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EXHIBIT 4.4
AMENDED AND RESTATED
DECLARATION OF TRUST
of
UAL Corporation Capital Trust I
__________ __, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of _____________ __, 1996 by the undersigned trustees (together
with all other Persons from time to time duly appointed and serving as trustees
in accordance with the provisions of this Declaration, the "Trustees"), UAL
Corporation, a Delaware corporation, as trust sponsor ("UAL" or the "Sponsor")
and the holders from time to time of undivided interests in the assets of the
Trust (as hereinafter defined).
WHEREAS, the Sponsor and certain of the Trustees entered into a
Declaration of Trust dated as of October 15, 1996 (the "Original Declaration")
in order to establish a statutory business trust (the "Trust") under the
Business Trust Act (as hereinafter defined);
WHEREAS, the Certificate of Trust (the "Certificate of Trust") of the
Trust was filed with the office of the Secretary of State of the State of
Delaware on October 15, 1996;
WHEREAS, the Trustees and the Sponsor desire to continue the Trust
pursuant to the Business Trust Act for the purpose of, as described more fully
in Section 3.3 hereof, (i) issuing Preferred Securities (as hereinafter
defined) representing undivided beneficial interests in the assets of the Trust
in exchange for Depositary Shares ("Depositary Shares") each representing
1/1,000 of a share of 12-1/4% Series B Preferred Stock (as hereinafter defined)
of UAL pursuant to the Offer (as hereinafter defined) and delivering such
Depositary Shares to UAL in consideration for the deposit by UAL as trust
assets of Debentures (as hereinafter defined) of UAL issued under the Indenture
(as hereinafter defined) and (ii) issuing and selling Common Securities (as
hereinafter defined) representing undivided beneficial interests in the assets
of the Trust to UAL in exchange for cash and investing the proceeds thereof in
additional Debentures (as hereinafter defined) of UAL issued under the
Indenture to be held as assets of the Trust; and
NOW, THEREFORE, it being the intention of the parties hereto that the
Trust constitute a business trust under the Business Trust Act, that the
Original Declaration be amended and restated in its entirety as provided herein
and that this Declaration
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constitute the governing instrument of such business trust, the Trustees
declare that all assets referred to in clauses (i) and (ii) of the previous
recital clause contributed to or purchased by the Trust will be held in trust
for the benefit of the Holders (as hereinafter defined) from time to time, of
the Certificates (as hereinafter defined) representing undivided beneficial
interests in the assets of the Trust issued hereunder, subject to the
provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Amended and Restated Declaration of Trust (including Exhibits A, B and C
hereto (the "Exhibits")) as modified, supplemented or amended from time to
time;
(d) all references in this Declaration to Articles and Sections and
Exhibits are to Articles and Sections of and Exhibits to this Declaration
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Book Entry Interest" means a beneficial interest in a Certificate
registered in the name of a Clearing Agency or a nominee thereof, ownership and
transfers of which shall be maintained and made through book entries by such
Clearing Agency as described in Section 9.4.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions are authorized or
obligated by law or executive order to close in the Place of Payment (as such
term is defined in the Indenture).
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"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. Sec. 3801 et seq., as it may be amended from time to time.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Certificate of Trust" has the meaning set forth in the second Whereas
clause above.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as a
depository for the Preferred Securities and in whose name or in the name of a
nominee of that organization shall be registered a certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with
the Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time or any successor legislation. A reference to a specific section of the
Code refers not only to such specific section but also to any corresponding
provision of any federal tax statute enacted after the date of this
Declaration, as such specific section or corresponding provision is in effect
on the date of application of the provisions of this Declaration containing
such reference.
"Commission" means the U.S. Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1(b).
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Annex I to Exhibit C.
"Covered Person" means (i) any officer, director, shareholder,
partner, member, representative, employee or agent of the Trust or its
Affiliates, (ii) any officer, director, shareholder, employee, representative
or agent of UAL or its Affiliates and (iii) the Holders from time to time of
the Securities.
"Dealer Manager Agreement" means the dealer manager agreement entered
into among UAL, the Trust and Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Smith Barney Inc. with
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respect to, among other things, the Offer and the Preferred Securities.
"Debenture Trustee" means The First National Bank of Chicago as
trustee under the Indenture until a successor is appointed thereunder and
thereafter means any such successor trustee.
"Debentures" means the series of Junior Subordinated Debentures issued
by UAL under the Indenture to the Trust and entitled the "13 1/4% Junior
Subordinated Debentures due 2026".
"Delaware Trustee" has the meaning set forth in Section 5.1(a)(3).
"Distribution" means a distribution payable to Holders of Securities
in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Indenture
Event of Default has occurred and is continuing in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Expiration Date" has the meaning set forth in the Prospectus.
"Fiscal Year" has the meaning specified in Section 11.1.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means any Trustee, any Affiliate of any Trustee,
any officers, directors, shareholders, members, partners, employees,
representatives or agents of any Trustee, or any employee or agent of the Trust
or its Affiliates.
"Indenture" means the Indenture dated as of [______________], 1996
between UAL and the Debenture Trustee as supplemented by the board resolution,
supplemental indenture or officers' certificate pursuant to which the
Debentures are to be issued.
"Indenture Event of Default" means any event or condition defined as
an "Event of Default" with respect to the Debentures under Section 5.1 of the
Indenture has occurred and is continuing.
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"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.1(c) and having the duties set forth for
the Institutional Trustee herein.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Legal Action" has the meaning specified in Section 3.6(g).
"Liquidation Distribution" has the meaning set forth in Exhibits B and
C hereto establishing the terms of the Securities.
"Majority in liquidation amount of the Securities" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 5 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holder(s) of outstanding Preferred Securities or Common Securities
each voting separately as a class, who are the record owners of a relevant
class of Securities whose liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined)
represents more than 50% of the liquidation amount of all outstanding
Securities of such class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Exhibits B and C hereto.
"Offer" means the offer by the Trust to exchange Preferred Securities
of the Trust for outstanding Depositary Shares of UAL in consideration for the
deposit to the Trust by UAL as trust assets, of Debentures issued under the
Indenture, all as described in the Prospectus.
"Original Declaration" has the meaning set forth in the first recital
clause above.
"Paying Agent" has the meaning specified in Section 3.8(g).
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
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"Preferred Guarantee" means the Guarantee Agreement dated as of
[___________], 1996 of UAL in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.1(b).
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a definitive certificate in
fully registered form representing a Preferred Security substantially in the
form of Annex I to Exhibit B.
"Prospectus" means the Prospectus dated November 20, 1996 relating to
the Offer.
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both such Regular Trustees.
"Regular Trustee" means any Trustee other than the Institutional
Trustee and the Delaware Trustee.
"Related Party" means any direct or indirect wholly owned subsidiary
of UAL or any other Person which owns, directly or indirectly, 100% of the
outstanding voting securities of UAL.
"Resignation Request" has the meaning specified in Section 5.2(d).
"Responsible Officer" means, with respect to the Institutional
Trustee, the chairman of the board of directors, the president, any
vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the Institutional Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act or any
successor rule thereunder.
"Securities" means the Common Securities and the Preferred Securities.
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"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Series B Preferred Stock" means the 12-1/4% Series B Preferred Stock
of UAL.
"Special Event" has the meaning set forth in the terms of the
Securities as set forth in Exhibits B and C hereto.
"Sponsor" or "UAL" means UAL Corporation, a Delaware corporation, or
any successor entity in a merger or consolidation, in its capacity as sponsor
of the Trust.
"Successor Delaware Trustee" has the meaning specified in Section
5.2(b)(ii).
"Successor Institutional Trustee" means a successor Trustee possessing
the qualifications to act as Institutional Trustee under Section 5.1(c).
"10% in liquidation amount of the Securities" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 5 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holder(s) of outstanding Preferred Securities or Common Securities,
voting separately as a class, who are the record owners of a relevant class of
Securities whose liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined)
represents 10% or more of the liquidation amount of all outstanding Securities
of such class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
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"UAL Corporation Capital Trust" shall mean any statutory business
trust created under the laws of the State of Delaware specified in the
applicable board resolution, supplemental indenture or officers' certificate
establishing a particular series of debt securities pursuant to Section 3.1 of
the Indenture.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to
the extent applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control;
(c) the Institutional Trustee, to the extent permitted by applicable
law and/or the rules and regulations of the Commission, shall be the only
Trustee which is a trustee for the purposes of the Trust Indenture Act; and
(d) the application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Preferred Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Institutional Trustee with such information as is
required under Section 312(a) of the Trust Indenture Act at the times and in
the manner provided in Section 312(a); and
(b) the Institutional Trustee shall comply with its obligations under
Sections 310(b), 311 and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
Within 60 days after May 15 of each year, the Institutional Trustee
shall provide to the Holders of the Securities such reports, if any, as are
required by Section 313 of the Trust Indenture Act in the form, in the manner
and at the times provided by Section 313 of the Trust Indenture Act. The
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Institutional Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee, the Commission and the Holders of
the Securities, as applicable, such documents, reports and information, if any,
as required by Section 314(a)(1)-(3) of the Trust Indenture Act and the
compliance certificates required by Section 314(a)(4) and (c) of the Trust
Indenture Act, any such certificates to be provided in the form, in the manner
and at the times required by Section 314(a)(4) and (c) of the Trust Indenture
Act (provided that any certificate to be provided pursuant to Section 314(a)(4)
of the Trust Indenture Act shall be provided within 120 days of the end of each
Fiscal Year).
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration which relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given pursuant to Section 314(c) shall
comply with Section 314(e) of the Trust Indenture Act.
SECTION 2.6 Events of Default; Waiver.
(a) Subject to Section 2.6(c), Holders of Preferred Securities may by
vote of at least a Majority in liquidation amount of the Preferred Securities,
voting separately as a class, (A) in accordance with the terms of the Preferred
Securities, direct the time, method and place of conducting any proceeding for
any remedy available to the Institutional Trustee, or exercising any trust or
power conferred upon the Institutional Trustee, or (B) on behalf of all Holders
of Preferred Securities waive any past Event of Default in respect of the
Preferred Securities and its consequences, provided that if the Event of
Default arises out of an Indenture Event of Default:
(i) which is not waivable under the Indenture, the Event of
Default under this Declaration shall also not be waivable; or
(ii) which requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority in
principal amount of the Debentures, or (2) each holder of Debentures, the Event
of Default under this Declaration
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may only be waived by, in the case of clause (1) above, the vote of Holders of
Preferred Securities representing such specified percentage of the aggregate
liquidation amount of the Preferred Securities, or, in the case of clause (2)
above, each Holder of Preferred Securities.
Upon such waiver, any such default shall cease to exist, and any Event of
Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Preferred Securities or impair any right consequent thereon.
(b) Subject to Section 2.6(c), Holders of Common Securities may by
vote of at least a Majority in liquidation amount of the Common Securities,
voting separately as a class, (A) in accordance with the terms of the Common
Securities, direct the time, method and place of conducting any proceeding for
any remedy available to the Institutional Trustee, or exercising any trust or
power conferred upon the Institutional Trustee, or (B) on behalf of all Holders
of Common Securities, waive any past Event of Default with respect to the
Common Securities and its consequences, provided that, if the Event of Default
arises out of an Indenture Event of Default:
(i) which is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have waived such Event of
Default under the Declaration as provided below, the Event of Default under
this Declaration shall also not be waivable; or
(ii) which requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority in
principal amount of the Debentures or (2) each holder of Debentures, except
where the holders of the Common Securities are deemed to have waived such Event
of Default under this Declaration as provided below, the Event of Default under
this Declaration may only be waived by, in the case of clause (1) above, the
vote of Holders of Common Securities representing such specified percentage of
the aggregate liquidation amount of the Common Securities, or, in the case of
clause (2) above, each Holder of Common Securities; and provided, further that,
each Holder of Common Securities will be deemed to have waived any Event of
Default with respect to the Common Securities and its consequences until all
Events of Default with respect to the Preferred Securities have been cured,
waived by the Holders of Preferred Securities as provided in this Declaration
or otherwise eliminated and, until all Events of Default with respect to the
Preferred Securities have been so cured, waived or otherwise eliminated, the
Institutional Trustee will be deemed to be acting solely on behalf of the
Holders of the Preferred Securities and only the Holders of the Preferred
Securities will have the right
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to direct the Institutional Trustee in accordance with the terms of this
Declaration or the Securities. If any Event of Default with respect to the
Preferred Securities is waived by the Holders of Preferred Securities as
provided in this Declaration, the Holders of Common Securities agree that such
waiver shall also constitute the waiver of such Event of Default with respect
to the Common Securities for all purposes under this Declaration without any
further act, vote or consent of the Holders of the Common Securities. Subject
to the foregoing provisions of this Section 2.6(b), upon such waiver, any such
default shall cease to exist and any Event of Default with respect to the
Common Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) The right of any Holder of Securities to receive payment of
Distributions on the Securities in accordance with this Declaration and the
terms of the Securities set forth in Exhibits B and C on or after the
respective payment dates therefor, or to institute suit for the enforcement of
any such payment on or after such payment dates, shall not be impaired without
the consent of each such Holder.
(d) As provided in the terms of the Securities set forth in Exhibits
B and C hereto, a waiver of an Indenture Event of Default by the Institutional
Trustee at the written direction of the Holders of the Preferred Securities
constitutes a waiver of the corresponding Event of Default under this
Declaration in respect of the Securities.
SECTION 2.7 Disclosure of Information.
