INTERCREDITOR AGREEMENT

Exhibit 4.4

 

 

INTERCREDITOR AGREEMENT

(2009-1)

Dated as of

October 13, 2009

AMONG

WILMINGTON TRUST COMPANY,

not in its individual capacity

but solely as Trustee under the

United Air Lines Pass Through Trust 2009-1A,

MORGAN STANLEY BANK, N.A.,

as Liquidity Provider,

AND

WILMINGTON TRUST COMPANY,

not in its individual capacity except

as expressly set forth herein but

solely as Subordination Agent and Trustee

 

TABLE OF CONTENTS

 

 

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INTERCREDITOR AGREEMENT

INTERCREDITOR AGREEMENT (the “ Agreement ”) dated as of October 13, 2009, among WILMINGTON TRUST COMPANY, a Delaware corporation (“ WTC ”), not in its individual capacity but solely as Trustee of the Trust (each as defined below); MORGAN STANLEY BANK, N.A., a national banking association (“ Morgan Stanley Bank ”), as Liquidity Provider; and WILMINGTON TRUST COMPANY, not in its individual capacity except as expressly set forth herein, but solely as Subordination Agent and trustee hereunder (in such capacity, together with any successor appointed pursuant to Article VIII hereof, the “ Subordination Agent ”).

WHEREAS, all capitalized terms used herein shall have the respective meanings referred to in Article I hereof;

WHEREAS, pursuant to the Indentures covering ten Airbus A319-131 aircraft, six Airbus A320-232 aircraft, seven Boeing 767-322ER aircraft, three Boeing 777-222ER aircraft and five Boeing 747-422 aircraft owned by United, United will issue from time to time on a recourse basis on or before the Cut-Off Date Series A Equipment Notes and may (at anytime after the Deposit Period Termination Date) issue a single additional series of Equipment Notes all to finance the Aircraft;

WHEREAS, pursuant to the Note Purchase Agreement and the Participation Agreements, the Class A Trust will acquire the Series A Equipment Notes having an interest rate equal to the Stated Interest Rate applicable to the Class A Certificates to be issued by the Class A Trust;

WHEREAS, pursuant to the Class A Trust Agreement, the Class A Trust proposes to issue the Class A Certificates having the interest rate and the final distribution date described in the Class A Trust Agreement on the terms and subject to the conditions set forth herein and therein;

WHEREAS, pursuant to the Underwriting Agreement, the Underwriters propose to purchase the Class A Certificates issued by the Class A Trust on the Issuance Date in the aggregate face amount set forth on Schedule I thereto on the terms and subject to the conditions set forth therein;

WHEREAS, the Liquidity Provider proposes to enter into a revolving credit agreement relating to the Class A Certificates with the Subordination Agent, as agent for the Class A Trustee for the benefit of the Class A Certificateholders; and

WHEREAS, it is a condition precedent to the obligations of the Underwriters under the Underwriting Agreement that the Subordination Agent, the Class A Trustee and the Liquidity Provider agree to the terms of subordination set forth in this Agreement, and the Subordination Agent, the Class A Trustee and the Liquidity Provider, 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 for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Definitions . For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(1)       the terms used herein that are defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular;

(2)       all references in this Agreement to designated “Articles”, “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement;

(3)       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

(4)       the term “including” means “including without limitation”.

“ Acceleration ” means, with respect to the amounts payable in respect of the Equipment Notes issued under any Indenture, such amounts becoming immediately due and payable by declaration or otherwise. “ Accelerate ”, “ Accelerated ” and “ Accelerating ” have meanings correlative to the foregoing.

“ Additional Certificateholders ” has the meaning specified in Section 9.1(c).

“ Additional Certificates ” has the meaning specified in Section 9.1(c).

“ Additional Equipment Notes ” has the meaning specified in Section 9.1(c).

“ Additional Trust ” has the meaning specified in Section 9.1(c).

“ Additional Trust Agreement ” has the meaning specified in Section 9.1(c).

“ Additional Trustee ” has the meaning specified in Section 9.1(c).

“ Administration Expenses ” has the meaning specified in clause “first” of Section 3.2.

“ Advance ” means any Advance as defined in the 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

 

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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.

“ Aircraft ” means, with respect to each Indenture, the “Aircraft” referred to therein.

“ Appraisal ” has the meaning specified in Section 4.1(a)(iv).

“ Appraised Current Market Value ” of any Aircraft means the lower of the average and the median of the three most recent Post-Default Appraisals of such Aircraft.

“ Appraisers ” means Aircraft Information Systems, Inc., BK Associates, Inc. and Morten Beyer and Agnew, Inc. or, so long as the Person entitled or required hereunder to select such Appraiser acts reasonably, any other nationally recognized appraiser reasonably satisfactory to the Subordination Agent and the Controlling Party.

