UAL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN TRUST AGREEMENT Between UAL CORPORATION and STATE STREET BANK AND TRUST COMPANY
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UAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Between
UAL CORPORATION
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
| RECITALS | 1 | |
| ARTICLE I | DEFINITIONS | 3 |
| ARTICLE II | ESTABLISHMENT OF THE TRUST | 4 |
| ARTICLE III | POWERS OF TRUSTEE | 5 |
| ARTICLE IV | ADMINISTRATION | 14 |
| ARTICLE V | PAYMENTS OF BENEFITS AND EXPENSES | 16 |
| ARTICLE VI | LIABILITY AND INDEMNIFICATION OF THE TRUSTEE | 17 |
| ARTICLE VII | ACCOUNTING OF THE TRUSTEE | 19 |
| ARTICLE VIII | REMOVAL AND RESIGNATION OF THE TRUSTEE | 21 |
| ARTICLE IX | AMENDMENT AND TERMINATION | 21 |
| ARTICLE X | LEVERAGED ACQUISITIONS OF QUALIFYING STOCK | 22 |
| ARTICLE XI | MISCELLANEOUS | 24 |
UAL CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
THIS AGREEMENT
has been made as of the 12th day of July, 1994, between UAL CORPORATION,
a corporation organized under the laws of the State of Delaware with its
principal place of business in Elk Grove Township, Illinois (hereinafter
referred to as the "Company"), and STATE STREET BANK AND TRUST COMPANY,
a Massachusetts trust company with its principal place of business at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx (hereinafter referred to as the
"Trustee").
RECITALS
WHEREAS, the Company
has adopted the UAL Corporation Employee Stock Ownership Plan (the "Plan")
for the benefit of certain employees of the Company and its Affiliates;
and
WHEREAS, the Plan
consists of two portions, a "leveraged" portion (Part A) that is intended
to be an employee stock ownership plan and an "unleveraged" portion (Part
B); and
WHEREAS, Part
A consists of both a stock bonus plan component and a money purchase pension
plan component and Part B consists solely of a stock bonus component; and
WHEREAS, the Plan
provides for the establishment of a trust (the "Trust") to hold, invest
and administer amounts contributed under both Part A and Part B of the
Plan; and
WHEREAS, in order
to effectuate the Plan, the Company desires to establish a Trust, designed
to meet the applicable requirements of the Internal Revenue Code of 1986,
as amended (the "Code"), and the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"); and
WHEREAS, Part
A and Part B are intended to qualify under Section 401 (a) of the Code
and Part A is intended to qualify under Section 4975(e)(7) of the Code
and to meet the requirements of Section 4975(d)(3) of the Code, and the
Trust is intended to be exempt from federal income taxation under Section
501(a) of the Code; and
WHEREAS, the authority
to manage and control the operation and administration of the Plan is vested
in the UAL Employee Stock Ownership Plan ESOP Committee, as named fiduciary
as provided in the Plan, which named fiduciary shall have such authorities
and shall be subject to such duties with respect to the Trust as are specified
in this Agreement and the Plan; and
WHEREAS, cash,
property and/or Company Stock (as hereinafter defined) will from time to
time be contributed to or purchased by the Trustee, which assets, as and
when received by the Trustee, will constitute a trust fund to be held for
the exclusive benefit of the participating employees under the Plan or
their beneficiaries and to defray reasonable expenses of administering
the Plan; and
WHEREAS, the Company
desires the Trustee to hold and administer such trust fund and the Trustee
is willing to hold and administer such trust fund pursuant to the terms
of this Agreement:
NOW, THEREFORE,
in consideration of the premises and of the mutual covenants herein contained,
and intending to be legally bound hereby, the Company and the Trustee do
hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
Definitions. All defined terms
used herein have the meaning assigned to them in the Plan, except as otherwise
provided herein, and unless the context otherwise requires or unless specifically
provided, all provisions of this Agreement shall apply to both Part A and
Part B. The following terms as used in this Agreement have the meaning
indicated unless the context requires otherwise:
1.1 "Affiliate" means any corporation,
trade or business, which, at the time of reference, is together with the
Company, a member of a controlled group of corporations, a group of trades
or businesses (whether or not incorporated) under common control or an
affiliated service group, as described in Code sections 415(b), 414 (c)
and 414(m), respectively, or any other organization treated as a single
employer under Code section 414(o); provided, however, that, where the
context so requires, the term "Affiliate" shall be construed to give full
effect to the provisions of Code sections 409(1)(4) and 415(h).
1.2 "Acquisition Loan" means a loan
(or other extension of credit, including an installment obligation to a
party in interest (as defined in ERISA Section 3(14)) incurred by the Trustee
in connection with the purchase of Qualifying Employer Securities.
1.3 "Beneficiary" means the person
or persons to whom a deceased Participant's benefits are payable under
the Plan.
1.4 "Board of Directors" means the
Board of Directors of the Company.
1.5 "Company" means UAL Corporation
and any successor thereto.
1.6 "Company Stock" means anystock
issued by the Company (or a corporation which is a member of the same controlled
group) which meet the requirements of Section 407 of ERISA or Section 409(1)
of the Code.
1.7 "Employee Group" means "Employee
Group" as defined in the Plan.
1.8 "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended, and all successor laws thereto.
1.9 "ESOP Committee" means the committee
appointed to administer the Plan pursuant to Section 11 thereof.
1.10 "Fund" means the contributions
of cash or property reasonably acceptable to the Trustee, including, but
not limited to, Company Stock deposited with or purchased by the Trustee
and held under this Trust by the Trustee, any property into which the same
or any part thereof may from time to time be converted, and any appreciation
therein or income thereon less any depreciation therein, any losses thereon
and any distributions or payments therefrom.
1.11 "Participant" means an employee
of the Company or any Affiliate or any other person who has an account
balance under the Plan.
1.12 "Prohibited Transaction" means
a prohibited transaction under Sections 406 of ERISA and/or Section 4975(c)(1)
of the Code which is not exempt under Section 408 of ERISA or Sections
4975(c)(2) or 4975(d) of the Code, as the case may be.
1.13 "Qualifying Employer Securities"
means shares of stock, common or preferred, issued by the Company (or a
corporation which is a member of the same controlled group) which meets
the requirements of Section 409(1) of the Code.