The disclosure of information as to the names and addresses of the
Holders of the Securities in accordance with Section 312 of the Trust Indenture
Act, regardless of the source from which such information was derived, shall
not be deemed to be a violation of any existing law, or any law hereafter
enacted which does not specifically refer to Section 312 of the Trust Indenture
Act, nor shall the Institutional Trustee be held accountable by reason of
mailing any material pursuant to a request made under Section 312(b) of the
Trust Indenture Act.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust continued by this Declaration is named "UAL Corporation
Capital Trust I" as such name may be modified from
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time to time by the Regular Trustees following written notice to the Holders of
Securities. The Trust's activities may be conducted under the name of the
Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o UAL
Corporation, 1200 East Algonquin Road, Elk Grove Township, Illinois 60007,
telephone number (847) 700-4000. Upon ten days' written notice to the Holders,
the Regular Trustees may change the location of the Trust's principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are: (a)(i) to issue
Preferred Securities in exchange for Depositary Shares pursuant to the Offer
and to deliver such Depositary Shares to UAL in consideration for the deposit
to the Trust by UAL as trust assets, of Debentures issued under the Indenture
having an aggregate principal amount equal to the aggregate liquidation amount
of the Depositary Shares so delivered; (ii) to enter into such agreements and
arrangements as may be necessary in connection with the Offer and to take all
action, and exercise such discretion, as may be necessary or desirable in
connection with the Offer and to file such registration statements or make such
other filings under the Securities Act, the Exchange Act or state securities or
"Blue Sky" laws as may be necessary or desirable in connection with the Offer
and the issuance of the Preferred Securities; and (iii) to issue and sell
Common Securities to UAL for cash and use the proceeds of such sale to purchase
as trust assets an equal aggregate principal amount of Debentures issued under
the Indenture; and (b) except as otherwise limited herein, to engage in only
those other activities necessary or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge
any of its assets or, at any time while the Securities are outstanding,
otherwise undertake (or permit to be undertaken) any activity that would result
in or cause the Trust to be treated as anything other than a grantor trust for
United States federal income tax purposes.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Institutional Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing
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with the Trustees acting on behalf of the Trust, no Person shall be required to
inquire into the authority of the Trustees to bind the Trust. Persons dealing
with the Trust are entitled to rely conclusively on the power and authority of
the Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Unless otherwise provided in this Declaration, legal title to all
assets of the Trust shall be vested in the Trust. The Holders of Certificates
shall not have legal title to any part of the assets of the Trust, but shall
have an individual undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, authority and
duty to cause the Trust, and shall cause the Trust, to engage in the following
activities:
(a) to issue Preferred Securities and Common Securities, in each case
in accordance with this Declaration; provided, however, that the Trust may
issue no more than one series of Preferred Securities and no more than one
series of Common Securities, and, provided further, there shall be no interests
in the Trust other than the Securities and the issuance of Securities shall be
limited to a one-time, simultaneous issuance of both Preferred Securities and
Common Securities;
(b) in connection with the Offer and the issuance of the Preferred
Securities, at the direction of the Sponsor, to effect or cause to be effected
the filings, and to execute or cause to be executed, the documents, set forth
in Section 3.11;
(c) to acquire as trust assets Debentures upon consummation of the
Offer in connection with the exchange of Preferred Securities for Depositary
Shares pursuant to the Offer and to acquire as trust assets additional
Debentures with the proceeds of the sale of the Common Securities;
(d) to cause the Trust to enter into the Dealer Manager Agreement and
such other agreements and arrangements as may be necessary or desirable in
connection with the Offer and the consummation thereof, and to take all action,
and exercise all discretion, as may be necessary or desirable in connection
with the Offer or the consummation thereof;
(e) to give the Sponsor and the Institutional Trustee prompt written
notice of the occurrence of a Special Event, provided that the Regular Trustees
shall consult with the Sponsor and the Institutional Trustee before taking or
refraining to take any Ministerial Action in relation to a Special Event;
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(f) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including for the
purposes of Section 316(c) of the Trust Indenture Act and with respect to
Distributions, voting rights, redemptions, and exchanges, and to issue relevant
notices to Holders of the Preferred Securities and Common Securities as to such
actions and applicable record dates;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(c), the Institutional Trustee
has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate to the Institutional Trustee required by
Section 314(a)(4) of the Trust Indenture Act, which certificate may be executed
by any Regular Trustee;
(k) to incur expenses which are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities, the Regular Trustees hereby initially
appointing [____________] for such purposes;
(m) to take all actions and perform such duties as may be required of
the Regular Trustee pursuant to the terms of the Securities set forth in
Exhibits B and C hereto;
(n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action which may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Securities or
to enable the Trust to effect the purposes for which the Trust has been
created;
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(p) to take all action, not inconsistent with this Declaration or
with applicable law, which the Regular Trustees determine in their discretion
to be reasonable and necessary or desirable in carrying out the activities of
the Trust as set out in this Section 3.6, in order that:
(i) the Trust will not be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) the Trust will not be classified for United States
federal income tax purposes as an association taxable as a corporation or a
partnership and will be treated as a grantor trust for United States federal
income tax purposes; and
(iii) the Trust will comply with any requirements imposed by
any taxing authority on holders of instruments treated as indebtedness for
United States federal income tax purposes;
provided that such action does not adversely affect the interests of Holders;
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust; and
(r) subject to the requirements of Rule 3a-5 and Section 317(b) of
the Trust Indenture Act, to appoint one or more Paying Agents in addition to
the Institutional Trustee.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner which is consistent with the purposes and functions of
the Trust set out in Section 3.3 and the Regular Trustees shall not take any
action which is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers nor any of the authority of the Institutional Trustee set forth in
Section 3.8.
SECTION 3.7 Prohibition of Actions by Trust and Trustees.
The Trust shall not, and the Trustees (including the Institutional
Trustee) shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Trustees (including the Institutional Trustee) shall cause the Trust
not to:
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(a) invest any proceeds received by the Trust from holding the
Debentures but shall promptly distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any investments, other than investments represented by the
Debentures;
(e) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(f) issue any securities or other evidences of beneficial ownership
of, or beneficial interests in, the Trust other than the Securities;
(g) incur any indebtedness for borrowed money; or
(h) (i) direct the time, method and place of exercising any trust or
power conferred upon the Debenture Trustee with respect to the Debentures, (ii)
waive any past default that is waivable under Section 5.7 of the Indenture,
(iii) exercise any right to rescind or annul any declaration that the principal
of all of the Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Debentures, in
each case where such consent shall be required, unless in the case of this
clause (h) the Institutional Trustee shall have received an unqualified opinion
of nationally recognized independent tax counsel recognized as expert in such
matters to the effect that such action will not cause the Trust to be
classified for United States federal income tax purposes as an association
taxable as a corporation or partnership and that the Trust will continue to be
classified as a grantor trust for United States federal income tax purposes.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
(a) The Institutional Trustee shall:
(i) on the receipt of payments of funds made in respect of
the Debentures held by the Trust, without any further acts of the Institutional
Trustee or the Regular Trustees, promptly make payments to the Holders of the
Preferred Securities and Common Securities in accordance with Section 6.1.
Funds held in the Trust may be held uninvested, and without liability for
interest thereon, until disbursed in accordance with this Declaration;
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(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect promptly the redemption of the Preferred
Securities and the Common Securities to the extent the Debentures are
redeemed or mature;
(iii) upon notice of distribution issued by the Regular
Trustees in accordance with the terms of the Preferred Securities and the
Common Securities, engage in such ministerial activities as shall be necessary
or appropriate to effect promptly the distribution pursuant to terms of the
Securities of Debentures to Holders of Securities upon the occurrence of a
Special Event; and
(iv) have the legal power to exercise all of the rights,
powers and privileges of a holder of the Debentures under the Indenture and, if
an Event of Default occurs and is continuing, the Institutional Trustee,
subject to Section 2.6(b), shall for the benefit of the Holders of the
Securities, enforce its rights as holder of the Debentures under the Indenture,
subject to the rights of the Holders of the Preferred Securities pursuant to
the terms of this Declaration and the Trust Indenture Act.
(b) The Institutional Trustee shall take all actions and perform such
duties as may be specifically required of the Institutional Trustee pursuant to
the terms of the Securities set forth in Exhibits B and C hereto.
(c) The Institutional Trustee shall take any Legal Action which
arises out of or in connection with an Event of Default or the Institutional
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act.
(d) All moneys and all Debentures held by the Trust will not be
subject to any right, charge, security interest, lien or claim of any kind in
favor of, or for the benefit of the Institutional Trustee or its agents or
their creditors.
(e) The Institutional Trustee shall, within 90 days after the
occurrence of a default with respect to the Securities, transmit by mail, first
class postage prepaid, to the Holders of the Securities, as their names and
addresses appear upon the register, notice of all defaults with respect to the
Securities known to the Institutional Trustee, unless such defaults shall have
been cured before the giving of such notice (the term "defaults" for the
purposes of this Section 3.8(e) being hereby defined to be an Indenture Event
of Default, not including any periods of grace provided for in the Indenture
and irrespective of the giving of any notice provided therein); provided that,
except in the case of default in the payment of the principal of (or premium,
if any) or interest on any of the Debentures, the Institutional Trustee shall
be protected in withholding such
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notice if and so long as the board of directors, the executive committee, or a
trust committee of directors and/or Responsible Officers, of the Institutional
Trustee in good faith determine that the withholding of such notice is in the
interests of the Holders of the Securities. The Institutional Trustee shall
not be deemed to have knowledge of any default, except (i) a default in the
payment of principal, premium or interest on the Debentures or (ii) any default
as to which the Institutional Trustee shall have received written notice or a
Responsible Officer charged with the administration of this Declaration shall
have obtained written notice.
(f) The Institutional Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the proceeds
thereof distributed to the Holders of Securities pursuant to the terms of the
Securities; or
(ii) a Successor Institutional Trustee has been appointed and
accepted that appointment in accordance with Article V.
(g) The Institutional Trustee shall act or appoint another Person to
act as paying agent in respect of the Securities and, subject to Section
3.6(r), may authorize one or more Persons (each, a "Paying Agent") to pay
Distributions, redemption payments or liquidation payments on behalf of the
Trust with respect to the Preferred Securities. Any such Paying Agent shall
comply with Section 317(b) of the Trust Indenture Act. Any Paying Agent may be
removed by the Institutional Trustee, after consultation with the Regular
Trustees, at any time and a successor Paying Agent or additional Paying Agents
may be appointed at any time by the Institutional Trustee, subject to Section
3.6(r). The Institutional Trustee hereby initially appoints [___________] as
the Paying Agent.
(h) The Institutional Trustee shall give prompt written notice to the
Holders of the Securities of any notice received by it from UAL of its election
to defer payments of interest on the Debentures by extending the interest
payment period with respect thereto.
(i) Subject to this Section 3.8, the Institutional Trustee shall have
none of the powers or the authority of the Regular Trustees set forth in
Section 3.6.
(j) The Institutional Trustee shall exercise the powers, duties and
rights set forth in this Section 3.8 and Section 3.10 in a manner which is
consistent with the purposes and functions of the Trust set out in Section 3.3
and the Institutional Trustee
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shall not take any action which is inconsistent with the purposes and functions
of the Trust set forth in Section 3.3.
SECTION 3.9 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.1(a)(3), the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Regular Trustees and the Institutional Trustee
described in this Declaration. Except as set forth in Section 5.1(a)(3), the
Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Business Trust Act. No
implied covenants or obligations shall be read into this Declaration against
the Delaware Trustee.
SECTION 3.10 Certain Rights and Duties of the Institutional Trustee.
(a) The Institutional Trustee, before the occurrence of an Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration, and no implied covenants shall be read into this Declaration
against the Institutional Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6), the Institutional
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Institutional Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Institutional
Trustee shall be determined solely by the express provisions of this
Declaration, and the Institutional Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Declaration, and no implied covenants or obligations shall be read into
this Declaration against the Institutional Trustee; and
(B) in the absence of bad faith on the part of the
Institutional Trustee, the Institutional Trustee may conclusively rely, as to
the truth of the statements and the
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correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Institutional Trustee and conforming to the
requirements of this Declaration; but in the case of any such certificates or
opinions that by any provision hereof are specifically required to be furnished
to the Institutional Trustee, the Institutional Trustee shall be under a duty
to examine the same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Institutional Trustee, unless it shall be proved that the Institutional
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders as provided herein relating to the
time, method and place of conducting any proceeding for any remedy available to
the Institutional Trustee hereunder or under the Indenture, or exercising any
trust or power conferred upon the Institutional Trustee under this Declaration;
and
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable ground for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Declaration or adequate indemnity against
such risk or liability is not reasonably assured to it.
(c) Subject to the provisions of Section 3.10(a) and (b):
(i) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part and, if the Trust is excluded from
the definition of Investment Company solely by means of Rule 3a-5, subject to
the requirements of Rule 3a-5, request and rely upon a certificate, which shall
comply with the provisions of Section 314(e) of the Trust Indenture Act, signed
by any two of the Regular Trustees or by an authorized officer of the Sponsor,
as the case may be;
(ii) The Institutional Trustee (A) may consult with counsel
of its choice (which may be counsel to the Sponsor or any of its Affiliates and
may include any of its employees) selected by it in good faith and with due
care and the written advice or
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opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon and in
accordance with such advice and opinion and (B) shall have the right at any
time to seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction;
(iii) The Institutional Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Institutional Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it in good faith and with due care;
(iv) The Institutional Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Declaration at the
request or direction of any Holders, unless such Holders shall have offered to
the Institutional Trustee reasonable security and indemnity against the costs,
expenses (including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction; provided that
nothing contained in this clause (iv) shall relieve the Institutional Trustee
of the obligation, upon the occurrence of an Event of Default (which has not
been cured or waived) to exercise such of the rights and powers vested in it by
this Declaration, and to use the same degree of care and skill in this
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs; and
(v) Any action taken by the Institutional Trustee or its
agents hereunder shall bind the Holders of the Securities and the signature of
the Institutional Trustee or its agents alone shall be sufficient and effective
to perform any such action; and no third party shall be required to inquire as
to the authority of the Institutional Trustee to so act, or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Institutional Trustee's or its
agent's taking such action.
SECTION 3.11 Registration Statement and Related Matters.
In accordance with the Original Declaration, UAL and the Trustees have
authorized and directed, and hereby confirm the authorization of, UAL, as the
sponsor of the Trust, (i) to file with the Commission and execute, in each case
on behalf of the Trust, (a) the Registration Statement on Form S-4 (File No.
