EXHIBIT 4.11
________________________________________________________________________________
AFE NOTE PURCHASE AGREEMENT
Dated as of July 31, 2000
between
UNITED AIR LINES, INC.,
AFE TRUST,
and
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION, as
Pass Through Trustee under each of the
United Airlines 2000-1 Pass Through Trust Agreements,
Subordination Agent and AFE Indenture Trustee
________________________________________________________________________________
TABLE OF CONTENTS
Page
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SECTION 1. Purchase of AFE Notes............................................. 2
SECTION 1.A Certain Definitions............................................... 2
SECTION 1.B Payment to Lease Notes Seller..................................... 3
SECTION 2. [Reserved]........................................................ 4
SECTION 3. Conditions Precedent.............................................. 4
SECTION 4. Representations, Warranties and Covenants of AFE Trust............ 11
SECTION 5. Representations, Warranties and Covenants of United............... 13
SECTION 6. Representations, Warranties and Covenants of Other Parties........ 16
SECTION 7. Indemnification by United......................................... 21
SECTION 8. Limited Liability................................................. 25
SECTION 9. Notices........................................................... 26
SECTION 10. Expenses.......................................................... 26
SECTION 11. Withholding....................................................... 26
SECTION 12. Miscellaneous..................................................... 26
SCHEDULES
Schedule I Names, Addresses and Wire Instructions
Schedule II AFE Notes, Purchasers and Purchase Prices
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AFE NOTE PURCHASE AGREEMENT
This AFE NOTE PURCHASE AGREEMENT, dated as of July 31, 2000 (this
"Agreement"), among UNITED AIR LINES, INC., a Delaware corporation ("United"),
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AFE TRUST, a Delaware business trust ("AFE Trust"), and STATE STREET BANK AND
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TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association (the "Bank"), not in its individual capacity, except as otherwise
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expressly provided herein, but solely as trustee (in such capacity, the "Pass
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Through Trustee") under each of the five separate Pass Through Trust Agreements
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(as defined below), subordination agent (in such capacity, the "Subordination
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Agent"), and indenture trustee (in such capacity, the "AFE Indenture Trustee")
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under the AFE Indenture (as defined below).
WHEREAS, United has leased six Boeing 757-222 aircraft (collectively, the
"Leased Aircraft") in six separate leveraged lease financings and in connection
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therewith, each lessor of such aircraft has issued notes (the "Lease Notes")
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under an indenture (the "Leveraged Lease Indentures") secured by such aircraft
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and such lessor's rights under the leases (the "Leases") of such aircraft to
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United;
WHEREAS, pursuant to the Trust Indenture, dated as of the date hereof (the
"AFE Indenture"), between AFE Trust and the AFE Indenture Trustee, AFE Trust
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proposes to issue on a nonrecourse basis up to four series of AFE Notes, all of
which are to be secured by the Lease Notes and related rights under the
Leveraged Lease Indentures in and to the Aircraft and the Leases and AFE Trust's
rights under the Confirmations (as defined below) granted pursuant to the AFE
Indenture by AFE Trust in favor of the AFE Indenture Trustee;
WHEREAS, pursuant to the Confirmations, dated as of the date hereof (the
"Confirmations"), by and between AFE Trust and United (each such confirmation
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incorporating the ISDA Master Agreement, the Schedule to the ISDA Master
Agreement and the ISDA Definitions), AFE Trust agrees to make certain floating
rate interest payments to United and United agrees to make certain fixed rate
interest payments to AFE Trust;
WHEREAS, Series A-1 AFE Notes, Series A-2 AFE Notes, Series B AFE Notes,
and Series C-1 AFE Notes with respect to each Aircraft (each, a "Series") will
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be issued on the Closing Date (as defined in Section 1 below) to the
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Subordination Agent acting on behalf of the Pass Through Trustee for the
applicable Pass Through Trust as evidence of AFE Trust's indebtedness to the
Pass Through Trustee;
WHEREAS, pursuant to each of the Pass Through Trust Supplements (the "Trust
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Supplements"; and together with the Basic Pass Through Trust Agreement, the
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"Pass Through Trust Agreements"), on the Closing Date (as defined in Section 1
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below), a separate grantor trust (each, a "Pass Through Trust") will be created
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to facilitate certain of the transactions contemplated hereby,
including, without limitation, the issuance and sale of enhanced pass through
certificates pursuant thereto (collectively, the "Pass Through Certificates") to
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provide the financing of the Aircraft;
WHEREAS, part of the proceeds from the issuance and sale of the Pass
Through Certificates will be applied by the Subordination Agent, acting on
behalf of the Pass Through Trustee, to purchase from AFE Trust on behalf of each
Pass Through Trust, the AFE Notes bearing the same interest rate as the Pass
Through Certificates issued by the related Pass Through Trust; and
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) Landesbank Hessen-Thuringen Girozentrale, a public-law banking institution
organized under the law of Germany (the "Liquidity Provider"), entered into
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three revolving credit agreements (each, a "Liquidity Facility") for the benefit
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of the United Airlines 2000-1A-1 Pass Through Trust, the United Airlines 2000-
1A-2 Pass Through Trust, and the United Airlines 2000-1B Pass Through Trust,
with the Subordination Agent, as agent and trustee for the Pass Through Trustee
on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee,
the Liquidity Provider and the Subordination Agent entered into the
Intercreditor Agreement, dated as of the date hereof (the "Intercreditor
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Agreement");
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NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. Purchase of AFE Notes. (a) Subject to the satisfaction or
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waiver of the conditions set forth herein, on July 31, 2000, or on such other
date agreed to by the parties hereto (the "Closing Date"):
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(i) the Pass Through Trustee for each Pass Through Trust shall pay to
AFE Trust the purchase price set forth on Schedule II for each AFE Note
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being issued and sold by AFE Trust to such Pass Through Trust; and
(ii) AFE Trust shall issue, pursuant to Article II of the AFE
Indenture, to the Subordination Agent, on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, an AFE Note having the Series,
maturity date and principal amount and bearing the interest rate set forth
on Schedule II opposite the name of such Pass Through Trust.
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(b) All payments pursuant to Section 1(a)(i) shall be made in
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immediately available funds to such accounts and at such banks as AFE Trust
shall designate on Schedule I or as it may otherwise designate in writing not
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less than one Business Day prior to the Closing Date.
SECTION 1.A Certain Definitions. (a) As used in this Agreement and
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unless otherwise expressly provided, the following capitalized terms shall have
the following respective meanings:
"AFE Certificate Purchase Agreement" means each separate AFE
Certificate Purchase Agreement, dated as of July 31, 2000, between
Wilmington Trust
Company, as Trustee of the AFE Trust, as Seller, and the AFE Investor
party thereto, as Purchaser.
"AFE Trust Agreement" means the Trust Agreement, dated as of June 9,
2000, between United Air Lines, Inc., as Trustor (solely for purposes
of establishing the AFE Trust), and Wilmington Trust Company, as
Trustee.
"Airframe" shall have the meaning specified in the Leases.
"Assignment Agreement" means each of the separate Assignment
Agreements, dated as of July 31, 2000, between the holder of the Lease
Notes party thereto and the Lease Note Seller.
"Engine" shall have the meaning specified in the Leases.
"Expenses" shall have the meaning specified in the Leases.
"FAA" means the Federal Aviation Administration.
"Federal Aviation Act" means Title 49 of the United States Code
(Transportation), as amended.
"Fundamental Documents" means, collectively (i) any document that is
an "Operative Document," a "Pass Through Document" or a "Fundamental
Document" under this Agreement, any Leveraged Lease Indenture or the
AFE Indenture and (ii) any amendment to any of the foregoing executed
in connection with the transactions contemplated hereby.
"Lease Notes Seller" means Four Star Leasing, Inc.
"Leverage Lease Documents" means, for each Leased Aircraft, the
Operative Documents as defined in the related Lease.
"Operative Documents" shall mean any document that is an Operative
Document under the AFE Indenture.
"Parts" shall have the meaning specified in the Leases.
"Trust Property" shall have the meaning specified in the AFE Trust
Agreement.
(b) Unless otherwise specifically defined herein, capitalized terms
used in this Agreement shall have the respective meanings specified in the
Intercreditor Agreement.
