Date: March 25, 2002
To: Wilmington Trust Company
One Xxxxxx Square
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx Xxxxx
From: Xxxxxxx Xxxxx Capital Services, Inc.
Xxxxxxx Xxxxx World Headquarters
4 World Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Swap Group - Xxxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Subject: CLASS G-1 ABOVE CAP LIQUIDITY FACILITY CONFIRMATION
Ladies and Gentlemen:
The purpose of this letter agreement (this "Confirmation") is to confirm
the terms and conditions of the Interest Rate Cap Transaction entered into on
the Trade Date referred to in Paragraph 2 below (the "Transaction") between
Xxxxxxx Xxxxx Capital Services, Inc. ("Party A") and Wilmington Trust Company
("Party B"), in its capacity as Subordination Agent on behalf of the Trustee
under the Pass Through Trust Agreement dated as of September 25, 1997 between
Wilmington Trust Company and Continental Airlines, Inc., as supplemented by the
Supplement No. 2002-1G-1-O dated as of March 25, 2002. This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below.
1. The definitions and provisions contained in the 2000 ISDA Definitions and
Annex to the 2000 ISDA Definitions (June 2000 Version) as published by the
International Swaps and Derivatives Association, Inc. (as so supplemented,
the "Definitions") are incorporated into this Confirmation. In the event
of any inconsistency between the Definitions and this Confirmation, this
Confirmation will govern. References herein to a "Transaction" shall be
deemed to be references to a "Swap Transaction" for the purposes of the
Definitions.
This Confirmation supplements, forms a part of, and is subject to the 1992
ISDA Master Agreement (Multicurrency - Cross Border) including the
Schedule thereto, dated as of March 25, 2002, as amended and supplemented
from time to time (collectively, the "Agreement"), between us. All
provisions contained in the Agreement govern this Confirmation except as
modified below. In the event of any inconsistency between the Agreement
and this Confirmation, this Confirmation will govern. Capitalized terms
not otherwise defined in the Agreement or this Confirmation shall have the
meanings ascribed to them in the Intercreditor Agreement dated as of March
25, 2002 among Wilmington Trust Company, as Trustee under the Continental
Airlines Pass Through Trust 2002-1G-1, Continental Airlines Pass Through
Trust 2002-1G-2, Continental Airlines Pass Through Trust 2002-1H and
Continental Airlines Pass Through Trust 0000-0X, Xxxxxxxxxx
Xxxxxx-Xxxxxxxxx Girozentrale, as Class G-1 Primary Liquidity Provider and
Class G-2 Primary Liquidity Provider, Xxxxxxx Xxxxx Capital Services,
Inc., as Class G-1 Above-Cap Liquidity Provider, Ambac Assurance
Corporation, as Policy Provider, and Wilmington Trust Company, as
Subordination Agent and Trustee (the "Intercreditor Agreement"). The
Agreement and each Confirmation will be governed by and construed in
accordance with the laws of the State of New York.
Each of Party A and Party B represents to the other that it has entered
into this Transaction in reliance upon such independent accounting,
regulatory, legal, tax and financial advice as it deems necessary and not
upon any view expressed by the other.
