more Class D Certificates.
"Class D Certificate Purchase Agreement" means the Class D
Certificate Purchase Agreement, dated as of December 23, 1997, between
the Trustee and United, as amended, supplemented or otherwise modified
from time to time in accordance with its terms.
"Class D Certificates" means the certificates issued by each
Class D Trust, substantially in the form of Exhibit A to the related
Class D Trust Agreement, and authenticated by the Trustee,
representing fractional undivided interests in such Class D Trust, and
any certificates issued in exchange therefor or in replacement thereof
pursuant to the terms of such Class D Trust Agreement.
"Class D Trust" means United Airlines 1997-1D Pass Through
Trust created and administered pursuant to the initial Class D Trust
Agreement or any subsequent or additional United Airlines 1997-1D Pass
Through Trust created and administered pursuant to any other Class D
Trust Agreement from time to time in effect.
"Class D Trust Agreement" means (i) the Class D Trust
Supplement, dated as of December 23, 1997, between United and FSB,
together with the Basic Pass Through Trust Agreement, as each may be
amended, supplemented or otherwise modified from time to time in
accordance with its terms and (ii) any subsequent or additional Trust
Supplement which is designated and is to be treated as a Class D Trust
Supplement and which, together with the Basic Pass Through Trust
Agreement, creates a Class D Trust.
"Class D Trust Supplement" shall mean a Trust Supplement
designated under the Basic Pass Through Trust Agreement as a Class D
Trust Agreement.
"Closing Date" means December 23, 1997.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the Eligible Deposit Account
established by the Subordination Agent pursuant to Section 2.2(a) into
and from which the Subordination Agent shall make deposits and
withdrawals in accordance with this Agreement.
9
14
"Commitment Percentage" means, at the date of determination,
(i) the commitment of each Primary Liquidity Provider, if more than
one, as compared to the aggregate commitments of all Primary Liquidity
Providers, stated as a percentage or (ii) the commitment of each
Above-Cap Liquidity Provider, if more than one, as compared to the
aggregate commitments of all Above-Cap Liquidity Providers, stated as
a percentage.
"Controlling Party" means the Person entitled to act as such
pursuant to the terms of Section 2.6.
"Corporate Trust Office" means, with respect to the Trustee,
the Subordination Agent or any Indenture Trustee, the office of such
Person in the city at which, at any particular time, its corporate
trust business shall be principally administered.
"CSFP" has the meaning assigned to such term in the recital of
parties to this Agreement.
"Current Distribution Date" means a Distribution Date
specified as a reference date for calculating the Expected
Distributions or the Adjusted Expected Distributions with respect to
the Certificates of any Trust as of such Distribution Date.
"Deferral Period" means the period (a) commencing on the date
of the first amendment, waiver, modification, exercise of remedies or
other action of the type described in clauses (i) through (v) of the
second sentence of Section 4.1(c), and (b) ending on the second
anniversary of such date.
"Deficiency Amount" has the meaning assigned to such term in
Section 3.6(a).
"Designated Representatives" means the Trustee Representatives
and the LP Representatives identified under Section 2.5.
"Distribution Date" means a Regular Distribution Date or a
Special Distribution Date.
"Dollars" means United States dollars.
"Downgrade Collateral" has the meaning assigned thereto in the
Above-Cap Liquidity Facilities.
"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c).
"Downgraded Facility" has the meaning assigned to such term in
Section 3.6(c).
10
15
"Drawing" means an Interest Drawing, a Final Drawing or a
Downgrade Drawing, as the case may be.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account
with the corporate trust department of a depository institution
organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any U.S. branch of
a foreign bank), having corporate trust powers and acting as trustee
for funds deposited in such account, so long as any of the securities
of such depository institution has a long-term unsecured debt rating
from each Rating Agency of at least "A-3" or its equivalent. An
Eligible Deposit Account may be maintained with a Liquidity Provider
so long as such Liquidity Provider is an Eligible Institution;
provided, however, that such Liquidity Provider shall have waived all
rights of set-off and counterclaim with respect to such account; and
provided, further, that each institution at which any Eligible Deposit
Account is maintained shall agree, for all purposes of the applicable
Uniform Commercial Code ("UCC"), including Article 8 thereof, that (a)
such account shall be a "securities account" (as defined in Section
8-501 of the UCC), (b) all property credited to such account shall be
treated as a "financial asset" (as defined in Section 8-102(9) of the
UCC), (c) the Subordination Agent shall be the "entitlement holder"
(as defined in Section 8-102(7) of the UCC) in respect of such
account, (d) such institution shall comply with all entitlement orders
issued by the Subordination Agent to the exclusion of any other Person
and (e) the "securities intermediary jurisdiction" (under Section
8-110(e) of the UCC) shall be the State of Illinois.
"Eligible Institution" means (a) the corporate trust
department of the Subordination Agent or the Trustee, as applicable,
or (b) a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of
Columbia (or any U.S. branch of a foreign bank), which has a long-term
unsecured debt rating from each Rating Agency of at least "A-3" or its
equivalent.
"Eligible Investments" means each of (i) obligations of, or
guaranteed by, the United States Government, (ii) open market
commercial paper of any corporation incorporated under the laws of the
United States of America or any State thereof rated at least "P-1" or
its equivalent by Moody's or at least "A-1" or its equivalent by
Standard & Poor's, (iii) certificates of deposit, time deposits or
other direct obligations of, or obligations guaranteed by, commercial
banks organized under the laws of the United States or of any
political subdivision thereof having a combined capital and surplus in
excess of $500,000,000 which banks or their holding companies have a
rating of "A" or its equivalent by Moody's or Standard & Poor's;
provided, however, that the aggregate amount at any one time so
invested in certificates of deposit issued by any one bank shall not
exceed 5% of such bank's capital and surplus, (iv) U.S. dollar
denominated offshore certificates of deposit issued by, or offshore
time deposits with, any commercial bank described in clause (iii) or
any subsidiary thereof and (v) repurchase agreements with any
financial institution having combined capital and surplus of at least
$500,000,000 with
11
16
any of the obligations described in clauses (i) through (iv) as
collateral; provided that all Eligible Investments held pursuant to
this Agreement must be held in an Eligible Deposit Account.
"Equipment Notes" means, at any time, the Series A Equipment
Notes, the Series B Equipment Notes, the Series C Equipment Notes and
the Series D Equipment Notes, collectively, and in each case, any
Equipment Notes issued in exchange therefor or replacement thereof
pursuant to the terms of the Indentures.
"Expected Distributions" means, with respect to the
Certificates of any Trust or Trusts of the same Class on any Current
Distribution Date, the sum of (x) accrued and unpaid interest on such
Certificates and (y) the difference between (A) the Pool Balance of
such Certificates as of the preceding Distribution Date and (B) the
Pool Balance of such Certificates as of the Current Distribution Date,
calculated on the basis that the principal of the Equipment Notes held
in such Trust or Trusts has been paid when due (whether at stated
maturity or upon redemption, prepayment or acceleration or otherwise)
and such payments have been distributed to the holders of such
Certificates. For purposes of calculating Expected Distributions, any
Additional Payment paid on the Equipment Notes held in any Trust which
has not been distributed to the Certificateholders of such Trust
(other than such Additional Payment or a portion thereof applied to
the payment of interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be added to the
amount of such Expected Distributions.
"Fee Letter" means the Fee Letter, dated December 23, 1997,
among United, KfW and the Subordination Agent with respect to the
Primary Liquidity Facilities.
"Final Distributions" means, with respect to the Certificates
of any Trust or Trusts of the same Class on any Distribution Date, the
sum of (x) accrued and unpaid interest on such Certificates and (y)
the Pool Balance of such Certificates as of the preceding Distribution
Date. For purposes of calculating Final Distributions, any Additional
Payment paid on the Equipment Notes held in any Trust which has not
been distributed to the Certificateholders of such Trust (other than
such Additional Payment or a portion thereof applied to the payment of
interest on the Certificates of such Trust or the reduction of the
Pool Balance of such Trust) shall be added to the amount of such Final
Distributions.
"Final Drawing" has the meaning assigned to such term in
Section 3.6(i).
"Final Maturity Date" for the Class A Certificates and the
Class B Certificates means March 2, 2004 and for the Class C
Certificates and Class D Certificates means December 2, 2002.
"FSB" has the meaning assigned to such term in the recital of
parties to this Agreement.
12
17
"Indenture" means each of the Amended and Restated Trust
Indentures and Security Agreements and the Trust Indentures and
Security Agreements listed on Schedule 1 hereto, as the same may be
amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Indenture Default" means, with respect to any Indenture, any
Indenture Event of Default (as such term is defined in such Indenture)
thereunder.
"Indenture Estate" means, with respect to any Indenture, the
"Indenture Estate" referred to therein.
"Indenture Trustee" means, with respect to any Indenture, the
Indenture Trustee thereunder.
"Initial Purchasers" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated,
BT Alex. ▇▇▇▇▇ Incorporated, Citicorp Securities, Inc., Credit Suisse
First Boston Corporation and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a).
"Interest Period" shall have the meaning set forth in the
Indentures.
"Interest Period Available Amount" means, with respect to any
Primary Liquidity Facility, at any time, the lesser of (i) the
Interest Period Commitment at such time and (ii) the Available Amount
at such time.
"Interest Period Commitment" means, with respect to any
Primary Liquidity Facility, at any time, an amount equal to the
Maximum Commitment Amount at such time multiplied by 1/6.
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and investment expenses of
the Subordination Agent in making such investments.
"KfW" has the meaning assigned to such term in the recital of
parties to this Agreement.
"Lease" means, with respect to the Indenture pertaining to
each Leased Aircraft, the "Lease" referred to therein.
"Leased Aircraft" has the meaning assigned to such term in the
preliminary statements to this Agreement.
13
18
"Leased Aircraft Participation Agreement" means, with respect
to the Indenture pertaining to each Leased Aircraft, the
"Participation Agreement" referred to therein.
"Lien" means any mortgage, pledge, lien, charge, claim,
disposition of title, encumbrance, lease, sublease, or security
interest of any kind, including any arising under any conditional
sales or other title retention agreement.
"Liquidity Event of Default," with respect to any Primary
Liquidity Facility, has the meaning assigned to such term in such
Primary Liquidity Facility.
"Liquidity Expenses" means, with respect to the Primary
Liquidity Facilities, all Liquidity Obligations other than (i) the
principal amount of any Drawings under the Primary Liquidity
Facilities and (ii) any interest accrued on such Liquidity
Obligations.
"Liquidity Facility" means, at any time, the Class A Primary
Liquidity Facility, the Class A Above-Cap Liquidity Facility, the
Class B Primary Liquidity Facility or the Class B Above-Cap Liquidity
Facility, as applicable.
"Liquidity Obligations" means, with respect to the Primary
Liquidity Facilities, all principal, interest, fees and other amounts
owing to the Primary Liquidity Providers under the Primary Liquidity
Facilities, the Note Purchase Agreement, the Participation Agreements
and the Fee Letter.
"Liquidity Provider" means, at any time, the Primary Liquidity
Provider or the Above-Cap Liquidity Provider, as applicable.
"LP Incumbency Certificate" has the meaning assigned to such
term in Section 2.5(b).
"LP Interest Drawing" means an Interest Drawing under any
Primary Liquidity Facility.
"LP Representatives" has the meaning assigned to such term in
Section 2.5(b).
"LTV Appraisals" has the meaning assigned to such term in
Section 4.1(a).
"LTV Collateral Amount" of any Aircraft for any Class of
Certificates means, as of any Distribution Date, the lesser of (i) the
LTV Ratio for such Class of Certificates multiplied by the Appraised
Current Market Value of such Aircraft and (ii) the outstanding
principal amount of the Equipment Notes secured by such Aircraft after
giving effect to any principal payments of such Equipment Notes on or
before such Distribution Date.
14
19
"LTV Ratio" means for the Class A Certificates 46%, for the
Class B Certificates 57%, for the Class C Certificates 68.3% and for
the Class D Certificates 82.3%.
"Make-Whole Amount" shall have the meaning set forth in the
Indentures.
"Maximum Commitment Amount" means, with respect to any Primary
Liquidity Facility, the Commitment (as defined in such Primary
Liquidity Facility).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Non-Controlling Party" means, at any time, any Trustee or
Liquidity Provider that is not the Controlling Party at such time.
"Non-Performing Equipment Note" means an Equipment Note issued
pursuant to an Indenture that is not a Performing Equipment Note.
"Note Purchase Agreement" means the Note Purchase Agreement,
dated as of the date hereof, among United, each Owner Trustee, the
Trustee, the Subordination Agent and each Indenture Trustee, as
amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Officer's Certificate" of any Person means a certification
signed by a Responsible Officer of such Person.
"Operative Agreements" means this Agreement, the Liquidity
Facilities, the Indentures, the Trust Agreements, the Purchase
Agreement, the Note Purchase Agreement, the Registration Rights
Agreement, the Class B Certificate Purchase Agreement, the Class C
Certificate Purchase Agreement, the Class D Certificate Purchase
Agreement, the Leases, the Participation Agreements, the Fee Letter,
the Equipment Notes and the Certificates, together with all exhibits
and schedules included with any of the foregoing.
"Outstanding" means, when used with respect to each Class of
Certificates, as of the date of determination, all Certificates of
such Class theretofore authenticated and delivered under the related
Trust Agreements, except:
(i) Certificates of such Class theretofore
canceled by the Registrar (as defined in such Trust Agreement)
or delivered to the Trustee thereunder or such Registrar for
cancellation;
(ii) Certificates of such Class for which money in
the full amount required to make the final distribution with
respect to such Certificates pursuant to Section 11.01 of such
Trust Agreement has been theretofore deposited with the
related Trustee in trust for the holders of such Certificates
as provided in
15
20
Section 4.01 of such Trust Agreement pending distribution of
such money to such Certificateholders pursuant to such final
distribution payment; and
(iii) Certificates of such Class in exchange for or
in lieu of which other Certificates of like Class have been
authenticated and delivered pursuant to such Trust Agreement;
provided, however, that in determining whether the holders of the
requisite Outstanding amount of such Certificates have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, any Class A, Class B, Class C or Class D Certificates owned
by United or any of its Affiliates shall be disregarded and deemed not
to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Certificates
that the Trustee knows to be so owned shall be so disregarded.
Notwithstanding the foregoing, (x) if United or any of its Affiliates
shall own 100% of the Certificates, such Certificates shall not be so
disregarded and (y) Certificates so owned by United or any of its
Affiliates that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not United or any of its
Affiliates.
"Overdue Scheduled Payment" means any Scheduled Payment that
is not in fact received by the Subordination Agent within five days
after the Scheduled Payment Date relating thereto.
"Owned Aircraft" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"Owned Aircraft Participation Agreement" means, with respect
to the Indenture pertaining to each Owned Aircraft, the "Participation
Agreement" referred to therein.
"Owner Trustee" means, with respect to any Indenture
pertaining to a Leased Aircraft, the "Owner Trustee" (as defined
therein) not in its individual capacity but solely as trustee under
the related owner trust agreement, together with any successor trustee
appointed pursuant to such owner trust agreement.
"Participation Agreement" means any Owned Aircraft
Participation Agreement or Leased Aircraft Participation Agreement, as
applicable.