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SECTION 1.B Payment to Lease Notes Seller. AFE Trust shall apply the
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purchase price received for the AFE Notes, together with proceeds from the
issuance of AFE Trust Certificates, to the purchase of the outstanding leased
equipment notes from the Lease Note Seller in accordance with Section 1.3 of the
Loan Certificate Purchase Agreements (as defined in the AFE Indenture).
SECTION 2. [Reserved].
SECTION 3. Conditions Precedent. (a) Conditions Precedent to the
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Obligations of the Pass Through Trustee. The obligation of the Pass
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Through Trustee to make the payments described in Section 1(a)(i) and to
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enter into the Fundamental Documents to which it is a party are subject to
the fulfillment, on or prior to the Closing Date, of the following
conditions precedent:
(i) No change shall have occurred after the date of the execution and
delivery of this Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory or judicial authorities
which, in the opinion of each Pass Through Trustee, would make it a
violation of law or regulations for the Pass Through Trustee to make the
payments described in Section 1(a), to execute, deliver and perform the
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Fundamental Documents, to acquire the AFE Notes or to realize the security
afforded by the AFE Indenture.
(2) AFE Trust shall have tendered the AFE Notes to the AFE Indenture
Trustee for authentication and shall have tendered the AFE Notes to the
Subordination Agent on behalf of the Pass Through Trustee in accordance
with Section 1. AFE Trust shall have tendered the AFE Trust Certificates
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and the AFE Investors shall have tendered payment of amounts equal to their
investments.
(3) The Pass Through Trustee shall have received duly authorized and
validly executed counterparts or conformed copies of the following
documents in form and substance satisfactory to the Pass Through Trustee
and all such documents shall be in full force and effect:
(2) this Agreement;
(3) the Basic Pass Through Trust Agreement and each Trust
Supplement;
(4) the Intercreditor Agreement;
(5) the Liquidity Facility for each of the Class A-1 Trust, the
Class A-2 Trust, and the Class B Trust;
(6) each Loan Certificate Purchase Agreement (as defined in the
AFE Indenture);
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(7) the Confirmations;
(8) the AFE Indenture;
(9) the AFE Notes;
(10) the Leveraged Lease Documents with respect to the Leased
Aircraft;
(11) the United Equipment Indentures (as defined in the United
Equipment Note Purchase Agreement);
(12) the AFE Trust Agreement;
(13) the Owned Aircraft Indentures;
(14) each Assignment Agreement;
(15) the 747 Leased Equipment Note Purchase Agreement;
(16) the United Equipment Note Purchase Agreement;
(17) each AFE Certificate Purchase Agreement;
(18) the Underwriting Agreement;
(19) the Class C-1 Certificate Purchase Agreement;
(20) the Class C-2 Certificate Purchase Agreement;
(21) the 747 Leased Aircraft Indenture (as defined in the 747
Leased Equipment Note Purchase Agreement);
(22) the 747 Leased Aircraft Participation Agreement;
(23) the 747 Leased Aircraft Trust Agreement (as defined in the
747 Leased Equipment Note Purchase Agreement);
(24) the 747 Leased Aircraft Lease Agreement (as defined in the
747 Leased Equipment Note Purchase Agreement);
(25) the 747 Leased Aircraft Owner Participant Guaranty Agreement
(as defined in the 747 Leased Equipment Note Purchase
Agreement);
(26) the 747 Leased Aircraft Assignment and Assumption Agreement
(as defined in the 747 Leased Equipment Note Purchase
Agreement); and
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(27) acknowledgment copies of the Uniform Commercial Code
financing statements (and any amendments thereto) referred
to in Section 3(a)(iii)(K) of the 747 Leased Equipment Note
Purchase Agreement.
(iv) Uniform Commercial Code financing statements covering all the
security interests created by or pursuant to the Granting Clause of the AFE
Indenture shall have been executed and delivered by AFE Trust and the AFE
Trustee, and such financing statements shall have been duly filed or
arrangements satisfactory to the Pass Through Trustee shall have been made
for filing within 10 days after the Closing Date, in such places deemed
necessary or advisable.
(v) The Pass Through Trustee shall have received the following, in
each case in form and substance satisfactory to it:
(1) a certified copy of the Certificate of Trust and a copy of
the AFE Trust Agreement, certified by the Secretary or an Assistant
Secretary of the AFE Trust, duly authorizing the execution, delivery
and performance by the AFE Trust of this Agreement and each other
Fundamental Document required to be executed and delivered by the AFE
Trust in accordance with the provisions hereof and thereof;
(2) a certified copy of the Restated Certificate of Incorporation
and By-Laws of United and a copy of resolutions of the board of
directors of United or the executive committee thereof, certified by
the Secretary or an Assistant Secretary of United, duly authorizing
the execution, delivery and performance by United of this Agreement
and each other Fundamental Document required to be executed and
delivered by United in accordance with the provisions hereof and
thereof;
(3) a copy of the organizational documents, by-laws and general
authorizing resolutions of the boards of directors (or executive
committees) or other satisfactory evidence of authorization of each of
the AFE Indenture Trustee, United and the Subordination Agent,
certified as of the Closing Date by the Secretary or an Assistant
Secretary of such parties, respectively, which authorize the
execution, delivery and performance by the AFE Indenture Trustee,
United and the Subordination Agent, respectively, of all the
Fundamental Documents to which it is a party, together with such other
documents and evidence with respect to the AFE Indenture Trustee,
United, and the Subordination Agent as the Pass Through Trustee may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement, the taking of all
corporate proceedings in connection therewith and compliance with the
conditions herein set forth; and
(4) a certificate signed by the Secretary or an Assistant
Secretary of each of the AFE Trust, the AFE Indenture Trustee, United
and the Subordination Agent as to the Person or Persons authorized to
execute and deliver this Agreement and any
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other Fundamental Document to be executed on behalf of such party in
connection with the transactions contemplated hereby and as to the
signature of such Person or Persons.
(vi) On the Closing Date, (A) the representations and warranties of
AFE Trust in Section 4, the representations and warranties of United in
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Section 5, and the representations and warranties of the AFE Indenture
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Trustee and the Subordination Agent in Section 6 shall be true and correct
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in all material respects as though made on and as of such date except to
the extent that such representations and warranties relate solely to an
earlier date (in which case such representations and warranties shall have
been true and correct in all material respects on and as of such earlier
date), and (B) no event shall have occurred and be continuing, or would
result from the transactions contemplated hereby, which constitutes (or
would, with the passage of time or the giving of notice or both,
constitute) an AFE Indenture Default under the AFE Indenture.
(vii) The Pass Through Trustee shall have received an opinion
addressed to the Pass Through Trustee from (A) Xxxxxxxx, Xxxxxx & Finger,
counsel for the AFE Trust, and (B) Xxxxx, Xxxxx & Xxxxx, special New York
counsel for the AFE Trust, in each case with respect to such matters and in
form and substance reasonably satisfactory to the Pass Through Trustee.
(viii) The Pass Through Trustee shall have received an opinion
addressed to the Pass Through Trustee and the AFE Trust from (A) in house
German counsel for the Liquidity Provider, and (B) Winthrop, Stimson,
Xxxxxx & Xxxxxxx, special counsel for the Liquidity Provider, in each case
in form and substance reasonably satisfactory to the Pass Through Trustee.
(ix) [reserved].
(x) The Pass Through Trustee shall have received an opinion
addressed to the Pass Through Trustee and the AFE Trust from Xxxxxxx Xxxx
LLP, special counsel for the AFE Indenture Trustees and the Pass Through
Trustee, in form and substance reasonably satisfactory to the Pass Through
Trustee.
(xi) The Pass Through Trustee shall have received an opinion
addressed to the Pass Through Trustee from (A) the General Counsel or
Assistant General Counsel for United, (B) Vedder, Price, Xxxxxxx &
Kammholz, special counsel for United and (C) Xxxxx, Xxxxx & Xxxxx, special
counsel for United, in each case with respect to such matters and in form
and substance reasonably satisfactory to the Pass Through Trustee.
(xii) The Pass Through Trustee shall have received opinions addressed
to the Pass Through Trustee from Xxxxx Xxxxx & Xxxxx, special Illinois and
New York counsel for
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United, with respect to true sale issues in form and substance reasonably
satisfactory to the Pass Through Trustee.
