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EXHIBIT 4.7
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of ____________, 1996, is executed
and delivered by UAL Corporation, a Delaware corporation (the "Guarantor"), and
The First National Bank of Chicago as the initial Guarantee Trustee (as defined
herein) for the benefit of the Holders (as defined herein) from time to time of
the Preferred Securities (as defined herein) of UAL Corporation Capital Trust
I, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of ___________, 1996 among the trustees of the Issuer
named therein, UAL Corporation, as Sponsor, and the Holders from time to time
of undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing as of the date hereof in accordance with the Offer (as defined herein)
$____ aggregate liquidation amount of its [____] Trust Originated Preferred
Securities (the "Preferred Securities") representing undivided beneficial
interests in the assets of the Issuer and having the terms set forth in Exhibit
B to the Declaration;
WHEREAS, the Preferred Securities will be issued by the Issuer upon
deposit of the Guarantor's Debentures (as defined herein) with the Issuer as
trust assets; and
WHEREAS, as incentive for the Holders to exchange Depositary Shares
("Depositary Shares") representing 1/1,000 of a share of the 12-1/4% Series B
Preferred Stock of the Guarantor for Preferred Securities pursuant to the
Offer, the Guarantor desires to irrevocably and unconditionally agree, to the
extent set forth herein, to pay to the Holders of the Preferred Securities the
Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the exchange of Depositary Shares
for Preferred Securities, which exchange the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders from time to time of the Preferred
Securities.
ARTICLE I
SECTION 1.1
Definitions. (a) Capitalized terms used in this
Guarantee Agreement but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
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(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement 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 of 1933, as amended, or any successor rule thereunder.
"Commission" means the United States Securities and Exchange
Commission.
"Common Securities" means the securities representing undivided
beneficial interests in the assets of the Issuer, having the terms set forth in
Exhibit C to the Declaration.
"Covered Person" means any Holder of Preferred Securities.
"Debentures" means the series of Junior Subordinated Debentures issued
by the Guarantor under the Indenture and entitled the "[______]% Junior
Subordinated Debentures due December 31, 2026".
"Distributions" means the periodic distributions and other payments
payable to Holders of Preferred Securities in accordance with the terms of the
Preferred Securities set forth in Exhibit B to the Declaration.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions and the redemption price, including all accrued and unpaid
Distributions to the date of
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redemption (the "Redemption Price"), with respect to the Preferred Securities
called for redemption by the Issuer but if and only to the extent that in each
case the Guarantor has made a payment to the Trust of interest or principal on
the Debentures and (ii) upon a voluntary or involuntary dissolution, winding-up
or termination of the Issuer (other than in connection with the distribution of
Debentures to Holders or the redemption of all the Preferred Securities upon
the maturity or redemption of the Debentures as provided in the Declaration),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid Distributions on the Preferred Securities to the date of payment, to the
extent the Issuer has funds available therefor, and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in liquidation of
the Issuer (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means The First National Bank of Chicago until a
Successor Guarantee Trustee has been appointed and accepted such appointment
pursuant to the terms of this Guarantee Agreement, and thereafter means each
such Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any entity directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, and any officers, directors, shareholders, members,
partners, employees, representatives or agents of the Guarantee Trustee.
"Indenture" means the Indenture dated as of [_________], 1996 between
the Guarantor and The First National Bank of Chicago, as trustee, as
supplemented by the board resolution or supplemental indenture pursuant to
which the Debentures are to be issued.
"Majority in liquidation amount of the Preferred Securities" means,
except as otherwise required by the Trust Indenture Act, Holder(s) of
outstanding Preferred Securities voting together as a single class, who are the
record owners of Preferred 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 Preferred Securities.
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"Offer" means the offer by the Issuer to exchange Preferred Securities
for outstanding Depositary Shares in consideration for the deposit by the
Guarantor of Debentures as trust assets of the Issuer, all as described in a
Prospectus dated [ ], 1996.
"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.
"Preferred Securities" has the meaning set forth in the first recital
clause above.
"Redemption Price" means the amount payable on redemption of the
Preferred Securities in accordance with the terms of the Preferred Securities.
"Responsible Officer" means, with respect to the Guarantee 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 Guarantee 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.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as a Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application. (a) This Guarantee
Agreement is subject to the provisions of the Trust Indenture Act that are
required to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the
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duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act,
such imposed duties shall control.