333-14245) (the "1933 Act Registration Statement") and any pre-effective or
post-effective amendments to such Registration Statement, relating to the
registration under the Securities Act of the Preferred Securities of the Trust,
(b) a Registration Statement on Form 8-A or other appropriate form (the "1934
Act
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Registration Statement") (including all pre-effective and post-effective
amendments thereto) relating to the registration of the Preferred Securities of
the Trust under Section 12(b) of the Exchange Act and (c) an Issuer Tender
Offer Statement on Schedule 13E-4 and any other tender offer statement required
to be filed by the Trust with the Commission (including, if necessary, Schedule
14D-1) relating to the Offer (collectively, the "Tender Offer Schedules") and
any amendment or supplement thereto; (ii) to file with the New York Stock
Exchange ("NYSE") and execute on behalf of the Trust a listing application and
all other applications, statements, certificates, agreements and other
instruments as shall be necessary or desirable to cause the Preferred
Securities to be listed on the NYSE; (iii) to file and execute on behalf of the
Trust such applications, reports, surety bonds, irrevocable consents,
appointments of attorney for service of process and other papers and documents
as shall be necessary or desirable to register the Preferred Securities under
the securities or "Blue Sky" laws of such jurisdictions as UAL, on behalf of
the Trust, may deem necessary or desirable and (iv) to execute on behalf of the
Trust the Dealer Manager Agreement, relating to the Offer, substantially in the
form included as Exhibit 1 to the 1933 Act Registration Statement. In the
event that any filing referred to in clauses (i)-(iii) above is required by the
rules and regulations of the Commission, the NYSE or state securities or "Blue
Sky" laws, to be executed on behalf of the Trust by the Trustees, the Regular
Trustees, in their capacities as Trustees of the Trust, are hereby authorized
and directed to join in any such filing and to execute on behalf of the Trust
any and all of the foregoing, it being understood that the Institutional
Trustee and the Delaware Trustee, in their capacities as Trustees of the Trust,
shall not be required to join in any such filing or execute on behalf of the
Trust any such document unless required by the rules and regulations of the
Commission, the NYSE or state securities or "Blue Sky" laws. In connection
with all of the foregoing, each Trustee, solely in its capacity as Trustee of
the Trust, have constituted and appointed, and hereby confirm the appointment
of, UAL Corporation as his, her or its, as the case may be, true and lawful
attorney-in-fact, and agent, with full power of substitution and
resubstitution, for such Trustee or in such Trustee's name, place and stead, in
any and all capacities, to sign any and all amendments (including
post-effective amendments) to the 1933 Act Registration Statement, the 1934 Act
Registration Statement and the Tender Offer Schedules and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as such Trustee might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or its substitute, shall
do or cause to be done by virtue hereof.
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SECTION 3.12 Filing of Amendments to Certificate of Trust.
The Certificate of Trust as filed with the Secretary of State of the
State of Delaware on October 15, 1996 is attached hereto as Exhibit A. On or
after the date of execution of this Declaration, the Trustees shall cause the
filing with the Secretary of State of the State of Delaware of such amendments
to the Certificate of Trust as the Trustees shall deem necessary or desirable.
SECTION 3.13 Execution of Documents by Regular Trustees.
Unless otherwise determined by the Regular Trustees and except as
otherwise required by the Business Trust Act with respect to the Certificate of
Trust or otherwise, a majority of, or if there are only two, both of, the
Regular Trustees are authorized to execute and deliver on behalf of the Trust
any documents which the Regular Trustees have the power and authority to
execute or deliver pursuant to this Declaration.
SECTION 3.14 Trustees Not Responsible for Recitals or Issuance of
Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.15 Duration of Trust.
The Trust, absent termination pursuant to the provisions of Article
VIII hereof, shall have existence until December 31, 2026.
ARTICLE IV
SPONSOR
SECTION 4.1 Purchase of Common Securities by Sponsor.
The Sponsor will purchase Common Securities issued by the Trust at the
same time as the Preferred Securities are issued in exchange for Depositary
Shares pursuant to the Offer, such purchase to be in an amount equal to 3% of
the sum of (i) the aggregate stated liquidation amount of the Preferred
Securities issued in exchange for Depositary Shares pursuant to the Offer and
(ii) the proceeds derived from the sale of the Common Securities.
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SECTION 4.2 Expenses.
(a) The Sponsor shall be responsible for and shall pay for all debts
and obligations (other than with respect to the Securities) and all costs and
expenses of the Trust (including, but not limited to, costs and expenses
relating to the organization of the Trust, the issuance of the Preferred
Securities pursuant to the Offer, the fees and expenses (including reasonable
counsel fees and expenses) of the Trustees (including any amounts payable under
Article X), the costs and expenses relating to the operation of the Trust,
including, without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the disposition of
Trust assets).
(b) The Sponsor will pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust.
(c) The Sponsor's obligations under this Section 4.2 shall be for the
benefit of, and shall be enforceable by, any Person to whom any such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice hereof. Any such Creditor may enforce the
Sponsor's obligations under this Section 4.2 directly against the Sponsor and
the Sponsor irrevocably waives any right or remedy to require that any such
Creditor take any action against the Trust or any other Person before
proceeding against the Sponsor. The Sponsor agrees to execute such additional
agreements as may be necessary or desirable in order to give full effect to the
provisions of this Section 4.2.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees; Qualifications.
(a) The number of Trustees initially shall be five (5). At any time
(i) before the issuance of the Securities, the Sponsor may, by written
instrument, increase or decrease the number of, and appoint, remove and replace
the, Trustees, and (ii) after the issuance of the Securities, the number of
Trustees may be increased or decreased solely by, and Trustees may be
appointed, removed or replaced solely by, vote of Holders of Common Securities
representing a Majority in liquidation amount of the Common Securities voting
as a class; provided that in any case:
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(1) the number of Trustees shall be at least five (5) unless the
Trustee that acts as the Institutional Trustee also acts as the Delaware
Trustee, in which case the number of Trustees shall be at least three (3);
(2) at least a majority of the Trustees shall at all times be
officers, directors or employees of UAL;
(3) if required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be either a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware and otherwise is permitted
to act as a Trustee hereunder under the laws of the State of Delaware, except
that if the Institutional Trustee has its principal place of business in the
State of Delaware and otherwise is permitted to act as a Trustee hereunder
under the laws of the State of Delaware, then the Institutional Trustee shall
also be the Delaware Trustee and Section 3.9 shall have no application; and
(4) there shall at all times be an Institutional Trustee hereunder
which shall satisfy the requirements of Section 5.1(c).
Each Trustee shall be either a natural person at least 21 years of age or a
legal entity which shall act through one or more duly appointed
representatives.
(b) The initial Regular Trustees shall be:
[_______________]
[_______________]
[_______________]
c/o UAL Corporation
1200 East Algonquin Road
Elk Grove Township, Illinois 60007
(c) There shall at all times be one Trustee which shall act as
Institutional Trustee. In order to act as Institutional Trustee hereunder,
such Trustee shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or of
the District of Columbia, or a Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such Person publishes
reports of condition at least annually, pursuant to law or to the
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requirements of the supervising or examining authority referred to above, then,
for the purposes of this Section 5.1(c)(ii), the combined capital and surplus
of such Person shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.
If at any time the Institutional Trustee shall cease to satisfy the
requirements of clauses (i)-(ii) above, the Institutional Trustee shall
immediately resign in the manner and with the effect set out in Section 5.2(d).
If the Institutional Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the
Institutional Trustee and the Holders of the Common Securities (as if such
Holders were the obligor referred to in Section 310(b) of the Trust Indenture
Act) shall in all respects comply with the provisions of Section 310(b) of the
Trust Indenture Act. The Preferred Guarantee shall be deemed to be specifically
described in this Declaration for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
The initial Trustee which shall serve as the Institutional Trustee is
The First National Bank of Chicago, whose address is as set forth in Section
14.1(b).
(d) The initial Trustee which shall serve as the Delaware Trustee is
First Chicago Delaware Inc., whose address is as set forth in Section 14.1(c).
(e) Any action taken by Holders of Common Securities pursuant to this
Article V shall be taken at a meeting of Holders of Common Securities convened
for such purpose or by written consent as provided in Section 12.2.
(f) No amendment may be made to this Section 5.1 which would change
any rights with respect to the number, existence or appointment and removal of
Trustees, except with the consent of each Holder of Common Securities.
SECTION 5.2 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.2(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of the Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of the Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Securities voting as
a class.
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(b) (i) The Trustee that acts as Institutional Trustee shall not be
removed in accordance with Section 5.2(a) until a Successor Institutional
Trustee possessing the qualifications to act as Institutional Trustee under
Section 5.1(c) has been appointed and has accepted such appointment by written
instrument executed by such Successor Institutional Trustee and delivered to
the Regular Trustees, the Sponsor and the Institutional Trustee being removed;
and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.2(a) until a successor Trustee possessing
the qualifications to act as Delaware Trustee under Section 5.1(a)(3) (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees, the Sponsor and the Delaware Trustee
being removed.
(c) A Trustee appointed to office shall hold office until his or her
successor shall have been appointed or until his or her death, removal or
resignation.
(d) Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument (a "Resignation Request") in writing
signed by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided however, that:
(i) no such resignation of the Trustee that acts as the
Institutional Trustee shall be effective until a Successor Institutional
Trustee possessing the qualifications to act as Institutional Trustee under
Section 5.1(c) has been appointed and has accepted such appointment by
instrument executed by such Successor Institutional Trustee and delivered to
the Trust, the Sponsor and the resigning Institutional Trustee; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(e) If no Successor Institutional Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.2 within 60 days after delivery to the Sponsor and the Trust of a
Resignation Request, the resigning Institutional Trustee or Delaware Trustee
may petition any court of competent jurisdiction for appointment of a Successor
Institutional Trustee or Successor Delaware Trustee. Such court may thereupon
after such notice, if any, as it may
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deem proper and prescribe, appoint a Successor Institutional Trustee or
Successor Delaware Trustee, as the case may be.
SECTION 5.3 Vacancies Among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1 or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by a majority of the Regular Trustees
shall be conclusive evidence of the existence of such vacancy. The vacancy
shall be filled with a Trustee appointed in accordance with the requirements of
this Article V.
SECTION 5.4 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee, or
any one of them, shall not operate to annul the Trust. Whenever a vacancy in
the number of Regular Trustees shall occur until such vacancy is filled as
provided in this Article V, the Regular Trustees in office, regardless of their
number, shall have all the powers granted to the Regular Trustees and shall
discharge all the duties imposed upon the Regular Trustees by this Declaration.
SECTION 5.5 Meetings.
Meetings of the Regular Trustees shall be held from time to time upon
the call of any Trustee. Regular meetings of the Regular Trustees may be held
at a time and place fixed by resolution of the Regular Trustees. Notice of any
in-person meetings of the Regular Trustees shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 48 hours before such meeting. Notice of any telephonic
meetings of the Regular Trustees or any committee thereof shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than 24 hours before a meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of a
Regular Trustee at a meeting shall constitute a waiver of notice of such
meeting except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Declaration, any action of the Regular Trustees may be taken at a meeting
by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees.
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SECTION 5.6 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any registration statement or amendment
thereto or other document or schedule filed with the Commission or making any
other governmental filing (including, without limitation filings referred to in
Section 3.11).
(b) The Regular Trustees shall have power to delegate from time to
time to such of their number the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Regular
Trustees or otherwise as the Regular Trustees may deem expedient, to the extent
such delegation is not prohibited by applicable law or contrary to the
provisions of the Trust, as set forth herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive periodic distributions, redemption payments and
liquidation distributions in accordance with the applicable terms of the
relevant Holder's Securities ("Distributions"). Distributions shall be made to
the Holders of Preferred Securities and Common Securities in accordance with
the terms of the Securities as set forth in Exhibits B and C hereto. If and to
the extent that UAL makes a payment of interest, premium and principal on the
Debentures held by the Institutional Trustee (the amount of any such payment
being a "Payment Amount"), the Institutional Trustee shall and is directed to
promptly make a Distribution of the Payment Amount to Holders in accordance
with the terms of the Securities as set forth in Exhibits B and C hereto.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall issue on behalf of the Trust
securities in fully registered form representing undivided beneficial interests
in the assets of the Trust in accordance with Section 7.1(b) and for the
consideration specified in Section 3.3.
(b) The Regular Trustees shall issue on behalf of the Trust one class
of preferred securities representing undivided
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beneficial interests in the assets of the Trust having such terms as are set
forth in Exhibit B (the "Preferred Securities") which terms are incorporated by
reference in, and made a part of, this Declaration as if specifically set forth
herein, and one class of common securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Exhibit C (the "Common Securities") which terms are incorporated by reference
in, and made a part of, this Declaration as if specifically set forth herein.
The Trust shall have no securities or other interests in the assets of the
Trust other than the Preferred Securities and the Common Securities.
(c) The Certificates shall be signed on behalf of the Trust by the
Regular Trustees (or if there are more than two Regular Trustees by any two of
the Regular Trustees). Such signatures may be the manual or facsimile
signatures of the present or any future Regular Trustee. Typographical and
other minor errors or defects in any such reproduction of any such signature
shall not affect the validity of any Security. In case any Regular Trustee of
the Trust who shall have signed any of the Certificates shall cease to be such
Regular Trustee before the Certificate so signed shall be delivered by the
Trust, such Certificate nevertheless may be delivered as though the person who
signed such Certificate had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons as, at the
actual date of the execution of such Security, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of the
Declaration any such person was not such a Regular Trustee. Certificates shall
be printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which Securities may be listed, or to
conform to usage. Pending the preparation of definitive Certificates, the
Regular Trustees on behalf of the Trust may execute temporary Certificates
(printed, lithographed or typewritten), substantially in the form of the
definitive Certificates in lieu of which they are issued, but with such
omissions, insertions and variations as may be appropriate for temporary
Certificates all as may be determined by the Regular Trustees. Each temporary
Certificate shall be executed by the Regular Trustees on behalf of the Trust
upon the same conditions and in substantially the same manner, and with like
effect, as definitive Certificates. Without unnecessary delay, the Regular
Trustees on behalf of the Trust will execute and furnish definitive
Certificates and thereupon any or all temporary Certificates may be surrendered
to the transfer agent and registrar in exchange therefor (without charge to the
Holders).
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Each Certificate whether in temporary or definitive form shall be countersigned
by the manual signature of an authorized signatory of the Person acting as
registrar and transfer agent for the Securities, which shall initially be
[________________].
(d) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(e) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(f) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and
shall be bound by, this Declaration.
(g) Upon issuance of the Securities as provided in this Declaration,
the Regular Trustees on behalf of the Trust shall return to UAL the $10
constituting initial trust assets as set forth in the Original Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
The Trust shall terminate:
(i) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been
paid to the Holders of Securities in accordance with the terms of the
Securities; or
(ii) when all of the Debentures shall have been distributed
to the Holders of Securities in exchange for all of the Securities in
accordance with the terms of the Securities; or
(iii) upon the expiration of the term of the Trust as set
forth in Section 3.15, and a certificate of cancellation is filed by the
Trustees with the Secretary of State of the State of Delaware; or
(iv) upon the bankruptcy of UAL or the Trust; or
(v) upon the filing of a certificate of dissolution or
the equivalent with respect to UAL, the filing of a certificate of cancellation
with respect to the Trust after having obtained
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the consent of at least a majority in liquidation amount of the Securities,
voting together as a single class, to file such certificate of cancellation, or
the revocation of the charter of UAL and the expiration of 90 days after the
date of revocation without a reinstatement thereof; or
(vi) upon the entry of a decree of judicial dissolution of
UAL or the Trust.