(xiii) The Pass Through Trustee shall have received an opinion
addressed to the Pass Through Trustee from Xxxxxxx & Xxxxxxx LLP, special
counsel for State Street Bank and Trust Company, in form and substance
reasonably satisfactory to the Pass Through Trustee.
(xiv) The Pass Through Trustee shall have received an opinion
addressed to the Pass Through Trustee and the AFE Trust from Morris, James,
Hitchens & Xxxxxxxx, special Delaware counsel for United.
(xv) The Pass Through Trustee shall have received an independent
insurance broker's report, and certificates of insurance, in form and
substance reasonably satisfactory to it, as to the due compliance with the
terms of Section 11 of the Leases with respect to the Aircraft.
(xvi) The Pass Through Trustee shall have received a report from
each of the Appraisers as to the base value of the Leased Aircraft, in form
and substance satisfactory to the Pass Through Trustee and the AFE Trust.
(xvii) The conditions precedent to the transactions specified in the
Underwriting Agreement, the United Equipment Note Purchase Agreement and
the 747 Leased Equipment Note Purchase Agreement shall have been satisfied
(or waived) in accordance with the terms thereof.
(xviii) With respect to the Leased Aircraft, no event shall have
occurred that constitutes an Event of Default or an Event of Loss under
the Leveraged Lease Documents.
(xix) The Lease Notes shall have been duly issued, authenticated and
registered in the name of the AFE Indenture Trustee.
(b) Conditions Precedent to the Obligations of AFE Trust. The obligations
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of AFE Trust to participate in the transactions contemplated hereby and to enter
into the Fundamental Documents to which AFE Trust is a party are all subject to
the fulfillment to the satisfaction of or waiver by AFE Trust, on or prior to
the Closing Date, of the following conditions precedent:
(i) Those documents described in Section 3(a)(iii) shall have been
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duly authorized, executed and delivered by the respective party or parties
thereto (other than AFE Trust) in the manner specified in Section
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3(a)(iii), shall each be satisfactory in form and substance to AFE Trust,
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shall be in full force and effect on the Closing Date, and an executed
counterpart of each thereof (other than the AFE Notes) shall have been
delivered to AFE Trust or counsel for AFE Trust.
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(ii) AFE Trust shall have received a copy of the organizational
documents, by-laws and general authorizing resolutions of the boards of
directors (or executive committees) or other satisfactory evidence of
authorization of United, the AFE Indenture Trustee, the Pass Through
Trustee and the Subordination Agent, certified as of the Closing Date by
the Secretary or an Assistant Secretary of each such party, respectively,
that authorize the execution, delivery and performance by United, the AFE
Indenture Trustee, the Pass Through Trustee and the Subordination Agent,
respectively, of all the Fundamental Documents to which each such party is
a party, together with such other documents and evidence with respect to
United, the AFE Indenture Trustee, the Pass Through Trustee and the
Subordination Agent as AFE Trust or its counsel may reasonably request in
order to establish the consummation of the transactions contemplated by
this Agreement, the taking of all corporate proceedings in connection
therewith and compliance with the conditions set forth herein.
(iii) A certificate signed by the Secretary or an Assistant Secretary
of United, the AFE Indenture Trustee, the Pass Through Trustee and the
Subordination Agent as to the Person or Persons authorized to execute and
deliver this Agreement and any other Fundamental Document to be executed on
behalf of such party in connection with the transactions contemplated
hereby and as to the signature of such Person or Persons.
(iv) The representations and warranties of United in Section 5 and
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the in Section 6, shall be true and correct in all material respects as of
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the Closing Date as though made on and as of such date except to the extent
that such representations and warranties relate solely to an earlier date
(in which event such representations and warranties shall have been true
and correct in all material respects on and as of such earlier date).
(v) AFE Trust shall have received the opinions set forth in
Sections 3(a)(vii)-3(a)(xiv) (except receipt by AFE Trust of the opinions
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set forth in Section 3(a)(vii) shall not be a condition precedent to its
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obligations hereunder), in each case addressed to AFE Trust and dated the
Closing Date and otherwise in form and substance satisfactory to AFE Trust.
(vi) AFE Trust shall have received a copy of the reports required to
be delivered pursuant to Section 3(a)(xvi).
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(vii) The conditions precedent to the transactions specified in the
Underwriting Agreement shall have been satisfied (or waived) in accordance
with the terms thereof.
(viii) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations thereunder
or interpretations thereof by appropriate regulatory authorities which, in
the opinion of AFE Trust, would make it a
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violation of law or regulations for AFE Trust to enter into any transaction
contemplated by the Fundamental Documents.
(c) Conditions Precedent to the Obligations of United. The obligations of
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United to participate in the transactions contemplated hereby and to enter into
the Fundamental Documents to which United is a party are all subject to the
fulfillment to the satisfaction of or waiver by United, on or prior to the
Closing Date, of the following conditions precedent:
(i) Those documents described in Section 3(a)(iii) shall have been
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duly authorized, executed and delivered by the respective party or parties
thereto (other than United) in the manner specified in Section 3(a)(iii),
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shall each be satisfactory in form and substance to United, shall be in
full force and effect on the Closing Date, and an executed counterpart of
each thereof (other than the AFE Notes) shall have been delivered to United
or counsel for United.
(ii) United shall have received a copy of the organizational
documents, by-laws and general authorizing resolutions of the boards of
directors (or executive committees) or other satisfactory evidence of
authorization of the AFE Indenture Trustee, the Pass Through Trustee and
the Subordination Agent, certified as of the Closing Date by the Secretary
or an Assistant Secretary of each such party, respectively, that authorize
the execution, delivery and performance by the AFE Indenture Trustee, the
Pass Through Trustee and the Subordination Agent, respectively, of all the
Fundamental Documents to which each such party is a party, together with
such other documents and evidence with respect to the AFE Indenture
Trustee, the Pass Through Trustee and the Subordination Agent as AFE Trust,
United or its counsel may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement, the taking
of all corporate proceedings in connection therewith and compliance with
the conditions set forth herein.
(iii) A certificate signed by the Secretary or an Assistant Secretary
of the AFE Indenture Trustee, the Pass Through Trustee and the
Subordination Agent as to the Person or Persons authorized to execute and
deliver this Agreement and any other Fundamental Document to be executed on
behalf of such party in connection with the transactions contemplated
hereby and as to the signature of such Person or Persons.
(iv) The representations and warranties of the AFE Indenture
Trustee, the Pass Through Trustee and the Subordination Agent contained in
Section 6, shall be true and correct in all material respects as of the
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Closing Date as though made on and as of such date except to the extent
that such representations and warranties relate solely to an earlier date
(in which event such representations and warranties shall have been true
and correct in all material respects on and as of such earlier date).
(v) United shall have received the opinions set forth in Sections
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3(a)(vii)-3(a)(xiv) (except receipt by United of the opinions set forth in
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Sections 3(a)(vii), 3(a)(xii),
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and 3(a)(xiv) shall not be a condition precedent to its obligations
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hereunder), in each case addressed to United and dated the Closing Date and
otherwise in form and substance satisfactory to United.
(vi) United shall have received a copy of the reports required to be
delivered pursuant to Section 3(a)(xvi).
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(vii) The conditions precedent to the transactions specified in the
Underwriting Agreement shall have been satisfied (or waived) in accordance
with the terms thereof.
(viii) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations thereunder
or interpretations thereof by appropriate regulatory authorities which, in
the opinion of United, would make it a violation of law or regulations for
United to enter into any transaction contemplated by the Fundamental
Documents.
SECTION 4. Representations, Warranties and Covenants of AFE Trust.
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AFE Trust represents, warrants and covenants to the Pass Through Trustee, United
and the AFE Indenture Trustee that:
(a) AFE Trust is a Delaware business trust duly formed, validly
existing and in good standing under the laws of the State of Delaware; is duly
qualified to conduct business and is in good standing in each other jurisdiction
where the conduct of its business requires such qualification; has the requisite
power and authority as a Delaware business trust and the legal right to acquire,
assign, grant, transfer, pledge, mortgage and convey Trust Property, issue AFE
Notes pursuant to the AFE Indenture, issue the AFE Trust Certificates pursuant
to the AFE Trust Agreement and to conduct its business as now, heretofore and
proposed to be conducted; has its chief executive office (as such term is
defined in Article 9 of the Uniform Commercial Code) in Wilmington, Delaware;
has all licenses, permits, consents or approvals from or by, and has made all
filings with, and has given all notices to, all governmental authorities having
jurisdiction, to the extent required for such conduct and is in compliance with
the AFE Trust Agreement.