"Performing Equipment Note" means an Equipment Note issued
pursuant to an Indenture with respect to which no payment default has
occurred and is continuing; provided, however, that in the event of a
bankruptcy proceeding involving United under Title 11 of the United
States Code (the "Bankruptcy Code"), (i) any payment default existing
during the 60-day period under Section 1110(a)(1)(A) of the Bankruptcy
Code
16
21
(or such longer period as may apply under Section 1110(b) of the
Bankruptcy Code) (the "Section 1110 Period") shall not be taken into
consideration, unless during the Section 1110 Period the trustee in
such proceeding or United does not agree to perform its obligations
under the Lease related to such Equipment Note (in the case of the
Leased Aircraft) or under the Indenture (in the case of the Owned
Aircraft) and (ii) any payment default occurring after the date of the
order of relief in such proceeding shall not be taken into
consideration if such payment default is cured under Section
1110(a)(1)(B) of the Bankruptcy Code before the later of 30 days after
the date of such default or the expiration of the Section 1110 Period.
"Performing Note Deficiency" means any time that less than 65%
of the then aggregate outstanding principal amount of all Equipment
Notes are Performing Equipment Notes.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, trustee,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pool Balance" means, with respect to the Certificates of a
Class, as of any date, (i) the original aggregate face amount of the
Certificates of such Class less (ii) the aggregate amount of all
payments made in respect of the Certificates of such Class other than
payments made in respect of interest or Additional Payment thereon or
reimbursement of any costs and expenses in connection therewith. The
Pool Balance for each Class of Certificates as of any Distribution
Date shall be computed after giving effect to the payment of
principal, if any, on the Equipment Notes held in the related Trust or
Trusts, if more than one Trust of such Class shall exist, and the
distribution thereof to be made on such date.
"Primary Liquidity Facility" means the Class A Primary
Liquidity Facility or the Class B Primary Liquidity Facility, as
applicable.
"Primary Liquidity Provider" means the Class A Primary
Liquidity Provider and/or the Class B Primary Liquidity Provider, as
applicable.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"PTC Event of Default" means, with respect to the Trust
Agreements of any Class, the failure to pay within 10 Business Days of
the due date thereof: (i) the outstanding Pool Balance of the
applicable Class of Certificates on the Final Maturity Date for such
Class or (ii) interest due on such Certificates on any Distribution
Date (unless, in the case of the Class A or Class B Certificates, the
Subordination Agent shall have made an Interest Drawing or a
withdrawal from a Cash Collateral Account with
17
22
respect thereto in an amount sufficient to pay such interest and shall
have distributed such amount to the Certificateholders entitled
thereto).
"Purchase Agreement" means the Purchase Agreement, dated as of
December 18, 1997, between the Initial Purchasers and United, relating
to the purchase of the Class A Certificates by the Initial Purchasers,
as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Rating Agencies" means, collectively, at any time, each
nationally recognized rating agency that shall have been requested to
rate the Class A Certificates and the Class B Certificates and that
shall then be rating such Certificates. The initial Rating Agencies
shall be Moody's and Standard & Poor's.
"Ratings Confirmation" means, with respect to any action
proposed to be taken, a written confirmation from each of the Rating
Agencies that such action would not result in (i) a reduction of the
rating for the Class A Certificates or Class B Certificates below the
then current rating for such Class of Certificates or (ii) a
withdrawal or suspension of the rating of the Class A Certificates or
the Class B Certificates.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of December 23, 1997, between the Initial
Purchasers, the Trustee and United, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"Regular Distribution Dates" means each March 2, June 2,
September 2 and December 2, commencing on March 2, 1998; provided,
however, that, if any such day shall not be a Business Day, the
related distribution for each Class of Certificates shall be made on
the next Business Day with additional interest accruing at the rate
applicable to such Class of Certificates.
"Remaining Commitment Amount," with respect to any Primary
Liquidity Facility, has the meaning assigned to such term in such
Primary Liquidity Facility.
"Replacement Above-Cap Liquidity Facility" means, for any
Above-Cap Liquidity Facility, an irrevocable interest rate cap
agreement issued by a one or more Replacement Above-Cap Liquidity
Providers for the same term as the Above-Cap Liquidity Facility being
replaced, in substantially the form of the replaced Above-Cap
Liquidity Facility or in such other form (which may include a letter
of credit) as shall permit the Rating Agencies to confirm in writing
their respective ratings then in effect for the Class A Certificates
and Class B Certificates (before the downgrading of such ratings, if
any, as a result of the downgrading of the Above-Cap Liquidity
Provider), issued by a Replacement Above-Cap Liquidity Provider;
provided that (i) upon the replacement of the Above-Cap Liquidity
Facility for either the Class A Certificates or the Class B
Certificates, the Above-Cap Liquidity Facility for the other Class of
Certificates shall
18
23
also be replaced by the same Replacement Above-Cap Liquidity Providers
as provided above and (ii) the Commitment Percentage of each
Replacement Above-Cap Liquidity Provider shall be the same for each
Above-Cap Liquidity Facility.
"Replacement Above-Cap Liquidity Provider" means a Person
having (i) short-term unsecured debt ratings issued by each Rating
Agency that are equal to or higher than the Threshold Rating specified
in clause (i) of the definition of Threshold Rating or (ii) if such
Person does not have a short-term unsecured debt rating from each
Rating Agency, long-term unsecured debt ratings issued by each Rating
Agency that are equal to or higher than the Threshold Rating specified
in clause (ii) of the definition of Threshold Rating.
"Replacement Liquidity Facility" means a Replacement Primary
Liquidity Facility or a Replacement Above- Cap Liquidity Facility, as
applicable.
"Replacement Liquidity Provider" means a Replacement Primary
Liquidity Provider or a Replacement Above- Cap Liquidity Provider, as
applicable.
"Replacement Primary Liquidity Facility" means, for any
Primary Liquidity Facility, an irrevocable revolving credit agreement
issued by a one or more Replacement Primary Liquidity Providers for
the same term as the Primary Liquidity Facility being replaced in
substantially the form of the replaced Primary Liquidity Facility,
including reinstatement provisions, or in such other form (which may
include a letter of credit) as shall permit the Rating Agencies to
confirm in writing their respective ratings then in effect for the
Class A Certificates and the Class B Certificates (before the
downgrading of such ratings, if any, as a result of the downgrading of
the Primary Liquidity Provider), in a face amount equal to the Maximum
Commitment Amount for such Primary Liquidity Facility and issued by a
Replacement Primary Liquidity Provider; provided that (i) upon the
replacement of the Primary Liquidity Facility for either the Class A
Certificates or the Class B Certificates, the Primary Liquidity
Facility for the other Class of Certificates shall also be replaced by
the same Replacement Primary Liquidity Providers as provided above and
(ii) the Commitment Percentage of each Replacement Primary Liquidity
Provider shall be the same for each Primary Liquidity Facility.
"Replacement Primary Liquidity Provider" means a Person having
(i) short-term unsecured debt ratings issued by each Rating Agency
that are equal to or higher than the Threshold Rating specified in
clause (i) of the definition of Threshold Rating or (ii) if such
Person does not have a short-term unsecured debt rating from each
Rating Agency, long-term unsecured debt ratings issued by each Rating
Agency that are equal to or higher than the Threshold Rating specified
in clause (ii) of the definition of Threshold Rating.
19
24
"Responsible Officer" means, (i) in the case of any Liquidity
Provider that is a corporation, the Chairman of the Board of
Directors, the President, the Treasurer, the Secretary, or any Vice
President thereof, (ii) in the case of the Trustee and the
Subordination Agent, any officer in the Corporate Trust Department
thereof or any other officer customarily performing functions similar
to those performed by the persons who at the time shall be such
officers or to whom any corporate trust matter is referred because of
his knowledge of and familiarity with a particular subject and (iii)
in any other case, an individual generally authorized to execute and
deliver contracts on behalf of such entity.
"Scheduled Payment" means, with respect to any Equipment Note,
(i) any payment of principal and interest on such Equipment Note
(other than an Overdue Scheduled Payment) due from the obligor thereon
or (ii) in the case of the Class A Certificates or the Class B
Certificates, any payment of interest on the corresponding Class of
Certificates with funds drawn under any Liquidity Facility or
withdrawn from a Cash Collateral Account, which payment represents the
installment of principal at the stated maturity of such installment of
principal on such Equipment Note, the payment of regularly scheduled
interest accrued on the unpaid principal amount of such Equipment
Note, or both; provided, however, that any payment of principal of,
Additional Payment, if any, or interest resulting from the redemption
or purchase of any Equipment Note shall not constitute a Scheduled
Payment.
"Scheduled Payment Date" means, with respect to any Scheduled
Payment, the date on which such Scheduled Payment is scheduled to be
made.
"Series A Equipment Notes" means the Series A Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee in the
case of the Leased Aircraft, or United, in the case of the Owned
Aircraft, as the case may be, and authenticated by the respective
Indenture Trustee thereunder, and any such Equipment Notes issued in
exchange therefor or replacement thereof pursuant to the terms of such
Indenture.
"Series B Equipment Notes" means the Series B Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee in the
case of the Leased Aircraft, or United, in the case of the Owned
Aircraft, as the case may be, and authenticated by the respective
Indenture Trustee thereunder, and any such Equipment Notes issued in
exchange therefor or replacement thereof pursuant to the terms of such
Indenture.
"Series C Equipment Notes" means the Series C Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee in the
case of the Leased Aircraft, or United, in the case of the Owned
Aircraft, as the case may be, and authenticated by the respective
Indenture Trustee thereunder, and any such Equipment Notes issued in
exchange therefor or replacement thereof pursuant to the terms of such
Indenture.
20
25
"Series D Equipment Notes" means the Series D Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee in the
case of the Leased Aircraft, or United, in the case of the Owned
Aircraft, as the case may be, and authenticated by the respective
Indenture Trustee thereunder, and any such Equipment Notes issued in
exchange therefor or replacement thereof pursuant to the terms of such
Indenture.
"Special Distribution Date" means, with respect to any Special
Payment, the date chosen by the Subordination Agent pursuant to
Section 2.4(a) for the distribution of such Special Payment in
accordance with this Agreement; provided, however, that, if any such
day shall not be a Business Day, the related distribution for each
Class of Certificates shall be made on the next Business Day with
additional interest accruing at the rate applicable to such Class of
Certificates.
"Special Payment" means any payment (other than a Scheduled
Payment) in respect of, or any proceeds of, (i) any Equipment Note or
the Indenture or (ii) the proceeds from a refinancing, redemption or
purchase pursuant to Section 2 of the Note Purchase Agreement.
"Special Payments Account" means the Eligible Deposit Account
created pursuant to Section 2.2 as a sub- account to the Collection
Account.
"Standard & Poor's" means Standard & Poor's Ratings Services,
a division of ▇▇▇▇▇▇-▇▇▇▇ Inc.
"Stated Interest Rate" means (i) with respect to the Class A
Certificates, for any Interest Period, LIBOR plus 0.22% per annum and
(ii) with respect to the Class B Certificates, for any Interest
Period, LIBOR plus 0.325% per annum, and in each case, plus an
additional margin equal to 0.50% per annum, from and including July 1,
1998, in the event no Registration Event (as defined in the
Registration Rights Agreement) occurs on or prior to the 180th day
after the Closing Date (provided that any such additional margin shall
cease to be in effect from and including the date on which such
Registration Event occurs); provided, however, that if the Shelf
Registration Statement (as defined in the Registration Rights
Agreement), if any, ceases to be effective at any time during the
period specified by Section 3(b) of the Registration Rights Agreement
for more than 60 days, whether or not consecutive, during any 12-month
period, the Stated Interest Rate for each Class of Certificates shall
be increased by 0.50% per annum from the 61st day of the period during
which such Shelf Registration Statement ceases to be effective until
such time as the Shelf Registration Statement again becomes effective.
"Subordination Agent" has the meaning assigned to such term in
the recital of parties to this Agreement.
"Tax" and "Taxes" mean any and all taxes, fees, levies,
duties, tariffs, imposts and other charges of any kind (together with
any and all interest, penalties, loss, damage,
21
26
liability, expense, additions to tax and additional amounts or costs
incurred or imposed with respect thereto) imposed or otherwise
assessed by the United States or by any state, local or foreign
government (or any subdivision or agency thereof) or other taxing
authority, including, without limitation: taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment,
social security, workers' compensation, unemployment compensation or
net worth and similar charges; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, taxes
on goods and services, gains taxes, license, registration and
documentation fees, customs duties, tariffs and similar charges.
"Termination Notice" with respect to any Primary Liquidity
Facility has the meaning assigned to such term in such Primary
Liquidity Facility.
"Three-Month LIBOR" shall have the meaning set forth in the
Indentures.
"Threshold Rating" means, with respect to any Liquidity
Provider, (i) the short-term unsecured debt rating of "P-1" by Moody's
and "A-1+" by Standard & Poor's and (ii) for any Person which does not
have a published short-term unsecured debt rating from each Rating
Agency, the long-term unsecured debt rating of "Aa3" by Moody's and
"AA-" by Standard & Poor's.
"Treasury Regulations" means regulations, including proposed
or temporary regulations, promulgated under the Code. References
herein to specific provisions of proposed or temporary regulations
shall include analogous provisions of final Treasury Regulations or
other successor Treasury Regulations.
"Triggering Event" means (x) the occurrence of an Indenture
Default under all of the Indentures resulting in a PTC Event of
Default with respect to the most senior Class of Certificates then
Outstanding, (y) the Acceleration of all of the outstanding Equipment
Notes or (z) the occurrence of a United Bankruptcy Event.
"Trust" means any of the Class A Trust, the Class B Trust, the
Class C Trust or the Class D Trust.
"Trust Accounts" has the meaning assigned to such term in
Section 2.2(a).
"Trust Agreement" means any of the Class A Trust Agreement,
the Class B Trust Agreement, the Class C Trust Agreement or the Class
D Trust Agreement.
"Trustee" means First Security Bank, National Association, or
its successor in interest, and any successor or other trustee
appointed as provided in the Trust Agreements; provided, however, that
if the same institution is not acting as Trustee in respect of all
Classes of Certificates, the phrase "the Trustee" shall, unless the
context
22
27
otherwise requires, mean, as to any Class of Certificates, the
institution acting as the Trustee in respect of such Class.
"Trustee Incumbency Certificate" has the meaning assigned to
such term in Section 2.5(a).
"Trustee Representatives" has the meaning assigned to such
term in Section 2.5(a).
"Trust Supplement" means an agreement supplemental to the
Basic Pass Through Agreement pursuant to which (i) a separate Trust is
created for the benefit of the Holders of the Certificates of a class,
(ii) the issuance of the Certificates of such class representing
fractional undivided interests in such Trust is authorized and (iii)
the terms of the Certificates of such class are established.
"U.C.C." means the Uniform Commercial Code in effect in the
applicable jurisdiction.
"United" means United Air Lines, Inc., a Delaware corporation,
and its successors and assigns.
