| Issuer: |
Reorganized UAL Corp. |
| Guarantor: |
United Airlines, Inc. |
| Issue: |
[___]% Senior Subordinated Convertible Notes Due 2021 (the “Notes”) to be issued no later than 180 days following the Exit Date (the “Issuance Date”). |
| Initial Holder: |
A trust or similar non-permanent vehicle for the benefit of eligible United Flight Attendants; the Notes or the value of the Notes to be distributed to such Flight Attendants or Flight Attendants retirement accounts as soon as reasonably practicable given tax, accounting, securities and market considerations; all rights of the Notes to be exercised by individual Flight Attendants while the notes remain in the trust. Distribution mechanics, eligibility and allocation among such Flight Attendants to be reasonably determined by the Union. |
| Principal Amount: |
$20,000,000 in denominations of $1,000. |
| Term: |
15 years from the Issuance Date. |
| Amortization: |
None prior to maturity; full principal to be repaid at the maturity date except to the extent converted or prepaid. |
| Interest Rate: |
Semi-annually in arrears, in cash, at an annual rate of [__]%1; provided, however, that (i) the first full year of interest from the Issuance Date may be paid in cash or in kind at the option of the Issuer; (ii) if such interest is paid in kind, it will be in Common Stock, but only to the extent there exists Common Stock that is exempt from registration under 11 U.S.C. § 1145; and (iii) if such interest is paid in kind, it shall be delivered to the Holders under applicable market terms at issuance for public convertible debt securities of this type (e.g., any notice period and stock payment premium). |
| Security: |
None. |
| Ranking: |
Junior to the Reorganized UAL exit facility, customary secured indebtedness, indebtedness contemplated under a plan of reorganization, and other mutually agreed-upon indebtedness; pari passu to all current and future UAL or United Airlines senior unsecured debt; senior to all current and future subordinated debt. |
| Conversion Rights: |
The Holder may convert any number of the Notes into the Issuer’s common stock (the “Common Stock”), at any time, at the Conversion Price. |
| Conversion Price: |
The product of (x) 125% and (y) the average closing price of the Common Stock for the sixty consecutive trading days following the Exit Date. |
| Transferability: |
To the greatest extent feasible under applicable law, the Notes and the Common Stock shall be issued under 11 U.S.C. §1145, and the Notes and the Common Stock into which they shall be convertible shall be freely transferable by the Holders without registration under the Securities Act of 1933. |
| Common Stock: |
When delivered, the Common Stock into which Notes may convert shall be fully paid and non-assessable. Issuer shall use its best efforts to list the Common Stock on a national stock exchange or NASDAQ prior to the Issuance Date. |
| Call Rights: |
No call for five years from the Issuance Date; thereafter, callable in cash or Common Stock if the Common Stock has traded at no less than 125% of the Conversion Price for the sixty (60) consecutive trading days prior to the call date. |
| Put Rights: |
Soft put right on the fifth and tenth anniversary of the Issuance Date for all principal and accrued interest as of such date; payable in cash or shares of Common Stock. |
Mandatory
Prepayments: |
Mandatory prepayment upon a “fundamental change” with a customary make whole premium, if any, for public convertible debt securities of this type; no prepayment obligations for mergers in which the Issuer is the surviving entity; no make whole premium in other mergers. |
Anti-Dilution
Protections: |
The Conversion Price will be subject to customary anti-dilution adjustments, including upon (i) stock or extraordinary cash dividends, (ii) reclassifications, subdivisions or combinations of the Common Stock, (iii) the issuance of rights or warrants to all holders of Common Stock convertible into or exercisable for Common Stock at less than the then-current market price, (iv) distribution of the capital stock of an Issuer subsidiary to holders of the Common Stock and (v) any other distributions of assets by the Issuer to holders of the Common Stock. |
Mergers and Business
Combinations: |
The Notes will enjoy customary adjustments and protections in the event the Common Stock is converted into, reclassified into or exchanged for cash, other assets or securities. |
Other Terms and
Conditions: |
The Notes are intended to be public market securities and to trade at par value. The documentation of the Notes shall include such other terms and conditions as are customarily found in public market convertible securities of this type. |
| Implementation: |
Implementing documentation reasonably acceptable to the Union and the Company. |
| Distribution: |
The Union and the Company will coordinate any distribution of the Notes so that such distribution does not unreasonably interfere with capital markets activities of the UAL or the Company. |