(c) The application of the Trust Indenture Act to this Guarantee
Agreement shall not affect the nature of the Preferred Securities as equity
securities representing undivided beneficial interests in the assets of the
Issuer.
SECTION 2.2 Lists of Holders of Preferred Securities. (a) The
Guarantor shall provide the Guarantee 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).
(b) the Guarantee 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 Guarantee Trustee. Within 60 days after
May 15 of each year, the Guarantee Trustee shall provide to the Holders of the
Preferred Securities such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form, in the manner and at the times provided by
Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also
comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee. The Guarantor
shall provide to the Guarantee Trustee, the Commission and the Holders of the
Preferred 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 of the Issuer).
SECTION 2.5 Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee Agreement
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(b), Holders of Preferred Securities may by vote of at least a Majority in
liquidation amount of the Preferred
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Securities, (A) direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee, or exercising any trust or
power conferred upon the Guarantee Trustee or (B) on behalf of the Holders of
all Preferred Securities waive any past Event of Default and its consequences.
Upon such waiver, any such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Guarantee Agreement, but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right consequent thereon.
(b) The right of any Holder of Preferred Securities to receive
payment of the Guarantee Payments in accordance with this Guarantee Agreement,
or to institute suit for the enforcement of any such payment, shall not be
impaired without the consent of each such Holder.
SECTION 2.7 Disclosure of Information. The disclosure of information
as to the names and addresses of the Holders of the Preferred 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
Guarantee Trustee be held accountable by reason of mailing any material
pursuant to a request made under Section 312(b) of the Trust Indenture Act.
SECTION 2.8 Conflicting Interest. The Declaration shall be deemed to
be specifically described in this Guarantee Agreement for the purposes of
clause (i) of the first provision contained in Section 310(b) of the Trust
Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee. (a) This
Guarantee Agreement shall be held by the Guarantee Trustee in trust for the
benefit of the Holders of the Preferred Securities. The Guarantee Trustee
shall not transfer its right, title and interest in the Guarantee Agreement to
any Person except a Successor Guarantee Trustee on acceptance by such Successor
Guarantee Trustee of its appointment to act as Guarantee Trustee or to a Holder
of Preferred Securities exercising his or her rights pursuant to Section 5.4.
The right, title and interest of the Guarantee Trustee to the Guarantee
Agreement shall vest automatically in each Person who may hereafter be
appointed as Guarantee Trustee in accordance with Article IV. Such vesting and
cessation of title shall be
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effective whether or not conveyancing documents have been executed and
delivered.
(b) If an Event of Default occurs and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders
of the Preferred Securities.
(c) This Guarantee Agreement and all moneys received by the Trust
hereunder in respect of the Guarantee Payments 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 Guarantee Trustee or its agents or their creditors.
(d) The Guarantee Trustee shall transmit, after the occurrence of an
Event of Default, by first class mail, postage prepaid, to the holders of the
Preferred Securities, as their names and addresses appear upon the register,
notice of all Events of Default known to the Guarantee Trustee, unless such
defaults shall have been cured before the giving of such notice; provided that
the Guarantee Trustee shall be protected in withholding such 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 Guarantee Trustee in good faith
determine that the withholding of such notice is in the interests of the
Holders of the Preferred Securities. The Guarantee Trustee shall not be deemed
to have knowledge of any default except any default as to which the Guarantee
Trustee shall have received written notice or a Responsible Officer charged
with the administration of this Guarantee Agreement shall have obtained written
notice.
(e) The Guarantee Trustee shall not resign as a Trustee unless a
Successor Guarantee Trustee has been appointed and accepted that appointment in
accordance with Article IV.
SECTION 3.2 Certain Rights and Duties of the Guarantee Trustee. (a)
The Guarantee 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 Guarantee
Agreement, and no implied covenants shall be read into this Guarantee Agreement
against the Guarantee Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6(a)), the Guarantee Trustee
shall exercise such of the rights and powers vested in it by this Guarantee
Agreement, 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 Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its
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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 Guarantee
Trustee shall be determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Guarantee Agreement, and no implied covenants or obligations shall be read
into this Guarantee Agreement against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Guarantee Trustee and conforming
to the requirements of this Guarantee Agreement; but in the case of any such
certificates or opinions that are specifically required to be furnished to the
Guarantee Trustee by any provision hereof, the Guarantee Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Guarantee Agreement;
(ii) The Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall have proved that the Guarantee Trustee was negligent
in ascertaining the pertinent facts;
(iii) the Guarantee 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 of Preferred Securities as provided herein
relating to the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require
the Guarantee 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 Guarantee Agreement or adequate indemnity
against such risk or liability is not reasonably assured to it.