ARTICLE II
ESTABLISHMENT OF THE TRUST
2.1 The Company hereby establishes
with the Trustee a trust for the purpose of holding and administering the
Fund in accordance with this Agreement.
2.2 Notwithstanding anything to the
contrary in this Agreement, or in any amendment thereto, except as otherwise
provided under ERISA, the Company, the ESOP Committee and the Trustee shall
discharge their respective duties with respect to the Fund for, and the
Fund shall be used solely for and not diverted from, the exclusive purposes
of providing benefits for Participants and their Beneficiaries and defraying
reasonable expenses of administering the Plan. Notwithstanding the preceding
sentence, however, contributions shall be returned by the Trustee to the
Company at the direction of the ESOP Committee if (i) the ESOP Committee
certifies in writing to the Trustee that one or more of the circumstances
listed below exist and (ii) prior to any such return of contributions,
appropriate arrangements shall have been made to protect the substantive
rights of each Employee Group under the Plan:
2.2.1 if a contribution is made
by the Company by reason of a mistake of fact, the contribution or the
then current value thereof, if less, shall be returned to the Company without
interest within one year after it was paid to the Trustee;
2.2.2. if the deduction of a contribution
is disallowed by the Internal Revenue Service, the contribution, or the
then current value thereof, if less, to the extent the deduction is disallowed
shall be returned to the Company without interest within one year after
the disallowance; and
2.2.3. if the initial qualification
of the Plan under Sections 401, 409 and 4975(e)(7) of the Code is denied,
the entire Fund or the then current value thereof, if less, shall be returned
to the Company without interest within one year after such qualification
has been denied.
2.3 The Trustee shall receive any contributions
paid to it in cash, in Company Stock or in other property acceptable to
it. All contributions so received, together with the income therefrom and
any other increment thereon, shall be held, managed and administered by
the Trustee pursuant to the terms of this Agreement without distinction
between principal and income and without liability for the payment of interest
thereon. The Trustee shall not be responsible for the collection of any
contributions to the Plan, or for the determination of the amount or frequency
of any contribution required by the Plan or the provisions of the Code
or ERISA, which responsibilities shall be borne solely by the ESOP Committee.
ARTICLE III
POWERS OF TRUSTEE
3.1 The Trustee shall maintain books
of account and records with respect to the Fund. The Fund shall be held
by the Trustee in trust and dealt with in accordance with the provisions
of this Agreement. The Trustee shall take all action necessary to implement
any written directions received from the ESOP Committee and shall conform
to procedures established by the ESOP Committee for disbursement of funds
in accordance with the terms of the Plan.
3.2 It shall be the duty of the Trustee
(a) to hold, invest and reinvest the Fund in accordance with the provisions
of this Agreement, and (b) to pay moneys therefrom in accordance with the
written directions of the ESOP Committee.
3.3 Subject to Paragraphs 3.6, 3.7
and 3.8, at the direction of the ESOP Committee, the Trustee shall invest
the assets of the Fund exclusively in Company Stock (except for di minimis
investments in cash or cash equivalents pending investment in Company Stock
or pending distributions to Participants); provided, however, that the
portion of the Fund attributable to Part A of the Plan is intended to be
invested primarily in Qualifying Employer Securities. To the extent that
Company contributions are made in Company Stock, the Trustee shall retain
such Company Stock unless otherwise directed by the ESOP Committee. To
the extent Company contributions are made in cash and are not used to pay
principal or interest on an Acquisition Loan pursuant to Article X or to
pay expenses of the Fund, the Trustee shall, at the direction of the ESOP
Committee, acquire Company Stock. If at the time Company Stock is to be
purchased, the Company has outstanding more than one class of Company Stock,
the ESOP Committee shall direct the Trustee as to which class of Company
Stock shall be purchased. Subject to Paragraph 3.8, the Trustee may rely
in good faith without liability upon the valuation of Company Stock as
determined by the ESOP Committee. The Trustee may also, at the direction
of the ESOP Committee, invest the Fund in temporary investments other than
Company Stock, may hold such portion of the Fund in such investments as
may be required under the investment diversification provision of the Plan,
may hold such portion of the Fund uninvested as the ESOP Committee deems
advisable for making distributions under the Plan, may invest assets of
the Fund in short-term investments bearing a reasonable rate of interest,
including without limitation, deposits in, or short-term instruments of,
the Trustee, or in one or more short-term collective investment funds administered
by the Trustee as trustee thereof for the collective investment of assets
of employee pension or profit-sharing trusts, as long as each such collective
investment fund constitutes a qualified trust under the applicable provisions
of the Code (and while any portion of the Fund is so invested, such collective
investment funds shall constitute part of the Plan to the extent of such
investment, and the instrument creating such funds shall constitute part
of this Agreement).
3.4 The Trustee shall have no duty
hereunder to determine or inquire into whether any directions received
from the ESOP Committee in accordance with the terms of this Agreement
represent proper and lawful decisions or result in Prohibited Transactions.
The Trustee shall have no duty to review any investment to be acquired,
held or disposed of pursuant to such instructions from the ESOP Committee.
If the Trustee does not receive written directions with respect to any
part of the Fund subject to the ESOP Committee's direction (including,
without limitation, income, sale proceeds or contributions), the Trustee
shall, pending receipt of such directions, hold and invest such amount
in short-term securities as provided in Paragraph 3.3 hereof.