"United Bankruptcy Event" means the occurrence and
continuation of any of the following:
(i) United shall consent to the appointment of or
the taking of possession by a receiver, trustee or liquidator
of itself or of a substantial part of its property, or United
shall admit in writing its inability to pay it debts generally
as they come due, or does not pay its debts generally as they
become due or shall make a general assignment for the benefit
of creditors, or United shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking
reorganization, liquidation or other relief in a case under
any bankruptcy laws or other insolvency laws (as in effect at
such time) or an answer admitting the material allegations of
a petition filed against United in any such case, or United
shall seek relief by voluntary petition, answer or consent,
under the provisions of any other bankruptcy or other similar
law providing for the reorganization or winding-up of
corporations (as in effect at such time) or United shall seek
an agreement, composition, extension or adjustment with its
creditors under such laws, or United's board of directors
shall adopt a resolution authorizing corporate action in
furtherance of any of the foregoing; or
(ii) an order, judgment or decree shall be entered
by any court of competent jurisdiction appointing, without the
consent of United, a receiver, trustee or liquidator of United
or of any substantial part of its property, or any substantial
part of the property of United shall be sequestered, or
granting any
23
28
other relief in respect of United as a debtor under any
bankruptcy laws or other insolvency laws (as in effect at such
time), and any such order, judgment or decree of appointment
or sequestration shall remain in force undismissed, unstayed
and unvacated for a period of 90 days after the date of entry
thereof; and
(iii) a petition against United in a case under any
bankruptcy laws or other insolvency laws (as in effect at such
time) is filed and not withdrawn or dismissed within 90 days
thereafter, or if, under the provisions of any law providing
for reorganization or winding-up of corporations which may
apply to United, any court of competent jurisdiction assumes
jurisdiction, custody or control of United or of any
substantial part of its property and such jurisdiction,
custody or control remains in force unrelinquished, unstayed
and unterminated for a period of 90 days.
"United Provisions" has the meaning assigned to such term in
Section 9.1(a).
"Written Notice" means, from (i) the Trustee or any Liquidity
Provider, a written instrument executed by the Designated
Representative of such Person, and (ii) the Subordination Agent, a
written instrument executed by a Person designated in the Officer's
Certificate of the Subordination Agent delivered on the Closing Date.
An invoice delivered by a Primary Liquidity Provider pursuant to
Section 3.1 in accordance with its normal invoicing procedures shall
constitute Written Notice under such Section.
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
2.1 Agreement to Terms of Subordination; Payments from Monies
Received Only.
(a) The Trustee hereby acknowledges and agrees to the terms
of subordination set forth in this Agreement in respect of each Class of
Certificates and agrees to enforce such provisions and cause all payments in
respect of the Equipment Notes and the Liquidity Facilities to be applied in
accordance with the terms of this Agreement. In addition, the Trustee hereby
agrees to cause the Equipment Notes purchased by the related Trust to be
registered in the name of the Subordination Agent, as nominee of the Trustee,
to be held in trust by the Subordination Agent solely for the purpose of
facilitating the enforcement of the subordination and other provisions of this
Agreement.
(b) Except as otherwise expressly provided in the next
sentence of this Section 2.1, all payments to be made by the Subordination
Agent hereunder shall be made only from amounts received by it that constitute
Scheduled Payments, Special Payments, payments under Section 7 of the Leased
Aircraft Participation Agreements, payments under Section 5 of the Owned
Aircraft Participation Agreements, payments under Section 6(j) or 9 of the Note
24
29
Purchase Agreement or payments under any Liquidity Facility, and only to the
extent that the Subordination Agent shall have received sufficient income or
proceeds therefrom to enable it to make such payments in accordance with the
terms hereof. Each of the Trustee and the Subordination Agent hereby agrees
and, as provided in each Trust Agreement, each Certificateholder, by its
acceptance of a Certificate, and each Liquidity Provider, by entering into the
Liquidity Facility to which it is a party, has agreed to look solely to such
amounts to the extent available for distribution to it as provided in this
Agreement and that none of the Trustee, the Owner Trustees, the Indenture
Trustees, the Owner Participants nor the Subordination Agent is personally
liable to any of them for any amounts payable or any liability under this
Agreement, any Trust Agreement, any Liquidity Facility or such Certificate,
except (in the case of the Subordination Agent) as expressly provided herein or
(in the case of the Trustee) as expressly provided in each Trust Agreement or
(in the case of the Owner Trustees and the Indenture Trustees) as expressly
provided in any Operative Agreement.
2.2 Trust Accounts. (a) Upon the execution of this Agreement,
the Subordination Agent shall establish and maintain in its name (i) the
Collection Account as an Eligible Deposit Account, bearing a designation
clearly indicating that the funds deposited therein are held in trust for the
benefit of the Trustee, the Certificateholders and the Primary Liquidity
Providers and (ii) as a sub-account in the Collection Account, the Special
Payments Account as an Eligible Deposit Account, bearing a designation clearly
indicating that the funds deposited therein are held in trust for the benefit
of the Trustee, the Certificateholders and the Primary Liquidity Providers.
The Subordination Agent shall establish and maintain the Cash Collateral
Accounts pursuant to and under the circumstances set forth in Section 3.6(f).
Upon such establishment and maintenance under Section 3.6(f), the Cash
Collateral Accounts shall, together with the Collection Account, constitute the
"Trust Accounts" hereunder. Each such Trust Account shall meet the
requirements of an"Eligible Deposit Account."
(b) Funds on deposit in the Trust Accounts shall be invested
and reinvested by the Subordination Agent in Eligible Investments selected by
United if such investments are reasonably available and have maturities no
later than the earlier of (i) 90 days following the date of such investment and
(ii) the Business Day preceding the Regular Distribution Date or the date of
the related distribution pursuant to Section 2.4, as the case may be, next
following the date of such investment; provided, however, that upon the
occurrence and during the continuation of a Triggering Event, the Subordination
Agent shall invest and reinvest such amounts in accordance with the written
instructions of the Controlling Party; and provided, further, that following
the making of a Downgrade Drawing under any Primary Liquidity Facility, the
Subordination Agent shall invest and reinvest the amounts in the Cash
Collateral Account with respect to such Primary Liquidity Facility at the
direction of the Primary Liquidity Provider funding such Drawing. Unless
otherwise expressly provided in this Agreement (including Section 3.6(f)), any
Investment Earnings shall be deposited in the Collection Account when received
by the Subordination Agent and shall be applied by the Subordination Agent in
the same manner as the principal amount of such investment is to be applied and
any losses shall be charged against the principal amount invested, in each case
net of the Subordination Agent's reasonable fees and expenses in making such
investments. The Subordination Agent shall not
25
30
be liable for any loss resulting from any investment, reinvestment or
liquidation required to be made under this Agreement other than by reason of
its willful misconduct or gross negligence. Eligible Investments and any other
investment required to be made hereunder shall be held to their maturities
except that any such investment may be sold (without regard to its maturity) by
the Subordination Agent without instructions whenever such sale is necessary to
make a distribution required under this Agreement. Uninvested funds held
hereunder shall not earn or accrue interest.
(c) The Subordination Agent shall possess all right, title
and interest in all funds on deposit from time to time in the Trust Accounts
and in all proceeds thereof (including all income thereon, except as otherwise
expressly provided herein with respect to Investment Earnings). The Trust
Accounts shall be held in trust by the Subordination Agent under the sole
dominion and control of the Subordination Agent for the benefit of the Trustee,
the Certificateholders and the Primary Liquidity Providers, as the case may be.
The Subordination Agent shall maintain "control" of the Trust Accounts within
the meaning of Section 8-106 of the U.C.C. If, at any time, any of the Trust
Accounts ceases to be an Eligible Deposit Account, the Subordination Agent
shall within 10 Business Days (or such longer period, not to exceed 30 calendar
days, to which each Rating Agency may consent) establish a new Collection
Account, Special Payments Account or Cash Collateral Account, as the case may
be, as an Eligible Deposit Account and shall transfer any cash and/or any
investments to such new Collection Account, Special Payments Account or Cash
Collateral Account, as the case may be. So long as FSB is an Eligible
Institution, the Trust Accounts shall be maintained with it as Eligible Deposit
Accounts.
2.3 Deposits to the Collection Account and Special Payments
Account. (a) The Subordination Agent shall, upon receipt thereof, deposit in
the Collection Account all Scheduled Payments received by it.
(b) The Subordination Agent shall, on each date when one or
more Special Payments are made to the Subordination Agent as holder of the
Equipment Notes, deposit in the Special Payments Account the aggregate amount
of such Special Payments.
2.4 Distributions of Special Payments. (a) Notice of
Special Payment. Upon receipt by the Subordination Agent, as registered holder
of the Equipment Notes, of any notice of a Special Payment (or, in the absence
of any such notice, upon receipt by the Subordination Agent of a Special
Payment), the Subordination Agent shall promptly give notice thereof to the
Trustee and the Primary Liquidity Providers. The Subordination Agent shall
promptly calculate the amount of the redemption or purchase of Equipment Notes
or the amount of any Overdue Scheduled Payment, as the case may be, comprising
such Special Payment under the applicable Indenture or Indentures or the Note
Purchase Agreement and shall promptly send to the Trustee a Written Notice of
such amount. Such Written Notice shall also set the distribution date for such
Special Payment (a "Special Distribution Date"), which shall be a Business Day
which follows the later to occur of (x) the 20th day after the date of such
Written Notice or (y) the date the Subordination Agent has received or expects
to receive such Special Payment.
26
31
(b) Redemptions and Purchases of All Equipment Notes Issued
Under an Indenture. So long as no Triggering Event shall have occurred
(whether or not continuing), the Subordination Agent shall make distributions
pursuant to this Section 2.4(b) of amounts on deposit in the Special Payments
Account on account of the redemption, purchase or refinancing (including a
purchase resulting from a sale of the Equipment Notes permitted by Article IV
and a purchase, redemption or refinancing permitted by Section 2(a) or 2(c) of
the Note Purchase Agreement) of all of the Equipment Notes issued pursuant to
an Indenture on the Special Distribution Date for such Special Payment in the
following order of priority:
first, such amount as shall be required to pay (A) all accrued
and unpaid Liquidity Expenses then in arrears plus (B) the product of
(x) the aggregate amount of all accrued and unpaid Liquidity Expenses
not in arrears to such Special Payment Date multiplied by (y) a
fraction, the numerator of which is the aggregate outstanding
principal amount of Equipment Notes being redeemed, purchased or
refinanced on such Special Payment Date and the denominator of which
is the aggregate outstanding principal amount of all Equipment Notes,
shall be distributed to the Primary Liquidity Providers pari passu on
the basis of the amount of Liquidity Expenses owed to each Primary
Liquidity Provider;
second, such amount as shall be required to pay (A) all
accrued and unpaid interest then in arrears on all Liquidity
Obligations (including interest accrued on any Interest Drawing or any
Applied Downgrade Drawing (as defined in any Primary Liquidity
Facility)) plus (B) the product of (x) the aggregate amount of all
accrued and unpaid interest on all Liquidity Obligations not in
arrears to such Special Payment Date (at the rate provided in the
applicable Primary Liquidity Facility) multiplied by (y) a fraction,
the numerator of which is the aggregate outstanding principal amount
of Equipment Notes being redeemed, purchased or refinanced on such
Special Payment Date and the denominator of which is the aggregate
outstanding principal amount of all Equipment Notes, shall be
distributed to the Primary Liquidity Providers pari passu on the basis
of the amount of Liquidity Obligations owed to each Primary Liquidity
Provider;
third, such amount as shall be required (A) if any Cash
Collateral Account relating to a Primary Liquidity Facility had been
previously funded as provided in Section 3.6(f), to fund such Cash
Collateral Account up to the Maximum Commitment Amount applicable to
the related Primary Liquidity Facility shall be deposited in such Cash
Collateral Account, (B) if any Primary Liquidity Facility shall become
a Downgraded Facility at a time when unreimbursed LP Interest Drawings
under such Primary Liquidity Facility have reduced the Remaining
Commitment Amount thereunder to zero, to fund the relevant Cash
Collateral Account up to the Maximum Commitment Amount applicable to
such Primary Liquidity Facility shall be deposited in such Cash
Collateral Account and (C) if, with respect to any particular Primary
Liquidity Facility, neither subclause (A) nor subclause (B) of this
clause third are applicable, to pay or reimburse the Primary Liquidity
Provider in respect of such Primary Liquidity Facility, in each case
in an amount equal to the amount of any unreimbursed Interest Drawings
27
32
under the Primary Liquidity Facilities shall be distributed to the
Primary Liquidity Providers, pari passu on the basis of the amounts of
all such deficiencies and/or unreimbursed Interest Drawings;
fourth, if, with respect to any particular Primary Liquidity
Facility, either subclause (A) or (B) of clause third above is
applicable, then the Primary Liquidity Provider with respect to such
Primary Liquidity Facility shall be paid the excess of (x) the
aggregate outstanding amount of unreimbursed Advances (whether or not
then due) under such Primary Liquidity Facility over (y) the Maximum
Commitment Amount applicable to such Primary Liquidity Facility, pari
passu on the basis of such amounts in respect of each Primary
Liquidity Provider;
fifth, if any Class A Certificates are Outstanding on such
Special Distribution Date, such amount as shall be required to pay in
full Expected Distributions to the holders of Class A Certificates on
such Special Distribution Date shall be distributed to the Trustee;
sixth, if any Class B Certificates are Outstanding on such
Special Distribution Date, such amount as shall be required to pay in
full Expected Distributions to the holders of Class B Certificates on
such Special Distribution Date shall be distributed to the Trustee;
seventh, if any Class C Certificates are Outstanding on such
Special Distribution Date, such amount as shall be required to pay in
full Expected Distributions to the holders of Class C Certificates on
such Special Distribution Date shall be distributed to the Trustee;
eighth, if any Class D Certificates are Outstanding on such
Special Distribution Date, such amount as shall be required to pay in
full Expected Distributions to the holders of Class D Certificates on
such Special Distribution Date shall be distributed to the Trustee;
and
ninth, the balance, if any, of such Special Payment shall be
distributed to United.
(c) Other Special Payments. Any amounts on deposit in the
Special Payments Account other than in respect of amounts to be distributed
pursuant to Section 2.4(b) or (e) shall be distributed on the Special
Distribution Date therefor in accordance with Article III.
(d) Investment of Amounts in Special Payments Account. Any
amounts on deposit in the Special Payments Account prior to the distribution
thereof pursuant to Section 2.4(b), (c) or (e) shall be invested in accordance
with Section 2.2(b). Investment Earnings on such investments shall be
distributed in accordance with Section 2.4(b), (c) or (e), as the case may be.
28
33
(e) Certain Payments. The Subordination Agent shall
distribute promptly upon receipt thereof (i) any indemnity payment received by
it from United in respect of any Trustee or any Primary Liquidity Provider
(collectively, the "Payees") and (ii) any compensation (including any fees
payable to any Primary Liquidity Provider under Section 2.03 of any Primary
Liquidity Facility) received by it from United under any Operative Agreement in
respect of any Payee, directly to the Payee entitled thereto.
2.5 Designated Representatives. (a) With the delivery of this
Agreement, the Trustee shall furnish to the Subordination Agent, and from time
to time thereafter may furnish to the Subordination Agent, at the Trustee's
discretion, or upon the Subordination Agent's request (which request shall not
be made more than one time in any 12-month period), a certificate (a "Trustee
Incumbency Certificate") of a Responsible Officer of the Trustee certifying as
to the incumbency and specimen signatures of the officers of the Trustee and
the attorney-in-fact and agents of the Trustee (the "Trustee Representatives")
authorized to give Written Notices on behalf of the Trustee hereunder. Until
the Subordination Agent receives a subsequent Trustee Incumbency Certificate,
it shall be entitled to rely on the last Trustee Incumbency Certificate
delivered to it hereunder.
(b) With the delivery of this Agreement, each Liquidity
Provider shall furnish to the Subordination Agent, and from time to time
thereafter may furnish to the Subordination Agent, at such Liquidity Provider's
discretion, or upon the Subordination Agent's request (which request shall not
be made more than one time in any 12-month period), a certificate (an "LP
Incumbency Certificate") of any authorized signatory of such Liquidity Provider
certifying as to the incumbency and specimen signatures of any officer,
attorney-in-fact, agent or other designated representative of such Liquidity
Provider (the "LP Representatives" and, together with the Trustee
Representatives, the "Designated Representatives") authorized to give Written
Notices on behalf of such Liquidity Provider hereunder. Until the
Subordination Agent receives a subsequent LP Incumbency Certificate, it shall
be entitled to rely on the last LP Incumbency Certificate delivered to it
hereunder.