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(c) Subject to the provisions of Section 3.2(a) and (b):
(i) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any action
hereunder, the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and rely upon
a certificate, which shall comply with the provisions of Section 314(e) of the
Trust Indenture Act, signed by any authorized officer of the Guarantor;
(ii) the Guarantee Trustee (A) may consult with counsel (which
may be counsel to the Guarantor 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 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 Guarantee
Agreement from any court of competent jurisdiction;
(iii) The Guarantee 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 Guarantee 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 Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee Agreement
at the request or direction of any Holders of Preferred Securities, unless such
Holders shall have offered to the Guarantee 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 Guarantee 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 Guarantee Agreement, 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 Guarantee Trustee or its agents
hereunder shall bind the Holders of the Preferred Securities and the signature
of the Guarantee Trustee or its agents alone shall be sufficient and effective
to perform any
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such action; and no third party shall be required to inquire as to the
authority of the Guarantee Trustee to so act, or as to its compliance with any
of the terms and provisions of this Guarantee Agreement, both of which shall be
conclusively evidenced by the Guarantee Trustee's or its agent's taking such
action.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee shall be taken as the statements of
the Guarantor and the Guarantee Trustee does not assume any responsibility for
their correctness. The Guarantee Trustee makes no representations as to the
validity or sufficiency of this Guarantee Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Qualifications. (a) There shall at all times be a
Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; 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 corporation or 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 corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this Section
4.1(a)(ii), the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
If at any time the Guarantee Trustee shall cease to satisfy the
requirements of clauses (i)-(ii) above, the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.2. If the
Guarantee Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee and
the Guarantor shall in all respects comply with the provisions of Section
310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
Trustee. (a) Subject to Section 4.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
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(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.1(a) has been
appointed and has accepted such appointment by written instrument executed by
such Successor Guarantee Trustee and delivered to the Guarantor and the
Guarantee Trustee being removed.
(c) The Guarantee Trustee appointed to office shall hold office until
his or her successor shall have been appointed or until its removal or
resignation.
(d) The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument (a "Resignation Request") in
writing signed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that no such resignation of the Guarantee
Trustee shall be effective until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.1(a) has been
appointed and has accepted such appointment by instrument executed by such
Successor Guarantee Trustee and delivered to Guarantor and the resigning
Guarantee Trustee.
(e) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of a Resignation Request, the resigning Guarantee
Trustee may petition any court of competent jurisdiction for appointment of a
Successor Guarantee Trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, appoint a Successor Guarantee
Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without
duplication of amounts theretofore paid by the Issuer) regardless of any
defense, right of set-off or counterclaim which the Issuer may have or assert.
The Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice. The Guarantor hereby waives notice of
acceptance of this Guarantee Agreement and of any liability to which it applies
or may apply, presentment, demand
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for payment, any right to require a proceeding first against the Issuer or any
other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Debentures), Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Preferred Securities or the extension of time
for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent
of this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances. There shall be no
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obligation of the Holders to give notice to, or obtain consent of, the
Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4 Enforcement of Guarantee. The Guarantor and the
Guarantee Trustee expressly acknowledge that (i) this Guarantee Agreement will
be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) Holders representing not less than a
Majority in liquidation amount of the Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available in respect of this Guarantee Agreement, including the giving of
directions to the Guarantee Trustee, or exercising any trust or other power
conferred upon the Guarantee Trustee under this Guarantee Agreement, and (iv)
any Holder may institute a legal proceeding directly against the Guarantor to
enforce such Holder's rights under this Guarantee Agreement, without first
instituting a legal proceeding against the Issuer, the Guarantee Trustee, or
any other Person and without prior notice to the Guarantee Trustee.
SECTION 5.5 Guarantee of Payment. This Guarantee Agreement creates a
guarantee of payment and not merely of collection. This Guarantee Agreement
will not be discharged except by payment of the Guarantee Payments in full
(without duplication of amounts theretofore paid by the Issuer).