“ Assignment and Assumption Agreement ” means the Assignment and Assumption Agreement to be executed between the Class A Trustee in its capacity as trustee of the Original Class A Trust and as trustee of the Successor Class A Trust in accordance with the Class A Trust Agreement, as the same may be amended, modified or supplemented from time to time.

“ Available Amount ” means, with respect to the Liquidity Facility on any date, the Maximum Available Commitment (as defined therein) on such date.

“ Bankruptcy Code ” means the United States Bankruptcy Code, 11 U.S.C. Sections 101 et seq .

“ Basic Agreement ” means the Pass Through Trust Agreement dated as of June 26, 2007 between United and WTC, not in its individual capacity, except as otherwise expressly provided therein, but solely as trustee thereunder.

“ Business Day ” means any day other than a Saturday or Sunday or a day on which commercial banks are required or authorized to close in Chicago, Illinois, New York, New York, or, so long as any Certificate is outstanding, the city and state in which any Trustee, the Subordination Agent or any Loan Trustee maintains its Corporate Trust Office and that, solely with respect to the making and repayment of Advances under the Liquidity Facility, also is a “Business Day” as defined in the Liquidity Facility.

“ 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 Liquidity Facility pursuant to Section 3.5(c), 3.5(d), 3.5(i) or 3.5(k) shall be deposited.

“ Certificate ” means a Class A Certificate or an Additional Certificate, as applicable.

 

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“ Certificateholder ” means any holder of one or more Certificates.

“ Class ” means a class of Certificates issued by the Class A Trust and/or the Additional Trust as the context may require.

“ Class A Certificateholder ” means, at any time, any holder of one or more Class A Certificates.

“ Class A Certificates ” means the certificates issued by the Class A Trust, substantially in the form of Exhibit A to the Class A Trust Agreement, and authenticated by the Class A Trustee, representing fractional undivided interests in the Class A Trust, and any certificates issued in exchange therefor or replacement thereof pursuant to the terms of the Class A Trust Agreement.

“ Class A Trust ” means (i) prior to the Transfer, the Original Class A Trust and (ii) after the Transfer, the Successor Class A Trust.

“ Class A Trust Agreement ” means (i) prior to the Transfer, the Basic Agreement, as supplemented by the Supplement No. 2009-1A-O thereto dated as of the date hereof, governing the creation and administration of the Original Class A Trust and the issuance of the Class A Certificates, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms and (ii) after the Transfer, the Basic Agreement, as supplemented by the Supplement No. 2009-1A-S thereto, governing the creation and administration of the Successor Class A Trust and the issuance of the Class A Certificates, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

“ Class A Trustee ” means WTC, not in its individual capacity except as expressly set forth in the Class A Trust Agreement, but solely as trustee under the Class A Trust Agreement, together with any successor trustee appointed pursuant thereto.

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time, and the Treasury Regulations promulgated thereunder.

“ Collateral ” has the meaning specified in the Indentures.

“ Collection Account ” means the Eligible Deposit Account established by the Subordination Agent pursuant to Section 2.2(a)(i) which the Subordination Agent shall make deposits in and withdrawals from in accordance with this Agreement.

“ 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 any Trustee, the Subordination Agent or any Loan Trustee, the office of such Person in the city at which, at any particular time, its corporate trust business shall be principally administered.

 

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“ Current Distribution Date ” means a Distribution Date specified as a reference date for calculating the Expected Distributions with respect to the Certificates of any Trust as of such Distribution Date.

“ Cut-Off Date ” means the earlier of (i) the Deposit Period Termination Date and (b) the date on which a Triggering Event occurs.

“ Deposit Agreement ” means the Deposit Agreement, dated as of the date hereof, between the Escrow Agent and the Depositary, as the same may be amended, modified or supplemented from time to time in accordance with the terms thereof.

“ Deposit Period Termination Date ” means the earlier of (a) the date that is 90 days after the Issuance Date and (b) the date on which the Series A Equipment Notes issued with respect to all of the Aircraft have been purchased by the Class A Trust in accordance with the Note Purchase Agreement and the Participation Agreements.

“ Depositary ” means JPMorgan Chase Bank, N.A., as depositary under the Deposit Agreement.

“ Deposits ” has the meaning set forth in the Deposit Agreement.

“ Designated Representatives ” has the meaning specified in Section 2.5(c).

“ Distribution Date ” means a Regular Distribution Date or a Special Distribution Date.

“ Dollars ” or “ $ ” means United States dollars.

“ Downgrade Drawing ” has the meaning specified in Section 3.5(c).

“ Downgrade Event ” has the meaning assigned to such term in the Liquidity Facility.

“ Downgraded Facility ” has the meaning specified in Section 3.5(c).