3.5 In addition to, and not in limitation
of, the powers now, or which may later become, vested in it, the Trustee
shall have the following powers; provided, however, that the Trustee's
exercise of such powers shall be consistent with and subject to all other
provisions of this Agreement, and provided further that, subject to the
provisions of Paragraph 3.6, 3.7, and 3.8, the powers set forth in Paragraphs
3.5.1, 3.5.2, 3.5.3, and 3.5.4 shall be exercised by the Trustee only to
the extent and in the manner directed by the ESOP Committee, a Participant
or a Beneficiary in accordance with the terms of this Agreement, except
as otherwise required by ERISA:
3.5.1 To hold, invest and reinvest
the principal or income of the Trust in bonds, common or preferred stock,
other securities, or other personal, real or mixed tangible or intangible
property, including any securities issued by the Company or its Affiliates
(including investment in deposits with Trustee which bear a reasonable
interest rate, including without limitation investments in trust savings
accounts, certificates of deposit, time certificates or similar investments
or deposits maintained by the Trustee);
3.5.2 To exercise voting rights either
in person or by proxy, with respect to any securities or other property,
and generally to exercise with respect to the Fund all rights, powers and
privileges as may be lawfully exercised by any person owning similar property
in his own right;
3.5.3 To exercise any options, conversion
rights, put rights, or rights to subscribe for additional stocks, bonds
or other securities appurtenant to any securities or other property held
by it, and to make any necessary payments in connection with such exercise,
and to join in, dissent from, and oppose the reorganization, consolidation,
recapitalization, liquidation, merger or sale of corporate property with
respect to any corporations or property in which it may be interested as
Trustee;
3.5.4 To compromise, compound, and
settle any debt or obligation owing to or from it as Trustee, and to reduce
or increase the rate of interest on, extend or otherwise modify, foreclose
upon default, or otherwise enforce any such obligation;
3.5.5 To xxx or defend suits or legal proceedings to enforce or protect any interest of the Trust, and to represent the Trust in all suits or legal proceedings in any court or before any other administrative agency, body or tribunal, provided that the Trustee is indemnified to the Trustee's satisfaction against liability and expenses;
3.5.6 To hold any property at any place, except that it shall not maintain the indicia of ownership of any assets of the Fund outside the jurisdiction of the district courts of the United States except as permitted by regulations issued by the Secretary of Labor of the United States under ERISA Section 404(b);
3.5.7 To make, execute, acknowledge and deliver assignments, agreements and other instruments;
3.5.8 To register any securities held by it hereunder in its own name or in the name of a nominee with or without the addition of words indicating that such securities are held in a fiduciary capacity, to permit securities or other property to be held by or in the name of others, to hold any securities in bearer form and to deposit any securities or other property in a depository, clearing corporation or similar corporation, either domestic or foreign; provided, however, that the records of the Trustee shall at all times show that any such property held or registered in the name of another is part of the Fund;
3.5.9 To employ legal counsel, brokers and other advisors, agents or employees to perform services for the Fund or to advise it with respect to its duties and obligations under this Agreement and in connection with the Trust, and to pay them reasonablecompensation from the Fund, to the extent not paid directly by the Company or an Affiliate;
3.5.10 In accordance with the applicable provisions of the Plan and subject to Paragraph 3.8, to obtain an Acquisition Loan in such amounts and upon such terms and conditions as shall be deemed advisable or proper to carry out the purposes of the Trust, and, in connection therewith, to issue its promissory note as Trustee, to pledge any securities or other property of the Fund for the repayment of such Acquisition Loan and to repay from time to time the principal and interest on, and to take any other action with respect to, such Acquisition Loan; provided that if such Acquisition Loan is from, or guaranteed by, a "party of interest" within the meaning of Section 3(14) of ERISA, the requirements of Article X shall be satisfied;
3.5.11 To open and make use of banking accounts including checking accounts, which accounts, if bearing a reasonable rate of interest or if checking accounts, may be with the Trustee.
3.6 Voting of Company Stock 3.6.1 Allocated Shares. Each Participant (or Beneficiary) as a named fiduciary within the meaning of ERISA section 403(a)(1), in accordance with the procedures hereinafter set forth, may direct the Trustee with respect to the votes of the shares of Company Stock allocated to his ESOP Stock Account, and the Trustee shall follow the directions of those Participants (and Beneficiaries) who provide timely instructions to the Trustee; provided that, notwithstanding the foregoing, the Trustee shall vote the shares of Company Stock allocated to the Part B Accounts of the Participants who are (or were) members of the ALPA Employee Group but who are not Employees (or allocated to the Part B Accounts of their Beneficiaries.)
3.6.2 Unallocated and Uninstructed Shares.
(i) Part A. Each active Participant
(which shall be defined for purposes of Sections 3.6 and 3.7 to mean a
Participant who is an Employee) who directed the Trustee with respect to
the shares allocated to his Account under Part A in accordance with Section
3.6.1 may, again as a named fiduciary, direct the Trustee with respect
to a portion of both the number of shares of Company Stock held in the
Loan Suspense Account and the number of such shares allocated to any Participant's
Account under Part A for which no instructions were timely received by
the Trustee. Such portion shall be determined as follows:
(A) Such portion shall be limited
to the sum of: (I) the number of shares of Company Stock held in the Loan
Suspense Account reserved for allocation to such Participant's Employee
Group, plus (ii) the number of shares of Company Stock allocated to the
Accounts of Participants in such Participant's Employee Group under Part
A for which no instructions were timely received.
(B) The number of shares of Company
Stock determined under clause (i)(A) shall be multiplied by a fraction,
the numerator of which is the number of shares of Company Stock allocable
to Part A that such Participant directed the Trustee in accordance with
Section 3.6.1 and the denominator of which is the aggregate number of shares
allocable to Part A that were directed by active Participants in the same
Employee Group in accordance with Section 3.6.1.
(C) Such Participant, as a named fiduciary, shall be entitled to direct the Trustee with respect to the number of shares determined under clause (i)(B).
(ii) Part B. Each active Participant
who directed the Trustee with respect to shares allocated to his Account
under Part B in accordance with Section 3.6.1(a) may, again as a named
fiduciary, direct the Trustee with respect to a portion of the number of
such shares allocated to any Participant's Account under Part B for which
no instructions were timely received by the Trustee. Such portion
shall be determined as follows:
(A) Such portion shall be limited
to the number of shares of Company Stock allocated to the Accounts of Participants
in such Participant's Employee Group under Part B for which no instructions
were timely received.
(B) The number of shares of Company
Stock as determined under clause (ii)(A) shall be multiplied by a fraction,
the numerator of which is the number of shares of Common Stock allocable
to Part B that such Participant directed the Trustee in accordance with
Section
3.6.1 and the denominator of which is the aggregate number of shares allocable
to Part B that were directed by active Participants in the same Employee
Group in accordance with Section 3.6.1.
(C) Such Participant, as a named
fiduciary, shall be entitled to direct the Trustee with respect to the
number of shares determined under clause (ii)(B).