SECTION 5.6 Subrogation. The Guarantor shall be subrogated to all
rights of the Holders against the Issuer in respect of any amounts paid to the
Holders by the Guarantor under this Guarantee Agreement; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust
for the Holders and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
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ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions. So long as any Preferred
Securities remain outstanding, the Guarantor will not declare or pay any
dividend on, or redeem, purchase, acquire or make a distribution or liquidation
payment with respect to, any of its common stock or preferred stock or any
other securities similar to the Preferred Securities or the Debentures, or make
any guarantee payments with respect thereto, if at such time (i) the Guarantor
shall be in default with respect to its Guarantee Payments or other payment
obligations hereunder, (ii) there shall have occurred and be continuing any
event of default under the Indenture or (iii) the Guarantor shall have given
notice of its selection of an Extension Period (as defined in the Indenture)
and such period, or any extension thereof, is continuing; provided that the
Guarantor will be permitted to pay dividends (and cash in lieu of fractional
shares) upon the mandatory conversion of any of its preferred stock in
accordance with the terms of such stock. In addition, so long as any Preferred
Securities remain outstanding, the Guarantor (i) will remain the sole direct or
indirect owner of all of the outstanding Common Securities and shall not cause
or permit the Common Securities to be transferred except to the extent such
transfer is permitted under Section 9.1(c) of the Declaration; provided that
any permitted successor of the Guarantor under the Indenture may succeed to the
Guarantor's ownership of the Common Securities and (ii) will not take any
action which would cause the Issuer to cease to be treated as a grantor trust
for United States federal income tax purposes except in connection with a
distribution of Debentures as provided in the Declaration.
SECTION 6.2 Subordination. This Guarantee Agreement will constitute
an unsecured obligation of the Guarantor and will rank (i) subordinate and
junior in right of payment to all other liabilities of the Guarantor, except
those made pari passu or subordinate by their terms, and (ii) senior to all
capital stock now or hereafter issued by the Guarantor and to any guarantee now
or hereafter entered into by the Guarantor in respect of any of its capital
stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Guarantee Agreement shall terminate
and be of no further force and effect upon full payment of the Redemption Price
of all Preferred Securities, upon the distribution of Debentures to Holders of
Preferred Securities and Common Securities in exchange for all of the Preferred
Securities
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and Common Securities or upon full payment of the amounts payable in accordance
with the Declaration upon liquidation of the Issuer. Notwithstanding the
foregoing, this Guarantee Agreement will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder must restore payment
of any sums paid with respect to the Preferred Securities or this Guarantee
Agreement.
ARTICLE VIII
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.1 Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Guarantor 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 and in a
manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Guarantee Agreement
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 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 Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor 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 Guarantor, 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 Preferred Securities might properly be paid.
SECTION 8.2 Indemnification. (a) To the fullest extent permitted by
applicable law, the Guarantor 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 and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Guarantee Agreement, 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 negligence or willful
misconduct with respect to such acts or omissions.
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(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 Guarantor prior to the final disposition of such claim, demand, action,
suit or proceeding upon receipt by the Guarantor 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 8.2(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger or sale involving the Guarantor that is
permitted under Article Eight of the Indenture, the Guarantor shall not assign
its obligations hereunder.
SECTION 9.2 Amendments. Except with respect to any changes which do
not adversely affect the rights of Holders (in which case no consent of Holders
will be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in liquidation amount of
the Preferred Securities. The provisions of Section 12.2 of the Declaration
concerning meetings of Holders shall apply to the giving of such approval.
SECTION 9.3 Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first
class mail as follows:
(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Holders:
UAL Corporation
0000 Xxxx Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Corporate Secretary
(b) if given to the Guarantee Trustee, to the address set forth below
or such other address as the Guarantee Trustee may give notice of to the
Holders:
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The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
(c) if given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All notices hereunder 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 document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 9.4 Genders. The masculine, feminine and neuter genders used
herein shall include the masculine, feminine and neuter genders.
SECTION 9.5 Benefit. This Guarantee Agreement is solely for the
benefit of the Holders and subject to Section 3.1(a) is not separately
transferable from the Preferred Securities.
SECTION 9.6 Governing Law. THIS GUARANTEE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF [NEW YORK].
SECTION 9.7 Counterparts. This Guarantee Agreement may be executed
in counterparts, each of which shall be an original; but such counterparts
shall together constitute one and the same instrument.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
UAL CORPORATION
By:
---------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
as Guarantee Trustee
By:
---------------------
Name:
Title:
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