“ Drawing ” means an Interest Drawing, a Final Drawing, a Special Termination Drawing, a Non-Extension 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 of at least A3 from Moody’s and a long-term issuer credit rating of at least A- from Standard & Poor’s. An Eligible Deposit Account may be maintained with the Liquidity Provider so long as the Liquidity Provider is an Eligible Institution; provided that the Liquidity Provider shall have waived all rights of set-off and counterclaim with respect to such account.

 

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“ Eligible Institution ” means (a) the corporate trust department of the Subordination Agent or any 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 or issuer credit rating, as the case may be, from each Rating Agency of at least A-3 or its equivalent.

“ Eligible Investments ” means (a) investments in obligations of, or guaranteed by, the United States government having maturities no later than 90 days following the date of such investment, (b) investments in open market commercial paper of any corporation incorporated under the laws of the United States of America or any state thereof with a short-term unsecured debt rating issued by Moody’s of at least P-1 and a short-term issuer credit rating issued by Standard & Poor’s of at least A-1 having maturities no later than 90 days following the date of such investment or (c) investments in negotiable certificates of deposit, time deposits, banker’s acceptances, commercial paper 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 (or any U.S. branch of a foreign bank) with a short-term unsecured debt rating by Moody’s of at least P-1 and a short-term issuer credit rating by Standard & Poor’s of at least A-1, having maturities no later than 90 days following the date of such investment; provided , however , that (x) all Eligible Investments that are bank obligations shall be denominated in Dollars; and (y) the aggregate amount of Eligible Investments at any one time that are bank obligations issued by any one bank shall not be in excess of 5% of such bank’s capital surplus; provided further that any investment of the types described in clauses (a), (b) and (c) above may be made through a repurchase agreement in commercially reasonable form with a bank or other financial institution qualifying as an Eligible Institution so long as such investment is held by a third party custodian also qualifying as an Eligible Institution; provided further , however , that in the case of any Eligible Investment issued by a domestic branch of a foreign bank, the income from such investment shall be from sources within the United States for purposes of the Code. Notwithstanding the foregoing, no investment of the types described in clause (b) above which is issued or guaranteed by United or any of its Affiliates, and no investment in the obligations of any one bank in excess of $10,000,000, shall be an Eligible Investment unless a Ratings Confirmation shall have been received with respect to the making of such investment.

“ Equipment Note Special Payment ” means a Special Payment on account of the redemption, purchase or prepayment of all of the Equipment Notes issued pursuant to an Indenture.

“ Equipment Notes ” means, at any time, the Series A Equipment Notes and any Additional Equipment Notes, collectively, and in each case, any Equipment Notes issued in exchange therefor or replacement thereof pursuant to the terms of the Indentures.

“ Escrow Agent ” means WTC, as escrow agent under the Escrow Agreement, together with its successors in such capacity.

“ Escrow Agreement ” means the Escrow and Paying Agent Agreement, dated as of the date hereof, among the Escrow Agent, the Underwriters, the Class A Trustee and the Paying Agent, as the same may be amended, modified or supplemented from time to time in accordance with the terms thereof.

 

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“ Escrow Receipts ” has the meaning assigned to such term in the Escrow and Agreement.

“ Expected Distributions ” means, with respect to the Class A Certificates on any Current Distribution Date, the difference between (A) the Pool Balance of the Class A Certificates as of the immediately preceding Distribution Date (or, if the Current Distribution Date is the first Distribution Date next following the Issuance Date, the original aggregate face amount of the Class A Certificates) and (B) the Pool Balance of the Class A Certificates as of the Current Distribution Date calculated on the basis that (i) the principal of the Non-Performing Equipment Notes held in the Class A Trust has been paid in full and such payments have been distributed to the holders of the Class A Certificates, (ii) the principal of the Performing Equipment Notes held in the Class A Trust has been paid when due (without giving effect to any Acceleration of Performing Equipment Notes) and such payments have been distributed to the holders of the Class A Certificates and (iii) the principal of any Equipment Notes formerly held in the Class A Trust that have been sold pursuant to the terms hereof has been paid in full and such payments have been distributed to the holders of the Class A Certificates, but without giving effect to any reduction in the Pool Balance as a result of any distribution attributable to Deposits occurring after the immediately preceding Distribution Date (or, if the Current Distribution Date is the first Distribution Date, occurring after the Issuance Date). For purposes of calculating Expected Distributions with respect to the Class A Certificates, any Premium paid on the Series A Equipment Notes held in the Class A Trust which has not been distributed to the Class A Certificateholders (other than such Premium or a portion thereof applied to the payment of interest on the Class A Certificates or the reduction of the Pool Balance of the Class A Trust) shall be added to the amount of such Expected Distributions.

“ Facility Office ” means the office of the Liquidity Provider, presently located in New York, New York, or such other office as the Liquidity Provider from time to time shall notify the Class A Trustee as its “Facility Office” under the Liquidity Facility; provided that the Liquidity Provider shall not change its Facility Office to another Facility Office outside the United States of America except in accordance with Section 3.01, 3.02 or 3.03 of the Liquidity Facility.