3.6.3 Procedure. Such directions
shall be provided directly to the Trustee and shall be held in confidence
and not be divulged or released to any other person. Within a reasonable
time prior to each annual or special meeting of holders of Company Stock,
the ESOP Committee shall furnish to all Participants (and Beneficiaries)
entitled to direct the Trustee as to the voting of shares of Company Stock,
copies of any proxy solicitation material provided to holders of voting
Company Stock generally together with appropriate instruction forms or
cards andinformation concerning the method of providing such instructions
to the Trustee. To the extent permitted by law, if the Trustee cannot follow
directions of Participants (or Beneficiaries), the ESOP Committee shall
direct the Trustee.
Notwithstanding any other provision
of this Agreement or the Plan, the Trustee shall not be obligated to follow
the direction of a named fiduciary unless such direction is in accordance
with the terms of the Plan and is proper within the meaning of Section
403 (a) of ERISA and is not contrary to ERISA.
3.7 _Control Transactions and
Certain Dispositions of Company Stock.
3.7.1 General. The provisions
of this Section 3.7 shall apply in the event a Control Transaction is commenced
or proposed by a person or persons. In the event a Control Transaction
is commenced or proposed, the ESOP Committee, promptly after receiving
notice, shall transfer certain of the ESOP Committee's record keeping functions
under the Plan to an independent record keeper (which if the Trustee consents
in writing, may be the Trustee). The functions so transferred shall be
those necessary to preserve the confidentiality of any directions given
by the Participants (and Beneficiaries) in connection with the Control
Transaction. Within a reasonable time after a Control Transaction is commenced,
the ESOP Committee shall furnish to all Participants (and Beneficiaries)
entitled, as hereinafter set forth, to direct the Trustee with respect
to the Control Transaction, copies of all offering material provided to
holders of Company Stock generally, together with appropriate instruction
forms or cards and information concerning the method of providing such
instructions to the Trustee. Except as otherwise required by ERISA, the
Trustee shall have no discretion or authority to sell, exchange, transfer,
convert or otherwise dispose of any of such shares of Company Stock pursuant
to such Control Transaction, except to the extent that the Trustee is timely
directed to do so in writing as follows:
(i) Allocated Shares. Each
Participant (or Beneficiary) to whose ESOP Stock Account shares of Company
Stock have been allocated may, as a named fiduciary within the meaning
of ERISA section 403(a)(1), direct the Trustee with respect to the sale,
exchange, transfer, conversion or other disposition of the shares of Company
Stock allocated to his ESOP Stock Account, and the Trustee shall follow
the directions of those Participants (and Beneficiaries) who provide timely
instructions to the Trustee.
(ii) Unallocated and Uninstructed
Shares.
(A) Part A. Each active
Participant who directed the Trustee with respect to shares allocated to
his Account under Part A in accordance with Section 3.7.1(i) may, again
as a named fiduciary, direct the Trustee with respect to a portion of both
the number of shares of Company Stock held in the Loan Suspense Account
and the number of such shares allocated to any Participant's Account under
Part A for which no instructions were timely received by the Trustee. Such
portion shall be determined as follows:
(I) Such portion shall be limited to
the sum of: (x) the number of shares of Company Stock held in the Loan
Suspense Account reserved for allocation to such Participant's Employee
Group, plus (y) the number of shares of Company Stock allocated to the
Accounts of Participants in such Participant's Employee Group under Part
A for which no instructions were timely received.
(II) The number of shares of Company
Stock determined under clause (ii)(a)(I) shall be multiplied by a fraction,
the numerator of which is the number of shares of Company Stock allocable
to Part A that such Participant directed the Trustee in accordance with
Section 3.7.1(i) and the denominator of which is the aggregate number of
shares allocable to Part A that were directed by active Participants in
the same Employee Group in accordance with Section 3.7.1(i).
(III) Such Participant, as a named
fiduciary, shall be entitled to direct the Trustee with respect to the
number of shares determined under clause
(ii)(A)(II).
(B) Part B. Each active Participant
who directed the Trustee with respect to shares allocated to his Account
under Part B in accordance with Section 3.7.1(i) may, again as a named
fiduciary, direct the Trustee with respect to a portion of the number of
such shares allocated to any Participant's Account under Part B for which
no instructions were timely received by the Trustee. Such portion shall
be determined as follows:
(I) Such portion shall be limited
to the number of shares of Company Stock allocated to the Accounts of Participants
in such Participant's Employee Group under Part B for which no instructions
were timely received.
(II) The number of shares of Company
Stock determined under clause (ii)(B)(I) shall be multiplied by a fraction,
the numerator of which is the number of shares of Company Stock allocable
to Part B that such Participant directed the Trustee in accordance with
Section 3.7.1(a)(i) and the denominator of which is the aggregate number
of shares allocable to Part B that were directed by active Participants
in the same Employee Group in accordance with Section 3.7.1(a)(i).
(III) Such Participant, as a named
fiduciary, shall be entitled to direct the Trustee with respect to the
number of shares determined under clause (ii)(B)(II).
All such instructions from Participants
(and Beneficiaries) shall be provided directly to the independent record
keeper which, if different from the Trustee, shall then instruct the Trustee
as to the amount of shares to be sold, tendered, exchanged, converted or
otherwise disposed of in accordance with the above directions. To the extent
the Trustee cannot follow Participant (or Beneficiary) instructions, the
ESOP Committee, as a named fiduciary, shall direct the Trustee. Except
as contemplated by the foregoing or as required to facilitate the making
of Plan distributions or diversification elections or as required by law,
the Trustee shall have no authority to dispose of Company Stock in a Control
Transaction or otherwise.
Notwithstanding any other provision
of this Agreement or the Plan, the Trustee shall not be obligated to follow
the direction of a named fiduciary unless such direction is in accordance
with the terms of the Plan and is proper within the meaning of Section
403(a) of ERISA and is not contrary to ERISA.