2.6 Controlling Party. (a) The Trustee and the Primary
Liquidity Providers hereby agree that, with respect to any Indenture at any
given time, the Indenture Trustee thereunder shall be directed (i) in taking,
or refraining from taking, any action under such Indenture or the Equipment
Notes issued thereunder, so long as no Indenture Default has occurred and is
continuing thereunder, by the holders of at least a majority of the outstanding
principal amount of such Equipment Notes (provided that, for so long as the
Subordination Agent is the registered holder of the Equipment Notes, the
Subordination Agent shall act with respect to this clause (i) in accordance
with the direction of the Trustee), and (ii) after the occurrence and during
the continuation of an Indenture Default thereunder (which, in the case of an
Indenture pertaining to a Leased Aircraft, has not been cured by the Owner
Trustee or the Owner Participant thereunder, if applicable, pursuant to Section
8.03 of such Indenture), in taking, or refraining from taking, any action under
such Indenture or with respect to such Equipment Notes, including exercising
remedies thereunder (including Accelerating the Equipment Notes issued
thereunder
29
34
or foreclosing the Lien on the Aircraft securing such Equipment Notes), by the
Controlling Party.
(b) The Person who shall be the "Controlling Party" with
respect to any Indenture shall be: (w) the Trustee acting on behalf of holders
of Class A Certificates; (x) upon payment of Final Distributions to the holders
of Class A Certificates, the Trustee acting on behalf of the holders of Class B
Certificates; (y) upon payment of Final Distributions to the holders of Class A
Certificates and Class B Certificates, the Trustee acting on behalf of holders
of Class C Certificates; and (z) upon payment of Final Distributions to the
holders of Class A Certificates, Class B Certificates and Class C Certificates,
the Trustee acting on behalf of holders of Class D Certificates. For purposes
of giving effect to the foregoing, the Trustee (other than as the Controlling
Party) irrevocably agrees (and the Certificateholders (other than the
Certificateholders represented by the Controlling Party) shall be deemed to
agree by virtue of their purchase of Certificates) that the Subordination
Agent, as record holder of the Equipment Notes, shall exercise its voting
rights in respect of the Equipment Notes as directed by the Controlling Party.
The Subordination Agent shall give written notice to all of
the other parties to this Agreement promptly upon a change in the identity of
the Controlling Party (including, for this purpose, a change in the Class of
Certificates that the Trustee then represents as the Controlling Party). Each
of the parties hereto agrees that it shall not exercise any of the rights of
the Controlling Party at such time as it is not the Controlling Party
hereunder; provided, however, that nothing herein contained shall prevent or
prohibit any Non-Controlling Party from exercising such rights as shall be
specifically granted to such Non-Controlling Party hereunder and under the
other Operative Agreements.
(c) Notwithstanding the foregoing, at any time after 18
months following the earlier to occur of (i) the date on which the Remaining
Commitment Amount under any Primary Liquidity Facility shall be and remain zero
(for any reason other than a Downgrade Drawing), (ii) a Final Drawing shall
have been made under any Primary Liquidity Facility and remains unreimbursed
and (iii) the date on which all Equipment Notes shall have been Accelerated,
the Primary Liquidity Providers holding more than 50% of all unreimbursed
Liquidity Obligations under the Liquidity Facilities shall have the right to
elect, by Written Notice to the Subordination Agent and the Trustee, that such
Liquidity Providers will become the Controlling Party hereunder with respect to
any Indenture at any time from and including the last day of such 18-month
period.
(d) The exercise of remedies by the Controlling Party under
this Agreement shall be expressly limited by Section 4.1(a)(ii) and 4.1(c).
(e) The Controlling Party shall not be entitled to require
or obligate any Non-Controlling Party to provide funds necessary to exercise
any right or remedy hereunder.
30
35
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
3.1 Written Notice of Distribution. (a) No later than 3:00 P.M.
(New York City time) on the Business Day preceding each Distribution Date, each
of the following Persons shall deliver to the Subordination Agent a Written
Notice setting forth the following information as at the close of business on
such Business Day:
(i) With respect to the Class A Certificates, if any are
Outstanding, the Trustee shall separately set forth the amounts to be
paid in accordance with clause fifth of Section 2.4(b) or 3.2;
(ii) With respect to the Class B Certificates, if any are
Outstanding, the Trustee shall separately set forth the amounts to be
paid in accordance with clause sixth of Sections 2.4(b) or 3.2;
(iii) With respect to the Class C Certificates, if any are
Outstanding, the Trustee shall separately set forth the amounts to be
paid in accordance with clause seventh of Section 2.4(b) or 3.2;
(iv) With respect to the Class D Certificates, if any are
Outstanding, the Trustee shall separately set forth the amounts to be
paid in accordance with clause eighth of Section 2.4(b) or 3.2;
(v) With respect to each Primary Liquidity Facility, the
Primary Liquidity Providers thereunder shall separately set forth the
amounts to be paid in accordance with clauses first, second, third and
fourth of Section2.4(b) or 3.2; and
(vi) The Trustee shall set forth the amounts to be paid in
accordance with clause ninth of Section 3.2.
The notices required under this Section 3.1(a) may be in the form of a schedule
or similar document provided to the Subordination Agent by the parties
referenced therein or by any one of them, which schedule or similar document
may state that, unless there has been a prepayment, purchase or redemption of
the Certificates, such schedule or similar document is to remain in effect
until any substitute notice or amendment shall be given to the Subordination
Agent by the party providing such notice.
(b) Following the occurrence of a Triggering Event, the
Subordination Agent shall request the following information from the following
Persons, and each of the following Persons shall, upon the request of the
Subordination Agent, deliver a Written Notice to the Subordination Agent
setting forth for such Person the following information:
31
36
(i) With respect to the Class A Certificates, if any are
Outstanding, the Trustee shall separately set forth the amounts to be
paid in accordance with clauses first (to reimburse payments made by
the Class A Certificateholders pursuant to subclause (iii) of clause
first of Section 3.3) and seventh of Section 3.3;
(ii) With respect to the Class B Certificates, if any are
Outstanding, the Trustee shall separately set forth the amounts to be
paid in accordance with clauses first (to reimburse payments made by
the Class B Certificateholders pursuant to subclause (iii) of clause
first of Section 3.3) and eighth of Section 3.3;
(iii) With respect to the Class C Certificates, if any are
Outstanding, the Trustee shall separately set forth the amounts to be
paid in accordance with clauses first (to reimburse payments made by
the Class C Certificateholders pursuant to subclause (iii) of clause
first of Section 3.3) and ninth of Section 3.3;
(iv) With respect to the Class D Certificates, if any are
Outstanding, the Trustee shall separately set forth the amounts to be
paid in accordance with clauses first (to reimburse payments made by
the Class D Certificateholders pursuant to subclause (iii) of clause
first of Section 3.3) and tenth of Section 3.3;
(v) With respect to each Primary Liquidity Facility, each
Primary Liquidity Provider thereunder shall separately set forth the
amounts to be paid to it in accordance with subclause (iii) of clause
first of Section 3.3 and clauses second, third, fourth and fifth of
Section 3.3; and
(vi) The Trustee shall set forth the amounts to be paid in
accordance with clause sixth of Section 3.3.
(c) At such time as the Trustee or a Primary Liquidity
Provider shall have received all amounts owing to it (and, in the case of the
Trustee, the Certificateholders for which it is acting) pursuant to Section
2.4, 3.2 or 3.3, as applicable, and, in the case of a Primary Liquidity
Provider, its commitment under the related Primary Liquidity Facility shall
have terminated or expired, such Person shall, by a Written Notice, so inform
the Subordination Agent and each other party to this Agreement.
(d) As provided in Section 6.5, the Subordination Agent
shall be fully protected in relying on any of the information set forth in a
Written Notice provided by the Trustee or any Primary Liquidity Provider
pursuant to Sections 3.1(a) through (c) above and shall have no independent
obligation to verify, calculate or recalculate any amount set forth in any
Written Notice delivered in accordance with such paragraphs.
(e) Any Written Notice delivered by the Trustee or a Primary
Liquidity Provider, as applicable, pursuant to Section 3.1(a), 3.1(b) or
3.1(c), if made prior to 10:00 A.M. (New York City time) shall be effective on
the date delivered (or if delivered later shall
32
37
be effective as of the next Business Day). Subject to the terms of this
Agreement, the Subordination Agent shall as promptly as practicable comply with
any such instructions; provided, however, that any transfer of funds pursuant
to any instruction received after 10:00 A.M. (New York City time) on any
Business Day may be made on the next succeeding Business Day.
(f) If the Subordination Agent shall not receive from any
Person any information set forth in Section 3.1(a) or (b) above which is
required to enable the Subordination Agent to make a distribution to such
Person pursuant to Sections 2.4(b), 3.2 or 3.3, the Subordination Agent shall
request such information and, failing to receive any such information, the
Subordination Agent shall not make such distribution(s) to such Person. In
such event, the Subordination Agent shall make distributions pursuant to
clauses first through ninth of Section 2.4(b), clauses first through tenth of
Section 3.2 and clauses first through eleventh of Section 3.3 to the extent it
shall have sufficient information to enable it to make such distributions, and
shall continue to hold any funds remaining, after making such distributions,
until the Subordination Agent shall receive all necessary information to enable
it to distribute any funds so withheld.
(g) On such dates (but not more frequently than monthly) as
any Primary Liquidity Provider or the Trustee shall request, the Subordination
Agent shall send to such party a written statement reflecting all amounts on
deposit with the Subordination Agent pursuant to Section 3.1(f).
3.2 Distribution of Amounts on Deposit in the Collection Account.
Except as otherwise provided in Sections 2.4, 3.1(f), 3.3, 3.4 and 3.6(b),
amounts on deposit in the Collection Account (or, in the case of any amount
described in Section 2.4(c), on deposit in the Special Payments Account) shall
be promptly distributed on each Distribution Date in the following order of
priority and in accordance with the information provided to the Subordination
Agent pursuant to Section 3.1(a):
first, such amount as shall be required to pay all accrued and
unpaid Liquidity Expenses owed to each Primary Liquidity Provider
shall be distributed to the Primary Liquidity Providers pari passu on
the basis of the amount of Liquidity Expenses owed to each Primary
Liquidity Provider;
second, such amount as shall be required to pay in full the
aggregate amount of interest accrued on all Liquidity Obligations
payable as of such Distribution Date (at the rate provided in the
applicable Primary Liquidity Facility) shall be distributed to the
Primary Liquidity Providers pari passu on the basis of the amount of
Liquidity Obligations owed to each Primary Liquidity Provider;
third, such amount as shall be required (A) if any Cash
Collateral Account relating to a Primary Liquidity Facility had been
previously funded as provided in Section 3.6(f), to fund such Cash
Collateral Account up to the Maximum Commitment
33
38
Amount applicable to the related Primary Liquidity Facility shall be
deposited in such Cash Collateral Account, (B) if any Primary
Liquidity Facility shall become a Downgraded Facility at a time when
unreimbursed LP Interest Drawings under such Primary Liquidity
Facility have reduced the Remaining Commitment Amount thereunder to
zero, to fund the relevant Cash Collateral Account up to the Maximum
Commitment Amount applicable to the such Primary Liquidity Facility
shall be deposited in such Cash Collateral Account and (C) if, with
respect to any particular Primary Liquidity Facility, neither
subclause (A) nor subclause (B) of this clause third are applicable,
to pay or reimburse the Primary Liquidity Provider in respect of such
Primary Liquidity Facility, in each case in an amount equal to the
amount of all Liquidity Obligations then due under such Primary
Liquidity Facility (other than amounts payable pursuant to clause
first second of this Section 3.2) shall be distributed to such Primary
Liquidity Provider, pari passu on the basis of the amounts of all such
unreimbursed Liquidity Obligations and/or deficiencies;
fourth, if, with respect to any particular Primary Liquidity
Facility, either subclause (A) or (B) of clause third above is
applicable, then the Primary Liquidity Provider with respect to such
Primary Liquidity Facility shall be paid the excess of (x) the
aggregate outstanding amount of unreimbursed Advances (whether or not
then due) under such Primary Liquidity Facility over (y) the Maximum
Commitment Amount applicable to such Primary Liquidity Facility, pari
passu on the basis of such amounts in respect of each Primary
Liquidity Provider;
fifth, if any Class A Certificates are Outstanding on such
Distribution Date, such amount as shall be required to pay in full
Expected Distributions to the holders of the Class A Certificates on
such Distribution Date shall be distributed to the Trustee;
sixth, if any Class B Certificates are Outstanding on such
Distribution Date, such amount as shall be required to pay in full
Expected Distributions to the holders of the Class B Certificates on
such Distribution Date shall be distributed to the Trustee;
seventh, if any Class C Certificates are Outstanding on such
Distribution Date, such amount as shall be required to pay in full
Expected Distributions to the holders of the Class C Certificates on
such Distribution Date shall be distributed to the Trustee;
eighth, if any Class D Certificates are Outstanding on such
Distribution Date, such amount as shall be required to pay in full
Expected Distributions to the holders of the Class D Certificates on
such Distribution Date shall be distributed to the Trustee;
ninth, such amount as shall be required to pay in full the
aggregate unpaid amount of fees and expenses payable as of such
Distribution Date to the Subordination Agent and the Trustee pursuant
to the terms of this Agreement and the Trust Agreements, as the case
may be, shall be distributed to the Subordination Agent and the
Trustee; and
34
39
tenth, the balance, if any, of any such payment remaining
thereafter shall be distributed to United.