“ Fee Letters ” means, collectively, (i) the Fee Letter dated as of the date hereof among Morgan Stanley Bank, the Subordination Agent and United with respect to the Liquidity Facility, and (ii) any fee letter entered into among the Subordination Agent, any Replacement Liquidity Provider and United in respect of the Liquidity Facility.

“ Final Distributions ” means, with respect to the Class A Certificates on any Distribution Date, the sum of (x) the aggregate amount of all accrued and unpaid interest on the Class A Certificates (excluding interest, if any, payable with respect to the Deposits relating to the Class A Trust) and (y) the Pool Balance of the Class A Certificates as of the immediately preceding Distribution Date (less the amount of the Deposits for the Class A Certificates as of such preceding Distribution Date other than any portion of such Deposits thereafter used to acquire the Series A Equipment Notes pursuant to the Note Purchase Agreement). For purposes of calculating Final Distributions with respect to the Class A Certificates, any Premium paid on the

 

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Series A Equipment Notes held in the Class A Trust which has not been distributed to the Class A Certificateholders (other than such Premium or a portion thereof applied to the payment of interest on the Class A Certificates or the reduction of the Pool Balance of the Class A Trust) shall be added to the amount of such Final Distributions.

“ Final Drawing ” has the meaning assigned to such term in Section 3.5(i).

“ Final Legal Distribution Date ” means (i) with respect to the Class A Certificates, May 1, 2018, and (ii) with respect to any Additional Certificates, the date specified for such Additional Certificates in an amendment to this Agreement duly executed and delivered by the parties thereto in accordance with the provisions of Section 9.1(c) hereof.

“ Financing Agreement ” means each of the Participation Agreements, the Indentures and the Equipment Notes issued thereunder.

“ Indenture ” means each of the Trust Indentures entered into by the Loan Trustee and United, as described in the Note Purchase Agreement, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

“ Indenture Event of Default ” means, with respect to any Indenture, any Event of Default (as such term is defined in such Indenture) thereunder.

“ Interest Drawing ” has the meaning specified in Section 3.5(a).

“ Interest Payment Date ” means each date on which interest is due and payable under the Liquidity Facility on a Downgrade Drawing, Non-Extension Drawing, a Special Termination Drawing or Final Drawing thereunder, other than any such date on which interest is due and payable under the Liquidity Facility only on an Applied Provider Advance or Applied Special Termination Advance (as such terms are defined in the Liquidity Facility).

“ Interest Period ” has the meaning specified in the Indentures.

“ 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.

“ Issuance Date ” means October 13, 2009.

“ Lien ” means any mortgage, pledge, lien, charge, claim, disposition of title, encumbrance, lease, sublease, sub-sublease or security interest of any kind, including, without limitation, any thereof arising under any conditional sales or other title retention agreement.

“ Liquidity Event of Default ” has the meaning assigned to such term in the Liquidity Facility.

 

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“ Liquidity Expenses ” means all Liquidity Obligations other than (i) the principal amount of any Drawings under the Liquidity Facility and (ii) any interest accrued on any Liquidity Obligations.

“ Liquidity Facility ” means, initially, the Revolving Credit Agreement dated as of the date hereof, between the Subordination Agent, as agent and trustee for the Class A Trust, and the initial Liquidity Provider, and from and after the replacement of such Revolving Credit Agreement pursuant hereto, the Replacement Liquidity Facility therefor, if any, in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms.

“ Liquidity Obligations ” means all principal, interest, fees and other amounts owing to the Liquidity Provider under the Liquidity Facility, Section 4(a)(v) of the Note Purchase Agreement, Section 7.1 of the Participation Agreements or the Fee Letters.

“ Liquidity Provider ” means Morgan Stanley Bank or, if applicable, any Replacement Liquidity Provider which has issued a Replacement Liquidity Facility to replace the Liquidity Facility pursuant to Section 3.5(e).

“ Loan Trustee ” means, with respect to any Indenture, the mortgagee thereunder.

“ Minimum Sale Price ” means, with respect to any Aircraft or the Equipment Notes issued in respect of such Aircraft, at any time, in the case of the sale of an Aircraft, 75%, or in the case of the sale of related Equipment Notes, 85%, of the Appraised Current Market Value of such Aircraft.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ Non-Controlling Party ” means, at any time, any Trustee or the Liquidity Provider which is not the Controlling Party at such time.

“ Non-Extended Facility ” has the meaning specified in Section 3.5(d).

“ Non-Extension Drawing ” has the meaning specified in Section 3.5(d).

“ Non-Performing Equipment Note ” means an Equipment Note that is not a Performing Equipment Note.

“ Note Purchase Agreement ” means the Note Purchase Agreement, dated as of the date hereof, among United, the Class A Trustee, the Subordination Agent, the Escrow Agent and the Paying Agent, as amended, supplemented or otherwise modified from time to time in accordance with its terms.