The Trustees shall file a certificate of cancellation with the
Secretary of State of the State of Delaware after (i) termination of the Trust
in accordance with this Section 8.1, (ii) satisfaction of creditors of the
Trust and (iii) distribution of the Trust's assets in accordance with this
Declaration. The provisions of Sections 3.10 and 4.2 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration. Any
transfer or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be freely
transferable.
(c) Subject to this Article IX, UAL and any Related Party may only
transfer Common Securities to UAL or a Related Party, provided that any such
transfer shall be subject to the condition that the transferor shall have
obtained (1) either a ruling from the Internal Revenue Service or an
unqualified written opinion addressed to the Trust and delivered to the
Trustees of nationally recognized independent tax counsel experienced in such
matters to the effect that such transfer will not (i) cause the Trust to be
treated as issuing a class of interests in the Trust differing from the class
of interests represented by the Common Securities originally issued to UAL,
(ii) result in the Trust acquiring or disposing of, or being deemed to have
acquired or disposed of, an asset, or (iii) result in or cause the Trust to be
treated as anything other than a grantor trust for United States federal income
tax purposes and (2) an unqualified written opinion addressed to the Trust and
delivered to the Trustees of a nationally recognized independent counsel
experienced in such matters that such transfer will not cause the Trust to be
an Investment Company or controlled by an Investment Company.
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SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges which may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer shall be
canceled by the Regular Trustees. A transferee of a Certificate shall be
entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration. The Trust shall not be required (i) to issue, register the
transfer of or exchange of any Securities during the period beginning at the
opening of 15 business days before the mailing of a notice of redemption of
Securities according to the terms of the Securities and ending at the close of
business on the day of the mailing of the relevant notice of redemption or (ii)
to register the transfer of or exchange of any Security so selected for
redemption, in whole or in part, except the unredeemed portion of any Security
being redeemed in part.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trustees shall have
actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
The Preferred Securities Certificates, on original issuance, will be
issued in fully registered form. With respect to any Certificates registered
on the books and records of the Trust in the name of a Clearing Agency or the
nominee of a Clearing Agency:
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(i) the Trust and the Trustees shall be entitled to deal with
the Clearing Agency for all purposes of this Declaration (including paying
Distributions on such Certificates and receiving approvals, votes or consents
hereunder) as the Preferred Security Holder and the sole holder of such
Certificates and, except as set forth herein, shall have no obligation to the
Preferred Security Beneficial Owners;
(ii) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(iii) the rights of the Preferred Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants. The Clearing Agency will make book entry transfers among
Clearing Agency Participants and receive and transmit payments of Distributions
on such Certificates to such Clearing Agency Participants; provided, that
solely for the purposes of determining whether the Holders of the requisite
amount of Preferred Securities have voted on any matter provided for in this
Declaration, so long as definitive Preferred Security Certificates have not
been issued (pursuant to Section 9.7 hereof), the Trustees may conclusively
rely on, and shall be protected in relying on, any written instrument
(including a proxy) delivered to the Trustees by the Clearing Agency setting
forth the Preferred Security Beneficial Owners' votes or assigning the right to
vote on any matter to any other Persons either in whole or in part.
SECTION 9.5 Notices to Holders of Certificates.
Whenever a notice or other communication to the Holders is required to
be given under this Declaration, the relevant Trustees shall give such notices
and communications to the Holders and, with respect to any Preferred Security
Certificate registered in the name of a Clearing Agency or the nominee of a
Clearing Agency, the Trustees shall, except as set forth herein, have no
obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depository with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to the Preferred Securities.
SECTION 9.7 Definitive Preferred Securities Certificates.
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If (i) a Clearing Agency elects to discontinue its services as
securities depository with respect to the Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such discontinuance
pursuant to Section 9.6 or (ii) the Regular Trustees elect after consultation
with the Sponsor to terminate the book entry system through the Clearing Agency
with respect to the Preferred Securities, then upon surrender of the
Certificates representing the Book Entry Interests with respect to the
Preferred Securities by the Clearing Agency, accompanied by registration
instructions, the Regular Trustees shall cause definitive Preferred Security
Certificates to be delivered to Preferred Security Beneficial Owners in
accordance with the instructions of the Clearing Agency. Neither the Trustees
nor the Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on, and shall be protected in relying
on, such instructions.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and (b)
there shall be delivered to the Regular Trustees such security or indemnity as
may be required by them to keep each of them harmless, then in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
any two Regular Trustees on behalf of the Trust shall execute and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like denomination. In connection with the
issuance of any new Certificate under this Section 9.8, the Regular Trustees
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive
evidence of an ownership interest in the relevant Securities, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
ARTICLE X
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 10.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of
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the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence (or, in the case of the Institutional Trustee or the Delaware
Trustee, negligence) or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
(c) Pursuant to Section 3803 (a) of the Business Trust Act, the
Holders of Securities, in their capacities as Holders, shall be entitled to the
same limitation of liability extended to stockholders of private corporations
for profit organized under the General Corporation Law of the State of
Delaware.
SECTION 10.2 Indemnification.
(a) To the fullest extent permitted by applicable law, the Sponsor
shall indemnify and hold harmless each Indemnified Person from and against any
loss, damage or claim incurred by such Indemnified Person by reason of any act
or omission performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of authority conferred on such Indemnified Person by
this Declaration, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of gross negligence (or, in the case of the
Institutional Trustee or the Delaware Trustee, negligence) or willful
misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any
claim, demand, action, suit or proceeding shall, from time to time, be advanced
by the Sponsor prior to the final disposition of such claim, demand, action,
suit or proceeding upon receipt by the Sponsor of an undertaking by or on
behalf of the Indemnified Person to repay such amount if it shall be determined
that the Indemnified Person is not entitled to be indemnified as authorized in
Section 10.2(a).
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(c) The provisions of this Section 10.2 shall survive the
termination of this Declaration.
SECTION 10.3 Outside Business.
The Sponsor and any Trustee may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders of Securities shall have no rights by virtue of this Declaration in
and to such independent ventures or the income or profits derived therefrom,
and the pursuit of any such venture, even if competitive with the business of
the Trust, shall not be deemed wrongful or improper. Neither the Sponsor nor
any Trustee, shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and the Sponsor or any
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Trustee may engage or be interested in any financial
or other transaction with the Sponsor or any Affiliate of the Sponsor or may
act as depository for, trustee or agent for, or act on any committee or body of
holders of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail each transaction
of the Trust. The books of account shall be maintained on the accrual method
of accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books and records of the Trust,
together with a copy of this Declaration and a certified copy of the
Certificate of Trust, and any amendment thereto, shall at all times be
maintained at the principal office of the Trust and shall be open for
inspection for any examination by any Holder or its duly authorized
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representative for any purpose reasonably related to its interest in the Trust
during normal business hours.
(b) If required by applicable law, the Regular Trustees shall, as soon
as available after the end of each Fiscal Year of the Trust, cause to be
prepared and mailed to each Holder of Securities unaudited financial statements
of the Trust for such Fiscal Year, prepared in accordance with generally
accepted accounting principles, provided that if the Trust is required to
comply with the periodic reporting requirements of Sections 13(a) or 15(d) of
the Exchange Act, such financial statements for such Fiscal Year shall be
examined and reported on by a firm of independent certified public accountants
selected by the Regular Trustees (which firm may be the firm used by the
Sponsor).
(c) The Regular Trustees shall cause to be prepared and mailed to
each Holder of Securities an annual United States federal income tax
information statement, on such form as is required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the
Code to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be prepared and filed with
the appropriate taxing authority an annual United States federal income tax
return, on such form as is required by the Code, and any other annual income
tax returns required to be filed by the Regular Trustees on behalf of the Trust
with any state or local taxing authority, such returns to be filed as soon as
practicable after the end of each Fiscal Year of the Trust.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust. The sole signatories for such accounts shall be
designated by the Regular Trustees.
SECTION 11.4 Withholding.
The Trust and the Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to
each Holder, and any representations and forms as shall reasonably be requested
by the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Trust shall file required forms with applicable
jurisdictions and, unless an exemption from withholding is properly established
by a Holder, shall remit amounts withheld with respect to the Holder to
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applicable jurisdictions. To the extent that the Trust is required to withhold
and pay over any amounts to any authority with respect to distributions or
allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of
any claimed overwithholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount to be withheld was not withheld from a
Distribution, the Trust may reduce subsequent Distributions by the amount of
such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may be amended by, and
only by, a written instrument executed by a majority of the Regular Trustees;
provided, however, that (i) no amendment to this Declaration shall be made if
such amendment or modification would cause the Trust to be classified for
United States federal income tax purposes as other than a grantor trust or
would cause the Trust to be deemed an "investment company" which is required to
be registered under the 1940 Act, (ii) at such time after the Trust has issued
any Securities which remain outstanding, any amendment which would adversely
affect the rights, privileges or preferences of any Holder of Securities may be
effected only with such additional requirements as may be set forth in the
terms of such Securities, (iii) Section 4.2, Section 9.1(c) and this Section
12.1 shall not be amended without the consent of all of the Holders of the
Securities, (iv) no amendment which adversely affects the rights, powers and
privileges of the Institutional Trustee shall be made without the consent of
the Institutional Trustee, (v) Article IV shall not be amended without the
consent of the Sponsor and (vi) the rights of Holders of Common Securities
under Article V to increase or decrease the number of, and to appoint, replace
or remove, Trustees shall not be amended without the consent of each Holder of
Common Securities.
(b) Notwithstanding Section 12.1(a)(ii), this Declaration may be
amended without the consent of the Holders of the Securities to (i) cure any
ambiguity, (ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this Declaration,
(iii) add to the covenants, restrictions or obligations of the Sponsor, (iv)
preserve the status of the Trust as a grantor trust for federal income tax
purposes, and (v) conform to any changes in Rule 3a-5 or any change in
interpretation or application of Rule
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3a-5 by the Commission, which amendment does not adversely affect the rights,
preferences or privileges of the Holders.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of Preferred Securities and/or Common
Securities may be called at any time by the Regular Trustees (or as provided in
the terms of the Securities) to consider and act on any matter on which Holders
of such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange on
which the Preferred Securities are listed or admitted for trading. The Regular
Trustees shall call a meeting of Holders of Preferred Securities or Common
Securities, if directed to do so by Holders of at least 10% in liquidation
amount of such class of Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in a writing stating that
the signing Holders of Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of Securities calling a meeting shall specify in writing the Certificates held
by the Holders of Securities exercising the right to call a meeting and only
those specified Certificates shall be counted for purposes of determining
whether the required percentage set forth in the second sentence of this
paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provision shall apply to meetings of Holders of
Securities:
(i) Notice of any such meeting shall be given by mail to all
the Holders of Securities having a right to vote thereat not less than 7 days
nor more than 60 days prior to the date of such meeting. Whenever a vote,
consent or approval of the Holders of Securities is permitted or required under
this Declaration or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading, such vote, consent or approval
may be given at a meeting of the Holders of Securities. Any action that may be
taken at a meeting of the Holders of Securities may be taken without a meeting
if a consent in writing setting forth the action so taken is signed by Holders
of Securities owning not less than the minimum aggregate liquidation amount of
Securities that would be necessary to authorize or take such action at a
meeting at which all Holders of Securities having a right to vote thereon were
present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders of Securities entitled to vote who have not
consented in writing. The Regular Trustees may specify that any written ballot
submitted to the Holders of Securities for the purpose of taking any action
without a meeting shall be
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returned to the Trust within the time specified by the Regular Trustees.
(ii) Each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder of a Security is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration of 11
months from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Holder of the Security
executing it. Except as otherwise provided herein or in the terms of the
Securities, all matters relating to the giving, voting or validity of proxies
shall be governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if the Trust
were a Delaware corporation and the Holders of the Securities were stockholders
of a Delaware corporation.
(iii) Each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate.
(iv) Unless otherwise provided in the Business Trust Act,
this Declaration or the rules of any stock exchange on which the Preferred
Securities are then listed or admitted for trading, the Regular Trustees, in
their sole discretion, shall establish all other provisions relating to
meetings of Holders of Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.
(a) The Trustee which acts as initial Institutional Trustee
represents and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Institutional Trustee represents and warrants
to the Trust and the Sponsor at the time of the Successor Institutional
Trustee's acceptance of its appointment as Institutional Trustee, that:
(i) The Institutional Trustee is a national banking
association with trust powers, duly organized, validly existing and in good
standing under the laws of the United States, with trust power and authority to
execute and deliver, and to carry
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out and perform its obligations under the terms of, this Declaration.
(ii) The execution, delivery and performance by the
Institutional Trustee of this Declaration has been duly authorized by all
necessary corporate action on the part of the Institutional Trustee. The
Declaration has been duly executed and delivered by the Institutional Trustee,
and constitutes a legal, valid and binding obligation of the Institutional
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the enforcement
of such remedies is considered in a proceeding in equity or at law).
(iii) The execution, delivery and performance of this
Declaration by the Institutional Trustee do not conflict with or constitute a
breach of the Charter or By-laws of the Institutional Trustee.
(iv) No consent, approval or authorization of, or
registration with or notice to, any banking authority which supervises or
regulates the Institutional Trustee is required for the execution, delivery or
performance by the Institutional Trustee of this Declaration.
(v) The Institutional Trustee satisfies the qualifications
set forth in Section 5.1(c).
(b) The Trustee which acts as initial Delaware Trustee represents and
warrants to the Trust and the Sponsor at the date of this Declaration, and each
Successor Delaware Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Delaware Trustee's acceptance of its appointment
as Delaware Trustee, that it satisfies the qualifications set forth in Section
5.1(a)(3).