3.3 Distribution of Amounts on Deposit Following a Triggering
Event. Except as otherwise provided in Sections 3.1(f) and 3.6(b), upon the
occurrence of a Triggering Event and at all times thereafter, all funds in the
Collection Account (including the Special Payments Account) shall be promptly
distributed by the Subordination Agent in the following order of priority:
first, such amount as shall be required to reimburse (i) the
Subordination Agent for any out-of-pocket costs and expenses actually
incurred by it (to the extent not previously reimbursed) in the
protection of, or the realization of the value of, the Equipment Notes
or any Indenture Estate, shall be applied by the Subordination Agent
in reimbursement of such costs and expenses, (ii) the Trustee for any
amounts of the nature described in clause (i) above actually incurred
by it under the applicable Trust Agreement (to the extent not
previously reimbursed), shall be distributed to the Trustee and (iii)
any Primary Liquidity Provider or Certificateholder for payments, if
any, made by it to the Subordination Agent or the Trustee in respect
of amounts described in clause (i) above, shall be distributed to such
Primary Liquidity Provider or to the Trustee for the account of such
Certificateholder, in each such case, pari passu on the basis of all
amounts described in clauses (i) through (iii) above;
second, such amount remaining as shall be required to pay all
accrued and unpaid Liquidity Expenses shall be distributed to each
Primary Liquidity Provider pari passu on the basis of the amount of
Liquidity Expenses owed to each Liquidity Provider;
third, such amount remaining as shall be required to pay
accrued and unpaid interest on the Liquidity Obligations as provided
in the Primary Liquidity Facilities shall be distributed to each
Primary Liquidity Provider pari passu on the basis of the amount of
such accrued and unpaid interest owed to each Primary Liquidity
Provider;
fourth, such amount as shall be required (A) if any Cash
Collateral Account relating to a Primary Liquidity Facility had been
previously funded as provided in Section 3.6(f) unless (i) a
Performing Note Deficiency exists and a Triggering Event shall have
occurred and be continuing with respect to the relevant Primary
Liquidity Facility or (ii) a Final Drawing shall have occurred with
respect to the relevant Primary Liquidity Facility, to fund such Cash
Collateral Account up to the Maximum Commitment Amount applicable to
the related Primary Liquidity Facility shall be deposited in such Cash
Collateral Account, (B) if any Primary Liquidity Facility shall become
a Downgraded Facility at a time when unreimbursed LP Interest Drawings
under such Primary Liquidity Facility have reduced the Remaining
Commitment Amount thereunder to zero unless (i) a Performing Note
Deficiency exists and a Triggering Event shall have occurred and be
continuing with respect to the relevant Primary Liquidity Facility or
(ii) a Final Drawing shall have occurred with respect to the relevant
Primary
35
40
Liquidity Facility, to fund the relevant Cash Collateral Account up to
the Maximum Commitment Amount applicable to such Primary Liquidity
Facility shall be deposited in such Cash Collateral Account and (C)
if, with respect to any particular Primary Liquidity Facility, neither
subclause (A) nor subclause (B) of this clause fourth is applicable,
to pay or reimburse the Primary Liquidity Provider in respect of such
Primary Liquidity Facility, in each case in an amount equal to the
amount of all Liquidity Obligations, whether or not then due under
such Primary Liquidity Facility (other than amounts payable pursuant
to clause first, second or third of this Section 3.3), shall be
distributed to such Primary Liquidity Provider, pari passu on the
basis of the amounts of such deficiencies and/or unreimbursed
Liquidity Obligations;
fifth, if, with respect to any particular Primary Liquidity
Facility, either subclause (A) or (B) of clause fourth above is
applicable, then the Primary Liquidity Provider with respect to such
Primary Liquidity Facility shall be paid the excess of (x) the
aggregate outstanding amount of unreimbursed Advances (whether or not
then due) under such Primary Liquidity Facility over (y) the Maximum
Commitment Amount applicable to such Primary Liquidity Facility, pari
passu on the basis of such amounts in respect of each Primary
Liquidity Provider;
sixth, such amount as shall be required to reimburse or pay
(i) the Subordination Agent for any Tax (other than Taxes imposed on
compensation paid hereunder), expense, fee, charge or other loss
incurred by or any other amount payable to the Subordination Agent in
connection with the transactions contemplated hereby (to the extent
not previously reimbursed), shall be applied by the Subordination
Agent in reimbursement of such amount, (ii) the Trustee for any Tax
(other than Taxes imposed on compensation paid under any Trust
Agreement), expense, fee, charge, loss or any other amount payable to
the Trustee under the Trust Agreements (to the extent not previously
reimbursed), shall be distributed to the Trustee and (iii) each
Certificateholder for payments, if any, made by it pursuant to Section
5.2 in respect of amounts described in clause (i) above, shall be
distributed to the Trustee for the account of such Certificateholder,
in each such case, pari passu on the basis of all amounts described in
clauses (i) through (iii) above;
seventh, if any Class A Certificates are then Outstanding,
such amount remaining as shall be required to pay in full Adjusted
Expected Distributions on the Class A Certificates shall be
distributed to the Trustee;
eighth, if any Class B Certificates are then Outstanding, such
amount remaining as shall be required to pay in full Adjusted Expected
Distributions on the Class B Certificates shall be distributed to the
Trustee;
ninth, if any Class C Certificates are then Outstanding, such
amount remaining as shall be required to pay in full Adjusted Expected
Distributions on the Class C Certificates shall be distributed to the
Trustee;
36
41
tenth, if any Class D Certificates are then Outstanding, such
amount remaining as shall be required to pay in full Adjusted Expected
Distributions on the Class D Certificates shall be distributed to the
Trustee; and
eleventh, the balance, if any, of such funds remaining
thereafter shall be distributed to United.
3.4 Other Payments. (a) Any payments received by the
Subordination Agent for which no provision as to the application thereof is
made in this Agreement shall be distributed by the Subordination Agent (i) in
the order of priority specified in Section 3.3 and (ii) to the extent received
or realized at any time after the Final Distributions for each Class of
Certificates have been made, in the following order of priority: first, in the
manner provided in clause first of Section 3.3 and second, in the manner
provided in clause eleventh of Section 3.3.
(b) On any interest payment date under each Primary
Liquidity Facility which is not a Distribution Date, the Subordination Agent
shall pay to the Primary Liquidity Provider under such Primary Liquidity
Facility from, and to the extent of, amounts on deposit in the Collection
Account, an amount equal to the amount of interest then due and payable to such
Primary Liquidity Provider under such Primary Liquidity Facility.
(c) Except as otherwise provided in Section 3.3, if the
Subordination Agent receives any Scheduled Payment after the Scheduled Payment
Date relating thereto, but prior to such payment becoming an Overdue Scheduled
Payment, then the Subordination Agent shall deposit such Scheduled Payment in
the Collection Account and promptly distribute such Scheduled Payment in
accordance with the priority of distributions set forth in Section 3.2;
provided, however, that for the purposes of this Section 3.4(c) only, each
reference in clause second or ninth of Section 3.2 to "Distribution Date" shall
be deemed to mean the actual date of payment of such Scheduled Payment and each
reference in clause fifth, sixth, seventh or eighth of Section 3.2 to
"Distribution Date" shall be deemed to refer to such Scheduled Payment Date.
3.5 Payments to the Trustee and the Primary Liquidity Providers.
Any amounts distributed hereunder to any Primary Liquidity Provider shall be
paid to such Primary Liquidity Provider by wire transfer of funds to the
address such Primary Liquidity Provider shall provide to the Subordination
Agent. The Subordination Agent shall provide a Written Notice of any such
transfer to the applicable Primary Liquidity Provider, as the case may be, at
the time of such transfer. Any amounts distributed hereunder by the
Subordination Agent to the Trustee which shall not be the same institution as
the Subordination Agent shall be paid to the Trustee by wire transfer funds at
the address the Trustee shall provide to the Subordination Agent.
3.6 Liquidity Facilities. (a) Interest Drawings. If on any
Distribution Date, after giving effect to the subordination provisions of this
Agreement, the Subordination Agent shall not have sufficient funds for the
payment of any amounts due and owing in respect of accrued interest on the
Class A Certificates or the Class B Certificates, then, prior to 12:00 noon
(New
37
42
York City time) on the Business Day following such Distribution Date, the
Subordination Agent shall request a drawing, in the case of the Primary
Liquidity Facilities, or an interest rate cap payment, in the case of the
Above-Cap Liquidity Facilities (each such drawing or payment, an "Interest
Drawing"), first under the Primary Liquidity Facility with respect to such
Class of Certificates in an amount equal to the lesser of (i) an amount
sufficient to pay the amount of such accrued interest and (ii) the Interest
Period Available Amount at such time under such Primary Liquidity Facility and,
second, to the extent that the Interest Drawing under such Primary Liquidity
Facility is insufficient (assuming the Advance thereunder was paid to the
Subordination Agent) to pay the amount of such accrued interest (the
"Deficiency Amount"), under the Above-Cap Liquidity Facility with respect to
such Class of Certificates in an amount equal to such Deficiency Amount, and,
upon receipt by the Subordination Agent thereof, shall pay such amounts to the
Trustee with respect to such Class of Certificates in payment of such accrued
interest.
(b) Application of Interest Drawings. Notwithstanding
anything to the contrary contained in this Agreement, (i) all payments received
by the Subordination Agent in respect of an Interest Drawing under the Class A
Primary Liquidity Facility and, if necessary, under the Class A Above-Cap
Liquidity Facility, and all amounts withdrawn by the Subordination Agent from
the Class A Cash Collateral Account and, if necessary, the Class A Above-Cap
Account, and payable in each case to the Class A Certificateholders, shall be
promptly distributed to the Trustee acting on behalf of the Class A
Certificateholders and (ii) all payments received by the Subordination Agent in
respect of an Interest Drawing under the Class B Primary Liquidity Facility
and, if necessary, under the Class B Above-Cap Liquidity Facility, and all
amounts withdrawn by the Subordination Agent from the Class B Cash Collateral
Account and, if necessary, the Class B Above-Cap Account, and payable in each
case to the Class B Certificateholders, shall be promptly distributed to the
Trustee acting on behalf of the Class B Certificateholders.
(c) Downgrade of Primary Liquidity Providers; Downgrade
Drawings. If at any time the short-term unsecured debt rating of any Primary
Liquidity Provider or, if such Primary Liquidity Provider does not have a
short- term unsecured debt rating, the long-term unsecured debt rating of such
Primary Liquidity Provider issued by either Rating Agency is lower than the
applicable Threshold Rating, such Primary Liquidity Provider shall provide
notice of such downgrading in writing to United, the Subordination Agent, the
Trustee for the Class A Trust and the Trustee for the Class B Trust. Within 30
days after such Primary Liquidity Provider receives notice of such downgrading
(but no later than the expiration date of the Primary Liquidity Facilities (the
"Downgraded Facility")), such Primary Liquidity Provider or United may arrange
for one or more Replacement Liquidity Providers to issue and deliver a
Replacement Primary Liquidity Facility for both the Class A Primary Liquidity
Facility and the Class B Primary Liquidity Facility to the Subordination Agent.
If the Primary Liquidity Facilities have not been replaced in accordance with
the terms of this paragraph, the Subordination Agent shall, on such 30th day
(or if such 30th day is not a Business Day, on the next succeeding Business
Day) (or, if earlier, the expiration date of the Primary Liquidity Facilities)
request a drawing in accordance with and to the extent permitted by the Primary
38
43
Liquidity Facilities (such drawing, a "Downgrade Drawing") of the Remaining
Commitment Amount thereunder (but not to exceed the Available Amount at such
time thereunder). Amounts drawn pursuant to a Downgrade Drawing shall be
maintained and invested as provided in Section 3.6(f). Any Primary Liquidity
Provider may also arrange for one or more Replacement Primary Liquidity
Providers to issue and deliver a Replacement Primary Liquidity Facility for
both the Class A Primary Liquidity Facility and the Class B Primary Liquidity
Facility at any time after such Downgrade Drawing so long as such Downgrade
Drawing has not been reimbursed in full to the Primary Liquidity Providers.
(d) Downgrade of Above-Cap Liquidity Providers; Posting of
Collateral Accounts. If at any time the short-term unsecured debt rating of
any Above-Cap Liquidity Provider or, if such Above-Cap Liquidity Provider does
not have a short-term unsecured debt rating, the long-term unsecured debt
rating of such Above-Cap Liquidity Provider issued by either Rating Agency is
lower than the applicable Threshold Rating, such Above-Cap Liquidity Provider
shall provide notice of such downgrading in writing to United, the
Subordination Agent, the Trustee for the Class A Trust and the Trustee for the
Class B Trust. Within 30 days after the Above-Cap Liquidity Provider receives
notice of such downgrading (but no later than the expiration date of the
Above-Cap Liquidity Facilities), such Above-Cap Liquidity Provider or United
may arrange for one or more Replacement Above-Cap Liquidity Providers to issue
and deliver a Replacement Above-Cap Liquidity Facility for both the Class A
Above-Cap Liquidity Facility and the Class B Above-Cap Liquidity Facility to
the Subordination Agent. If the Above-Cap Liquidity Facilities have not been
replaced in accordance with the terms of this paragraph, the Above-Cap
Liquidity Providers shall, on such 30th day (or if such 30th day is not a
Business Day, on the next succeeding Business Day) (or, if earlier, the
expiration date of the Above-Cap Liquidity Facilities) either (x) transfer its
rights and obligations under the Above-Cap Liquidity Facilities to an Affiliate
that is eligible to become a debtor under the United States Bankruptcy Code and
reasonably acceptable to the Rating Agencies, which Affiliate will pay to the
Subordination Agent, for the benefit of the Trustee on behalf of the holders of
the Class A Certificates and the Class B Certificates, the Downgrade Collateral
(as defined in the Above-Cap Liquidity Facilities) to secure the obligation of
the Above-Cap Liquidity Providers to pay the Deficiency Amount, if any, upon an
Interest Drawing or (y) provide to the Subordination Agent, for the benefit of
the Trustee on behalf of the holders of the Class A Certificates and the Class
B Certificates, such other assurances of creditworthiness as will maintain the
then current ratings of the Class A Certificates and the Class B Certificates
by the Rating Agencies as confirmed by a Ratings Confirmation. United may
arrange for one or more Replacement Above-Cap Liquidity Providers to issue and
deliver a Replacement Above-Cap Liquidity Facility for both the Class A
Above-Cap Liquidity Facility and the Class B Above-Cap Liquidity Facility at
any time after the posting of such Downgrade Collateral or provision of other
assurances whereupon the Downgrade Collateral deposited in the Class A
Above-Cap Account and the Class B Above-Cap Account shall be released to the
Above-Cap Liquidity Provider.
(e) Issuance of Replacement Liquidity Facility. At any
time, United may, at its option, arrange for Replacement Liquidity Facilities
to replace the Primary Liquidity Facilities and/or the Above-Cap Liquidity
Facilities for the Class A Certificates and the Class B
39
44
Certificates; provided, however, that the initial Primary Liquidity Provider
shall not be replaced by United as a Primary Liquidity Provider with respect to
any Class of Certificates unless (A) there shall have become due to the initial
Primary Liquidity Provider, or the initial Primary Liquidity Provider shall
have demanded, amounts pursuant to Section 3.01, 3.02 or 3.03 of any Primary
Liquidity Facility and the replacement of the initial Primary Liquidity
Provider would reduce or eliminate the obligation to pay such amounts, (B) such
replacement of the initial Primary Liquidity Provider would reduce or eliminate
an economic hardship to United or (C) a Downgrade Drawing shall have occurred
under any Primary Liquidity Facility issued by the initial Primary Liquidity
Provider. If a Replacement Primary Liquidity Facility is provided at any time
after a Downgrade Drawing has been made, all funds on deposit in the Class A
Cash Collateral Account and the Class B Cash Collateral Account shall be
returned to the Primary Liquidity Providers being replaced. No such
Replacement Liquidity Facility executed in connection therewith shall become
effective and no such Replacement Liquidity Facility shall be deemed a
"Liquidity Facility" under the Operative Agreements, unless and until (i) the
Liquidity Providers being replaced shall have satisfied each of the conditions
referred to in the immediately following paragraph and (ii) if such Replacement
Liquidity Facility shall materially adversely affect the rights, remedies,
interests or obligations of the Class A Certificateholders or the Class B
Certificateholders under any of the Operative Agreements, the Trustee shall
have consented, in writing, to the execution and issuance of such Replacement
Liquidity Facility.