“ Notice Date ” has the meaning specified in Section 3.5(d).

“ Operative Agreements ” means this Agreement, the Liquidity Facility, the Note Purchase Agreement, the Trust Agreement, the Underwriting Agreement, the Financing Agreements, the Fee Letters and the Certificates, together with all exhibits and schedules included with any of the foregoing.

 

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“ Original Class A Trust ” means the United Air Lines Pass Through Trust 2009-1A-O created and administered pursuant to the Class A Trust Agreement.

“ 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 Agreement, 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 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 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 Certificates owned by United or any of its Affiliates shall be disregarded and deemed not to be Outstanding, except that, in determining whether such Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Certificates that such Trustee knows to be so owned shall be so disregarded. Certificates so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the applicable 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 which is not in fact received by the Subordination Agent within ten Business Days after the Scheduled Payment Date relating thereto.

“ Participation Agreement ” means, with respect to each Indenture, the “Participation Agreement” referred to therein.

“ Payee ” has the meaning specified in Section 2.4(c).

“ Paying Agent ” means WTC, as paying agent under the Escrow Agreement, together with its successors in such capacity.

“ Paying Agent Account ” has the meaning assigned to such term in the Escrow Agreement.

“ Performing Equipment Note ” means a Series A Equipment Note with respect to which no payment default has occurred and is continuing (without giving effect to any Acceleration); provided that in the event of

 

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a bankruptcy proceeding under the Bankruptcy Code in which United is a debtor any payment default existing during the 60-Day Period (or such longer period as may apply under Section 1110(b) of the Bankruptcy Code or as may apply for the cure of such payment default under Section 1110(a)(2)(B) of the Bankruptcy Code) shall not be taken into consideration until the expiration of the applicable period.

“ Performing Note Deficiency ” means any time that less than 65% of the then aggregate outstanding principal amount of the Series A Equipment Notes are Performing Equipment Notes.

“ Person ” means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, trustee, unincorporated organization or government or any agency or political subdivision thereof.

“ Pool Balance ” means, with respect to the Class A Certificates, as of any date, (i) the original aggregate face amount of the Class A Certificates less (ii) the aggregate amount of all payments made as of such date in respect of the Class A Certificates or in respect of Deposits relating to the Class A Trust other than payments made in respect of interest or Premium thereon or reimbursement of any costs and expenses incurred in connection therewith. The Pool Balance for the Class A Trust or for the Class A Certificates as of any date shall be computed after giving effect to any special distribution with respect to unused Deposits, if any, payment of principal, if any, on the Equipment Notes or payment with respect to other Trust Property held in the Class A Trust and the distribution thereof to be made on that date.

“ Post-Default Appraisal ” has the meaning specified in Section 4.1(a)(iv).

“ Premium ” means any “Make-Whole Amount”, as such term is defined in any Indenture.

“ Proceeding ” means any suit in equity, action at law or other judicial or administrative proceeding.

“ Provider Incumbency Certificate ” has the meaning specified in Section 2.5(c).

“ Provider Representatives ” has the meaning specified in Section 2.5(c).

“ PTC Event of Default ” means, with respect to the Class A Trust Agreement, the failure to pay within 10 Business Days of the due date thereof: (i) the outstanding Pool Balance of the Class A Certificates on the Final Legal Distribution Date for the Class A Certificates or (ii) interest due on the Class A Certificates on any Distribution Date (unless, in the case of the Class A Trust Agreement, the Subordination Agent shall have made an Interest Drawing and/or a withdrawal from the Cash Collateral Account in an aggregate amount sufficient to pay such interest and shall have distributed such amount to the Class A Trustee).

“ Rate Determination Notice ” has the meaning assigned to such term in the Liquidity Facility.

 

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“ Rating Agencies ” means, collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Certificates and which shall then be rating the Certificates. The initial Rating Agencies will 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 any Class of Certificates below the then current rating for such Class of Certificates or (ii) a withdrawal or suspension of the rating of any Class of Certificates.

“ Regular Distribution Dates ” means each May 1 and November 1 commencing on May 1, 2010; provided , however , that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day.

“ Replacement Liquidity Facility ” means an irrevocable revolving credit agreement (or agreements) in substantially the form of the replaced 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 (before downgrading of such ratings, if any, as a result of the downgrading of the Liquidity Provider), in a face amount (or in an aggregate face amount) equal to the then Required Amount and issued by a Person (or Persons) having unsecured short-term debt rating or issuer credit rating, as the case may be, issued by both Rating Agencies which are equal to or higher than the Threshold Rating. Without limitation of the form that a Replacement Liquidity Facility otherwise may have pursuant to the preceding sentence, a Replacement Liquidity Facility may have a stated expiration date earlier than 15 days after the Final Legal Distribution Date of the Class A Certificates so long as such Replacement Liquidity Facility provides for a Non-Extension Drawing as contemplated by Section 3.5(d) hereof.