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at
the Trust's mailing address set forth below (or such
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other address as the Regular Trustees on behalf of the Trust may give notice of
to the Holders of the Securities):
UAL Corporation Capital Trust I
c/o UAL Corporation
1200 East Algonquin Road
Elk Grove Township, Illinois 60007
Attention: Trustees
Facsimile No: (847) 700-4683
(b) if given to the Institutional Trustee, at the mailing
address of the Institutional Trustee set forth below (or such other address as
the Institutional Trustee may give notice of to the Holders of the Securities):
The First National Bank of Chicago
One First National Plaza, Suite 0216
Chicago, Illinois 60670-0126
Attention: Corporate Trust Department
Facsimile No: (312) 407-1708
(c) if given to the Delaware Trustee, at the mailing address
of the Delaware Trustee set forth below (or such other address as the Delaware
Trustee may give notice of to the Holders of the Securities):
First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801
Facsimile No: (312) 407-1708
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
UAL Corporation
1200 East Algonquin Road
Elk Grove Township, Illinois 60007
Attention: Corporate Secretary
Facsimile No: (847) 700-4683
(e) if given to any other Holder, at the address set forth on
the books and records of the Trust.
A copy of any notice to the Institutional Trustee or the Delaware
Trustee shall also be sent to the Trust. All notices shall be deemed to have
been given, when received in person, telecopied with receipt confirmed, or
mailed by first class mail, postage prepaid, except that if a notice or other
document is refused delivery or cannot be delivered because of a changed
address of which no notice was given, such notice or other
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document shall be deemed to have been delivered on the date of such refusal or
inability to deliver.
SECTION 14.2 Undertaking for Costs.
All parties to this Declaration agree, and each Holder of any
Securities by his or her acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement
of any right or remedy under this Declaration, or in any suit against the
Institutional Trustee for any action taken or omitted by it as Institutional
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 14.2 shall not apply to any suit instituted by the Institutional
Trustee, to any suit instituted by any Holder of Preferred Securities, or group
of Holders of Preferred Securities, holding more than 10% in aggregate
liquidation amount of the outstanding Preferred Securities, or to any suit
instituted by any Holder of Preferred Securities for the enforcement of the
payment of the principal of (or premium, if any) or interest on the Debentures,
on or after the respective due dates expressed in such Debentures.
SECTION 14.3 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE; PROVIDED HOWEVER, THAT THERE
SHALL NOT BE APPLICABLE TO THE TRUST, THE TRUSTEES OR THIS DECLARATION ANY
PROVISIONS OF THE LAWS (STATUTORY OR COMMON) OF THE STATE OF DELAWARE
PERTAINING TO TRUSTS, OTHER THAN THE BUSINESS TRUST ACT, THAT RELATE TO OR
REGULATE, IN A MANNER INCONSISTENT WITH THE TERMS HEREOF, (I) THE FILING WITH
ANY COURT OR GOVERNMENTAL BODY OR AGENCY OF TRUSTEE ACCOUNTS OR SCHEDULES OF
TRUSTEE FEES AND CHARGES, (II) AFFIRMATIVE REQUIREMENTS TO POST BONDS FOR
TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (III) THE NECESSITY FOR
OBTAINING COURT OR OTHER GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION,
HOLDING OR DISPOSITION OF REAL OR PERSONAL PROPERTY, (IV) FEES OR OTHER SUMS
PAYABLE TO TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (V) THE
ALLOCATION OF RECEIPTS AND EXPENDITURES TO INCOME OR PRINCIPAL, (VI)
RESTRICTIONS OR LIMITATIONS ON THE PERMISSIBLE NATURE, AMOUNT OR CONCENTRATION
OF TRUST INVESTMENTS OR REQUIREMENTS RELATING TO THE TITLING, STORAGE OR OTHER
MANNER OF HOLDING OR INVESTING TRUST ASSETS, OR (VII) THE ESTABLISHMENT OF
FIDUCIARY OR OTHER STANDARDS OF RESPONSIBILITIES OR LIMITATIONS ON THE ACTS OR
POWERS OF TRUSTEES, THAT ARE INCONSISTENT WITH THE LIMITATIONS OR LIABILITIES
OR AUTHORITIES AND POWERS OF TRUSTEES AS SET FORTH OR REFERENCED IN THIS
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AGREEMENT. SECTION 3540 OF TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO
THE TRUST.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 14.5 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder
of this Declaration, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.6 Counterparts.
This Declaration may contain more than one counterpart of the
signature pages and this Declaration may be executed by the affixing of the
signature of the Sponsor and each of the Trustees to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as
though one, and they shall have the same force and effect as though all of the
signers had signed a single signature page.
SECTION 14.7 Intention of the Parties.
It is the intention of the parties hereto that the Trust not be
classified for United States federal income tax purposes an association taxable
as a corporation or partnership but that the Trust be treated as a grantor
trust for United States federal income tax purposes. The provisions of this
Declaration shall be interpreted to further this intention of the parties.
SECTION 14.8 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether or not so expressed.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
UAL Corporation,
as Sponsor
By:_____________________________
Name:
Title:
________________________________
[ ]
as Trustee
________________________________
[ ]
as Trustee
________________________________
[ ]
as Trustee
The First National Bank of Chicago
as Trustee
By:_____________________________
Name:
Title:
First Chicago Delaware Inc.
as Trustee
By:_____________________________
Name:
Title:
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There personally appeared before me [______________] (on behalf of UAL
Corporation ) and [___________] and [__________] who acknowledged the foregoing
instrument to be his, her or its free act and deed and the free act and deed of
UAL Corporation and the Trustees of UAL Corporation Capital Trust I.
Before me,
________________________________
Notary Public
My Commission Expires:
______________________________________________
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There personally appeared before me [____________] (on behalf of
[__________] as Trustee) who acknowledged the foregoing instrument to be his,
her or its free act and deed and the free act and deed of [________________] as
Trustee.
Before me,
________________________________
Notary Public
My Commission Expires:
______________________________________________
There personally appeared before me [_______________] (on behalf of
[_____________], as Trustee) who acknowledged the foregoing instrument to be
his, her or its free act and deed and the free act and deed
of[_______________], as Trustee.
Before me,
________________________________
Notary Public
My Commission Expires:
______________________________________________
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EXHIBIT A
CERTIFICATE OF TRUST
OF
UAL CORPORATION CAPITAL TRUST I
This Certificate of Trust of UAL Corporation Capital Trust I
(the "Trust"), dated October 15, 1996, is being duly executed and filed by the
undersigned, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del.C. Sec. 3801 et seq.).
1. Name. The name of the business trust formed hereby is UAL
Corporation Capital Trust I.
2. Delaware Trustee. The name and business address of the trustee
of the Trust with a principal place of business in the State of Delaware are
First Chicago Delaware Inc., a Delaware corporation, 300 King Street,
Wilmington, Delaware 19801.
3. Effective Date. This Certificate of Trust shall be effective
as of its filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust
at the time of filing this Certificate of Trust, have executed this Certificate
of Trust as of the date first above written.
The First National Bank of Chicago,
as trustee
By: /s/ Richard D. Manella
----------------------------------
Name: Richard D. Manella
Title: Vice President
First Chicago Delaware Inc.,
as trustee
By: /s/ Steven M. Wagner
----------------------------------
Name: Steven M. Wagner
Title: Vice President
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EXHIBIT B
TERMS OF
PREFERRED SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust of UAL Corporation Capital Trust I dated as of ____________, 1996 (as
amended from time to time, the "Declaration"), the designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Securities are set forth below (each capitalized term used but not
defined herein having the meaning set forth in the Declaration):
1. Designation and Number. Preferred Securities of the Trust with an
aggregate liquidation amount in the assets of the Trust of
___________________________________ (____) and a liquidation amount in the
assets of the Trust of $25 per Preferred Security, are hereby designated as "13
1/4% Trust Originated Preferred Securities." The Preferred Security
Certificates evidencing the Preferred Securities shall be substantially in the
form attached hereto as Annex I, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice or
to conform to the rules of any stock exchange on which the Preferred Securities
are listed. The Preferred Securities shall be issued to former holders of
Depositary Shares ("Depositary Shares") each representing 1/1,000 of a share of
12- 1/4% Series B Preferred Stock (the "Series B Preferred"), of UAL
Corporation ("UAL") in exchange for such Depositary Shares pursuant to the
Offer. In connection with such Offer and the purchase by UAL of the Common
Securities, UAL will deposit in the Trust, and the Trust will purchase,
respectively, as trust assets Debentures of UAL having an aggregate principal
amount equal to $[__________], and bearing interest at an annual rate equal to
the annual Distribution rate on the Preferred Securities and Common Securities
and having payment and redemption provisions which correspond to the payment
and redemption provisions of the Preferred Securities and Common Securities.
2. Distributions. (a) Periodic distributions payable on each
Preferred Security will be fixed at a rate per annum of 13 1/4% (the "Coupon
Rate") of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears will bear interest at the rate per annum of 13 1/4%
thereof, compounded quarterly to the extent permitted by law. The term
"Distributions" as used in these terms means such periodic cash distributions
and any such interest payable unless otherwise stated. A Distribution will be
made by the Institutional Trustee only to the extent that interest payments are
made in respect of
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the Debentures held by the Trust. The amount of Distributions payable for any
period will be computed for any full quarterly Distribution period on the basis
of a 360-day year of twelve 30-day months, and for any period shorter than a
full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days
elapsed in such a 30-day month.
(b) Distributions on the Preferred Securities will be cumulative,
will accrue from November 1, 1996 and will be payable quarterly in arrears, on
March 31, June 30, September 30 and December 31 of each year, commencing on
December 31, 1996, except as otherwise described below, but only if and to the
extent that interest payments are made in respect of the Debentures held by the
Trust. In addition, Holders of Preferred Securities will be entitled to a cash
distribution at the rate of 12- 1/4% per annum of the liquidation amount
thereof from November 1, 1996 through December 31, 1996, payable on December
31, 1996 ("Pre-Issuance Interest"). With the exception of Pre-Issuance
Interest, so long as UAL shall not be in default in the payment of interest on
the Debentures, UAL has the right under the Indenture for the Debentures to
defer payments of interest by extending the interest payment period from time
to time on the Debentures for a period not exceeding 20 consecutive quarterly
interest periods (each, an "Extension Period") and, as a consequence, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the rate of 13 1/4% per annum, compounded
quarterly to the extent permitted by law during any such Extension Period.
Prior to the termination of any such Extension Period, UAL may further extend
such Extension Period; provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 20 consecutive
quarterly interest periods and provided further that no Extension Period may
extend beyond the maturity of the Debentures. Upon the termination of any
Extension Period and the payment on the next distribution payment date
following such extension period of all amounts then due, UAL may commence a new
Extension Period, subject to the above requirements. Any interest paid on the
Debentures during an Extension Period on an Interest Payment Date shall be paid
pro rata to the Holders of Preferred Securities on the corresponding
distribution payment date. Payments of accrued Distributions will be payable
to Holders of Preferred Securities as they appear on the books and records of
the Trust on the record date for the first payment occurring on or after the
end of the Extension Period.
(c) Distributions on the Preferred Securities will be payable
promptly by the Institutional Trustee (or other Paying Agent) upon receipt of
immediately available funds to the Holders thereof as they appear on the books
and records of the Trust on the relevant record dates, which will be 15
calendar days prior to the relevant Distribution date, which record and payment
dates
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correspond to the record and interest payment dates on the Debentures.
Distributions payable on any Preferred Securities that are not punctually paid
on any Distribution payment date as a result of UAL having failed to make the
corresponding interest payment on the Debentures will forthwith cease to be
payable to the Person in whose name such Preferred Security is registered on
the relevant record date, and such defaulted Distribution will instead be
payable to the Person in whose name such Preferred Security is registered on
the special record date established by the Regular Trustees, which record date
shall correspond to the special record date or other specified date determined
in accordance with the Indenture; provided, however, that Distributions shall
not be considered payable on any Distribution payment date falling within an
Extension Period unless UAL has elected to make a full or partial payment of
interest accrued on the Debentures on such Distribution payment date. Subject
to any applicable laws and regulations and the provisions of the Declaration,
each payment in respect of the Preferred Securities will be made as described
in paragraph 9 hereof. If any date on which Distributions are payable on the
Preferred Securities is not a Business Day, then payment of the Distribution
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
(d) All Distributions paid with respect to the Preferred Securities
and the Common Securities will be paid Pro Rata (as defined herein) to the
Holders thereof entitled thereto. If an Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities with respect to Distributions.
(e) In the event that there is any money or other property held by or
for the Trust that is not accounted for under the Declaration, such money or
property shall be distributed Pro Rata among the Holders of the Preferred
Securities and Common Securities.
3. Liquidation Distribution Upon Dissolution. In the event of any
voluntary or involuntary dissolution, winding-up or termination of the
Trust, the Holders of the Preferred Securities and Common Securities at the
date of the dissolution, winding-up or termination, as the case may be, will be
entitled to receive Pro Rata solely out of the assets of the Trust available
for distribution to Holders of Preferred Securities and Common Securities after
satisfaction of liabilities to creditors, an amount equal to the aggregate of
the stated liquidation amount of $25 per Preferred Security and Common Security
plus accrued and unpaid Distributions thereon to the date of payment (such
amount
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53
being the "Liquidation Distribution"), unless, in connection with such
dissolution, winding-up or termination, and after satisfaction of liabilities
to creditors, Debentures in an aggregate principal amount equal to the
aggregate stated liquidation amount of such Preferred Securities and Common
Securities and bearing accrued and unpaid interest in an amount equal to the
accrued and unpaid Distributions on such Preferred Securities and Common
Securities shall be distributed Pro Rata to the Holders of the Preferred
Securities and Common Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Preferred Securities and Common Securities shall be paid on
a Pro Rata basis, except that, if an Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities with respect to such Liquidation Distribution.
4. Redemption and Distribution of Debentures. The Preferred
Securities and Common Securities may only be redeemed if Debentures having
an aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Securities and Common Securities are repaid, redeemed or distributed
as set forth below:
(a) Upon the repayment of the Debentures, in whole or in part,
whether at maturity, or upon redemption at any time or from time to time on or
after July 12, 2004, the proceeds of such repayment will be promptly applied to
redeem Pro Rata Preferred Securities and Common Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed, upon not less than 10 nor more than 60 days' notice, at a
redemption price of $25 per Preferred and Common Security plus an amount equal
to accrued and unpaid Distributions thereon to the date of redemption, payable
in cash (the "Redemption Price"). The date of any such repayment or redemption
of Preferred Securities and Common Securities shall be established to coincide
with the repayment or redemption date of the Debentures.
(b) The Common Securities will be entitled to be redeemed on a Pro
Rata basis with the Preferred Securities, except that if an Event of Default
has occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities with respect to the payment of the Redemption Price.