3.7.2 Records. Following any
Control Transaction that has resulted in the sale or exchange of any shares
of Company Stock held in the Plan, the record keeper shall continue to
maintain on a confidential basis the Accounts of Participants (and Beneficiaries)
to whose Accounts shares of Company Stock were allocated at any time during
such offer, until complete distribution of such Accounts or such earlier
time as the record keeper determines that the transfer of the record keeping
functions back to the ESOP Committee will not violate the confidentiality
of the directions given by the Participants (and Beneficiaries). In the
event that there is no sale or exchange of any shares of Company Stock
held in the Plan pursuant to the Control Transaction, the record keepershall
transfer back to the ESOP Committee the record keeping functions; provided,
however, that the record keeper shall keep confidential any instructions
which it may receive from Participants (and Beneficiaries) relating to
the Control Transaction.
3.7.3 Proceeds. For purposes
of allocating the proceeds of any sale or exchange pursuant to a Control
Transaction, the ESOP Committee or the independent record keeper, as the
case may be, shall determine the portion, expressed as a percentage, of
shares of each class tendered by the Trustee that were actually sold or
exchanged (the "applicable percentage" for that class). For each class,
the ESOP Committee or the independent record keeper, as the case may be,
shall then treat as having been sold or exchanged from the portion of the
Loan Suspense Account applicable to that Employee Group and each of the
individual Accounts of Participants (and Beneficiaries) that number of
shares (of that class) that is obtained by multiplying (i) the applicable
percentage for that class, times (ii) the total number of shares in such
Account of that class that were directed to be tendered or exchanged or
sold in connection with the Control Transaction. The adjustments to individual
Accounts shall be made by the ESOP Committee or the independent record
keeper, as the case may be, on information supplied by the Company, the
ESOP Committee or the Trustee.
3.8 Notwithstanding any other provisions
of this Agreement or the Plan, the purchase of Qualifying Employer Securities
pursuant to the ESOP Preferred Stock Purchase Agreement dated March 25,
1994, as amended, or pursuant to any Additional Acquisition Loans (including
loans to effect Section 8.2 (e) of the Plan and Section 1.6 (g) of the
Recapitalization Agreement) among the Trustee and the Company shall be
effected by the Trustee without direction from the ESOP Committee pursuant
to the Trustee's determination, in the exercise of its reasonable judgment
after consultation with such advisors as it reasonably deems necessary,
that such transaction is in the best interests of the Participants and
Beneficiaries and that the purchase transaction and the terms and conditions
of any Acquisition Loan entered into in connection with the above-described
Purchase Agreement are in compliance with all applicable provisions of
the Code and ERISA.
3.9 In addition to, and not in limitation
of, the powers vested and to be vested in it by law or enumerated in this
Article III, the Trustee shall have the power to take any action with respect
to the Fund as is appropriate and helpful in carrying out the purposes
of this Agreement, subject to any directions of the ESOP Committee or the
Participants (or Beneficiaries) as provided herein.
ARTICLE IV
ADMINISTRATION
4.1 The ESOP Committee shall represent
the Company in dealing with the Trustee under this Agreement. Until it
receives written notice that a person is no longer a member of the ESOP
Committee, the Trustee shall be fully protected in assuming that the person
is still a member of the ESOP Committee. The Company shall cause to be
delivered to the Trustee a specimen signature of each member as well as
that of any designee of the ESOP Committee appointed pursuant to Paragraph
4.2. The members of the ESOP Committee shall be "named fiduciaries"
within the meaning of ERISA Section 402(a) with respect to the Plan.
4.2 The Trustee may rely (and shall
be fully protected in relying) on any written communication signed by a
majority of the members of the ESOP Committee as being authorized by, and
reflecting the action of, the ESOP Committee. If the Trustee is advised
in writing by a majority of the members of the ESOP Committee that directives
to the Trustee will be signed by a person or persons designated by the
ESOP Committee, the Trustee may rely on communications signed by the person
or persons so named as a directive reflecting the action of the ESOP Committee.
4.3 The Trustee shall have only those
duties specified in this Agreement or specified in the Plan and expressly
incorporated herein by reference. In the event of any conflict between
the provisions of the Plan and this Agreement, the provisions of this Agreement
shall control. The Trustee shall have no responsibility to administer or
interpret the Plan, to enforce payment of any contributions to the Fund
or to see that the Fund is adequate to meet the liabilities of the Plan.
4.4 The Company or anyone acting
on its behalf may at any time employ the Trustee in its corporate capacity
as agent to perform any act or to keep any records in connection with the
administration of the Plan. Any such agency relationship shall be established
by a separate written agreement between the Company and the Trustee and
the existence of such arrangement shall not affect its responsibility or
liability as Trustee under this Agreement.
4.5 Notwithstanding any other provision
of the Plan or this Agreement, the Trustee shall not be obligated to follow
the direction of a named fiduciary unless such direction is in accordance
with the terms of the Plan or this Agreement and is proper under ERISA
Section 403(a)(2) and not contrary to Title I of ERISA.
4.6 With respect to the exercise
of any fiduciary responsibility with respect to the Plan or the Trust,
including, without limitation, the voting, sale, exchange, other disposition
or conversion of Company Stock, the Trustee and any other relevant fiduciary
may, to the extent permitted by law, take into consideration any relevant
economic factors affecting the interests of current and future Participants
(and Beneficiaries), including, but not limited to, the prospect
for continued Employee enfranchisement through the voting power of Company
Stock held in the Trust, the prospect for future benefits under the Plan
as a result of the prospective release and allocation of Qualifying Employer
Securities held in the Loan Suspense Account and the prospect for future
employment with the Company and its Affiliates.
ARTICLE V
PAYMENTS OF BENEFITS AND EXPENSES
5.1 Except as otherwise provided
in Paragraph 5.3, the Trustee shall pay benefits and administrative expenses
under the Plan only when it receives (and in accordance with) written instructions
from the ESOP Committee, indicating the amount of the payment and the name
and address of the recipient. The Trustee shall have no duty to inquire
into whether any payment the ESOP Committee instructs it to make is consistent
with the terms of the Plan or applicable law or otherwise proper. Any payment
made by the Trustee in accordance with such instructions shall be a complete
discharge and acquittance to the Trustee. If the ESOP Committee advises
the Trustee that benefits have become payable respecting a Participant's
interest in the Fund, but does not instruct the Trustee as to the manner
of payment, the Trustee shall hold the Participant's interest in the Trust
until it receives written instructions from the ESOP Committee as to the
manner of payment. The Trustee shall not pay benefits from the Fund without
such instructions, even though it may be informed from other sources, including,
without limitation, a Participant (or beneficiary), that benefits are payable
under the Plan. The Trustee shall have no responsibility to determine when,
to whom, or in what amounts benefits and expenses are payable under the
Plan.