“ Replacement Liquidity Provider ” means a Person (or Persons) who issues a Replacement Liquidity Facility.

“ Required Amount ” means with respect to the Liquidity Facility or the Cash Collateral Account, for any day, the sum of the aggregate amount of interest, calculated at the rate per annum equal to the Stated Interest Rate for the Class A Certificates, that would be payable on the Class A Certificates on each of the three successive Regular Distribution Dates immediately following such day or, if such day is a Regular Distribution Date, on such day and the succeeding two Regular Distribution Dates, in each case calculated on the basis of the Pool Balance of the Class A Certificates on such day and without regard to expected future distributions of principal on the Class A Certificates.

“ Responsible Officer ” means (i) with respect to the Subordination Agent and each of the Trustees, any officer in the corporate trust administration department of the Subordination Agent or such Trustee or any other officer customarily performing functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject and (ii) with respect to the Liquidity Provider, any authorized officer of the Liquidity Provider.

 

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“ Scheduled Payment ” means, with respect to any Series A Equipment Note, (i) any payment of principal or interest on such Series A Equipment Note (other than an Overdue Scheduled Payment) due from the obligor thereon, which payment represents the installment of principal at the stated maturity of such installment of principal on such Series A Equipment Note, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both or (ii) any payment of interest on the Class A Certificates with funds drawn under the Liquidity Facility or withdrawn from the Cash Collateral Account, which payment represents the payment of regularly scheduled interest accrued on the unpaid principal amount of such Series A Equipment Note; provided that any payment of principal of, Premium, if any, or interest resulting from the redemption or purchase of any Series A 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.

“ Section 2.4 Fraction ” means, with respect to any Special Distribution Date, a fraction, the numerator of which shall be the amount of principal of the applicable Series A Equipment Notes being redeemed, purchased or prepaid on such Special Distribution Date, and the denominator of which shall be the aggregate unpaid principal amount of all Series A Equipment Notes outstanding as of such Special Distribution Date.

“ Series A Equipment Notes ” means the Series A Equipment Notes issued pursuant to any Indenture by United and authenticated by the Loan Trustee thereunder, and any such Equipment Notes issued in exchange therefor or replacement thereof pursuant to the terms of such Indenture.

“ 60-Day Period ” means 60-day period specified in Section 1110(a)(2)(A) of the Bankruptcy Code.

“ 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, whether distributed pursuant to Section 2.4 or Section 3.2 hereof.

“ Special Payment ” means any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note or Collateral.

“ Special Payments Account ” means the Eligible Deposit Account created pursuant to Section 2.2(a)(ii) as a sub-account to the Collection Account.

“ Special Termination Drawing ” has the meaning assigned to such term in Section 3.5(k).

“ Special Termination Notice ” has the meaning assigned to such term in the Liquidity Facility.

“ Standard & Poor’s ” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business.

 

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“ Stated Amount ” means the Maximum Commitment (as defined in the Liquidity Facility) of the Liquidity Provider under the Liquidity Facility.

“ Stated Expiration Date ” has the meaning specified in Section 3.5(d).

“ Stated Interest Rate ” means (i) with respect to the Class A Certificates, 10.40% per annum and (ii) with respect to any Additional Certificates, the rate per annum or spread over six months or other LIBOR for any applicable Interest Period as specified for such Additional Certificates in an amendment to this Agreement duly executed and delivered by the parties thereto in accordance with the provisions of Section 9.1(c) hereof.

“ Subordination Agent ” has the meaning assigned to it in the preliminary statements to this Agreement.

“ Subordination Agent Incumbency Certificate ” has the meaning specified in Section 2.5(a).

“ Subordination Agent Representatives ” has the meaning specified in Section 2.5(a).

“ Successor Class A Trust ” means the United Air Lines Pass Through Trust 2009-1A-S created and administered pursuant to the Class A Trust Agreement.

“ Tax ” and “ Taxes ” mean any and all taxes, fees, levies, duties, tariffs, imposts, and other charges of similar kind (together with any and all interest, penalties, loss, damage, liability, expense, additions to tax and additional amounts or costs incurred or imposed with respect thereto) imposed or otherwise assessed by the United States of America 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 ” has the meaning assigned to such term in the Liquidity Facility.

“ Threshold Rating ” means the short-term unsecured debt rating of P-1 by Moody’s and the short-term issuer credit rating of A-1 by Standard & Poor’s.

“ Transfer ” means, with respect to the Class A Trust, the transfers contemplated by the Assignment and Assumption Agreement.

“ 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.