(b) The execution, delivery and performance by AFE Trust of this
Agreement, the AFE Notes issued under the AFE Indenture and the other
Fundamental Documents to which it is a party are within its power as a Delaware
business trust; have been duly authorized by all necessary or proper action; do
not contravene any provision of the AFE Trust Agreement or its other
organizational documents; do not violate any law or regulation, or any order or
decree of any court or any federal, state or local authority or agency,
governing the banking and trust powers of Wilmington Trust Company in its
capacity as trustee in connection with the AFE Trust Agreement; do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, its
Certificate of Trust, or any indenture, mortgage, deed of trust, chattel
mortgage, conditional sales contract, bank loan or credit agreement, or other
agreement or instrument to which it is a party or by which it or any of its
property is bound; and do not require the consent or approval of, the giving of
notice to, the registration with, or the
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taking of any other action in respect of any federal, state, local or foreign
government authority or agency, except for (A) any required qualifications of
each Pass Through Trust Agreement under the Trust Indenture Act of 1939, as
amended, pursuant to an order of the Securities and Exchange Commission, (B) the
filings referred to in Section 3(a)(iv), and (C) any normal periodic and other
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reporting requirements under the applicable rules and regulations of the Federal
Aviation Administration ("FAA") to the extent required to be given or obtained
---
after the Closing Date.
(c) The execution, delivery and performance by AFE Trust of this
Agreement, the AFE Notes issued under the AFE Indenture and each other
Fundamental Document to which it is a party will not result in the creation of
any Lien (other than Permitted Liens (as defined in the AFE Indenture)) upon the
property of AFE Trust under, its Certificate of Trust or any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement or other agreement or instrument to which AFE Trust is a
party or by which it or its properties may be bound or affected which
contravention, default or Lien, individually or in the aggregate, would be
reasonably likely to have a material adverse effect on the ability of AFE Trust
to perform its obligations under the Fundamental Documents to which it is a
party.
(d) There are no pending or threatened actions or proceedings against
AFE Trust before any court or administrative agency which, if determined
adversely to it, would have a material adverse effect on the ability of AFE
Trust to perform its obligations under this Agreement or any other Fundamental
Document executed by AFE Trust in connection with the transactions contemplated
by the Fundamental Documents.
(e) This Agreement, the AFE Notes issued under the AFE Indenture and
each other Fundamental Document to which AFE Trust is a party have been duly
executed and delivered by AFE Trust and constitute legal, valid and binding
obligations of AFE Trust enforceable against AFE Trust in accordance with the
terms thereof, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether considered in a
proceeding at law or in equity.
(f) There has not occurred any event that constitutes an AFE Indenture
Default under the AFE Indenture that is presently continuing and there has not
occurred any event that constitutes or would, with the passage of time or the
giving of notice, or both, constitute an Event of Default (as defined in the AFE
Indenture) under the AFE Indenture.
(g) Neither United nor anyone acting on behalf of United has offered
any interest in any Pass Through Certificate and any AFE Trust Certificate or
any AFE Note in a manner that would violate the Securities Act of 1933, as
amended, the regulations thereunder, administrative and judicial interpretation
thereof or the securities laws, rules or regulations of any state.
(h) None of the proceeds from the sale of the AFE Notes will be used
directly or indirectly by AFE Trust to purchase or carry any "margin stock" as
such term is defined in Regulation G or U of the Board of Governors of the
Federal Reserve System.
12
(i) AFE Trust agrees to give each AFE Indenture Trustee and the Pass
Through Trustee at least 30 days' prior written notice of any relocation of its
chief executive office from its present location.
(j) There are no Taxes payable by AFE Trust imposed by the Sate of
Delaware or any political subdivision or taxing authority thereof in connection
with the execution, delivery and performance by AFE Trust of this Agreement or
any other Fundamental Document to which AFE Trust is a party (other than
franchise or other taxes based on or measured by any fees or compensation
received by the AFE Indenture Trustee for services rendered in connection with
the transactions contemplated by the AFE Trust Agreement and AFE Indenture, and
there are no Taxes payable by AFE Trust imposed by the State of Delaware or any
political subdivision thereof in connection with the acquisition, possession or
ownership by AFE Trust of any of the AFE Notes (other than franchise or other
taxes based on or measured by any fees or compensation received by the AFE
Indenture Trustee for services rendered in connection with the transactions
contemplated by the AFE Trust Agreement and the AFE Indenture).
(k) Except for the issue and sale of the AFE Notes contemplated
hereby, AFE Trust has not directly or indirectly offered any AFE Notes for sale
to any Person or solicited any offer to acquire any AFE Notes from any Person,
nor has AFE Trust authorized anyone to act on its behalf to offer directly or
indirectly any AFE Note for sale to any Person, or to solicit any offer to
acquire any AFE Notes from any Person; and AFE Trust is not in default under the
AFE Trust Agreement or the AFE Indenture, and
(l) AFE Trust is not directly or indirectly controlling, controlled by
or under common control with the Pass Through Trustee or the Subordination
Agent.
SECTION 5. Representations, Warranties and Covenants of United.
---------------------------------------------------
United represents, warrants, and covenants to the Pass Through Trustee and the
AFE Indenture Trustee that:
(a) United is a corporation duly organized and validly existing in
good standing pursuant to the laws of the State of Delaware; is an "air carrier"
within the meaning of 49 U.S.C. 40102(a)(15); holds a certificate of public
convenience and necessity in accordance with 49 U.S.C. Section 41102, and an air
carrier operating certificate issued by the Secretary of Transportation pursuant
to Chapter 447 of Title 49 of United States Code for aircraft capable of
carrying 10 or more individuals or 6,000 pounds or more of cargo, is a "citizen
of the United States" as defined in 49 U.S.C. Section 40102; has its chief
executive office (as such term is defined in Article 9 of the Uniform Commercial
Code) in Elk Grove Township, Illinois; is duly qualified to do business as a
foreign corporation in each jurisdiction in which its operations or the nature
of its business requires, except where the failure to be so qualified would not
have a material adverse effect on the ability of United to perform its
obligations under the Fundamental Documents to which it is a party; holds all
material licenses, certificates, permits and franchises from the appropriate
agencies of the United States of America and/or all other governmental
authorities having jurisdiction, necessary to
13
authorize United to engage in air transport and to carry on scheduled passenger
service, in each case as presently conducted; and has, or had on the respective
dates of execution thereof, the corporate power and authority to conduct its
business as it is presently being conducted, and to enter into and perform its
obligations under this Agreement and each other Fundamental Document to which it
is a party.
(b) The execution, delivery and performance by United of this
Agreement and each other Fundamental Document to which it is a party, including
any transfer of the Lease Notes by United or its affiliates to AFE Trust, have
been duly authorized by all necessary corporate action on the part of United, do
not require any stockholder approval or approval or consent of any trustee or
holders of any indebtedness or obligations of United, except such as have been
duly obtained, and none of the execution, delivery and performance by United of
this Agreement or such Fundamental Documents contravenes any law, judgment,
governmental rule, regulation or order binding on United or the certificate of
incorporation or by-laws of United or contravenes the provisions of, or
constitutes a default under, or results in the creation of any Lien (other than
Permitted Liens (as defined in the AFE Indenture)) upon the property of United
under, its certificate of incorporation or bylaws, or any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, bank loan or credit
agreement or other agreement or instrument to which United is a party or by
which it or its properties may be bound or affected which contravention, default
or Lien, individually or in the aggregate, would be reasonably likely to have a
material adverse effect on the ability of United to perform its obligations
under the Fundamental Documents to which it is a party.
(c) Neither the execution and delivery by United of this Agreement,
the AFE Notes issued under the AFE Indenture or any other Fundamental Document
to which it is a party nor the performance by United of its obligations
hereunder or thereunder require the consent or approval of, the giving of notice
to, or the registration with, or the taking of any other action in respect of
any federal, state, local or foreign government authority or agency, except for
(A) any required qualifications of each Pass Through Trust Agreement under the
Trust Indenture Act of 1939, as amended, pursuant to an order of the Securities
and Exchange Commission, (B) the filings referred to in Section 3(a)(iv), (C)
----------------
authorizations, consents, approvals, actions, notices and filings required to be
obtained, taken, given or made, the failure to obtain, take, give or make would
not have a material adverse effect on the financial condition, properties or
results of operations of United, and (D) any normal periodic and other reporting
requirements under the applicable rules and regulations of the Federal Aviation
Administration ("FAA") to the extent required to be given or obtained after the
---
Closing Date.