5.2 The Trustee shall distribute
benefits in the manner described in the Plan and as directed by the ESOP
Committee.
5.3 The Trustee shall receive as
compensation for its services as Trustee such amounts as may, from time
to time, be agreed upon in writing between the Company and the Trustee.
Such compensation and, in accordance with the applicable provisions of
ERISA and the Code, all reasonable and proper expenses incurred by the
Trustee in the administration of the Trust, including reasonable legal
counsel fees, shall be paid by the Company.
5.4 The Company intends that the
Plan shall at all times qualify under Code Sections 401(a), 409 and, to
the extent applicable, 4975(e)(7) and that the Trust hereby established
shall at all times be tax exempt under Section 501(a) of the Code, or successor
provisions. However, any taxes that may be levied upon or in respect of
the Fund shall be paid from the Fund. The Trustee shall promptly notify
the ESOP Committee of any proposed taxes (other than stock transfer taxes)
of which it receives notice and may assume that any such taxes are lawfully
levied or assessed, unless the ESOP Committee advises it in writing to
the contrary within fifteen (15) days after receiving the above notice
from the Trustee. In such case, the Trustee, if requested by the ESOP Committee
in writing, shall contest the
validity of such taxes in any manner
deemed appropriate by the
ESOP Committee; the Company may
itself contest the validity of
any such taxes, in which case the
ESOP Committee shall so notify
the Trustee and the Trustee shall
have no responsibility or
liability respecting such contest.
If any party to this Agreement contests any such proposed levy, the other
party shall provide such information and cooperation as the party conductingthe
contest shall reasonably request.
ARTICLE VI
LIABILITY AND INDEMNIFICATION OF THE TRUSTEE
6.1 The Trustee shall not be responsible
for computing or collecting contributions due under the Plan.
6.2 The Trustee in its corporate
capacity shall not be liable for claims of any persons arising under the
Plan; such claims shall be limited to the Fund. The Trustee shall not be
liable to make distributions or payments of any kind unless sufficient
funds are available therefor in the Fund. The Trustee shall be responsible
only for such money and other property as are actually received by it as
Trustee under this Agreement.
6.3 The Trustee may consult with
legal counsel with respect to the meaning and construction of this Agreement
or its powers, obligations and conduct hereunder, and the written
opinion of such counsel will, to the extent permitted by law, be full and
complete protection in respect of any action taken or omitted by the Trustee
hereunder in good faith and in accordance with the opinion of such counsel.
6.4 The Trustee shall have no liability
other than as imposed by law and this Agreement.
6.5 The Trustee shall be fully protected
in acting upon any instrument, certificate, or paper delivered by the Company,
the ESOP Committee, any Participant, (or Beneficiary) acting as a named
fiduciary and believed by the Trustee to be genuine and to be signed or
presented by the proper person or persons, and the Trustee shall be under
no duty to make any investigation or inquiry as to any statement contained
in any such writing, but may accept the same as conclusive evidence of
the truth and accuracy of the statements therein contained.
6.6 To the extent permitted by applicable
law, the Trustee shall be indemnified by the Company and UAL against any
and all liabilities, settlements, judgments, losses, costs, and expenses
(including reasonable legal fees and expenses) of whatever kind and nature
which may be imposed on, incurred by or asserted against the Trustee by
reason of the performance or nonperformance of its trustee function under
this Agreement, except to the extent such action or inaction constituted
negligence, willful misconduct or failure to act in good faith on the part
of the Trustee.
6.7 All notices, requests, demands
and other communications hereunder or with respect hereto shall be in writing
and shall be deemed to have been fully given if telegraphed, telecopied
or telefaxed, mailed by registered or certified mail, or personally delivered
(or delivered by courier) as follows:
If to the Company, to:
By Mail
UAL Corporation
X.X. Xxx #00000
Xxxxxxx, XX 00000
Attention: Corporate Secretary
By Courier
UAL Corporation
0000 Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxxx, XX 00000
Attention: Corporate Secretary
If to the Trustee, to:
State Street Bank and Trust Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: UAL ESOP Administration
or to such other address or addresses
as any party hereto may furnish to the other party in writing.
6.8 Whenever the Trustee shall deem
it desirable for a matter to be proved or established before taking, permitting
or omitting any act, the matter (unless other evidence in respect thereof
is specifically prescribed in this Agreement) may be deemed to be conclusively
established by a certification signed by a majority of the members of the
ESOP Committee and delivered to the Trustee, and the Trustee shall be fully
protected in relying on such an instrument.
6.9 If a dispute arises as to the
payment of any funds or delivery of any assets by the Trustee, the Trustee
may withhold such payment or delivery until the dispute is determined by
a court of competent jurisdiction or finally settled in writing by the
parties concerned.
ARTICLE VII
ACCOUNTING OF THE TRUSTEE
7.1 The Trustee shall keep accurate
and detailed accounts of all its transactions (including receipts and disbursements)
under this Agreement. These records shall be open to inspection and audit
during regular business hours of the Trustee by the ESOP Committee or any
person or persons designated by the ESOP Committee or the Company in a
written instrument
filed with the Trustee. If mutually
agreed upon in a separate
writing by the ESOP Committee and
the Trustee, the Trustee shall
establish and maintain accountsfor
Participants which shall show
their respective interests, determined
in accordance with the
terms of the Plan, in the Fund;
provided, however, that to the
extent that such accounts are kept
by the Trustee on the basis of
information furnished or caused
to be furnished to it by the ESOP
Committee, the Trustee shall have
no responsibility for the
accuracy of any information so furnished.
All such accounts and
records shall be preserved (in original
form, or on microfilm,
magnetic tape or any other similar
process) for such period as
the Trustee may determine, but the
Trustee may destroy such
accounts and records only after
first notifying the ESOP
Committee and the Company in writing
at least ninety (90) days in
advance of its intention to do so
and transferring to the ESOP
Committee or the Company any such
accounts and records requested.