In connection with the issuance of each Replacement Liquidity
Facility, the Subordination Agent shall (x) prior to the issuance of such
Replacement Liquidity Facility, obtain written confirmation from each Rating
Agency that such Replacement Liquidity Facility will not cause a reduction of
any rating then in effect for the Class A Certificates or the Class B
Certificates by such Rating Agency (without regard to any downgrading of any
rating of any Liquidity Provider being replaced pursuant to Section 3.6(c)),
(y) pay, in the case of the Primary Liquidity Facilities, all Liquidity
Obligations then owing to the replaced Primary Liquidity Providers and, in the
case of the Above-Cap Liquidity Facilities, all obligations then owing to the
replaced Above-Cap Liquidity Providers under the Above-Cap Liquidity Facilities
(which payment, in the case of the Primary Liquidity Facilities, may be made as
provided in clause (v) of Section 3.6(f) pursuant to a drawing under the
Replacement Primary Liquidity Facility, or otherwise) and (z) cause the issuer
or issuers of the Replacement Liquidity Facility to deliver the Replacement
Liquidity Facility to the Subordination Agent, together with a legal opinion
opining that such Replacement Liquidity Facility is an enforceable obligation
of such Replacement Liquidity Providers. Upon satisfaction of the conditions
set forth in this Section 3.6(e), (i) the replaced Liquidity Facilities shall
terminate and (ii) such Replacement Liquidity Providers shall be deemed to be a
Primary Liquidity Providers or Above-Cap Liquidity Providers, as appropriate,
with the rights and obligations of such a Liquidity Provider hereunder and
under the other Operative Agreements and each such Replacement Liquidity
Facility shall be deemed to be a Primary Liquidity Facility or an Above-Cap
Liquidity Facility, as appropriate, hereunder and under the other Operative
Agreements.
In connection with any replacement of a Primary Liquidity
Facility under Section 3.6(c) or this Section 3.6(e) with a Replacement Primary
Liquidity Facility, the other Primary
40
45
Liquidity Facility will be concurrently replaced with a Replacement Primary
Liquidity Facility and the Commitment Percentage of each Replacement Primary
Liquidity Provider will be the same for each Replacement Primary Liquidity
Facility. In connection with any replacement of an Above-Cap Liquidity
Facility under Section 3.6(d) or this Section 3.6(e) with a Replacement
Above-Cap Liquidity Facility, the other Above-Cap Liquidity Facility will be
concurrently replaced with a Replacement Above-Cap Liquidity Facility and the
Commitment Percentage of each Replacement Above-Cap Liquidity Provider will be
the same for each Replacement Above-Cap Liquidity Facility.
(f) Cash Collateral Accounts; Withdrawals; Investments. If
the Subordination Agent shall draw all available amounts under the Class A
Primary Liquidity Facility or the Class B Primary Liquidity Facility pursuant
to Section 3.6(c) or 3.6(i), or in the event that amounts are to be deposited
in any Cash Collateral Account related to the Primary Liquidity Facilities
pursuant to subclause (B) of clause third of Section 2.4(b) or 3.2 or subclause
(B) of clause fourth of Section 3.3, amounts so drawn or to be deposited, as
the case may be, shall be deposited by the Subordination Agent in the Class A
Cash Collateral Account or the Class B Cash Collateral Account, respectively.
If an Affiliate of the Above-Cap Liquidity Provider shall post Downgrade
Collateral under the Class A Above-Cap Liquidity Facility or the Class B
Above-Cap Liquidity Facility pursuant to Section 3.6(d), such Downgrade
Collateral shall be deposited by the Subordination Agent in the Class A
Above-Cap Account or the Class B Above-Cap Account to secure the obligations of
the Above-Cap Liquidity Providers. Amounts so deposited in the Cash Collateral
Accounts shall be invested in Eligible Investments in accordance with Section
2.2(b). Investment Earnings on amounts on deposit in the Cash Collateral
Accounts with respect to any Primary Liquidity Facility shall be paid after a
Downgrade Drawing by the Subordination Agent to the relevant Primary Liquidity
Provider from time to time on demand of such Primary Liquidity Provider and
otherwise shall be deposited in the Collection Account prior to giving effect
to the distributions below on each Distribution Date commencing on the first
Distribution Date after any such drawing. Investment Earnings on amounts on
deposit in the Cash Collateral Accounts with respect to any Above-Cap Liquidity
Facility shall be paid to the relevant Above-Cap Liquidity Provider from time
to time on demand of such Above-Cap Liquidity Provider. The Subordination
Agent shall deliver a written statement to United and each Liquidity Provider
one day prior to each Distribution Date setting forth the aggregate amount of
Investment Earnings held in the Cash Collateral Accounts as of such date. In
addition, from and after the date funds are so deposited, the Subordination
Agent shall make withdrawals from such account as follows:
(i) on each Distribution Date, the Subordination Agent
shall, to the extent it shall not have received funds to pay accrued
and unpaid interest on the Class A Certificates from any other source,
(A) withdraw from the Class A Cash Collateral Account, and pay to the
Trustee for the benefit of the Class A Certificateholders, an amount
equal to the least of (x) an amount necessary to pay accrued and
unpaid interest on such Class A Certificates, (y) the Interest Period
Available Amount at such time under the related Primary Liquidity
Facility and (z) the amount on deposit in the Class A Cash Collateral
Account and (B) if the Above- Cap Liquidity Provider is required to
pay an
41
46
Interest Drawing and fails to do so, withdraw from or foreclose upon
the Class A Above-Cap Account, and pay to the Trustee for the benefit
of the Class A Certificateholders, an amount equal to the lesser of
(x) the portion of the Interest Drawing payable by the Above-Cap
Liquidity Providers on such Class A Certificates and (y) the amount on
deposit in the Class A Above-Cap Account;
(ii) on each Distribution Date, the Subordination Agent
shall, to the extent it shall not have received funds to pay accrued
and unpaid interest on the Class B Certificates from any other source,
(A) withdraw from the Class B Cash Collateral Account, and pay to the
Trustee for the benefit of the Class B Certificateholders, an amount
equal to the least of (x) an amount necessary to pay accrued and
unpaid interest on such Class B Certificates, (y) the Interest Period
Available Amount at such time under the related Primary Liquidity
Facility and (z) the amount on deposit in the Class B Cash Collateral
Account and (B) if the Above- Cap Liquidity Provider is required to
pay an Interest Drawing and fails to do so, withdraw from or foreclose
upon the Class B Above-Cap Account, and pay to the Trustee for the
benefit of the Class B Certificateholders, an amount equal to the
lesser of (x) the portion of the Interest Drawing payable by the
Above-Cap Liquidity Providers on such Class B Certificates and (y) the
amount on deposit in the Class B Above-Cap Account;
(iii) on each date on which the Pool Balance of the Class A
Trust shall have been reduced by payments made to the Class A
Certificateholders pursuant to Section 2.4, 3.2 or 3.3, the
Subordination Agent shall withdraw from the Class A Cash Collateral
Account an amount equal to the excess, if any, of the amount on
deposit in the Class A Cash Collateral Account (less Investment
Earnings on deposit in such Cash Collateral Account) over the Maximum
Commitment Amount for the related Primary Liquidity Facility and shall
first, pay such amount to the Class A Primary Liquidity Provider until
the Liquidity Obligations (with respect to the Class A Certificates)
owing to such Primary Liquidity Provider shall have been paid in full,
and second, pay any remaining amount to United;
(iv) on each date on which the Pool Balance of the Class B
Trust shall have been reduced by payments made to the Class B
Certificateholders pursuant to Section 2.4, 3.2 or 3.3, the
Subordination Agent shall withdraw from the Class B Cash Collateral
Account an amount equal to the excess, if any, of the amount on
deposit in the Class B Cash Collateral Account (less Investment
Earnings on deposit in such Cash Collateral Account) over the Maximum
Commitment Amount for the related Primary Liquidity Facility and shall
first, pay such amount to the relevant Class B Primary Liquidity
Provider until the Liquidity Obligations (with respect to the Class B
Certificates) owing to such Primary Liquidity Provider shall have been
paid in full, and second, pay any remaining amount to United;
(v) if a Replacement Primary Liquidity Facility for any
Class of Certificates shall be delivered to the Subordination Agent
following the date on which funds have
42
47
been deposited into the Cash Collateral Account related to the Primary
Liquidity Facility for such Class of Certificates, the Subordination
Agent shall withdraw all amounts on deposit in such Cash Collateral
Account and shall pay such amounts to the replaced Primary Liquidity
Provider until all Liquidity Obligations owed to such Person shall
have been paid in full pari passu on the basis of the amount of
Liquidity Obligations owed to each Primary Liquidity Provider, and
shall deposit any remaining amount in the Collection Account;
(vi) following the payment of Final Distributions with
respect to the Class A Certificates or the Class B Certificates, on
the date on which the Subordination Agent shall have been notified by
any Primary Liquidity Provider for such Class of Certificates that the
Liquidity Obligations owed to such Primary Liquidity Provider have
been paid in full, the Subordination Agent shall withdraw all amounts
on deposit in the Cash Collateral Account related to the Primary
Liquidity Facility in respect of such Class of Certificates and shall
pay such amount to United; and
(vii) following the occurrence of any event that would,
pursuant to the Above-Cap Liquidity Facilities, require the adjustment
and release of Downgrade Collateral held in the Cash Collateral
Accounts related to the Above-Cap Liquidity Facilities, the
Subordination Agent shall release such Downgrade Collateral at the
times and in accordance with the terms of the Above-Cap Liquidity
Facilities.
(g) Reinstatement. With respect to any LP Interest Drawing
under the Primary Liquidity Facility for any Trust, upon the reimbursement of
each applicable Primary Liquidity Provider for all or any part of the amount of
such Interest Drawing, together with any accrued interest thereon, (x) the
Available Amount of such Primary Liquidity Facility shall be reinstated by an
amount equal to the amount of such LP Interest Drawing so reimbursed to the
relevant Primary Liquidity Providers and (y) the Remaining Commitment Amount
shall be increased by the Interest Period Available Amount related to such LP
Interest Drawing, but not in either case to exceed the Maximum Commitment
Amount for such Primary Liquidity Facility; provided, however, that such
Primary Liquidity Facility shall not be so reinstated in part or in full at any
time if (i) a Triggering Event shall have occurred and be continuing and (ii) a
Performing Note Deficiency exists. In the event that, with respect to any
particular Primary Liquidity Facility, (i) funds are withdrawn from the related
Cash Collateral Account pursuant to clauses (i) or (ii) of Section 3.6(f) or
(ii) such Primary Liquidity Facility shall become a Downgraded Facility at a
time when unreimbursed LP Interest Drawings under such Primary Liquidity
Facility have reduced the Remaining Commitment Amount thereunder to zero, then
funds received by the Subordination Agent at any time other than (x) any time
when a Triggering Event shall have occurred and be continuing with respect to
such Primary Liquidity Facility and a Performing Note Deficiency exists or (y)
any time after a Final Drawing shall have occurred with respect to such Primary
Liquidity Facility, shall be deposited in such applicable Cash Collateral
Account as provided in clause third of Section 2.4(b), clause third of Section
3.2 or clause fourth of Section 3.3, as applicable, and applied in accordance
with Section 3.6(f).
43
48
(h) Reimbursement. The amount of each drawing under the
Liquidity Facilities shall be due and payable, together with interest thereon,
on the dates and at the rates, respectively, provided in the Liquidity
Facilities.
(i) Final Drawing upon Termination Notice. Upon receipt
from a Primary Liquidity Provider of a Termination Notice with respect to any
Primary Liquidity Facility, the Subordination Agent shall, not later than the
date specified in such Termination Notice, in accordance with and to the extent
permitted by the terms of such Primary Liquidity Facility, request a drawing
under such Primary Liquidity Facility of all available and undrawn amounts
thereunder (a "Final Drawing"). Amounts drawn pursuant to a Final Drawing
shall be maintained and invested in accordance with Section 3.6(f).
(j) [Reserved]
(k) Relation to Subordination Provisions. Interest Drawings
under the Liquidity Facilities and withdrawals from the Cash Collateral
Accounts, in each case, in respect of interest on the Certificates of the Class
A Certificates or the Class B Certificates, shall be distributed to the Trustee
for such Class of Certificates, notwithstanding Sections 3.2, 3.3 and 3.6(h).
ARTICLE IV
EXERCISE OF REMEDIES
4.1 Directions from the Controlling Party. (a) (i) Following
the occurrence and during the continuation of an Indenture Default under any
Indenture, the Controlling Party shall direct the Subordination Agent, which in
turn shall direct the Indenture Trustee under such Indenture in the exercise of
remedies available to the holders of the Equipment Notes issued pursuant to
such Indenture, including, the ability to vote all such Equipment Notes in
favor of declaring all of the unpaid principal amount of such Equipment Notes
and accrued interest thereon to be due and payable under, and in accordance
with, the provisions of such Indenture. Subject to the Owner Trustees' and the
Owner Participants' rights set forth in the Indentures with respect to the
Leased Aircraft to purchase the Equipment Notes and the provisions of the next
paragraph, if the Equipment Notes issued pursuant to any Indenture have been
Accelerated following an Indenture Default with respect thereto, the
Controlling Party may sell, assign, contract to sell or otherwise dispose of
and deliver all (but not less than all) of such Equipment Notes to any Person
at public or private sale, at any location at the option of the Controlling
Party, all upon such terms and conditions as it may reasonably deem advisable
in accordance with applicable law.
(ii) Subject to the Owner Trustees' and the Owner
Participants' rights set forth in the Indentures with respect to Leased
Aircraft to purchase the Equipment Notes and notwithstanding the foregoing, so
long as any Certificates remain Outstanding, during the period ending on the
date which is nine months after the earlier of (x) the Acceleration of the
44
49
Equipment Notes issued pursuant to any Indenture or (y) the occurrence of a
United Bankruptcy Event, without the consent of the Trustee, (A) no Aircraft
subject to the Lien of such Indenture or Equipment Notes may be sold if the net
proceeds from such sale would be less than the aggregate outstanding principal
amount of Equipment Notes issued with respect to such Aircraft, plus accrued
and unpaid interest thereon and (B) with respect to any Leased Aircraft, the
amount and payment dates of rentals payable by United under the Lease for such
Aircraft may not be adjusted, if, as a result of such adjustment, the
discounted present value (using the weighted average interest rate of the
Equipment Notes issued pursuant to such Indenture as the discount rate) of all
such rentals would be less than 75% of the discounted present value of the
rentals payable by United under such Lease before giving effect to such
adjustment.
(iii) At the request of the Controlling Party, the
Subordination Agent may from time to time during the continuance of an
Indenture Default (and before the occurrence of a Triggering Event) commission
Appraisals with respect to the Aircraft subject to such Indenture.
(iv) After a Triggering Event occurs and any Equipment Note
becomes a Non-Performing Equipment Note, the Subordination Agent shall obtain
Appraisals with respect to all of the Aircraft (the "LTV Appraisals") as soon
as practicable and additional LTV Appraisals on or prior to each anniversary of
the date of such initial LTV Appraisals; provided, however, that if the
Controlling Party reasonably objects to the appraised value of the Aircraft
shown in such LTV Appraisals, the Controlling Party shall have the right to
obtain or cause to be obtained substitute LTV Appraisals (including LTV
Appraisals based upon physical inspection of the Aircraft).
(b) The Controlling Party shall take such actions as it may
reasonably deem most effectual to complete the sale or other disposition of
such Aircraft or Equipment Notes. In addition, in lieu of any sale,
assignment, contract to sell or other disposition, the Controlling Party may
maintain possession of such Equipment Notes and continue to apply monies
received in respect of such Equipment Notes in accordance with Article III. In
addition, in lieu of such sale, assignment, contract to sell or other
disposition, or in lieu of such maintenance of possession, the Controlling
Party may instruct the Indenture Trustee under such Indenture to foreclose on
the Lien on the related Aircraft.
(c) So long as any Liquidity Obligations remain outstanding,
the powers of the Controlling Party shall be restricted as provided in this
Section 4.1(c).