If fewer than all the outstanding Preferred Securities and Common Securities
are to be so redeemed, the Preferred Securities and the Common Securities will
be redeemed Pro Rata and the Preferred Securities to be redeemed will be
redeemed as described in paragraph
B-4
54
4(f)(ii) below. If a partial redemption would result in the delisting of the
Preferred Securities by any national securities exchange or other organization
on which the Preferred Securities are then listed, UAL pursuant to the
Indenture will only redeem Debentures in whole and, as a result, the Trust may
only redeem the Preferred Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company Event (each
as hereinafter defined, and each a "Special Event") shall occur and be
continuing, the Regular Trustees shall, unless the Debentures are redeemed in
the limited circumstances described below, dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Institutional Trustee
having an aggregate principal amount equal to the aggregate stated liquidation
amount of and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment as, the Preferred
Securities and Common Securities, to be distributed to the Holders of the
Preferred Securities and Common Securities on a Pro Rata basis in liquidation
of such Holders' interests in the Trust, within 90 days following the
occurrence of such Special Event (the "90 Day Period"), provided, however, that
in the case of the occurrence of a Tax Event, as a condition of such
dissolution and distribution, the Regular Trustees shall have received an
opinion (a "No Recognition Opinion") of a nationally recognized independent tax
counsel experienced in such matters , which opinion may rely on any then
applicable published revenue ruling of the Internal Revenue Service, to the
effect that the Holders of the Preferred Securities will not recognize any gain
or loss for United States federal income tax purposes as a result of the
dissolution of the Trust and distribution of Debentures; and provided, further,
that, if and as long as at the time there is available to the Trust the
opportunity to eliminate, within the 90 Day Period, the Special Event by taking
some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable measure that has no adverse effect on
the Trust, UAL, or the Holders of the Preferred Securities ("Ministerial
Action"), the Trust will pursue such measure in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the Regular
Trustees have received an opinion (a "Redemption Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial risk that UAL would
be precluded from deducting the interest on the Debentures for United States
federal income tax purposes even if the Debentures were distributed to the
Holders of Preferred Securities and Common Securities in liquidation of such
Holder's interest in the Trust as described in this paragraph 4(c) or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, UAL shall
B-5
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have the right at any time, upon not less than 10 nor more than 60 days notice,
to redeem the Debentures in whole or in part for cash at the Redemption Price
within 90 days following the occurrence of such Tax Event, and promptly
following such redemption Preferred Securities and Common Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so redeemed will be redeemed by the Trust at the Redemption Price on
a Pro Rata basis; provided, however, that, if at the time there is available to
UAL or the Regular Trustees on behalf of the Trust the opportunity to
eliminate, within such 90 day period, the Tax Event by taking some Ministerial
Action, UAL or the Regular Trustees on behalf of the Trust will pursue such
measure in lieu of redemption, and provided further that UAL shall have no
right to redeem the Debentures while the Regular Trustees on behalf of the
Trust are pursuing such Ministerial Action. The Common Securities will be
redeemed Pro Rata with the Preferred Securities, except that, if an Event of
Default under the Indenture has occurred and is continuing, the Preferred
Securities will have a priority over the Common Securities with respect to
payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained an
opinion (a "Dissolution Tax Opinion") of nationally recognized independent tax
counsel experienced in such matters to the effect that on or after the
Expiration Date as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, (b) any amendment to, or change in, an interpretation or application
of any such laws or regulations by any legislative body, court, governmental
agency or regulatory authority (including the enactment of any legislation and
the publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after the Expiration Date, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90
days of the date thereof, subject to United States federal income tax with
respect to income accrued or received on the Debentures, (ii) the Trust is, or
will be within 90 days of the date thereof, subject to more than a de minimis
amount of taxes, duties or other governmental charges or (iii) interest payable
by UAL to the Trust on the Debentures is not, or within 90 days of the date
thereof will not be, deductible by UAL for United States federal income tax
purposes.
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"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act that, as a result of the occurrence
of a change in law or regulation or a change in interpretation or application
of law or regulation by any legislative body, court, governmental agency or
regulatory authority or of the staff of such governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is more than an insubstantial
risk that the Trust is or will be considered an Investment Company which is
required to be registered under the Investment Company Act, which Change in
1940 Act Law becomes effective on or after the Expiration Date.
On the date fixed for any distribution of Debentures, upon dissolution
of the Trust, (i) the Preferred Securities will no longer be deemed to be
outstanding and (ii) certificates representing Preferred Securities will be
deemed to represent beneficial interests in the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and bearing accrued
and unpaid interest equal to accrued and unpaid Distributions on, such
Preferred Securities until such certificates are presented to UAL or its agent
for transfer or reissuance.
(d) The Trust may not redeem fewer than all the outstanding Preferred
Securities unless all accrued and unpaid Distributions have been paid on all
Preferred Securities for all quarterly Distribution periods terminating on or
prior to the date of redemption.
(e) If Debentures are distributed to Holders of the Preferred
Securities, UAL, pursuant to the terms of the Indenture, will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) (i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Preferred Securities and Common Securities (a
"Redemption/Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 10 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of
the calculation of the date of redemption or exchange and the dates on which
notices are given pursuant to this paragraph (f)(i), a Redemption/Distribution
Notice shall be deemed to be given on the day such notice is first mailed by
first class mail, postage prepaid, to Holders of Preferred Securities and
Common Securities. Each Redemption/ Distribution Notice shall be addressed to
the Holders of
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Preferred Securities and Common Securities at the address of each such Holder
appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Preferred Securities are to be redeemed (subject to adjustment to eliminate
fractional Preferred Securities), the Preferred Securities to be redeemed will
be redeemed Pro Rata from each Holder of Preferred Securities, it being
understood that, in respect of Preferred Securities registered in the name of
and held of record by DTC (or successor Clearing Agency) or any other nominee,
the distribution of the proceeds of such redemption will be made to each
Clearing Agency Participant (or Person on whose behalf such nominee holds such
securities) in accordance with the procedures applied by such agency or
nominee.
(iii) If the Trust gives a Redemption/Distribution Notice in
respect of a redemption of Preferred Securities as provided in this paragraph 4
(which notice will be irrevocable) then immediately prior to the close of
business on the redemption date, provided that UAL has paid to the Trust in
immediately available funds a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, Distributions will cease to
accrue on the Preferred Securities called for redemption, such Preferred
Securities will no longer be deemed to be outstanding and all rights of Holders
of such Preferred Securities so called for redemption will cease, except the
right of the Holders of such Preferred Securities to receive the Redemption
Price, but without interest on such Redemption Price. Neither the Trustees nor
the Trust shall be required to register or cause to be registered the transfer
of any Preferred Securities which have been so called for redemption. If any
date fixed for redemption of Preferred Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Redemption Price in
respect of Preferred Securities is improperly withheld or refused and not paid
either by the Trust or by UAL pursuant to the Preferred Guarantee,
Distributions on such Preferred Securities will continue to accrue, from the
original redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
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(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to the Holders of the Preferred
Securities.
(v) Upon the date of dissolution of the Trust and
distribution of Debentures as a result of the occurrence of a Special Event,
Preferred Security Certificates shall be deemed to represent beneficial
interests in the Debentures so distributed, and the Preferred Securities will
no longer be deemed outstanding and may be canceled by the Regular Trustees.
The Debentures so distributed shall have an aggregate principal amount equal to
the aggregate liquidation amount of the Preferred Securities so distributed.
(vi) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), UAL or any of its
subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
5. Voting Rights. (a) Except as provided under paragraph 5(b) below
and as otherwise required by law and the Declaration, the Holders of the
Preferred Securities will have no voting rights.
(b) If any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than in accordance
with the terms of the Declaration, then the Holders of outstanding Securities
will be entitled to vote on such amendment or proposal as a class and such
amendment or proposal shall not be effective except with the approval of the
Holders of Securities representing a Majority in liquidation amount of such
Securities; provided, however, (A) if any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or the
Common Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of a Majority in liquidation amount of such
class of Securities and (B) amendments to the Declaration shall be subject to
such further requirements as are set forth in Sections 12.1 and 12.2 of the
Declaration.
In the event the consent of the Institutional Trustee, as the holder
of the Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination. The
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Institutional Trustee shall vote with respect to such amendment, modification
or termination as directed by a Majority in liquidation amount of the
Securities voting together as a single class (and in the case of any other UAL
Corporation Capital Trust holding debt securities issued under the Indenture,
voting with the holders of securities of such other UAL Corporation Capital
Trust); provided that where such amendment, modification or termination of the
Indenture requires the consent or vote of (1) holders of Debentures
representing a specified percentage greater than a majority in principal amount
of the Debentures or (2) each holder of Debentures, the Institutional Trustee
may only vote with respect to that amendment, modification or termination as
directed by, in the case of clause (1) above, the vote of Holders of Securities
representing such specified percentage of the aggregate liquidation amount of
the Securities, or, in the case of clause (2) above, each Holder of Securities;
and provided, further, that the Institutional Trustee shall be under no
obligation to take any action in accordance with the directions of the Holders
of Securities unless the Institutional Trustee shall have received, at the
expense of the Sponsor, an opinion of nationally recognized independent tax
counsel recognized as expert in such matters to the effect that the Trust will
not be classified for United States federal income tax purposes as an
association taxable as a corporation or a partnership on account of such action
and will be treated as a grantor trust for United States federal income tax
purposes following such action.
Subject to Section 2.6 of the Declaration, and the provisions of this
and the next two succeeding paragraphs, the Holders of a Majority in
liquidation amount of the Preferred Securities, voting separately as a class,
shall have the right to (A) on behalf of all Holders of Preferred Securities,
waive any past default, and its consequences, that is waivable under the
Declaration (subject to, and in accordance with, the Declaration) and (B)
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee, as the holder of the Debentures (and
in the case of any other UAL Corporation Capital Trust holding debt securities
issued under the Indenture, voting with the holders of preferred securities of
such other UAL Corporation Capital Trust), to (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee, or exercising any trust or power conferred on the Debenture Trustee
with respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under Section 5.7 of the Indenture, or (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Debentures shall be due and payable; provided that where the taking of any
action under the Indenture requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a
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majority in principal amount of the Debentures or (2) each holder of
Debentures, the Institutional Trustee may only take such action if directed by,
in the case of clause (1) above, the vote of Holders of Preferred Securities
representing such specified percentage of the aggregate liquidation amount of
the Preferred Securities, or, in the case of clause (2) above, each Holder of
Preferred Securities. The Institutional Trustee shall not revoke, or take any
action inconsistent with, any action previously authorized or approved by a
vote of the Holders of the Preferred Securities.
Other than with respect to directing the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee
or the Debenture Trustee as set forth above, the Institutional Trustee shall be
under no obligation to take any of the foregoing actions at the direction of
the Holders of Preferred Securities unless the Institutional Trustee shall have
received, at the expense of the Sponsor, an opinion of nationally recognized
independent tax counsel recognized as expert in such matters to the effect that
the Trust will not be classified for United States federal income tax purposes
as an association taxable as a corporation or a partnership on account of such
action and will be treated as a grantor trust for United States federal income
tax purposes following such action. If the Institutional Trustee fails to
enforce its rights under the Declaration (including, without limitation, its
rights, powers and privileges as a holder of the Debentures under the
Indenture) to the fullest extent permitted by law, any Holder of Preferred
Securities may, upon such Holder's written request to the Institutional Trustee
to enforce such rights, institute a legal proceeding directly against UAL to
enforce the Institutional Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Institutional Trustee or any other
Person; provided that if an Event of Default is attributable to the failure of
UAL to pay interest or principal on the Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, the redemption
date), then a Holder of Preferred Securities may directly institute a
proceeding for enforcement of payment to such Holder of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such Holder without first (i)
directing the Institutional Trustee to enforce the terms of the Debentures or
(ii) instituting a legal proceeding against UAL to enforce the Institutional
Trustee's rights under the Debentures.
A waiver of an Indenture Event of Default by the Institutional Trustee
at the direction of the Holders of the Preferred Securities will constitute a
waiver of the corresponding Event of Default under the Declaration in respect
of the Securities.
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Any required approval or direction of Holders of Preferred Securities
may be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities of the Trust
or pursuant to written consent. The Regular Trustees will cause a notice of
any meeting at which Holders of Preferred Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Preferred Securities. Each
such notice will include a statement setting forth (i) the date of such meeting
or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or distribute
Debentures in accordance with the Declaration.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities at such time that are owned by UAL or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with UAL shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
Holders of the Preferred Securities will have no rights to increase or
decrease the number of Trustees or to appoint, remove or replace a Trustee,
which voting rights are vested solely in the Holders of the Common Securities.
6. Pro Rata Treatment. A reference in these terms of the Preferred
Securities to any payment, distribution or treatment as being "Pro Rata" shall
mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Preferred Securities pro rata according to the aggregate
liquidation amount of Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Preferred Securities outstanding,
and only after satisfaction of all amounts owed to the Holders of the Preferred
Securities, to each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the relevant Holder
relative to the
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aggregate liquidation amount of all Common Securities outstanding.
7. Ranking. The Preferred Securities rank pari passu and payment
thereon will be made Pro Rata with the Common Securities except that, where an
Event of Default occurs and is continuing, the rights of Holders of Preferred
Securities to payment in respect of Distributions and payments upon
liquidation, redemption or otherwise rank in priority to the rights of Holders
of the Common Securities.
8. Mergers, Consolidations or Amalgamations.
(a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Sections 3
and 8(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Securities, the Delaware Trustee or the
Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided
that:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations of
the Trust under the Preferred Securities; or
(B) substitutes for the Preferred Securities
other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Preferred
Securities rank with respect to Distributions and payments
upon liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the holder of the Debentures;
(iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification
of issuance, on any national securities exchange or with another
organization on which the Preferred Securities are then listed or
quoted;
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(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Preferred Securities (including any
Successor Securities) in any material respect (other than with respect
to any dilution of such Holders' interests in the Preferred Securities
as a result of such merger consolidation, amalgamation or
replacement);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) such merger, consolidation, amalgamation or replacement
does not vary the investment of the Holders of the Preferred
Securities within the meaning of Treasury Regulation Section
301.7701-4(c)(1), e.g., does not substitute other assets for assets of
the Trust to which the Preferred Securities relate or add assets to
the Trust to which the Preferred Securities relate;
(viii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences
and privileges of the Holders of the Preferred Securities
(including any Successor Securities) in any material respect
(other than with respect to any dilution of the Holders'
interest in the new entity);
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company; and
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will continue to be classified as a grantor trust for
United States federal income tax purposes; and
(ix) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided
by the Preferred Guarantee.