 

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“ Triggering Event ” means (x) the occurrence of an Indenture Event of Default under all of the Indentures resulting in a PTC Event of Default with respect to the Class A Certificates, (y) the Acceleration of all of the outstanding Series A Equipment Notes or (z) the occurrence of a United Bankruptcy Event.

“ Trust ” means either of the Class A Trust and/or the Additional Trust, as the context may require.

“ Trust Accounts ” has the meaning specified in Section 2.2(a).

“ Trust Agreement ” means either the Class A Trust Agreement or the Additional Trust Agreement, as the context may require.

“ Trust Property ” with respect to any Trust, has the meaning set forth in the Trust Agreement for such Trust.

“ Trustee ” means either the Class A Trustee or the Additional Trustee, as the context may require.

“ Trustee Incumbency Certificate ” has the meaning specified in Section 2.5(b).

“ Trustee Representatives ” has the meaning specified in Section 2.5(b).

“ Unapplied Provider Advance ” has the meaning assigned to such term in the Liquidity Facility.

“ Underwriters ” means J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co.

“ Underwriting Agreement ” means the Underwriting Agreement dated October 13, 2009, among the Underwriters, the Depositary and United, relating to the purchase of the Certificates by the Underwriters, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

“ Unindemnified Tax” means (i) any Tax imposed on the net income, net worth or capital, any franchise Tax or similar doing business Tax of the Subordination Agent and (ii) any withholding Tax imposed by the United States (including, without limitation, any withholding Tax imposed by the United States which is imposed or increased as a result of the Subordination Agent’s failing to deliver to the Company any certificate or document necessary to establish that payments under this Agreement are exempt from withholding Tax).

“ United ” means United Air Lines, Inc., a Delaware corporation, and its successors and assigns.

 

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“ United Bankruptcy Event ” means the occurrence and continuation of any of the following:

(a)       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 its 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

(b)       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 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; or

(c)       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 specified in Section 9.1(a).

“ Written Notice ” means, from the Subordination Agent, any Trustee or the Liquidity Provider, a written instrument executed by the Designated Representative of such Person. An invoice delivered by the 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

SECTION 2.1. Agreement to Terms of Subordination; Payments from Monies Received Only . (a) Each Trustee hereby acknowledges and agrees to the terms of subordination and distribution set forth in this Agreement in respect of each Class of Certificates and agrees to enforce such provisions and cause all

 

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payments in respect of the Equipment Notes held by the Subordination Agent and the Liquidity Facility to be applied in accordance with the terms of this Agreement. In addition, each Trustee hereby agrees to cause the Equipment Notes purchased by the related Trust to be registered in the name of the Subordination Agent or its nominee, as agent and trustee for such 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 succeeding sentence of this Section 2.1(b), 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 or payments under the Fee Letter, Section 7.1 of the Participation Agreements or Section 4(a)(v) of the Note Purchase Agreement, 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 Trustees and the Subordination Agent hereby agrees and, as provided in each Trust Agreement, each Certificateholder, by its acceptance of a Certificate and the Liquidity Provider, by entering into the Liquidity Facility, has agreed to look solely to such amounts to the extent available for distribution to it as provided in this Agreement and to the relevant Deposits and that none of the Trustees, Loan Trustees nor the Subordination Agent is personally liable to any of them for any amounts payable or any liability under this Agreement, any Trust Agreement, the Liquidity Facility or such Certificate, except (in the case of the Subordination Agent) as expressly provided herein or (in the case of the Trustees) as expressly provided in each Trust Agreement or (in the case of the Loan Trustees) as expressly provided in any Operative Agreement.

SECTION 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 Trustees, the Certificateholders and the Liquidity Provider 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 Trustees, the Certificateholders and the Liquidity Provider. The Subordination Agent shall establish and maintain the Cash Collateral Account pursuant to and under the circumstances set forth in Section 3.5(f) hereof. Upon such establishment and maintenance under Section 3.5(f) hereof, the Cash Collateral Account shall, together with the Special Payments Account and the Collection Account, constitute the “ Trust Accounts ” hereunder. Without limiting the foregoing, all monies credited to the Trust Accounts shall be, and shall remain, the property of the relevant Trust(s).

(b)       Funds on deposit in the Trust Accounts shall be invested and reinvested by the Subordination Agent in Eligible Investments selected by the Subordination Agent 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 immediately preceding the Regular Distribution Date or the date of the related distribution pursuant to Section 2.4 hereof, as the case may be, next following the date of such investment; provided , however , that following the making of a Downgrade Drawing, a Non-Extension Drawing or a Special Termination Drawing under the Liquidity Facility, the Subordination Agent shall invest and reinvest such amounts in Eligible Investments at the direction of United (or, if and to the extent so specified to the

 