7.2 Within sixty (60) days after
the close of each fiscal year of the Plan, the Trustee's removal or resignation
as Trustee hereunder, or the termination of the Plan or this Agreement,
the Trustee shall file with the ESOP Committee an account setting forth
all its transactions (including all receipts and disbursements) under this
Agreement during such year, or during the period from the close of the
last preceding fiscal year of the Plan to the effective date of its removal
or resignation or the termination of the Plan or this Agreement, and showing
all property (including its costs and fair market value) held by it hereunder
at the end of such accounting period; provided, however, that in the event
shares of Company Stock are then held in the Trust and a final valuation
report, if necessary, with respect to such Company Stock for any such accounting
period is not received by the Trustee within thirty (30) days of the date
the Trustee is required to render an accounting under the foregoing provision,
then the Trustee shall not be required to render such account until thirty
(30) days from the date such valuation report is received by the Trustee.
The ESOP Committee and the Trustee may agree in writing that similar accounts
will be prepared by the Trustee and filed with the ESOP Committee at more
frequent intervals. No person or persons (including, without limitation,
the Company and the ESOP Committee) shall be entitled to any further or
different accounting by the Trustee, except as may be required by law.
7.3 Twenty-four (24) months after
the filing with the ESOP Committee of the annual accounts for the 1994
and 1995 fiscal years of the Trust and twelve (12) months after the filing
with the ESOP Committee of any other account under Paragraph 7.2, the Trustee
shall be forever released and discharged from any liability or accountability
to the Company and the ESOP Committee with respect to the transactions
shown or reflected on the account, except with respect to any acts or transactions
as to which the ESOP Committee, within the applicable period, files written
objections with the Trustee. The written approval of the ESOP Committee
of any account filed by the Trustee, or the ESOP Committee's failure to
file written objections within the applicable period, shall be a settlement
of such account as against the Company and the ESOP Committee, and shall
forever release and discharge the Trustee from any liability or accountability
to the Company and the ESOP Committee with respect to the transaction shown
or reflected on such account. If a statement of objection is filed by the
ESOP Committee and the ESOP Committee is satisfied that its objections
should be withdrawn or if the account is adjusted to its satisfaction,
the ESOP Committee shall indicate its approval of the account in a written
statement filed with the Trustee and the Trustee shall be forever released
and discharged from all liability and accountability to the Company and
the ESOP Committee in accordance with the immediately preceding sentence.
If an objection is not settled by the ESOP Committee and the Trustee, the
Trustee may commence a proceeding for a judicial settlement of the account
in any court of competent jurisdiction; the only parties that need be joined
in such a proceeding are the Trustee, the ESOP Committee, the Company and
such other parties whose participation is required by law.
ARTICLE VIII
REMOVAL AND RESIGNATION OF THE TRUSTEE
8.1 The Trustee may resign as Trustee
under this Agreement at any time by a written instrument delivered to the
Company giving notice of such resignation, which shall be effective sixty
(60) days after receipt or at such other time as is agreed by the Company
and the Trustee. The Trustee may be removed at any time by the Company
(with the consent of the Air Line Pilot Association, International
and the International Association of Machinists and Aerospaceworkers)
by an instrument in writing and delivered to the Trustee, which shall be
effective sixty (60) days after receipt or at such other time as is agreed
between the Company and the Trustee.
8.2 If a vacancy in the office of
trustee of the Trust occurs, the Company (with the consent of the Air Line
Pilot Association, International and the International Association of Machinists
and Aerospace Workers) shall appoint a successor trustee and shall deliver
to the Trustee copies of (a) a written; instrument executed by the Company
appointing such successor, and (b) a written instrument executed by the
successor in which it accepts such appointment. Such instruments shall
indicate their effective date.
8.3 If the Trustee resigns or is
removed, it shall deliver all assets of the Fund in its possession to a
successor trustee as soon as is reasonably practicable after the settlement
of its account or at such earlier time as shall be agreed on by the Company,
the Trustee and the successor trustee.
ARTICLE IX
AMENDMENT AND TERMINATION
9.1 This Agreement may be amended
at anytime and from time to time by the Company (with the consent of the
Air Line Pilot Association, International and the International Association
of Machinists and Aerospace Workers) by a written instrument duly
acknowledged and delivered to the Trustee setting forth the terms of the
amendment; provided that no amendment affecting rights, duties, responsibilities
or liability of the Trustee may be made without the Trustee's consent.
The instrument of amendment shall state to the Trustee that the amendment
does not permit any part of the Fund to be used for or diverted to purposes
other than the exclusive benefit of Participants and their beneficiaries
or the payment of reasonable expenses of administering the Plan and Trust,
as specified in Paragraph 2.2 hereof. The instrument of amendment shall
specify its effective date and amendments may, with the Trustee's consent,
if applicable, be made effective retroactively.
9.2 If the ESOP Committee certifies
to the Trustee that the Plan is or has been terminated, the Trustee shall
hold and/or dispose of the Fund in accordance with the ESOP Committee's
written instructions. The ESOP Committee shall certify in writing to the
Trustee that the disposition directed: (a) except as provided in Paragraph
2.2, does not result in any part of the Fund being used for or diverted
to purposes other than the exclusive benefit of Participants and their
Beneficiaries and the payment of reasonable expenses (including the repayment
of any outstanding Acquisition Loans) of administering the Plan and Trust,
(b) is in accordance with the applicable provisions of the Code, ERISA
and any other applicable laws, and (c) does not result in a Prohibited
Transaction. If the Plan is terminated with respect to a group of persons
under the Plan, the portion of the Trust attributable to such group shall
be held and disposed of in accordance with the written instructions of
the ESOP Committee which shall be given in conformity with the provisions
of the Plan, the Code and ERISA. The Trustee may, however, reserve such
reasonable sum of money as it deems advisable for payment for the settlement
of its accounts or for payment of taxes that may be assessed on or in respect
of the Fund or the income thereof. This Agreement shall terminate upon
the termination of the Plan as provided herein and the disposition of the
Fund as provided herein.