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9. Transfer, Exchange, Method of Payments. Payment of Distributions
and payments on redemption of the Preferred Securities will be payable, the
transfer of the Preferred Securities will be registrable, and Preferred
Securities will be exchangeable for Preferred Securities of other denominations
of a like aggregate liquidation amount, at the principal corporate trust office
of the Institutional Trustee in [the City of New York]; provided that payment
of Distributions may be made at the option of the Regular Trustees on behalf of
the Trust by check mailed to the address of the Persons entitled thereto and
that the payment on redemption of any Preferred Security will be made only upon
surrender of such Preferred Security to the Institutional Trustee.
10. Acceptance of Indenture and Preferred Guarantee. Each Holder of
Preferred Securities, by the acceptance thereof, agrees to the provisions of
(i) the Preferred Guarantee, including the subordination provisions therein and
(ii) the Indenture and the Debentures, including the subordination provisions
of the Indenture.
11. No Preemptive Rights. The Holders of Preferred Securities shall
have no preemptive or similar rights to subscribe to any additional Preferred
Securities or Common Securities.
12. Miscellaneous. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the
Indenture to a Holder without charge on written request to the Trust at its
principal place of business.
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Annex I
Certificate Number Number of Preferred Securities
B-__ _____________________
CUSIP NO. ______________
Certificate Evidencing Preferred Securities
of
UAL Corporation Capital Trust I
13 1/4% Trust Originated Preferred Securities
(liquidation amount $25 per Preferred Security)
UAL Corporation Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
_________ (the "Holder") is the registered owner of _____ (______) preferred
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the 13 1/4% Trust Originated Preferred
Securities (liquidation amount $25 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are transferable on the books and
records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer.
The designations, rights, privileges, restrictions, preferences and other terms
and provisions of the Preferred Securities are set forth in, and this
certificate and the Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended
and Restated Declaration of Trust of the Trust dated as of [_______________],
1996, as the same may be amended from time to time (the "Declaration")
including the designation of the terms of Preferred Securities as set forth in
Exhibit B thereto. The Preferred Securities and the Common Securities issued
by the Trust pursuant to the Declaration represent undivided beneficial
interests in the assets of the Trust, including the Debentures (as defined in
the Declaration) issued by UAL Corporation, a Delaware corporation ("UAL"), to
the Trust pursuant to the Indenture referred to in the Declaration. The Holder
is entitled to the benefits of the Guarantee Agreement of UAL dated as of
[____________], 1996, as the same may be amended from time to time (the
"Guarantee"), to the extent provided therein. The Trust will furnish a copy of
the Declaration, the Guarantee and the Indenture to the Holder
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without charge upon written request to the Trust at its principal place of
business or registered office.
The Holder of this Certificate, by accepting this Certificate, is
deemed to have (i) agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture and (ii) agreed to the terms of the Guarantee,
including that the Guarantee is subordinate and junior in right of payment to
all other liabilities of UAL, including the Debentures, except those made pari
passu or subordinate by their terms, and senior to all capital stock now or
hereafter issued by UAL and to any guarantee now or hereafter entered into by
UAL in respect of any of its capital stock.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, Trustees of the Trust have executed this
Certificate as of [_______], 1996.
UAL CORPORATION CAPITAL TRUST I
By: _________________________
Name:
Title: Trustee
By: _________________________
Name:
Title: Trustee
Countersigned and Registered:
[___________________]
Transfer Agent and Registrar
By: ___________________________
Authorized Signature
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The Trust will furnish without charge to any registered owner of
Preferred Securities who so requests, copies of the Declaration, the Guarantee
and the Indenture. Any such request should be addressed to UAL Corporation
Capital Trust I, c/o Secretary, UAL Corporation, 1200 East Algonquin Road, Elk
Grove Township, Illinois 60007 or to the Registrar named on the face of this
Certificate.
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
UNIF GIFT MIN ACT -- under Uniform Gifts to Minors Act and not as tenants
TENENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survival
Additional abbreviations may also be used though not in the above
list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please insert social security or other identifying number of assignee)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
the within Certificate and all rights and interests represented by the
Preferred Securities evidenced thereby, and hereby irrevocably constitutes and
appoints________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
attorney to transfer the said Preferred Securities on the books of the
within-named Trust with full power of substitution in the premises.
Dated: _________________________
Signature: _____________________
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Note: The signature(s) to this assignment must correspond with the name(s) as
written upon the face of this certificate in every particular, without
alteration or enlargement, or any change whatever.
NOTICE: Signature(s) must be guaranteed by an "eligible guarantor institution"
that is a member or participant in a "signature guarantee program" (i.e., the
Securities Transfer Agents Medallion Program, the Stock Exchange Medallion
Program or the New York Stock Exchange, Inc. Medallion Signature Program).
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EXHIBIT C
TERMS OF COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust of UAL Corporation Capital Trust I dated as of ______________, 1996 (as
amended from time to time, the "Declaration"), the designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities are set forth below (each capitalized term used but not
defined herein having the meaning set forth in the Declaration):
1. Designation and Number. Common Securities of the Trust with an
aggregate liquidation amount in the assets of the Trust of ___________________
______________ (_________) and a liquidation amount in the assets of the Trust
of $25 per Common Security, are hereby designated as "13 1/4% Trust Originated
Common Securities." The Common Security Certificates evidencing the Common
Securities shall be substantially in the form attached hereto as Annex I, with
such changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice. The Common Securities are to be issued and
sold to UAL Corporation ("UAL") in consideration of $[_________] in cash. In
connection with the Offer and the purchase by UAL of the Common Securities, UAL
will deposit in the Trust, and the Trust will purchase, respectively, as trust
assets Debentures of UAL having an aggregate principal amount equal to
$[__________], and bearing interest at an annual rate equal to the annual
Distribution rate on the Preferred Securities and Common Securities and having
payment and redemption provisions which correspond to the payment and
redemption provisions of the Preferred Securities and Common Securities.
2. Distributions. (a) Periodic distributions payable on each Common
Security will be fixed at a rate per annum of 13 1/4% (the "Coupon Rate") of
the stated liquidation amount of $25 per Common Security. Distributions
in arrears for more than one quarter will bear interest at the rate per annum
of 13 1/4% thereof (to the extent permitted by applicable law), compounded
quarterly to the extent permitted by law. The term "Distributions" as used in
these terms means such periodic cash distributions and any such interest
payable unless otherwise stated. A Distribution will be made by the
Institutional Trustee only to the extent that interest payments are made in
respect of the Debentures held by the Trust. The amount of Distributions
payable for any period will be computed for any full quarterly Distribution
period on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly Distribution period for which
Distributions are computed,
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Distributions will be computed on the basis of the actual number of days
elapsed in such a 30-day month.
(b) Distributions on the Common Securities will be cumulative, will
accrue from [_____________], 1996 and will be payable quarterly in arrears, on
March 31, June 30, September 30 and December 31 of each year, commencing on
December 31, 1996, except as otherwise described below, but only if and to the
extent that interest payments are made in respect of the Debentures held by the
Trust. In addition, Holders of Common Securities will be entitled to a cash
distribution at the rate of 12- 1/4% per annum of the liquidation amount
thereof from November 1, 1996 through December 31, 1996, payable on December
31, 1996 ("Pre-Issuance Interest"). With the exception of Pre-Issuance
Interest, so long as UAL shall not be in default in the payment of interest on
the Debentures, UAL has the right under the Indenture for the Debentures to
defer payments of interest by extending the interest payment period from time
to time on the Debentures for a period not exceeding 20 consecutive quarterly
interest periods (each, an "Extension Period") and, as a consequence, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the rate of 13 1/4% per annum, compounded
quarterly to the extent permitted by law during any such Extension Period.
Prior to the termination of any such Extension Period, UAL may further extend
such Extension Period; provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 20 consecutive
quarterly interest periods and provided further that no Extension Period may
extend beyond the maturity of the Debentures. Upon the termination of any
Extension Period and the payment on the next distribution payment date
following such Extension Period of all amounts then due, UAL may commence a new
Extension Period, subject to the above requirements. Any interest paid on the
Debentures during an Extension Period on an Interest Payment Date shall be paid
pro rata to the Holders of Preferred Securities on the corresponding
distribution payment date. Payments of accrued Distributions will be payable
to Holders of Common Securities as they appear on the books and records of the
Trust on the record date for the first payment occurring on or after the end of
the Extension Period.
(c) Distributions on the Common Securities will be payable promptly
by the Institutional Trustee (or other Paying Agent) upon receipt of
immediately available funds to the Holders thereof as they appear on the books
and records of the Trust on the relevant record dates, which will be 15
calendar days prior to the relevant Distribution date, which record and payment
dates correspond to the record and interest payment dates on the Debentures.
Distributions payable on any Common Securities that are not punctually paid on
any Distribution payment date as a result of UAL having failed to make the
corresponding interest
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payment on the Debentures will forthwith cease to be payable to the Person in
whose name such Common Security is registered on the relevant record date, and
such defaulted Distribution will instead be payable to the Person in whose name
such Common Security is registered on the special record date established by
the Regular Trustees, which record date shall correspond to the special record
date or other specified date determined in accordance with the Indenture;
provided, however, that Distributions shall not be considered payable on any
Distribution payment date falling within an Extension Period unless UAL has
elected to make a full or partial payment of interest accrued on the Debentures
on such Distribution payment date. Subject to any applicable laws and
regulations and the provisions of the Declaration, each payment in respect of
the Common Securities will be made as described in paragraph 9 hereof. If any
date on which Distributions are payable on the Common Securities is not a
Business Day, then payment of the Distribution payable on such date will be
made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.
(d) All Distributions paid with respect to the Common Securities and
the Preferred Securities will be paid Pro Rata (as defined herein) to the
Holders thereof entitled thereto. If an Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities with respect to Distributions
(e) In the event that there is any money or other property held by or
for the Trust that is not accounted for under the Declaration, such money or
property shall be distributed Pro Rata among the Holders of the Preferred
Securities and Common Securities.
3. Liquidation Distribution Upon Dissolution. In the event of any
voluntary or involuntary dissolution, winding-up or termination of the Trust,
the Holders of the Preferred Securities and Common Securities at the date of
the dissolution, winding-up or termination, as the case may be, will be
entitled to receive Pro Rata solely out of the assets of the Trust available
for distribution to Holders of Preferred Securities and Common Securities,
after satisfaction of liabilities to creditors, an amount equal to the
aggregate of the stated liquidation amount of $25 per Preferred Security and
Common Security plus accrued and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, winding-up or termination, and after
satisfaction of liabilities to creditors, Debentures in an aggregate principal
amount equal to the aggregate stated
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liquidation amount of such Preferred Securities and Common Securities bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on such Preferred Securities and Common Securities shall be
distributed Pro Rata to the Holders of the Preferred Securities and Common
Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Preferred Securities and Common Securities shall be paid on
a Pro Rata basis, except that, if an Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities with respect to such Liquidation Distribution.
4. Redemption and Distribution of Debentures. The Preferred
Securities and Common Securities may only be redeemed if Debentures having
an aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Securities and Common Securities are repaid, redeemed or distributed
as set forth below:
(a) Upon the repayment of the Debentures, in whole or in part,
whether at maturity, or upon redemption at any time or from time to time on or
after July 12, 2004, the proceeds of such repayment will be promptly applied to
redeem Pro Rata Preferred Securities and Common Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed, upon not less than 10 nor more than 60 days' notice, at a
redemption price of $25 per Preferred and Common Security plus an amount equal
to accrued and unpaid Distributions thereon to the date of redemption, payable
in cash (the "Redemption Price"). The date of any such repayment or redemption
of Preferred Securities and Common Securities shall be established to coincide
with the repayment or redemption date of the Debentures.
(b) The Common Securities will be entitled to be redeemed on a Pro
Rata basis with the Preferred Securities, except that if an Event of Default
has occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities with respect to the payment of the Redemption Price.
If fewer than all the outstanding Preferred Securities and Common Securities
are to be so redeemed, the Preferred Securities and the Common Securities will
be redeemed Pro Rata and the Common Securities to be redeemed will be redeemed
as described in paragraph 4(e)(ii) below. If a partial redemption would result
in the delisting of the Preferred Securities by any national securities
exchange or other organization on which the Preferred Securities are then
listed, UAL pursuant to the Indenture will only redeem Debentures
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in whole and, as a result, the Trust may only redeem the Common Securities in
whole.
(c) If, at any time, a Tax Event or an Investment Company Event (each
as hereinafter defined, and each a "Special Event") shall occur and be
continuing, the Regular Trustees shall, unless the Debentures are redeemed in
the limited circumstances described below, dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Institutional Trustee
having an aggregate principal amount equal to the aggregate stated liquidation
amount of and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment as, the Preferred
Securities and Common Securities, to be distributed to the Holders of the
Preferred Securities and Common Securities on a Pro Rata basis in liquidation
of such Holders' interests in the Trust, within 90 days following the
occurrence of such Special Event (the "90 Day Period"), provided, however, that
in the case of the occurrence of a Tax Event, as a condition of such
dissolution and distribution, the Regular Trustees shall have received an
opinion (a "No Recognition Opinion") of a nationally recognized independent tax
counsel experienced in such matters, which opinion may rely on any then
applicable published revenue rulings of the Internal Revenue Service, to the
effect that the Holders of the Preferred Securities will not recognize any gain
or loss for United States federal income tax purposes as a result of the
dissolution of the Trust and distribution of Debentures; and provided, further,
that, if and as long as at the time there is available to the Trust the
opportunity to eliminate, within the 90 Day Period, the Special Event by taking
some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable measure that has no adverse effect on
the Trust, UAL, or the Holders of the Preferred Securities ("Ministerial
Action"), the Trust will pursue such measure in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the Regular
Trustees have received an opinion (a "Redemption Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial risk that UAL would
be precluded from deducting the interest on the Debentures for United States
federal income tax purposes even if the Debentures were distributed to the
Holders of Preferred Securities and Common Securities in liquidation of such
Holder's interest in the Trust as described in this paragraph 4(c) or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, UAL shall have the right
at any time, upon not less than 10 nor more than 60 days notice, to redeem the
Debentures in whole or in part for cash at the Redemption Price within 90 days
following the occurrence of such Tax Event, and promptly following such
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redemption Preferred Securities and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
redeemed will be redeemed by the Trust at the Redemption Price on a Pro Rata
basis; provided, however, that, if at the time there is available to UAL or the
Regular Trustees on behalf of the Trust the opportunity to eliminate, within
such 90 day period, the Tax Event by taking some Ministerial Action, UAL or the
Regular Trustees on behalf of the Trust will pursue such measure in lieu of
redemption, and provided further that UAL shall have no right to redeem the
Debentures while the Regular Trustees on behalf of the Trust are pursuing such
Ministerial Action. The Common Securities will be redeemed Pro Rata with the
Preferred Securities, except that if an Event of Default under the Indenture
has occurred and is continuing, the Preferred Securities will have a priority
over the Common Securities with respect to payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained an
opinion (a "Dissolution Tax Opinion") of nationally recognized independent tax
counsel experienced in such matters to the effect that on or after the
Expiration Date as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, (b) any amendment to, or change in, an interpretation or application
of any such laws or regulations by any legislative body, court, governmental
agency or regulatory authority (including the enactment of any legislation and
the publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after the Expiration Date, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90
days of the date thereof, subject to United States federal income tax with
respect to income accrued or received on the Debentures, (ii) the Trust is, or
will be within 90 days of the date thereof, subject to more than a de minimis
amount of taxes, duties or other governmental charges or (iii) interest payable
by UAL to the Trust on the Debentures is not, or within 90 days of the date
thereof will not be, deductible by UAL for United States federal income tax
purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act that, as a result of the occurrence
of a change in
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law or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority or the staff of such governmental agency or regulatory authority (a
"Change in 1940 Act Law"), there is more than an insubstantial risk that the
Trust is or will be considered an Investment Company which is required to be
registered under the Investment Company Act, which Change in 1940 Act Law
becomes effective on or after the Expiration Date.