(d) This Agreement and each other Fundamental Document to which United
is a party have been duly executed and delivered by United and constitute legal,
valid and binding obligations of United enforceable against United in accordance
with the terms thereof, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity.
14
(e) To the best of its knowledge, there has not occurred any event
that constitutes an AFE Indenture Default under the AFE Indenture that is
presently continuing.
(f) Neither United nor anyone acting on behalf of United has offered
any interest in any Pass Through Certificate, any AFE Trust Certificate or any
AFE Note in a manner that would violate the Securities Act of 1933, as amended,
the regulations thereunder, administrative and judicial interpretation thereof
or the securities laws, rules or regulations of any state.
(g) Neither United nor any subsidiary of United is an "investment
company" or a company "controlled by an investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(h) Except for the proceedings described in the discussion of Legal
Proceedings in United's Annual Report on Form 10-K for the year ended December
31, 1999 and subsequently filed Form 10-Qs filed prior to the Closing Date,
there are no pending or, to the knowledge of United, threatened actions or
proceedings before any court or administrative agency which individually (or in
the aggregate in the case of any group of related lawsuits) would have a
material adverse effect on the financial condition of United or the ability of
United to perform its obligations hereunder or under any Fundamental Document to
which United is a party.
(i) United agrees to pay to the Subordination Agent any amounts
required to be paid by the Subordination Agent pursuant to Sections 2.03, 3.01,
3.02, 3.03, 3.09, 7.05 and 7.07 of any Liquidity Facility.
(j) United agrees to give each AFE Indenture Trustee and the Pass
Through Trustee at least 30 days' prior written notice of any relocation of its
chief executive office from its present location.
(k) The trustee under each Leveraged Lease Indenture, as a secured
party under such Leveraged Lease Indenture (for the benefit of AFE Trust, as a
holder of Leased Notes, and AFE Indenture Trustee as a holder of a security
interest in the Leased Notes) would be entitled to the benefits of Section 1110
of the Bankruptcy Code with respect to the obligations secured by such Leveraged
Lease Indenture with respect to each relevant Aircraft.
(l) Each Leased Aircraft has been duly certified by the FAA as to type
and airworthiness and such certification remains in full force and effect.
(m) The Leveraged Lease Indentures have been duly filed for recording
with the FAA pursuant to the Federal Aviation Act.
(n) With respect to each Lease Aircraft, the Leveraged Lease Documents
to which United is a party have been duly executed and delivered by United and
constitute legal, valid and binding obligations of United enforceable against
United in accordance with the terms thereof,
15
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether considered in a
proceeding at law or equity.
(o) With respect to each Leased Aircraft, there has not occurred any
event that constitutes a Lease Default (as defined in the applicable Leveraged
Lease Documents) or, to the best of its knowledge, an Indenture Default under
any Leveraged Lease Indenture that is presently continuing and there has not
occurred any event that constitutes or would, with the passage of time or the
giving of notice, or both, constitute an Event of Loss (as defined in the
applicable Leverage Lease Documents).
(p) The Leveraged Lease Documents for each Leased Aircraft and all of
the related documentation delivered to the AFE Indenture Trustee and the Pass
Through Trustee is complete, true and accurate.
(q) United agrees that after the pending revisions to Article 9 are
adopted in the State of Illinois, but before July 1, 2002, it will file any
Uniform Commercial Code financing statements in Delaware and Illinois covering
all the security interests created by and pursuant to the Granting Clause of the
AFE Indenture necessary to continue the perfection thereof.
(r) United agrees that it will not permit any Lease to be terminated
unless it has paid the excess, if any, of the Make-Whole Amount, if any, in
respect of the principal amount of the AFE Notes and AFE Trust Certificates
subject to prepayment over the Break Amount, if any, in respect of the Lease
Notes related to such Lease.
SECTION 6. Representations, Warranties and Covenants of Other
--------------------------------------------------
Parties. Each of the parties below represents, warrants and covenants to each
-------
of the other parties to this Agreement as follows:
(a) The AFE Indenture Trustee represents, warrants and covenants that:
(i) the AFE Indenture Trustee is a national banking association
duly organized, validly existing and in good standing under the laws
of the United States of America, is a "citizen of the United States"
as defined in 49 U.S.C. Section 40102(a)(15) (without making use of a
voting trust agreement, voting powers agreement or similar
arrangements) and will resign as AFE Indenture Trustee promptly after
it obtains actual knowledge that it has ceased to be such a citizen,
and has, or had on the respective dates of execution thereof, the full
corporate power, authority and legal right under the laws of the State
of Connecticut and the United States of America pertaining to its
banking, trust and fiduciary powers to execute and deliver this
Agreement and each other Fundamental Document to which it is a party,
to authenticate the AFE Notes and to carry out its obligations under
this Agreement and each other Fundamental Document to which it is a
party;
16
(ii) the execution and delivery by the AFE Indenture Trustee of
this Agreement and each other Fundamental Document to which it is a
party, the authentication of the AFE Notes and the performance by the
AFE Indenture Trustee of its obligations under this Agreement and each
other Fundamental Document to which it is a party have been duly
authorized by the AFE Indenture Trustee and will not violate its
charter or by-laws, the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it is
bound or any federal or Connecticut law or regulation relating to the
banking, trust or fiduciary powers of the AFE Indenture Trustee;
(iii) this Agreement and each other Fundamental Document to
which the AFE Indenture Trustee is a party have been duly authorized,
executed and delivered by the AFE Indenture Trustee; this Agreement
constitutes, and each Fundamental Document to which the AFE Indenture
Trustee is a party, when it has been executed and delivered by the AFE
Indenture Trustee, will constitute, the legal, valid and binding
obligations of the AFE Indenture Trustee enforceable against it in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(iv) no consent, approval, order or authorization of, giving of
notice to, or registration or filing with, or taking of any other
action in respect of, any Connecticut state or local governmental
authority or agency or any United States federal governmental
authority or agency regulating the banking or trust powers of the AFE
Indenture Trustee is required for the execution and delivery of, or
the carrying out by, the AFE Indenture Trustee, of any of the
transactions contemplated by any of the Fundamental Documents to which
the AFE Indenture Trustee is or is to be a party, other than any such
consent, approval, order, authorization, registration, notice or
action as has been duly obtained, given or taken; and
(v) there are no pending or threatened actions or proceedings
against the AFE Indenture Trustee before any court or administrative
agency which, if determined adversely to it, would have a material
adverse effect on the ability of the AFE Indenture Trustee to perform
its obligations under this Agreement or any other Fundamental Document
executed by the AFE Indenture Trustee in connection with the
transactions contemplated by the Fundamental Documents.