2. Party A and Party B by this Confirmation are entering into a Transaction
(the "Above Cap Liquidity Facility") that provides an irrevocable interest
rate cap. The terms of the Above Cap Liquidity Facility are as follows:
General Terms:
Transaction Type: Interest Rate Cap Transaction
Notional Amount: The Pool Balance for the Class G-1
Certificates, before giving effect to
any distributions on such Certificates
on any Floating Rate Payer Payment Date
Trade Date: March 22, 2002
Effective Date: March 25, 2002
Termination Date: The first Business Day following the
earlier of (i) the Final Legal
Distribution Date of the Class G-1
Certificates and (ii) the date upon
which the Pool Balance of the Class G-1
Certificates equals zero
Currency Unit: USD
Business Day Convention: Following
Fixed Amounts:
Fixed Amount Payer: Party B
Fixed Amount Payer Payment Date: March 25, 2002
Fixed Amount: As set forth in a separate letter
agreement between Party A and Party B
Floating Amounts:
Floating Rate Payer: Party A
Floating Amount: On each Floating Rate Payer Payment
Date, the Floating Amount shall be
calculated as follows:
(i) in the event that the Interest
Shortfall (as defined in Paragraph 5
below) is equal to zero, the Floating
Amount shall equal zero;
(ii) in the event that there is a
nonzero Interest Shortfall and at least
one of the following is true: (x) the
Available Amount under the Class G-1
Primary Liquidity Facility (before
giving effect to any Interest Advances
to be made on such Payment Date) is
greater than zero, (y) the amount on
deposit in the Class G-1 Cash
Collateral Account (before giving
effect to any withdrawals to be made
from such account on such Payment Date)
is greater than zero, or (z) the amount
on deposit in the Class G-1 Above-Cap
Account (before giving effect to any
withdrawals to be made from such
account on such Payment Date) is
greater than zero, the Floating Amount
shall equal the Above-Cap Payment for
such date; and
(iii) in the event that there is a
nonzero Interest Shortfall and none of
the statements in clauses (ii)(x),
(ii)(y) and (ii)(z) above are true, the
Floating Amount shall equal zero.
Period End Dates: Each February 15, May 15,
August 15 and November 15, commencing
on May 15, 2002 and ending on the
Termination Date, inclusive, subject to
adjustment in accordance with the
Following Business Day Convention.
Floating Rate Payer Payment Dates: Each day that is a Period End Date and
any Special Distribution Date under and
as defined in the Intercreditor
Agreement not coinciding with a Period
End Date on which a distribution of
interest is, by the terms of the
Intercreditor Agreement, to be made on
the Class G-1 Certificates
Floating Rate Option: USD-LIBOR-BBA; PROVIDED, that, if the
relevant rate does not appear on the
Telerate Page 3750, the rate shall be
"LIBOR" as determined by the Reference
Agent under Section 6(b)(ii) of the
Reference Agency Agreement.
Cap Rate: As set forth in Appendix I to this
Confirmation
Designated Maturity: 3 months
Spread: None
Floating Rate Day Count Actual/360
Fraction:
Reset Dates: The first day of the relevant
Calculation Period
Compounding: Inapplicable
Notice: Party B shall, on or before 12:00 Noon
(New York time) on each Floating Rate
Payer Payment Date, provide Party A
with notice of the then-current Pool
Balance and the then-current Interest
Shortfall, if any, together with, if
such a shortfall exists, the
certificate referred to in the
penultimate sentence of Section 3.6(a)
of the Intercreditor Agreement.
3. ROLE OF PARTY A; ROLE OF CALCULATION AGENT
(i) Party B acknowledges that: (a) in connection with this Transaction
and this Agreement, Party A has acted in the capacity of an
arm's-length contractual counterparty and not as its financial
advisor or fiduciary; and (b) in exercising its rights or performing
any of its duties under this Agreement, Party A will act as
principal and not as a fiduciary of Party B.
(ii) Whenever the Calculation Agent is required to act or exercise
judgment in any way, it will do so in good faith and in a
commercially reasonable manner. The calculations and determinations
of the Calculation Agent shall be made in accordance with terms of
this Confirmation having regard in each case to the criteria
stipulated herein and (where relevant) on the basis of information
provided to or obtained by it and such further inquiries as it deems
necessary and will, in the absence of manifest error, be final,
conclusive and binding on Party B and Party A.