On the date fixed for any distribution of Debentures, upon dissolution
of the Trust, (i) the Common Securities will no longer be deemed to be
outstanding and (ii) any certificates representing Common Securities will be
deemed to represent beneficial interests in the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and bearing accrued
and unpaid interest equal to accrued and unpaid Distributions on, such Common
Securities until such certificates are presented to UAL or its agent for
transfer or reissuance.
(d) The Trust may not redeem fewer than all the outstanding Common
Securities unless all accrued and unpaid Distributions have been paid on all
Common Securities for all quarterly Distribution periods terminating on or
prior to the date of redemption.
(e)(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Preferred Securities and Common Securities (a
"Redemption/Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 10 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of
the calculation of the date of redemption or exchange and the dates on which
notices are given pursuant to this paragraph (e)(i), a Redemption/Distribution
Notice shall be deemed to be given on the day such notice is first mailed by
first class mail, postage prepaid, to Holders of Preferred Securities and
Common Securities. Each Redemption/Distribution Notice shall be addressed to
the Holders of Preferred Securities and Common Securities at the address of
each such Holder appearing in the books and records of the Trust. No defect in
the Redemption/Distribution Notice or in the mailing of either thereof with
respect to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Common
Securities are to be redeemed, the Common Securities to be redeemed will be
redeemed Pro Rata from each Holder of Common Securities (subject to adjustment
to eliminate fractional Common Securities).
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(iii) If the Trust gives a Redemption/Distribution Notice in
respect of a redemption of Common Securities as provided in this paragraph 4
(which notice will be irrevocable) then immediately prior to the close of
business on the redemption date, provided that UAL has paid to the Trust in
immediately available funds a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, Distributions will cease to
accrue on the Common Securities called for redemption, such Common Securities
will no longer be deemed to be outstanding and all rights of Holders of such
Common Securities so called for redemption will cease, except the right of the
Holders of such Common Securities to receive the Redemption Price, but without
interest on such Redemption Price. Neither the Trustees nor the Trust shall be
required to register or cause to be registered the transfer of any Common
Securities which have been so called for redemption. If any date fixed for
redemption of Common Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of Common Securities
is improperly withheld or refused and not paid by the Trust, Distributions on
such Common Securities will continue to accrue, from the original redemption
date to the date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to the Holders of the Common
Securities.
(v) Upon the date of dissolution of the Trust and
distribution of Debentures as a result of the occurrence of a Special Event,
Common Security Certificates shall be deemed to represent beneficial interests
in the Debentures so distributed, and the Common Securities will no longer be
deemed outstanding and may be canceled by the Regular Trustees. The Debentures
so distributed shall have an aggregate principal amount equal to the aggregate
liquidation amount of the Common Securities so distributed.
5. Voting Rights. (a) Except as provided under paragraph 5(b) below
and as otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Holders of Common Securities have the sole right under the
Declaration to increase or decrease the number of Trustees, and to appoint,
remove or replace a Trustee, any such increase,
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decrease, appointment, removal or replacement to be approved by Holders of
Common Securities representing a Majority in liquidation amount of the Common
Securities.
If any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than in accordance
with the terms of the Declaration, then the Holders of outstanding Securities
will be entitled to vote on such amendment or proposal as a class and such
amendment or proposal shall not be effective except with the approval of the
Holders of Securities representing a Majority in liquidation amount of such
Securities; provided, however, (A) if any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or the
Common Securities, then only the affected class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of a Majority in liquidation amount of such
class of Securities, (B) the rights of Holders of Common Securities under
Article V of the Declaration to increase or decrease the number of, and to
appoint, replace or remove, Trustees shall not be amended without the consent
of each Holder of Common Securities, and (C) amendments to the Declaration
shall be subject to such further requirements as are set forth in Sections 12.1
and 12.2 of the Declaration.
In the event the consent of the Institutional Trustee, as the holder
of the Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination. The
Institutional Trustee shall vote with respect to such amendment, modification
or termination as directed by a Majority in liquidation amount of the
Securities voting together as a single class (and in the case of any other UAL
Corporation Capital Trust holding debt securities issued under the Indenture,
voting with the holders of securities of such other UAL Corporation Capital
Trust); provided that where such amendment, modification or termination of the
Indenture requires the consent or vote of (1) holders of Debentures
representing a specified percentage greater than a majority in principal amount
of the Debentures or (2) each holder of Debentures, the Institutional Trustee
may only vote with respect to that amendment, modification or termination as
directed by, in the case of clause (1) above, the vote of Holders of Securities
representing such specified percentage of the aggregate liquidation amount of
the Securities, or, in the case of clause (2) above, each Holder of Securities;
and provided, further, that the Institutional Trustee shall be under no
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obligation to take any action in accordance with the directions of the Holders
of the Securities unless the Institutional Trustee shall have received, at the
expense of the Sponsor, an opinion of nationally recognized independent tax
counsel recognized as an expert in such matters to the effect that the Trust
will not be classified for United States federal income tax purposes as an
association taxable as a corporation or a partnership on account of such action
and will be treated as a grantor trust for United States federal income tax
purposes following such action.
Subject to Section 2.6 of the Declaration, and the provisions of this
and the next two succeeding paragraphs, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class,
shall have the right to (A) on behalf of all Holders of Common Securities,
waive any past default, and its consequences, that is waivable under the
Declaration (subject to, and in accordance with, the Declaration) and (B)
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee, as holder of the Debentures, to (i)
direct the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waive any past
default and its consequences that is waivable under Section 5.7 of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable; provided that
where the taking of any action under the Indenture requires the consent or vote
of (1) holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of
Debentures, the Institutional Trustee may only take such action if directed by,
in the case of clause (1) above, the vote of Holders of Common Securities
representing such specified percentage of the aggregate liquidation amount of
the Common Securities, or, in the case of clause (2) above, each Holder of
Common Securities. The Institutional Trustee shall not revoke, or take any
action inconsistent with, any action previously authorized or approved by a
vote of the Holders of the Preferred Securities, and shall not take any action
in accordance with the direction of the Holders of the Common Securities under
this paragraph if the action is prejudicial to the Holders of Preferred
Securities.
Other than with respect to directing the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee
or the Debenture Trustee as set forth above, the Institutional Trustee shall be
under no obligation to take any of the foregoing actions at the direction of
the Holders of Common Securities unless the Institutional Trustee shall have
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received, at the expense of the Sponsor, an opinion of nationally recognized
independent tax counsel recognized as expert in such matters to the effect that
the Trust will not be classified for United States federal income tax purposes
as an association taxable as a corporation or a partnership on account of such
action and will be treated as a grantor trust for United States income tax
purposes following such action.
Notwithstanding any other provision of these terms, each Holder of
Common Securities will be deemed to have waived any Event of Default with
respect to the Common Securities and its consequences until all Events of
Default with respect to the Preferred Securities have been cured, waived by the
Holders of Preferred Securities as provided in the Declaration or otherwise
eliminated, and until all Events of Default with respect to the Preferred
Securities have been so cured, waived by the Holders of Preferred Securities or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the Holders of Preferred Securities and only the Holders of
the Preferred Securities will have the right to direct the Institutional
Trustee in accordance with the terms of the Declaration or of the Securities.
In the event that any Event of Default with respect to the Preferred Securities
is waived by the Holders of Preferred Securities as provided in the
Declaration, the Holders of Common Securities agree that such waiver shall also
constitute the waiver of such Event of Default with respect to the Common
Securities for all purposes under the Declaration without any further act, vote
or consent of the Holders of the Common Securities.
A waiver of an Indenture Event of Default by the Institutional Trustee
at the direction of the Holders of the Preferred Securities will constitute a
waiver of the corresponding Event of Default under the Declaration in respect
of the Securities.
Any required approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of all of the Holders of Securities of the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
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No vote or consent of the Holders of Common Securities will be
required for the Trust to redeem and cancel Common Securities or distribute
Debentures in accordance with the Declaration.
6. Pro Rata Treatment. A reference in these terms of the Common
Securities to any payment, distribution or treatment as being "Pro Rata" shall
mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Preferred Securities pro rata according to the aggregate
liquidation amount of Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Preferred Securities outstanding,
and only after satisfaction of all amounts owed to the Holders of the Preferred
Securities, to each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Common Securities
outstanding.
7. Ranking. The Common Securities rank pari passu and payment
thereon will be made Pro Rata with the Preferred Securities except that,
where an Event of Default occurs and is continuing, the rights of Holders of
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption or otherwise are subordinate to the rights of Holders
of the Preferred Securities.
8. Mergers, Consolidations or Amalgamations.
(a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Sections 3
and 8(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Securities, the Delaware Trustee or the
Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided
that:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations of
the Trust under the Preferred Securities; or
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(B) substitutes for the Preferred Securities
other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Preferred
Securities rank with respect to Distributions and payments
upon liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the holder of the Debentures;
(iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification
of issuance, on any national securities exchange or with another
organization on which the Preferred Securities are then listed or
quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Preferred Securities (including any
Successor Securities) in any material respect (other than with respect
to any dilution of such Holders' interests in the Preferred Securities
as a result of such merger consolidation, amalgamation or
replacement);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) such merger, consolidation, amalgamation or replacement
does not vary the investment of the Holders of the Preferred
Securities within the meaning of Treasury Regulation Section
301.7701-4(c)(1), e.g., does not substitute other assets for assets of
the Trust to which the Preferred Securities relate or add assets to
the Trust to which the Preferred Securities relate;
(viii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences
and privileges of the Holders of the
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Preferred Securities (including any Successor Securities) in
any material respect (other than with respect to any
dilution of the Holders' interest in the new entity);
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company; and
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will continue to be classified as a grantor trust for
United States federal income tax purposes; and
(ix) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided
by the Preferred Guarantee.
9. Transfers, Exchanges, Method of Payments. Payment of Distributions
and payments on redemption of the Common Securities will be payable, the
transfer of the Common Securities will be registrable, and Common Securities
will be exchangeable for Common Securities of other denominations of a like
aggregate liquidation amount, at the principal corporate trust office of the
Institutional Trustee in [the City of New York]; provided that payment of
Distributions may be made at the option of the Regular Trustees on behalf of
the Trust by check mailed to the address of the Persons entitled thereto and
that the payment on redemption of any Common Security will be made only upon
surrender of such Common Security to the Institutional Trustee. Notwithstanding
the foregoing, transfers of Common Securities are subject to conditions set
forth in Section 9.1(c) of the Declaration.
10. Acceptance of Indenture. Each Holder of Common Securities, by
the acceptance thereof, agrees to the provisions of the Indenture and the
Debentures, including the subordination provisions thereof.
11. No Preemptive Rights. The Holders of Common Securities shall
have no preemptive or similar rights to subscribe to any additional Common
Securities or Preferred Securities.
12. Miscellaneous. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the
Indenture to a Holder without charge on written request to the Trust at its
principal place of business.
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Annex I
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
C-1 ________
Certificate Evidencing Common Securities
of
UAL Corporation Capital Trust I
13 1/4% Trust Originated Common Securities
(liquidation amount $25 per Common Security)
UAL Corporation Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
UAL Corporation (the "Holder") is the registered owner of ____________________
_________ (______) common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the 13 1/4% Trust
Originated Common Securities (liquidation amount $25 per Common Security) (the
"Common Securities"). The Common Securities are transferable on the books and
records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer and
satisfaction of the other conditions set forth in the Declaration (as defined
below) including, without limitation, Section 9.1(c) thereof. The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject
to the terms and provisions of, the Amended and Restated Declaration of
Trust of the Trust dated as of [_____________], 1996, as the same may be
amended from time to time (the "Declaration") including the designation of the
terms of Common Securities as set forth in Exhibit C thereto. The Common
Securities and the Preferred Securities issued by the Trust pursuant to the
Declaration represent undivided beneficial interests in the assets of the
Trust, including the Debentures (as defined in the Declaration) issued by UAL
Corporation, a
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Delaware corporation, to the Trust pursuant to the Indenture referred to in the
Declaration. The Trust will furnish a copy of the Declaration and the
Indenture to the Holder without charge upon written request to the Trust at its
principal place of business or registered office.
The Holder of this Certificate, by accepting this Certificate, is
deemed to have agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture.
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Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, Trustees of the Trust have executed this
certificate as of [____], 1996.
UAL CORPORATION CAPITAL TRUST I
By: _________________________
Name:
Title: Trustee
By: _________________________
Name:
Title: Trustee
Countersigned and Registered:
[__________________],
Transfer Agent and Registrar
By: ___________________________
Authorized Signature
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfer this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably constitutes and appoints
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
____________________ attorney to transfer this Common Security Certificate on
the books of the within-named Trust with full power of substitution in the
premises.
Dated: ____________________________
Signature: ________________________
Note: The signature(s) to this assignment must correspond with the name(s) as
written upon the face of this certificate in every particular, without
alteration or enlargement, or any change whatever.
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