(b) The Pass Through Trustee represents, warrants and covenants that:
(i) the Pass Through Trustee is a national banking association
duly organized, validly existing and in good standing under the laws
of the United States
17
of America, and has the full corporate power, authority and legal
right under the laws of the State of Connecticut and the United States
of America pertaining to its banking, trust and fiduciary powers to
execute and deliver this Agreement and each other Fundamental Document
to which it is a party and to perform its obligations hereunder and
thereunder;
(ii) this Agreement and each other Fundamental Document to which
the Pass Through Trustee is a party have been duly authorized,
executed and delivered by the Pass Through Trustee; this Agreement and
each other Fundamental Document to which the Pass Through Trustee is a
party constitute the legal, valid and binding obligations of the Pass
Through Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(iii) none of the execution, delivery and performance by the Pass
Through Trustee of this Agreement or any other Fundamental Document to
which the Pass Through Trustee is a party, the purchase by the Pass
Through Trustee of the AFE Notes pursuant to this Agreement, or the
issuance and sale of the Pass Through Certificates pursuant to the
Pass Through Trust Agreements, and the Underwriting Agreement,
contravenes any law, rule or regulation of the State of Connecticut or
any United States governmental authority or agency regulating the Pass
Through Trustee's banking, trust or fiduciary powers or any judgment
or order applicable to or binding on the Pass Through Trustee and do
not contravene or result in any breach of, or constitute a default
under, the Pass Through Trustee's charter or by-laws or any agreement
or instrument to which the Pass Through Trustee is a party or by which
it or any of its properties may be bound;
(iv) neither the execution and delivery by the Pass Through
Trustee of this Agreement or any of the other Fundamental Documents to
which the Pass Through Trustee is a party, nor the consummation by the
Pass Through Trustee of any of the transactions contemplated hereby or
thereby, requires the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action with respect
to, any Connecticut governmental authority or agency or any Federal
governmental authority or agency regulating the Pass Through Trustee's
banking, trust or fiduciary powers;
(v) there are no Taxes payable by the Pass Through Trustee
imposed by the State of Connecticut or any political subdivision or
taxing authority thereof in connection with the execution, delivery
and performance by the Pass Through Trustee of this Agreement or any
other Fundamental Document to which the Pass Through Trustee is a
party (other than franchise or other taxes based on or measured
18
by any fees or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions contemplated by
the Pass Through Trust Agreements), and there are no Taxes payable by
the Pass Through Trustee imposed by the State of Connecticut or any
political subdivision thereof in connection with the acquisition,
possession or ownership by the Pass Through Trustee of any of the AFE
Notes (other than franchise or other taxes based on or measured by any
fees or compensation received by the Pass Through Trustee for services
rendered in connection with the transactions contemplated by the Pass
Through Trust Agreements);
(vi) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would have a material adverse effect on the ability of the Pass
Through Trustee to perform its obligations under this Agreement or any
other Fundamental Document to which the Pass Through Trustee is a
party;
(vii) except for the issue and sale of the AFE Notes
contemplated hereby, the Pass Through Trustee has not directly or
indirectly offered any AFE Notes for sale to any Person or solicited
any offer to acquire any AFE Notes from any Person, nor has the Pass
Through Trustee authorized anyone to act on its behalf to offer
directly or indirectly any AFE Note for sale to any Person, or to
solicit any offer to acquire any AFE Note from any Person; and the
Pass Through Trustee is not in default under any Pass Through Trust
Agreement; and
(viii) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with AFE Trust.
(c) The Subordination Agent represents, warrants and covenants that:
(i) the Subordination Agent is a national banking association
duly organized, validly existing and in good standing under the laws
of the United States of America, and has the full corporate power,
authority and legal right under the laws of the State of Connecticut
and the United States of America pertaining to its banking, trust and
fiduciary powers to execute and deliver this Agreement and each other
Fundamental Document to which it is a party and to perform its
obligations hereunder and thereunder;
(ii) this Agreement and each other Fundamental Document to
which it is a party have been duly authorized, executed and delivered
by the Subordination Agent; this Agreement and each other Fundamental
Document to which it is a party constitute the legal, valid and
binding obligations of the Subordination Agent enforceable against it
in accordance with their respective terms, except as the same
19
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(iii) none of the execution, delivery and performance by the
Subordination Agent of this Agreement or any other Fundamental
Document to which the Subordination Agent is a party contravene any
law, rule or regulation of the State of Connecticut or any United
States governmental authority or agency regulating the Subordination
Agent's banking, trust or fiduciary powers or any judgment or order
applicable to or binding on the Subordination Agent and does not
contravene or result in any breach of, or constitute a default under,
the Subordination Agent's charter or by-laws or any agreement or
instrument to which the Subordination Agent is a party or by which it
or any of its properties may be bound;
(iv) neither the execution and delivery by the Subordination
Agent of this Agreement or any other Fundamental Document to which the
Subordination Agent is a party nor the consummation by the
Subordination Agent of any of the transactions contemplated hereby or
thereby requires the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action with respect
to, any Connecticut governmental authority or agency or any federal
governmental authority or agency regulating the Subordination Agent's
banking, trust or fiduciary powers;
(v) there are no Taxes payable by the Subordination Agent
imposed by the State of Connecticut or any political subdivision or
taxing authority thereof in connection with the execution, delivery
and performance by the Subordination Agent of this Agreement or any
other Fundamental Document to which the Subordination Agent is a party
(other than franchise or other taxes based on or measured by any fees
or compensation received by the Subordination Agent for services
rendered in connection with the transactions contemplated by the
Intercreditor Agreement or any Liquidity Facility), and there are no
Taxes payable by the Subordination Agent imposed by the State of
Connecticut or any political subdivision thereof in connection with
the acquisition, possession or ownership by the Subordination Agent of
any of the AFE Notes (other than franchise or other taxes based on or
measured by any fees or compensation received by the Subordination
Agent for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any Liquidity
Facility);
(vi) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the
Subordination Agent to perform its obligations under this
20
Agreement or any other Fundamental Document to which the Subordination
Agent is a party;
(vii) the Subordination Agent has not directly or indirectly
offered any AFE Notes for sale to any Person or solicited any offer to
acquire any AFE Notes from any Person, nor has the Subordination Agent
authorized anyone to act on its behalf to offer directly or indirectly
any AFE Note for sale to any Person, or to solicit any offer to
acquire any AFE Note from any Person; and the Subordination Agent is
not in default under any Liquidity Facility; and
(viii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with AFE Trust.
SECTION 7. Indemnification by United. United hereby agrees to
-------------------------
indemnify the AFE Trust, the AFE Trustee, the Pass Through Trustee, the
Subordination Agent, the AFE Indenture Trustee and the AFE Investors, and, in
each case, each of their respective affiliates, successors and permitted assigns
and each of their respective directors, officers, employees, agents and servants
(collectively, the "Indemnitees") against, and agrees to protect, save and keep
-----------
harmless and shall pay on demand each of them from (whether or not the
transactions contemplated herein or in any of the other Operative Documents or
the Pass Through Trust Agreements are consummated), any and all Expenses imposed
on, incurred by or asserted against any Indemnitee, in any way relating to or
arising out of (A) this Agreement, the AFE Trust Certificates issued under the
AFE Trust Agreement, the AFE Notes issued under the AFE Indenture, the
Fundamental Documents, and each Pass Through Trust Agreement (and any amendments
thereto), or the enforcement of any of the terms of any thereof, or (B) the
manufacture, design, purchase, resale, acceptance or rejection of the Airframe
or any Engine or Parts; or (C) the Aircraft (or any portion thereof) or any
Engine whether or not installed on the Airframe or any airframe on which an
Engine is installed whether or not arising out of the finance, refinance,
ownership, delivery, nondelivery, storage, lease, possession, use, non-use,
operation, maintenance, modification, alteration, condition, sale, replacement,
substitution, disposition, registration, reregistration or airworthiness of the
Aircraft (or any portion thereof) including, without limitation, latent or other
defects, whether or not discoverable, strict tort liability and any damage to
property or the environment, death or injury to any person and any claim for
patent, trademark or copyright infringement; (D) the offer, sale, holding,
transfer or delivery of the AFE Notes, the AFE Trust Certificates or the Pass
Through Certificates, whether before, on or after the applicable issuance date
(the indemnity in this clause (D) to extend also to any person who controls an
Indemnitee, its successors, assigns, employees, directors, officers, servants
and agents within the meaning of Section 15 of the Securities Act of 1933, as
amended); (E) fees incurred by AFE Trust in connection with the AFE Notes issued
under the AFE Indenture, the AFE Trust Certificates issued under the AFE Trust
Agreement, and the Fundamental Documents, and Wilmington Trust Company in its
capacity as trustee in connection with the AFE Trust Agreement; (F) any
shortfall that may result if the Make-Whole Amount, if any, with respect to the
AFE Notes and the AFE Trust Certificates exceeds the Break Amount, if any, with