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Subordination Agent by United, the Liquidity Provider); provided further , however , that, notwithstanding the foregoing proviso, following the making of a Non-Extension Drawing, a Downgrade Drawing or a Special Termination Drawing under the initial Liquidity Facility, the Subordination Agent shall invest and reinvest the amounts in the Cash Collateral Account in Eligible Investments pursuant to the written instructions of the Liquidity Provider; provided further , however , that notwithstanding the foregoing provisos, upon the occurrence of and during the continuation of a Triggering Event, the Subordination Agent shall invest and reinvest such amounts in Eligible Investments in accordance with the written instructions of the Controlling Party. Unless otherwise expressly provided in this Agreement (including, without limitation, with respect to Investment Earnings on amounts on deposit in the Cash Collateral Account pursuant to Section 3.5(f) hereof), 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 other amounts on deposit in the Collection Account are 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 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 (or, with respect to the handling or transfer of funds, its own 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 in Section 3.3(b) 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 Trustees, the Certificateholders and the Liquidity Provider, as the case may be. 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, for which a Ratings Confirmation for the Class A Certificates shall have been obtained) 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 WTC is an Eligible Institution, the Trust Accounts shall be maintained with it as Eligible Deposit Accounts.

SECTION 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 (other than any Scheduled Payment which by the express terms hereof is to be deposited to the Cash Collateral Account).

(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.

 

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SECTION 2.4. Distributions of Special Payments . (a)  Notice of Special Payment . Except as provided in Section 2.4(c) below, 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 each Trustee and the Liquidity Provider. The Subordination Agent shall promptly calculate the amount of the redemption or purchase of Equipment Notes, the amount of any Overdue Scheduled Payment or the proceeds of Equipment Notes or Collateral, as the case may be, comprising such Special Payment under the applicable Indenture or Indentures and shall promptly send to each Trustee and the Liquidity Provider a Written Notice of such amount and the amount allocable to each Trust. Such Written Notice shall also set the distribution date for such Special Payment (a “ Special Distribution Date ”), which shall be the Business Day which immediately follows the later to occur of (x) the 15th day after the date of such Written Notice and (y) the date the Subordination Agent has received or expects to receive such Special Payment. Amounts on deposit in the Special Payments Account shall be distributed in accordance with Sections 2.4(b) and 2.4(c) and Article III hereof, as applicable.

For the purposes of the application of any Equipment Note Special Payment distributed on a Special Distribution Date in accordance with Section 3.2 hereof, so long as no Indenture Event of Default shall have occurred and be continuing under any Indenture:

(i)        the amount of accrued and unpaid Liquidity Expenses that are not yet due that are payable pursuant to clause “second” thereof shall be multiplied by the Section 2.4 Fraction;

(ii)       clause “third” thereof shall be deemed to read as follows: “ third , (i) such amount as shall be required to pay accrued and unpaid interest then in arrears on all Liquidity Obligations (at the rate, or in the amount, provided in the Liquidity Facility) plus an amount equal to the amount of accrued and unpaid interest on the Liquidity Obligations not in arrears multiplied by the Section 2.4 Fraction, and (ii) if a Special Termination Drawing has been made under the Liquidity Facility and has not been converted into a Final Drawing, the outstanding amount of such Special Termination Drawing shall be distributed to the Liquidity Provider”; and

(iii)      clause “seventh” thereof shall be deemed to read as follows: “ seventh , such amount as shall be required to pay accrued, due and unpaid interest at the Stated Interest Rate on the outstanding Pool Balance of the Class A Certificates together with (without duplication) accrued and unpaid interest at the Stated Interest Rate on the outstanding principal amount of the Series A Equipment Notes held in the Class A Trust being redeemed, purchased or prepaid, in each case excluding interest, if any, payable with respect to the Deposits relating to the Class A Trust”.

(b)        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 or 3.2 shall be invested in accordance with Section 2.2(b). Investment Earnings on such investments shall be distributed in accordance with Article III hereof.

 

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(c)        Certain Payments . Except for amounts constituting Liquidity Obligations which shall be distributed as provided in Section 3.2, the Subordination Agent will distribute promptly upon receipt thereof (i) any indemnity payment or expense reimbursement received by it from United in respect of any Trustee, the Liquidity Provider, the Paying Agent, the Depositary or the Escrow Agent (collectively, the “ Payees ”) and (ii) any compensation received by it from United under any Operative Agreement in respect of any Payee, directly to the Payee entitled thereto.

SECTION 2.5. Designated Representatives . (a) With the delivery of this Agreement, the Subordination Agent shall furnish to the Liquidity Provider and each Trustee, and from time to time thereafter may furnish to the Liquidity Provider and each Trustee, at the Subordination Agent’s discretion, or upon the Liquidity Provider’s or any Trustee’s request (which request shall not be made more than one time in any 12-month period), a certificate (a “ Subordination Agent Incumbency Certificate ”) of a Responsible Officer of the Subordination Agent certifying as to the incumbency and specimen signatures of the officers of the Subordination Agent and the attorney-in-fact and agents of the Subordination Ag