The Controlling Party shall not agree to amend, waive or
otherwise modify any provision of any Operative Agreement, direct the exercise
of any remedy under any Operative Agreement or direct the taking of any other
actions under any Operative Agreement, for the following purposes (without the
consent of each Primary Liquidity Provider, which consent shall not be
unreasonably withheld or delayed):
45
50
(i) to reduce in any manner the amount of any payment on the
Equipment Notes or the Leases or to require that any such payment on
the Equipment Notes be made other than to the Subordination Agent;
(ii) to delay the timing of any payment on the Equipment
Notes or the Leases if such delay (taken together with all other
delays of payment on the Equipment Notes or the Leases on a cumulative
basis) would extend beyond the Deferral Period;
(iii) to impair the right to institute suit for the
enforcement of any payment obligation under the Equipment Notes or the
Leases, subject to deferrals permitted under clause (ii) above;
(iv) to enter into any lease or similar contract with respect
to any Aircraft unless the lessee (or comparable party) is required to
commence paying rent or comparable payments at market rates for such
Aircraft no later than the end of the Deferral Period; or
(v) to sell or otherwise dispose of any Equipment Note,
Lease or Aircraft (except as contemplated by clause (iv) above) unless
the market value of such Equipment Note, Lease or Aircraft is paid on
or before the end of the Deferral Period.
4.2 Remedies Cumulative. Each and every right, power and remedy
given to the Trustee, the Primary Liquidity Providers, the Controlling Party or
the Subordination Agent specifically or otherwise in this Agreement shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may, subject always to the terms and conditions
hereof, be exercised from time to time and as often and in such order as may be
deemed expedient by the Trustee, the Primary Liquidity Providers, the
Controlling Party or the Subordination Agent, as appropriate, and the exercise
or the beginning of the exercise of any power or remedy shall not be construed
to be a waiver of the right to exercise at the same time or thereafter any
other right, power or remedy. No delay or omission by the Trustee, the Primary
Liquidity Providers, the Controlling Party or the Subordination Agent in the
exercise of any right, remedy or power or in the pursuit of any remedy shall
impair any such right, power or remedy or be construed to be a waiver of any
default or to be an acquiescence therein.
4.3 Discontinuance of Proceedings. If any party to this Agreement
(including the Controlling Party in such capacity) shall have instituted any
Proceeding to enforce any right, power or remedy under this Agreement by
foreclosure, entry or otherwise, and such Proceeding shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to the Person instituting such Proceeding, then and in every such
case each such party shall, subject to any determination in such Proceeding, be
restored to its former position and rights hereunder, and all rights, remedies
and powers of such party shall continue as if no such Proceeding had been
instituted.
46
51
4.4 Right of Certificateholders to Receive Payments Not to Be
Impaired. Anything in this Agreement to the contrary notwithstanding but
subject to each Trust Agreement, the right of any Certificateholder or any
Primary Liquidity Provider, respectively, to receive payments hereunder
(including pursuant to Section 2.4, 3.2 or 3.3) when due, or to institute suit
for the enforcement of any such payment on or after the applicable Distribution
Date, shall not be impaired or affected without the consent of such
Certificateholder or such Primary Liquidity Provider, respectively.
4.5 Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Agreement or in any suit against any Controlling
Party or the Subordination Agent for any action taken or omitted by it as
Controlling Party or Subordination Agent, as the case may be, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant. The
provisions of this Section 4.5 do not apply to a suit instituted by the
Subordination Agent, a Liquidity Provider or a Trustee or a suit by
Certificateholders holding more than 10% of the original principal amount of
any Class of Certificates.
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
5.1 Notice of Indenture Default or Triggering Event. (a) If the
Subordination Agent shall have actual knowledge of the occurrence of an
Indenture Default or a Triggering Event, as promptly as practicable, and in any
event within 10 days after obtaining knowledge thereof, the Subordination Agent
shall transmit by mail to the Rating Agencies, the Liquidity Providers and the
Trustee notice of such Indenture Default or Triggering Event, unless such
Indenture Default or Triggering Event shall have been cured or waived. For all
purposes of this Agreement, in the absence of actual knowledge on the part of a
Responsible Officer, the Subordination Agent shall not be deemed to have
knowledge of any Indenture Default or Triggering Event unless notified in
writing by the Trustee, one or more Liquidity Providers or one or more
Certificateholders.
(b) Other Notices. The Subordination Agent will furnish to
each Liquidity Provider and the Trustee, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and other instruments furnished to the Subordination Agent
as registered holder of the Equipment Notes or otherwise in its capacity as
Subordination Agent to the extent the same shall not have been otherwise
directly distributed to such Liquidity Provider or the Trustee, as applicable,
pursuant to the express provision of any other Operative Agreement.
47
52
5.2 Indemnification. The Subordination Agent shall not be
required to take any action or refrain from taking any action under Section 5.1
(other than the first sentence thereof) or Article IV unless the Subordination
Agent shall have been indemnified (to the extent and in the manner reasonably
satisfactory to the Subordination Agent) against any liability, cost or expense
(including counsel fees and expenses) which may be incurred in connection
therewith. The Subordination Agent shall not be under any obligation to take
any action under this Agreement and nothing contained in this Agreement shall
require the Subordination Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder
or in the exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it. The
Subordination Agent shall not be required to take any action under Section 5.1
(other than the first sentence thereof) or Article IV, nor shall any other
provision of this Agreement be deemed to impose a duty on the Subordination
Agent to take any action, if the Subordination Agent shall have been advised by
counsel that such action is contrary to the terms hereof or is otherwise
contrary to law.
5.3 No Duties Except as Specified in Intercreditor Agreement. The
Subordination Agent shall not have any duty or obligation to take or refrain
from taking any action under, or in connection with, this Agreement, except as
expressly provided by the terms of this Agreement; and no implied duties or
obligations shall be read into this Agreement against the Subordination Agent.
The Subordination Agent agrees that it will, in its individual capacity and at
its own cost and expense (but without any right of indemnity in respect of any
such cost or expense) promptly take such action as may be necessary to duly
discharge all Liens on any of the Trust Accounts or any monies deposited
therein which result from claims against it in its individual capacity not
related to its activities hereunder or any other Operative Agreement.
5.4 Notice from the Liquidity Providers and Trustee. If any
Liquidity Provider or the Trustee has notice of an Indenture Default or a
Triggering Event, such Person shall promptly give notice thereof to all other
Liquidity Providers, to the Trustee and to the Subordination Agent, provided,
however, that no such Person shall have any liability hereunder as a result of
its failure to deliver any such notice.
ARTICLE VI
THE SUBORDINATION AGENT
6.1 Acceptance of Trusts and Duties. Each of the Liquidity
Providers and the Trustee hereby designates and appoints FSB as the
Subordination Agent under this Agreement. FSB hereby accepts the duties hereby
created and applicable to it as the Subordination Agent and agrees to perform
the same but only upon the terms of this Agreement and agrees to receive and
disburse all monies received by it in accordance with the terms hereof. The
Subordination Agent shall not be answerable or accountable under any
circumstances, except (a) for its own willful misconduct or gross negligence or
for its negligence in the receipt and disbursement of funds,
48
53
(b) as provided in Section 2.2 and (c) for liabilities that may result from the
material inaccuracy of any representation or warranty of the Subordination
Agent made in its individual capacity in any Operative Agreement. The
Subordination Agent shall not be liable for any error of judgment made in good
faith by a Responsible Officer of the Subordination Agent, unless it is proved
that the Subordination Agent was negligent in ascertaining the pertinent facts.
6.2 Absence of Duties. The Subordination Agent shall have no duty
to see to any recording or filing of this Agreement or any other document, or
to see to the maintenance of any such recording or filing.
6.3 No Representations or Warranties as to Documents. The
Subordination Agent in its individual capacity does not make nor shall be
deemed to have made any representation or warranty as to the validity, legality
or enforceability of this Agreement or any other Operative Agreement or as to
the correctness of any statement contained in any thereof, except for the
representations and warranties of the Subordination Agent, made in its
individual capacity, under any Operative Agreement to which it is a party. The
Certificateholders, the Trustee and the Liquidity Providers make no
representation or warranty hereunder whatsoever.
6.4 No Segregation of Monies; No Interest. Any monies paid to or
retained by the Subordination Agent pursuant to any provision hereof and not
then required to be distributed to the Trustee or any Primary Liquidity
Provider as provided in Articles II and III need not be segregated in any
manner except to the extent required by such Articles II and III and by law,
and the Subordination Agent shall not (except as otherwise provided in Section
2.2) be liable for any interest thereon; provided, however, that any payments
received or applied hereunder by the Subordination Agent shall be accounted for
by the Subordination Agent so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.
6.5 Reliance; Agents; Advice of Counsel. The Subordination Agent
shall not incur liability to anyone in acting upon any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion, bond
or other document or paper believed by it to be genuine and believed by it to
be signed by the proper party or parties. As to the Pool Balance of any Trust
or Trusts of the same Class as of any date, the Subordination Agent may for all
purposes hereof rely on a certificate signed by any Responsible Officer of the
Trustee, and such certificate shall constitute full protection to the
Subordination Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon. As to any fact or matter relating to the Liquidity
Providers or the Trustee the manner of ascertainment of which is not
specifically described herein, the Subordination Agent may for all purposes
hereof rely on a certificate, signed by any Responsible Officer of the
applicable Liquidity Provider or the Trustee, as the case may be, as to such
fact or matter, and such certificate shall constitute full protection to the
Subordination Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon. The Subordination Agent shall assume, and shall be
fully protected in assuming, that each of the Liquidity Providers and the
Trustee are authorized to enter into this Agreement and to take all action to
be taken by them pursuant to the provisions hereof, and shall not inquire into
the authorization of each of the Liquidity Providers and the Trustee with
respect thereto. In the
49
54
administration of the trusts hereunder, the Subordination Agent may execute any
of the trusts or powers hereof and perform its powers and duties hereunder
directly or through agents or attorneys and may consult with counsel,
accountants and other skilled persons to be selected and retained by it, and
the Subordination Agent shall not be liable for the acts or omissions of any
agent appointed with due care or for anything done, suffered or omitted in good
faith by it in accordance with the advice or written opinion of any such
counsel, accountants or other skilled persons.
6.6 Capacity in Which Acting. The Subordination Agent acts
hereunder solely as agent and trustee herein and not in its individual
capacity, except as otherwise expressly provided in the Operative Agreements.
6.7 Compensation. The Subordination Agent shall be entitled to
reasonable compensation, including expenses and disbursements, for all services
rendered hereunder and shall have a priority claim to the extent set forth in
Article III on all monies collected hereunder for the payment of such
compensation, to the extent that such compensation shall not be paid by others.
The Subordination Agent agrees that it shall have no right against the Trustee
or any Liquidity Provider for any fee as compensation for its services as agent
under this Agreement. The provisions of this Section 6.7 shall survive the
termination of this Agreement.
6.8 May Become Certificateholder. The institution acting as
Subordination Agent hereunder may become a Certificateholder and have all
rights and benefits of a Certificateholder to the same extent as if it were not
the institution acting as the Subordination Agent.
6.9 Subordination Agent Required; Eligibility. There shall at all
times be a Subordination Agent hereunder which shall be a corporation organized
and doing business under the laws of the United States of America or of any
State or territory thereof or the District of Columbia having a combined
capital and surplus of at least $75,000,000 (or $5,000,000 and the obligations
of which, whether now in existence or hereafter incurred, are fully and
unconditionally guaranteed by a corporation organized and doing business under
the laws of the United States, any State or territory thereof or of the
District of Columbia and having a combined capital and surplus of at least
$75,000,000), if there is such an institution willing and able to perform the
duties of the Subordination Agent hereunder upon reasonable or customary terms.
Such corporation shall be a citizen of the United States and shall be
authorized under the laws of the United States or any State or territory
thereof or of the District of Columbia to exercise corporate trust powers and
shall be subject to supervision or examination by federal, state, territorial
or District of Columbia authorities. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of any of
the aforesaid supervising or examining authorities, then, for the purposes of
this Section 6.9, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
50
55
In case at any time the Subordination Agent shall cease to be
eligible in accordance with the provisions of this Section, the Subordination
Agent shall resign immediately in the manner and with the effect specified in
Section 8.1.
6.10 Money to Be Held in Trust. All Equipment Notes, monies and
other property deposited with or held by the Subordination Agent pursuant to
this Agreement shall be held in trust for the benefit of the parties entitled
to such Equipment Notes, monies and other property. All such Equipment Notes,
monies or other property shall be held in the Trust Department of the
institution acting as Subordination Agent hereunder.
ARTICLE VII
[Reserved]
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
8.1 Replacement of Subordination Agent; Appointment of Successor.
The Subordination Agent may resign at any time by so notifying the Trustee and
the Liquidity Providers. The Controlling Party may remove the Subordination
Agent for cause by so notifying the Subordination Agent and may appoint a
successor Subordination Agent. The Controlling Party shall remove the
Subordination Agent if:
(1) the Subordination Agent fails to comply with Section
6.9;
(2) the Subordination Agent is adjudged bankrupt or
insolvent;
(3) a receiver or other public officer takes charge of the
Subordination Agent or its property; or
(4) the Subordination Agent otherwise becomes incapable of
acting.
If the Subordination Agent resigns or is removed or if a
vacancy exists in the office of Subordination Agent for any reason (the
Subordination Agent in such event being referred to herein as the retiring
Subordination Agent), the Controlling Party shall promptly appoint a successor
Subordination Agent.
A successor Subordination Agent shall deliver (x) a written
acceptance of its appointment as Subordination Agent hereunder to the retiring
Subordination Agent and (y) a written assumption of its obligations hereunder
and under each Primary Liquidity Facility to each party hereto, upon which the
resignation or removal of the retiring Subordination Agent shall
51
56
become effective, and the successor Subordination Agent shall have all the
rights, powers and duties of the Subordination Agent under this Agreement. The
successor Subordination Agent shall mail a notice of its succession to the
Liquidity Providers and the Trustee. The retiring Subordination Agent shall
promptly transfer its rights under each of the Liquidity Facilities and all of
the property held by it as Subordination Agent to the successor Subordination
Agent.
If a successor Subordination Agent does not take office within
60 days after the retiring Subordination Agent resigns or is removed, the
retiring Subordination Agent or the Trustee may petition any court of competent
jurisdiction for the appointment of a successor Subordination Agent.
If the Subordination Agent fails to comply with Section 6.9
(to the extent applicable), the Trustee or one or more of the Liquidity
Providers may petition any court of competent jurisdiction for the removal of
the Subordination Agent and the appointment of a successor Subordination Agent.
Notwithstanding the foregoing, no resignation or removal of
the Subordination Agent shall be effective unless and until a successor has
been appointed. No appointment of a successor Subordination Agent shall be
effective unless and until the Rating Agencies shall have delivered a Ratings
Confirmation.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
9.1 Amendments, Waivers, etc. (a) This Agreement may not be
supplemented, amended or modified without the consent of the Trustee (acting
with the consent of holders of Certificates of each Class evidencing interests
in the related Trust or Trusts of such Class aggregating not less than a
majority in interest in such Trust or Trusts of such Class or as otherwise
authorized pursuant to the relevant Trust Agreements), the Subordination Agent
and each Liquidity Provider; provided, however, that this Agreement may be
supplemented, amended or modified without the consent of the Trustee if such
supplement, modification or amendment cures an ambiguity or inconsistency or
does not materially adversely affect the Trustee, the Liquidity Providers or
the holders of the related Class of Certificates; provided, further, however,
that if such supplement, amendment or modification would (x) directly or
indirectly modify or supersede, or otherwise conflict with, Section 2.2(b),
Section 3.6(f) or the second sentence of Section 10.6 (collectively, together
with this proviso, the "United Provisions") or (y) otherwise adversely affect
the interests of a potential Replacement Liquidity Provider or of United with
respect to its payment obligations under any Lease or Owned Aircraft Indenture,
then such supplement, amendment or modification shall not be effective without
the additional written consent of United. Notwithstanding the foregoing,
without the consent of each Certificateholder and each Liquidity Provider, no
supplement, amendment or modification of this Agreement may (i) reduce the
percentage of the interest in any Trust or Trusts of the same Class
52
57
evidenced by the Certificates issued by such Trust or Trusts necessary to
consent to modify or amend any provision of this Agreement or to waive
compliance therewith or (ii) modify Section 2.4, 3.2, 3.3 or 3.6(f) relating to
the distribution of monies received by the Subordination Agent hereunder from
the Equipment Notes or pursuant to the Liquidity Facilities. Nothing contained
in this Section 9.1 shall require the consent of the Trustee with respect to a
Class of Certificates at any time following the payment of Final Distributions
with respect to such Class of Certificates.