respect to the Lease Notes; (G) any pre-existing claims or liabilities under the
Leveraged Lease Documents to the extent United
21
is required to indemnify therefor under the Leveraged Lease Documents; and (H)
amounts equal to (i) the fees payable to the relevant Liquidity Provider under
the related Fee Letter; (ii) all compensation and reimbursement of expenses,
disbursements and advances payable to the Pass Through Trustee under the Pass
Through Trust Agreements, except with respect to any income or franchise taxes
incurred by the Pass Through Trustee in connection with the Pass Through Trust
Agreements or; (iii) all compensation and reimbursement of expenses and
disbursements payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated by the
Intercreditor Agreement; and (iv) all compensation and reimbursement of
expenses, disbursements and advances payable to AFE Trust or AFE Trustee under
the AFE Trust Agreement; provided, with respect to an Indemnitee, that the
foregoing indemnity shall not extend to any Expense to the extent resulting from
or arising out of one or more of the following:
(1) any representation or warranty by such Indemnitee or any Related
Indemnitee (as defined below) thereof in the Operative Documents or in any
other Fundamental Document being incorrect; or
(2) the failure by such Indemnitee or any Related Indemnitee thereof
to perform or observe any agreement, covenant or condition in any of the
Fundamental Documents; or
(3) the willful misconduct or the gross negligence of such Indemnitee
or any Related Indemnitee thereof (other than gross negligence imputed to
such Indemnitee or any Related Indemnitee thereof solely by reason of its
interest in the Aircraft); or
(4) a disposition (voluntary or involuntary) by such Indemnitee of
all or any part of its interest in the Fundamental Documents, other than
during the continuance of an AFE Indenture Event of Default (as defined in
the AFE Indenture) or in connection with the exercise of remedies under any
Fundamental Documents; or
(5) any Tax; provided, however, this Section 7 shall not apply to
-------- ---------
Taxes taken into consideration in making any payments on an after-tax
basis; or
(6) in the case of the AFE Indenture Trustee in its individual
capacity, any Expense to the extent attributable to the failure of the AFE
Indenture Trustee to distribute funds received and distributable by it in
accordance with the AFE Indenture, (B) in the case of the Subordination
Agent in its individual capacity, any Expense to the extent attributable to
the failure of the Subordination Agent to distribute funds received and
distributable by it in accordance with the Intercreditor Agreement, or (C)
in the case of any Pass Through Trustee in its individual capacity, any
Expense to the extent attributable to the failure of such Pass Through
Trustee to distribute funds received and distributable by it in accordance
with the Pass Through Trust Agreement to which it is a party or, (D) in
case of AFE Trust, any expense to the extent attributable to the failure of
AFE Trust to distribute funds received and distributable by it in
accordance with the Confirmations and the AFE Indenture; or
22
(7) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents by such Indemnitee or any
Related Indemnitee thereof with respect to any of the Fundamental Documents
unless such amendments, supplements, waivers or consents are requested by
United or are required pursuant to the terms of the Fundamental Documents
(unless the same results from the actions of such Indemnitee or Related
Indemnitee), or
(8) except to the extent attributable to acts or events occurring on
or prior thereto, acts or events which occur after the termination of the
AFE Indenture in accordance with Section 10.01 thereof; or
(9) any Expense to the extent attributable to the offer or sale by
such Indemnitee or any Related Indemnitee of any interest in the Aircraft,
any Lease Note, any AFE Note, any AFE Trust Certificate, any Pass Through
Certificate or any similar interest in violation of the Securities Act,
other applicable federal, state or foreign securities laws or any other law
on or prior to the applicable issuance date thereof; or
(10) any Expense or other amount which such Indemnitee expressly
agrees to pay or such Indemnitee expressly agrees shall not be paid by or
be reimbursed by United; or
(11) any Expense that is an ordinary and usual operating or overhead
expense; or
(12) any Expense resulting from any Lien on the Aircraft which such
Indemnitee or any of its Related Indemnitees is required to discharge under
the Operative Documents; or
(13) activities or transactions of such Indemnitee not arising out of
or resulting form, or attributable to the transactions contemplated by the
Operative Documents; or
(14) any Expense incurred by or asserted against such Indemnitee or
any Related Indemnitee as a result of any "prohibited transaction" within
the meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code.
For purposes of this Section 7, a Person shall be considered a
---------
"Related Indemnitee" with respect to an Indemnitee if such Person is a director,
officer, employee, agent, servant or Affiliate thereof or, if such Indemnitee is
a Pass Through Trustee, the Subordination Agent or the AFE Indenture Trustee or
a director, officer, employee, agent, servant or Affiliate of any thereof, a
Person shall be considered a "Related Indemnitee" with respect to any such
Person if such Person is a Pass Through Trustee, the Subordination Agent or the
AFE Indenture Trustee or a director, officer, employee, agent, servant or
Affiliate of any thereof.
23
Notwithstanding clause (5) above, United further agrees that any
----------
payment or indemnity pursuant to this Section 7 in respect of any "Expenses"
---------
shall be in an amount which, after deduction of all Taxes required to be paid by
such recipient with respect to such payment or indemnity under the laws of any
federal, state or local government or taxing authority in the United States, or
under the laws of any taxing authority or governmental subdivision of a foreign
country, or any territory or possession of the United States or any
international authority, shall be equal to the excess, if any, of (A) the amount
of such Expense over (B) the current net reduction in Taxes actually realized by
such recipient resulting from the accrual or payment of such Expense.
Nothing in this Section 7 shall be construed as a guaranty by United
---------
of payments due pursuant to the AFE Notes, the AFE Trust Certificates or Pass
Through Certificates or of the residual value of the Aircraft.
If a claim is made against an Indemnitee involving one or more
Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly
after receiving such notice give notice of such claim to United; provided that
the failure to provide such notice shall not release United from any of its
obligations to indemnify hereunder except to the extent that such failure
results in an additional Expense to United (in which case United shall not be
responsible for such additional Expense) or United is prejudiced in the conduct
of or precluded from conducting a meritorious contest of such claim; provided
further that no payment by United to an Indemnitee pursuant to this Section 7
---------
shall be deemed to constitute a waiver or release of any right or remedy which
United may have against such Indemnitee for any actual damages as a result of
the failure by such Indemnitee to give United such notice. United shall be
entitled, at its sole cost and expense, acting through counsel reasonably
acceptable to the respective Indemnitee, (A) in any judicial or administrative
proceeding that involves solely a claim for one or more Expenses, to assume
responsibility for and control thereof, (B) in any judicial or administrative
proceeding involving a claim for one or more Expenses and other claims related
or unrelated to the transactions contemplated by the Operative Documents, to
assume responsibility for and control of such claim for Expenses to the extent
that the same may be and is severed from such other claims (and such Indemnitee
shall use reasonable efforts to obtain such severance), and (C) in any other
case, to be consulted by such Indemnitee with respect to judicial proceedings
subject to the control of such Indemnitee and to be allowed, at United's sole
expense, to participate therein. Notwithstanding any of the foregoing to the
contrary, United shall not be entitled to assume responsibility for and control
of any such judicial or administrative proceedings if such proceedings could, in
the reasonable judgment of the Indemnitee, entail any risk of criminal
liability. The Indemnitee may participate at its own expense and with its own
counsel in any judicial proceeding controlled by United pursuant to the
preceding provisions; provided, that such Indemnitee's participation does not,
--------
in the reasonable opinion of the independent counsel appointed by United or its
insurers to conduct such proceedings, interfere with the defense of such case.
The Indemnitee shall supply United, at United's expense, with such
information reasonably requested by United as is necessary or advisable for
United to control or participate in any proceeding to the extent permitted by
this Section 7. In no event shall any Indemnitee enter into
---------
24
a settlement or other compromise with respect to any Expense (i) unless (x) the
Indemnitee has given United at least 30 days' prior written notice of the nature
and scope of the proposed settlement or compromise and (y) such Indemnitee has
received United's prior written consent, which consent shall not be unreasonably
withheld or delayed, or (ii) unless such Indemnitee waives its right to be
indemnified with respect to such Expense under this Section 7.
---------
When United or the insurers under a policy of insurance maintained by
United undertakes the defense of an Indemnitee with respect to an Expense, no
additional legal fees or expenses of such Indemnitee in connection with the
defense of such Indemnitee shall be indemnified hereunder unless such fees or
expenses were incurred at the written request of United or such insurers,
provided that no such defense shall be compromised or settled on a basis that
admits any gross negligence or willful misconduct on the part of such Indemnitee
without such Indemnitee's prior consent.
In the case of any Expense indemnified by United hereunder which is
covered by a policy of insurance maintained by United, it shall be a condition
of such indemnity with respect to any particular Indemnitee that such Indemnitee
shall cooperate with the insurers in the exercise of their rights to
investigate, defend or compromise such Expense as may be required to retain the
benefits of such insurance with respect to such Expense. Notwithstanding any of
the foregoing to the contrary, with respect to any Expense which is covered
under policies of insurance maintained by United, the rights of an Indemnitee to
control or participate in any proceeding shall be modified to the extent
necessary to comply with the requirements of such policies and the rights of the
insurers thereunder.