4. CREDIT DOWNGRADE OF PARTY A/ INVALIDITY OF GUARANTEE
Notwithstanding any other provisions of this Agreement, within 10 days of
(x) the commencement of any Credit Downgrade Period (as defined in Paragraph
5 below) or (y) the Above-Cap Liquidity Guarantor's guarantee of Party A's
obligations under this Agreement becoming invalid or unenforceable for any
reason (but, in either case, no later than the Termination Date), Party A may,
at its own expense, arrange for one or more Replacement Above-Cap Liquidity
Providers to issue and deliver a Replacement Above-Cap Liquidity Facility to
replace this Above-Cap Liquidity Facility. If Party A does not arrange for such
replacement (and if this Above-Cap Liquidity Facility has not otherwise been
replaced by Continental (at Continental's expense) in accordance with the terms
of Section 3.6(c)(iv) of the Intercreditor Agreement), on such 10th day (or if
such 10th day is not a Business Day, on the next succeeding Business Day)
(which, notwithstanding Section 6(b) of the Agreement, shall be deemed to have
been effectively designated an "Early Termination Date"), Party A shall make a
termination payment to Party B in an amount equal to the Termination Amount for
such Early Termination Date for credit to the Class G-1 Above-Cap Collateral
Account (as provided in Section 3.6(f) of the Intercreditor Agreement) to be
applied as set forth in said Section 3.6(f) plus the amount of all other unpaid
sums due and payable by Party A under this Confirmation on or prior to such
Early Termination Date and upon such payment the Transaction evidenced by this
Confirmation shall terminate. The termination event set forth in this Paragraph
4 shall constitute an "Additional Termination Event" under the Agreement and
Party A shall be the sole "Affected Party" with respect thereto.
5. ADDITIONAL DEFINITIONS
For the purposes of this Confirmation, the following terms shall have the
meanings set forth below:
"BUSINESS DAY" and "LOCAL BUSINESS DAY" mean, with respect to the
Transaction set forth in this Confirmation, "Business Day" as defined in the
Intercreditor Agreement for all purposes under the Agreement.
"CREDIT DOWNGRADE PERIOD" means any continuous period during which the
short-term unsecured debt rating or issuer credit rating, as the case may be, of
Party A (or Above-Cap Liquidity Guarantor) issued by Xxxxx'x or Standard &
Poor's is lower than the applicable Threshold Rating.
"INTEREST SHORTFALL" means, on any Floating Rate Payer Payment Date, the
additional amount required in order for Party B to have sufficient funds to pay
interest (calculated at the applicable Stated Interest Rate) due on any Class
G-1 Certificates, before giving effect to any Interest Drawing to be made under
the Class G-1 Primary Liquidity Facility, any withdrawal to be made from the
Class G-1 Cash Collateral Account or the Class G-1 Above-Cap Account, or any
Policy Drawing pursuant to Section 3.7(a) of the Intercreditor Agreement.
"TERMINATION AMOUNT" means, for any Early Termination Date, the amount
obtained by solving the following formula for TA:
TA = (20.00% per annum - CR) x N x F
where
CR = the Cap Rate then in effect
N = the Notional Amount for such date
F = 1.528
For the avoidance of doubt, the Termination Amount shall not exceed $26,745,684
at any time.
6. PAYMENTS
Party A hereby irrevocably instructs Party B to make any payment due to
Party A directly to the account specified below in the name of Party A. Party B
hereby irrevocably instructs Party A to make any payments of Floating Amounts
due to Party B directly to the account(s) specified below in the name of Party
B. All payments by Party A of Floating Amounts due to Party B shall be made
prior to 4:00 p.m. (New York City time) on the date such payment is due without
set-off, deduction, withholding, netting, or any other reduction.
7. ACCOUNT DETAILS
Payments to Party A: Bankers Trust Company
New York, New York
ABA # 000000000
Account No. 00-000-000
Reference: Xxxxxxx Xxxxx Capital Services, Inc.
Dollar Swaps, New York, NY
Payments to Party B: Wilmington Trust Company
ABA # 000000000
Account No. 57767-0
Attention: Xxxxxx Xxxxx
Telephone No.: (000) 000-0000
Reference: Continental Airlines PTT,
Series 2002-1G-1
8. OFFICES
The Office of Party A for the Transaction is its office at the address
specified for notices to it in the Schedule to the Agreement. The Office of
Party B for the Transaction is its office at the address specified for notices
to it in the Schedule to the Agreement.