(b) If the Subordination Agent, as the registered holder of
any Equipment Notes, receives a request for its consent to any amendment,
modification or waiver under such Equipment Notes, the Indenture pursuant to
which such Equipment Notes were issued, or if applicable, the Lease,
Participation Agreement or other related document, (i) if no Indenture Default
shall have occurred and be continuing, the Subordination Agent shall request
instructions from the Trustee and the consent of each Primary Liquidity
Provider (which consent shall not be unreasonably withheld or delayed) and
shall vote or consent in accordance with the vote of the Trustee and the
instructions of the Primary Liquidity Providers and (ii) if any Indenture
Default (which, in the case of an Indenture pertaining to a Leased Aircraft,
has not been cured by the Owner Trustee or the Owner Participant thereunder, if
applicable, pursuant to Section 8.03 of such Indenture) shall have occurred and
be continuing with respect to such Indenture, the Subordination Agent will
exercise its voting rights as directed by the Controlling Party, subject to
Section 4.1; provided, however, that no amendment of or supplement to any
Indenture, Lease, Participation Agreement or other Operative Agreement or
waiver or modification of the terms of, or consent under, any thereof, shall
without the consent of each Primary Liquidity Provider, have any of the effects
listed in the proviso of Section 11.02(a) of any Indenture.
9.2 Subordination Agent Protected. If, in the reasonable opinion
of the institution acting as the Subordination Agent hereunder, any document
required to be executed pursuant to the terms of Section 9.1 affects any right,
duty, immunity or indemnity with respect to it under this Agreement or any
Liquidity Facility, the Subordination Agent may in its discretion decline to
execute such document.
9.3 Effect of Supplemental Agreements. Upon the execution of any
amendment or supplement hereto pursuant to the provisions hereof, this
Agreement shall be and be deemed to be and shall be modified and amended in
accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Agreement of the parties hereto
and beneficiaries hereof shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental agreement shall be and be
deemed to be and shall be part of the terms and conditions of this Agreement
for any and all purposes. In executing or accepting any supplemental agreement
permitted by this Article IX, the Subordination Agent shall be entitled to
receive, and shall be fully protected in relying upon, an opinion of counsel
stating that the execution of such supplemental agreement is authorized or
permitted by this Article IX.
53
58
9.4 Copy to Rating Agencies. Promptly following its receipt of
each amendment, consent, modification, supplement or waiver contemplated by
this Article IX, the Subordination Agent shall send a copy thereof to each
Rating Agency.
ARTICLE X
MISCELLANEOUS
10.1 Termination of Intercreditor Agreement. Following payment of
Final Distributions with respect to each Class of Certificates and the payment
in full of all Liquidity Obligations to the Primary Liquidity Providers and so
long as (i) there shall then be no other amounts due to the Certificateholders,
the Trustee, the Primary Liquidity Providers and the Subordination Agent
hereunder or under the Trust Agreements and (ii) the commitment of the
Liquidity Providers under the Liquidity Facilities shall have expired or been
terminated, this Agreement and the trusts created hereby shall terminate and
this Agreement shall be of no further force or effect. Except as aforesaid or
otherwise provided, this Agreement and the trusts created hereby shall continue
in full force and effect in accordance with the terms hereof.
10.2 Intercreditor Agreement for Benefit of Trustee, Liquidity
Providers and Subordination Agent. Nothing in this Agreement, whether express
or implied, shall be construed to give to any Person other than the Trustee,
the Liquidity Providers and the Subordination Agent (and United, in the case of
Section 9.1) any legal or equitable right, remedy or claim under or in respect
of this Agreement.
10.3 Notices. Unless otherwise expressly specified or permitted by
the terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents provided or permitted by this Agreement to be
made, given, furnished or filed shall be in writing, mailed by certified mail,
postage prepaid, or by confirmed telecopy and
(i) if to the Subordination Agent, addressed to it at its office
at:
FIRST SECURITY BANK, NATIONAL ASSOCIATION
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
54
59
(ii) if to the Trustee, addressed to it at its office at:
FIRST SECURITY BANK, NATIONAL ASSOCIATION
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) if to the Primary Liquidity Provider, addressed to it at its
office at:
KREDITANSTALT FUR WIEDERAUFBAU
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇-▇
▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
Attention: Head of Aircraft
Finance Department K 111 b 1
Telecopy: 011-49-69-7431-2944
(iv) if to the Above-Cap Liquidity Provider, addressed to it at its
office at:
Credit Suisse Financial Products
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: Director - Legal Department
Telecopy: 011-44-171-516-2686
Whenever any notice in writing is required to be given by the Trustee or any
Liquidity Provider or the Subordination Agent to any of the other of them, such
notice shall be deemed given and such requirement satisfied when such notice is
received, if such notice is received, if such notice is mailed by certified
mail, postage prepaid or by courier service or is sent by confirmed telecopy
addressed as provided above. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Agreement.
10.4 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.5 No Oral Modifications or Continuing Waivers. No terms or
provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party or other
Person against whom enforcement of the change, waiver,
55
60
discharge or termination is sought and any other party or other Person whose
consent is required pursuant to this Agreement and any waiver of the terms
hereof shall be effective only in the specific instance and for the specific
purpose given.
10.6 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of
the parties hereto and the successors and assigns of each, all as herein
provided. The agreements contained in Section 9.1 shall inure to the benefit
of United and its successors and assigns.
10.7 Headings. The headings of the various Articles and Sections
herein and in the table of contents hereto are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof.
10.8 Counterpart Form. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same agreement.
10.9 Subordination. (a) As between the Primary Liquidity
Providers, on the one hand, and the Trustee and the Certificateholders, on the
other hand, this Agreement shall be a subordination agreement for purposes of
▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code, as amended from time to time.
(b) Notwithstanding the provisions of this Agreement, if
prior to the payment in full to the Primary Liquidity Providers of all
Liquidity Obligations then due and payable, any party hereto shall have
received any payment or distribution in respect of Equipment Notes or any other
amount under the Indentures or other Operative Agreements which, had the
subordination provisions of this Agreement been properly applied to such
payment, distribution or other amount, would not have been distributed to such
Person, then such payment, distribution or other amount shall be received and
held in trust by such Person and paid over or delivered to the Subordination
Agent for application as provided herein.
(c) If the Trustee, any Primary Liquidity Provider or the
Subordination Agent receives any payment in respect of any obligations owing
hereunder (or, in the case of the Primary Liquidity Providers, in respect of
the Liquidity Obligations), which is subsequently invalidated, declared
preferential, set aside and/or required to be repaid to a trustee, receiver or
other party, then, to the extent of such payment, such obligations (or, in the
case of the Primary Liquidity Providers, such Liquidity Obligations) intended
to be satisfied shall be revived and continue in full force and effect as if
such payment had not been received.
(d) The Trustee (on behalf of itself and the holders of
Certificates), the Primary Liquidity Providers and the Subordination Agent
confirm that the payment priorities specified in Sections 2.4, 3.2 and 3.3
shall apply in all circumstances, notwithstanding the fact that the obligations
owed to the Trustee and the holders of Certificates are secured by certain
assets and the Liquidity Obligations are not so secured. The Trustee expressly
agrees (on behalf of itself
56
61
and the holders of Certificates) not to assert priority over the holders of
Liquidity Obligations due to their status as secured creditors in any
bankruptcy, insolvency or other legal proceeding.
(e) Each of the Trustee (on behalf of itself and the holders
of Certificates), the Primary Liquidity Providers and the Subordination Agent
may take any of the following actions without impairing its rights under this
Agreement:
(i) obtain a lien on any property to secure any amounts
owing to it hereunder, including, in the case of the Primary Liquidity
Providers, the Liquidity Obligations,
(ii) obtain the primary or secondary obligation of any other
obligor with respect to any amounts owing to it hereunder, including,
in the case of the Primary Liquidity Providers, any of the Liquidity
Obligations,
(iii) renew, extend, increase, alter or exchange any amounts
owing to it hereunder, including, in the case of the Primary Liquidity
Providers, any of the Liquidity Obligations, or release or compromise
any obligation of any obligor with respect thereto,
(iv) refrain from exercising any right or remedy, or delay in
exercising such right or remedy, which it may have, or
(v) take any other action which might discharge a
subordinated party or a surety under applicable law;
provided, however, that the taking of any such actions by any of the
Trustee, the Primary Liquidity Providers or the Subordination Agent
shall not prejudice the rights or adversely affect the obligations of
any other party under this Agreement.
10.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (OTHER THAN SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW)), AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
10.11 Submission to Jurisdiction; Waiver of Jury Trial; Waiver of
Indemnity.
(a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement or any other
Operative Agreement, or for recognition and enforcement of any
judgment in respect hereof or thereof, to the non-exclusive
general jurisdiction of the courts of the State of New York,
the courts
57
62
of the United States of America for the Southern District of
New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may
now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead
or claim the same;
(iii) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form and mail, postage prepaid, to each party hereto at its
address set forth in Section 10.3, or at such other address of
which the other person shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted by
law or shall limit the right to ▇▇▇ in any other jurisdiction.
(b) EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED, including contract claims, tort claims, breach of duty claims and
all other common law and statutory claims. Each of the parties warrants and
represents that it has reviewed this waiver with its legal counsel, and that it
knowingly and voluntarily waives its jury trial rights following consultation
with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) Each Liquidity Provider hereby waives any immunity it
may have from the jurisdiction of the courts of the United States or of any
State thereof and waives any immunity any of its properties located in the
United States may have from attachment or execution upon a judgment entered by
any such court under the United States Foreign Sovereign Immunities Act of 1976
or any similar successor legislation.
10.12 Obligations of CSFP. Notwithstanding any obligation set forth
in this Agreement to the contrary, so long as CSFP or any successor is the
Above-Cap Liquidity Provider under the Above-Cap Liquidity Facility, CSFP shall
have no obligations under this Agreement. The obligations of CSFP and such
successor are solely those set forth in the Above-Cap Liquidity Facility.
58
63
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written, and acknowledge that
this Agreement has been made and delivered in the City of Chicago, and this
Agreement has become effective only upon such execution and delivery.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Trustee for each of the Trusts
By: /s/ C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------
Name: C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
S-1 INTERCREDITOR AGREEMENT
64
KREDITANSTALT FUR
WIEDERAUFBAU,
AS PRIMARY LIQUIDITY PROVIDER
BY: /s/ ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
NAME: ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
TITLE: VP
BY: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
NAME: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
TITLE: Senior Project Manager
S-2 INTERCREDITOR AGREEMENT
65
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity except as
expressly set forth herein but solely as
Subordination Agent and trustee
By: /s/ C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------
Name: C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
S-3 INTERCREDITOR AGREEMENT
66
The undersigned hereby acknowledges
the terms of this Intercreditor Agreement:
CREDIT SUISSE FINANCIAL PRODUCTS,
as Above-Cap Liquidity Provider
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
S-4 INTERCREDITOR AGREEMENT
67
SCHEDULE 1 TO
INTERCREDITOR AGREEMENT
Indentures
1. Amended and Restated Trust Indenture and Security Agreement (1994 737
B), dated as of December 23, 1997, between State Street Bank and Trust Company
of Connecticut, National Association, as Owner Trustee (the "Owner Trustee")
and First Security Bank, National Association, as Indenture Trustee (the
"Indenture Trustee").
2. Amended and Restated Trust Indenture and Security Agreement (1994 737
C), dated as of December 23, 1997, between State Street Bank and Trust Company
of Connecticut, National Association, as Owner Trustee (the "Owner Trustee")
and First Security Bank, National Association, as Indenture Trustee (the
"Indenture Trustee").
3. Amended and Restated Trust Indenture and Security Agreement (1994 737
D), dated as of December 23, 1997, between State Street Bank and Trust Company
of Connecticut, National Association, as Owner Trustee (the "Owner Trustee")
and First Security Bank, National Association, as Indenture Trustee (the
"Indenture Trustee").
4. Amended and Restated Trust Indenture and Security Agreement (1994 737
E), dated as of December 23, 1997, between State Street Bank and Trust Company
of Connecticut, National Association, as Owner Trustee (the "Owner Trustee")
and First Security Bank, National Association, as Indenture Trustee (the
"Indenture Trustee").
5. Trust Indenture and Mortgage (1997 747-1), dated as of December 23,
1997, between United Air Lines, Inc., as Owner (the "Owner") and First Security
Bank, National Association, as Indenture Trustee (the "Indenture Trustee").
6. Trust Indenture and Mortgage (1997 747-2), dated as of December 23,
1997, between United Air Lines, Inc., as Owner (the "Owner") and First Security
Bank, National Association, as Indenture Trustee (the "Indenture Trustee").
7. Trust Indenture and Mortgage (1997 A320-1), dated as of December 23,
1997, between United Air Lines, Inc., as Owner (the "Owner") and First Security
Bank, National Association, as Indenture Trustee (the "Indenture Trustee").
8. Trust Indenture and Mortgage (1997 A320-2), dated as of December 23,
1997, between United Air Lines, Inc., as Owner (the "Owner") and First Security
Bank, National Association, as Indenture Trustee (the "Indenture Trustee").
68
9. Trust Indenture and Mortgage (1997 A320-3), dated as of December 23,
1997, between United Air Lines, Inc., as Owner (the "Owner") and First Security
Bank, National Association, as Indenture Trustee (the "Indenture Trustee").
10. Trust Indenture and Mortgage (1997 A320-4), dated as of December 23,
1997, between United Air Lines, Inc., as Owner (the "Owner") and First Security
Bank, National Association, as Indenture Trustee (the "Indenture Trustee").
11. Trust Indenture and Mortgage (1997 777-1), dated as of December 23,
1997, between United Air Lines, Inc., as Owner (the "Owner") and First Security
Bank, National Association, as Indenture Trustee (the "Indenture Trustee").
12. Trust Indenture and Mortgage (1997 777-2), dated as of December 23,
1997, between United Air Lines, Inc., as Owner (the "Owner") and First Security
Bank, National Association, as Indenture Trustee (the "Indenture Trustee").
13. Trust Indenture and Mortgage (1997 777-3), dated as of December 23,
1997, between United Air Lines, Inc., as Owner (the "Owner") and First Security
Bank, National Association, as Indenture Trustee (the "Indenture Trustee").
14. Trust Indenture and Mortgage (1997 777-4), dated as of December 23,
1997, between United Air Lines, Inc., as Owner (the "Owner") and First Security
Bank, National Association, as Indenture Trustee (the "Indenture Trustee").
69
SCHEDULE 2 TO
INTERCREDITOR AGREEMENT
Note Purchase Agreement