United shall supply the Indemnitee with such information reasonably
requested by the Indemnitee as is necessary or advisable for the Indemnitee to
control or participate in any proceeding to the extent permitted by this
Section 7.
---------
Upon payment of any Expense pursuant to this Section 7, United,
---------
without any further action, shall be subrogated to any claims the Indemnitee may
have relating thereto. The Indemnitee agrees to give such further assurances or
agreements and to cooperate with United to permit United to pursue such claims,
if any, to the extent reasonably requested by United.
In the event that United shall have paid an amount to an Indemnitee
pursuant to this Section 7, and such Indemnitee subsequently shall be reimbursed
in respect of such indemnified amount from any other person, such Indemnitee
shall promptly pay United an amount equal to the sum of (1) the amount of such
reimbursement, including interest received attributable thereto, net of taxes
required to be paid by such Indemnitee as a result of any reimbursement
including interest received attributable thereto and (2) any tax benefit
realized by such Indemnitee as a result of any payment to United hereunder;
provided, however, that (x) such amount attributable to (1) above shall not be
in excess of the amount of such Expense payment made by United plus interest
received attributable thereto and (y) any amount which is payable to United by
any Person pursuant to this
25
Section 7 shall not be paid to United if any payment is due and owing by United
---------
to such Person hereunder or under any other Operative Document.
United's obligations under the indemnities provided for in this
Agreement shall be those of a primary obligor, whether or not the Person
indemnified shall also be indemnified with respect to the same matter under the
terms of any other document or instrument, and the Person seeking
indemnification from United pursuant to any provision of this Agreement may
proceed directly against United without first seeking to enforce any other right
of indemnification.
SECTION 8. Limited Liability. It is expressly understood and
-----------------
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as
trustee of AFE Trust, in the exercise of the powers and authority conferred and
vested in it under the AFE Trust Agreement, (b) each of the representations,
undertakings and agreements herein made on the part of the AFE Trust is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose of binding
only the AFE Trust and (c) under no circumstances shall Wilmington Trust Company
be personally liable for the payment of any indebtedness or expenses of AFE
Trust or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by AFE Trust under this Agreement or the
other related agreements.
SECTION 9. Notices. Unless otherwise specifically provided herein,
-------
all notices required or permitted by the terms of this Agreement shall be in
English and in writing, and any such notice shall become effective five days
after being deposited in the United States mail, with proper postage for first-
class registered or certified mail prepaid, or when delivered personally or, if
promptly confirmed by mail as provided above, when dispatched by facsimile or
other written telecommunication, addressed, if to AFE Trust, United, the Pass
Through Trustee, the Subordination Agent or the AFE Indenture Trustee, at their
respective addresses or facsimile numbers set forth on Schedule 1.
----------
SECTION 10. Expenses. All of the reasonable out-of-pocket costs, fees
--------
and expenses incurred by the Pass Through Trustee, the Subordination Agent, the
Liquidity Provider, AFE Trust, AFE Trustee and the AFE Indenture Trustee in
connection with the transactions contemplated by this Agreement shall be paid on
or prior to the Closing Date by United.
SECTION 11. Withholding. United shall advise the AFE Indenture
------------
Trustee and the relevant Noteholder in writing if it believes that interest on
its AFE Notes is subject to United States withholding tax. The AFE Indenture
Trustee shall, if required, withhold as provided in Section 2.10 of the AFE
Indenture.
SECTION 12. Miscellaneous. (a) Provided that the transactions
-------------
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of AFE Trust,
United, the AFE Indenture Trustee, the Subordination Agent and the Pass Through
Trustee, and AFE Trust's, United's, the AFE Indenture Trustee's, the
Subordination Agent's and the Pass Through Trustee's obligations hereunder,
26
shall survive the expiration or other termination of this Agreement and the
other agreements referred to herein.
(b) This Agreement may be executed in any number of counterparts and
each counterpart of this Agreement, including a signature page executed by each
of the parties hereto, shall be an original counterpart of this Agreement, but
all of such counterparts together shall constitute one instrument. Neither this
Agreement nor any of the terms hereof may be terminated, amended or waived
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment or waiver is sought; and no such
termination, amendment or waiver shall be effective unless a signed copy thereof
shall have been delivered to the AFE Indenture Trustee. The table of contents
preceding this Agreement and the headings of the various Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof. The terms of this
Agreement shall be binding upon, and shall inure to the benefit of, AFE Trust
and its successors and permitted assigns, United and its successors and
permitted assigns, the Pass Through Trustee and its successors as Pass Through
Trustee (and any additional trustee properly appointed) under any of the Trust
Supplements, the AFE Indenture Trustee and its successors as AFE Indenture
Trustee (and any additional AFE Indenture Trustee properly appointed) under the
AFE Indenture and the Subordination Agent and its successors as Subordination
Agent under the Intercreditor Agreement.
(c) This Agreement is not intended to, and shall not, provide any
Person not a party hereto with any rights of any nature whatsoever against any
of the parties hereto, and no Person not a party hereto shall have any right,
power or privilege in respect of, or have any benefit or interest arising out
of, this Agreement; provided, however, that each of the parties hereto agrees
-------- -------
and acknowledges that the Liquidity Provider shall be a third party beneficiary
of each of the representations and warranties made herein by such party, and
that the Liquidity Provider may rely on such representations and warranties to
the same extent as if such representations and warranties were made to the
Liquidity Provider directly and that Section 7 inures to the benefit of AFE
----------
Trustee and the AFE Investors. The terms of this Agreement shall inure to the
benefit of the Liquidity Provider, its successors and permitted assigns.
(d) 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.
(e) 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 Fundamental
Document, or for recognition and enforcement of any judgment in
respect hereof or thereof, to the non-exclusive
27
general jurisdiction of the courts of the State of New York, the
courts 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 Schedule I,
----------
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 xxx in any other jurisdiction.
(f) 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.
SECTION 12. No Petition. United hereby covenants and agrees that it
-----------
will not at any time institute against the Lease Notes Seller, or join in any
institution against the Lease Notes Seller of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection with
any obligations relating to the AFE Trust Certificates, the AFE Notes, this
Agreement or any of the Indenture Documents (as defined in the AFE Indenture).
[signature pages follow]
28
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.
UNITED AIR LINES, INC.
By:___________________________
Name:
Title:
X-0
XXXXX XXXXXX BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not in its individual capacity,
except as otherwise provided herein, but solely as Pass
Through Trustee, Subordination Agent, and AFE Indenture
Trustee
By: ___________________________________
Name:
Title:
S-2
AFE TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual capacity, but solely as AFE
Trustee
By: ____________________________________
Name:
Title:
S-3
SCHEDULE I to
AFE Note Purchase Agreement
NAMES; ADDRESSES AND WIRE INSTRUCTIONS
--------------------------------------
UNITED:
------
Address for Notices:
If by U.S. Mail
---------------
United Air Lines, Inc.
X.X. Xxx 00000
XXXXX
Xxxxxxx, XX 00000
Attention: Vice President and Treasurer
Telecopy: (000) 000-0000
If by Overnight Delivery Service
--------------------------------
United Air Lines, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
WHQFT
Elk Grove Township, IL 60007
Attention: Vice President and Treasurer
Telecopy: (000) 000-0000
PASS THROUGH TRUSTEE, SUBORDINATION AGENT AND AFE INDENTURE TRUSTEE:
-------------------------------------------------------------------
Address for Notices:
State Street Bank and Trust Company
of Connecticut, National Association
000 Xxxxxx Xxxxxx
Xxxxxxx Square
Hartford, Connecticut 06103
Attention: Corporate Trust Division
Telecopy: (000) 000-0000
and
State Street Bank and Trust Company
of Connecticut, National Association
c/o 0 Xxxxxx xx Xxxxxxxxx, 0/xx/ Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Corporate Trust
Telecopy: (000) 000-0000
AFE TRUST:
---------
Address for Notices:
c/o Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Administration
Telecopy: (000) 000-0000
S-5
SCHEDULE II to
AFE Note Purchase Agreement
AFE NOTES,
PURCHASERS AND PURCHASE PRICE
-----------------------------
[To be completed by VPKK]
Series Purchaser Interest Rate Principal Amount
-------- --------- ------------- ----------------