ARTICLE X
LEVERAGED ACQUISITIONS OF STOCK
10.1 It is specifically contemplated
that the Trust will operate pursuant to a leveraged employee stock
ownership plan with respect to Part A of the Plan and that the Trustee
will incur several Acquisition Loans in connection with the acquisition
of Qualifying Employer Securities. Any Acquisition Loan shall meet all
of the requirements necessary to constitute an "exempt loan" within the
meaning of Treasury Regulation Section 54.4975-7(b)(1)(iii) and shall be
used primarily for the benefit of the Participants and their Beneficiaries.
The proceeds of any Acquisition Loan shall be used, within a reasonable
time after the Acquisition Loan is obtained, only to purchase Qualifying
Employer Securities or to repay such Acquisition Loan or a prior Acquisition
Loan. Any Acquisition Loan shall provide for no more than a reasonable
rate of interest and must be without recourse against the Plan and Trust.
The number of years to maturity under the Acquisition Loan must be definitely
ascertainable at all times. The Acquisition Loan may not be payable at
the demand of any person, except in the case of a default. The only assets
of the Trust that may be given as collateral for an Acquisition Loan are
shares of Qualifying Employer Securities acquired with the Acquisition
Loan, shares of Qualifying Employer Securities that were used as collateral
on prior Acquisition Loans repaid with the proceeds of the current Acquisition
Loan and all Qualifying Employer Securities received as consideration pursuant
to a Control Transaction or acquired with proceeds received pursuant to
a Control Transaction. In the event that Qualifying Employer Securities
are used as collateral for an Acquisition Loan, such Qualifying Employer
Securities shall be released from such encumbrance in accordance with the
provisions of the Plan and applicable Treasury Regulations. No person entitled
to payment under an Acquisition Loan shall be entitled to payment from
the Trust other than from shares of Qualifying Employer Securities acquired
with the Acquisition Loan which are collateral for the Acquisition Loan,
Company contributions made under the Plan for the purpose of satisfying
an Acquisition Loan, earnings attributable to such Qualifying Employer
Securities and such Company contributions (other than contributions of
Qualifying Employer Securities), and such other assets, if any, as to which
recourse may be permitted under Section 4975 of the Code. Payments of principal
and interest on an Acquisition Loan shall be made by the Trustee only from
(1) Company contributions (other than contributions of Qualifying Employer
Securities) made under the Plan for the purpose of satisfying such Acquisition
Loan, earnings on such contributions and earnings on shares of Qualifying
Employer Securities acquired with the proceeds of such Acquisition Loan,
including, but not limited to, cash dividends received by the Trust with
respect to such shares of Qualifying Employer Securities, whether or not
allocated to the accounts of Participants (or Beneficiaries), (2) the proceeds
of a subsequent Acquisition Loan made to repay the prior Acquisition Loan,
and/or (3) unless otherwise agreed in the definitive documentation pertaining
to such Acquisition Loan, the proceeds of the sale of any collateralized
shares of Qualifying Employer Securities acquired with the proceeds of
such Acquisition Loan; provided, however, that the Trustee shall in no
event be required to apply such proceeds of sale to repay principal and
interest on an Acquisition Loan if, in the written opinion of counsel to
the Trustee, such action would constitute a Prohibited Transaction or a
breach of the Trustee's fiduciary duties under ERISA. In the event of a
default under an Acquisition Loan, the value of Trust assets transferred
to the lender shall not exceed the amount of the default, provided further
that if the lender is a "party in interest" within the meaning of
ERISA Section 3(14) or a "disqualified person" within the meaning of Section
4975(e)(2) of the Code, a transfer of Trust assets upon default shall be
made only if, and to the extent of, the Trust's failure to meet the Acquisition
Loan's payment schedule.
ARTICLE XI
MISCELLANEOUS
11.1 This Agreement shall be binding
upon, and the powers granted to the Company and the Trustee, respectively,
shall be exercisable by, the respective successors and assigns of the Company
and the Trustee. Any corporation which shall, by merger, consolidation,
purchase or otherwise, succeed to substantially all the trust business
of the Trustee shall, upon such succession and without any appointment
or other action by the Company, be and become successor trustee hereunder,
upon notification to the Company.
11.2 No right or claim in or to the
Fund or any assets thereof shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge,
and any attempt to so anticipate, alienate, sell, transfer, assign, pledge,
encumber or charge shall be void and shall not be recognized by the Trustee,
except to such extent as may be legally required (e.g., as otherwise provided
in the Plan with respect to qualified domestic relations orders). No such
right or claim shall be liable for or subject to the debts, contracts,
liabilities, engagements or torts of the person entitled thereto.
11.3 This Agreement shall be administered,
construed and enforced in accordance with ERISA, and to the extent not
governed by ERISA, in accordance with the laws of the Commonwealth of Massachusetts.
11.4 One or more of the Company's
Affiliates may, with the approval of the Board of Directors, by resolution
of its own board of directors adopt the Trust if such subsidiary shall
have adopted the Plan or any part thereof. Each such Affiliate which has
adopted this Trust shall be deemed a party to this Agreement and all references
herein to "Company" shall be deemed as to include such Related Company,
except as the context may otherwise require.
11.5 For all purposes of the Plan
and Trust, all valuations of Stock which is not readily tradable on an
established securities market will be made by an "independent appraiser"
within the meaning of Section 401(a)(28)(C) of the Code.
11.6 Headings of Articles are inserted
for convenience of reference. They are not part of this Agreement and shall
not be considered in construing it.
11.7 This Agreement may be executed
in any number of counterparts, each of which shall be considered an original
even through no others are produced.
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IN WITNESS WHEREOF, the Company and
the Trustee have caused this Agreement to be executed by their duly authorized
officers and their respective corporate seals to be hereunto affixed as
of the day and year first above written.
| Attest: | UAL CORPORATION |
| BY: /s/Xxxxxxxxx X. Xxxxx | BY: /s/Xxxxxx X. X'Xxxxxx |
| TITLE: Vice President | TITLE: Executive Vice President |
| Attest: | STATE STREET BANK AND TRUST |
| COMPANY | |
| BY: /s/Xxxxxx X. Xxxxxx | BY: Xxxxx Xxxxxxxx |
| TITLE: Assistant Vice President | TITLE: Vice President |
| and Associate Counsel |
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