Party A has entered into this transaction as principal. The time at which
the above transaction was executed will be notified to Party B on request.
9. LIMITATION OF LIABILITY. The obligations of Party B under this
Confirmation, and in respect of the Transaction evidenced hereby, are expressly
limited to the extent of funds, if any, made available for such payment to
Party B under, and in accordance with, the priorities of payments set forth in
Sections 2.4(b), 3.2, 3.3 and 3.6 of the Intercreditor Agreement. No recourse
under any obligation, covenant or agreement of Party B contained in this
Confirmation shall be had against any incorporator, stockholder, agent,
affiliate, officer, employee or trustee of Party B, as such, by the enforcement
of any assessment or by any legal or equitable proceeding, by virtue of any
statute or otherwise; it being expressly agreed and understood that the
agreements of Party B contained in this Confirmation are solely trust
obligations of Party B and that no personal liability whatsoever shall attach
to or be incurred by the incorporators, stockholders, agents, affiliates,
officers, employees or trustees of Party B, as such, or any of them, under or
by reason of any of the obligations, covenants or agreements of Party B
contained in this Confirmation and that any and all personal liability of every
such incorporator, stockholder, agent, affiliate, officer, employee or trustee
of Party B for breaches by Party B of any such obligation, covenant or
agreement, which liability may arise either at common law or at equity, by
statute or constitution, or otherwise, is hereby expressly waived as a
condition of and in consideration for the execution of this Confirmation;
PROVIDED, HOWEVER, that nothing in this paragraph shall relieve any of the
foregoing persons from any liability which any such person may otherwise have
for his/her or its gross negligence or willful misconduct.
10. COUNTERPARTS. This Confirmation may be executed in any number of
counterparts and by each party hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Confirmation.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Yours sincerely,
XXXXXXX XXXXX CAPITAL SERVICES, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Confirmed as of the date first written above:
WILMINGTON TRUST COMPANY,
in its capacity as Subordination Agent on behalf
of the Trustee under the Class G-1 Trust Agreement
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
APPENDIX I
* Subject to adjustment in accordance with the
Following Business Day Convention
BEGINNING OF INTEREST PERIOD * CAP RATE
Mar 26, 2002 7.00%
May 15, 2002 7.05%
Aug 15, 2002 7.15%
Nov 15, 2002 7.15%
Feb 15, 2003 7.25%
May 15, 2003 7.25%
Aug 15, 2003 7.40%
Nov 15, 2003 7.40%
Feb 15, 2004 7.60%
May 15, 2004 7.60%
Aug 15, 2004 7.85%
Nov 15, 2004 7.85%
Feb 15, 2005 8.15%
May 15, 2005 8.15%
Aug 15, 2005 8.50%
Nov 15, 2005 8.50%
Feb 15, 2006 8.90%
May 15, 2006 8.90%
Aug 15, 2006 9.35%
Nov 15, 2006 9.35%
Feb 15, 2007 9.85%
May 15, 2007 9.85%
Aug 15, 2007 10.35%
Nov 15, 2007 10.35%
Feb 15, 2008 10.85%
May 15, 2008 10.85%
Aug 15, 2008 11.40%
Nov 15, 2008 11.40%
Feb 15, 2009 12.10%
May 15, 2009 12.10%
Aug 15, 2009 12.65%
Nov 15, 2009 12.65%
Feb 15, 2010 13.35%
May 15, 2010 13.35%
Aug 15, 2010 14.10%
Nov 15, 2010 14.10%
Feb 15, 2011 14.75%
May 15, 2011 14.75%
Aug 15, 2011 15.00%
Nov 15, 2011 15.00%
Feb 15, 2012 15.00%
May 15, 2012 15.00%
Aug 15, 2012 15.00%
Nov 15, 2012 15.00%
Feb 15, 2013 15.00%
May 15, 2013 15.00%
Aug 15, 2013 15.00%
